GSI Technology, Inc. Annual Report 2023

FY2023 Annual Report · GSI Technology, Inc.

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Fiscal 2023 Annual Report
and Proxy Statement

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July 17, 2023

To Our Stockholders:

I hope this letter finds you well. I am pleased to provide you with an update on the progress and achievements
of GSI Technology during the 2023 fiscal year. While the year presented us with positive developments
and challenges, we have made significant strides in advancing our goals and positioning ourselves for future
success.

This year saw explosive growth and advancements in generative AI, with notable examples such as Chat
GPT, Bard, and BingAI. The emergence of these powerful language models has sparked great excitement
and anticipation for their potential applications. However, it is essential to recognize that the traditional CPU
and GPU architectures, built on the von Neumann compute model, face inherent limitations when it
comes to unleashing the full economic potential of generative AI. This is where GSI Technology’s APU,
with its unique in-memory compute capabilities, comes into play.

By harnessing the power of in-memory computing, our APU unlocks new possibilities for generative AI,
enabling faster and more efficient processing of large language models. Our technology addresses the
shortcomings of traditional architectures and positions GSI Technology at the forefront of the evolving
generative AI landscape. We are excited about the opportunities that our technology presents and remain
dedicated to driving innovation that transforms industries and maximizes the economic potential of
generative AI.

Our roadmap for Gemini-II and Gemini-III continues to build on the unique benefits that Gemini-I
displays. So far, we have seen that our APU architecture can address significant problems that the industry
faces. The APU scales to meet increased demand without the limitations of CPUs and GPUs. Zero-shot
learning capability in the APU’s architecture allows the addition of new data without retraining. Our
lower power consumption means a smaller carbon footprint and lower operating expenses for generative AI
vendors.

In conclusion, the 2023 fiscal year has been a year of industry growth, technological development, and
progress in establishing partnerships for GSI Technology. We have navigated challenges, learned valuable
lessons, and made strides in advancing our goals. We remain focused on prioritizing near-term opportunities
for Gemini-I, particularly in the SAR and satellite sectors, where we believe we offer a superior solution.
Additionally, our APU plug-in’s enhanced performance in vector search engines presents promising growth
opportunities. As we move forward, we are determined to continue delivering innovative solutions,
leveraging our technological expertise, and fostering strategic partnerships that drive long-term value for
our shareholders.

On behalf of the entire GSI Technology team, I want to express our sincere gratitude for your continued
support and confidence in our vision. We remain committed to transparency, innovation, and delivering
shareholder value. Together, we will navigate the opportunities and challenges to come, and I am confident in
our ability to achieve success.

Thank you for your trust and investment in GSI Technology.

Sincerely,

Lee-Lean Shu
Chairman, President, and Chief Executive Officer

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July 17, 2023

Dear Stockholder:

You are cordially invited to attend the 2023 Annual Meeting of Stockholders of GSI Technology, Inc.

to be held at 2:00 p.m. PDT, on Thursday, August 24, 2023. This year, the Annual Meeting will be held
virtually via audio webcast. You will be able to attend and participate in the meeting by visiting
https://meetnow.global/MQV6UG2, where you will be able to listen to the meeting live, submit questions,
and vote.

The Notice of Annual Meeting of Stockholders and a Proxy Statement, which describe the formal

business to be conducted at the meeting, follow this letter. A copy of GSI Technology’s Annual Report to
Stockholders is also enclosed for your information.

After reading the Proxy Statement, please promptly mark, sign, date and return the enclosed proxy

card in the accompanying prepaid envelope. Alternatively, you may vote your shares via the Internet or by
telephone. Instructions regarding these methods of voting are provided on the proxy card.

Whether or not you plan to attend the annual meeting, we urge you to sign, date and return the
enclosed proxy card or vote via the Internet or by telephone at your earliest convenience. We look forward
to your online attendance at the annual meeting.

Sincerely yours,

Lee-Lean Shu
President, Chief Executive Officer and Chairman

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1213 Elko Drive
Sunnyvale, CA 94089

NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
To Be Held August 24, 2023

TO THE STOCKHOLDERS:

Notice is hereby given that the annual meeting of the stockholders of GSI Technology, Inc., a Delaware

corporation, will be held on Thursday, August 24, 2023, at 2:00 p.m. PDT, via audio webcast at
https://meetnow.global/MQV6UG2, for the following purposes:

1. To elect seven persons to serve on our Board of Directors until the next annual meeting of

stockholders and until their respective successors are duly elected and qualified;

2. To ratify the appointment of BDO USA, P.A. as our independent registered public accounting

firm for the fiscal year ending March 31, 2024;

3. To vote on an advisory (non-binding) resolution regarding the fiscal 2023 compensation of the

executive officers named in the Summary Compensation Table included in the proxy statement for
the annual meeting;

4. To vote on an advisory (non-binding) resolution regarding the frequency of future advisory votes

on executive compensation; and

5. To transact such other business as may properly come before the meeting or any adjournment or

postponement of the meeting.

These business items are described more fully in the proxy statement accompanying this Notice.

Our Board of Directors unanimously recommends that you vote FOR all of the nominees proposed by our

Board of Directors, and FOR Proposals No. 2 and 3 and a vote of EVERY YEAR for Proposal No. 4.
Stockholders of record at the close of business on July 5, 2023 are entitled to notice of, and to vote at, the
meeting and any adjournment or postponement thereof. For ten days prior to the meeting, a complete list of
stockholders entitled to vote at the meeting will be available for examination by any stockholder, for any
purpose relating to the meeting, during ordinary business hours at our principal offices located at 1213 Elko
Drive, Sunnyvale, California 94089. In addition, this list will be available online during the meeting.

This year, the Annual Meeting will be held virtually via audio webcast. You will be able to attend and

participate in the meeting by visiting https://meetnow.global/MQV6UG2, where you will be able to listen to
the meeting live, submit questions, and vote. To access the audio webcast of the meeting, you must have
the information that is printed on the shaded bar area located on the reverse side of the Notice. You must
enter a valid control number to enter the virtual meeting.

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Sunnyvale, California
July 17, 2023

Robert Yau
Secretary

IMPORTANT: Please vote your shares via the Internet or by telephone, in accordance with the
instructions contained in the accompanying materials, or by dating and signing the proxy card and
returning it in the accompanying postage-paid envelope to ensure that your shares are represented at the
meeting. If you attend the audio webcast of the meeting, you may choose to vote your shares even if you
have previously sent in your proxy card or submitted your proxy via the Internet.

IMPORTANT NOTICE REGARDING THE AVAILABILITY OF PROXY MATERIALS FOR THE
ANNUAL MEETING OF STOCKHOLDERS TO BE HELD ON AUGUST 24, 2023: Our proxy
statement is enclosed. Financial and other information concerning GSI Technology, Inc. is contained in
our annual report to stockholders for the fiscal year ended March 31, 2023. A complete set of proxy
materials relating to our annual meeting is available on the Internet. These materials, consisting of the
notice of annual meeting, proxy statement, proxy card and annual report to stockholders, may be viewed
and downloaded at: http://ir.gsitechnology.com/proxy-materials.

TABLE OF CONTENTS

INFORMATION CONCERNING SOLICITATION AND VOTING . . . . . . . . . . . . . . . . . . . . .

PROPOSAL NO. 1 ELECTION OF DIRECTORS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

CORPORATE GOVERNANCE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Director Independence . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Board of Directors Leadership Structure . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

The Board of Directors’ Role in Risk Oversight . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Executive Sessions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Committees and Meeting Attendance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Director Nominations

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Director Qualifications Matrix . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Board Diversity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Communications with Directors

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Evaluation of the Board of Directors and Committees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Director Attendance at Annual Meetings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Code of Business Conduct and Ethics; Corporate Governance Guidelines; Director Stock

Ownership . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Compensation Committee Interlocks and Insider Participation . . . . . . . . . . . . . . . . . . . . . . . . .

Transactions with Related Persons . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

PROPOSAL NO. 2 RATIFICATION OF APPOINTMENT OF INDEPENDENT REGISTERED
PUBLIC ACCOUNTING FIRM . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

REPORT OF THE AUDIT COMMITTEE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

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PROPOSAL NO. 3 ADVISORY (NON-BINDING) VOTE ON EXECUTIVE COMPENSATION

(SAY-ON-PAY) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

PROPOSAL NO. 4 ADVISORY (NON-BINDING) VOTE ON THE FREQUENCY OF

FUTURE ADVISORY VOTES ON EXECUTIVE COMPENSATION . . . . . . . . . . . . . . . . . .

EXECUTIVE COMPENSATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Compensation Discussion and Analysis . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Compensation Committee Report . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Summary Compensation Table . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Grants of Plan-Based Awards . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Outstanding Equity Awards at Fiscal Year-End . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Option Exercises and Stock Vested During Last Fiscal Year . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Potential Payments Upon Change of Control

Compensation of Directors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Equity Compensation Plan Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

PAY VERSUS PERFORMANCE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
RELATED PERSON TRANSACTIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

PRINCIPAL STOCKHOLDERS AND STOCK OWNERSHIP BY MANAGEMENT . . . . . . . . .

STOCKHOLDER PROPOSALS TO BE PRESENTED AT NEXT ANNUAL MEETING . . . . . .
TRANSACTION OF OTHER BUSINESS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

ANNUAL REPORT ON FORM 10-K . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

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GSI TECHNOLOGY, INC.
1213 Elko Drive
Sunnyvale, CA 94089

PROXY STATEMENT
FOR ANNUAL MEETING OF STOCKHOLDERS
To Be Held August 24, 2023

The accompanying proxy is solicited by the Board of Directors of GSI Technology, Inc., a Delaware
corporation, for use at its annual meeting of stockholders to be held on Thursday, August 24, 2023, or any
adjournment or postponement thereof, for the purposes set forth in the accompanying Notice of Annual
Meeting of Stockholders. This proxy statement and the enclosed proxy are being mailed to stockholders
on or about July 17, 2023. References in this proxy statement to the “Company,” “we,” “our,” “us” and “GSI
Technology” are to GSI Technology, Inc., and references to the “annual meeting” are to the 2023 Annual
Meeting of Stockholders. When we refer to the Company’s fiscal year, we mean the annual period ending on
March 31. This proxy statement covers our fiscal year ended March 31, 2023 (“fiscal 2023”).

INFORMATION CONCERNING SOLICITATION AND VOTING

Why am I receiving these proxy materials?

We sent you this proxy statement and proxy card because your Board of Directors is soliciting your

proxy to vote at the annual meeting. This proxy statement contains important information that is intended
to assist you in making informed decisions regarding your vote.

How can I attend the Annual Meeting?

The Annual Meeting will be a completely virtual meeting of stockholders, which will be conducted

exclusively by audio webcast. You are entitled to participate in the Annual Meeting only if you were a
stockholder of the Company as of the close of business on the Record Date, or if you hold a valid proxy for
the Annual Meeting. No physical meeting will be held.

You will be able to attend the Annual Meeting and submit your questions during the meeting by
visiting https://meetnow.global/MQV6UG2. You also will be able to vote your shares by attending the
Annual Meeting by audio webcast.

To participate in the Annual Meeting, you will need to review the information included on your Notice,

on your proxy card or on the instructions that accompanied your proxy materials. You must enter a valid
control number to enter the virtual meeting.

If you hold your shares through an intermediary, such as a bank or broker, you must register in

advance using the instructions below.

The online meeting will begin promptly at 2:00 p.m. PDT. We encourage you to access the meeting

prior to the start time in order to allow ample time to complete the check in process. Please follow the
registration instructions as outlined in this proxy statement.

How do I register to attend the Annual Meeting?

If you are a registered shareholder (i.e., you hold your shares through our transfer agent, Computershare),
you do not need to register to attend the Annual Meeting. Please follow the instructions on the notice or proxy
card that you received.

If you hold your shares through an intermediary, such as a bank or broker, you must register in

advance to attend the Annual Meeting.

To register to attend the Annual Meeting, you must submit proof of your proxy power (legal proxy)

reflecting your GSI Technology, Inc. holdings along with your name and email address to Computershare

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via email or U.S. mail. Requests for registration must be labeled as “Legal Proxy” and be received no later
than 5:00 p.m. EDT, on August 21, 2023.

You will receive a confirmation of your registration by email after we receive your registration materials.

Requests for registration should be directed to Computershare using the following contact information:

By email:

Forward the email from your broker, or attach an image of your legal proxy, to
legalproxy@computershare.com

By mail:

Computershare
GSI Technology, Inc. Legal Proxy
P.O. Box 43001
Providence, RI 02940-3001

What items of business will be voted on at the Annual Meeting?

Stockholders will vote on four proposals at the annual meeting:

• to elect seven persons to serve on our Board of Directors until the 2024 annual meeting

(Proposal No. 1);

• to ratify the appointment of BDO USA, P.A. as our independent registered public accounting firm

for the fiscal year ending March 31, 2024 (Proposal No. 2);

• to vote on an advisory (non-binding) resolution to approve the fiscal 2023 compensation of our

named executive officers (as defined in this proxy statement) (Proposal No. 3); and

• to vote on an advisory (non-binding) resolution regarding the frequency of future advisory votes on

executive compensation (Proposal No. 4).

We will also consider any other business that properly comes before the annual meeting.

What is a proxy?

A proxy is your designation of another person or persons to vote your shares on your behalf. By
properly signing and returning the enclosed proxy card, or by voting via the Internet or by telephone, you
give the persons designated as proxies by our Board of Directors the authority to vote your shares in the
manner that you specify.

How does the Board recommend that I vote my shares?

Our Board of Directors unanimously recommends that you vote your shares:

• FOR all of the Board’s nominees for director, as listed and described under Proposal No. 1;

• FOR ratification of the appointment of BDO USA, P.A. as our independent registered public

accounting firm for the fiscal year ending March 31, 2024;

• FOR approval of the advisory (non-binding) resolution approving the fiscal 2023 compensation of

our named Executive Officers; and

• FOR an advisory vote on executive compensation every year.

Who is entitled to vote at the Annual Meeting?

Only stockholders of record at the close of business on July 5, 2023 (the “Record Date”) are entitled to
vote at the annual meeting. As of the Record Date, 25,083,143 shares of our common stock were outstanding.

How many shares must be present to hold the Annual Meeting?

The presence of the holders of a majority of all shares outstanding and entitled to vote, whether
attending the audio webcast or represented by proxy, will constitute a quorum for the transaction of
business at the annual meeting. If a quorum is not present, the annual meeting will be adjourned until a
quorum is obtained.

How many votes do I have?

Each stockholder is entitled to cast one vote for each share of our common stock held on the Record

Date.

If I am a stockholder of record, how do I vote?

If your shares are registered directly in your name with our transfer agent, you are considered to be the
stockholder of record with respect to those shares, and these proxy materials have been sent directly to you.
If you are a stockholder of record, there are four ways to vote your shares:

• by completing, signing and dating your proxy card and returning it in the envelope provided;

• via the Internet by following the instructions on the proxy card you received;

• by telephone by following the instructions on the proxy card; or

• by attending the audio webcast of the annual meeting and voting at the directed time.

If I am a beneficial owner of shares, how do I vote?

If your shares are held for you in an account with a broker, bank or similar organization, you are
considered the “beneficial owner” of those shares, which are generally referred to as being held in “street
name,” and you should have received these proxy materials from that organization. If you are a beneficial
owner of shares held in street name, there are several ways to vote your shares:

• by completing, signing and dating the voting instruction form provided by the organization that
holds your shares and returning the form to that organization, which will vote your shares in
accordance with your instructions;

• if your broker, bank or other nominee permits you to provide voting instructions via the Internet or

by telephone, you may vote that way as well; or

• by attending the audio webcast of the annual meeting and voting at the directed time. However, in
order to vote at the meeting, you must obtain a legal proxy from the organization that holds your
shares. Follow the instructions from the broker, bank or other organization holding your shares to
obtain such a proxy.

In order that your shares are properly voted, we encourage you to provide specific voting instructions

with respect to each proposal to any organization that holds your shares in street name by carefully following
the organization’s voting instructions.

What happens if I do not provide specific voting instructions?

If you are a stockholder of record and you return a signed and dated proxy card without providing

specific voting instructions, the persons named as proxy holders will vote your shares in the manner
recommended by the Board of Directors on all of the proposals described in this proxy statement. If any
other matter is properly presented at the meeting, the proxy holders will vote your shares as they may
determine in their discretion.

If you are the beneficial owner of shares held in street name and do not provide specific voting
instructions to the organization that holds your shares, the organization may generally vote your shares at
their discretion on “routine matters” but cannot vote on “non-routine” matters. “Non-routine” matters would
include the election of directors (Proposal No. 1), the advisory (non-binding) vote on executive compensation
(Proposal No. 3) and the advisory (non-binding) vote regarding the frequency of future advisory votes on

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executive compensation (Proposal No. 4), while “routine” matters would include the ratification of the
appointment of our independent registered public accounting firm (Proposal No. 2).

How many votes are needed to elect directors?

Members of the GSI Technology Board of Directors are elected by plurality vote. Accordingly, the

seven persons duly nominated at the annual meeting who receive the highest number of FOR votes will be
elected as directors.

How many votes are needed to approve proposals Nos. 2, 3 and 4?

The appointment of BDO USA, P.A. as our independent registered public accounting firm (Proposal

No. 2) and approval of the advisory (non-binding) vote regarding fiscal 2023 executive officer compensation
(Proposal No. 3) each require the affirmative vote of a majority of the shares represented and voting at the
annual meeting. The option of one year, two years or three years (Proposal No. 4) that receives the highest
number of votes cast by stockholders will be the frequency for the advisory vote on executive compensation
that we will consider to have been recommended by our stockholders.

How are broker non-votes and abstentions treated?

A “broker non-vote” occurs when a broker, bank or other nominee holds shares in street name for the

beneficial owner but, with respect to a particular proposal, does not have discretionary authority to vote the
shares (i.e., it is a “non-routine” matter) and has not received timely voting instructions from the beneficial
owner.

Broker non-votes and abstentions are counted as present for purposes of determining whether a

quorum is present at the meeting.

Votes withheld and broker non-votes will have no effect on the election of directors (Proposal No. 1).

Abstentions and broker non-votes will have no effect on the preferred frequency of future advisory votes on
executive compensation (Proposal No. 4). Proposals Nos. 2 and 3 each requires the affirmative vote of a
majority of shares represented and voting at the annual meeting. Abstentions and broker non-votes will
reduce the number of shares voting as well as the number of shares in favor of the proposal and, therefore,
will have no impact on the results of voting.

Can I revoke my proxy or change my vote?

Yes. You may revoke your proxy and change your vote at any time before the polls close at the annual

meeting.

If you are a stockholder of record, you may revoke your proxy and change your vote in any of the

following ways:

• by signing and returning a proxy card with a later date that is received before the polls close at the

annual meeting;

• by voting again via the Internet or by telephone before the polls close at the annual meeting;

• by voting during the audio webcast of the annual meeting; or

• by giving written notice of revocation to the Company’s Corporate Secretary.

Please note that attendance at the audio webcast of the annual meeting, in and of itself, will not revoke

your proxy.

If you are the beneficial owner of shares held in street name, you may revoke your proxy and change

your vote in any of the following ways:

• by signing and returning an instruction form with a later date;

• by voting again via the Internet or by telephone (if such voting is allowed by your broker, bank or

other nominee) before the polls close at the annual meeting; or

• by voting during the audio webcast of the annual meeting (although, as noted above, in order to vote
at the annual meeting, you must obtain a legal proxy from the bank, broker or other nominee that
holds your shares).

How will the votes be counted?

Votes taken at the annual meeting will be counted by an independent inspector of election appointed

by the Company.

How can I find out the results of the voting?

Preliminary voting results will be announced at the annual meeting. Final voting results will be
tabulated by the inspector of election. We will publish voting results known to us in a Form 8-K report to
be filed with the Securities and Exchange Commission within four business days after the annual meeting. If
final results are not available to use at the time of such filing, we will file an amendment to the Form 8-K
report to publish the final results within four business days after they are known to us.

Who will solicit proxies on behalf of the Board of Directors?

Proxies may be solicited by directors and officers of the Company, without additional compensation.

Solicitation of proxies by mail may be supplemented by telephone, facsimile, e-mail or personal solicitation.
None of the participants will receive additional compensation for assisting with the solicitation.

You may also be solicited by press releases issued by us and postings on our corporate website. Unless

expressly indicated otherwise, information contained on our corporate website is not part of this proxy
statement.

Who will bear the cost of the solicitation of proxies?

We will pay for the entire cost of soliciting proxies on behalf of GSI Technology. We will also reimburse
brokerage firms, banks and other agents, upon their request, for the costs of forwarding our proxy materials
to beneficial owners of stock held in their name.

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PROPOSAL NO. 1

ELECTION OF DIRECTORS

We have a Board of Directors consisting of seven directors who will serve until the next annual

meeting of stockholders and until their respective successors are duly elected and qualified.

The Board of Directors’ nominees for election at the annual meeting are Jack A. Bradley, Elizabeth

Cholawsky, Haydn Hsieh, Ruey L. Lu, Barbara Nelson, Lee-Lean Shu and Robert Yau. All nominees
currently serve on the Board of Directors. If elected, the seven nominees will serve as directors until our
annual meeting of stockholders in 2024 and until their successors are duly elected and qualified. If any of
the nominees declines to serve or becomes unavailable for any reason, or if a vacancy occurs before the
election (although we know of no reason to anticipate that this will occur), the proxies may be voted for such
substitute nominees as we may designate.

These seven nominees represent a balance of directors with a history of service on the Board and
newer directors with a strong mix of relevant experience. Our Nominating and Governance Committee and
Board of Directors have evaluated each of our nominees against the factors and principles we use to
select nominees for director, which are described elsewhere in this proxy statement. Based on this evaluation,
our Nominating and Governance Committee and Board of Directors concluded that it is in the best
interests of GSI Technology and its stockholders for each of the seven nominees named above to serve as a
member of the Board of Directors.

If a quorum is present and voting, the seven nominees for director receiving the greatest number of

votes will be elected. A WITHHOLD vote will have no effect on the vote. Our Board of Directors has no
reason to believe that any nominee named herein will be unable or unwilling to serve.

The Board of Directors unanimously recommends a vote FOR the nominees named above.

The following table sets forth information regarding our current directors, each of whom is a nominee

for election at the annual meeting, as of June 30, 2023:

Nominee’s Name

Principal Occupation

Jack A. Bradley

Partner, David Powell Financial Services

Elizabeth Cholawsky Chief Executive Officer of HG Insights Inc.

Haydn Hsieh

Ruey L. Lu

Barbara Nelson

Lee-Lean Shu

Robert Yau

Chairman and Chief Strategy Officer of Wistron NeWeb Corp.

President of eMPIA Technology

Former Vice President, Western Digital Corporation; Board
member, Audit Committee member and Chair of the Nominating
and Corporate Governance Committee of Backblaze, Inc.

President, Chief Executive Officer and Chairman of the Board of
Directors of GSI Technology
Vice President, Engineering and Secretary of GSI Technology

Director
Since

Age

2015

2019

2008

2000

2021

1995

Business Experience of Director Nominees

Set forth below is a description of the business experience of each director nominee, including a
discussion of the specific experience, qualifications, attributes and skills that led our Nominating and
Governance Committee and our Board of Directors to conclude that those individuals should serve as
directors.

Jack A. Bradley has served as a member of our Board of Directors since March 2015. Mr. Bradley has
been a partner in David Powell Financial Services, an advisor to early-stage companies, since September 2014.
From February 2006 through March 2013, Mr. Bradley served as Chief Executive Officer of Packet
Design, Inc. (“PDI”), a venture capital-funded company that developed and marketed analytic management
systems for data communications. From March 2001 to February 2006, Mr. Bradley served as Chief
Financial Officer of Packet Design, LLC, a developer of networking infrastructure software that spun off

several networking companies, including PDI. Prior to joining Packet Design, LLC, Mr. Bradley held senior
operational and financial management positions with several networking and communications companies,
including Cisco Systems, Inc. (General Manager of Video Internet Services Business Unit), Network
Computing Devices, Inc. (Chief Financial Officer and Interim Chief Executive Officer), 3Com Corporation
(Vice President and General Manager, International Division), and Bridge Communications, Inc. (Chief
Financial Officer). Mr. Bradley holds a B.S. degree in Accounting from the University of San Francisco.
Mr. Bradley brings over 30 years’ experience in executive management positions with public and private
companies engaged in the software, systems and semiconductor industries. In particular, his extensive
experience in the networking and communications industries, including his operational experience with
providing integrated hardware and software solutions to customers, enables him to provide advice and
guidance as we develop our new in-place associative computing products.

Elizabeth Cholawsky has served as a member of our Board of Directors since September 2019. Since
April 2018, Dr. Cholawsky has served as the Chief Executive Officer and a member of the Board of Directors
of HG Insights Inc., a technology intelligence big data company that provides sales and marketing insights
for B2B companies in the Fortune 500. Since August 2019, Dr. Cholawsky has also served as a member of the
Board of Directors of American Riviera Bancorp (OTCQX: ARBV), a full-service community bank in
Santa Barbara, California. From November 2016 to March 2018, Dr. Cholawsky was a partner at Cholawsky
Gruenfeld Advisory, providing SaaS strategy consulting services to high growth companies. Dr. Cholawsky
served as President, CEO and Board member of Support.com, Inc. (Nasdaq: SPRT) from May 2014 to
October 2016, where she formulated and led a transformation strategy, developing and bringing to market
a new category of products. Dr. Cholawsky has a Ph.D. in Political Science with a concentration in
Econometrics from the University of Minnesota and a B.A. (cum laude and Phi Beta Kappa) from
Franklin & Marshall College. Dr. Cholawsky’s extensive experience in product innovation, marketing
strategies and customer development, along with her expertise in data software solutions, enables her to
provide advice and guidance with the marketing and sale of our new in-place associative computing products.

Haydn Hsieh has served as a member of our Board of Directors since August 2008. Mr. Hsieh has
served as the Chief Strategy Officer of Wistron NeWeb Corp., a manufacturer of wireless communications
products, since December 2017, its Chief Executive Officer from June 2000 through December 2017, its Vice
Chairman from June 2000 through June 2014, and its Chairman since June 2014. From February 1981
through June 2000, Mr. Hsieh served in various management capacities at several divisions of Acer Group,
a manufacturer of personal computers and related products, including President of the Mobile Computing
Business Unit and Senior Vice President of Acer Inc. Mr. Hsieh holds a B.S. degree in Electrical Engineering
from Tatung Institute of Technology and participated in the Executive Program at the Graduate School of
Business Administration of National Chengchi University in Taiwan. Mr. Hsieh’s broad management
background provides relevant experience in a number of strategic and operational areas, including his
management experience with the application and manufacturing of systems and modules, enables him to
provide advice and guidance as we develop our new in-place associative computing products. Moreover, his
management experience with, and service as an outside board member to, companies headquartered in
Taiwan provides him with relevant insight into that country, where GSI Technology has significant operations,
as well as a valuable perspective on global business operations.

Ruey L. Lu has served as a member of our Board of Directors since October 2000. Mr. Lu is the

President of eMPIA Technology Corp., a semiconductor solutions company, which he founded in
January 2002. From March 1993 to December 2000, Mr. Lu served as President of ARK Logic, a storage
device and software applications company, which he founded. From October 1989 to February 1993, Mr. Lu
served as Director of Engineering in the Imaging Product Division of Western Digital Corporation, an
information storage company. Mr. Lu holds a B.S. degree in Electrical Engineering from Taipei Institute of
Technology and an M.S. degree in Electrical Engineering from the University of Missouri. Mr. Lu’s experience
as President of eMPIA Technology and in executive roles at ARK Logic and Western Digital has provided
him with broad industry and executive experience, including the co-design of hardware and software platforms
like our new in-place associative computing products. Moreover, his management experience with a
company headquartered in Taiwan provides him with relevant insight into that country, where GSI
Technology has significant operations, as well as a valuable perspective on global business operations.

Barbara Nelson has served as a member of our Board of Directors since August 2021. Ms. Nelson has

been serving since October 2020 as a member of the Board of Directors, member of the Audit Committee

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and the Chair of the Nominating and Corporate Governance Committee of Backblaze, Inc. (Nasdaq:
BLZE), a cloud data management, storage and backup SaaS company. Ms. Nelson joined the board of
Omniscient Neurotechnology (o8t) in October of 2022. O8t is a private company that provides an AI platform
for brain connectivity offered in software tools used today in neurosurgery and applicable to address a
variety of mental illnesses such as depression in the future. From May 2017 to April 2020, she served as Vice
President, and from November 2016 to May 2017 she served as senior consultant to the President and
Chief Operating Officer, at Western Digital Corporation (Nasdaq: WDC), a data technology products,
systems and cloud storage services company. From May 2013 to March 2016, she served as Executive Vice
President and General Manager of the IronKey, the mobile security and SaaS division of Imation Corp
(NYSE: IMN) a data storage and information security products and solutions company. From July 2008
to March 2010, Ms. Nelson served as Chief Executive Officer of Element Labs Inc., a video and LED-
lighting company and from October 2003 to December 2007, Ms. Nelson served as Chief Executive Officer
and Chairman of NeoScale Systems Inc., an enterprise storage security and key management company.
Ms. Nelson holds a B.S. degree in Electrical Engineering from Stanford University. Ms. Nelson’s extensive
experience in the semiconductor and storage industries, with over fifteen years of P&L leadership, in matters
of go-to-market, product development and finance, and her expertise in cloud services and SaaS businesses
enables her to provide valuable input and guidance to our Board and management team.

Lee-Lean Shu co-founded our company in March 1995 and has served as our President and Chief

Executive Officer and as a member of our Board of Directors since our inception. In October 2000,
Mr. Shu became Chairman of our Board. From January 1995 to March 1995, Mr. Shu was Director, SRAM
Design at Sony Microelectronics Corporation, a semiconductor company and a subsidiary of Sony
Corporation, and from July 1990 to January 1995, he was a design manager at Sony Microelectronics
Corporation. Mr. Shu holds a B.S. degree in Electrical Engineering from Tatung Institute of Technology
and an M.S. degree in Electrical Engineering from the University of California, Los Angeles. It is our policy
that our Chief Executive Officer should serve on our Board. In addition, Mr. Shu’s role as a co-founder of
our company and his day-to-day involvement in the management of our business has provided him with
extensive knowledge and understanding of GSI Technology and its industry. As Chief Executive Officer,
he is in a unique position to provide our Board with insight and information related to our business and
operations and to participate in the ongoing review of strategic issues.

Robert Yau co-founded our company in March 1995 and has served as our Vice President, Engineering

and as a member of our Board of Directors since our inception. From December 1993 to February 1995,
Mr. Yau was design manager for specialty memory devices at Sony Microelectronics Corporation. From 1990
to 1993, Mr. Yau was design manager at MOSEL/VITELIC, a semiconductor company. Mr. Yau holds a
B.S. degree in Electrical Engineering from the University of Texas at Arlington and an M.S. degree in Electrical
Engineering from the University of California, Berkeley. As a co-founder, our Vice President, Engineering,
and an expert in SRAM technology, Mr. Yau is able to provide the Board with an understanding of our
technology and our product development strategy as well as expert perspective on industry trends and
opportunities.

Director Independence

CORPORATE GOVERNANCE

The Board of Directors has determined that, other than Lee-Lean Shu and Robert Yau, each of the

members of the Board is an “independent director” for purposes of the Nasdaq Listing Rules and
Rule 10A-3(b)(1) under the Securities Exchange Act of 1934, as amended, as the term relates to membership
on the Board and the various Board committees. There are no family relationships between any of our
directors or executive officers.

Board of Directors Leadership Structure

Lee-Lean Shu serves as both our Chief Executive Officer and the Chairman of our Board of Directors.

The Board believes that combining the role of Chairman and Chief Executive Officer is appropriate in the
case of Mr. Shu, given his role in founding GSI Technology and his significant ownership stake and also
because Mr. Shu is the Board member who is most familiar with our business strategy and most
knowledgeable regarding our industry. The Board also believes that the combined role of Chairman and
Chief Executive Officer facilitates the flow of information between the Board and management, improves
the Board’s ability to focus on key policy and operational issues and helps the Board operate in the long-term
interests of our stockholders.

The Board has determined that, at any time the office of Chairman is filled by our Chief Executive
Officer or another employee of GSI Technology, a non-employee director, recommended by the Nominating
and Governance Committee, shall be designated to serve as lead director. Jack A. Bradley currently serves
in that position and provided that he is re-elected at the annual meeting, will continue to serve as lead director
through our annual meeting of stockholders in 2024. The lead director serves as the principal liaison
between the independent directors and the Chairman. In that capacity, the lead director presides over
executive sessions of the independent directors, chairs Board meetings in the Chairman’s absence, and
collaborates with the Chairman on agendas, schedules and materials for Board meetings. The Board believes
that this leadership structure provides the appropriate balance of management and non-management
oversight. The Nominating and Corporate Governance Committee periodically evaluates our leadership
structure to ensure that we maintain a structure that is beneficial to us and our stockholders, and will
recommend any appropriate changes to the Board.

The Board of Directors’ Role in Risk Oversight

Risk is inherent with every business, and how well a business manages risk can ultimately determine its
success. We face a number of risks, including general economic risks, operational risks, financial risks, legal
risks, strategic and competitive risks and reputational risks. Management is responsible for the day-to-day
management of the risks that we face, while the Board of Directors, as a whole and through its committees,
has responsibility for the oversight of risk management. Our independent committee chairs and members are
experienced professionals or executives who can and do raise risk related issues for Board consideration
and review and who are willing to challenge management when necessary. As part of its risk oversight role,
the Board has the responsibility to satisfy itself that the risk management processes designed and implemented
by management are adequate and functioning as designed. In addition, the Board is responsible for
matters relating to management and Board succession planning.

While the full Board of Directors is charged with ultimate oversight responsibility for risk management,

committees of the Board also have responsibilities with respect to various aspects of risk management
oversight. During the course of the year, each committee of the Board spends a portion of their time
reviewing and discussing specific risk topics. The full Board is kept informed of each committee’s risk oversight
and related activities. Strategic, operational and competitive risks also are presented and discussed at the
Board’s quarterly meetings, and more often as necessary. On at least an annual basis, the Board reviews our
long-term strategic plans.

The Audit Committee plays a significant role in monitoring and assessing our financial risk exposures,

financial reporting, internal controls, liquidity risk, compliance risk and operational risks, including cyber
security. The Audit Committee is also responsible for establishing and administering our code of conduct and

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reviewing transactions between the Company and any related parties. The Audit Committee meets
periodically in separate executive session with the Chief Financial Officer and our independent auditor, as
well as with committee members only, to facilitate a full and candid discussion of risk and other issues. The
Compensation Committee oversees human capital risks, monitors and assesses risks associated with our
compensation policies and consults with management and the Board concerning the development of incentives
that encourage a level of risk-taking consistent with our overall strategy, as further discussed under the
heading “Compensation Discussion and Analysis.” The Compensation Committee also is charged with
monitoring our incentive and equity-based compensation plans, including employee retirement and benefit
plans. The Nominating and Governance Committee has oversight responsibility for corporate governance
risks, including risks associated with Board and committee composition, Board size and structure, director
independence and Board and committee effectiveness. In addition to the responsibilities undertaken by the
committees discussed above, the Board committees may have oversight of specific risk areas consistent
with the committees’ charters and responsibilities. Our executive management meets regularly to discuss our
strategy and the risks that we face. Senior officers regularly attend Board meetings where they are available
to address questions or concerns raised by the Board regarding risk management related matters.

Executive Sessions

Non-management directors generally meet in executive session without the presence of management,

including our Chief Executive Officer and our Vice President, Engineering, at each regularly scheduled
meeting of the Board. The non-management director serving as lead director, acts as the presiding director
for these executive sessions.

Committees and Meeting Attendance

The Board of Directors has three standing committees: an Audit Committee, a Compensation

Committee and a Nominating and Governance Committee. The Board of Directors held fourteen meetings
during the fiscal year ended March 31, 2023. During fiscal 2023, no director attended fewer than 86% of
the total number of meetings of the Board and all of the committees of the Board on which such director
served that were held during that period.

Our Nominating and Governance Committee, as part of its governance review, evaluates the

composition of each of our Board committees to ensure that we maintain a structure that is beneficial to us
and our stockholders, and recommends any appropriate changes to our Board of Directors.

The following table sets forth the current members of each of our Board’s standing committees as of

the date of this proxy statement:

Committee Member

Audit

Compensation

Nominating
and Governance

Jack A. Bradley . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Chair

Elizabeth Cholawsky . . . . . . . . . . . . . . . . . . . . . . . . . . .

Haydn Hsieh . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Ruey L. Lu . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Barbara Nelson . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Chair

X
X

Chair

Audit Committee

The members of the Audit Committee during fiscal 2023 were Mr. Bradley (Chair upon Ms. Le’s
resignation from the board in December 2022), Mr. Hsieh, Ms. Nelson (beginning in September 2022),
Dr. Cholawsky and Ms. Le (Chair, until her resignation from the board in December 2022). The Audit
Committee held eleven meetings during fiscal 2023. Each of the members of the Audit Committee is
independent for purposes of the Nasdaq Listing Rules as they apply to audit committee members.
Mr. Bradley and Ms. Nelson have been designated as “audit committee financial experts,” as the term is
defined in applicable SEC rules. The Audit Committee operates under a charter that is available on our
website at www.gsitechnology.com. The functions of the Audit Committee include oversight, review and
evaluation of our financial statements, accounting and financial reporting processes and public filings,

disclosure control and internal control functions, compliance with policies and procedures, cyber and data
security and information technology risk exposures and the audits of our financial statements. The Audit
Committee is responsible for the engagement, compensation, retention and oversight of our independent
registered public accounting firm. Additional information regarding the Audit Committee is set forth in the
Report of the Audit Committee immediately following Proposal No. 2.

Compensation Committee

The members of the Compensation Committee during fiscal 2023 were Dr. Cholawsky (Chair) and
Messrs. Bradley, Hsieh and Lu. The Compensation Committee held seven meetings during fiscal 2023. Each
of the members of the Compensation Committee is independent for purposes of the Nasdaq Listing
Rules. The Compensation Committee operates under a charter that is available on our website at
www.gsitechnology.com. The purpose of the Compensation Committee is to assist the Board of Directors in
carrying out its responsibilities with respect to: (i) overseeing our compensation policies and practices;
and (ii) reviewing and approving compensation and compensation procedures for our executive officers.
The Compensation Committee’s responsibilities include: periodically reviewing and advising the Board of
Directors concerning overall compensation philosophy, policies and plans, including reviewing both regional
and industry compensation practices and trends; identifying any peer group of companies to be used for
comparison purposes; reviewing and approving all performance goals and objectives relevant to the
compensation of all executive officers and assessing the achievement of such goals and objectives;
determining and approving all compensation for our executive officers (including salary and incentive-based
compensation and awards); making recommendations to the Board of Directors regarding the establishment
and terms of incentive compensation plans, and administering such plans; and approving grants of options
and other equity awards to all executive officers and other eligible individuals under our equity
compensation plans. Other responsibilities of the Compensation Committee include: reviewing and
approving compensation related matters outside the ordinary course of business, including but not limited
to employment contracts, change-in-control provisions, severance arrangements, and material amendments
thereto; preparing an annual report on executive compensation, including a Compensation Discussion
and Analysis, for inclusion in the proxy statement for our annual meeting of stockholders; monitoring and
assessing risks associated with our compensation policies and consulting with management regarding such
risks; and reporting to the Board of Directors on the Compensation Committee’s activities on a regular
basis. Regarding most compensation matters, including executive compensation, our management provides
recommendations to the Compensation Committee. Additional information regarding the Compensation
Committee and its activities is set forth under the heading “Executive Compensation” in this proxy
statement.

Nominating and Governance Committee

The members of the Nominating and Governance Committee during fiscal 2023 were Messrs. Bradley
(Chair until December 2022), Lu, and Dr. Cholawsky and Ms. Nelson (Chair beginning in December 2022).
The Nominating and Governance Committee held five meetings during fiscal 2023. Each of the members
of the Nominating and Governance Committee is independent for purposes of the Nasdaq Listing Rules. The
Nominating and Governance Committee operates under a charter that is available on our website at
www.gsitechnology.com. The Nominating and Governance Committee identifies prospective Board candidates,
recommends nominees for election to our Board of Directors, develops and recommends Board member
selection criteria, considers committee member qualification, reviews and makes recommendations to the
Board of Directors regarding Board and committee compensation based in part upon input from an
independent national compensation consulting firm engaged for that purpose, recommends corporate
governance principles to the Board of Directors, reviews and proposes responses to shareholder proposals,
and provides oversight in the evaluation of the Board of Directors and each committee.

Director Nominations

The Nominating and Governance Committee is responsible for, among other things, the selection and

recommendation to the Board of Directors of nominees for election as directors. When considering the
nomination of directors for election at an annual meeting, the Nominating and Governance Committee
reviews the needs of the Board of Directors for various skills, background and experience. When reviewing

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potential nominees, including incumbents, the Nominating and Governance Committee considers the
current and future needs of GSI Technology to ensure that the Board of Directors has the appropriate
balance of knowledge, experience, skills, expertise, judgment, perspectives and backgrounds. The Nominating
and Governance Committee also seeks appropriate input from the Chief Executive Officer and other
executive officers in assessing the needs of the Board of Directors for relevant knowledge, experience, skills,
expertise, judgment, perspective and background of its members.

The Nominating and Governance Committee’s goal is to assemble a Board of Directors that brings to

GSI Technology a diversity of experience at policy-making levels in business and technology, and in areas
that are relevant to GSI Technology’s global activities. Directors should possess the highest personal and
professional ethics, integrity and values and be committed to representing the long-term interests of our
stockholders. They must have an inquisitive and objective outlook and mature judgment. They must also
have experience in positions with a high degree of responsibility and be leaders in the companies or institutions
with which they are, or have been, affiliated. Director candidates must have sufficient time available, in the
judgment of the Nominating and Governance Committee, to perform all Board and committee responsibilities
that will be expected of them. Members of the Board of Directors are expected to rigorously prepare for,
attend and participate in all meetings of the Board of Directors and applicable committees. While we do not
have a specific policy regarding diversity, when considering the nomination of directors, the Nominating
and Governance Committee does consider the diversity of its directors and nominees in terms of knowledge,
experience, skills, expertise, judgment, perspective, background and other demographic factors. Other than
the foregoing, there are no specific minimum criteria for director nominees, although the Nominating and
Governance Committee believes that it is preferable that a majority of the Board of Directors meet the
definition of “independent director” set forth in Nasdaq and SEC rules. The Nominating and Governance
Committee also believes it appropriate for one or more key members of the Company’s management, including
the Chief Executive Officer, to serve on the Board of Directors.

The Nominating and Governance Committee will consider candidates for director proposed by
directors or management, and will evaluate any such candidates against the criteria and pursuant to the
policies and procedures set forth above. If the Nominating and Governance Committee believes that the
Board of Directors requires additional candidates for nomination, the Nominating and Governance
Committee may engage, as appropriate, a third party search firm to assist in identifying qualified candidates.
The nominating process may also include interviews and additional background and reference checks for non-
incumbent nominees, at the discretion of the Nominating and Governance Committee.

The Nominating and Governance Committee will also consider candidates for director recommended

by a stockholder, provided that any such recommendation is sent in writing to the Board of Directors,
c/o Corporate Secretary at the address noted below, at least 120 days prior to the anniversary of the date
definitive proxy materials were mailed to stockholders in connection with the prior year’s annual meeting of
stockholders and contains the following information:

• the candidate’s name, age, contact information and present principal occupation or employment; and

• a description of the candidate’s qualifications, skills, background and business experience during at

least the last five years, including his or her principal occupation and employment and the name and
principal business of any company or other organization where the candidate has been employed
or has served as a director.

The Nominating and Governance Committee will evaluate any candidates recommended by
stockholders against the same criteria and pursuant to the same policies and procedures applicable to the
evaluation of candidates proposed by directors or management.

In addition, stockholders may make direct nominations of directors for election at an annual meeting,
provided the advance notice requirements set forth in our bylaws have been met. Under our bylaws, written
notice of such nomination, including certain information and representations specified in the bylaws,
must be delivered to our principal executive offices, addressed to the Corporate Secretary, at least 120 days
prior to the anniversary of the date definitive proxy materials were mailed to stockholders in connection with
the prior year’s annual meeting of stockholders, except that if no annual meeting was held in the previous
year or the date of the annual meeting has been advanced by more than 30 days from the date contemplated
at the time of the previous year’s proxy statement, such notice must be received not later than the close of

business on the 10th day following the day on which the public announcement of the date of such meeting is
first made. To comply with the universal proxy rules, with respect to our 2024 annual meeting, stockholders
who intend to solicit proxies in support of director nominees other than the Board of Directors’ nominees
must provide us with notice that sets forth the information required by Rule 14a-19 under the Exchange
Act and our bylaws no later than June 25, 2024.

Director Qualifications Matrix

The following matrix shows how the Nominating and Governance Committee has applied our director
criteria to the director nominees and identifies areas of expertise and experience that may benefit the Board
in the future and led to each nominee’s selection as a member of the Board, as well as gaps in those areas
that may arise as directors retire.

Qualification

Audit and Financial
Expertise

Broad Business & Corporate
Governance Experience

Public Company Board
Experience

Understanding of a Board’s
Legal Duties and
Responsibilities

Cybersecurity Expertise

ESG Expertise

Relevant Industry
Experience (Semiconductor)

Relevant Industry
Experience (Software/SaaS)

Strategic Planning
Capabilities

Capital Markets Expertise

International Business
Experience

Sales Experience

Risk Management
Background
Leadership Skills

Diversity (Gender)
Diversity (Ethnic/Racial)

Board Diversity

Jack A.
Bradley
✓

Elizabeth
Cholawsky
✓

Haydn
Hsieh
✓

Ruey-Lin
Lu
✓

Barbara
Nelson
✓

Lee-Lean
Shu
✓

Robert
Yau

✓

✓
✓

✓

✓
✓

✓

✓
✓

✓

✓
✓

✓

✓
✓

✓

✓
✓

✓

✓
✓

✓

✓
✓

✓

✓
✓

✓

Nasdaq Listing Rules require all Nasdaq listed companies to annually disclose voluntary self-identified
diversity information regarding their board of directors. The following table sets forth the Board’s diversity
statistics in the format prescribed by the Nasdaq rules. Our Board Diversity Matrix as of June 30, 2022 can be
found in the proxy statement for our 2022 Annual Meeting of Stockholders, filed with the Securities and
Exchange Commission on July 18, 2022.

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Total Number of Directors

Part I: Gender Identity

Board Diversity Matrix (as of June 30, 2023)

Female Male Non-Binary

Did Not
Disclose
Gender

Directors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Part II: Demographic Background

African American or Black . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . —

Alaskan Native or Native American . . . . . . . . . . . . . . . . . . . . . . . . —

Asian . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . —

Hispanic or Latinx . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . —

Native Hawaiian or Pacific Islander . . . . . . . . . . . . . . . . . . . . . . . . —

White (not of Hispanic or Latinx origin) . . . . . . . . . . . . . . . . . . . . .

Two or More Races or Ethnicities . . . . . . . . . . . . . . . . . . . . . . . . . . —

—

LGBTQ+ . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Did Not Disclose Demographic Background . . . . . . . . . . . . . . . . . .

—

Communications with Directors

Stockholders may send any communications to the Board of Directors or any individual director at the

following address. All communications received are reported to the Board or the individual directors:

Board of Directors (or name of individual director(s))
c/o Secretary
GSI TECHNOLOGY, INC.
1213 Elko Drive
Sunnyvale, California, 94089

Our Secretary will forward all such communications to the Board of Directors, or the individual
director or directors, except for spam, junk mail, mass mailings, product complaints or inquiries, job
inquiries, surveys, business solicitations, advertisements, or patently offensive or otherwise inappropriate
material. Our Secretary may forward certain correspondence, such as product-related inquiries, elsewhere
within GSI Technology for review and possible response.

Evaluation of the Board of Directors and Committees

Approximately once a year, the members of the Board of Directors and each Board committee hold a

special meeting to conduct a confidential oral assessment of their performance and effectiveness. This process
is coordinated by the lead director and the chair of the Nominating and Governance Committee. As part
of the evaluation process, the Board and each Committee reviews its overall composition, including director
tenure, board leadership structure, diversity and individual skill sets, to ensure it serves the best interests of
stockholders and positions the Company for future success. After the evaluations, the Board and management
work to improve upon any issues or focus points disclosed during the evaluation process.

Director Attendance at Annual Meetings

We attempt to schedule our annual meeting of stockholders at a time and date to accommodate

attendance by directors, taking into account the directors’ schedules. Directors are encouraged to attend our
annual meeting of stockholders, but the Board has not adopted a formal policy with respect to such
attendance. Five of the eight directors then serving on the Board attended last year’s annual meeting of
stockholders.

Code of Business Conduct and Ethics; Corporate Governance Guidelines; Director Stock Ownership

We have adopted a Code of Business Conduct and Ethics that applies to all of our employees, officers

and directors. The Board of Directors, upon the recommendation of the Nominating and Governance

Committee, has also adopted a series of Corporate Governance Guidelines. The Corporate Governance
Guidelines include a director stock ownership requirement, which provides that directors must hold within
the later of (a) five years following his or her first election or appointment to the Board, or (b) October 31,
2026, an amount of stock valued at the lesser of its purchase price or its fair market value (measured on
October 31st of each year) equal to at least three times the total annual retainer cash compensation paid by
the Company for Board service (excluding for this purpose compensation that is not paid to all independent
directors, such as compensation for committee or chair service). The Code of Business Conduct and
Ethics and Corporate Governance Guidelines are available on our website at www.gsitechnology.com. If we
make any substantive amendments to the Code of Business Conduct and Ethics, or grant any waiver from a
provision of the Code to any executive officer or director, we will promptly disclose the nature of the
amendment or waiver on our website, as well as via any other means then required by Nasdaq Listing Rules
or applicable law.

Compensation Committee Interlocks and Insider Participation

None of the members of the Compensation Committee are or have been an officer or employee of GSI
Technology. During fiscal 2023, no member of the Compensation Committee had any relationship with GSI
Technology requiring disclosure under Item 404 of Regulation S-K. During fiscal 2023, none of GSI
Technology’s executive officers served on the compensation committee (or its equivalent) or board of
directors of another entity any of whose executive officers served on GSI Technology’s Compensation
Committee or Board of Directors.

Transactions with Related Persons

GSI Technology incurred non-recurring engineering service expense and manufacturing services of
approximately $240,000 and $397,000 during the fiscal years ended March 31, 2023 and March 31, 2022,
respectively, from Wistron NeWeb Corp (“WNC”) in connection with the design, development and
manufacture of single-APU PCIe production boards, to be used in the Company’s in-place associative
computing product. Mr. Hsieh, a member of the Board of Directors, is the Chairman and Chief Strategy
Officer of WNC.

For information regarding GSI Technology’s procedures for approval of transactions with related

persons, please see “Related Person Transactions”.

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PROPOSAL NO. 2

RATIFICATION OF APPOINTMENT OF
INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

The Audit Committee of the Board of Directors of GSI Technology has selected BDO USA, P.A.
(f/k/a BDO USA, LLP) as its independent registered public accounting firm to audit the consolidated
financial statements of GSI Technology for the fiscal year ending March 31, 2024. BDO USA, P.A. has
acted in such capacity since its appointment in September 2017. A representative of BDO USA, P.A. is
expected to be present at the 2023 Annual Meeting, with the opportunity to make a statement if the
representative desires to do so, and is expected to be available to respond to appropriate questions. At the
2023 Annual Meeting, the shareholders are being asked to ratify the selection of BDO USA, P.A. as the
Company’s independent registered public accounting firm for the fiscal year ending March 31, 2024.

The following table sets forth the aggregate fees billed to GSI Technology for the fiscal years ended

March 31, 2023 and March 31, 2022 by BDO USA, P.A.:

Audit fees(1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Tax fees(2)
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Fiscal 2023

Fiscal 2022

$926,200
30,778

$726,200
29,206

$956,978

$755,406

(1) Audit fees consist of fees for professional services rendered for the audit of GSI Technology’s annual

consolidated financial statements, the review of the interim consolidated financial statements included
in quarterly reports, review of registration statements and services that are normally provided in
connection with statutory and regulatory filings.

(2) Tax fees consist of fees for consultation on various tax matters and compliance with federal and state

income tax filing requirements.

The Audit Committee has determined that all services performed by BDO USA, P.A. are compatible
with maintaining the independence of BDO USA, P.A. The Audit Committee’s policy is to pre-approve all
audit and permissible non-audit services provided by our independent registered public accounting firm.
These services may include audit services, audit related services, tax services and other services. Pre-approval
is generally provided for up to one year and any pre-approval is detailed as to the particular service or category
of services. The independent registered public accounting firm and management are required to periodically
report to the Audit Committee regarding the extent of services provided by the independent registered
public accounting firm in accordance with this pre-approval.

Vote Required and Board of Directors Recommendation

Approval of this proposal requires the affirmative vote of a majority of the shares present in person or

by proxy and voting on the matter. Abstentions and broker non-votes will each be counted as present for
purposes of determining the presence of a quorum but will not have any effect on the outcome of the vote.

The Board of Directors unanimously recommends a vote “FOR” the ratification of the appointment of

BDO USA, P.A. as our independent registered public accounting firm for the fiscal year ending March 31,
2024.

REPORT OF THE AUDIT COMMITTEE

The Audit Committee oversees GSI Technology’s financial reporting process on behalf of the Board of
Directors. Management has the primary responsibility for the financial statements and the reporting process,
including the design and maintenance of our internal control systems. Our independent registered public
accounting firm, BDO USA, P.A., is responsible for expressing an opinion as to the conformity of our audited
financial statements with generally accepted accounting principles. BDO USA, P.A. has served as our
independent registered public accounting firm since its appointment in September 2017.

The Audit Committee currently consists of four directors, two of which have been designated as “audit
committee financial experts.” Each member of the Committee, in the judgment of the Board of Directors, is
an “independent director” as defined in the Nasdaq Listing Rules. The Audit Committee acts pursuant to
a written charter that has been adopted by the Board of Directors. The charter provides, among other things,
that the Audit Committee is to review the qualifications, independence and performance, and approve the
terms of engagement, including the fees payable, for our independent auditor, oversee our system of disclosure
controls and procedures and internal controls over financial reporting, oversee our compliance with ethical
standards and oversee the preparation of any reports required of the Audit Committee under rules of the
Securities and Exchange Commission. A copy of this charter is available on our website at
www.gsitechnology.com.

The Audit Committee has reviewed and discussed with management GSI Technology’s audited
financial statements and the results of management’s assessment of the effectiveness of GSI Technology’s
internal control over financial reporting as of March 31, 2023. The Audit Committee has discussed and
reviewed with our independent registered public accounting firm all of the matters required to be discussed by
the applicable requirements of the Public Company Accounting Oversight Board (“PCAOB”) and the
Securities and Exchange Commission. The Audit Committee has met with BDO USA, P.A., with and without
management present, to discuss the overall scope of BDO’s audit, the results of its examinations, and the
overall quality of GSI Technology’s financial reporting and internal control over financial reporting.

The Audit Committee has received the written disclosures and the letter from our independent registered

public accounting firm required by applicable requirements of the PCAOB regarding the independent
registered public accounting firm’s communications with the Audit Committee concerning their independence,
and has discussed with our independent registered public accounting firm any relationships that may
impact their objectivity and independence, and satisfied itself as to our independent registered public
accounting firm’s independence.

Based on the review and discussions referred to above, the Audit Committee recommended to the

Board of Directors that GSI Technology’s audited financial statements be included in GSI Technology’s
Annual Report on Form 10-K for the fiscal year ended March 31, 2023.

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THE AUDIT COMMITTEE

Jack A. Bradley (Chair)
Elizabeth Cholawsky
Haydn Hsieh
Barbara Nelson

The foregoing Audit Committee Report shall not be deemed to be incorporated by reference into any filing
of GSI Technology under the Securities Act of 1933 or the Securities Exchange Act of 1934, except to the extent
that GSI Technology specifically incorporates such information by reference.

PROPOSAL NO. 3

ADVISORY (NON-BINDING) VOTE
ON EXECUTIVE COMPENSATION (SAY-ON-PAY)

Background

In accordance with the requirements of Section 14A of the Securities Exchange Act of 1934 and the
related rules of the SEC, we provide our stockholders the opportunity to cast an advisory (non-binding)
vote on executive compensation, commonly referred to as a “Say-on-Pay” vote. At our 2017 Annual Meeting
of Stockholders, our stockholders voted in favor of holding future “Say-on-Pay” votes on an annual basis.
The Board subsequently determined that such advisory votes shall be held annually at the annual meeting of
stockholders. The vote is advisory, which means that it is not binding on the Board of Directors, the
Compensation Committee or GSI Technology in any way. However, the Compensation Committee will
review the outcome of the vote and take it into consideration when considering future executive compensation
policies and decisions.

At our 2018, 2019, 2020, 2021 and 2022 annual meetings, 99%, 99%, 99%, 98% and 75%, respectively,

of the votes cast were voted in favor of the Company’s executive compensation program for the previous
fiscal year. Partially as a result of this positive stockholder feedback, our Compensation Committee has
adopted compensation packages having similar basic structures in subsequent years.

As described in our Compensation Discussion and Analysis included elsewhere in this proxy statement,
we seek to closely align the interests of our executive officers with the interests of our stockholders, and attract
and retain superior executive talent. Our compensation programs are designed to reward our executive
officers for the achievement of our short-term and long-term strategic and operational goals and the
achievement of increased total stockholder return, while avoiding the encouragement of unnecessary or
excessive risk-taking. Please read the Compensation Discussion and Analysis section for a more detailed
discussion of our compensation philosophy and our executive compensation program.

The advisory vote on executive compensation solicited by this proposal is not intended to address any
specific item of compensation, but rather the overall compensation of our Chief Executive Officer and our
two other most highly-compensated executive officers, who are collectively referred to as our “named executive
officers,” which is disclosed and discussed elsewhere in this proxy statement. Furthermore, because this
non-binding, advisory resolution primarily relates to the compensation of our named executive officers that
has already been paid or contractually committed, there is generally no opportunity for us to revisit these
decisions.

Stockholders will be asked at the annual meeting to approve the following resolution pursuant to this

Proposal No. 3:

“RESOLVED, that the stockholders of GSI Technology, Inc. approve, on an advisory (non-binding)
basis, the compensation for the fiscal year ended March 31, 2023 of the Company’s executive officers
named in the Summary Compensation Table included in the proxy statement for the 2023 Annual Meeting
of Stockholders.”

Vote Required and Board of Directors Recommendation

Approval of this resolution requires the affirmative vote of a majority of the shares present in person

or by proxy and voting on the matter. Abstentions and broker non-votes will each be counted as present for
purposes of determining a quorum but will not have any effect on the outcome of the vote.

The Board of Directors unanimously recommends a vote “FOR” approval of the foregoing resolution.

PROPOSAL NO. 4

ADVISORY (NON-BINDING) VOTE ON THE FREQUENCY OF FUTURE ADVISORY VOTES
ON EXECUTIVE COMPENSATION

In connection with Proposal No. 3 above seeking advisory approval of our executive compensation
program, Section 14A of the Securities Exchange Act of 1934 and the related rules of the SEC also require
that we conduct a separate advisory (non-binding) stockholder vote every six years to advise on whether
future Say-on-Pay votes should occur every one, two or three years. You have the option to vote for any
one of the three options, or to abstain on the matter.

At our 2017 annual meeting, our stockholders voted to hold an advisory vote on our executive
compensation program on an annual basis. Our Board subsequently determined that such advisory votes
shall be held annually at the annual meeting of stockholders. As a result, the Company has conducted a
Say-on-Pay vote each year. Our Board and Compensation Committee believe that our stockholders continue
to prefer to have an opportunity to express their views on the Company’s executive compensation program
through an annual Say-on-Pay vote, and that the Company benefits from receiving feedback on stockholders’
views of the compensation of our named executive officers on an annual basis.

In addition, the Compensation Committee and the Board believe annual advisory votes will continue
to allow the Board to obtain information on stockholders’ views of the compensation of our named executive
officers on a consistent basis, and will continue to provide our Compensation Committee and Board with
frequent input from stockholders on our compensation program. By contrast, less frequent votes could allow
an unpopular pay practice to continue too long without timely feedback.

For the reasons stated above, the Compensation Committee and Board believe that holding an
advisory vote on executive compensation every year is a good corporate governance practice and the most
appropriate policy for our stockholders and the Company at this time.

You may cast your vote on your preferred frequency of future Say-on-Pay votes by choosing the option
of one year, two years or three years, or abstain from voting when you vote in response to the resolution set
forth below.

RESOLVED, that the stockholders of GSI Technology, Inc. determine, on an advisory basis, that the

frequency with which the stockholders of the Company shall have an advisory vote on executive compensation,
as disclosed pursuant to the compensation disclosure rules of the SEC, shall be:

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Choice 1 — every year;

Choice 2 — every two years;

Choice 3 — every three years; or

Choice 4 — abstain from voting.

Vote Required and Board of Directors Recommendation

The option of every year, two years or three years that receives the highest number of votes cast by

stockholders will be the frequency for the advisory vote on the compensation of our named executive
officers that we will consider to have been recommended by our stockholders. However, because this vote is
advisory and is not binding on our Board of Directors, the Board may decide that it is in the best interests
of our stockholders and the Company to hold an advisory vote on executive compensation more or less
frequently than the option recommended by our stockholders.

Abstentions and broker non-votes will not be counted and, accordingly, will have no effect on the

outcome of the vote on this Proposal No. 4.

The Board of Directors unanimously recommends that you vote for the option of every year as the frequency
with which stockholders are provided an advisory vote on executive compensation, as disclosed pursuant to
Item 402 of Regulation S-K of the SEC rules.

EXECUTIVE COMPENSATION

Compensation Discussion and Analysis

Overview

This Compensation Discussion and Analysis explains our philosophy and objectives with respect to the

compensation of our executive officers and our compensation-setting process and provides more detailed
information regarding the compensation of our Chief Executive Officer and our two other most highly
compensated executive officer, determined as of March 31, 2023. We refer to these individuals as our “named
executive officers.” This discussion focuses on the information contained in the tables and related footnotes
and narrative included below, primarily for our 2023 fiscal year.

Philosophy and Objectives

Our fundamental compensation philosophy is to align the compensation of our senior management
with our annual and long-term business objectives, performance against those objectives and creation of
stockholder value, as well as to offer compensation that will enable us to attract, retain, and appropriately
reward executive officers whose contributions are necessary for our long-term success. We seek to reward our
executive officers’ contributions to achieving revenue growth, increasing operating profits and controlling
costs. We operate in a very competitive environment for executive talent, and it is our belief that our
compensation packages should be competitive when compared to our peers and should also be aligned with
our stockholders’ interests.

The Compensation Committee of the Board of Directors oversees the design and administration of

our executive compensation program. The principal elements of the program are base salary, variable
incentive cash compensation programs, long-term equity-based incentive compensation and broad-based
benefits programs. The policy of the Compensation Committee is that the total compensation of the executive
officers should generally be comparable to the median compensation paid by the Company’s peer companies
to officers performing comparable functions. However, it has not been the Compensation Committee’s
policy to adopt a rigid formula or benchmark system related to peer company compensation practices.

Compensation-Setting Process

Generally, the Compensation Committee reviews the compensation of our executive officers in the
early part of each fiscal year and takes action at that time to set base salaries and variable compensation for
the current year. In setting our executive officers’ total compensation, the Compensation Committee
considers individual and company performance, as well as compensation surveys and other market
information regarding compensation paid by comparable companies, including our industry peers. The
Compensation Committee considers the grant of equity awards to all of our executive and non-executive
officers at the same time, once a year, usually in July or August.

In its annual review of compensation for GSI Technology’s executive officers, the Compensation
Committee has considered compensation data and analyses assembled and prepared by the Committee and
our Human Resources staff. The Chief Executive Officer provides the Compensation Committee with a
review of each of the other executive officer’s individual performance and contributions over the past year
and makes recommendations regarding their compensation, which the Compensation Committee considers.
In making compensation decisions, our Chief Executive Officer and our Compensation Committee have
considered the Company’s financial performance as well as the experience level and contributions of the
individual executive officer, the role and responsibilities of the executive officer and market factors.

The Compensation Committee has the authority to engage its own consultants and advisors to assist it
in carrying out its responsibilities. In February 2013, the Compensation Committee determined that it would
periodically retain compensation consultants in connection with its annual review of executive officer
compensation and, in accordance with such policy, engaged the services of Compensia, Inc. (“Compensia”),
an independent national compensation consulting firm, to assist it in connection with its annual review
and determination of executive officer compensation for fiscal 2014, 2016, 2018, 2020 and 2022. Pursuant
to the terms of its engagement, Compensia is directed to assist with the selection of the peer group and then,

using such peer group, provide a competitive assessment of executive officer compensation to the
Compensation Committee and a similar assessment of director compensation programs to the Nominating
and Governance Committee. The Compensation Committee has assessed the independence of Compensia
pursuant to applicable SEC rules and concluded that no conflicts of interest existed that would affect
Compensia’s independence in providing services and advice to the Compensation Committee. The
Compensation Committee did not retain the services of compensation consultants in connection with its
annual review and determination of executive officer compensation for fiscal 2015, 2017, 2019, 2021 or 2023.

At our annual meetings of stockholders, we provide our stockholders the opportunity to vote to

approve, on an advisory basis, the compensation of our named executive officers for the previous fiscal year,
as disclosed in the proxy statement for the meeting (commonly referred to as a “Say-on-Pay” vote). These
stockholder advisory votes are held after the Compensation Committee has determined the compensation to
be paid to our executive officers for the fiscal year in question. Accordingly, the Compensation Committee
cannot take such results into account in determining executive compensation for that year. However, in its
annual review of executive compensation, the Compensation Committee considers, among other things,
the results of the stockholder Say-on-Pay vote for previous years.

Components of Compensation

In order to align executive compensation with our compensation philosophy, our executive compensation

package contains three principal components: (i) base salary, (ii) variable cash compensation and
(iii) long-term stock-based incentive awards. Each component of our executive compensation program is
designed to reward a different aspect of performance. The base salaries of our executive officers are initially
set based on negotiation with the individual officers at the time of their recruitment. Once set, these base
salaries are subject to annual review. Our variable cash compensation plans are intended to motivate and
reward performance over the current fiscal year. Our equity award program is designed to provide long-term
retention incentives through the use of options subject to time-based vesting. We also provide our executive
officers a variety of benefits that are available generally to all salaried employees. The basic elements of
our executive compensation package are generally the same among our named executive officers.

Fiscal 2023 Base Salary

The base salaries of our executive officers are initially negotiated with the individual executive officer at
the time of his or her recruitment or promotion and with reference to their experience, expected contribution,
geographical location and market factors. Historically, the base salaries of our executive officers generally
have been adjusted concurrently with our annual company-wide compensation review.

During the first quarter of fiscal 2023, the Compensation Committee conducted its annual review of
executive compensation. In connection with its fiscal 2023 review, the Compensation Committee, with the
assistance of our Chief Financial Officer, compiled data on the same group of peer companies identified with
the assistance of Compensia in connection with the fiscal 2022 review, with the exception of one company
that was no longer a public reporting company (the “Fiscal 2023 Peer Companies”). The Fiscal 2023 Peer
Companies include industry peers and similarly-sized companies in our broader industry group. The
Fiscal 2023 Peer Companies were as follows:

Aehr Test Systems
Amtech Systems, Inc.

AXT, Inc.
CyberOptics

eMagin

Emcore Corporation
Everspin Technologies

Immersion Corporation
inTEST Corporation

Lantronix
NVE Corporation

Pixelworks, Inc
QuickLogic Corporation

Kopin Corporation

Techpoint, Inc.

In its annual review of executive compensation for fiscal 2023, the Compensation Committee took into

account its general compensation philosophy and objectives, as described above, and various other
considerations, including:

• available compensation data for the Fiscal 2023 Peer Companies;

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• the Company’s financial performance during fiscal 2022, including the impact of the COVID-19

global pandemic on the Company’s revenues, lack of significant APU revenues and the Company’s
continuing operating losses;

• the outlook for the Company’s fiscal 2023 financial performance; and

• management’s recommendation that no increase in officers’ base salaries over fiscal 2022 levels was

deemed appropriate.

The Committee also noted that, by positive votes at the last five annual meetings of stockholders, our

stockholders had approved the compensation of our named executive officers. Partially in recognition of
this positive stockholder feedback, the Committee adopted a compensation package for fiscal 2023 having
the same basic structure as the compensation packages that had been adopted for previous years.

On the basis of its review, in the first quarter of fiscal 2023 the Compensation Committee concluded
that executive officer base salaries would not be increased. The fiscal 2023 base salaries of the named executive
officers were as follows:

Name

Title

Lee-Lean Shu . . . . . . . . . . . . . President and Chief Executive Officer

Douglas M. Schirle . . . . . . . . . Chief Financial Officer
Didier Lasserre . . . . . . . . . . . . Vice President, Sales

Fiscal 2023
Base Salary
$431,912(1)
$306,593(2)
$322,712(3)

Percentage Increase over
Fiscal 2022 Base Salary

—
—
—

(1)

(2)

(3)

In connection with the Company’s cost reduction initiatives announced in November 2022, Mr. Shu
accepted a 30% reduction in his annual base salary. Effective December 1, 2022, Mr. Shu’s annual salary
is $302,339.

In connection with the Company’s cost reduction initiatives announced in November 2022, Mr. Schirle
accepted a 10% reduction in his annual base salary. Effective December 1, 2022, Mr. Schirle’s annual
salary is $275,934.

In connection with the Company’s cost reduction initiatives announced in November 2022, Mr. Lasserre
accepted a 10% reduction in his annual base salary. Effective December 1, 2022, Mr. Lasserre’s annual
salary is $290,441.

2023 Variable Compensation Plan

Under our compensation policy, a significant component of each executive officer’s potential annual

compensation takes the form of a performance-based cash bonus. On May 31, 2022, the Compensation
Committee adopted the 2023 Variable Compensation Plan, which was similar in structure to previous variable
compensation plans for the Company’s executive officers. The 2023 Variable Compensation Plan was
designed to encourage performance and retention of eligible employees by providing cash bonus awards
based on the achievement of performance criteria based on net revenues, including a target for Associative
Processing Unit (APU) net revenue and a target for a Rad tolerant/Rad Hard net revenue, all determined in
accordance with US GAAP. Each of our executive officers was eligible to participate in the 2023 Plan.
Certain non-executive officers were also eligible to participate.

Under the 2023 Variable Compensation Plan, each participant had a designated target bonus, which

was set at the same level as their target bonus under the 2022 Variable Compensation Plan. The target
bonus for Lee-Lean Shu, our President, Chief Executive Officer and Chairman, was $250,000, and the target
bonus for each of our other executive officers was $125,000. If the target financial goals were exceeded,
actual bonus awards payable to participants in the 2023 Variable Compensation Plan could have been up to
two times their target bonuses. There was no threshold or minimum amount payable under the 2023
Variable Compensation Plan. The Compensation Committee considered the critical role of Mr. Shu, our
President and Chief Executive Officer, in our long-term success when determining his target bonus amount.
The use of the same target bonus amount for each of our other named executive officers reflected the
Compensation Committee’s desire to encourage a team approach by treating our executive officers equally
with respect to bonus opportunities. The targets for net revenue, Associative Processing Unit (APU) net

revenue and Rad tolerant/Rad Hard net revenue were not met in fiscal 2023. There were no bonus awards
earned under the 2023 Variable Compensation Plan in fiscal 2023.

Original target bonus amounts for each of the named executive officers under the 2023 Variable
Compensation Plan and the bonuses actually earned under the plan for their services during fiscal 2023
were as follows:

Name

Fiscal 2023
Target Bonus

Fiscal 2023
Bonus Earned

Lee-Lean Shu . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$250,000

Douglas M. Schirle . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$125,000

Didier Lasserre . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$125,000

—

While no bonus awards were earned under the 2023 Variable Compensation Plan, the 2023 Variable

Compensation Plan provided that any bonus awards paid would be subject to vesting based on the
participant’s continued employment with the Company, with 60% becoming vested and payable on the last
business day in April 2023 and 20% becoming vested and payable on the last business day in April of each of
the succeeding two years.

Total Fiscal 2023 Cash Compensation

The total cash compensation of each of our named executive officers for fiscal 2023 was:

Name

Principal Position

Fiscal 2023
Base Salary

Lee-Lean Shu . . . . . . . . . . . . . . . . . . . President and Chief Executive Officer

$431,912

Douglas M. Schirle . . . . . . . . . . . . . . . Chief Financial Officer
Didier Lasserre . . . . . . . . . . . . . . . . . Vice President, Sales

$306,593
$322,712

Fiscal 2023
Total Cash
Compensation
Earned
$388,721(1)
$296,373(2)
$317,355(3)

(1)

(2)

(3)

Long-Term Incentive Compensation

We utilize stock option awards as a primary component of compensation for our executive officers,

with the objective of strengthening the mutuality of interests between the executive officers and our
stockholders. These grants are designed to provide each executive with a significant incentive to manage
from the perspective of an owner with an equity stake in our company. All stock options granted to our
employees, including named executive officers, and to our directors have exercise prices equal to the fair
market value of our common stock on the grant date. Our policies and procedures for the grant of stock-
based awards provide that all options and other stock-based awards are generally to be granted by the
Compensation Committee and, except in special circumstances, all grants are to be made at regular quarterly
meetings of the Compensation Committee. Accordingly, option grants to new employees hired since the
previous quarterly meeting and annual grants to continuing employees with anniversary dates subsequent to
the previous meeting are made each quarter. The effective date of each quarterly grant is the later of the
second trading day following the public announcement of our financial results for the preceding quarter or
the date of the meeting at which the grant is approved.

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The Compensation Committee considers the grant of equity awards to all of our executive and

non-executive officers at the same time, once a year, usually in July or August. Executive and non-executive
officers that accepted a reduction in salary as part of our cost reduction initiative in November 2022 also
received an additional option grant in recognition of the reduced salary level in December 2022, shortly
after the announcement of the cost reduction initiative. During fiscal 2023, the Compensation Committee
approved grants to our named executive officers of options to purchase the following number of shares of our
common stock:

Name

Lee-Lean Shu . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

250,000

Douglas M. Schirle . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Didier Lasserre . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

60,000

Unlike options granted to our non-officer employees, which vest in four annual installments, options

granted to our executive and non-executive officers generally vest in their entirety four years after the
anniversary date of the officer’s commencement of employment that is closest to the date of grant, subject
to the officer’s continued service. Options granted in December 2022 in recognition of the reduced salary
levels vest on the first anniversary of the grant date. Each of these option grants provides a return to the
officer only if he remains employed by us during the respective vesting period, and then only if the market
price of the shares appreciates over the option term. The Compensation Committee believes the four-year
vesting schedule deters risk taking and further focuses management on building long-term stockholder
value. The value of the shares subject to the fiscal 2023 option grants to named executive officers are reflected
in the “Summary Compensation Table” below, and further information about these grants is contained in
the “Fiscal 2023 Grants of Plan-Based Awards” table below.

Executive Retention and Severance Plan

On September 30, 2014, the Compensation Committee adopted the Executive Retention and Severance
Plan (the “Retention Plan”) and on August 29, 2017 and August 27, 2020 extended the term of the Plan by
an additional three years such that the Retention Plan will expire on September 30, 2023. The purpose of the
Retention Plan is to mitigate some of the risk that exists for executives working in an environment where
GSI Technology could be acquired or the subject of another transaction that would result in a change in its
control. The severance benefits provided by the Retention Plan are intended to encourage the continued
dedication of our executive officers and key employees during a period of unrest, notwithstanding a possible
change in control. The change in control arrangements is also intended to mitigate potential disincentives
to the consideration of a transaction that would result in a change in control, particularly where the services
of the participants may not be required by a potential acquirer.

The Retention Plan and amounts potentially payable thereunder are described in more detail below

under “Potential Payments Upon Change of Control.”

Inter-Relationship of Components of Compensation Packages

The Compensation Committee has adopted a policy that the aggregate compensation of our executive

officers (composed of base compensation, variable cash compensation and equity awards) should approximate
the median aggregate compensation paid by our peer companies to officers performing comparable
functions. Except for this policy, the various components of our executive officers’ compensation generally
are not inter-related. Adjustments to our executive officers’ base compensation are primarily based on our
financial performance, our annual company-wide compensation survey and review of peer company
compensation levels. As we have relied on long-term equity incentives for a portion of our total compensation
package, option grants for our executive officers are generally considered each year. If the value of options
that are granted in one year is reduced due to a reduction in the value of the underlying common stock, the
size of the option grants for the next year are not affected. Similarly, if the value of previously granted
options increases significantly, the amount of compensation to be awarded for the next year is not affected.
While the Compensation Committee has discretion to make exceptions to existing compensation
arrangements, it has not approved any exceptions to such arrangements with regard to any named executive
officers.

Other Benefits

Our executive officers are eligible to participate in all of our employee benefit plans, such as our
medical, dental, vision, group life, disability, and accidental death and dismemberment insurance and our
simplified employee pension plan, in each case on the same basis as our other employees. Aside from a $5,400
car allowance provided to Mr. Lasserre, there were no special benefits or perquisites provided to any
named executive officer in fiscal 2023.

Accounting for Executive Compensation

We account for equity compensation paid to our employees under authorization guidance for stock-

based compensation which requires us to measure and record an expense over the service period of the
award. Accounting rules also require us to record cash compensation as an expense at the time the obligation
is incurred.

Tax Considerations

We intend to consider the impact of Section 162(m) of the Internal Revenue Code in determining the

mix of elements of future executive compensation. This section limits the deductibility of non-performance
based compensation paid to each of our named executive officers (other than our Chief Financial Officer)
to $1 million annually. The stock options granted to our executive officers have been intended to qualify as
performance-based compensation exempt from the limitation on deductibility. As a result of changes in
December 2017 to federal tax laws, we expect that stock options granted or other compensation provided
under arrangements entered into or materially modified after November 2, 2017 generally will not be
deductible to the extent they result in compensation to certain executive officers that exceeds $1 million in
any one year for any such officer. Due to uncertainties as to the application and interpretation of
Section 162(m), including the scope of the transition relief under the legislation repealing the exemption the
Section 162(m) deduction limit, no assurance can be given that compensation intended to satisfy the
requirements for exemption in fact will do so. Salaries and bonuses do not qualify as performance-based
compensation for purposes of Section 162(m).

Other Compensation-Related Policies

Our insider trading policy applies to shares of our common stock held by our directors, officers and
other employees, including shares issued pursuant to equity-based awards. The policy prohibits our directors,
executive officers and other employees from, among other things:

• engaging in short sales of our stock;

• engaging in transactions in derivative securities involving our stock;

• hedging their ownership position in our stock; and

• holding our stock in a margin account or pledging our stock as collateral for a loan.

Compensation Committee Report

We, the Compensation Committee of the Board of Directors of GSI Technology, Inc., have reviewed

the Compensation Discussion and Analysis contained in this proxy statement and discussed it with
management. Based on such review and discussions, we have recommended to the Board of Directors that
the Compensation Discussion and Analysis be included in this proxy statement and in GSI Technology, Inc.’s
Annual Report on Form 10-K for the fiscal year ended March 31, 2023.

THE COMPENSATION COMMITTEE

Elizabeth Cholawsky (Chair)
Jack A. Bradley
Haydn Hsieh
Ruey L. Lu

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Summary Compensation Table

The following table sets forth information concerning the compensation earned during the fiscal years

ended March 31, 2023, 2022 and 2021 by our Chief Executive Officer and our two other most highly
compensated executive officers, determined as of March 31, 2023:

Name and Principal Position
Lee-Lean Shu . . . . . . . . . . . . . . . . .

President and Chief
Executive Officer

Douglas M. Schirle. . . . . . . . . . . . . .

Chief Financial Officer

Didier Lasserre . . . . . . . . . . . . . . . .

Vice President, Sales

Year
2023
2022
2021
2023
2022
2021
2023
2022
2021

Salary
($)
388,721
431,912
431,912
296,373
306,593
306,593
311,955
322,712
322,712

Option
Awards
($)(1)
341,545
233,630
224,440
94,446
93,452
89,776
94,446
93,452
89,776

Non-Equity
Incentive Plan
Compensation
($)

All Other
Compensation
($)

—

410,681(2)
62,500(3)
—

205,340(4)
31,250(5)
—

205,340(4)
31,250(5)

—
—
—
—
—
—
5,400(6)
5,400(6)
5,400(6)

Total
($)
730,266
1,076,223
718,852
390,819
605,385
427,619
411,801
626,904
449,138

(1) As required by SEC rules, amounts shown in the column entitled “Option Awards” present the
aggregate grant date fair value of option grants made each year computed in accordance with
authoritative guidance. These amounts do not reflect whether the recipient has actually realized or will
realize a financial benefit from the option award. The assumptions used with respect to the valuation
of option grants are set forth in Note 11 to our Consolidated Financial Statements included in our
Annual Report on Form 10-K for the fiscal year ended March 31, 2023. Under generally accepted
accounting principles, compensation expense with respect to option awards granted to our employees
and directors is generally recognized over the vesting periods applicable to the awards.

(2) Earned under the 2022 Variable Compensation Plan, of which $246,409 was paid in June 2022, $82,136

was paid in June 2023 and $82,136 will be vested and payable on the last day of April 2024.

(3) Earned under the 2021 Variable Compensation Plan, of which $37,500 was paid in May 2021, $12,500

was paid in June 2022 and $12,500 was paid in June 2023.

(4) Earned under the 2022 Variable Compensation Plan, of which $123,204 was paid in June 2022, $41,068

was paid in June 2023 and $41,068 will be vested and payable on the last day of April 2024.

(5) Earned under the 2021 Variable Compensation Plan, of which $18,750 was paid in May 2021, $6,250

was paid in June 2022 and $6,250 was paid in June 2023.

(6) Represents Mr. Lasserre’s car allowance of $5,400.

Grants of Plan-Based Awards

The following table sets forth certain information with respect to plan-based awards granted during the

fiscal year ended March 31, 2023 to our named executive officers:

Name
Lee-Lean Shu . . . . . . . . . . . . .

Douglas M. Schirle . . . . . . . . .

Didier Lasserre . . . . . . . . . . . .

Grant
Date
8/1/22
12/2/22
8/1/22
12/2/22
8/1/22
12/2/22

Estimated Future Payouts Under
Non-Equity Incentive Plan Awards(1)
Maximum
Target
Threshold
($)
($)
($)
250,000
—
500,000
—
—
125,000
—
—
—
125,000
—
—
—

250,000
—
250,000
—

All Other
Option
Awards:
Number of
Securities
Underlying
Options (#)
100,000(3)
— 150,000(4)
40,000(5)
20,000(4)
40,000(7)
20,000(4)

Exercise
or Base
Price of
Option
Awards
($)
4.08
2.27
4.08
2.27
4.08
2.27

Grant Date
Fair Value
of Option
Awards
($)(2)
183,400
158,145
73,360
21,086
73,360
21,086

(1) Represents the range of potential cash bonuses payable under the 2023 Variable Compensation Plan, as

more fully described above under “Compensation Discussion and Analysis — 2023 Variable
Compensation Plan.” There was no threshold or minimum amount payable under the Plan.

(2) Reflects the grant date fair value of each equity award in accordance with authoritative guidance. The

assumptions used in the calculation of this amount are included in Note 11 to our Consolidated Financial
Statements included in our Annual Report on Form 10-K for the year ended March 31, 2023.

(3) Option granted pursuant to the 2016 Equity Incentive Plan. This option vests 100% on April 13, 2026.

(4) Option granted pursuant to the 2016 Equity Incentive Plan. This option vests 100% on December 2,

2023.

(5) Option granted pursuant to the 2016 Equity Incentive Plan. This option vests 100% on June 3, 2026.

(6) Option granted pursuant to the 2016 Equity Incentive Plan. This option vests 100% on May 3, 2026.

Outstanding Equity Awards at Fiscal Year-End

The following table sets forth certain information with respect to the value of all unexercised options

previously awarded to our named executive officers as of March 31, 2023:

Name

Number of
Securities
Underlying
Unexercised
Options (#)
Exercisable

Number of
Securities
Underlying
Unexercised
Options (#)
Unexercisable

Option
Exercise
Price ($)

Option
Expiration
Date

Lee-Lean Shu . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

100,000

25,000

100,000

—
—
—

—
—
40,000

40,000
40,000

40,000
—
—
—

—
—

Douglas M. Schirle . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

—

100,000(1)
100,000(2)
100,000(3)
100,000(4)
150,000(5)

—

—
—

—
40,000(6)
40,000(7)
40,000(8)
40,000(9)
20,000(5)

5.76

6.86

5.23

4.98

4.99

7.26

6.70
8.30
5.83

5.58
4.08
2.27
6.86

5.23
4.98

4.99
7.26

6.70
8.30
5.83
5.58
4.08
2.27

5/6/23

7/29/23

8/11/24

8/3/25

8/1/26

7/31/27

7/30/28
7/29/29
8/3/30

8/2/31
8/1/32
12/2/32
7/29/23

8/11/24
8/3/25

8/1/26
7/31/27

7/30/28
7/29/29
8/3/30
8/2/31
8/1/32
12/2/32

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Name

Didier Lasserre . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Number of
Securities
Underlying
Unexercised
Options (#)
Exercisable

Number of
Securities
Underlying
Unexercised
Options (#)
Unexercisable

Option
Exercise
Price ($)

Option
Expiration
Date

15,000

30,000

40,000

—
—

—
—
—

—

—
40,000(10)
40,000(11)
40,000(12)
40,000(13)
20,000(5)

6.86

5.23

4.98

4.99

7.26

6.70
8.30

5.83
5.58
4.08
2.27

7/29/23

8/11/24

8/3/25

8/1/26

7/31/27

7/30/28
7/29/29

8/3/30
8/2/31
8/1/32
12/2/32

(1) Option vested 100% on April 13, 2023.

(2) Option vests 100% on April 13, 2024.

(3) Option vests 100% on April 13, 2025.

(4) Option vests 100% on April 13, 2026.

(5) Option vests 100% on December 2, 2023.

(6) Option vested 100% on June 3, 2023.

(7) Option vests 100% on June 3, 2024.

(8) Option vests 100% on June 3, 2025.

(9) Option vests 100% on June 3, 2026.

(10) Option vested 100% on May 3, 2023.

(11) Option vests 100% on May 3, 2024.

(12) Option vests 100% on May 3, 2025.

(13) Option vests 100% on May 3, 2026.

Option Exercises and Stock Vested During Last Fiscal Year

There were no options exercised by our named executive officers during the fiscal year ended March 31,

2023.

We have not made any direct grants of stock awards to any of our employees. Accordingly, there was
no vesting of restricted stock held by any named executive officers during the fiscal year ended March 31,
2023.

Potential Payments Upon Change of Control

Our executive officers, including our named executive officers, are eligible to participate in our
Executive Retention and Severance Plan (the “Retention Plan”). Participants in the Retention Plan are
entitled to receive severance benefits upon an “involuntary termination” of their employment other than for
“cause” or a voluntary termination for “good reason” during a period beginning two months prior to and
ending two years following a “change in control,” as such terms are defined in the Retention Plan.

Benefits payable under the Retention Plan consist of the following (in addition to all other compensation

and benefits accrued at the time of the participant’s termination):

• A lump sum cash payment equal to: (i) the greater of 18 months of base salary or one month’s salary
for each full or partial year of service for the Chief Executive Officer; (ii) the greater of 12 months
of base salary or one month’s salary for each full or partial year of service for other executive officers;
and (iii) 12 months of base salary or such lesser amount as the Compensation Committee may
specify for other participants;

• a lump sum cash payment of all bonuses earned by the participant in prior fiscal years but not vested

and payable at the time of termination;

• a lump sum cash payment of the pro rata portion of the participant’s bonus or anticipated bonus for

the fiscal year in which the termination occurs (calculated as provided in the Plan) and 150% of
such amount in the case of the Chief Executive Officer;

• Medical, dental, vision and life insurance benefits for the same period covered by the participant’s

base salary benefit; and

• 100% acceleration of the participant’s equity awards assumed by an acquirer in connection with a

change in control, effective upon termination (100% acceleration effective upon the change in control
for awards not assumed).

Benefits under the Retention Plan are subject to withholding of applicable income and employment
taxes. Participants are not entitled to any tax “gross up” in respect of excise taxes, if any, that might arise
under the “parachute payment” provisions of the Internal Revenue Code and may be subject to a reduction
in benefits if any such excise tax were applicable and the reduced benefit would maximize the net after-tax
payment to the participant.

No severance or change of control payments were made to any of our executive officers in fiscal 2023.

The following table summarizes amounts that would have been payable to our named executive officers

upon a termination of their employment qualifying for benefits under the Retention Plan, assuming that
such termination had occurred on March 31, 2023:

Cash Severance Payment

Name

Based on
Salary

Based on
Bonus

Continued Health
Benefits(1)

Acceleration of
Stock Options(2)

Total

Lee-Lean Shu . . . . . . . . . . . . . . .

$1,043,787

$176,772

$ 81,527

$ —

$1,302,086

Douglas M. Schirle . . . . . . . . . . .

Didier Lasserre . . . . . . . . . . . . . .

613,186

699,209

88,386

94,429

102,298

—

796,001

889,893

(1) Represents the aggregate premium payments required to provide continued health insurance coverage
under COBRA, based on the officer’s health insurance coverage in effect as of March 31, 2023.

(2) The value of the acceleration of stock options is calculated by multiplying (x) the number of shares

subject to acceleration by (y) the difference between the fair market value of a share of our common stock
on March 31, 2023 ($1.72) and the per share exercise price of the unvested shares subject to acceleration.
No options were in-the-money as of March 31, 2023.

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Compensation of Directors

Our policy for the compensation of non-employee directors provides that non-employee directors are

entitled to receive annual cash retainers as follows:

Board

Lead Director

Audit Committee:

• Chair

• Other Members

Compensation Committee:

• Chair

• Other Members

Nominating and Governance Committee:

• Chair

• Other Members

$40,000

$20,000

$7,500

$10,000

$5,000

$7,500

$3,000

Pursuant to the terms of our option grant policy, each non-employee director receives an option to

purchase a number of shares of our common stock having a fair market value equal to the aggregate
amount of the annual cash retainer payable to such director for service on the Board and its committees.

The table below summarizes the compensation we paid to our directors that are not named executive

officers for the fiscal year ended March 31, 2023 with respect to their services as a director.

Name

Fees Earned
or Paid in
Cash ($)

Option Awards
($)(1)(2)(3)

Jack A. Bradley . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Elizabeth Cholawsky . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Haydn Hsieh . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Kim Le . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Ruey L. Lu . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Barbara Nelson . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Robert Yau(5)
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

82,201

59,766

52,500
42,391(4)
48,000

48,804
—

37,770

25,023

24,787
28,328

22,662

23,843
—

Total ($)

119,971

84,789

77,287
70,719

70,662

72,647
—

(1) Valuation based on the dollar amount recognized during fiscal 2023 for financial statement reporting
purposes pursuant to authoritative guidance, giving effect to service based vesting conditions, but
disregarding the estimate of forfeitures related to such vesting conditions. These amounts do not reflect
whether the recipient has actually realized or will realize a financial benefit from the option award.
The assumptions used with respect to the valuation of option grants are set forth in Note 11 to our
Consolidated Financial Statements included in our Annual Report on Form 10-K for the fiscal year
ended March 31, 2023.

(2) On October 31, 2022, Mr. Bradley, Dr. Cholawsky, Mr. Hsieh, Ms. Le, Mr. Lu and Ms. Nelson were

granted options to purchase 42,780, 28,342, 28,074, 32,085, 25,668 and 27,005 shares, respectively, that
will be fully vested on August 15, 2023. The grant date fair value of each of these options was $37,770,
$25,023, $24,787, $28,328, $22,662 and $23,843, respectively. As Ms. Le resigned from the board on
December 15, 2022, her option grant was canceled.

(3) As of March 31, 2023, each director that is not a named executive officer had the following number of

shares underlying outstanding options: Mr. Bradley: 111,748; Dr. Cholawsky: 55,821; Mr. Hsieh: 95,299;
Mr. Lu: 88,500; Ms. Nelson: 34,738; and Mr. Yau: 470,000.

(4) Reflects fees earned by Ms. Le from April 1, 2022 through December 15, 2022, the date Ms. Le

resigned from the board.

(5) Mr. Yau is an employee of the Company, and therefore no additional compensation is provided to

Mr. Yau for his services as a director.

Equity Compensation Plan Information

We currently maintain three compensation plans that provide for the issuance of our common stock to

officers and other employees, directors and consultants. These consist of the 2007 Equity Incentive Plan,
the 2016 Equity Incentive Plan (the “2016 Plan”) and the 2007 Employee Stock Purchase Plan (the “Purchase
Plan”), each of which has been approved by stockholders. The following table sets forth information
regarding outstanding options and shares reserved for future issuance under the foregoing plans as of
March 31, 2023:

Number of shares to
be issued upon
exercise of
outstanding options,
warrants and rights
(a)

Weighted-average
exercise price of
outstanding options,
warrants and rights
(b)

Number of shares
remaining available
for future issuance
under equity
compensation plans
(excluding shares
reflected in
column (a))
(c)

Plan Category

Equity compensation plans approved by

stockholders . . . . . . . . . . . . . . . . . . . . . . . . . .

8,809,160

$5.62

4,759,850(1)(2)

(1)

Includes 1,164,999 shares available for future issuance under the Purchase Plan.

(2) A total of 10,000,000 shares of common stock have been authorized and reserved for issuance under

the 2016 Plan, of which 3,594,851 were available for grant as of March 31, 2023. Appropriate adjustments
will be made in the number of authorized shares and other numerical limits in the 2016 Plan and in
outstanding awards to prevent dilution or enlargement of participants’ rights in the event of a stock split
or other change in our capital structure. Shares subject to awards which expire or are cancelled or
forfeited will again become available for issuance under the 2016 Plan. The shares available will not be
reduced by awards settled in cash or by shares withheld to satisfy tax withholding obligations. Only the
net number of shares issued upon the exercise of stock appreciation rights or options exercised by
means of a net exercise or by tender of previously owned shares will be deducted from the shares available
under the 2016 Plan.

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PAY VERSUS PERFORMANCE

As required by Section 953(a) of the Dodd-Frank Wall Street Reform and Consumer Protection Act

and Item 402(v) of Regulation S-K, we are providing the following: (1) tabular executive compensation
disclosure for our principal executive officer, our other named executive officers, and company performance
for the fiscal years listed below and (2) additional disclosure relative to the relationship between the
“Compensation Actually Paid” set forth in the Pay versus Performance Table and each of the performance
metrics set forth in the Pay versus Performance Table, in each case over our fiscal years ended March 31, 2022
and 2023.

Our Compensation Committee did not consider the pay versus performance disclosure below in
making its pay decisions for either of the years shown. For further information concerning our pay-for-
performance philosophy and how we structure our executive compensation to drive and reward performance,
refer to the section above entitled “Executive Compensation”. The amounts shown for “Compensation
Actually Paid” have been calculated in accordance with Item 402(v) of Regulation S-K and do not reflect
compensation actually earned, realized, or received by our named executive officers for any of the periods
listed. These amounts reflect the Summary Compensation Table total compensation with certain adjustments
as described in the following table and footnotes.

GSI Technology Pay Versus Performance

Year(1)

Summary
Compensation
Table Total
for PEO(2)

Compensation
Actually
Paid
for PEO(3)

2023 . . . . . . . . . . .

$ 730,266

$292,681

2022 . . . . . . . . . . .

$1,076,223

$472,737

Average
Summary
Compensation
Table Total
for Non-PEO
NEOs(2)

$401,310

$591,858

Average
Compensation
Actually
Paid
for Non-PEO
NEOs(4)

$245,877

$353,027

Total
Shareholder
Return
(Value of $100
Initial Investment
on 3/31/21)(5)

$26

$57

Net Income
(Loss)(6)

($15,977,000)

($16,368,000)

(1) Lee-Lean Shu served as the Company’s Principal Executive (our “PEO”) for the entirety of 2022 and

2023 and the Company’s NEOs other than our PEO (the “Reported NEOs”) for the indicated fiscal years
were as follows:

— 2023: Douglas M. Schirle and Didier Lasserre

— 2022: Douglas M. Schirle, Didier Lasserre, Robert Yau, and Ping Wu

(2) Amounts reported in these columns represent (i) the total compensation reported in the Summary

Compensation Table for the indicated fiscal year in the case of Lee-Lean Shu and (ii) the average of the
total compensation reported in the Summary Compensation Table for the Reported NEOs in the
indicated year for such years.

(3) Amounts reported in this column represent the compensation actually paid to our PEO for the

indicated fiscal year, as calculated under Item 402(v) of Regulation S-K based on his total compensation
reported in the Summary Compensation Table for the indicated fiscal years and adjusted as shown in
the table below:

PEO

+/-

Summary Compensation Table – Total Compensation
Grant Date Fair Value of Option Awards Granted in
Fiscal Year

Fair Value at Fiscal Year End of Outstanding and
Unvested Option Awards Granted in Fiscal Year

Change in Fair Value of Outstanding and Unvested
Option Awards Granted in Prior Fiscal Years

Fair Value at Vesting of Option Awards Granted in

2022

$1,076,223
$233,630

2023

$730,266
$341,545

$119,217

$142,783

($498,963)

($228,557)

(a)
(b)

(c)

(d)

(e)

+/-

PEO

Fiscal Year That Vested During Fiscal Year

Change in Fair Value as of Vesting Date of Option
Awards Granted in Prior Fiscal Years For Which
Applicable Vesting Conditions Were Satisfied During
Fiscal Year

Fair Value as of Prior Fiscal Year End of Option
Awards Granted in Prior Fiscal Years That Failed to
Meet Applicable Vesting Conditions During Fiscal Year

2022

2023

(f)

$9,890

($10,266)

(g)

Compensation Actually Paid

$472,737

$292,681

(a) Represents Total Compensation as reported in the Summary Compensation Table for the indicated

fiscal year.

(b) Represents the aggregate grant date fair value of the option awards granted to our PEO during the

indicated fiscal year, computed in accordance with FASB ASC Topic 718.

and unvested option awards granted during such fiscal year, computed in accordance with FASB
ASC Topic 718.

(d) Represents the aggregate change in fair value (measured from the prior fiscal year-end) during the
indicated fiscal year of the outstanding and unvested option awards held by our PEO as of the
last day of the indicated fiscal year, computed in accordance with FASB ASC Topic 718.

(e) Represents the aggregate fair value at vesting of the option awards that were granted to our PEO
and vested during the indicated fiscal year (of which there happened to be none for 2022 or 2023)

(f) Represents the aggregate change in fair value, measured from the prior fiscal year-end to the

vesting date, of each option award held by our PEO that was granted in a prior fiscal year and
which vested during the indicated fiscal year, computed in accordance with FASB ASC Topic 718.

(g) Represents the aggregate fair value as of the last day of the prior fiscal year of our PEO’s option
awards that were granted in a prior fiscal year and which failed to meet the applicable vesting
conditions in the indicated fiscal year (of which there happened to be none for 2022 or 2023)

(4) Amounts reported in this column represent the compensation actually paid to the Reported NEOs in
the indicated fiscal year, as calculated under Item 402(v) of Regulation S-K based on the average total
compensation for such NEOs reported in the Summary Compensation Table for the indicated fiscal year
and adjusted as shown in the table below:

+/-

NEO Average

Summary Compensation Table – Total Compensation

Grant Date Fair Value of Option Awards Granted in
Fiscal Year

Fair Value at Fiscal Year End of Outstanding and
Unvested Option Awards Granted in Fiscal Year
Change in Fair Value of Outstanding and Unvested
Option Awards Granted in Prior Fiscal Years

Fair Value at Vesting of Option Awards Granted in
Fiscal Year That Vested During Fiscal Year
Change in Fair Value as of Vesting Date of Option
Awards Granted in Prior Fiscal Years For Which
Applicable Vesting Conditions Were Satisfied During
Fiscal Year

2022

$591,858

$87,611

2023

$401,310

$94,446

$44,706

$29,951

($187,111)

($91,423)

($8,815)

$485

(a)

(b)

(c)

(d)

(e)

(f)

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+/-

Fair Value as of Prior Fiscal Year End of Option
Awards Granted in Prior Fiscal Years That Failed to
Meet Applicable Vesting Conditions During Fiscal Year

NEO Average

2022

2023

(g)

Compensation Actually Paid

$353,027

$245,877

Please see footnote 1 for the Reported NEOs included in the average for each indicated fiscal year.

(a) Represents the average Total Compensation as reported in the Summary Compensation Table for

the Reported NEOs in the indicated fiscal year.

(b) Represents the average aggregate grant date fair value of the option awards granted to the
Reported NEOs during the indicated fiscal year, computed in accordance with FASB ASC
Topic 718.

(c) Represents the average aggregate fair value as of the indicated fiscal year-end of the Reported
NEOs’ outstanding and unvested option awards granted during such fiscal year, computed in
accordance with FASB ASC Topic 718.

(d) Represents the average aggregate change in fair value (measured from the prior fiscal year-end)

during the indicated fiscal year of the outstanding and unvested option awards held by the Reported
NEOs as of the last day of the indicated fiscal year, computed in accordance with FASB ASC
Topic 718.

(e) Represents the average aggregate fair value at vesting of the option awards that were granted to

the Reported NEOs and vested during the indicated fiscal year (of which there happened to be none
for 2022 or 2023).

(f) Represents the average aggregate change in fair value, measured from the prior fiscal year-end to

the vesting date, of each option award held by the Reported NEOs that was granted in a prior fiscal
year and which vested during the indicated fiscal year, computed in accordance with FASB ASC
Topic 718.

(g) Represents the average aggregate fair value as of the last day of the prior fiscal year of the

Reported NEOs’ option awards that were granted in a prior fiscal year and which failed to meet
the applicable vesting conditions in the indicated fiscal year (of which there happened to be none for
2022 or 2023).

(5) Pursuant to Item 402(v) of Regulation S-K, this calculation assumes $100 was invested in our common
stock on March 31, 2021, the last day of our fiscal year 2021, using the closing stock price at the end
of that day, and shows the value of such invested amount on each of March 31, 2022 and 2023. Historic
stock price performance is not necessarily indicative of future stock price performance.

(6) The dollar amounts represent the amount of net income (loss) attributable to GSI Technology as

reflected in our audited financial statements for the applicable fiscal year.

Relationship Between Pay and Performance

We believe “Compensation Actually Paid” over 2022 and 2023 is reflective of our Compensation
Committee’s emphasis on aligning pay and performance given “Compensation Actually Paid” declined year-
over-year and was lower in both 2022 and 2023 than the total pay reported in our Summary Compensation
table, largely driven by our stock price performance and reflecting the emphasis on the use of equity
awards in our executive compensation program.

The following charts illustrate the relationship between pay and performance, as calculated per

Item 402(v) of Regulation S-K:

Compensation Actually Paid vs. TSR

Compensa(cid:2)on Actually Paid to PEO

Average Compensa(cid:2)on Actually Paid to Non-PEO NEOs

GSI Technology Total Shareholder Return

$600

2022

2023

$500

$473

$400

$300

$200

$100

$600

$400

$200

-$200

-$400

-$600

$353

$57

$293

$246

$26

Compensation Actually Paid vs. Net Loss

Compensa(cid:2)on Actually Paid to PEO

Average Compensa(cid:2)on Actually Paid to Non-PEO NEOs

GSI Technology Net Loss

2022

$473

$353

2023

$293

$246

-$16

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RELATED PERSON TRANSACTIONS

Procedures for Approval of Related Person Transactions

Pursuant to our Code of Business Conduct and Ethics and the Audit Committee Charter, our executive

officers, directors, and principal stockholders, including their immediate family members and affiliates, are
prohibited from entering into a related party transaction with us without the prior consent of our Audit
Committee which reviews and approves any related party transactions.

We have entered into indemnification agreements with our officers and directors containing provisions

that may require us, among other things, to indemnify our officers and directors against certain liabilities
that may arise by reason of their status or service as officers or directors and to advance their expenses
incurred as a result of any proceeding against them as to which they could be indemnified.

Other Transactions

For information regarding the grant of stock options to our directors and executive officers, please see
“Executive Compensation — Compensation of Directors” and “Executive Compensation — Grants of Plan-
Based Awards, — Outstanding Equity Awards at Fiscal Year-End and — Potential Payments Upon
Change of Control.”

PRINCIPAL STOCKHOLDERS AND STOCK OWNERSHIP BY MANAGEMENT

The following table sets forth, as of June 30, 2023 certain information with respect to the beneficial
ownership of GSI Technology’s common stock by (i) each stockholder known by GSI Technology to be the
beneficial owner of more than 5% of GSI Technology’s common stock, (ii) each director and director
nominee of GSI Technology, (iii) each executive officer named in the Summary Compensation Table, and
(iv) all directors and executive officers of GSI Technology as a group:

Beneficial Owner(1)

Principal Stockholders:

AIGH Capital Management, LLC, AIGH Investment Partners, LLC and

Oren Hirschman(4) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
6006 Berkeley Avenue
Baltimore, MD 21209

Number of
Shares
Beneficially
Owned(2)

Percentage
of Shares
Beneficially
Owned(3)

2,000,000

8.0

Roumell Asset Management, LLC and James C. Roumell(5) . . . . . . . . . . . . . . . . .

1,724,989

6.9

2 Wisconsin Circle, Suite 700
Chevy Chase, MD 20815

Jing Rong Tang(6) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

1,525,141

6.1

c/o HolyStone Enterprises Co., Ltd.
1FL No. 62, Sec 2 Huang Shan Road
Taipei, Taiwan, R.O.C

Directors, Named Executive Officers and certain Executive Officers:
Lee-Lean Shu(7)
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Jack A. Bradley(8) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Elizabeth Cholawsky(9)
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Haydn Hsieh(10)
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Ruey L. Lu(11)
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Barbara Nelson(12)
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Robert Yau(13)
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Didier Lasserre(14)
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Douglas M. Schirle(15) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
All executive officers and directors as a group (14 persons)(16)
. . . . . . . . . . . . . . .

3,239,615

12.6

119,748
57,171
107,416
141,000

34,738
1,231,439
515,321
340,625

8,195,605

*
*
*
*

*
4.9
2.0
1.3

32.1

Less than 1.0%

(1) The address for those individuals and entities not otherwise indicated is 1213 Elko Drive, Sunnyvale,
California 94089. Except as otherwise indicated, the persons named in this table have sole voting and
investment power with respect to all shares of common stock shown as beneficially owned by them,
subject to community property laws where applicable and to the information contained in the other
footnotes to this table.

(2) Under the rules of the SEC, a person is deemed to be the beneficial owner of shares that can be

acquired by such person within 60 days upon the exercise of options.

(3) Calculated on the basis of 25,083,143 shares of common stock outstanding as of June 30, 2023,

provided that any additional shares of common stock that a stockholder has the right to acquire within
60 days after June 30, 2023 are deemed to be outstanding for the purpose of calculating that
stockholder’s percentage beneficial ownership.

(4) Based on information contained in a Schedule 13G filed with the SEC on May 15, 2023. Includes

2,000,000 shares deemed to be held by AIGH Capital Management, LLC, AIGH Investment Partners,
LLC and Oren Hirschman.

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(5) Based on information contained in a Schedule 13G filed with the SEC on January 20, 2023. Includes:

1,715,989 shares deemed to be held by Roumell Asset Management, LLC (“RAM”) solely as a result of
its discretionary power over such shares as investment adviser to the Roumell Opportunistic Value
Fund (the “Fund”); and 8,400 shares held directly by James C. Roumell (“Roumell”). Roumell is
President of RAM and holds a controlling percentage of its outstanding voting securities and, as a result
of his position with and ownership of securities of RAM, Roumell may be deemed the beneficial
owner of the shares beneficially owned by RAM.

(6) Based on information contained in a Schedule 13G filed with the SEC on February 11, 2022. Mr. Tang

has sole voting and investment power with respect to 1,010,000 of such shares and shared voting and
investment power with respect to 515,141 of such shares. Of such 515,141 shares, this includes: 47,000
shares held by HolyStone Enterprises Co., Ltd., of which Mr. Tang is Chief Executive Officer; and
468,141 shares held by Koowin Co., Ltd., of which Mr. Tang is a director. Mr. Tang disclaims beneficial
ownership of these securities except to the extent of his pecuniary interest therein.

(7)

(8)

(9)

Includes: 625,000 shares issuable upon exercise of options that are exercisable within 60 days following
June 30, 2023; 13,600 shares held by Mr. Shu’s children; 530,939 shares held by Mr. Shu’s spouse;
and 87,659 shares issuable upon exercise of options held by his spouse that are exercisable within 60 days
of June 30, 2023.

Includes 111,748 shares issuable upon exercise of options that are exercisable within 60 days following
June 30, 2023.

Includes 55,821 shares issuable upon exercise of options that are exercisable within 60 days following
June 30, 2023.

(10) Includes 86,416 shares issuable upon exercise of options that are exercisable within 60 days following

June 30, 2023.

(11) Includes 88.500 shares issuable upon exercise of options that are exercisable within 60 days following

June 30, 2023.

(12) Includes 34,738 shares issuable upon exercise of options that are exercisable within 60 days following

June 30, 2023

(13) Includes 250,000 shares issuable upon exercise of options that are exercisable within 60 days following

June 30, 2023 and 4,000 shares held by Mr. Yau’s spouse.

(14) Includes 215,000 shares issuable upon exercise of options that are exercisable within 60 days following

June 30, 2023.

(15) Includes 280,000 shares issuable upon exercise of options that are exercisable within 60 days following

June 30, 2023.

(16) Includes an aggregate of 3,059,957 shares issuable upon exercise of options that are exercisable within

60 days following June 30, 2023.

STOCKHOLDER PROPOSALS TO BE PRESENTED
AT NEXT ANNUAL MEETING

Stockholder proposals may be included in our proxy materials for an annual meeting so long as they
are provided to us on a timely basis and satisfy the other conditions set forth in applicable SEC rules and
our bylaws. For a stockholder proposal to be included in our proxy materials for the 2024 annual meeting in
accordance with SEC rules and our bylaws, the proposal must be received at our principal executive
offices, addressed to the Secretary, not later than March 20, 2024.

Submitting a stockholder proposal does not guarantee that we will include it in our proxy statement.
Our Nominating and Governance Committee reviews all stockholder proposals and makes recommendations
to the board for actions on such proposals. For information on qualifications of director nominees
considered by our Nominating and Governance committee, see the “Corporate Governance” section of this
proxy statement.

TRANSACTION OF OTHER BUSINESS

At the date of this Proxy Statement, the Board of Directors knows of no other business that will be
conducted at the 2023 Annual Meeting other than as described in this Proxy Statement. If any other matter
or matters are properly brought before the meeting, or any adjournment or postponement of the meeting,
it is the intention of the persons named in the accompanying form of proxy to vote the proxy on such matters
in accordance with their best judgment.

ANNUAL REPORT ON FORM 10-K

A copy of our annual report on Form 10-K (without exhibits) for the fiscal year ended March 31, 2023

is being distributed along with this proxy statement. We refer you to such report for financial and other
information about us, but such report is not incorporated in this proxy statement and is not deemed to be a
part of the proxy solicitation material. It is also available on our website at www.gsitechnology.com. In
addition, the report (with exhibits) is available at the SEC’s website at www.sec.gov.

July 17, 2023

Robert Yau
Secretary

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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K

☒ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT

OF 1934

For the fiscal year ended March 31, 2023

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE

ACT OF 1934

For the transition period from to

Commission File Number 001-33387
GSI Technology, Inc.
(Exact name of registrant as specified in its charter)

Delaware
(State or other jurisdiction of
incorporation or organization)

77-0398779
(IRS Employer
Identification No.)

1213 Elko Drive
Sunnyvale, California 94089
(Address of principal executive offices, zip code)

(408) 331-8800
(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:

Title of Each Class
Common Stock, $0.001 par value

Trading Symbol(s)
GSIT

Name of Each Exchange on which Registered
The Nasdaq Stock Market LLC

Securities registered pursuant to Section 12(g) of the Act: None

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes ☐ No ☒

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes ☐ No ☒

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934

during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements
for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of

Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such
files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an
emerging growth company. See the definitions of “large accelerated filer”, “accelerated filer”, “smaller reporting company” and “emerging growth company” in
Rule 12b-2 of the Exchange Act. (Check one):

Large accelerated filer ☐

Accelerated filer ☐

Non-accelerated filer ☒

Smaller reporting company ☒

Emerging growth company ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new

or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant has filed a report on and attestation to its management’s assessment of the effectiveness of its internal

control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or
issued its audit report. ☐

If securities are registered pursuant to Section 12(b) of the Act, indicate by check mark whether the financial statements of the registrant included in the

filing reflect the correction of an error to previously issued financial statements. ☐

Indicate by check mark whether any of those error corrections are restatements that required a recovery analysis of incentive-based compensation received

by any of the registrant’s executive officers during the relevant recovery period pursuant to §240.10D-1(b). ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

The aggregate market value of the registrant’s voting stock held by non-affiliates of the registrant, based upon the closing sale price of the common stock
on September 30, 2022, as reported on the Nasdaq Global Market, was approximately $55.4 million. Shares of the registrant’s common stock held by each officer
and director and each person who owns 10% or more of the outstanding common stock of the registrant have been excluded in that such persons may be deemed to
be affiliates. This determination of affiliate status is not necessarily a conclusive determination for other purposes. As of May 31, 2023, there were 25,016,627
shares of the registrant’s common stock issued and outstanding.

DOCUMENTS INCORPORATED BY REFERENCE
Portions of the registrant’s definitive proxy statement for its 2023 annual meeting of stockholders are incorporated by reference into Part III hereof.

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GSI TECHNOLOGY, INC.

2023 FORM 10-K ANNUAL REPORT

TABLE OF CONTENTS

PART I
Item 1.
Business . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Item 1A. Risk Factors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Item 1B. Unresolved Staff Comments. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Properties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Item 2.
Legal Proceedings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Item 3.
Mine Safety Disclosures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Item 4.

Page
3
17
35
35
36
36

PART II
Item 5.

Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer

Purchases of Equity Securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Reserved . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Item 6.
Item 7.
Management’s Discussion and Analysis of Financial Condition and Results of Operations . . . .
Item 7A. Quantitative and Qualitative Disclosures About Market Risk . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Financial Statements and Supplementary Data. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Item 8.
Item 9.
Changes in and Disagreements with Accountants on Accounting and Financial Disclosure . . . .
Item 9A. Controls and Procedures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Item 9B. Other Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Item 9C. Disclosure Regarding Foreign Jurisdictions that Prevent Inspections. . . . . . . . . . . . . . . . . . . . . . .

PART III
Item 10. Directors, Executive Officers and Corporate Governance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Executive Compensation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Item 11.
Security Ownership of Certain Beneficial Owners and Management and Related Stockholder
Item 12.

Item 13.
Item 14.

PART IV
Item 15.
Item 16.

Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Certain Relationships and Related Transactions, and Director Independence . . . . . . . . . . . . . . . .
Principal Accountant Fees and Services . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Exhibits and Financial Statement Schedules. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Form 10-K Summary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

SIGNATURES

36
36

36
37
48
49
87
87
88
88

89
89
89
89

89
89

90
90
93

Forward-looking Statements

In addition to historical information, this Annual Report on Form 10-K includes 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 (the “Exchange Act”). These forward-looking statements involve risks and
uncertainties. Forward-looking statements are identified by words such as “anticipates,” “believes,” “expects,”
“intends,” “may,” “will,” and other similar expressions. In addition, any statements which refer to expectations,
projections, or other characterizations of future events or circumstances are forward-looking statements. Actual
results could differ materially from those projected in the forward-looking statements as a result of a number of
factors, including those set forth in this report under “Management’s Discussion and Analysis of Financial
Condition and Results of Operations” and “Risk Factors,” those described elsewhere in this report, and those
described in our other reports filed with the Securities and Exchange Commission (“SEC”). We caution you not to
place undue reliance on these forward-looking statements, which speak only as of the date of this report, and we
undertake no obligation to update these forward-looking statements after the filing of this report. You are urged to
review carefully and consider our various disclosures in this report and in our other reports publicly disclosed or
filed with the SEC that attempt to advise you of the risks and factors that may affect our business.

Item 1. Business

Overview

PART I

GSI provides in-place associative computing solutions for applications in high growth markets such as
artificial intelligence (“AI”) and high-performance computing (“HPC”), including natural language processing and
computer vision. Our associative processing unit (“APU”) products are focused on applications using similarity
search. Similarity search is used in visual search queries for ecommerce, computer vision, drug discovery, cyber
security and service markets such as NoSQL, Elasticsearch, and OpenSearch. Our extensive historical experience in
developing high speed synchronous static random access memory, or SRAM, facilitated our ability to transform the
focus of our business to the development of reliable hardware AI products and solutions like the APU.

Even as we expand our offering of in-place associative computing solutions, we continue to be committed to

the synchronous SRAM market, by making available exceedingly high density performance memory products for
incorporation into high-performance networking and telecommunications equipment, such as routers, switches, wide
area network infrastructure equipment, wireless base stations and network access equipment. Our position in the
synchronous SRAM market is well established and we have long-term supplier relationships with many of the
leading original equipment manufacturer, or OEM, customers including Nokia. The revenue generated by these
sales of high-speed synchronous SRAM products is being used to finance the development of our new in-place
associative computing solutions and new types of SRAM products. We also serve the ongoing needs of the
military/defense and aerospace markets by offering robust high-quality radiation-tolerant and radiation-hardened
space grade SRAMs in addition to new in-place associative computing solutions including synthetic aperture radar
(“SAR”) image processing.

We utilize a fabless business model for the manufacture of our APU and SRAM products, which allows us

both to focus our resources on research and development, product design and marketing, and to gain access to
advanced process technologies with only modest capital investment and fixed costs.

GSI’s fiscal year 2023 net revenue decreased by 11% compared to net revenue in fiscal year 2022, reflecting

an easing of the semiconductor supply chain shortage that previously caused customers to purchase extra buffer
stock of GSI’s products coupled with its customers continuing to work through the remaining levels of their past

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buffer stock purchases, the impact of rising interest rates, worldwide inflationary pressures, significant fluctuations
in energy prices and the decline in the global economic environment, all of which resulted in a decline in demand for
our SRAM products and delays in completing the productization of our APU products. GSI’s gross margin
improved by 4.0% compared to the prior fiscal year, reflecting increased sales of higher-margin products and our
ability to manage supply chain challenges and increased costs brought on by the pandemic. Despite the difficult
financial climate in fiscal 2023, our first-place wins in the MAFAT challenge and the Mobile Standoff Autonomous
Indoor Capabilities (“MoSAIC”) challenge have given GSI high-profile exposure to the leading agencies in the
Israeli and American military and defense organizations allowing us to pursue opportunities such as our proof of
concept order from Elta Systems Ltd, a subsidiary of Israeli Aerospace Industries, which funded a SAR image
processing acceleration system based on our APU technology.

In June 2023, we announced the receipt of an award of a prototype agreement with the Space Development

Agency (“SDA”) for the development of a Next-Generation Associative Processing Unit-2 (“APU2”) for Enhanced
Space-Based Capabilities. Our next-generation non-Von-Neumann Associative Processing Unit compute in-memory
integrated circuit (“IC”) offers unique capabilities to address the challenges faced by the U.S. Space Force (“USSF”)
in processing extensive sets of big data in space. Our overarching objective is to enable and enhance current and
future mission capabilities through the deployment of compute in-memory integrated systems that can efficiently
handle vast amounts of data in real-time at the edge. The APU, featuring a scalable format, compact footprint, and
low power consumption, presents an ideal solution for edge applications where prompt and precise responses are
crucial. These capabilities empower the USSF to swiftly detect, warn, analyze, attribute, and forecast potential and
actual threats in space, ultimately bolstering the ability of the United States to maintain and leverage space
superiority. The U.S. Space Force is actively seeking solutions to address current limitations in processing big data
that is needed to execute the mission objectives of the Space Development Agency within the evolving and
challenging space environment. This award will be funded by the Small Business Innovation Research program, a
competitive program funded by various U.S. government agencies, that encourages small businesses to engage in
federal research and development with the potential for commercialization. Under the terms of this Direct to Phase
II award, we will develop an advanced non-Von-Neumann Associative Processing Unit-2, compute in-memory IC,
and design and fabricate an APU2 Evaluation Board. Pursuant to an agreed-upon schedule, we will receive
milestone payments totaling an estimated $1.25 million upon the successful completion of predetermined
milestones.

We are marketing our OpenSearch Software-as-a-Service (“SaaS”) acceleration platform to strategic
customers and intend to support Amazon Web Services (“AWS”), Azure, or Google Cloud Storage (“GCS”) users
with fast vector search acceleration with a software plugin. We support customers with prebuilt APIs and libraries to
support their parallel programming of the Gemini APU in C, C++. The software stack accelerates development by
providing an integrated framework environment for the compute-in-memory as well as host, and management code
modules. In calendar 2023, we plan on releasing an update to this compiler stack framework allowing customers to
write their applications in Python, taking advantage of groundbreaking speed and debug advantages of L-Python.

In the first quarter of fiscal 2023, we started a program with a major prime contractor for a radiation-hardened

SRAM prototype that shipped in the first half of fiscal 2023 and has prospects for increasing GSI’s net revenue in
fiscal 2024 and beyond.

We were incorporated in California in 1995 under the name Giga Semiconductor, Inc. We changed our name

to GSI Technology in December 2003 and reincorporated in Delaware in June 2004 under the name
GSI Technology, Inc. Our principal executive offices are located at 1213 Elko Drive, Sunnyvale, California, 94089,
and our telephone number is (408) 331-8800.

Industry and Market Strategy

Associative Processing Unit Computing Market Overview

The markets for associating processing computing solutions are significant and growing rapidly. The total

addressable market (“TAM”) for APU search applications, which is the market where GSI is focusing its
commercialization efforts, has been determined by GSI to be approximately $232 billion in 2023, and growing at a
compound annual growth rate (“CAGR”) of 13% to $380 billion by 2027. GSI has similarly determined that the
Serviceable Available Market (“SAM”) for APU search applications is approximately $7.1 billion in 2023, and
anticipated to grow at a CAGR of 16% to $12.8 billion by 2027. The search market segments included in GSI’s
TAM and SAM analyses include vector search HPC. Some market applications in these segments are computer
vision, synthetic aperture radar, drug discovery, and cybersecurity; and service markets such as NoSQL,
Elasticsearch, and OpenSearch.

The growth in demand for associative processing computing solutions is being driven by the increasing
market adoption and usage of graphics processing unit (“GPU”) and CPU farms for AI processing of large data
collections, including parallel computing in scientific research. However, the large-scale usage of GPU and CPU
farms for AI processing of data is demonstrating the limits of GPU and CPU processing speeds and resulting in ever
higher energy consumption. The amounts of data being processed, which is coming from increasing numbers of
users and continuously increasing amounts of collected data, has resulted in efforts to split and store the processed
data among multiple databases, through a process called sharding. Sharding substantially increases processing costs
and worsens the power consumption factors associated with processing so much data. As the environmental impacts
of data processing are becoming increasingly important, and complex workloads are migrating to edge computing
for real-time applications, it is becoming increasingly difficult to achieve market demands for low power, smaller
footprints and faster results.

The GSI APU has been demonstrated to outperform CPU’s and GPU’s in the market for AI search of large

data collections by providing lower latency and increased capacity in a smaller form-factor and achieve such results
with lower power consumption. In addition, GSI’s compute-in-place technology has wide application. The APU has
several benefits that are particularly useful to overcoming the data processing challenges noted above. First, the
APU does not have the word size limitation of traditional CPU and GPU processors. Because traditional data
processors move data around to various parts of a system, they need to select or duplicate resources of particular
word sizes, be they 8-bit, 16-bit, 32-bit or 64-bit. The APU is based on a memory line structure, which means the
APU can operate on legacy instruction widths of 8 or 16-bits, or just as seamlessly operate on instructions of
arbitrary widths from 1 bit to 768-bits or 2048-bits. The APU can operate on any word width that makes sense for
the problem and also for what makes sense at the current processing step. This dynamic flexibility is a tremendous
advantage for non-linear processing like trigonometry. The APU is also an associative machine, which means that
data that is resident in the device can be applied to a function only if it is deemed associated (for example, with a
meta-tag) to the processing. Such processing is similar to a person looking for his car in a parking lot, but ignoring
all cars that are not the color of his car. Another strength of the APU design is that it is multi-threaded. One sensor
or query input can be simultaneously applied to multiple functions or searches in the device.

Our associative computing technology utilizes in-memory associative processor structures to address the

bottlenecks that limit performance and increase power consumption in CPUs, GPUs, and Field Programable Gate
Arrays (“FPGAs”) when processing large datasets. By constantly having to move operands and results in and out of
devices with ever increasing processing speeds and bus speeds, current solutions are focused on memory transfers
rather than addressing the basic computation problem. By changing the computational framework to parallel
processing and having search functions conducted directly in a processing memory array, the APU can greatly
expedite computation and response times in many “big data” applications. We are creating a new category of

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computing products that are expected to have substantial target markets and a large new customer base in those
markets.

Our commercialization efforts for the APU product are focused on markets where the APU shows factors of

improvement against CPU or GPU-only systems. The APU differentiates itself most for similarity search, multi-
modal vector search, real-time very large database search, and several scientific high-performance computing
workloads processing sensor data. The APU’s improved performance over CPU or GPU systems provides a
paradigm-shifting ability to process data in real-time. As a result, we see demand for the APU in artificial
intelligence applications, including approximate nearest neighbor searches, natural language processing,
cryptography, and synthetic aperture radar as well as other fields whose processing in the datacenter can benefit
from the APU’s smaller footprint, superior productivity, and low system power consumption. GSI is currently in
development and field testing with potential customers in the computer vision, synthetic aperture radar, and
cybersecurity market segments. We have a solution to accelerate multimodal vector search as an on-prem or SaaS
solution for OpenSearch and Fast Vector Search (“FVS”). Our expectations of demand for the APU have been
supported by comparisons of the power usage for processing large area SAR image in real-time at high resolution.
In one comparison, the APU used on average 93% less power than CPU or GPU systems.

Similarity search uses a technique called distance metric learning, in which learning algorithms measure how

similar related objects are. The APU is well suited for very fast similarity search because its design determines
distance metric at fast computation speeds with high degrees of accuracy. Our APU is further differentiated from
other solutions in the market by its scalability for very large datasets. The APU has demonstrated its ability to
increase the rate of computation for visual search by orders of magnitude with greater accuracy and reduced power
consumption. The APU also adds multi-modal search capability to this computational performance. For instance, the
ability to search on a picture of a product on an ecommerce website, with pricing and specific filters, does not
impede the performance of the in-memory search versus a traditional text only search. This kind of performance has
the potential to transform online retailers’ capabilities to run search queries and improve customers’ online shopping
experience.

The APU’s higher speeds and increased accuracy in similarity search has been shown to speed drug
discovery, which can potentially lower drug discovery costs, an important consideration for research organizations
dependent on funding. The APU is well suited for enhancing drug discovery work because it can perform similarity
searches using very descriptive molecular representations in a virtual environment. The APU’s ability to process
word lengths of 2000-8000 bits can significantly reduce the cost of developing drugs by allowing virtual screening
and more effective use of physical laboratory resources. Use of AI products like the APU could reduce costs,
increase drug efficacy and safety, and increase speed to market thereby potentially saving billions of dollars. For
these reasons, the APU is drawing interest from prospective customers in the pharmaceutical and genomics
industries.

New Markets for the APU

The APU is capable of processing large data arrays in a cost competitive solution for large database similarity

search, but the mathematical capabilities of the APU also create new opportunities for using real-time causal
processing. Examples of real-time causal processing are SAR, image re-registration, and mathematical structural
similarity index measure (“SSIM”). This combination of sensor processing, image processing, and computer vision
at high performance has the potential to bring application processing that normally requires several resources in a
data center to real-time edge applications. Possible examples are in-asset aircraft reconnaissance and satellite image
processing. Furthermore, GSI’s expertise in developing radiation-tolerant components creates new opportunities in
the growing market for AI products that can be used in low earth orbit and space applications, where other AI
products are not able to survive the harsh environment.

Recent excitement relating to ChatGPT has brought the market for AI search to the forefront of consumer

awareness. Applications using ChatGPT for natural language processing as well as similarity coding structures are
situations where our APU has already shown benefits of higher speeds, higher accuracy and lower power
consumption. Possible uses for ChatGPT are accelerating customer interest in technologies and services that can
increase AI search capacity and significantly lower their utilization costs.

For even smaller footprint applications such as satellites or networking blades, GSI is looking to license the

intellectual property (“IP”) underlying the APU to companies that have their own chip design capabilities to
incorporate GSI’s IP into their custom products.

APU Board Level Product

The APU is currently available as a full-size PCIe card, which is our LEDA-E product, and is used in
enterprise, datacenter, and edge server installations. We are now productizing a 1U SSD-type E1.L form factor card,
that is our LEDA-S board level product. The E1.L form factor enables the use of market standard SSD rack
enclosures to build a dense APU compute appliance, such as a 16 card LEDA-S 1U form factor server. We envision
that this dense appliance would be of high interest for in-plane real-time SAR applications, for instance. Software
and systems are being developed to allow a single LEDA-S to be used without the need for a host PC so that, as an
example, it can be packaged in a compact case for quad-copter use. These small appliances would allow functions
such as location recognition, object recognition, and GPS-denied alternate routing useful for drone product delivery
or reconnaissance applications. The APU board level products are also integrated and sold as server appliances that
include software for turn-key applications in various markets such as medical molecular search and edge SAR image
processing.

APU SaaS Product

We are also commercializing the APU as a service. This service offering runs on servers in a datacenter that

have a direct connection to Amazon Web Services. Customers can access the APU via the AWS Cognito user
identity and data synchronization service for GSI-packaged SaaS applications, or a customer’s own custom APU-
accelerated applications. The cloud connected cards in this datacenter are also connected via the same ultra-low
latency system to provide approximate nearest neighbor (“ANN”) and multi-modal extension capability to
OpenSearch. We envision customers who use OpenSearch for their database storage would use our SaaS product to
accelerate searches run on OpenSearch. Customers who are building their own search engines for special use case
products could use our SaaS product to support high volume searches run on their products. There are early
indications that our SaaS product can be used by vendors of SAR mapping and analysis services to enhance their
own product offerings.

APU Commercialization Risk

Sales of APU products have not been material to date, and our commercialization efforts have taken much
longer than anticipated. If we fail to commercialize our APU products, we may not generate sufficient revenues to
offset our development costs and other expenses, which will have an adverse impact on our business including a
potential impairment of intangible assets and a negative impact on our market capitalization.

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High-Speed Synchronous SRAM Market Overview

High-speed synchronous SRAMs are incorporated into networking and telecom equipment, military/defense

and aerospace applications, audio/video processing, test and measurement equipment, medical and automotive
applications, and other miscellaneous applications. The networking and telecom market demand for high-speed
synchronous SRAMs has been, and is expected to continue to decline due to the industry trend of embedding greater
amounts of SRAM into each generation of ASICs/controllers products, thereby reducing the need for external
SRAMs. As a result, the demand for external high-speed synchronous SRAMs in new end-products is being driven
by markets such as military/defense and aerospace applications. Such applications require a combination of high
densities and high random transaction rates that GSI is well positioned to serve, being the only SRAM manufacturer
to offer 288Mb densities as well as offering the highest truly random transaction rate in the industry – 1866 million
transactions per second (MT/s). To further serve the military/defense and aerospace markets, GSI has been focusing
on qualifying its products for space/satellite applications to capitalize on opportunities resulting from the
development of near-earth orbiting satellite mega constellations, as well as the more traditional geo-stationary earth
orbit satellite communication platforms and national assets.

High-Speed Synchronous SRAM Products

We offer four families of high-speed synchronous SRAMs – SyncBurst™, NBT™, SigmaQuad™, and
SigmaDDR™. All four SRAM families feature high density, high transaction rate, high data bandwidth, low
latency, and low power consumption. These four product families provide the basis for approximately 10,000
individual part numbers. They are available in several density and data width configurations, and are available in a
variety of performance, feature, temperature, and package options. Our products can be found in a wide range of
networking and telecommunications equipment, including routers, universal gateways, fast Ethernet switches and
wireless base stations. We also sell our products to OEMs that manufacture products for military/defense and
aerospace applications such as radar and guidance systems and satellites, for test and measurement applications such
as high-speed testers, for automotive applications such as smart cruise control, and for medical applications such as
ultrasound and CAT scan equipment.

We have introduced and are marketing radiation-hardened, or “RadHard”, and radiation-tolerant, or
“RadTolerant”, SRAMs for military/defense and aerospace applications such as networking satellites and missiles.
Our initial RadHard and RadTolerant products are 288 megabit, 144 megabit, and 72 megabit devices from our
SigmaQuad-II+ family. We have also expanded our product offerings to include 144 megabit, 72 megabit, and
32 megabit SyncBurst and NBT SRAMs RadTolerant products to enable the avionics and other space platforms that
have historically leveraged smaller asynchronous devices. The RadHard products are housed in a hermetically-
sealed ceramic column grid array package, and undergo a special fabrication process that diminishes the adverse
effects of high-radiation environments.

SRAM Leadership in the High Performance Memory Market

We endeavor to address the overall needs of our SRAM customers, not only satisfying their immediate
requirements for our latest generation, highest performance networking memory, but also providing them with the
ongoing long-term support necessary during the entire lives of the systems in which our products are utilized.
Accordingly, the key elements of our SRAM solution include:

• Product Performance Leadership. Through the use of advanced architectures and design methodologies,

we have developed high-performance SRAM products offering superior high speed performance
capabilities and low power consumption, while our advanced silicon process technologies allow us to
optimize yields, lower manufacturing costs and improve quality.

• Product Innovation. We believe that we have established a position as a technology leader in the design
and development of Very Fast SRAMs. We are believed to have the industry’s highest density RadHard
SRAM, the SigmaQuad - II+, which is an example of our industry-leading product innovation.

• Broad and Readily Available Product Portfolio. We have what we believe is the broadest catalog of

Very Fast SRAM products.

• Master Die Methodology. Our master die methodology enables multiple product families, and variations
thereof, to be manufactured from a single mask set so that we are able to maintain a common pool of
wafers that incorporate all available master die, allowing rapid fulfillment of customer orders and
reducing costs.

• Customer Responsiveness. We work closely with leading networking and telecommunications OEMs, as
well as their chip-set suppliers, to anticipate their requirements and to rapidly develop and implement
solutions that allow them to meet their specific product performance objectives.

Business Transformation Strategy

Our objective is to market and sell transformative new products utilizing our cutting-edge in-place associative

computing technology in high growth markets, while continuing to profitably increase our share of the external
SRAM market. Our strategy includes the following key elements:

• Complete productization of our initial In-place Associative Computing product. Our principal operations

objective is the completion of productization efforts for our initial in-place associative computing
product, including the second release of our compiler stack in the second half of calendar 2023.

•

Identifying and developing new long tail markets where the APU is differentiated. Realization of this
goal will require additional development and marketing efforts in calendar 2023. Our initial focus is in
the markets for artificial intelligence and high-performance computing, including natural language
processing, computer vision and cyber security with a focus in this area being for similarity search
applications including facial recognition, drug discovery and drug toxicity, signal and object detection
and cryptography.

Identify opportunities and rapidly increase sales of RadHard and RadTolerant SRAMs. We continue to
aggressively target the military/defense and aerospace markets with our RadHard and RadTolerant
devices. We plan to continue expansion into the military/defense and aerospace markets with our APU
platform that has shown design robustness.

• Exploit opportunities to expand the market for our SRAM products. We are continuing the expansion of
sales of our high-performance SRAM products in the military, industrial, test and measurement, and
medical markets and intend to continue penetrating these and other new markets with similar needs for
high-performance SRAM technologies.

• Collaborate with wafer foundry to leverage advanced process technologies. We will continue to utilize

complementary metal-oxide semiconductor fabrication process technologies from Taiwan Semiconductor
Manufacturing Company (“TSMC”) to design our products.

•

Seek new market opportunities. We intend to supplement our internal development activities by seeking
additional opportunities to acquire other businesses, product lines or technologies, or enter into strategic
partnerships, that would complement our current product lines, expand the breadth of our markets,
enhance our technical capabilities, or otherwise provide growth opportunities.

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Customers

For our compute-in-memory associative computing solutions, we are focusing sales and marketing efforts in

the markets for artificial intelligence and high-performance computing, with leading applications in natural language
processing, computer vision and synthetic aperture radar. Our focus in this area being for similarity search
acceleration in fast vector search applications and real-time mobile applications in aerospace and defense.

With the SRAM market, we are focusing our sales on network/telecom OEMs and military/defense and

aerospace with our radiation hardened and radiation tolerant product offerings.

The following is a representative list of our OEM customers that directly or indirectly purchased more than

$600,000 of our SRAM products in the fiscal year ended March 31, 2023:

BAE Systems
Lockheed

Ciena
Nokia
Rockwell

Honeywell
Raytheon

Many of our OEM customers use contract manufacturers to assemble their equipment. Accordingly, a

significant percentage of our net revenues has been derived from sales to these contract manufacturers, and less
frequently, to consignment warehouses who purchase products from us for use by contract manufacturers. In
addition, we sell our products to OEM customers indirectly through domestic and international distributors.

In the case of sales of our products to distributors and consignment warehouses, the decision to purchase our
products is typically made by the OEM customers. In the case of contract manufacturers, OEM customers typically
provide a list of approved products to the contract manufacturer, which then has discretion whether or not to
purchase our products from that list.

Direct sales to contract manufacturers and consignment warehouses accounted for 19.8%, 31.0% and 43.7%

of our net revenues for fiscal 2023, 2022 and 2021, respectively. Sales to foreign and domestic distributors
accounted for 77.5%, 66.8% and 54.7% of our net revenues for fiscal 2023, 2022 and 2021, respectively.

The following direct customers accounted for 10% or more of our net revenues in one or more of the

following periods:

Fiscal Year Ended
March 31,
2022 2021

2023

Contract manufacturers and consignment warehouses:

Flextronics Technology . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Sanmina . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

10.4 % 16.0 % 21.1 %
11.2
8.8

21.5

Distributors:

Avnet Logistics . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Nexcomm . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

48.1
16.6

38.0
17.2

29.8
14.7

Nokia was our largest customer in fiscal 2023, 2022 and 2021. Nokia purchases products directly from us

Sales, Marketing and Technical Support

We sell our products primarily through our worldwide network of independent sales representatives and

distributors. As of March 31, 2023, we employed 16 sales and marketing personnel, and were supported by over
200 independent sales representatives, which we believe will enable us to address an expanded customer base with
the continuing introduction of our associative computing products in fiscal 2024. We believe that our relationship
with our U.S. distributors, Avnet, Mouser and Digi-Key, put us in a strong position to address the Very Fast SRAM
memory market in the United States. We currently have regional sales offices located in China, Hong Kong, Israel
and the United States. We believe this international coverage allows us to better serve our distributors and OEM
customers by providing them with coordinated support. We believe that our customers’ purchasing decisions are
based primarily on product performance, low power consumption, availability, features, quality, reliability, price,
manufacturing flexibility and service. Many of our OEM customers have had long-term relationships with us based
on our success in meeting these criteria.

Our sales are generally made pursuant to purchase orders received between one and twelve months prior to

the scheduled delivery date. Because industry practice allows customers to reschedule or cancel orders on relatively
short notice, these orders are not firm and hence we believe that backlog is not a good indicator of our future sales.
We experienced increased costs as a result of supply chain constraints in fiscal 2022 and 2023 for wafers, including
a 20% increase in the cost of wafers that was implemented in early calendar 2022 and a 6% increase that was
implemented in early calendar 2023, as well as varying cost increases in outsourced assembly, burn-in and test
operations. We have responded with increased pricing to our customers. We typically provide a warranty of up to
36 months on our products. Liability for a stated warranty period is usually limited to replacement of defective
products.

Our marketing efforts are, first and foremost, focused on ensuring that the products we develop meet or

exceed our customers’ needs. Our marketing efforts are currently focused on marketing our in-place associative
computing solutions and our radiation-tolerant and radiation-hardened space grade SRAMs. Previously, those efforts
were focused on defining our high-performance SRAM product roadmap. We work closely with key customers to
understand their roadmaps and to ensure that the products we develop meet their requirements (primary aspects of
which include functionality, performance, electrical interfaces, power, and schedule). Our marketing group also
provides technical, strategic and tactical sales support to our direct sales personnel, sales representatives and
distributors. This support includes in-depth product presentations, datasheets, application notes, simulation models,
sales tools, marketing communications, marketing research, trademark administration and other support functions.
We also engage in various marketing activities to increase brand awareness.

We emphasize customer service and technical support in an effort to provide our OEM customers with the

knowledge and resources necessary to successfully use our products in their designs. Our customer service
organization includes a technical team of applications engineers, technical marketing personnel and, when required,
product design engineers. We provide customer support throughout the qualification and sales process and continue
providing follow-up service after the sale of our products and on an ongoing basis. In addition, we provide our OEM
customers with comprehensive datasheets, application notes and reference designs and access to our FPGA
controller IP for use in their product development.

Manufacturing

We outsource our wafer fabrication, assembly and wafer sort testing, which enables us to focus on our design

strengths, minimize fixed costs and capital expenditures and gain access to advanced manufacturing technologies.
Our engineers work closely with our outsource partners to increase yields, reduce manufacturing costs, and help
assure the quality of our products.

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Currently, all of our SRAM and APU wafers are manufactured by TSMC under individually negotiated

purchase orders. We do not currently have a long-term supply contract with our foundry, and, therefore, TSMC is
not obligated to manufacture products for us for any specified period, in any specified quantity or at any specified
price, except as may be provided in a particular purchase order. Our future success depends in part on our ability to
secure sufficient capacity at TSMC or other independent foundries to supply us with the wafers we require.

Our APU products are manufactured at TSMC using 28 nanometer process technology. The majority of our

current SRAM products are manufactured using 0.13 micron, 90 nanometer, 65 nanometer and 40 nanometer
process technologies on 300 millimeter wafers at TSMC.

Our master die methodology enables multiple product families, and variations thereof, to be manufactured

from a single mask set. As a result, based upon the way available die from a wafer are metalized, wire bonded,
packaged and tested, we can create a number of different products. The manufacturing process consists of two
phases, the first of which takes approximately thirteen to fifteen weeks and results in wafers that have the potential
to yield multiple products within a given product family. After the completion of this phase, the wafers are stored
pending customer orders. Once we receive orders for a particular product, we perform the second phase, consisting
of final wafer processing, assembly, burn-in and test, which takes approximately eight to ten weeks to complete.
Substrates are required in the second phase before the assembly process can begin for many of our products. This
two-step manufacturing process enables us to significantly shorten our product lead times, providing flexibility for
customization and to increase the availability of our products.

All of our manufactured wafers, including wafers for our APU product, are tested for electrical compliance

and most are packaged at Advanced Semiconductor Engineering (“ASE”) which is located in Taiwan. Wistron
Neweb Corporation in Taiwan manufactures the boards for our APU product line. Our test procedures require that
all of our products be subjected to accelerated burn-in and extensive functional electrical testing which is performed
at our Taiwan and U.S. test facilities. Our radiation-hardened products are assembled and tested at Silicon Turnkey
Solutions Inc., located near our Sunnyvale, California headquarters facility.

Research and Development

We have devoted substantial resources in the last seven years on the development of our APU products. Our

research and development staff includes engineering professionals with extensive experience in the areas of high-
speed circuit design, including APU design, as well as SRAM design and systems level networking and
telecommunications equipment design. Additionally, we have assembled a team of software development experts in
Israel needed for the development of the various levels of software required in the use of our APU products. The
design process for our products is complex. As a result, we have made substantial investments in computer-aided
design and engineering resources to manage our design process.

Competition

Our existing and potential competitors include many large domestic and international companies, some of

which have substantially greater resources, offer other types of memory and/or non-memory technologies and may
have longer standing relationships with OEM customers than we do. Unlike us, some of our principal competitors
maintain their own semiconductor fabs, which may, at times, provide them with capacity, cost and technical
advantages.

Our principal competitors include NVIDIA Corporation and Intel Corporation for our in-place associative

computing solutions and Infineon Technologies AG, Integrated Silicon Solution and REC for our SRAM products.
We expect additional competitors to enter the associative computing market as well. While some of our competitors

offer a broader array of products and offer some of their products at lower prices than we do, we believe that our
focus on performance leadership provides us with key competitive advantages.

In December 2021, we were among the leaders in the Billion-Scale Approximate Nearest Neighbor Search

Challenge held at the NeurIPS 2021 Conference performing on par with NVIDIA and Intel. Our results in the ANNS
Challenge proved that our technology could perform on par with the category leaders in AI. The Billion-Scale
ANNS Challenge was created to provide a comparative understanding of algorithmic ideas and their application at
scale, promote the development of new techniques for the problem and demonstrate their value, and introduce a
standard benchmarking approach.

In April 2022, we announced that our submission to the MoSAIC Challenge won first place in the
Human/Object Tagging category. The MoSAIC Challenge was designed to identify best-in-class, cutting-edge
hardware and software solutions to address challenging and longstanding technological gaps concerning remote
autonomous indoor maneuvers. The MoSAIC Challenge was led by the U.S. Department of Defense (“DoD”),
Irregular Warfare Technical Support Directorate (“IWTSD”), and the Israel Ministry of Defense (“IMOD”),
Directorate of Defense Research and Engineering (DDR&D), along with the Merage Institute.

We believe that our ability to compete successfully in the rapidly evolving markets for “big data” and
memory products for the networking and telecommunications markets depends on a number of factors, including:

•

product performance, features, including low power consumption, quality, reliability and price;

• manufacturing flexibility, product availability and customer service throughout the lifetime of the

product;

•

the availability of software tools, such as compilers and libraries that enable customers to easily design
products for their specific needs;

the timing and success of new product introductions by us, our customers and our competitors; and

our ability to anticipate and conform to new industry standards.

We believe we compete favorably with our competitors based on these factors. However, we may not be able

to compete successfully in the future with respect to any of these factors. Our failure to compete successfully in
these or other areas could harm our business.

The market for networking memory products is competitive and is characterized by technological change,
declining average selling prices and product obsolescence. Competition could increase in the future from existing
competitors and from other companies that may enter our existing or future markets with solutions that may be less
costly or provide higher performance or more desirable features than our products. This increased competition may
result in price reductions, reduced profit margins and loss of market share.

In addition, we are vulnerable to advances in technology by competitors, including new SRAM architectures

as well as new forms of Dynamic Random Access Memory (“DRAM”) and other new memory technologies.
Because we have limited experience developing integrated circuit (“IC”) products other than Very Fast SRAMs, any
efforts by us to introduce new products based on new technology, including our new in-place associative computing
products, may not be successful and, as a result, our business may suffer.

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Intellectual Property

Our ability to compete successfully depends, in part, upon our ability to protect our proprietary technology

and information. We rely on a combination of patents, copyrights, trademarks, trade secret laws, non-disclosure and
other contractual arrangements and technical measures to protect our intellectual property. We believe that it is
important to maintain a large patent portfolio to protect our innovations. We currently hold 123 United States
patents, including 63 memory patents and 60 associative computing patents, and have in excess of a dozen patent
applications pending. We cannot assure you that any patents will be issued as a result of our pending applications.
We believe that factors such as the technological and creative skills of our personnel and the success of our ongoing
product development efforts are also important in maintaining our competitive position. We generally enter into
confidentiality or license agreements with our employees, distributors, customers and potential customers and limit
access to our proprietary information. Our intellectual property rights, if challenged, may not be upheld as valid,
may not be adequate to prevent misappropriation of our technology or may not prevent the development of
competitive products. Additionally, we may not be able to obtain patents or other intellectual property protection in
the future. Furthermore, the laws of certain foreign countries in which our products are or may be developed,
manufactured or sold, including various countries in Asia, may not protect our products or intellectual property
rights to the same extent as do the laws of the United States and thus make the possibility of piracy of our
technology and products more likely in these countries.

The semiconductor industry is characterized by vigorous protection and pursuit of intellectual property rights,

which have resulted in significant and often protracted and expensive litigation. We or our foundry from time to
time are notified of claims that we may be infringing patents or other intellectual property rights owned by third
parties. We have been involved in patent infringement litigation in the past. We have been subject to other
intellectual property claims in the past and we may be subject to additional claims and litigation in the future.
Litigation by or against us relating to allegations of patent infringement or other intellectual property matters could
result in significant expense to us and divert the efforts of our technical and management personnel, whether or not
such litigation results in a determination favorable to us. In the event of an adverse result in any such litigation, we
could be required to pay substantial damages, cease the manufacture, use and sale of infringing products, expend
significant resources to develop non-infringing technology, discontinue the use of certain processes or obtain
licenses to the infringing technology. Licenses may not be offered or the terms of any offered licenses may not be
acceptable to us. If we fail to obtain a license from a third party for technology used by us, we could incur
substantial liabilities and be required to suspend the manufacture of products or the use by our foundry of certain
processes.

Human Capital Resources

In November 2022, we announced measures taken to reduce our operating expenses by approximately
$7.0 million on an annualized basis, primarily from salary reductions related to reduced headcount and salary
decreases for certain retained employees, as well as targeted reductions in research and development spending.
These strategic cost reduction measures are expected to enable us to better focus on our operational resources on
advancing our proprietary APU technology. None of our Gemini-II chip development and core APU software
development efforts, including the building of the APU compiler, was affected by the reduction in research and
development spending. The APU marketing, sales, and APU engineering efforts will retain priority in our budget.
The spending reductions are not expected to impact the launch of Gemini-I in target markets, including SAR, search,
and SaaS. The cost reduction initiative is expected to be completed by September 30, 2023 and will result in an
approximate 15% decrease in our global workforce. In total, we expect to incur approximately $917,000 in cash
expenditures for termination costs, including the payout of accrued vacation, of which $490,000 was incurred in
fiscal 2023.

As of March 31, 2023, we had 156 full-time employees, including 107 engineers, of which 70 are engaged in
research and development and 48 have PhD or MS degrees, 16 employees in sales and marketing, 10 employees in
general and administrative capacities and 60 employees in manufacturing. Of these employees, 51 are based in our
Sunnyvale facility, 55 are based in our Taiwan facility and 35 are based in our Israel facility. We believe that our
future success will depend in large part on our ability to attract and retain highly-skilled, engineering, managerial,
sales and marketing personnel. Our employees are not represented by any collective bargaining unit, and we have
never experienced a work stoppage. We believe that our employee relations are good.

Compensation and benefits

Our goal is to attract, motivate and retain talent with a focus on encouraging performance, promoting
accountability and adhering to our company values. The future growth and success of our company largely depends
on our ability to attract, train and retain qualified professionals. As part of our effort to do so, we offer competitive
compensation and benefit programs including a 401(k) Plan, stock options for all employees, flexible spending
accounts and paid time off. We understand that effective compensation and benefits programs are important in
retaining high-performing and qualified individuals. We continue to assess our healthcare and retirement benefits
each year in order to provide competitive benefits to our employees.

Diversity, inclusion and belonging

We are committed to our continued efforts to increase diversity and foster an inclusive work environment that

supports the global workforce and the communities we serve. We recruit the best people for the job regardless of
gender, ethnicity or other protected traits and it is our policy to fully comply with all laws applicable to
discrimination in the workplace. Our diversity, equity and inclusion principles are also reflected in our employee
training and policies. We continue to enhance our diversity, equity and inclusion policies which are guided by our
executive leadership team.

Ethics & Corporate Responsibility

We are committed to ensuring ethical organizational governance, embracing diversity and inclusion in the

board room and throughout the organization and are committed to observing fair, transparent, and accountable
operating practices. We seek to create and foster a healthy, balanced, and ethical work environment for everyone in
our organization. To this end, we promote an ethical organizational culture and encourage all employees to raise
questions or concerns about actual or potential ethical issues and company policies and to offer suggestions about
how we can make our organization better. These practices are set forth in our Code of Business Conduct and Ethics,
which is periodically reviewed by all of our employees and is available on our website under “Corporate
Governance.”

Health and safety

We are committed to maintain a safe and healthy workplace for our employees. Our policies and practices are

intended to protect our employees.

Since fiscal 2021, in response to the COVID-19 pandemic, we implemented safety protocols and new
procedures to protect our employees. These protocols, which were no longer being enforced, included complying
with social distancing and other health and safety standards as required by state and local government agencies,
taking into consideration guidelines of the Centers for Disease Control and Prevention and other public health
authorities.

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Investor Information

You can access financial and other information in the Investor Relations section of our website at

www.gsitechnology.com. We make available, on our website, free of charge, copies of our annual report on
Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K, and amendments to those reports filed or
furnished pursuant to Section 13(a) or 15(d) of the Exchange Act as soon as reasonably practicable after filing such
material electronically or otherwise furnishing it to the SEC.

The charters of our Audit Committee, our Compensation Committee, and our Nominating and Governance
Committee, our code of conduct (including code of ethics provisions that apply to our principal executive officer,
principal financial officer, controller, and senior financial officers) and our corporate governance guidelines are also
available at our website under “Corporate Governance.” These items are also available to any stockholder who
requests them by calling (408) 331-8800. The contents of our website are not incorporated by reference in this
report.

The SEC maintains an Internet site that contains reports, proxy statements and other information regarding

issuers that file electronically with the SEC at www.sec.gov.

Information About Our Executive Officers

The following table sets forth certain information concerning our executive officers as of June 1, 2023:

Name
Lee-Lean Shu . . . . . . . . . . .
Avidan Akerib . . . . . . . . . .
Didier Lasserre . . . . . . . . . .
Douglas Schirle . . . . . . . . .
Bor-Tay Wu . . . . . . . . . . . .
Ping Wu . . . . . . . . . . . . . . .
Robert Yau . . . . . . . . . . . . .

Age
68
67
58
68
71
66
70

Title

President, Chief Executive Officer and Chairman
Vice President, Associative Computing
Vice President, Sales
Chief Financial Officer
Vice President, Taiwan Operations
Vice President, U.S. Operations
Vice President, Engineering, Secretary and Director

Lee-Lean Shu co-founded our company in March 1995 and has served as our President and Chief Executive
Officer and as a member of our Board of Directors since inception. Since October 2000, Mr. Shu has also served as
Chairman of our Board. From January 1995 to March 1995, Mr. Shu was Director, SRAM Design at Sony
Microelectronics Corporation, a semiconductor company and a subsidiary of Sony Corporation, and from July 1990
to January 1995, he was a design manager at Sony Microelectronics Corporation.

Avidan Akerib has served as our Vice President, Associative Computing since MikaMonu Group Ltd. was

acquired in November 2015. From July 2011 to November 2015, Dr. Akerib served as co-founder and chief
technologist of MikaMonu Group Ltd, a developer of computer in-memory and storage technologies. From
July 2008 to March 2011, Dr. Akerib served as chief scientist of ZikBit Ltd., a developer of DRAM computing
technologies. From Jan 2001 to July 2007, Dr. Akerib was the General Manager of NeoMagic Israel, a supplier of
low-power audio and video integrated circuits for mobile use. Dr. Akerib has a PhD in applied mathematics and
computer science from the Weizmann Institute of Science, Israel, and an MSc and BSc in electrical engineering
from Tel Aviv University and Ben Gurion University, respectively. Dr. Akerib is the inventor of more than
50 patents related to parallel and In Memory Associative Computing.

Didier Lasserre has served as our Vice President, Sales since July 2002. From November 1997 to July 2002,

Mr. Lasserre served as our Director of Sales for the Western United States and Europe. From July 1996 to

October 1997, Mr. Lasserre was an account manager at Solectron Corporation, a provider of electronics
manufacturing services. From June 1988 to July 1996, Mr. Lasserre was a field sales engineer at Cypress
Semiconductor Corporation, a semiconductor company.

Douglas Schirle has served as our Chief Financial Officer since August 2000. From June 1999 to

August 2000, Mr. Schirle served as our Corporate Controller. From March 1997 to June 1999, Mr. Schirle was the
Corporate Controller at Pericom Semiconductor Corporation, a provider of digital and mixed signal integrated
circuits. From November 1996 to February 1997, Mr. Schirle was Vice President, Finance for Paradigm
Technology, a manufacturer of SRAMs, and from December 1993 to October 1996, he was the Controller for
Paradigm Technology. Mr. Schirle was formerly a certified public accountant.

Bor-Tay Wu has served as our Vice President, Taiwan Operations since January 1997. From January 1995 to

December 1996, Mr. Wu was a design manager at Atalent, an IC design company in Taiwan.

Ping Wu has served as our Vice President, U.S. Operations since September 2006. He served in the same

capacity from February 2004 to April 2006. From April 2006 to August 2006, Mr. Wu was Vice President of
Operations at QPixel Technology, a semiconductor company. From July 1999 to January 2004, Mr. Wu served as
our Director of Operations. From July 1997 to June 1999, Mr. Wu served as Vice President of Operations at Scan
Vision, a semiconductor manufacturer.

Robert Yau co-founded our company in March 1995 and has served as our Vice President, Engineering and as

a member of our Board of Directors since inception. From December 1993 to February 1995, Mr. Yau was design
manager for specialty memory devices at Sony Microelectronics Corporation. From 1990 to 1993, Mr. Yau was
design manager at MOSEL/VITELIC, a semiconductor company.

Item 1A. Risk Factors

Our future performance is subject to a variety of risks. If any of the following risks actually occur, our
business, financial condition and results of operations could suffer and the trading price of our common stock could
decline. Additional risks that we currently do not know about or that we currently believe to be immaterial may also
impair our business operations. You should also refer to other information contained in this report, including our
consolidated financial statements and related notes.

Risk Factor Summary

Our business is subject to numerous risks and uncertainties, which are more fully described in the Risk

Factors below. These risks include, but are not limited to:

Risks Related to Our Business and Financial Condition

• Unpredictable fluctuations in our operating results could cause our stock price to decline.

• Our largest OEM customer accounts for a significant percentage of our net revenues. If this customer, or
any of our other major customers, reduces the amount they purchase, stops purchasing our products or
fails to pay us, our financial position and operating results will suffer.

• Rising interest rates, worldwide inflationary pressures, bank failures, the military conflict in Ukraine,
significant fluctuations in energy prices and the decline in the global economic environment may
continue to adversely affect our financial condition.

• We have incurred significant losses and may incur losses in the future.

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• We have identified a material weakness in our internal control over financial reporting, and if our
remediation of such material weakness is not effective, our ability to produce timely and accurate
financial statements could be impaired.

• Goodwill impairment and related charges, as well as other accounting charges or adjustments could

negatively impact our operating results.

• We depend upon the sale of our Very Fast SRAMs for most of our revenues and the market for Very Fast

SRAMs is highly competitive.

•

If we do not successfully implement certain cost reduction initiatives, we may suffer adverse impacts on
our business and operations.

• We are dependent on a number of single source suppliers.

•

If we do not successfully develop and introduce the new in-place associative computing products, which
entails certain significant risks, our business will be harmed.

If we are unable to offset increased wafer fabrication and assembly costs, our gross margins will suffer.

• We are subject to the highly cyclical nature of the networking and telecommunications markets.

• We rely heavily on distributors and our business will be negatively impacted if we are unable to develop

and manage distribution channels and accurately forecast future sales through our distributors.

• The average selling prices of our products are expected to decline.

• We are substantially dependent on the continued services of our senior management and other key
personnel. If we are unable to recruit or retain qualified personnel, our business could be harmed.

• Cyber-attacks could disrupt our operations or the operations of our partners, and result in reduced

revenue, increased costs, liability claims and harm our reputation or competitive position.

• Demand for our products may decrease if our OEM customers experience difficulty manufacturing,

marketing or selling their products.

• Our products have lengthy sales cycles that make it difficult to plan our expenses and forecast results.

• Our business could be negatively affected as a result of actions of activist stockholders or others.

• Our acquisition of companies or technologies could prove difficult to integrate, disrupt our business,

dilute stockholder value and adversely affect our operating results.

• Our business will suffer if we are unable to protect our intellectual property or if there are claims that we

infringe third party intellectual property rights.

• Current unfavorable economic and market conditions may adversely affect our business, financial

condition, results of operations and cash flows.

•

If our business grows, such growth may place a significant strain on our management and operations.

Risks Related to Manufacturing and Product Development

• We may experience difficulties in transitioning our manufacturing process technologies, which may

result in reduced manufacturing yields, delays in product deliveries and increased expenses.

• Manufacturing process technologies are subject to rapid change and require significant expenditures.

• Our products may contain defects, which could reduce revenues or result in claims against us.

Risks Related to Our International Business and Operations

• The international political, social and economic environment, particularly as it relates to Taiwan, may

affect our business performance.

• Certain of our independent suppliers and OEM customers have operations in the Pacific Rim, an area
subject to significant risk of natural disasters and outbreak of contagious diseases such as COVID-19.

• The United States could materially modify certain international trade agreements, or change tax

provisions related to the global manufacturing and sales of our products.

• Some of our products are incorporated into advanced military electronics, and changes in international

geopolitical circumstances and domestic budget considerations may hurt our business.

Risks Relating to Our Common Stock and the Securities Market

• The trading price of our common stock is subject to fluctuation and is likely to be volatile.

• We may need to raise additional capital in the future, which may not be available on favorable terms or at

all, and which may cause dilution to existing stockholders.

• Use of a portion of our cash reserves to repurchase shares of our common stock presents potential risks

and disadvantages to us and our continuing stockholders.

• Our executive officers, directors and their affiliates hold a substantial percentage of our common stock.

• The provisions of our charter documents might inhibit potential acquisition bids that a stockholder might

believe are desirable, and the market price of our common stock could be lower as a result.

Risks Related to Our Business and Financial Condition

Unpredictable fluctuations in our operating results could cause our stock price to decline.

Our quarterly and annual revenues, expenses and operating results have varied significantly and are likely to
vary in the future. For example, in the twelve fiscal quarters ended March 31, 2023, we recorded net revenues of as
much as $9.0 million and as little as $5.4 million, and operating losses from $2.9 million to $5.7 million. We
therefore believe that period-to-period comparisons of our operating results are not a good indication of our future
performance, and you should not rely on them to predict our future performance or the future performance of our
stock price. Furthermore, if our operating expenses exceed our expectations, our financial performance could be
adversely affected. Factors that may affect periodic operating results in the future include:

•

commercial acceptance of our associative computing products;

commercial acceptance of our RadHard and RadTolerant products;

changes in our customers' inventory management practices;

unpredictability of the timing and size of customer orders, since most of our customers purchase our
products on a purchase order basis rather than pursuant to a long-term contract;

changes in our product pricing policies, including those made in response to new product
announcements, pricing changes of our competitors and price increases by our foundry and suppliers;

our ability to anticipate and conform to new industry standards;

fluctuations in availability and costs associated with materials and manufacturing services needed to
satisfy customer requirements caused by supply constraints;

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restructuring, asset and goodwill impairment and related charges, as well as other accounting changes or
adjustments;

• manufacturing defects, which could cause us to incur significant warranty, support and repair costs, lose

potential sales, harm our relationships with customers and result in write-downs; and

•

our ability to address technology issues as they arise, improve our products' functionality and expand our
product offerings.

Our expenses are, to a large extent, fixed, and we expect that these expenses will increase in the future. In

fiscal years 2022 and 2023, we experienced price increases for raw materials, including a 20% increase in the price
of wafers that was implemented in early calendar 2022 and a 6% increase that was implemented in early calendar
2023, as well as varying pricing increases for manufacturing services due to the supply chain constraints in the
semiconductor market. We expect to experience additional price increases for raw materials in fiscal year 2024 due
to worldwide inflationary pressures. We will not be able to adjust our spending quickly if our revenues fall short of
our expectations. If this were to occur, our operating results would be harmed. If our operating results in future
quarters fall below the expectations of market analysts and investors, the price of our common stock could fall.

Rising interest rates, worldwide inflationary pressures, bank failures, the military conflict in Ukraine,
significant fluctuations in energy prices and the decline in the global economic environment have caused increased
stock market volatility and uncertainty in customer demand and the worldwide economy in general, and we may
continue to experience decreased sales and revenues in the future. We expect such impact will in particular affect
our SRAM sales and has also impacted the launch of our APU product to some degree and the adoption of RadHard
and RadTolerant SRAM products by aerospace and military customers. However, the magnitude of such impact on
our business and its duration is highly uncertain.

Our largest OEM customer accounts for a significant percentage of our net revenues. If this customer, or

any of our other major customers, reduces the amount they purchase or stop purchasing our products, our
operating results will suffer.

Nokia, our largest customer, purchases our products directly from us and through contract manufacturers and
distributors. Purchases by Nokia represented approximately 17%, 29% and 39% of our net revenues in fiscal 2023,
2022 and 2021, respectively. We expect that our operating results in any given period will continue to depend
significantly on orders from our key OEM customers, particularly Nokia, and our future success is dependent to a
large degree on the business success of this customer over which we have no control. We do not have long-term
contracts with Nokia or any of our other major OEM customers, distributors or contract manufacturers that obligate
them to purchase our products. We expect that future direct and indirect sales to Nokia and our other key OEM
customers will continue to fluctuate significantly on a quarterly basis and that such fluctuations may substantially
affect our operating results in future periods. If we fail to continue to sell to our key OEM customers, distributors or
contract manufacturers in sufficient quantities, our business could be harmed.

Rising interest rates, worldwide inflationary pressures, bank failures, the military conflict in Ukraine,

significant fluctuations in energy prices and the resulting decline in the global economic environment are
expected to adversely affect our revenues, results of operations and financial condition.

Our business is expected to be materially adversely affected by rising interest rates, worldwide inflationary

pressures, bank failures, the military conflict in Ukraine and the significant fluctuations in energy prices, all of
which are contributing to a decline in the global economic environment.

Our quarterly revenues have been flat and trended downward in the past year due to the decline in the global

economic environment that has resulted in less demand for GSI’s products. We expect that a continued rise in
interest rates, continued inflationary pressures, recent bank failures, continued uncertainties in the business climate

caused by the military conflict in Ukraine and related fluctuations in energy prices will adversely impact demand for
new and existing products, and to impact the mindset of potential commercial partners to launch new products using
GSI’s technology. The resulting decline in the global economic environment is expected to have an adverse impact
on our business and financial condition.

Disruptions in the capital and financial markets as a result of rising interest rates, worldwide inflationary

pressures, bank failures, the military conflict in Ukraine, significant fluctuations in energy prices and the decline in
the global economic environment may also adversely affect our ability to obtain additional liquidity should the
impacts of a decline in the global economic environment continue for a prolonged period.

We have incurred significant losses and may incur losses in the future.

We have incurred significant losses. We incurred net losses of $16.0 million, $16.4 million and $21.5 million
during fiscal 2023, 2022 and 2021, respectively. There can be no assurance that our Very Fast SRAMs will continue
to receive broad market acceptance, that our new product development initiatives will be successful or that we will
be able to achieve sustained revenue growth or profitability.

We have identified a material weakness in our internal control over financial reporting, and if our
remediation of such material weakness is not effective, or if we fail to develop and maintain an effective system of
disclosure controls and internal control over financial reporting, our ability to produce timely and accurate
financial statements or comply with applicable laws and regulations could be impaired.

In the course of preparing our financial statements for the fiscal year ended March 31, 2022, we identified a

material weakness in our internal control over financial reporting which remained un-remediated at March 31, 2023.
A material weakness is a deficiency, or combination of deficiencies, in internal control over financial reporting, such
that there is a reasonable possibility that a material misstatement of the annual or interim financial statements will
not be prevented or detected on a timely basis. The material weakness identified pertains to the design and
maintenance of control over the review of the forecasts used to calculate the contingent consideration liability, used
in the goodwill impairment test and used in the recoverability test for intangible assets. This material weakness has
not been remediated as of March 31, 2023. Our management is taking steps to remediate our material weakness,
including re-evaluating the methodology and procedures involved in developing forecasts as well as the review and
oversight of the forecasting process. We are in the process of implementing a detailed plan for the remediation of the
material weakness, including enhancing management’s review controls over the forecasts used to calculate the
contingent consideration liability, used in the recoverability test for intangible assets and used in the goodwill
impairment test. Although we have begun implementing the enhancements described above, the material weakness
will not be considered remediated until the applicable controls operate for a sufficient period of time and
management has concluded, through testing, that these controls are operating effectively. Until this material
weakness is remediated, we plan to continue to perform additional analyses and other procedures to ensure that our
consolidated financial statements are prepared in accordance with GAAP.

If we are unable to further implement and maintain effective internal control over financial reporting or
disclosure controls and procedures, our ability to record, process and report financial information accurately, and to
prepare financial statements within required time periods could be adversely affected, which could subject us to
litigation or investigations requiring management resources and payment of legal and other expenses, negatively
affect investor confidence in our financial statements and adversely impact our stock price. If we are unable to assert
that our internal control over financial reporting is effective, investors may lose confidence in the accuracy and
completeness of our financial reports, the market price of our common stock could be adversely affected and we
could become subject to litigation or investigations by Nasdaq, the SEC or other regulatory authorities, which could
require additional financial and management resources.

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Furthermore, we cannot assure you that the measures we have taken to date, and actions we may take in the

future, will be sufficient to remediate the control deficiencies that led to our material weakness in our internal
control over financial reporting or that they will prevent or avoid potential future material weaknesses. Our current
controls and any new controls that we develop may become inadequate because of changes in conditions in our
business. Further, weaknesses in our disclosure controls and internal control over financial reporting may be
discovered in the future. Any failure to develop or maintain effective controls or any difficulties encountered in their
implementation or improvement could harm our operating results or cause us to fail to meet our reporting
obligations and may result in a restatement of our financial statements for prior periods. Any failure to implement
and maintain effective internal control over financial reporting could adversely affect the results of periodic
management evaluations.

If we determine that our goodwill and intangible assets have become impaired, we may incur impairment

charges, which would negatively impact our operating results.

Goodwill represents the difference between the purchase price and the estimated fair value of the identifiable
assets acquired and liabilities assumed in a business combination, such as our acquisition of MikaMonu Group Ltd.
in fiscal 2016. We test for goodwill impairment on an annual basis, or more frequently if events or changes in
circumstances indicate that the asset is more likely than not impaired. If the carrying value of a material asset is
determined to be impaired, it will be written down to fair value by a charge to operating earnings. As of March 31,
2023, we had a goodwill balance of $8.0 million and intangible assets of $1.8 million, respectively, from the
MikaMonu acquisition. An adverse change in market conditions, including a sustained decline in our stock price,
loss of significant customers, or a weakened demand for our products could be considered to be an impairment
triggering event. If such change has the effect of changing one of our critical assumptions or estimates, a change to
the estimation of fair value could result in an impairment charge to our goodwill or intangible assets, which would
negatively impact our operating results and harm our business. In the fiscal year ended March 31, 2023, we
identified sustained declines in our stock price that resulted in our market capitalization being below the carrying
value of our stockholders’ equity. We concluded the sustained declines in our stock price were triggering events and
proceeded with quantitative goodwill impairment assessments. The results of the quantitative goodwill impairment
assessments that we performed indicated the fair value of our sole reporting unit exceeded its carrying value as of
December 31, 2022, February 28, 2023 and March 31, 2023.

We depend upon the sale of our Very Fast SRAMs for most of our revenues, and a downturn in demand

for these products could significantly reduce our revenues and harm our business.

We derive most of our revenues from the sale of Very Fast SRAMs, and we expect that sales of these
products will represent the substantial majority of our revenues for the foreseeable future. Our business depends in
large part upon continued demand for our products in the markets we currently serve, which will continue to be
adversely impacted by the decline in the global economic environment, and adoption of our products in new
markets. Market adoption will be dependent upon our ability to increase customer awareness of the benefits of our
products and to prove their high-performance and cost-effectiveness. We may not be able to sustain or increase our
revenues from sales of our products, particularly if the networking and telecommunications markets were to
experience another significant downturn in the future. Any decrease in revenues from sales of our products could
harm our business more than it would if we offered a more diversified line of products.

Our future success is substantially dependent on the successful introduction of new in-place associative

computing products which entails significant risks.

Since 2015, our principal strategic objective has been the development of our first in-place associative

computing product. We have devoted, and will continue to devote, substantial efforts and resources to the
development of our new family of in-place associative computing products. This ongoing project involves the
commercialization of new, cutting-edge technology, will require a continuing substantial effort during fiscal 2024

and will be subject to significant risks. In addition to the typical risks associated with the development of
technologically advanced products, this project will be subject to enhanced risks of technological problems related
to the development of this entirely new category of products, substantial risks of delays or unanticipated costs that
may be encountered, and risks associated with the establishment of entirely new markets and customer and partner
relationships. The establishment of new customer and partner relationships and selling our in-place associative
computing products to such new customers is a significant undertaking that requires us to invest heavily in our sales
team, enter into new channel partner relationships, expand our marketing activities and change the focus of our
business and operations. Our inability to successfully establish a market for the product that we have developed will
have a material adverse effect on our future financial and business success, including our prospects for increased
revenues. Additionally, if we are unable to meet the expectations of market analysts and investors with respect to
this major product introduction effort, then the price of our common stock could fall.

We are dependent on a number of single source suppliers, and if we fail to obtain adequate supplies, our

business will be harmed and our prospects for growth will be curtailed.

We currently purchase several key components used in the manufacture of our products from single sources

and are dependent upon supply from these sources to meet our needs. If any of these suppliers cannot provide
components on a timely basis, at the same price or at all, our ability to manufacture our products will be constrained
and our business will suffer. For example, due to worldwide inflationary pressures, the cost of wafers and assembly
services have increased by approximately 25% since the beginning of fiscal 2021. Most significantly, we obtain
wafers for our Very Fast SRAM and APU products from a single foundry, TSMC, and most of them are packaged at
ASE. If we are unable to obtain an adequate supply of wafers from TSMC or find alternative sources in a timely
manner, we will be unable to fulfill our customer orders and our operating results will be harmed. We do not have
supply agreements with TSMC, ASE or any of our other independent assembly and test suppliers, and instead obtain
manufacturing services and products from these suppliers on a purchase-order basis. Our suppliers, including
TSMC, have no obligation to supply products or services to us for any specific product, in any specific quantity, at
any specific price or for any specific time period. As a result, the loss or failure to perform by any of these suppliers
could adversely affect our business and operating results.

Should any of our single source suppliers experience manufacturing failures or yield shortfalls, be disrupted
by natural disaster, military action or political instability, choose to prioritize capacity or inventory for other uses or
reduce or eliminate deliveries to us for any other reason, we likely will not be able to enforce fulfillment of any
delivery commitments and we would have to identify and qualify acceptable replacements from alternative sources
of supply. In particular, if TSMC is unable to supply us with sufficient quantities of wafers to meet all of our
requirements, we would have to allocate our products among our customers, which would constrain our growth and
might cause some of them to seek alternative sources of supply. Since the manufacturing of wafers and other
components is extremely complex, the process of qualifying new foundries and suppliers is a lengthy process and
there is no assurance that we would be able to find and qualify another supplier without materially adversely
affecting our business, financial condition and results of operations.

If we do not successfully develop new products to respond to rapid market changes due to changing
technology and evolving industry standards, particularly in the networking and telecommunications markets, our
business will be harmed.

If we fail to offer technologically advanced products and respond to technological advances and emerging

standards, we may not generate sufficient revenues to offset our development costs and other expenses, which will
hurt our business. The development of new or enhanced products is a complex and uncertain process that requires
the accurate anticipation of technological and market trends. In particular, the networking and telecommunications
markets are rapidly evolving and new standards are emerging. We are vulnerable to advances in technology by
competitors, including new SRAM architectures, new forms of DRAM and the emergence of new memory

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technologies that could enable the development of products that feature higher performance or lower cost. In
addition, the trend toward incorporating SRAM into other chips in the networking and telecommunications markets
has the potential to reduce future demand for Very Fast SRAM products. We may experience development,
marketing and other technological difficulties that may delay or limit our ability to respond to technological
changes, evolving industry standards, competitive developments or end-user requirements. For example, because we
have limited experience developing integrated circuits, or IC, products other than Very Fast SRAMs, our efforts to
introduce new products may not be successful and our business may suffer. Other challenges that we face include:

•

our products may become obsolete upon the introduction of alternative technologies;

• we may incur substantial costs if we need to modify our products to respond to these alternative

technologies;

• we may not have sufficient resources to develop or acquire new technologies or to introduce new

products capable of competing with future technologies;

• new products that we develop may not successfully integrate with our end-users’ products into which

they are incorporated;

• we may be unable to develop new products that incorporate emerging industry standards;

• we may be unable to develop or acquire the rights to use the intellectual property necessary to implement

new technologies; and

• when introducing new or enhanced products, we may be unable to effectively manage the transition from

older products.

If we do not successfully implement the cost reduction initiatives that were announced on November 30,

2022, we may suffer adverse impacts on our business and operations.

On November 30, 2022, we announced the implementation of cost reduction initiatives. The cost reduction
initiatives are expected to be completed by September 30, 2023, and will result in an approximate 15% decrease in
our global workforce. The aim of these initiatives is to reduce GSI Technology’s operating expenses by
approximately $7.0 million on an annualized basis, primarily from salary reductions related to reduced headcount
and salary decreases for certain retained employees, as well as targeted reductions in research and development
spending. The implementation of these cost reduction initiatives may result in unintended and adverse impacts on
our business and operations. Any failure to successfully implement the cost reduction initiatives could prevent us
from focusing our operational resources on advancing GSI Technology’s proprietary APU technology.

If we are unable to offset increased wafer fabrication and assembly costs by increasing the average selling

prices of our products, our gross margins will suffer.

If there is a significant upturn in the demand for the manufacturing and assembly of semiconductor products

as occurred in fiscal 2022, the available supply of wafers and packaging services may be limited. As a result, we
could be required to obtain additional manufacturing and assembly capacity in order to meet increased demand.
Securing additional manufacturing and assembly capacity may cause our wafer fabrication and assembly costs to
increase. Inflationary pressures may also cause our wafer fabrication costs to increase. If we are unable to offset
these increased costs by increasing the average selling prices of our products, our gross margins will decline.

We are subject to the highly cyclical nature of the networking and telecommunications markets.

Our Very Fast SRAM products are incorporated into routers, switches, wireless local area network
infrastructure equipment, wireless base stations and network access equipment used in the highly cyclical
networking and telecommunications markets. We expect that the networking and telecommunications markets will
continue to be highly cyclical, characterized by periods of rapid growth and contraction. Our business and our
operating results are likely to fluctuate, perhaps quite severely, as a result of this cyclicality.

The market for Very Fast SRAMs is highly competitive.

The market for Very Fast SRAMs, which are used primarily in networking and telecommunications

equipment, is characterized by price erosion, rapid technological change, cyclical market patterns and intense
foreign and domestic competition. Several of our competitors offer a broad array of memory products and have
greater financial, technical, marketing, distribution and other resources than we have. Some of our competitors
maintain their own semiconductor fabrication facilities, which may provide them with capacity, cost and technical
advantages over us. We cannot assure you that we will be able to compete successfully against any of these
competitors. Our ability to compete successfully in this market depends on factors both within and outside of our
control, including:

•

real or perceived imbalances in supply and demand of Very Fast SRAMs;

the rate at which OEMs incorporate our products into their systems;

the success of our customers’ products;

the price of our competitors’ products relative to the price of our products;

our ability to develop and market new products; and

the supply and cost of wafers.

In fiscal 2022 and 2023 we experienced increases of 20% and 6%, respectively, in wafer fabrication costs due

to supply chain constraints, which resulted in us increasing the cost of our products. Inflationary pressures are
expected to result in additional increases in our wafer fabrication costs, which may require us to further increase the
cost of our products. Our customers may decide to purchase products from our competitors rather than accept these
price increases and our business may suffer. There can be no assurance that we will be able to compete successfully
in the future. Our failure to compete successfully in these or other areas could harm our business.

We rely heavily on distributors and our success depends on our ability to develop and manage our indirect

distribution channels.

A significant percentage of our sales are made to distributors and to contract manufacturers who incorporate
our products into end products for OEMs. For example, in fiscal 2023, 2022 and 2021, our largest distributor Avnet
Logistics accounted for 48.1%, 38.0% and 29.8%, respectively, of our net revenues. Avnet Logistics and our other
existing distributors may choose to devote greater resources to marketing and supporting the products of other
companies. Since we sell through multiple channels and distribution networks, we may have to resolve potential
conflicts between these channels. For example, these conflicts may result from the different discount levels offered
by multiple channel distributors to their customers or, potentially, from our direct sales force targeting the same
equipment manufacturer accounts as our indirect channel distributors. These conflicts may harm our business or
reputation.

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The average selling prices of our products are expected to decline, and if we are unable to offset these

declines, our operating results will suffer.

Historically, the average unit selling prices of our products have declined substantially over the lives of the
products, and we expect this trend to continue. A reduction in overall average selling prices of our products could
result in reduced revenues and lower gross margins. Our ability to increase our net revenues and maintain our gross
margins despite a decline in the average selling prices of our products will depend on a variety of factors, including
our ability to introduce lower cost versions of our existing products, increase unit sales volumes of these products,
and introduce new products with higher prices and greater margins. If we fail to accomplish any of these objectives,
our business will suffer. To reduce our costs, we may be required to implement design changes that lower our
manufacturing costs, negotiate reduced purchase prices from our independent foundries and our independent
assembly and test vendors, and successfully manage our manufacturing and subcontractor relationships. Because we
do not operate our own wafer foundry or assembly facilities, we may not be able to reduce our costs as rapidly as
companies that operate their own foundries or facilities.

We are substantially dependent on the continued services and performance of our senior management and

other key personnel.

Our future success is substantially dependent on the continued services and continuing contributions of our

senior management who must work together effectively in order to design our products, expand our business,
increase our revenues and improve our operating results. Members of our senior management team have long-
standing and important relationships with our key customers and suppliers. The loss of services, whether as a result
of illness, resignation, retirement or death, of Lee-Lean Shu, our President and Chief Executive Officer, Dr. Avidan
Akerib, our Vice President of Associative Computing, any other executive officer or other key employee could
significantly delay or prevent the achievement of our development and strategic objectives. We do not have
employment contracts with, nor maintain key person insurance on, any of our executive officers or other key
employees.

System security risks, data protection, cyber-attacks and systems integration issues could disrupt our

internal operations or the operations of our business partners, and any such disruption could harm our
reputation or cause a reduction in our expected revenue, increase our expenses, negatively impact our results of
operation or otherwise adversely affect our stock price.

Security breaches, computer malware and cyber-attacks have become more prevalent and sophisticated and
may increase in the future due to a number of our employees working from home and the potential for retaliatory
cyber-attacks as a result of the military conflict in Ukraine. Experienced computer programmers and hackers may be
able to penetrate our network security or the network security of our business partners, and misappropriate or
compromise our confidential and proprietary information, create system disruptions or cause shutdowns. The costs
to us to eliminate or alleviate cyber or other security problems, bugs, viruses, worms, malicious software programs
and security vulnerabilities could be significant, and our efforts to address these problems may not be successful and
could result in interruptions and delays that may impede our sales, manufacturing, distribution or other critical
functions.

We manage and store various proprietary information and sensitive or confidential data relating to our

business on the cloud. Breaches of our security measures or the accidental loss, inadvertent disclosure or
unapproved dissemination of proprietary information or confidential data about us, including the potential loss or
disclosure of such information or data as a result of fraud, trickery or other forms of deception, could expose us to a
risk of loss or misuse of this information, result in litigation and potential liability for us, damage our reputation or
otherwise harm our business. In addition, the cost and operational consequences of implementing further data
protection measures could be significant.

Portions of our IT infrastructure also may experience interruptions, delays or cessations of service or produce

errors in connection with systems integration or migration work that takes place from time to time. We may not be
successful in implementing new systems and transitioning data, which could cause business disruptions and be more
expensive, time consuming, disruptive and resource-intensive than originally anticipated. Such disruptions could
adversely impact our ability to attract and retain customers, fulfill orders and interrupt other processes and could
adversely affect our business, financial results, stock price and reputation.

We may be unable to accurately forecast future sales through our distributors, which could harm our

ability to efficiently manage our resources to match market demand.

Our financial results, quarterly product sales, trends and comparisons are affected by fluctuations in the
buying patterns of the OEMs that purchase our products from our distributors. While we attempt to assist our
distributors in maintaining targeted stocking levels of our products, we may not consistently be accurate or
successful. This process involves the exercise of judgment and use of assumptions as to future uncertainties,
including end user demand. Inventory levels of our products held by our distributors may exceed or fall below the
levels we consider desirable on a going-forward basis. This could result in distributors returning unsold inventory to
us, or in us not having sufficient inventory to meet the demand for our products. If we are not able to accurately
forecast sales through our distributors or effectively manage our relationships with our distributors, our business and
financial results will suffer.

A small number of customers generally account for a significant portion of our accounts receivable in any

period, and if any one of them fails to pay us, our financial position and operating results will suffer.

At March 31, 2023, three customers accounted for 36%, 25% and 19% of our accounts receivable,
respectively. If any of these customers do not pay us, our financial position and operating results will be harmed.
Generally, we do not require collateral from our customers.

Demand for our products may decrease if our OEM customers experience difficulty manufacturing,

marketing or selling their products.

Our products are used as components in our OEM customers’ products, including routers, switches and other
networking and telecommunications products. Accordingly, demand for our products is subject to factors affecting
the ability of our OEM customers to successfully introduce and market their products, including:

•

capital spending by telecommunication and network service providers and other end-users who purchase
our OEM customers’ products;

the competition our OEM customers face, particularly in the networking and telecommunications
industries;

the technical, manufacturing, sales and marketing and management capabilities of our OEM customers;

the financial and other resources of our OEM customers; and

the inability of our OEM customers to sell their products if they infringe third-party intellectual property
rights.

As a result, if OEM customers reduce their purchases of our products, our business will suffer.

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Our products have lengthy sales cycles that make it difficult to plan our expenses and forecast results.

Our products are generally incorporated in our OEM customers’ products at the design stage. However, their

decisions to use our products often require significant expenditures by us without any assurance of success, and
often precede volume sales, if any, by a year or more. If an OEM customer decides at the design stage not to
incorporate our products into their products, we will not have another opportunity for a design win with respect to
that customer’s product for many months or years, if at all. Our sales cycle can take up to 24 months to complete,
and because of this lengthy sales cycle, we may experience a delay between increasing expenses for research and
development and our sales and marketing efforts and the generation of volume production revenues, if any, from
these expenditures. Moreover, the value of any design win will largely depend on the commercial success of our
OEM customers’ products. There can be no assurance that we will continue to achieve design wins or that any
design win will result in future revenues.

We are developing a subscription business model for certain of our new APU products, which will take time
to implement and will be subject to execution risks. The sales cycle for subscription products is different from our
hardware sales business and we will need to implement strategies to manage customer retention, which may be more
volatile than the hardware sales to OEM customers. We anticipate that there will be quarterly fluctuations in the
revenue and expenses associated with this new license-based business as we optimize the sales process for our target
customers. Furthermore, because of the time it takes to build a meaningful subscription business, we expect to incur
significant expenses relating to the subscription business before generating revenue from that new business.

Our business could be negatively affected as a result of actions of activist stockholders or others.

We may be subject to actions or proposals from stockholders or others that may not align with our business
strategies or the interests of our other stockholders. Responding to such actions can be costly and time-consuming,
disrupt our business and operations, and divert the attention of our board of directors, management, and employees
from the pursuit of our business strategies. Such activities could interfere with our ability to execute our strategic
plan. Activist stockholders or others may create perceived uncertainties as to the future direction of our business or
strategy which may be exploited by our competitors and may make it more difficult to attract and retain qualified
personnel and potential customers, and may affect our relationships with current customers, vendors, investors, and
other third parties. In addition, a proxy contest for the election of directors at our annual meeting would require us to
incur significant legal fees and proxy solicitation expenses and require significant time and attention by management
and our board of directors. The perceived uncertainties as to our future direction also could affect the market price
and volatility of our securities.

Claims that we infringe third party intellectual property rights could seriously harm our business and

require us to incur significant costs.

There has been significant litigation in the semiconductor industry involving patents and other intellectual
property rights. We were previously involved in protracted patent infringement litigation, and we could become
subject to additional claims or litigation in the future as a result of allegations that we infringe others’ intellectual
property rights or that our use of intellectual property otherwise violates the law. Claims that our products infringe
the proprietary rights of others would force us to defend ourselves and possibly our customers, distributors or
manufacturers against the alleged infringement. Any such litigation regarding intellectual property could result in
substantial costs and diversion of resources and could have a material adverse effect on our business, financial
condition and results of operations. Similarly, changing our products or processes to avoid infringing the rights of
others may be costly or impractical. If any claims received in the future were to be upheld, the consequences to us
could require us to:

•

stop selling our products that incorporate the challenged intellectual property;

•

obtain a license to sell or use the relevant technology, which license may not be available on reasonable
terms or at all;

pay damages; or

redesign those products that use the disputed technology.

Although patent disputes in the semiconductor industry have often been settled through cross-licensing
arrangements, we may not be able in any or every instance to settle an alleged patent infringement claim through a
cross-licensing arrangement in part because we have a more limited patent portfolio than many of our competitors.
If a successful claim is made against us or any of our customers and a license is not made available to us on
commercially reasonable terms or we are required to pay substantial damages or awards, our business, financial
condition and results of operations would be materially adversely affected.

Our acquisition of companies or technologies could prove difficult to integrate, disrupt our business, dilute

stockholder value and adversely affect our operating results.

In November 2015, we acquired all of the outstanding capital stock of privately held MikaMonu Group Ltd.,
a development-stage, Israel-based company that specializes in in-place associative computing for markets including
big data, computer vision and cyber security. We also acquired substantially all of the assets related to the SRAM
memory device product line of Sony Corporation in 2009. We intend to supplement our internal development
activities by seeking opportunities to make additional acquisitions or investments in companies, assets or
technologies that we believe are complementary or strategic. Other than the MikaMonu and Sony acquisitions, we
have not made any such acquisitions or investments, and therefore our experience as an organization in making such
acquisitions and investments is limited. In connection with the MikaMonu acquisition, we are subject to risks related
to potential problems, delays or unanticipated costs that may be encountered in the development of products based
on the MikaMonu technology and the establishment of new markets and customer relationships for the potential new
products. In addition, in connection with any future acquisitions or investments we may make, we face numerous
other risks, including:

•

difficulties in integrating operations, technologies, products and personnel;

diversion of financial and managerial resources from existing operations;

risk of overpaying for or misjudging the strategic fit of an acquired company, asset or technology;

problems or liabilities stemming from defects of an acquired product or intellectual property litigation
that may result from offering the acquired product in our markets;

challenges in retaining key employees to maximize the value of the acquisition or investment;

inability to generate sufficient return on investment;

incurrence of significant one-time write-offs; and

delays in customer purchases due to uncertainty.

If we proceed with additional acquisitions or investments, we may be required to use a considerable amount

of our cash, or to finance the transaction through debt or equity securities offerings, which may decrease our
financial liquidity or dilute our stockholders and affect the market price of our stock. As a result, if we fail to
properly evaluate and execute acquisitions or investments, our business and prospects may be harmed.

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If we are unable to recruit or retain qualified personnel, our business and product development efforts

could be harmed.

We must continue to identify, recruit, hire, train, retain and motivate highly skilled technical, managerial,

sales and marketing and administrative personnel. Competition for these individuals is intense, and we may not be
able to successfully recruit, assimilate or retain sufficiently qualified personnel. We may encounter difficulties in
recruiting and retaining a sufficient number of qualified engineers, which could harm our ability to develop new
products and adversely impact our relationships with existing and future end-users at a critical stage of development.
The failure to recruit and retain necessary technical, managerial, sales, marketing and administrative personnel could
harm our business and our ability to obtain new OEM customers and develop new products.

Our business will suffer if we are unable to protect our intellectual property.

Our success and ability to compete depends in large part upon protecting our proprietary technology. We rely

on a combination of patent, trade secret, copyright and trademark laws and non-disclosure and other contractual
agreements to protect our proprietary rights. These agreements and measures may not be sufficient to protect our
technology from third-party infringement. Monitoring unauthorized use of our intellectual property is difficult and
we cannot be certain that the steps we have taken will prevent unauthorized use of our technology, particularly in
foreign countries where the laws may not protect our proprietary rights as fully as in the United States. Our attempts
to enforce our intellectual property rights could be time consuming and costly. In the past, we have been involved in
litigation to enforce our intellectual property rights and to protect our trade secrets. Additional litigation of this type
may be necessary in the future. Any such litigation could result in substantial costs and diversion of resources. If
competitors are able to use our technology without our approval or compensation, our ability to compete effectively
could be harmed.

Any significant order cancellations or order deferrals could adversely affect our operating results.

We typically sell products pursuant to purchase orders that customers can generally cancel or defer on short

notice without incurring a significant penalty. Any significant cancellations or deferrals in the future could
materially and adversely affect our business, financial condition and results of operations. Cancellations or deferrals
could cause us to hold excess inventory, which could reduce our profit margins, increase product obsolescence and
restrict our ability to fund our operations. We generally recognize revenue upon shipment of products to a customer.
If a customer refuses to accept shipped products or does not pay for these products, we could miss future revenue
projections or incur significant charges against our income, which could materially and adversely affect our
operating results.

If our business grows, such growth may place a significant strain on our management and operations and,

as a result, our business may suffer.

We are endeavoring to expand our business, and any growth that we are successful in achieving could place a
significant strain on our management systems, infrastructure and other resources. To manage the potential growth of
our operations and resulting increases in the number of our personnel, we will need to invest the necessary capital to
continue to improve our operational, financial and management controls and our reporting systems and procedures.
Our controls, systems and procedures may prove to be inadequate should we experience significant growth. In
addition, we may not have sufficient administrative staff to support our operations. For example, we currently have
only four employees in our finance department in the United States, including our Chief Financial Officer.
Furthermore, our officers have limited experience in managing large or rapidly growing businesses. If our
management fails to respond effectively to changes in our business, our business may suffer.

Risks Related to Manufacturing and Product Development

We may experience difficulties in transitioning to smaller geometry process technologies and other more

advanced manufacturing process technologies, which may result in reduced manufacturing yields, delays in
product deliveries and increased expenses.

In order to remain competitive, we expect to continue to transition the manufacture of our products to smaller

geometry process technologies. This transition will require us to migrate to new manufacturing processes for our
products and redesign certain products. The manufacture and design of our products is complex, and we may
experience difficulty in transitioning to smaller geometry process technologies or new manufacturing processes.
These difficulties could result in reduced manufacturing yields, delays in product deliveries and increased expenses.
We are dependent on our relationships with TSMC to transition successfully to smaller geometry process
technologies and to more advanced manufacturing processes. If we or TSMC experience significant delays in this
transition or fail to implement these transitions, our business, financial condition and results of operations could be
materially and adversely affected.

Manufacturing process technologies are subject to rapid change and require significant expenditures for

research and development.

We continuously evaluate the benefits of migrating to smaller geometry process technologies in order to
improve performance and reduce costs. Historically, these migrations to new manufacturing processes have resulted
in significant initial design and development costs associated with pre-production mask sets for the manufacture of
new products with smaller geometry process technologies. For example, in the second quarter of fiscal 2019, we
incurred approximately $1.0 million in research and development expense associated with a pre-production mask set
that will not be used in production as part of the transition to our new 28 nanometer SRAM process technology for
our APU product. We will incur similar expenses in the future as we continue to transition our products to smaller
geometry processes. The costs inherent in the transition to new manufacturing process technologies will adversely
affect our operating results and our gross margin.

Our products are complex to design and manufacture and could contain defects, which could reduce

revenues or result in claims against us.

We develop complex products. Despite testing by us and our OEM customers, design or manufacturing errors

may be found in existing or new products. These defects could result in a delay in recognition or loss of revenues,
loss of market share or failure to achieve market acceptance. These defects may also cause us to incur significant
warranty, support and repair costs, divert the attention of our engineering personnel from our product development
efforts, result in a loss of market acceptance of our products and harm our relationships with our OEM customers.
Our OEM customers could also seek and obtain damages from us for their losses. A product liability claim brought
against us, even if unsuccessful, would likely be time consuming and costly to defend. Defects in wafers and other
components used in our products and arising from the manufacturing of these products may not be fully recoverable
from TSMC or our other suppliers.

Risks Related to Our International Business and Operations

Changes in Taiwan’s political, social and economic environment may affect our business performance.

Because much of the manufacturing and testing of our products is conducted in Taiwan, our business

performance may be affected by changes in Taiwan’s political, social and economic environment. For example,
political instability or restrictions on transportation logistics for our products resulting from changes in the
relationship among the United States, Taiwan and the People’s Republic of China could negatively impact our
business. Any significant armed conflict related to this matter would be expected to materially and adversely

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damage our business. Moreover, the role of the Taiwanese government in the Taiwanese economy is significant.
Taiwanese policies toward economic liberalization, and laws and policies affecting technology companies, foreign
investment, currency exchange rates, taxes and other matters could change, resulting in greater restrictions on our
ability and our suppliers’ ability to do business and operate facilities in Taiwan. If any of these changes were to
occur, our business could be harmed and our stock price could decline.

Our international business exposes us to additional risks.

Products shipped to destinations outside of the United States accounted for 51.4%, 53.5% and 55.4% of our

net revenues in fiscal 2023, 2022 and 2021, respectively. Moreover, a substantial portion of our products is
manufactured and tested in Taiwan, and the software development for our associative computing products occurs in
Israel. We intend to continue expanding our international business in the future. Conducting business outside of the
United States subjects us to additional risks and challenges, including:

•

potential political and economic instability in, or armed conflicts that involve or affect, the countries in
which we, our customers and our suppliers are located;

uncertainties regarding taxes, tariffs, quotas, export controls and license requirements, trade wars,
policies that favor domestic companies over nondomestic companies, including government efforts to
provide for the development and growth of local competitors, and other trade barriers;

heightened price sensitivity from customers in emerging markets;

compliance with a wide variety of foreign laws and regulations and unexpected changes in these laws
and regulations;

fluctuations in freight rates and transportation disruptions;

difficulties and costs of staffing and managing personnel, distributors and representatives across different
geographic areas and cultures, including assuring compliance with the U. S. Foreign Corrupt Practices
Act and other U. S. and foreign anti-corruption laws;

difficulties in collecting accounts receivable and longer accounts receivable payment cycles; and

limited protection for intellectual property rights in some countries.

Moreover, our reporting currency is the U.S. dollar. However, a portion of our cost of revenues and our
operating expenses is denominated in currencies other than the U.S. dollar, primarily the New Taiwanese dollar and
Israeli Shekel. As a result, appreciation or depreciation of other currencies in relation to the U.S. dollar could result
in transaction gains or losses that could impact our operating results. We do not currently engage in currency
hedging activities to reduce the risk of financial exposure from fluctuations in foreign exchange rates.

TSMC, as well as our other independent suppliers and many of our OEM customers, have operations in

the Pacific Rim, an area subject to significant risk of earthquakes, typhoons and other natural disasters and
adverse consequences related to the outbreak of contagious diseases.

The foundry that manufactures our Fast SRAM and APU products, TSMC, and all of the principal
independent suppliers that assemble and test our products are located in Taiwan. Many of our customers are also
located in the Pacific Rim. The risk of an earthquake in these Pacific Rim locations is significant. The occurrence of
an earthquake, typhoon or other natural disaster near the fabrication facilities of TSMC or our other independent
suppliers could result in damage, power outages and other disruptions that impair their production and assembly
capacity. Any disruption resulting from such events could cause significant delays in the production or shipment of

our products until we are able to shift our manufacturing, assembling, packaging or production testing from the
affected contractor to another third-party vendor. In such an event, we may not be able to obtain alternate foundry
capacity on favorable terms, or at all.

The recent COVID-19 global pandemic, along with the previous outbreaks of SARS, H1N1 and the Avian

Flu, curtailed travel between and within countries, including in the Asia-Pacific region. Outbreaks of new
contagious diseases or the resurgence of existing diseases that significantly affect the Asia-Pacific region could
disrupt the operations of our key suppliers and manufacturing partners. In addition, our business could be harmed if
such an outbreak resulted in travel being restricted, the implementation of stay-at-home or shelter-in-place orders or
if it adversely affected the operations of our OEM customers or the demand for our products or our OEM customers’
products.

We do not maintain sufficient business interruption and other insurance policies to compensate us for all

losses that may occur. Any losses or damages incurred by us as a result of a catastrophic event or any other
significant uninsured loss in excess of our insurance policy limits could have a material adverse effect on our
business.

The United States could materially modify certain international trade agreements, or change tax

provisions related to the global manufacturing and sales of our products.

A portion of our business activities are conducted in foreign countries, including Taiwan and Israel. Our

business benefits from free trade agreements, and we also rely on various U.S. corporate tax provisions related to
international commerce as we develop, manufacture, market and sell our products globally. Any action to materially
modify international trade agreements, change corporate tax policy related to international commerce or mandate
domestic production of goods, could adversely affect our business, financial condition and results of operations.

Some of our products are incorporated into advanced military electronics, and changes in international

geopolitical circumstances and domestic budget considerations may hurt our business.

Some of our products are incorporated into advanced military electronics such as radar and guidance systems.

Military expenditures and appropriations for such purchases rose significantly in recent years. However, if current
U.S. military operations around the world are scaled back, demand for our products for use in military applications
may decrease, and our operating results could suffer. Domestic budget considerations may also adversely affect our
operating results. For example, if governmental appropriations for military purchases of electronic devices that
include our products are reduced, our revenues will likely decline.

Risks Relating to Our Common Stock and the Securities Market

The trading price of our common stock is subject to fluctuation and is likely to be volatile.

The trading price of our common stock may fluctuate significantly in response to a number of factors, some

of which are beyond our control, including:

•

the establishment of a market for our new associative computing products;

actual or anticipated declines in operating results;

changes in financial estimates or recommendations by securities analysts;

the institution of legal proceedings against us or significant developments in such proceedings;

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•

announcements by us or our competitors of financial results, new products, significant technological
innovations, contracts, acquisitions, strategic relationships, joint ventures, capital commitments or other
events;

changes in industry estimates of demand for Very Fast SRAM, RadHard and RadTolerant products;

the gain or loss of significant orders or customers;

recruitment or departure of key personnel; and

• market conditions in our industry, the industries of our customers and the economy as a whole.

In recent years, the stock market in general, and the market for technology stocks in particular, have
experienced extreme price fluctuations, which have often been unrelated to the operating performance of affected
companies. The market price of our common stock might experience significant fluctuations in the future, including
fluctuations unrelated to our performance. These fluctuations could materially adversely affect our business
relationships, our ability to obtain future financing on favorable terms or otherwise harm our business. In addition,
in the past, securities class action litigation has often been brought against a company following periods of volatility
in the market price of its securities. This risk is especially acute for us because the extreme volatility of market
prices of technology companies has resulted in a larger number of securities class action claims against them. Due to
the potential volatility of our stock price, we may in the future be the target of similar litigation. Securities litigation
could result in substantial costs and divert management’s attention and resources. This could harm our business and
cause the value of our stock to decline.

We may need to raise additional capital in the future, which may not be available on favorable terms or at

all, and which may cause dilution to existing stockholders.

We may need to seek additional funding in the future. We do not know if we will be able to obtain additional
financing on favorable terms, if at all. If we cannot raise funds on acceptable terms, if and when needed, we may not
be able to develop or enhance our products, take advantage of future opportunities or respond to competitive
pressures or unanticipated requirements, and we may be required to reduce operating costs, which could seriously
harm our business. In addition, if we issue equity securities, our stockholders may experience dilution or the new
equity securities may have rights, preferences or privileges senior to those of our common stock.

Our executive officers, directors and entities affiliated with them hold a substantial percentage of our

common stock.

As of May 31, 2023, our executive officers, directors and entities affiliated with them beneficially owned

approximately 32% of our outstanding common stock. As a result, these stockholders will be able to exercise
substantial influence over, and may be able to effectively control, matters requiring stockholder approval, including
the election of directors and approval of significant corporate transactions, which could have the effect of delaying
or preventing a third party from acquiring control over or merging with us.

The provisions of our charter documents might inhibit potential acquisition bids that a stockholder might

believe are desirable, and the market price of our common stock could be lower as a result.

Our Board of Directors has the authority to issue up to 5,000,000 shares of preferred stock. Our Board of

Directors can fix the price, rights, preferences, privileges and restrictions of the preferred stock without any further
vote or action by our stockholders. The issuance of shares of preferred stock might delay or prevent a change in
control transaction. As a result, the market price of our common stock and the voting and other rights of our
stockholders might be adversely affected. The issuance of preferred stock might result in the loss of voting control to

other stockholders. We have no current plans to issue any shares of preferred stock. Our charter documents also
contain other provisions, which might discourage, delay or prevent a merger or acquisition, including:

•

our stockholders have no right to act by written consent;

our stockholders have no right to call a special meeting of stockholders; and

our stockholders must comply with advance notice requirements to nominate directors or submit
proposals for consideration at stockholder meetings.

These provisions could also have the effect of discouraging others from making tender offers for our common

stock. As a result, these provisions might prevent the market price of our common stock from increasing
substantially in response to actual or rumored takeover attempts. These provisions might also prevent changes in our
management.

Use of a portion of our cash reserves to repurchase shares of our common stock presents potential risks

and disadvantages to us and our continuing stockholders.

Since November 2008, we have repurchased and retired an aggregate of 12,004,779 shares of our common

stock at a total cost of $60.7 million, including 3,846,153 shares repurchased at a total cost of $25 million pursuant
to a modified “Dutch auction” self-tender offer that we completed in August 2014 and additional shares repurchased
in the open market pursuant to our stock repurchase program. At March 31, 2023, we had outstanding authorization
from our Board of Directors to purchase up to an additional $4.3 million of our common stock from time to time
under our repurchase program. Although our Board has determined that these repurchases are in the best interests of
our stockholders, they expose us to certain risks including:

•

the risks resulting from a reduction in the size of our “public float,” which is the number of shares of our
common stock that are owned by non-affiliated stockholders and available for trading in the securities
markets, which may reduce the volume of trading in our shares and result in reduced liquidity and,
potentially, lower trading prices;

the risk that our stock price could decline and that we would be able to repurchase shares of our common
stock in the future at a lower price per share than the prices we have paid in our tender offer and
repurchase program; and

the risk that the use of a portion of our cash reserves for this purpose has reduced, or may reduce, the
amount of cash that would otherwise be available to pursue potential cash acquisitions or other strategic
business opportunities.

Item 1B. Unresolved Staff Comments

None.

Item 2. Properties

Our executive offices, our principal administration, marketing and sales operations and a portion of our
research and development operations are located in a 44,277 square foot facility in Sunnyvale, California, which we
purchased in fiscal 2010. In addition, we occupy approximately 25,250 square feet in a facility located in Hsin Chu,
Taiwan under a lease expiring in August 2023. This facility supports our manufacturing activities. We believe that
both our Sunnyvale and Taiwan facilities are adequate for our needs for the foreseeable future. We also lease space
in the United States in the states of Georgia and Texas and in Israel. The aggregate annual gross rent for our leased
facilities was approximately $764,000 in fiscal 2023.

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Item 3. Legal Proceedings

None.

Item 4. Mine Safety Disclosures

Not applicable.

PART II

Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity
Securities

Market Information, Holders of Common Stock and Dividends

Our common stock is traded on the Nasdaq Global Market under the symbol “GSIT”.

On May 31, 2023, there were approximately 21 holders of record of our common stock. Because many of

such shares are held by brokers and other institutions on behalf of stockholders, we are unable to estimate the total
number of beneficial holders of our common stock represented by these record holders.

We have never declared or paid cash dividends on our common stock, and we do not anticipate declaring or

paying any cash dividends in the foreseeable future.

Issuer Purchases of Equity Securities

Our Board of Directors has authorized us to repurchase, at management’s discretion, shares of our common

stock. Under the repurchase program, we may repurchase shares from time to time on the open market or in private
transactions. The specific timing and amount of the repurchases will be dependent on market conditions, securities
law limitations and other factors. The repurchase program may be suspended or terminated at any time without prior
notice. During the quarter ended March 31, 2023, we did not repurchase any of our shares under the repurchase
program.

Item 6. Reserved

Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations

The following discussion contains forward-looking statements that involve risks and uncertainties. Our actual

results could differ substantially from those anticipated in these forward-looking statements as a result of many
factors, including those set forth under “Risk Factors” and elsewhere in this report. The following discussion
should be read together with our consolidated financial statements and the related notes included elsewhere in this
report.

This discussion and analysis generally covers our financial condition and results of operations for the fiscal

year ended March 31, 2023, including year-over-year comparisons versus the fiscal year ended March 31, 2022.
Our Annual Report on Form 10-K for the fiscal year ended March 31, 2022 includes year-over-year comparisons
versus the fiscal year ended March 31, 2021 in Item 7 of Part II, “Management’s Discussion and Analysis of
Financial Condition and Results of Operations.”

Overview

We are a leading provider of high-performance semiconductor memory solutions for in-place associative
computing applications in high growth markets such as artificial intelligence and high-performance computing,
including natural language processing and computer vision. Our initial associative processing unit (“APU”) products
are focused on applications using similarity search, but have not resulted in material revenues to date. Similarity
search is used in visual search queries for ecommerce, computer vision, drug discovery, cyber security and service
markets such as NoSQL, Elasticsearch, and OpenSearch. We also design, develop and market static random access
memories, or SRAMs, that operate at speeds of less than 10 nanoseconds, which we refer to as Very Fast SRAMs,
primarily for the networking and telecommunications and the military/defense and aerospace markets. We are
subject to the highly cyclical nature of the semiconductor industry, which has experienced significant fluctuations,
often in connection with fluctuations in demand for the products in which semiconductor devices are used. Our
revenues have been substantially impacted by significant fluctuations in sales to our largest customer, Nokia. We
expect that future direct and indirect sales to Nokia will continue to fluctuate significantly on a quarterly basis. The
networking and telecommunications market has accounted for a significant portion of our net revenues in the past
and has declined during the past several years and is expected to continue to decline. In anticipation of the decline
of the networking and telecommunications market, we have been using the revenue generated by the sales of high-
speed synchronous SRAM products to finance the development of our new in-place associative computing solutions
and the marketing and sale of new types of SRAM products such as radiation-hardened and radiation-tolerant
SRAMs. However, with no debt and substantial liquidity, we believe we are in a better financial position than many
other companies of our size.

Our revenues in recent years have been impacted by changes in customer buying patterns and communication

limitations related to COVID-19 restrictions that required a significant number of our customer contacts to work
from home. Our results for the fiscal years ended March 31, 2021 and 2022 demonstrated the challenges that we
have faced during the COVID-19 global pandemic, which restricted the activities of our sales force and distributors,
reduced customer demand and caused the postponement of investment in certain customer sectors. These challenges
impacted us as we entered new markets and engaged with target customers to sell our new APU product. Industry
conferences and on-site training workshops, which are typically used for building a sales pipeline, were limited due
to COVID-19 related restrictions. We adapted our sales strategies for the COVID-19 environment, where we could
not have face-to-face meetings and conduct secure meetings with government and defense customers. While the
COVID-19 pandemic has ended, the significant fluctuations in energy prices, worldwide inflationary pressures,
rising interest rates and decline in the global economic environment have had, and may continue to have, an adverse
impact on our business and financial condition. Furthermore, the easing of supply chain shortages and prior buffer
stock purchases from significant customers have led to a decrease in fiscal 2023 revenues.

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As of March 31, 2023, we had cash, cash equivalents and short-term investments of $30.6 million, with no

debt. We have a team in-place with tremendous depth and breadth of experience and knowledge, with a legacy
business that is providing an ongoing source of funding for the development of new product lines. We have a strong
balance sheet and liquidity position that we anticipate will provide financial flexibility and security in the current
environment of economic uncertainty. Generally, our primary source of liquidity is cash equivalents and short-term
investments. Our level of cash equivalents and short-term investments has historically been sufficient to meet our
current and longer term operating and capital needs. We believe that during the next 12 months, continued
inflationary pressures and rising interest rates will continue to negatively impact general economic activity and
demand in our end markets. Although it is difficult to estimate the length or gravity of the continued inflationary
pressures and rising interest rates, the impact of recent bank failures, significant fluctuations in energy prices and the
decline in the global economic environment, are expected to have an adverse effect on our results of operations,
financial position, including potential impairments, and liquidity in fiscal 2024.

In November 2022, we announced measures taken to reduce our operating expenses by approximately
$7.0 million on an annualized basis, primarily from salary reductions related to reduced headcount and salary
decreases for certain retained employees, as well as targeted reductions in research and development spending.
These strategic cost reduction measures are expected to enable us to better focus on our operational resources on
advancing our proprietary APU technology. None of the Gemini-II chip development and core APU software
development, including the APU compiler, will be affected by the reduction in research and development spending.
The APU marketing, sales, and APU engineering efforts will retain priority in the budget. The spending reductions
are not expected to impact the launch of Gemini-I in target markets, including SAR, search, and SaaS. The cost
reduction initiative is expected to be completed by September 30, 2023 and will result in an approximate
15% decrease in our global workforce. In total, we expect to incur approximately $917,000 in cash expenditures for
termination costs, including the payout of accrued vacation, of which $490,000 was incurred in fiscal 2023.

Revenues. Substantially all of our revenues are derived from sales of our Very Fast SRAM products. Sales to

networking and telecommunications OEMs accounted for 32% to 53% of our net revenues during our last three
fiscal years. We also sell our products to OEMs that manufacture products for military and aerospace applications
such as radar and guidance systems and satellites, for test and measurement applications such as high-speed testers,
for automotive applications such as smart cruise control, and for medical applications such as ultrasound and CAT
scan equipment.

As is typical in the semiconductor industry, the selling prices of our products generally decline over the life of

the product. Our ability to increase net revenues, therefore, is dependent upon our ability to increase unit sales
volumes of existing products and to introduce and sell new products with higher average selling prices in quantities
sufficient to compensate for the anticipated declines in selling prices of our more mature products. Although we
expect the average selling prices of individual products to decline over time, we believe that, over the next several
quarters, our overall average selling prices will increase due to a continuing shift in product mix to a higher
percentage of higher price, higher density products, and to a lesser extent, recent price increases to our customers
due to supply constraints. Our ability to increase unit sales volumes is dependent primarily upon increases in
customer demand but, particularly in periods of increasing demand, can also be affected by our ability to increase
production through the availability of increased wafer fabrication capacity from TSMC, our wafer supplier, and our
ability to increase the number of good integrated circuit die produced from each wafer through die size reductions
and yield enhancement activities.

We may experience fluctuations in quarterly net revenues for a number of reasons. Historically, orders on

hand at the beginning of each quarter are insufficient to meet our revenue objectives for that quarter and are
generally cancelable up to 30 days prior to scheduled delivery. Accordingly, we depend on obtaining and shipping
orders in the same quarter to achieve our revenue objectives. In addition, the timing of product releases, purchase

orders and product availability could result in significant product shipments at the end of a quarter. Failure to ship
these products by the end of the quarter may adversely affect our operating results. Furthermore, our customers may
delay scheduled delivery dates and/or cancel orders within specified timeframes without significant penalty.

We sell our products through our direct sales force, international and domestic sales representatives and

distributors. Our revenues have been and are expected to continue to be impacted by changes in customer buying
patterns and communication limitations related to changes in working habits that have resulted in a significant
number of our customer contacts working from home. Our customer contracts, which may be in the form of
purchase orders, contracts or purchase agreements, contain performance obligations for delivery of agreed upon
products. Delivery of all performance obligations contained within a contract with a customer typically occurs at
the same time (or within the same accounting period). Transfer of control occurs at the time of shipment or at the
time the product is pulled from consignment as that is the point at which delivery has occurred, title and the risks
and rewards of ownership have passed to the customer, and we have a right to payment. Thus, we will recognize
revenue upon shipment of the product for direct sales and sales to our distributors. Sales to consignment warehouses,
who purchase products from us for use by contract manufacturers, are recorded upon delivery to the contract
manufacturer.

Historically, a small number of OEM customers have accounted for a substantial portion of our net revenues,

and we expect that significant customer concentration will continue for the foreseeable future. Many of our
OEMs use contract manufacturers to manufacture their equipment. Accordingly, a significant percentage of our net
revenues is derived from sales to these contract manufacturers and to consignment warehouses. In addition, a
significant portion of our sales are made to foreign and domestic distributors who resell our products to OEMs, as
well as their contract manufacturers. Direct sales to contract manufacturers and consignment warehouses accounted
for 19.8%, 31.0% and 43.7% of our net revenues for fiscal 2023, 2022 and 2021, respectively. Sales to foreign and
domestic distributors accounted for 77.5%, 66.8% and 54.7% of our net revenues for fiscal 2023, 2022 and 2021,
respectively. The following direct customers accounted for 10% or more of our net revenues in one or more of the
following periods:

Fiscal Year Ended
March 31,
2022 2021

2023

Contract manufacturers and consignment warehouses:

10.4 % 16.0 % 21.1 %
11.2
8.8

21.5

Distributors:

48.1
16.6

38.0
17.2

29.8
14.7

Nokia was our largest customer in fiscal 2023, 2022 and 2021. Nokia purchases products directly from us

and through contract manufacturers and distributors. Based on information provided to us by its contract
manufacturers and our distributors, purchases by Nokia represented approximately 17%, 29% and 39% of our net
revenues in fiscal 2023, 2022 and 2021, respectively. Our revenues have been substantially impacted by significant
fluctuations in sales to Nokia, and we expect that future direct and indirect sales to Nokia will continue to fluctuate
substantially on a quarterly basis and that such fluctuations may significantly affect our operating results in future
periods. To our knowledge, none of our other OEM customers accounted for more than 10% of our net revenues in
fiscal 2023, 2022 or 2021.

Cost of Revenues. Our cost of revenues consists primarily of wafer fabrication costs, wafer sort, assembly,

test and burn-in expenses, the amortized cost of production mask sets, stock-based compensation and the cost of
materials and overhead from operations. All of our wafer manufacturing and assembly operations, and a significant

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portion of our wafer sort testing operations, are outsourced. Accordingly, most of our cost of revenues consists of
payments to TSMC and independent assembly and test houses. Because we do not have long-term, fixed-price
supply contracts, our wafer fabrication, assembly and other outsourced manufacturing costs are subject to the
cyclical fluctuations in demand for semiconductors. We have experienced increased costs as a result of supply chain
constraints for wafers and outsourced assembly, burn-in and test operations. We expect these increased
manufacturing costs will continue into fiscal 2024. Cost of revenues also includes expenses related to supply chain
management, quality assurance, and final product testing and documentation control activities conducted at our
headquarters in Sunnyvale, California and our branch operations in Taiwan.

Gross Profit. Our gross profit margins vary among our products and are generally greater on our radiation
hardened and radiation tolerant SRAMs, on our higher density products and, within a particular density, greater on
our higher speed and industrial temperature products. We expect that our overall gross margins will fluctuate from
period to period as a result of shifts in product mix, changes in average selling prices and our ability to control our
cost of revenues, including costs associated with outsourced wafer fabrication and product assembly and testing.

Research and Development Expenses. Research and development expenses consist primarily of salaries and

related expenses for design engineers and other technical personnel, the cost of developing prototypes, stock-based
compensation and fees paid to consultants. We charge all research and development expenses to operations as
incurred. We charge mask costs used in production to cost of revenues over a 12-month period. However, we charge
costs related to pre-production mask sets, which are not used in production, to research and development expenses at
the time they are incurred. These charges often arise as we transition to new process technologies and, accordingly,
can cause research and development expenses to fluctuate on a quarterly basis. We believe that continued
investment in research and development is critical to our long-term success, and we expect to continue to devote
significant resources to product development activities. In particular, we are devoting substantial resources to the
development of a new category of in-place associative computing products. Accordingly, we expect that our
research and development expenses will continue to be substantial in future periods and may lead to operating losses
in some periods. Such expenses as a percentage of net revenues may fluctuate from period to period.

Selling, General and Administrative Expenses. Selling, general and administrative expenses consist
primarily of commissions paid to independent sales representatives, salaries, stock-based compensation and related
expenses for personnel engaged in sales, marketing, administrative, finance and human resources activities,
professional fees, costs associated with the promotion of our products and other corporate expenses. We expect that
our sales and marketing expenses will increase in absolute dollars in future periods if we are able to grow and
expand our sales force but that, to the extent our revenues increase in future periods, these expenses will generally
decline as a percentage of net revenues. We also expect that, in support of any future growth that we are able to
achieve, general and administrative expenses will generally increase in absolute dollars.

Acquisition

On November 23, 2015, we acquired all of the outstanding capital stock of privately held MikaMonu Group
Ltd. (“MikaMonu”), a development-stage, Israel-based company that specialized in in-place associative computing
for markets including big data, computer vision and cyber security. MikaMonu, located in Tel Aviv, held 12 United
States patents and had a number of pending patent applications.

The acquisition was undertaken in order to gain access to the MikaMonu patents and the potential markets,

and new customer base in those markets, that can be served by new products that we are developing using the in-
place associative computing technology.

The acquisition has been accounted for as a purchase under authoritative guidance for business

combinations. The purchase price of the acquisition was allocated to the intangible assets acquired, with the excess

of the purchase price over the fair value of assets acquired recorded as goodwill. We perform a goodwill impairment
test near the end of each fiscal year and if certain events or circumstances indicate that an impairment loss may have
been incurred, on an interim basis.

Under the terms of the acquisition agreement, we paid the former MikaMonu shareholders initial cash
consideration of approximately $4.9 million, and cash retention payments totaling $2.5 million in 2017, 2018 and
2019 to the former MikaMonu shareholders, that were conditioned on the continued employment of Dr. Avidan
Akerib, MikaMonu’s co-founder and chief technologist.

We will also make “earnout” payments to the former MikaMonu shareholders in cash or shares of our

common stock, at our discretion, during a period of up to ten years following the closing if certain product
development milestones and revenue targets for products based on the MikaMonu technology are achieved. Earnout
amounts of $750,000 were paid in the fiscal year ended March 31, 2019 based on the achievement of certain product
development milestones. Earnout payments, up to a maximum of $30.0 million, equal to 5% of net revenues from
the sale of qualifying products in excess of certain thresholds, will be made quarterly through December 31, 2025.

The portion of the retention payment made to Dr. Akerib (approximately $1.2 million) was recorded as

compensation expense over the period that his services were provided to us. The portion of the retention payment
made to the other former MikaMonu shareholders (approximately $1.3 million) plus the maximum amount of the
potential earnout payments totals approximately $30.0 million at March 31, 2023. We determined that the fair value
of this contingent consideration liability was $5.8 million at the acquisition date. The contingent consideration
liability is included in contingent consideration, non-current on the Consolidated Balance Sheet at March 31, 2022
and 2023 in the amount of $2.7 million and $1.1 million, respectively.

At each reporting period, the contingent consideration liability will be re-measured at then current fair value

with changes recorded in the Consolidated Statements of Operations. Changes in any of the inputs may result in
significant adjustments to the recorded fair value. Re-measurement of the contingent consideration liability during
the fiscal year ended March 31, 2023 resulted in a decrease of the contingent consideration liability of $1.9 million.

The allocation of the purchase price to acquired identifiable intangible assets and goodwill was based on their

estimated fair values at the date of acquisition. The fair value allocated to patents was $3.5 million and the residual
value allocated to goodwill was $8.0 million.

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Results of Operations

The following table sets forth statement of operations data as a percentage of net revenues for the periods

indicated:

Net revenues . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Cost of revenues. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Gross profit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Operating expenses:

Research and development . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Selling, general and administrative . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total operating expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Loss from operations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Interest and other income (expense), net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Loss before income taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Provision (benefit) for income taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Net loss . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Year Ended March 31,
2022
2023

100.0 %
40.4
59.6

100.0 %
44.5
55.5

79.3
33.5
112.8
(53.2)
0.7
(52.5)
1.3
(53.8)

73.9
30.6
104.5
(49.0)
(0.2)
(49.2)
(0.2)
(49.0)

Fiscal Year Ended March 31, 2023 Compared to Fiscal Year Ended March 31, 2022

Net Revenues. Net revenues decreased by 11.1% from $33.4 million in fiscal 2022 to $29.7 million in fiscal
2023. The overall average selling price of all units shipped in fiscal 2023 increased by 2.1% in fiscal 2023 compared
to the prior fiscal year. The decrease in net revenues in fiscal 2023 compared to fiscal 2022 is related to the decline
in the global economic environment during the period. Units shipped decreased by 13.7% in fiscal 2023 compared to
fiscal 2022. The networking and telecommunications markets represented 32% and 49% of shipments in fiscal 2023
and in fiscal 2022, respectively. Direct and indirect sales to Nokia, currently our largest customer, decreased by
$4.6 million from $9.6 million in fiscal 2022 to $5.0 million fiscal 2023 due to buffer stock purchases in fiscal 2022
which did not recur in fiscal 2023 as supply shortages eased. Shipments to Nokia will continue to fluctuate as a
result of demand and shipments to its end customers. Shipments of our SigmaQuad product line accounted for
49.1% of total shipments in fiscal 2023 compared to 51.2% of total shipments in fiscal 2022. While recent customer
order patterns have been particularly variable, these fluctuations are related to economic and external factors, which
include the rapid rise in energy prices, worldwide inflationary pressures, rising interest rates and the decline in the
global economic environment.

Cost of Revenues. Cost of revenues decreased by 19.1% from $14.8 million in fiscal 2022 to $12.0 million
in fiscal 2023. Cost of revenues decreased as a result of the lower volume of units shipped in fiscal 2023 compared
to fiscal 2022 as discussed above. Cost of revenues included a provision for excess and obsolete inventories of
$226,000 in fiscal 2023 compared to $402,000 in fiscal 2022. Cost of revenues included stock-based compensation
expense of $202,000 and $248,000, respectively, in fiscal 2023 and fiscal 2022.

Gross Profit. Gross profit decreased by 4.6% from $18.5 million in fiscal 2022 to $17.7 million in fiscal

2023. Gross margin increased from 55.5% in fiscal 2022 to 59.6% in fiscal 2023. The change in gross profit is
primarily related to the change in net revenues discussed above. The increase in gross margin was primarily related
to changes in the mix of products and customers and, to a lesser extent, a 20% price increase effective in
December 2021 for the majority of our products.

Research and Development Expenses. Research and development expenses decreased 4.5% from

$24.7 million in fiscal 2022 to $23.6 million in fiscal 2023. The reduction in research and development spending in fiscal

2023 reflects the impact of cost reduction measures implemented in the quarter ended December 31, 2022. The
decrease in research and development spending was primarily related to decreases of $1.7 million in payroll related
expenses and $360,000 in stock-based compensation expense, partially offset by increases of $436,000 in outside
consulting expenses and $253,000 in software maintenance expense. Research and development expenses included
stock-based compensation expense of $1.3 million and $1.7 million in fiscal 2023 and fiscal 2022, respectively.

Selling, General and Administrative Expenses. Selling, general and administrative expenses increased 1.4%

from $10.2 million in fiscal 2022 to $10.4 million in fiscal 2023. In fiscal 2023, the value of contingent
consideration liability resulting from the MikaMonu acquisition decreased by $1.5 million compared to a decrease
of $1.6 million in fiscal 2022 as a result of re-measurement of contingent consideration liability in each year. The
increase in selling, general and administrative expenses included increases of $348,000 in professional fees and
$121,000 in facility related expenses, partially offset by decreases of $423,000 in payroll related expenses and
$118,000 in stock-based compensation expense. Payroll related expenses included approximately $200,000 for
severance payments made to terminated employees as a result of our cost cutting measures discussed above. Selling,
general and administrative expenses included stock-based compensation expense of $951,000 and $1.1 million,
respectively, in fiscal 2023 and fiscal 2022.

Interest and Other Income (Expense), Net. Interest and other income (expense), net increased from an
expense of $60,000 in fiscal 2022 to income of $202,000 in fiscal 2023. Interest income increased by $252,000 due
to higher interest rates received on cash and short-term and long-term investments, partially offset by lower levels of
short-term and long-term investments. The foreign currency exchange loss decreased from ($131,000) in fiscal
2022 to ($121,000) in fiscal 2023. The exchange loss in each period was primarily related to our Taiwan branch
operations and operations in Israel.

Provision (benefit) for Income Taxes. The provision for income taxes increased from a benefit from income

taxes of ($45,000) in fiscal 2022 to a provision of $372,000 in fiscal 2023. The benefit for income taxes in fiscal
2022 included a benefit of ($220,000) related to the approval by the Israel tax authorities of a “Preferred Company”
tax rate that was retroactively applied to fiscal 2018 and subsequent fiscal years. Because we recorded a cumulative
three-year loss on a U.S. tax basis for the year ended March 31, 2023 and the realization of our deferred tax assets is
questionable, we recorded a tax provision reflecting a valuation allowance of $17.5 million in net deferred tax assets
in fiscal 2023. Reductions in uncertain tax benefits due to lapses in the statute of limitations were not significant in
the years ended March 31, 2023 and 2022.

Net Loss. Net loss was ($16.4) million in fiscal 2022 compared to a net loss of ($16.0) million in fiscal
2023. This decrease was primarily due to the changes in net revenues, gross profit and operating expenses discussed
above.

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Liquidity and Capital Resources

As of March 31, 2023, our principal sources of liquidity were cash, cash equivalents and short-term
investments of $30.6 million compared to $44.0 million as of March 31, 2022. Cash, cash equivalents and short-
term investments totaling $21.4 million were held in foreign locations as of March 31, 2023. Net cash used in
operating activities was $16.8 million and $13.8 million for fiscal 2023 and fiscal 2022, respectively.

The primary uses of cash in fiscal 2023 were the net loss of $16.0 million, a reduction in accrued expenses

and other liabilities of $2.3 million and an increase in inventories of $2.0 million. The reduction in accrued expenses
and other liabilities was primarily related to the payment of fiscal 2022 year-end accruals for incentive
compensation. The uses of cash in fiscal 2023 were less than the net loss due to non-cash items including stock-
based compensation of $2.5 million and depreciation and amortization expenses of $1.0 million. The primary source
of cash in fiscal 2023 was a decrease in accounts receivable of $1.1 million. The primary uses of cash in fiscal 2022
were the net loss of $16.4 million and increases in accounts receivable, inventory and accrued expenses and other
liabilities. The uses of cash in fiscal 2022 were less than the net loss due to non-cash items including stock-based
compensation of $3.0 million and depreciation and amortization expenses of $1.0 million.

Net cash provided by investing activities was $6.7 million and $4.2 million in fiscal 2023 and 2022,
respectively. Investment activities in fiscal 2023 primarily consisted of the maturity of certificates of deposit and
agency bonds of $7.0 million partially offset by the purchase of property and equipment of $316,000. Investment
activities in fiscal 2022 primarily consisted of the maturity of certificates of deposit and agency bonds of
$12.1 million partially offset by the purchase of certificates of deposit of $7.2 million.

Cash provided by financing activities was $402,000 and $2.4 million in fiscal 2023 and fiscal 2022,

respectively and consisted of the net proceeds from the sale of common stock pursuant to our employee stock plans.

At March 31, 2023, we had total minimum lease obligations of approximately $686,000 from April 1, 2023

through February 29, 2024, under non-cancelable operating leases for our facilities.

While the disruptions in the capital markets as a result of rising interest rates, worldwide inflationary
pressures, significant fluctuations in energy prices and the decline in the global economic environment have created
significant uncertainty as to general economic and capital market conditions for the remainder of 2023 and beyond,
we believe that our existing balances of cash, cash equivalents and short-term investments, and cash flow expected
to be generated from our future operations, will be sufficient to meet our cash needs for working capital and capital
expenditures for at least the next 12 months, although we could be required, or could elect, to seek additional
funding prior to that time. Our future capital requirements will depend on many factors, including the rate of
revenue growth, if any, that we experience, any additional manufacturing cost increases resulting from supply
constraints, the extent to which we utilize subcontractors, the levels of inventory and accounts receivable that we
maintain, the timing and extent of spending to support our product development efforts and the expansion of our
sales and marketing efforts. A material decline in the global economic environment could result in a need to raise
additional capital or incur additional indebtedness to fund strategic initiatives or operating activities, particularly if
we pursue additional acquisitions of businesses, products or technologies. We cannot assure you that additional
equity or debt financing, if required, will be available on terms that are acceptable or at all.

As of March 31, 2023, we had $1.7 million in purchase obligations for facility leases and software and test

purchase obligations that are binding commitments, of which $1.3 million are payable in the next twelve months and
$416,000 are committed in the long term.

As of March 31, 2023, the current portion of our unrecognized tax benefits was $0, and the long-term portion

was $0.

In connection with the acquisition of MikaMonu on November 23, 2015, we are required to make contingent
consideration payments to the former MikaMonu shareholders conditioned upon the achievement of certain revenue
targets for products based on the MikaMonu technology. As of March 31, 2023, the accrual for potential payment of
contingent consideration was $1.1 million.

Critical Accounting Policies and Estimates

The preparation of our consolidated financial statements and related disclosures in conformity with
accounting principles generally accepted in the United States (“GAAP”) requires us to make estimates and
assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and
liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the
reporting period. Significant estimates are inherent in the preparation of the consolidated financial statements and
include estimates affecting obsolete and excess inventory, contingent consideration and the valuation of intangibles
and goodwill. We believe that we consistently apply these judgments and estimates and that our financial statements
and accompanying notes fairly represent our financial results for all periods presented. However, any errors in these
judgments and estimates may have a material impact on our balance sheet and statement of operations. Critical
accounting estimates, as defined by the Securities and Exchange Commission, are those that are most important to
the portrayal of our financial condition and results of operations and require our most difficult and subjective
judgments and estimates of matters that are inherently uncertain. Our critical accounting estimates include those
regarding the valuation of inventories, contingent consideration and the valuation of intangibles and goodwill.

Revenue Recognition. Revenue is recognized upon transfer of control which occurs at the point at which

delivery has occurred, title and the risks and rewards of ownership have passed to the customer, and the Company
has a right to payment. For all transactions apart from consignment sales, the Company will recognize revenue upon
shipment of the product. For consignment sales, revenue is recognized at the time that the product is pulled from
consignment warehouses.

There was no revenue in fiscal 2023 resulting from sales of SaaS applications. See the policy in Note 2 –

Revenue Recognition.

Valuation of Inventories. Inventories are stated at the lower of cost or net realizable value, cost being
determined on a weighted average basis. Our inventory write-down allowance is established when conditions
indicate that the selling price of our products could be less than cost due to physical deterioration, obsolescence
based on changes in technology and demand, changes in price levels, or other causes. We consider the need to
establish the allowance for excess inventory generally based on inventory levels in excess of 12 months of
forecasted customer demand for each specific product, which is based on historical sales and expected future orders.
At any point in time, some portion of our inventory is subject to the risk of being materially in excess of our
projected demand. Additionally, our average selling prices could decline due to market or other conditions, which
creates a risk that costs of manufacturing our inventory may not be recovered. These factors contribute to the risk
that we may be required to record additional inventory write-downs in the future, which could be material. In
addition, if actual market conditions are more favorable than expected, inventory previously written down may be
sold to customers resulting in lower cost of sales and higher income from operations than expected in that period.

Accounting for Income Taxes. We account for income taxes under the liability method, whereby deferred

tax assets and liabilities are determined based on the difference between the financial statement and tax bases of
assets and liabilities using enacted tax rates in effect for the year in which the differences are expected to affect
taxable income. We make certain estimates and judgments in the calculation of tax liabilities and the determination
of deferred tax assets, which arise from temporary differences between tax and financial statement recognition
methods. We record a valuation allowance to reduce our deferred tax assets to the amount that management
estimates is more likely than not

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to be realized. Due to historical losses in the U.S., we have a full valuation allowance on our U.S. federal and state
deferred tax assets. If, in the future we determine that we are likely to realize all or part of our net deferred tax
assets, an adjustment to deferred tax assets would be added to earnings in the period such determination is made.

In addition, the calculation of tax liabilities involves inherent uncertainty in the application of complex tax
laws. We record tax reserves for additional taxes that we estimate we may be required to pay as a result of future
potential examinations by federal and state taxing authorities. If the payment ultimately proves to be unnecessary,
the reversal of these tax reserves would result in tax benefits being recognized in the period we determine such
reserves are no longer necessary. If an ultimate tax assessment exceeds our estimate of tax liabilities, an additional
charge to provision for income taxes will result. See the policy in Note 6 – Income Taxes.

Stock-Based Compensation Expense. Stock-based compensation expense recognized in the statement of
operations is based on options ultimately expected to vest, reduced by the amount of estimated forfeitures. We chose
the straight-line method of allocating compensation cost over the requisite service period of the related award in
accordance with the authoritative guidance. We calculated the expected term based on the historical average period
of time that options were outstanding as adjusted for expected changes in future exercise patterns, which, for options
granted in fiscal 2023, 2022 and 2021, resulted in an expected term of approximately 4.6 to 5.0 years, 5.0 years and
5.0 years, respectively. We used our historical volatility to estimate expected volatility in fiscal 2023, 2022 and
2021. The risk-free interest rate is based on the U.S. Treasury yields in effect at the time of grant for periods
corresponding to the expected life of the options. The dividend yield is 0% based on the fact that we have never paid
dividends and have no present intention to pay dividends. Determining some of these assumptions requires
significant judgment and changes to these assumptions could result in a significant change to the calculation of
stock-based compensation in future periods. See Accounting for stock-based compensation in Note 1.

Contingent Consideration. The fair value of the contingent consideration liability potentially payable in
connection with our acquisition of MikaMonu was initially determined as of the acquisition date using unobservable
inputs. These inputs included the estimated amount and timing of future cash flows, the probability of achievement
of the forecast, and a risk-adjusted discount rate to adjust the probability-weighted cash flows to their present value.
Since the acquisition date, at each reporting period, the contingent consideration liability is re-measured at its then
current fair value with changes recorded selling, general and administrative expenses in the Consolidated Statements
of Operations. Due to revisions to the amount of expected revenue, the timing of revenue to be recognized prior to
the end of the earnout period and the probability of achievement of the APU revenue forecast, the contingent
consideration liability decreased by $1.7 million from March 31, 2022 to March 31, 2023. Future changes to any of
the inputs, including forecasted revenues from a new product, which are inherently difficult to estimate, or the
valuation model selected, may result in material adjustments to the recorded fair value.

Valuation of Goodwill and Intangibles. Goodwill represents the difference between the purchase price and

the estimated fair value of the identifiable assets acquired and liabilities assumed in a business combination. We test
for goodwill impairment on an annual basis, or more frequently if events or changes in circumstances indicate that
the asset is more likely than not impaired. We have one reporting unit. We assess goodwill for impairment on an
annual basis on the last day of February in the fourth quarter of our fiscal year.

We had a goodwill balance of $8.0 million as of both March 31, 2023 and March 31, 2022. The goodwill

resulted from the acquisition of MikaMonu Group Ltd. in fiscal 2016. We completed our annual goodwill
impairment test during the fourth quarter of fiscal 2023 and concluded that there was no impairment, as the fair
value of our sole reporting unit exceeded its carrying value.

For the fiscal year ended March 31, 2023, we identified sustained declines in our stock price that resulted in

our market capitalization being below the carrying value of our stockholders’ equity. We concluded the sustained
declines in our stock price were triggering events and proceeded with quantitative goodwill impairment assessments.

The results of the quantitative goodwill impairment assessments that we performed indicated the fair value of our
sole reporting unit exceeded its carrying value as of December 31, 2022, February 28, 2023, and March 31, 2023.
The quantitative impairment assessments were performed as of December 1, 2022, February 28, 2023, and
March 31, 2023, utilizing an equal weighting of the income approach and the market comparable method. The
analysis required the comparison of our carrying value with our fair value, with an impairment recorded for any
excess of carrying value over the fair value. The income approach utilized a discounted cash flow analysis to
determine the fair value of our single reporting unit. Key assumptions used in the discounted cash flow analysis
included, but are not limited to, a discount rate of approximately 22% to account for risk in achieving the forecast
and a terminal growth rate for cash flows of 2%. The market comparable method was used to determine the fair
value of the reporting unit by multiplying forecasted revenue by a market multiple. The revenue market multiple
was calculated by comparing the enterprise value to revenue for comparable companies in the semiconductor
industry and then applying a control premium. The equal weighting of the income approach and the market
comparable method was then reconciled to the market approach. The market approach was calculated by
multiplying the average closing share price of our common stock for the 30 days prior to the measurement date, by
the number of outstanding shares of our common stock and adding a control premium that reflected the premium a
hypothetical buyer might pay. The control premium was estimated using historical acquisition transactions in the
semiconductor industry over the past five years. The results of the quantitative analysis performed indicated the fair
value of the reporting unit exceeded its carrying value. As a result, we concluded there was no goodwill impairment
as of December 31, 2022, February 28, 2023, or March 31, 2023.

A number of significant assumptions and estimates are involved in the income approach and the market

comparable method. The income approach assumes the future cash flows reflect market expectations. The market
comparable method requires an estimate of a revenue market multiple and an appropriate control premium. These
fair value measurements require significant judgements using Level 3 inputs, such as discounted cash flows from
operations and revenue forecasts, which are not observable from the market, directly or indirectly. There is
uncertainty in the projected future cash flows used in our impairment analysis, which requires the use of estimates
and assumptions. If actual performance does not achieve the projections, or if the assumptions used in the analysis
change in the future, we may be required to recognize impairment charges in future periods. Key assumptions in the
market approach include determining a control premium. We believe our procedures for determining fair value are
reasonable and consistent with current market conditions as of December 31, 2022 and March 31, 2023.

Intangible assets with finite useful lives are amortized over their estimated useful lives, generally on a

straight-line basis over five to fifteen years. We review identifiable amortizable intangible assets for impairment
whenever events or changes in circumstances indicate that the carrying value of the assets may not be recoverable.
Determination of recoverability is based on the lowest level of identifiable estimated undiscounted cash flows
resulting from use of the asset and its eventual disposition. Measurement of any impairment loss is based on the
excess of the carrying value of the asset over its fair value. Based on the uncertainty of forecasts, events such as the
failure to generate revenue from future product launches could result in impairment in the future. We identified a
potential impairment indicator for the finite lived intangible assets and performed a recoverability test by comparing
the sum of the estimated undiscounted future cash flows of the asset group to the carrying amount as of
December 31, 2022 and March 31, 2023. The result of the recoverability tests indicated that the sum of the expected
future cash flows was greater than the carrying amount of the finite lived intangible assets. Based on the uncertainty
of forecasts inherent with a new product, events such as the failure to generate forecasted revenue from the APU
product could result in a non-cash impairment charge in future periods.

Recent Accounting Pronouncements

Please refer to Note 1 to our consolidated financial statements appearing under Part II, Item 8 for a discussion

of recent accounting pronouncements that may impact the Company.

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Foreign Currency Exchange Risk. Our revenues and expenses, except those expenses related to our
operations in Israel and Taiwan, including subcontractor manufacturing expenses in Taiwan, are denominated in
U.S. dollars. As a result, we have relatively little exposure for currency exchange risks, and foreign exchange losses
have been minimal to date. We do not currently enter into forward exchange contracts to hedge exposure
denominated in foreign currencies or any other derivative financial instruments for trading or speculative purposes.
In the future, if we believe our foreign currency exposure has increased, we may consider entering into hedging
transactions to help mitigate that risk.

Interest Rate Sensitivity. We had cash, cash equivalents, short term investments and long-term investments

totaling $30.6 million at March 31, 2023. These amounts were invested primarily in money market funds,
certificates of deposit and agency bonds. The cash, cash equivalents and short-term marketable securities are held
for working capital purposes. We do not enter into investments for trading or speculative purposes. Due to the short-
term nature of these investments, we believe that we do not have any material exposure to changes in the fair value
of our investment portfolio as a result of changes in interest rates. We believe a hypothetical 100 basis point increase
in interest rates would not materially affect the fair value of our interest-sensitive financial instruments. Declines in
interest rates, however, will reduce future investment income.

Item 8. Financial Statements and Supplementary Data

GSI TECHNOLOGY, INC.

INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

Report of Independent Registered Public Accounting Firm (BDO USA, LLP; San Jose, CA;

PCAOB ID#243) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Consolidated Balance Sheets As of March 31, 2023 and 2022 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Consolidated Statements of Operations For the Three Years Ended March 31, 2023, 2022 and 2021 . . . . . .
Consolidated Statements of Comprehensive Loss For the Three Years Ended March 31, 2023, 2022 and

2021 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Consolidated Statements of Stockholders’ Equity For the Three Years Ended March 31, 2023, 2022 and

2021 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Consolidated Statements of Cash Flows For the Three Years Ended March 31, 2023,

2022 and 2021 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Notes to Consolidated Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Page

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Report of Independent Registered Public Accounting Firm

Shareholders and Board of Directors
GSI Technology, Inc.
Sunnyvale, California

Opinion on the Consolidated Financial Statements

We have audited the accompanying consolidated balance sheets of GSI Technology, Inc. (the “Company”) as

of March 31, 2023 and 2022, the related consolidated statements of operations, comprehensive loss, stockholders’
equity, and cash flows for each of the three years in the period ended March 31, 2023, and the related notes
(collectively referred to as the “consolidated financial statements”). In our opinion, the consolidated financial
statements present fairly, in all material respects, the financial position of the Company at March 31, 2023 and 2022,
and the results of its operations and its cash flows for each of the three years in the period ended March 31, 2023, in
conformity with accounting principles generally accepted in the United States of America.

Basis for Opinion

These consolidated financial statements are the responsibility of the Company’s management. Our

responsibility is to express an opinion on the Company’s consolidated financial statements based on our audits. We
are a public accounting firm registered with the Public Company Accounting Oversight Board (United States)
(“PCAOB”) and are required to be independent with respect to the Company in accordance with the U.S. federal
securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the
PCAOB.

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we
plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are
free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we
engaged to perform, an audit of its internal control over financial reporting. As part of our audits we are required to
obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion
on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such
opinion.

Our audits included performing procedures to assess the risks of material misstatement of the consolidated

financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such
procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated
financial statements. Our audits also included evaluating the accounting principles used and significant estimates
made by management, as well as evaluating the overall presentation of the consolidated financial statements. We
believe that our audits provide a reasonable basis for our opinion.

Critical Audit Matters

The critical audit matters communicated below are matters arising from the current period audit of the
consolidated financial statements that were communicated or required to be communicated to the audit committee
and that: (1) relate to accounts or disclosures that are material to the consolidated financial statements; and (2)
involved our especially challenging, subjective, or complex judgments. The communication of critical audit matters
does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by
communicating the critical audit matters below, providing separate opinions on the critical audit matters or on the
accounts or disclosures to which they relate.

Valuation of Inventories

As described in Note 1 to the consolidated financial statements, the Company’s consolidated inventory

balance is stated at lower of cost or net realizable value. The valuation of inventories is adjusted by the Company
when conditions indicate a decline in value due to obsolescence and is adjusted based on estimates for inventory
levels in excess of forecasted demand for each specific product.

We identified the valuation of inventories as a critical audit matter due to the significant judgments and

estimates required by management. Determining whether a decline in value has occurred requires significant
judgments related to: (i) future demand for excess units on hand based on historical sales and expected future orders,
and (ii) obsolescence of certain products based on changes in technology and demand. Auditing these judgments
was especially challenging and involved subjective auditor judgment due to the nature and extent of audit effort
required to address these matters.

The primary procedures we performed to address this critical audit matter included:

• Evaluating management's inventory valuation estimates by, (i) comparing ending inventory quantities on
hand to recent and expected shipment quantities, and (ii) reviewing at-risk inventory items for potential
obsolescence based on changes in shipment trends.

• Challenging the reasonableness of management's assumptions related to future orders by verifying the
reliability of current backlog and historical sales data, evaluating fluctuations in demand for certain
product ordered by a limited number of customers, and assessing changes in technology.

Valuation of Contingent Consideration

As described in Notes 7 and 14 to the consolidated financial statements, on November 23, 2015, the

Company acquired all of the outstanding stock of MikaMonu Group Ltd. (“MikaMonu”) for cash and future
contingent consideration payable to former MikaMonu shareholders based on the achievement of certain milestones,
including development of qualifying products and meeting certain revenue targets from the sale of those products.
Since the initial measurement at the acquisition date, the liability has been re-measured to fair value at each balance
sheet date. The inputs used in the valuation include the estimated amount and timing of future cash flows, the
probability of achievement of the forecast, and a risk-adjusted discount rate to adjust the probability-weighted cash
flows to their present value.

We identified the valuation of the contingent consideration liability as a critical audit matter due to the
significant judgments required to estimate the fair value at the balance sheet date. Valuation of the contingent
consideration liability involves management’s complex judgments related to determining: (i) the continued
appropriateness of the valuation model selected, and (ii) the reasonableness of inputs and assumptions used in the
valuation model, including estimated amount and timing of future cash flows, probability of achievement of the
forecast, and risk-adjusted discount rate. Auditing these inputs and assumptions involved especially challenging and
subjective auditor judgements due to the nature and extent of procedures performed and the specialized knowledge
required to audit the valuation.

The primary procedures we performed to address this critical audit matter included:

• Evaluating the reasonableness of inputs used in the valuation including management’s forecast of amount
and timing of future cash flows, including challenging assumptions such as the probability of achieving
forecasted cash flows and examining third-party market sources and contradictory evidence from
retrospective reviews of prior period forecasts.

• Utilizing professionals with specialized skills and knowledge in valuation to: (i) test the appropriateness
of the valuation model utilized by management to estimate the fair value of the contingent consideration;

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(ii) verify the reasonableness of the risk-adjusted discount rate used in the model; and (iii) perform
sensitivity analyses to test the effects of potential changes in the risk-adjusted discount rate based on
comparable public companies and incorporating market risk to management’s revenue forecasts.

/s/ BDO USA, LLP

We have served as the Company's auditor since 2017.
San Jose, California
June 28, 2023

GSI TECHNOLOGY, INC.

CONSOLIDATED BALANCE SHEETS

March 31,

2023

2022

(In thousands, except share and
per share amounts)

ASSETS
Cash and cash equivalents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
Short-term investments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Accounts receivable, net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Inventories . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Prepaid expenses and other current assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total current assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Property and equipment, net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Operating lease right-of-use assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Long-term investments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Goodwill . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Intangible assets, net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Deposits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Total assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $

LIABILITIES AND STOCKHOLDERS’ EQUITY
Accounts payable ($8 and $32 to a related party) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
Lease liabilities, current . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Accrued expenses and other liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total current liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Deferred tax liability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Lease liabilities, non-current . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Contingent consideration, non-current . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

27,212 $
3,363
3,471
6,415
1,414
41,875
7,423
684
—
7,978
1,790
126
59,876 $

1,621 $
413
5,168
7,202
12
238
1,052
8,504

36,971
6,992
4,518
4,655
1,555
54,691
7,359
889
3,345
7,978
2,023
137
76,422

1,474
537
6,850
8,861
11
361
2,738
11,971

Commitments and contingencies (Note 9)
Stockholders’ equity:

Preferred stock: $0.001 par value authorized: 5,000,000 shares; issued and

outstanding: none . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

—

Common Stock: $0.001 par value authorized: 150,000,000 shares; issued and

outstanding: 24,685,059 and 24,486,239 shares, respectively . . . . . . . . . . . . . . . .
Additional paid-in capital . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Accumulated other comprehensive loss . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Retained earnings (deficit) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total stockholders’ equity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Total liabilities and stockholders’ equity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $

25
55,953
(127)
(4,479)
51,372
59,876 $

24
53,083
(154)
11,498
64,451
76,422

The accompanying notes are an integral part of these consolidated financial statements.

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GSI TECHNOLOGY, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS

Year Ended March 31,
2022
(In thousands, except per share amounts)
Net revenues . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 29,691 $ 33,384 $ 27,729
14,512
Cost of revenues ($240, $397 and $482 to a related party) . . . . . . . . . . . . . . . . .
Gross profit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
13,217
Operating expenses:

14,847
18,537

12,010
17,681

2021

2023

23,344
Research and development . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
11,137
Selling, general and administrative . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
34,481
Total operating expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(21,264)
Loss from operations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
295
Interest income, net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(201)
Other expense, net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(21,170)
Loss before income taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Provision (benefit) for income taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
335
Net loss . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ (15,977) $ (16,368) $ (21,505)
Net loss per share:

24,672
10,218
34,890
(16,353)
71
(131)
(16,413)
(45)

23,550
9,938
33,488
(15,807)
308
(106)
(15,605)
372

Basic . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
Diluted . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $

(0.65) $
(0.65) $

(0.67) $
(0.67) $

(0.91)
(0.91)

Weighted average shares used in per share calculations:

Basic . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Diluted . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

24,595
24,595

24,303
24,303

23,671
23,671

The accompanying notes are an integral part of these consolidated financial statements.

GSI TECHNOLOGY, INC.

CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS

2023

Year Ended March 31,
2022
(In thousands)

2021

Net loss . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ (15,977) $ (16,368) $ (21,505)
Net unrealized gain (loss) on available-for-sale investments . . . . . . . . . . . . . . .
(91)
Total comprehensive loss . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ (15,950) $ (16,502) $ (21,596)

(134)

The accompanying notes are an integral part of these consolidated financial statements.

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GSI TECHNOLOGY, INC.

CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY

Accumulated

Common Stock
Shares

Additional
Paid-in
Amount Capital

Other

Retained

Total

Comprehensive
Income (Loss)

Earnings Stockholders'
(Deficit)

Equity

Balance, March 31, 2020. . . . . . . . . . . .
Issuance of common stock under

employee stock option plans . . . . . . .
Stock-based compensation expense . . .
Net loss . . . . . . . . . . . . . . . . . . . . . . . . . .
Net unrealized loss on available-for-

sale investments . . . . . . . . . . . . . . . . .
Balance, March 31, 2021. . . . . . . . . . . .
Issuance of common stock under

employee stock option plans . . . . . . .
Stock-based compensation expense . . .
Net loss . . . . . . . . . . . . . . . . . . . . . . . . . .
Net unrealized loss on available-for-

sale investments . . . . . . . . . . . . . . . . .
Balance, March 31, 2022. . . . . . . . . . . .
Issuance of common stock under

employee stock option plans . . . . . . .
Stock-based compensation expense . . .
Net loss . . . . . . . . . . . . . . . . . . . . . . . . . .
Net unrealized loss on available-for-

sale investments . . . . . . . . . . . . . . . . .
Balance, March 31, 2023. . . . . . . . . . . .

23,229,286 $ 23 $ 40,176 $

71 $ 49,371 $ 89,641

(In thousands, except share amounts)

790,990
—
—

1
—
—

4,692
2,854
—

—
—
—

—
—
(21,505)

4,693
2,854
(21,505)

—
24,020,276

—
24

—
47,722

(91)
(20)

—
27,866

(91)
75,592

465,963
—
—

—
—
—

2,368
2,993
—

—
—
—

—
—
(16,368)

2,368
2,993
(16,368)

—
24,486,239

—
24

—
53,083

(134)
(154)

—
11,498

(134)
64,451

198,820
—
—

1
—
—

401
2,469
—

—
—
—

—
—
(15,977)

402
2,469
(15,977)

—

24,685,059 $ 25 $ 55,953 $

27
—
(127) $ (4,479) $ 51,372

The accompanying notes are an integral part of these consolidated financial statements.

GSI TECHNOLOGY, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

Cash flows from operating activities:

2023

Year Ended March 31,
2022
(In thousands)

2021

Net loss . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ (15,977) $ (16,368) $ (21,505)
Adjustments to reconcile net loss to net cash used in operating activities:
Allowance for doubtful accounts and other . . . . . . . . . . . . . . . . . . . . . . . . . .
Provision for excess and obsolete inventories . . . . . . . . . . . . . . . . . . . . . . . .
Non-cash lease expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Change in fair value of contingent consideration . . . . . . . . . . . . . . . . . . . . . .
Depreciation and amortization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Stock-based compensation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Amortization of premium on investments . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Changes in assets and liabilities:

(39)
402
373
(1,487)
1,004
2,993
69

(21)
226
581
(1,685)
1,015
2,469
13

35
466
598
327
1,214
2,854
88

Accounts receivable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Inventories . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Prepaid expenses and other assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Accounts payable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Accrued expenses and other liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Net cash used in operating activities . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

1,068
(1,986)
140
(383)
(2,305)
(16,845)

(814)
(714)
(70)
(127)
952
(13,826)

2,630
(527)
440
383
(2,255)
(15,252)

Cash flows from investing activities:

Purchase of investments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Maturities of short-term investments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Purchases of property and equipment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Net cash provided by investing activities . . . . . . . . . . . . . . . . . . . . . . . . . .

—
7,000
(316)
6,684

(7,163)
12,132
(774)
4,195

(17,510)
21,000
(203)
3,287

Cash flows from financing activities:

Proceeds from issuance of common stock under employee stock plans . . . .
4,693
Net cash provided by financing activities . . . . . . . . . . . . . . . . . . . . . . . . .
4,693
Net decrease in cash and cash equivalents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(7,272)
51,506
Cash and cash equivalents at beginning of the period . . . . . . . . . . . . . . . . . . . . .
Cash and cash equivalents at end of the period . . . . . . . . . . . . . . . . . . . . . . . . . . $ 27,212 $ 36,971 $ 44,234
Non-cash investing and financing activities:

2,368
2,368
(7,263)
44,234

402
402
(9,759)
36,971

Purchases of property and equipment through accounts payable and

accruals . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $

Operating lease right-of-use assets exchanged for lease obligations . . . . . . . .

564 $
376

34 $

585

6
658

Supplemental cash flow information:

Net cash paid for income taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $

155 $

26 $

858

The accompanying notes are an integral part of these consolidated financial statements.

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NOTE 1—THE COMPANY AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

The Company

GSI Technology, Inc. (the “Company”) was incorporated in California in March 1995 and reincorporated in

Delaware on June 9, 2004. The Company is a provider of high-performance semiconductor memory solutions to
networking, industrial, medical, aerospace and military customers. The Company’s products are incorporated
primarily in high-performance networking and telecommunications equipment, such as routers, switches, wide area
network infrastructure equipment, wireless base stations and network access equipment. In addition, the Company
serves the ongoing needs of the military, industrial, test equipment and medical markets for high-performance
SRAMs. The Company’s in-place associative computing product is targeted for markets including computer vision,
synthetic aperture radar, drug discovery, cybersecurity, and service markets such as NoSQL, Elasticsearch, and
OpenSearch, which the Company plans to support with a SaaS solution.

Accounting principles

The consolidated financial statements and accompanying notes were prepared in accordance with accounting

principles generally accepted in the United States of America (“GAAP”).

Basis of consolidation

The consolidated financial statements include the accounts of the Company’s four wholly owned subsidiaries,

GSI Technology Holdings, Inc., GSI Technology (BVI), Inc., GSI Technology Israel Ltd. and GSI Technology
Taiwan, Inc. All inter-company transactions and balances have been eliminated in consolidation.

Use of estimates

The preparation of financial statements in conformity with GAAP requires management to make estimates

and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and
liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the
reporting period. Significant estimates are inherent in the preparation of the consolidated financial statements and
include obsolete and excess inventory, the valuation of contingent consideration and the valuation of intangibles and
goodwill. The uncertainty created by the disruptions in the capital markets as a result of rising interest rates,
worldwide inflationary pressures, significant fluctuations in energy prices and the decline in the global economic
environment, has made such estimates more difficult and subjective. Actual results could differ materially from
those estimates.

Risk and uncertainties

The decline in the global economic environment due to, among other things, rising interest rates, worldwide

inflationary pressures and significant fluctuations in energy prices has affected the business activities of the
Company, its customers, suppliers, and other business partners in the fiscal year ended March 31, 2023. In addition,
the COVID-19 global pandemic significantly impacted the global economic environment, disrupted normal business
operations and had significant negative impacts on the Company’s business during the last three years.

The Company’s revenues have been adversely impacted by changes in customer buying patterns and

communication limitations related to COVID-19 restrictions that required a significant number of its customer
contacts to work from home. The Company’s results for the fiscal years ended March 31, 2023, 2022 and 2021
demonstrated the challenges that the Company has faced during the COVID-19 global pandemic, which has
restricted the activities of the Company’s sales force and distributors, reduced customer demand and caused the
postponement of investment in certain customer sectors. These challenges have also impacted the Company as it
entered new markets and engaged with target customers to sell its new APU product. Industry conferences and on-
site training workshops, which are typically used for building a sales pipeline, were limited, due to COVID-19
related restrictions. The Company adapted its sales strategies for the COVID-19 environment, where it could not do
face-to-face meetings and conduct secure meetings with government and defense customers.

The Company believes that during the next 12 months disruptions in the capital markets as a result of rising

interest rates, worldwide inflationary pressures, significant fluctuations in energy prices and the decline in the global
economic environment could impact general economic activity and demand in the Company’s end markets.
Additionally, fluctuations in customer demand due to previous buffer stock purchases during the semiconductor
supply shortage may negatively impact near-term revenues.

The Company buys all of its SRAM wafers, an integral component of its products, from a single supplier and

is also dependent on independent suppliers to assemble and test its products. During the years ended March 31,
2023, 2022 and 2021, all of the wafers used in the Company’s SRAM products were supplied by Taiwan
Semiconductor Manufacturing Company Limited, or TSMC. If this supplier fails to satisfy the Company’s
requirements on a timely basis at competitive prices, the Company could suffer manufacturing delays, a possible
loss of revenues, or higher cost of revenues, any of which could adversely affect operating results.

A majority of the Company’s net revenues come from sales to customers in the networking and

telecommunications equipment industry. A decline in demand in this industry could have a material adverse effect
on the Company’s operating results and financial condition.

Because much of the manufacturing and testing of the Company’s products is conducted in Taiwan, its

business performance may be affected by changes in Taiwan’s political, social and economic environment. For
example, any political instability or restrictions on transportation logistics for our products that result from the
relationship among the United States, Taiwan and the People’s Republic of China could damage the Company’s
business. Moreover, the role of the Taiwanese government in the Taiwanese economy is significant. Taiwanese
policies toward economic liberalization, and laws and policies affecting technology companies, foreign investment,
currency exchange rates, taxes and other matters could change, resulting in greater restrictions on the Company’s
and its suppliers' ability to do business and operate facilities in Taiwan. If any of these risks were to occur, the
Company’s business could be harmed.

Some of the Company’s suppliers and the Company’s two principal operations are located near fault lines. In

the event of a major earthquake, typhoon or other natural disaster near the facilities of any of these suppliers or the
Company, the Company’s business could be harmed.

From time to time, the Company is involved in legal actions. There are many uncertainties associated with

any litigation, and the Company may not prevail. If information becomes available that causes us to determine that
a loss in any of the Company’s pending litigation, or the settlement of such litigation, is probable, and we can
reasonably estimate the loss associated with such events, we will record the loss in accordance with GAAP.
However, the actual liability in any such litigation may be materially different from the Company’s estimates, which
could require us to record additional costs.

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Revenue recognition

The Company recognizes revenue when control of the promised goods or services is transferred to its
customers, in an amount that reflects the consideration to which the Company expects to be entitled in exchange for
those goods or services. Under this criteria, revenue from the sale of products is generally recognized upon shipment
according to the Company’s shipping terms, net of accruals for estimated variable consideration resulting from sales
returns and allowances based on historical experience. When consignment warehouses purchase products from the
Company for use by contract manufacturers, revenues are recognized upon delivery to the contract manufacturer.

Cash and cash equivalents

Cash and cash equivalents include cash in demand accounts and highly liquid investments purchased with an

original or remaining maturity of three months or less at the date of purchase, stated at cost, which approximates
their fair value.

Short-term and long-term investments

All of the Company’s short-term and long-term investments are classified as available-for-sale. Available-for-
sale debt securities with maturities greater than twelve months are classified as long-term investments when they are
not intended for use in current operations. Investments in available-for-sale securities are reported at fair value with
unrecognized gains (losses), net of tax, as a component of “Accumulated other comprehensive loss” on the
Consolidated Balance Sheets. The Company monitors its investments for impairment periodically and records
appropriate reductions in carrying values when the declines in fair value are determined to be other-than-temporary.

Concentration of credit risk

Financial instruments that potentially subject the Company to a concentration of credit risk consist primarily

of cash, cash equivalents, short-term and long-term investments and accounts receivable. The Company places its
cash primarily in checking, certificate of deposit, and money market accounts with reputable financial institutions,
and by policy, limits the amount of credit exposure with any one financial institution or commercial issuer. The
Company’s accounts receivables are derived primarily from revenue earned from customers located in the U.S. and
Asia. The Company performs ongoing credit evaluations of its customers’ financial condition and, generally,
requires no collateral from its customers. The Company maintains an allowance for doubtful accounts receivable
based upon the expected collectability of accounts receivable. There were no write offs of accounts receivable in the
years ended March 31, 2023, 2022 or 2021.

At March 31, 2023, three customers accounted for 36%, 25% and 19% of accounts receivable, and for the

year then ended, three customers accounted for 48%, 17% and 10% of net revenues. At March 31, 2022, three
customers accounted for 34%, 28% and 19% of accounts receivable, and for the year then ended, four customers
accounted for 38%, 17%, 16% and 11% of net revenues. For the year ended March 31, 2021, four customers
accounted for 30%, 22%, 21% and 15% of net revenues.

Inventories

Inventories are stated at the lower of cost or net realizable value, cost being determined on a weighted
average basis. Inventory write-down allowances are established when conditions indicate that the selling price could
be less than cost due to physical deterioration, obsolescence of certain products based on changes in technology and
demand, changes in price levels, or other causes. These allowances, once recorded, result in a new cost basis for the
related inventory. These allowances are also considered for excess inventory generally based on inventory levels in
excess of 12 months of forecasted customer demand based on historical sales and expected future orders, as

estimated by management, for each specific product. The allowance is not reversed until the inventory is sold or
disposed.

The Company recorded write-downs of excess and obsolete inventories of $226,000, $402,000 and $466,000,

respectively, in fiscal 2023, 2022 and 2021.

Property and equipment, net

Property and equipment are stated at cost. Depreciation is computed using the straight-line method over the

estimated useful lives of the assets as presented below:

Software . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Computer and other equipment . . . . . . . . . . . . . . . . . . . . . . . . . . .
Building and building improvements . . . . . . . . . . . . . . . . . . . . . .
Furniture and fixtures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

3 to 5 years
5 to 10 years
10 to 25 years
7 years

Leasehold improvements are amortized using the straight-line method over the shorter of the estimated useful

lives of the assets or the remaining lease term of the respective assets. Gains or losses on disposals of property and
equipment are recorded within loss from operations. Costs of repairs and maintenance are included as part of
operating expenses unless they are incurred in relation to major improvements to existing property and equipment, at
which time they are capitalized.

Operating Leases

The Company determines if an arrangement is a lease at inception. Operating leases are included in operating

lease right-of-use ("ROU") assets, lease liabilities, current and lease liabilities, non-current on the Company's
Consolidated Balance Sheets. The Company did not identify any finance leases as of March 31, 2023 and 2022.

Operating lease ROU assets and operating lease liabilities are recognized based on the present value of the

future minimum lease payments over the lease term at commencement date. As the Company’s leases do not
provide an implicit rate, the Company uses an estimate of its incremental borrowing rate based on observed market
data and other information available at the lease commencement date. The operating lease ROU assets also include
any lease payments made and exclude lease incentives. Lease terms may include options to extend or terminate the
lease when it is reasonably certain that the Company will exercise such options. The Company does not record
leases on the Consolidated Balance Sheet with a term of one year or less. The Company does not separate lease and
non-lease components but rather accounts for each separate component as a single lease component for all
underlying classes of assets. Variable lease payments are expensed as incurred and are not included within the
operating lease ROU asset and lease liability calculation. Variable lease payments primarily include reimbursements
of costs incurred by lessors for common area maintenance and utilities. Lease expense for minimum operating lease
payments is recognized on a straight-line basis over the lease term.

Impairment of long-lived assets

Long-lived assets held and used by the Company are reviewed for impairment whenever events or changes in
circumstances indicate that their net book value may not be recoverable. If the sum of the expected future cash flows
(undiscounted and before interest) from the use of the assets is less than the net book value of the asset an
impairment could exist and the amount of the impairment loss, if any, will generally be measured as the difference
between the net book value of the assets and their estimated fair values. There were no impairment losses recognized
during the years ended March 31, 2023, 2022 or 2021.

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Goodwill and intangible assets

Goodwill is not amortized but is tested for impairment on an annual basis or whenever events or changes in

circumstances indicate that the carrying amount of these assets may not be recoverable.

The Company assesses goodwill for impairment on an annual basis on the last day of February in the fourth

quarter of its fiscal year and if certain events or circumstances indicate that an impairment loss may have been
incurred, on an interim basis. The Company has one reporting unit. Impairment is recognized if the carrying value of
the net assets of the reporting unit exceeds the fair value of the reporting unit, with the impairment loss not to exceed
the amount of goodwill allocated to the reporting unit.

Intangible assets with finite useful lives are amortized over their estimated useful lives, generally on a

straight-line basis over five to fifteen years. The Company reviews identifiable amortizable intangible assets for
impairment whenever events or changes in circumstances indicate that the carrying value of the assets may not be
recoverable. Determination of recoverability is based on the lowest level of identifiable estimated undiscounted cash
flows resulting from use of the asset and its eventual disposition. Measurement of any impairment loss is based on
the excess of the carrying value of the asset over its fair value. The Company identified a potential impairment
indicator for the finite lived intangible assets and performed a recoverability test by comparing the sum of the
estimated undiscounted future cash flows of the asset group to the carrying amount as of March 31, 2023 and
March 31, 2022. The result of the recoverability test indicated that the sum of the expected future cash flows was
greater than the carrying amount of the finite lived intangible assets. Based on the uncertainty of forecasts inherent
with a new product, events such as the failure to generate forecasted revenue from the APU product could result in a
non-cash impairment in future periods.

Research and development

Research and development expenses are related to new product designs, including, salaries, stock-based

compensation, contractor fees, preproduction masks, and allocation of corporate costs and are charged to the
statement of operations as incurred.

Income taxes

The Company accounts for income taxes under the liability method, whereby deferred tax assets and
liabilities are determined based on the difference between the financial statement and tax bases of assets and
liabilities using enacted tax rates in effect for the year in which the differences are expected to affect taxable income.
Valuation allowances are established when it is more likely than not that the deferred tax asset will not be
realized. Due to historical losses in the U.S., the Company has a full valuation allowance on its U.S. federal and
state deferred tax assets. As of March 31, 2023 and 2022, the Company’s net deferred tax assets of $17.5 and
$16.2 million, respectively, were subject to a valuation allowance of $17.5 and $16.2 million, respectively.
Management continues to evaluate the realizability of deferred tax assets and the related valuation allowance.

Authoritative guidance prescribes a comprehensive model for how a company should recognize, measure,

present, and disclose in its financial statements uncertain tax positions that the Company has taken or expects to take
on a tax return (including a decision whether to file or not to file a return in a particular jurisdiction). Under the
guidance, the financial statements will reflect expected future tax consequences of such positions presuming the
taxing Authorities’ full knowledge of the position and all relevant facts, but without considering time values. The
first step is to evaluate the tax position for recognition by determining if the weight of available evidence indicates
that it is more likely than not that the position will be sustained on audit, including resolution of related appeals or
litigation process, if any. The second step is to measure the tax benefit as the largest amount that is more than 50%
likely of being realized upon ultimate settlement.

Shipping and handling costs

The Company records costs related to shipping and handling in cost of revenues.

Advertising expense

Advertising costs are charged to expense in the period incurred. Advertising expense was not material for the

years ended March 31, 2023, 2022 and 2021.

Foreign currency transactions

The U.S. dollar is the functional currency for all of the Company’s foreign operations. Foreign currency
transaction gains and losses, resulting from transactions denominated in currencies other than U.S. dollars are
included in the Consolidated Statements of Operations. These gains and losses were not material for the years ended
March 31, 2023, 2022 or 2021.

Segments

Segment reporting is based on the “management approach,” following the method that management organizes

the Company’s reportable segments for which separate financial information is made available to, and evaluated
regularly by, the chief operating decision maker in allocating resources and in assessing performance. The
Company’s chief operating decision maker is its Chief Executive Officer (“CEO”), who makes the decision on
allocating resources and in assessing performance. The CEO reviews the Company's consolidated results as one
operating segment. In making operating decisions, the CEO primarily considers consolidated financial information,
accompanied by disaggregated information about revenues by customers and product. All of the Company’s
principal operations and decision-making functions are located in the U.S. The Company’s CEO views its
operations, manages its business, and uses one measurement of profitability for the one operating segment, which
designs, develops and sells integrated circuits.

Accounting for stock-based compensation

Stock-based compensation expense recognized in the Consolidated Statements of Operations is based on

options ultimately expected to vest, reduced by the amount of estimated forfeitures. The Company chose the
straight-line method of allocating compensation cost over the requisite service period of the related award according
to authoritative guidance. The Company calculates the expected term based on the historical average period of time
that options were outstanding as adjusted for expected changes in future exercise patterns, which, for options
granted in fiscal 2023, 2022 and 2021 resulted in an expected term of approximately 4.6 to 5.0 years, 5.0 years and
5.0 years, respectively. The Company uses its historical volatility to estimate expected volatility. The risk-free
interest rate is based on the U.S. Treasury yields in effect at the time of grant for periods corresponding to the
expected life of the options. The dividend yield is 0%, based on the fact that the Company has never paid dividends
and has no present intention to pay dividends. Changes to these assumptions may have a significant impact on the
results of operations.

Authoritative guidance requires cash flows, if any, resulting from the tax benefits from tax deductions in
excess of the compensation cost recognized for those options (excess tax benefits) to be classified as financing cash
flows in the Consolidated Statements of Cash Flows.

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Comprehensive loss

Comprehensive loss is defined to include all changes in stockholders’ equity during a period except those

resulting from investments by owners and distributions to owners. For the years ended March 31, 2023, 2022 and
2021, comprehensive loss was $16.0 million, $16.5 million and $21.6 million, respectively.

Accounting pronouncements not yet effective for fiscal 2023

In June 2016, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update

(“ASU”) No. 2016-13, “Financial Instruments—Credit Losses (Topic 326): Measurement of Credit Losses on
Financial Instruments.” ASU 2016-13 replaces the incurred loss impairment methodology in current GAAP with a
methodology that reflects expected credit losses and requires consideration of a broader range of reasonable and
supportable information to inform credit loss estimates. For trade and other receivables, loans, and other financial
instruments, the Company will be required to use a forward-looking expected loss model rather than the incurred
loss model for recognizing credit losses which reflects losses that are probable. Credit losses relating to available-
for-sale debt securities will also be recorded through an allowance for credit losses rather than as a reduction in the
amortized cost basis of the securities. ASU 2016-13 is effective for fiscal years beginning after December 15, 2022,
including interim periods within those fiscal years, with early adoption permitted beginning April 1, 2019.
Application of the amendments is through a cumulative-effect adjustment to retained earnings as of the effective
date. Implementation of this guidance on April 1, 2023 did not have a material impact on the Company’s
consolidated financial statements and related disclosures.

NOTE 2 —REVENUE RECOGNITION

The Company determines revenue recognition through the following steps: (1) identification of the contract

with a customer; (2) identification of the performance obligations in the contract; (3) determination of the
transaction price; (4) allocation of the transaction price to the performance obligations in the contract; and
(5) recognition of revenue when, or as, we satisfy a performance obligation.

The Company’s customer contracts, which may be in the form of purchase orders, contracts or purchase
agreements, contain performance obligations for delivery of agreed upon products. Delivery of all performance
obligations contained within a contract with a customer typically occurs at the same time (or within the same
accounting period). Transfer of control occurs at the point at which delivery has occurred, title and the risks and
rewards of ownership have passed to the customer, and the Company has a right to payment. For all transactions
apart from consignment sales, the Company will recognize revenue upon shipment of the product. For consignment
sales, which are infrequent and did not occur in fiscal 2023, revenue is recognized at the time that the product is
pulled from consignment warehouses.

Because all of the Company’s performance obligations relate to contracts with a duration of less than one
year, the Company elected to apply the optional exemption practical expedient and, therefore, is not required to
disclose the aggregate amount of the transaction price allocated to performance obligations that are unsatisfied or
partially unsatisfied at the end of the reporting period.

The Company adjusts the transaction price for variable consideration. Variable consideration is not typically
significant and primarily results from stock rotation rights and quick pay discounts provided to certain distributors.
As a practical expedient, the Company is recognizing the incremental costs of obtaining a contract, specifically
commission expenses that have a period of benefit of less than twelve months, as an expense when incurred.
Additionally, the Company has adopted an accounting policy to recognize shipping costs that occur after control
transfers to the customer as a fulfillment activity.

The Company’s contracts with customers do not typically include extended payment terms. Payment terms

vary by contract type and type of customer and generally range from 30 to 60 days from shipment. Additionally, the
Company has right to payment upon shipment.

The Company records revenue net of sales tax, value added tax, excise tax and other taxes collected

concurrent with product sales. The impact of such taxes on product sales is immaterial.

The Company warrants its products to be free of defects generally for a period of three years. The Company

estimates its warranty costs based on historical warranty claim experience and includes such costs in cost of
revenues. Warranty costs and the accrued warranty liability were not material as of March 31, 2023 and 2022.

Substantially all of the Company’s revenue is derived from sales of SRAM products which represented

approximately 97%, 97% and 98% of total revenues in the years ended March 31, 2023, 2022 and 2021,
respectively.

Nokia, the Company’s largest customer, purchases products directly from the Company and through contract

manufacturers and distributors. Based on information provided to the Company by its contract manufacturers and
distributors, purchases by Nokia represented approximately 17%, 29% and 39% of the Company’s net revenues in
fiscal 2023, 2022 and 2021, respectively.

See “Note 13 - Segment and Geographic Information” for revenue by shipment destination.

The following table presents the Company’s revenue disaggregated by customer type.

2023

Year Ended March 31,
2022
(In thousands)

2021

Contract manufacturers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 5,882 $ 10,354 $ 12,127
15,172
Distribution . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
430
OEMs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$ 29,691 $ 33,384 $ 27,729

22,289
741

23,023
786

NOTE 3—NET LOSS PER COMMON SHARE

The Company uses the treasury stock method to calculate the weighted average shares used in computing
diluted net loss per share. The following table sets forth the computation of basic and diluted net loss per share:

Year Ended March 31,
2022
(In thousands, except per share amounts)
Net loss . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ (15,977) $ (16,368) $ (21,505)

2023

2021

Denominators:
Weighted average shares—Basic . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Dilutive effect of employee stock options . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Dilutive effect of employee stock purchase plan options . . . . . . . . . . . . . . . . .
Weighted average shares—Dilutive . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Net loss per common share—Basic . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
Net loss per common share—Diluted . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $

24,595
—
—
24,595

24,303
—
—
24,303

(0.65) $
(0.65) $

(0.67) $
(0.67) $

23,671
—
—
23,671
(0.91)
(0.91)

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The following shares of common stock (determined on a weighted average basis) were excluded from the

computation of diluted net loss per common share as they had an anti-dilutive effect:

Shares underlying options and ESPP shares . . . . . . . . . . . . . . . . . . . . . . . . . . . .

NOTE 4—BALANCE SHEET DETAIL

2023

Year Ended March 31,
2022
(In thousands)
6,405

2021

4,607

8,531

Inventories:

Work-in-progress . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 3,629 $ 3,085
1,555
Finished goods . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2,767
15
Inventory at distributors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
19
$ 6,415 $ 4,655

March 31,

2023

2022

(In thousands)

Accounts receivable, net:

Accounts receivable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 3,531 $ 4,599
(81)
Less: Allowances for doubtful accounts and other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$ 3,471 $ 4,518

(60)

March 31,

2023

2022

(In thousands)

Prepaid expenses and other current assets:

March 31,

2023

2022

(In thousands)

Prepaid tooling and masks . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
Other receivables . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other prepaid expenses and other current assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

333 $
156
925

68
226
1,261
$ 1,414 $ 1,555

Property and equipment, net:

March 31,

2023

2022

(In thousands)

Computer and other equipment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 19,188 $ 18,415
4,425
Software . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
3,900
Land . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
3,735
Building and building improvements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
102
Furniture and fixtures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
878
Leasehold improvements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
31,455
(24,096)
7,423 $ 7,359

4,428
3,900
3,741
102
910
32,269
(24,846)

Less: Accumulated depreciation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Depreciation expense was $782,000, $771,000 and $981,000 for the years ended March 31, 2023, 2022 and

2021, respectively.

The following table summarizes the components of intangible assets and related accumulated amortization

balances at March 31, 2023 and 2022, respectively (in thousands):

As of March 31, 2023

Gross
Carrying
Amount

Accumulated
Amortization

Net Carrying
Amount

Intangible assets:

Product designs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
Patents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Software . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

4,220
80

Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 4,890 $

590 $

(590) $

(2,430)
(80)
(3,100) $

—
1,790
—
1,790

As of March 31, 2022

Gross
Carrying
Amount

Accumulated
Amortization

Net Carrying
Amount

Intangible assets:

4,220
80

Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 4,890 $

590 $

(590) $

(2,197)
(80)
(2,867) $

—
2,023
—
2,023

Amortization of intangible assets of $233,000, $233,000 and $233,000 was included in cost of revenues for

the years ended March 31, 2023, 2022 and 2021, respectively.

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As of March 31, 2023, the estimated future amortization expense of intangible assets in the table above is as

follows (in thousands):

Fiscal year ending March 31,
2024 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
2025 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2026 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2027 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2028 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Thereafter . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

233
233
233
233
233
625
1,790

March 31,

2023

2022

(In thousands)

Accrued expenses and other liabilities:

Accrued compensation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 3,441 $ 5,524
232
Accrued commissions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
127
Income taxes payable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
967
Miscellaneous accrued expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$ 5,168 $ 6,850

214
345
1,168

On November 30, 2022, the Company announced cost reduction initiatives which included an approximate

15% reduction in the Company’s global workforce. The Company incurred $0.3 million in severance related charges
during fiscal 2023 including $0.1 million recorded as cost of revenues and $0.2 million recorded as selling, general
and administrative expense in the condensed consolidated statements of operations. The Company expects to incur
an additional $0.3 million in severance related charges during the first half of fiscal 2024. There were no severance
charges accrued as of March 31, 2023 as the terms of the severance benefits have not been communicated to
employees expected to be impacted. There was no accrued severance as of March 31, 2022 and there were no
severance charges incurred during the year ended March 31, 2022.

NOTE 5—GOODWILL

Goodwill represents the difference between the purchase price and the estimated fair value of the identifiable
assets acquired and liabilities assumed in a business combination. The Company tests for goodwill impairment on an
annual basis, or more frequently if events or changes in circumstances indicate that the asset is more likely than not
impaired. The Company has one reporting unit. The Company assesses goodwill for impairment on an annual basis
on the last day of February in the fourth quarter of its fiscal year.

Goodwill Impairment Test

The Company had a goodwill balance of $8.0 million as of both March 31, 2023 and 2022. The goodwill

resulted from the acquisition of MikaMonu Group Ltd. (“MikaMonu”) in fiscal 2016.

During each of the three months ended December 31, 2022 and March 31, 2023, we identified sustained

declines in our stock price that resulted in our market capitalization being below the carrying value of our
stockholders’ equity. We concluded the sustained declines in our stock price were triggering events and proceeded
with quantitative goodwill impairment assessments. The results of the quantitative goodwill impairment assessments

that we performed indicated the fair value of our sole reporting unit exceeded its carrying value as of December 31,
2022, February 28, 2023 and March 31, 2023.

The quantitative impairment assessments performed as of December 31, 2022 and March 31, 2023, utilized

an equal weighting of the income approach and market comparable approach. The analysis required the comparison
of the Company’s carrying value with its fair value, with an impairment recorded for any excess of carrying value
over the fair value. The income approach utilized a discounted cash flow analysis to determine the fair value of the
Company’s single reporting unit. Key assumptions used in the discounted cash flow analysis included, but are not
limited to, a discount rate of approximately 22% to account for risk in achieving the forecast and a terminal growth
rate for cash flows of 2%. The market comparable method was used to determine the fair value of the reporting unit
by multiplying forecasted revenue by a market multiple. The revenue market multiple was calculated by comparing
the enterprise value to revenue for comparable companies in the semiconductor industry and then applying a control
premium. The equal weighting of the income approach and the market comparable method was then reconciled to
the market approach. The market approach was calculated by multiplying the average closing share price of the
Company’s common stock for the 30 days prior to the measurement date, by the number of outstanding shares of the
Company’s common stock and adding a control premium that reflected the premium a hypothetical buyer might pay.
The control premium was estimated using historical acquisition transactions in the semiconductor industry over the
past five years. The results of the quantitative analysis performed indicated the fair value of the reporting unit
exceeded its carrying value. As a result, the Company concluded there was no goodwill impairment as of
December 31, 2022 and March 31, 2023.

A number of significant assumptions and estimates are involved in the income approach and the market

comparable method. The income approach assumes the future cash flows reflect market expectations. The market
comparable method requires an estimate of a revenue market multiple and an appropriate control premium. These
fair value measurements require significant judgements using Level 3 inputs, such as discounted cash flows from
operations and revenue forecasts, which are not observable from the market, directly or indirectly. There is
uncertainty in the projected future cash flows used in the Company’s impairment analysis, which requires the use of
estimates and assumptions. If actual performance does not achieve the projections, if there is a further decline in the
Company’s stock price, or if the assumptions used in the analysis change in the future, the Company may be
required to recognize impairment charges in future periods. Key assumptions in the market approach include
determining the control premium. The Company believes its procedures for determining fair value are reasonable
and consistent with current market conditions as of March 31, 2023.

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NOTE 6—INCOME TAXES

Loss before income taxes and the provision for income taxes consists of the following:

2023

Year Ended March 31,
2022
(In thousands)

2021

Loss before income taxes:

U.S. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ (10,992) $ (11,132) $ (10,775)
(10,395)
Foreign . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$ (15,605) $ (16,413) $ (21,170)

(5,281)

(4,613)

Current income tax expense (benefit):

U.S. federal . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
Foreign . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
State . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Deferred income tax expense (benefit):

U.S. federal . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
State . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Provision (benefit) for income taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $

— $

382
1
383

(7)
(4)
(11)
372 $

— $
(48)
1
(47)

2
—
2
(45) $

(379)
714
(1)
334

1
—
1
335

The provision for income tax differs from the amount of income tax determined by applying the applicable

U.S. statutory income tax rate to pre-tax loss as follows:

2023

Year Ended March 31,
2022
(In thousands)

2021

U.S. Federal taxes at statutory rate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ (3,277) $ (3,447) $ (4,446)
(1)
State taxes, net of federal benefit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
524
Settlement of uncertain tax positions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
482
Stock-based compensation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Tax credits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(509)
2,419
Foreign tax rate differential . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
—
GILTI tax . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(5)
Tax exempt interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
—
Tax remeasurement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(2)
Non-deductible expenses and other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(1,538)
1,873
335

1
—
605
(497)
1,277
—
—
(220)
4
(2,277)
2,232

(3)
—
463
(487)
1,350
1,262
—
—
1
(691)
1,063

Valuation allowance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

372 $

(45) $

Deferred tax assets and deferred tax liabilities consist of the following:

March 31,

2023

2022

(In thousands)

Deferred tax assets:

Tax credits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
Net operating losses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Capitalized research and development. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Stock-based compensation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Property and equipment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Unrecognized gains . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other reserves and accruals . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total deferred tax assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Less valuation allowance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Deferred tax assets, net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Deferred tax liabilities:

8,714 $ 7,861
5,207
4,064
—
2,106
1,171
1,119
771
551
22
10
1,384
1,073
16,416
17,637
(16,183)
(17,480)
233
157

Leased assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total deferred tax liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Net deferred tax liability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $

(169)
(169)

(12) $

(244)
(244)
(11)

The Company currently intends to indefinitely reinvest earnings in operations outside the United States. No

provision has been made for state income taxes that might be payable upon remittance of such earnings, nor is it
practicable to determine the amount of such potential liability.

The long-term portion of the Company’s unrecognized tax benefits at March 31, 2023 and 2022 was $0 for

both years, of which the timing of the resolution is uncertain. As of March 31, 2023 and 2022, $3.7 million and
$3.5 million, respectively, of unrecognized tax benefits had been recorded as a reduction to net deferred tax assets. It
is possible, however, that some months or years may elapse before an uncertain position for which the Company has
established a reserve is resolved. A reconciliation of unrecognized tax benefits is as follows:

2023

Year Ended March 31,
2022
(In thousands)

2021

Unrecognized tax benefits, beginning of period . . . . . . . . . . . . . . . . . . . . . . . . . . $ 3,502 $ 3,273 $ 3,321
233
Additions based on tax positions related to current year . . . . . . . . . . . . . . . . . . .
Settlements during the period . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(203)
(78)
Reductions based on tax positions related to prior years . . . . . . . . . . . . . . . . . . .
Unrecognized tax benefits, end of period . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 3,723 $ 3,502 $ 3,273

229
—
—

221
—
—

There is no unrecognized tax benefit balance as of March 31, 2023 that would affect the Company’s effective
tax rate if recognized after considering the valuation allowance. At March 31, 2023, due to the Company’s valuation
allowance in the United States, there was no net income tax effect related to Global intangible low-taxed income
(“GILTI”) in the Company’s fiscal year ended March 31, 2023.

On March 27, 2020, the Coronavirus Aid, Relief, and Economic Security Act (“CARES Act”) was enacted.
The CARES Act, along with the Consolidated Appropriations Act (“CAA”) and the American Rescue Plan Act of
2021 (“ARPA”) is an emergency economic stimulus package passed in response to the COVID-19 global pandemic
that includes aid to small businesses in the form of loans and grants and other efforts to stabilize the U.S. economy.
Also included in the CARES Act are numerous income tax provisions including changes to the net operating loss

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rule. During fiscal year 2021, the Company recorded a $378,000 tax benefit resulting from the carryback of the
Company’s fiscal year 2020 federal net operating loss to fiscal year 2018 due to the five-year net operating loss
carryback provision from the March 2020 CARES Act. The Company has not filed for funding related to the
CARES Act, CAA and ARPA.

Management believes that within the next twelve months the Company will have no material reduction in

uncertain tax benefits, including interest and penalties, as a result of the lapse of statute of limitations.

The Company’s policy is to include interest and penalties related to unrecognized tax benefits within the

provision for income taxes in the Consolidated Statements of Operations.

The Company's federal and state net operating loss carryforwards for income tax purposes are approximately

$13.1 million and $22.1 million, respectively, at March 31, 2023. The Company's federal net operating loss
carryforwards do not expire and the Company’s state tax net operating loss carryforwards expire beginning in 2034.
The Company's federal and state tax credit carryforwards for income tax purposes are approximately $4.6 million
and $5.1 million respectively, at March 31, 2023. The Company's federal tax credit carryforwards expire beginning
in 2033. The Company's state tax credit carryforwards have no expiration date. Utilization of the Company’s net
operating loss carryforwards and research tax credit carryforwards may be subject to substantial annual limitations
due to the ownership change limitations provided by the Internal Revenue Code and similar state provisions. The
annual limitation could result in the expiration of the net operating loss carryforwards and research tax credit
carryforwards before utilization. The Company has not performed an analysis to determine if a limitation applies
and whether the limitation would cause the net operating losses to expire unutilized.

Due to historical losses in the U.S., the Company has a full valuation allowance on its U.S. federal and state

deferred tax assets. As of March 31, 2023 and 2022, the Company’s net deferred tax assets of $17.5 million and
$16.2 million, respectively, were subject to a valuation allowance of $17.5 million and $16.2 million, respectively.
The net valuation allowance increased by $1.3 million and $3.2 million in fiscal 2023 and 2022, respectively. As of
March 31, 2023 and 2022, the Company’s net deferred tax liabilities were $12,000 and $11,000, respectively. The
deferred tax assets consist primarily of the tax credits and federal and state net operating losses. Realization of
deferred tax assets is dependent upon future taxable income, if any, the amount and timing of which are uncertain. In
assessing the realizability of deferred tax assets, management determined that it is more likely than not that no
deferred tax assets will be realized. Therefore, the Company has provided a full valuation allowance against these
deferred tax assets.

The Company is subject to taxation in the United States and various state and foreign jurisdictions. Fiscal
years 2013 through 2022 remain open to examination by the federal tax authorities and fiscal years 2012 through
2022 remain open to examination by the state of California. Fiscal years 2020, 2021, 2022 and 2023 are subject to
audit by the Israeli tax authorities. During the quarter ended June 30, 2020, the Company settled an income tax audit
in Israel for fiscal years 2016 through 2019 that resulted in a discrete tax provision of $479,000 and a tax liability of
$713,000 as of June 30, 2020 that was paid in the quarter ended September 30, 2020.

NOTE 7—FINANCIAL INSTRUMENTS

Fair value measurements

Authoritative accounting guidance for fair value measurements provides a framework for measuring fair

value and related disclosures. The guidance applies to all financial assets and financial liabilities that are measured
on a recurring basis. The guidance requires fair value measurement to be classified and disclosed in one of the
following three categories:

Level 1: Valuations based on quoted prices in active markets for identical assets and liabilities. The fair value

of available-for-sale securities included in the Level 1 category is based on quoted prices that are readily and

regularly available in an active market. As of March 31, 2023, the Level 1 category included money market funds of
$7.8 million, which were included in cash and cash equivalents on the Consolidated Balance Sheets.

Level 2: Valuations based on observable inputs (other than Level 1 prices), such as quoted prices for similar

assets at the measurement date; quoted prices in markets that are not active; or other inputs that are observable,
either directly or indirectly. The fair value of available-for-sale securities included in the Level 2 category is based
on the market values obtained from an independent pricing service that were evaluated using pricing models that
vary by asset class and may incorporate available trade, bid and other market information and price quotes from
well-established independent pricing vendors and broker-dealers. As of March 31, 2023, the Level 2 category
included short-term investments of $3.4 million which were primarily comprised of certificates of deposit,
supranational obligations and agency securities. There were no long-term investments as of March 31, 2023.

Level 3: Valuations based on inputs that are unobservable and involve management judgment and the
reporting entity’s own assumptions about market participants and pricing. As of March 31, 2023, the Company’s
Level 3 financial instruments measured at fair value on the Consolidated Balance Sheets consisted of the contingent
consideration liability related to the MikaMonu acquisition. The fair value of the contingent consideration liability
was initially determined as of the acquisition date using unobservable inputs. These inputs include the estimated
amount and timing of future cash flows, the probability of achievement of the forecast and a risk-adjusted discount
rate of approximately 14.8% used to adjust the probability-weighted cash flows to their present value. Significant
increases (decreases) to the estimated amount and timing of future cash flows or the probability of achievement of
the forecast would result in a significantly higher (lower) fair value measurement. Conversely, a significant increase
(decrease) in the risk-adjusted discount rate would result in a significantly (lower) higher fair value measurement.
Generally, changes used in the assumptions for future cash flows and probability of achievement of the forecast
would be accompanied by a directionally similar change in the fair value measurement and expense. Conversely,
changes in the risk-adjusted discount rate would be accompanied by a directionally opposite change in the related
fair value measurement and expense. The continued appropriateness of the valuation model selected or any decision
to change the valuation model may also lead to changes in fair value measurement. Subsequent to the acquisition
date, at each reporting period, the contingent consideration liability is re-measured to fair value with changes
recorded in selling, general and administrative expenses in the Consolidated Statements of Operations. During the
most recent re-measurement of the contingent consideration liability as of March 31, 2023, the Company used a
risk-adjusted discount rate of approximately 15.2% to adjust the probability-weighted cash flows to their present
value using probabilities ranging from 15% to 90% for the remaining contingent events. The contingent
consideration liability is included in contingent consideration, non-current on the Consolidated Balance Sheet at
March 31, 2023 and 2022 in the amount of $1.1 million and $2.7 million, respectively.

Refer to Note 14, “Acquisition” for more information.

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The fair value of financial assets measured on a recurring basis is as follows (in thousands):

Fair Value Measurements at Reporting Date Using
Quoted Prices
in Active
Markets for
Identical Assets
and Liabilities
(Level 1)

Significant
Observable Unobservable

Significant
Other

Inputs
(Level 3)

Inputs
(Level 2)

March 31, 2023

Assets:
Money market funds . . . . . . . . . . . . . . . . . . . . . . . . . . . $
Marketable securities . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $

7,796 $
3,363
11,159 $

7,796
—
7,796

—
3,363
3,363

—
—
—

Liabilities:
Contingent consideration. . . . . . . . . . . . . . . . . . . . . . . . $

1,052 $

—

1,052

Fair Value Measurements at Reporting Date Using
Quoted Prices
in Active
Markets for
Identical Assets
and Liabilities
(Level 1)

Significant
Observable Unobservable

Significant
Other

Inputs
(Level 3)

Inputs
(Level 2)

March 31, 2022

16,142 $
10,337
26,479 $

16,142
—
16,142

—
10,337
10,337

—
—
—

Liabilities:
Contingent consideration. . . . . . . . . . . . . . . . . . . . . . . . $

2,738 $

—

2,738

The following table sets forth the changes in fair value of contingent consideration for the fiscal years ended

March 31, 2023, 2022 and 2021, respectively:

2023

Year Ended March 31,
2022
(In thousands)

2021

Contingent consideration, beginning of period . . . . . . . . . . . . . . . . . . . . . $
Change due to accretion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Re-measurement of contingent consideration . . . . . . . . . . . . . . . . . . . . . .
Contingent consideration, end of period . . . . . . . . . . . . . . . . . . . . . . . . . . $

2,738 $
222
(1,908)
1,052 $

4,225 $
88
(1,575)
2,738 $

3,898
98
229
4,225

Short-term and long-term investments

All of the Company’s short-term and long-term investments are classified as available-for-sale. Available-for-
sale debt securities with maturities greater than twelve months are classified as long-term investments when they are
not intended for use in current operations. Investments in available-for-sale securities are reported at fair value with
unrecognized gains (losses), net of tax, as a component of accumulated other comprehensive loss on the
Consolidated Balance Sheets. The Company had money market funds of $7.8 million and $16.1 million at

March 31, 2023 and March 31, 2022, respectively, included in cash and cash equivalents on the Consolidated
Balance Sheets. The Company monitors its investments for impairment periodically and records appropriate
reductions in carrying values when the declines are determined to be other-than-temporary.

The following table summarizes the Company’s available-for-sale investments:

March 31, 2023

Gross

Cost

Unrealized Unrealized
Gains

Losses

Fair
Value

Short-term investments:

Certificates of deposit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 1,750 $
Supranational obligations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Agency bonds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

654
999

Total short-term investments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 3,403 $

— $
—
—
— $

(13) $ 1,737
637
(17)
989
(10)
(40) $ 3,363

(In thousands)

March 31, 2022

Gross

Cost

Unrealized Unrealized
Gains

Losses

Fair
Value

(In thousands)

Short-term investments:

Certificates of deposit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 4,000 $
Supranational obligations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Agency bonds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

1,007
2,011

Total short-term investments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 7,018 $
Long-term investments:

651
997

Total long-term investments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 3,398 $

— $
—
—
— $

(11) $ 3,989
1,000
(7)
(8)
2,003
(26) $ 6,992

— $
—
—
— $

(18) $ 1,732
(17)
634
979
(18)
(53) $ 3,345

The following table shows the gross unrealized losses and fair value of the Company’s investments with
unrealized losses aggregated by investment category and length of time that individual securities have been in a
continuous loss position as of March 31, 2023 and 2022, respectively.

Less Than 12 Months
Fair
Value

Unrealized
Loss

March 31, 2023
12 Months or Greater

Total

Fair
Value

Unrealized
Loss

Fair
Value

Unrealized

Loss

(In thousands)

Certificates of deposit . . . . . . . . . $
Agency bonds . . . . . . . . . . . . . . . .
Supranational obligations . . . . . .
$

— $
—
—
— $

1,737 $
990
636
3,363 $

(13) $
(10)
(17)
(40) $

1,737 $
990
636
3,363 $

(13)
(10)
(17)
(40)

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Less Than 12 Months
Fair
Value

Unrealized
Loss

March 31, 2022
12 Months or Greater

Total

Fair
Value

Unrealized
Loss

Fair
Value

Unrealized

Loss

(In thousands)

Certificates of deposit . . . . . . . . . $
Agency bonds . . . . . . . . . . . . . . . .
Supranational obligations . . . . . .
$

4,974 $
2,982
1,634
9,590 $

(26) $
(26)
(24)
(76) $

246 $
—
—
246 $

(3) $
—
—
(3) $

5,220 $
2,982
1,634
9,836 $

(29)
(26)
(24)
(79)

The Company’s investment portfolio consists of both corporate and governmental securities that have a
maximum maturity of three years. All unrealized gains and losses are due to changes in interest rates and bond
yields. Subject to normal credit risks, the Company has the ability to realize the full value of all these investments
upon maturity.

At March 31, 2023 and 2022, the deferred tax asset related to unrecognized gains and losses on short-term

and long-term investments was $10,000 and $22,000, respectively.

As of March 31, 2023, contractual maturities of the Company’s available-for-sale investments were as

follows:

Cost

Fair
Value

(In thousands)

Maturing within one year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 3,403 $ 3,363
—
Maturing in one to three years . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
—
$ 3,403 $ 3,363

NOTE 8—LEASES

The Company has operating leases for corporate offices, and research and development facilities. The

Company’s leases have remaining lease terms of 5 months to 49 months, some of which include options to extend
for up to 5 years.

Supplemental balance sheet information related to leases was as follows:

As of

March 31, 2023 March 31, 2022

(In thousands)

Operating Leases
Operating lease right-of-use assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $

Lease liabilities-current . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
Lease liabilities-non-current . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total operating lease liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $

684 $

413 $
238
651 $

889

537
361
898

The following table provides the details of lease costs:

Operating lease cost (fixed) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
Short-term lease cost . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

The following table provides other information related to leases:

Year Ended March 31,
2022
2023

(In thousands)
592 $
31
623 $

429
254
683

Year Ended March 31,
2022
2023

(In thousands)

Cash paid for amounts included in the measurement of lease liabilities
Operating cash flows from operating leases . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $

589 $

436

Right-of-use assets obtained in exchange for lease obligations
Operating leases . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $

376 $

585

Weighted-average remaining lease term (years):
Operating leases . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

2.42

1.70

Weighted-average discount rate:
Operating leases . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

4.37%

4.25%

The following table provides the maturities of the Company’s operating lease liabilities as of March 31,

2023:

Operating Lease
Liabilities

(In thousands)

Fiscal Year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2024 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
2025 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2026 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2027 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2028 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total undiscounted future cash flows . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Less: Imputed interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Present value of undiscounted future cash flows . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $

Presentation on statement of financial position
Current . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
Non-current . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $

420
84
86
89
7
686
(35)
651

413
238

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NOTE 9—COMMITMENTS AND CONTINGENCIES

Royalty obligations

The Company has license agreements that require it to pay royalties on the sale of products using the licensed

technology. Royalty expense for the years ended March 31, 2023, 2022 and 2021 was $39,000, $32,000 and
$35,000, respectively, and was included within cost of revenues.

Indemnification obligations

The Company is a party to a variety of agreements pursuant to which it may be obligated to indemnify the

other party with respect to certain matters. Typically, these obligations arise in the context of contracts entered into
by the Company, under which the Company customarily agrees to hold the other party harmless against losses
arising from a breach of representations and covenants related to such matters as title to assets sold and certain
intellectual property rights. In each of these circumstances, payment by the Company is conditioned on the other
party making a claim pursuant to the procedures specified in the particular contract, which procedures typically
allow the Company to challenge the other party’s claims. Further, the Company’s obligations under these
agreements may be limited in terms of time and/or amount, and in some instances, the Company may have recourse
against third parties for certain payments made by it under these agreements.

It is not possible to predict the maximum potential amount of future payments under these or similar

agreements due to the conditional nature of the Company’s obligations and the unique facts and circumstances
involved in each particular agreement. Historically, payments made by the Company under these agreements have
not had a material effect on its business, financial condition, cash flows or results of operations. The Company
believes that if it were to incur a loss in any of these matters, such loss should not have a material effect on its
business, financial condition, cash flows or results of operations.

Product warranties

The Company warrants its products to be free of defects generally for a period of three years. The Company

NOTE 10—COMMON STOCK

The Company’s Certificate of Incorporation, as amended, authorizes the Company to issue

150,000,000 shares of $0.001 par value common stock.

The Company’s board of directors has authorized the repurchase, at management’s discretion, of shares of its

common stock. Under the repurchase program, the Company may repurchase shares from time to time on the open
market or in private transactions. The specific timing and amount of the repurchases will be dependent on market
conditions, securities law limitations and other factors. The repurchase program may be suspended or terminated at
any time without prior notice. Through March 31, 2023, including the shares purchased in a modified “Dutch
Auction” self-tender offer, the Company has repurchased and retired a total of 12,004,779 shares at an average cost
of $5.06 per share for a total cost of $60.7 million. At March 31, 2023, management was authorized to repurchase
additional shares with a value of up to $4.3 million under the repurchase program.

NOTE 11—STOCK-BASED COMPENSATION

The 2007 Equity Incentive Plan

In January 2007, the Company’s board of directors approved the 2007 Equity Incentive Plan, (the “2007

Plan”), which was subsequently approved by the Company’s stockholders in March 2007. A total of
3,000,000 shares of common stock were authorized and reserved for issuance under the 2007 Plan. This reserve
automatically increased on April 1 of each year through 2017 by an amount equal to the smaller of (a) five percent
of the number of shares of common stock issued and outstanding on the immediately preceding March 31, or (b) a
lesser amount determined by the board of directors. As described below, the 2007 Plan was terminated in
August 2016 and no further awards may be granted pursuant to the 2007 Plan. In the event of a stock split or other
change in the Company’s capital structure, appropriate adjustments will be made in the number of outstanding
awards to prevent dilution or enlargement of participants’ rights.

Awards could be granted under the 2007 Plan to the Company’s employees, including officers, directors, or

consultants or those of any present or future parent or subsidiary corporation or other affiliated entity. Options
granted to non-officer employees generally vest at the rate of 25% on the first anniversary and subsequent
anniversaries of the date of grant, while grants to officers vest in full four years after the anniversary date of the
officer’s employment that is closest to the date of grant.

In the event of a change in control as described in the 2007 Plan, the acquiring or successor entity may
assume or continue all or any awards outstanding under the 2007 Plan or substitute substantially equivalent awards.
Any awards which are not assumed or continued in connection with a change in control or exercised or settled prior
to the change in control will terminate effective as of the time of the change in control. The administrator may
provide for the acceleration of vesting of any or all outstanding awards upon such terms and to such extent as it
determines, except that the vesting of all nonemployee director awards will automatically be accelerated in full. The
2007 Plan also authorizes the administrator, in its discretion and without the consent of any participant, to cancel
each or any outstanding award denominated in shares upon a change in control in exchange for a payment to the
participant with respect to each vested share subject to the cancelled award of an amount equal to the excess of the
consideration to be paid per share of common stock in the change in control transaction over the exercise price per
share, if any, under the award.

The 2016 Equity Incentive Plan

In June 2016, the Company’s board of directors approved the 2016 Equity Incentive Plan, (the “2016 Plan”),

which was subsequently approved by the Company’s stockholders in August 2016. In connection with the
stockholders’ approval of the 2016 Plan, 6,000,000 shares available for future award under the 2007 Plan were
transferred to the 2016 Plan, 705,699 shares available for grant under the 2007 plan were canceled and the 2007 Plan
was terminated. The Company granted options under the 2007 Plan until August 2016, and the 2007 Plan continues
to govern the terms of options that remain outstanding under the 2007 Plan.

In July 2021, the Company’s board of directors approved the amendment and restatement of the 2016 Plan,

which was subsequently approved by the Company’s stockholders in August 2021. The following summary
highlights the material changes to the 2016 Plan:

• The number of shares available for issuance was increased by 4,000,000 shares;

• The sum of the aggregate grant date fair value of all equity awards and cash compensation for services as
a director that may be provided to any non-employee director in any fiscal year was limited to $300,000,
reflecting an amendment to a provision of the 2016 Plan that applies a limit of $150,000 to the grant of
equity awards alone in any fiscal year; and

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• The period during which new awards may be granted under the 2016 Plan was extended to August 25,

2031.

Appropriate and proportionate adjustments will be made to the number of shares authorized and other
numerical limits in the 2016 Plan and to outstanding awards in the event of any change in the Company’s common
stock through merger, consolidation, reorganization, reincorporation, recapitalization, reclassification, stock
dividend, stock split, reverse stock split, split-up, split-off, spin-off, combination of shares, exchange of shares or
similar change in the Company’s capital structure, or if the Company makes a distribution to its stockholders in a
form other than common stock (excluding regular and periodic cash dividends) that has a material effect on the fair
market value of the Company’s common stock. In such circumstances, the administrator also has the discretion
under the 2016 Plan to adjust other terms of outstanding awards as it deems appropriate.

If any award granted under the 2016 Plan expires or otherwise terminates for any reason without having been

exercised or settled in full, or if shares subject to forfeiture or repurchase are forfeited or repurchased by the
Company for not more than the participant's purchase price, any such shares reacquired or subject to a terminated
award will again become available for issuance under the 2016 Plan. Shares will not be treated as having been
issued under the 2016 Plan and will therefore not reduce the number of shares available for issuance to the extent an
award is settled in cash or to the extent that shares are withheld or reacquired by the Company in satisfaction of a tax
withholding obligation. Upon the exercise of a stock appreciation right, tender of shares in payment of an option's
exercise price or net-exercise of an option, the number of shares available under the 2016 Plan will be reduced by
number of shares actually issued in settlement of the award.

To enable compensation provided in connection with certain types of awards intended to qualify as

“performance-based” within the meaning of Section 162(m) of the Internal Revenue Code, the 2016 Plan establishes
limits on the maximum aggregate number of shares or dollar value for which awards may be granted to an employee
in any fiscal year, as follows:

• No more than 300,000 shares subject to stock options and stock appreciation rights.

• No more than 100,000 shares subject to restricted stock and restricted stock unit awards.

• For each full fiscal year of the Company contained in the performance period of performance shares or
performance unit awards, no more than 50,000 shares subject to performance share awards or more than
$500,000 subject to performance unit awards.

• For each full fiscal year of the Company contained in the performance period of cash-based or other
stock-based awards, no more than $500,000 subject to cash-based awards or more than 50,000 shares
subject to other stock-based awards.

Awards may be granted under the 2016 Plan to the Company’s employees, including officers, directors and

consultants or those of any present or future parent or subsidiary corporation or other affiliated entity of the
Company. To date, options granted to non-officer employees generally vest 25% on the first anniversary and
subsequent anniversaries of the date of grant, while grants to officers generally vest in full four years after the
anniversary date of the officer’s employment that is closest to the date of grant.

While the Company may grant incentive stock options only to employees, the Company may grant
nonstatutory stock options, stock appreciation rights, restricted stock and stock units, performance shares and units,
other stock-based awards and cash-based awards to any eligible participant. Non-employee director awards may be
granted only to members of the Company’s board of directors who, at the time of grant, are not employees.

Only members of the board of directors who are not employees at the time of grant are eligible to participate

in the nonemployee director awards component of the 2016 Plan. The board or the compensation committee shall set
the amount and type of nonemployee director awards to be awarded on a periodic, non-discriminatory basis.
Nonemployee director awards may be granted in the form of NSOs, stock appreciation rights, restricted stock
awards and restricted stock unit awards. Subject to adjustment for changes in the Company's capital structure, no
nonemployee director may be awarded, in any fiscal year, one or more nonemployee director awards for more than a
number of shares determined by dividing $150,000 by the fair market value of a share of the Company’s stock
determined on the last trading day immediately preceding the date on which the applicable nonemployee award is
granted.

The 2016 Plan provides that, without the approval of a majority of the votes cast in person or by proxy at a

meeting of the Company’s stockholders, the administrator may not provide for any of the following with respect to
underwater options or stock appreciation rights: (1) either the cancellation of such outstanding options or stock
appreciation rights in exchange for the grant of new options or stock appreciation rights at a lower exercise price or
the amendment of outstanding options or stock appreciation rights to reduce the exercise price, (2) the issuance of
new full value awards in exchange for the cancellation of such outstanding options or stock appreciation rights, or
(3) the cancellation of such outstanding options or stock appreciation rights in exchange for payments in cash.

In the event of a change in control as described in the 2016 Plan, the surviving, continuing, successor or

purchasing entity or its parent may, without the consent of any participant, either assume or continue outstanding
awards or substitute substantially equivalent awards for its stock. If so determined by the Committee, stock-based
awards will be deemed assumed if, for each share subject to the award prior to the change in control, its holder is
given the right to receive the same amount of consideration that a stockholder would receive as a result of the
change in control. Any awards which are not assumed or continued in connection with a change in control or
exercised or settled prior to the change in control will terminate effective as of the time of the Change in Control.
The administrator may provide for the acceleration of vesting or settlement of any or all outstanding awards upon
such terms and to such extent as it determines, except that the vesting of all nonemployee director awards will
automatically be accelerated in full. The 2016 Plan also authorizes the administrator, in its discretion and without the
consent of any participant, to cancel each or any outstanding award denominated in shares of stock upon a change in
control in exchange for a payment to the participant with respect to each vested share (and each unvested share if so
determined by the administrator) subject to the cancelled award of an amount equal to the excess of the
consideration to be paid per share of common stock in the change in control transaction over the exercise or
purchase price per share, if any, under the award.

The 2007 Employee Stock Purchase Plan

In January 2007, the board of directors approved the 2007 Employee Stock Purchase Plan (the “2007

Purchase Plan”) which was subsequently approved by the Company’s stockholders in March 2007. A total of
500,000 shares of the Company’s common stock was authorized and reserved for sale under the 2007 Purchase Plan.
In addition, the 2007 Purchase Plan provides for an automatic annual increase in the number of shares available for
issuance under the plan on April 1 of each year beginning in 2008 and continuing through and including April 1,
2017 equal to the lesser of (1) one percent of the number of issued and outstanding shares of common stock on the
immediately preceding March 31, (2) 250,000 shares or (3) a number of shares as the board of directors may
determine. Appropriate adjustments will be made in the number of authorized shares and in outstanding purchase
rights to prevent dilution or enlargement of participants' rights in the event of a stock split or other change in our
capital structure. Shares subject to purchase rights that expire or are canceled will again become available for
issuance under the 2007 Purchase Plan.

The Company’s employees and employees of any parent or subsidiary corporation designated by the
administrator will be eligible to participate in the 2007 Purchase Plan if they are customarily employed by us for

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more than 20 hours per week and more than five months in any calendar year. However, an employee may not be
granted a right to purchase stock under the 2007 Purchase Plan if: (1) the employee immediately after such grant
would own stock possessing 5% or more of the total combined voting power or value of all classes of our capital
stock or of any parent or subsidiary corporation, or (2) the employee’s rights to purchase stock under all of our
employee stock purchase plans would accrue at a rate that exceeds $25,000 in value for each calendar year of
participation in such plans.

The 2007 Purchase Plan is designed to be implemented through a series of sequential offering periods,

generally six (6) months in duration beginning on the first trading day on or after May 1 and November 1 of each
year. The administrator is authorized to establish additional or alternative sequential or overlapping offering periods
and offering periods having a different duration or different starting or ending dates, provided that no offering period
may have a duration exceeding 27 months.

Amounts accumulated for each participant under the 2007 Purchase Plan are used to purchase shares of the
Company’s common stock at the end of each offering period at a price generally equal to 85% of the lower of the
fair market value of our common stock at the beginning of an offering period or at the end of the offering period.
Prior to commencement of an offering period, the administrator is authorized to reduce, but not increase, this
purchase price discount for that offering period, or, under circumstances described in the 2007 Purchase Plan, during
that offering period. The maximum number of shares a participant may purchase in any six-month offering period is
the lesser of (i) that number of shares determined by multiplying (x) 1,000 shares by (y) the number of months
(rounded to the nearest whole month) in the offering period and rounding to the nearest whole share or (ii) that
number of whole shares determined by dividing (x) the product of $2,083.33 and the number of months (rounded to
the nearest whole month) in the offering period and rounding to the nearest whole dollar by (y) the fair market value
of a share of our common stock at the beginning of the offering period. Prior to the beginning of any offering period,
the administrator may alter the maximum number of shares that may be purchased by any participant during the
offering period or specify a maximum aggregate number of shares that may be purchased by all participants in the
offering period. If insufficient shares remain available under the plan to permit all participants to purchase the
number of shares to which they would otherwise be entitled, the administrator will make a pro rata allocation of the
available shares. Any amounts withheld from participants' compensation in excess of the amounts used to purchase
shares will be refunded, without interest. During fiscal 2023, 198,820 shares of common stock were issued under the
2007 Purchase Plan.

In the event of a change in control, an acquiring or successor corporation may assume our rights and
obligations under the 2007 Purchase Plan. If the acquiring or successor corporation does not assume such rights and
obligations, then the purchase date of the offering periods then in progress will be accelerated to a date prior to the
change in control.

The following table summarizes stock option activities:

Balance at March 31, 2020 . . . . . . . . . . . . . . . . .
Granted . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Exercised . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Forfeited . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Balance at March 31, 2021 . . . . . . . . . . . . . . . . .
Options reserved . . . . . . . . . . . . . . . . . . . . . .
Granted . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Exercised . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Forfeited . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Balance at March 31, 2022 . . . . . . . . . . . . . . . . .
Granted . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Exercised . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Forfeited . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Balance at March 31, 2023 . . . . . . . . . . . . . . . . .
Options vested and exercisable . . . . . . . . . . . . . .
Options vested and expected to vest . . . . . . . . . .

Shares
Available for

Grant
2,522,314
(1,285,252)
—
94,500
1,331,562
4,000,000
(1,280,761)
—
484,862
4,535,663
(1,535,647)
—
594,835
3,594,851

Number of Shares
Underlying
Options

Outstanding

Weighted
Average

Weighted
Remaining Average
Contractual Exercise
Life (Years) Price

Intrinsic
Value

8,135,791
1,285,252
(667,503)
(320,663)
8,432,877
—
1,280,761
(316,784)
(806,179)
8,590,675
1,535,647
—
(1,317,162)
8,809,160
5,470,684
8,628,329

$ 6.17
$ 6.46
$ 5.99 $ 961,633
$ 7.84
$ 6.17
$
—
$ 5.43
$ 5.12 $ 149,937
$ 6.45
$ 6.07
$ 3.01
$
$ 5.50
5.52 $ 5.62
3.77 $ 6.01 $
5.44 $ 5.64 $

—
—

— $

—

The options outstanding and by exercise price at March 31, 2023 are as follows:

Number of
Shares
Underlying
Options

Exercise Price

Outstanding

Options Outstanding

Options Exercisable

Weighted
Average
Exercise
Price

Weighted Average

Remaining
Contractual
Life (Years)

Number
Vested and
Exercisable

Weighted
Average
Exercise
Price

-
-
-
-
-
-
-
-

3.40
4.42
4.99
5.58
5.83
6.70
7.40
8.00

$ 1.87
$ 3.60
$ 4.68
$ 5.13
$ 5.69
$ 5.91
$ 6.86
$ 7.46
$ 8.09
$ 8.30

1,069,082 $
913,408 $
1,081,111 $
1,346,631 $
953,077 $
1,182,559 $
935,148 $
698,791 $
77,260 $
552,093 $
8,809,160 $

2.52
4.12
4.97
5.42
5.80
6.42
7.10
7.74
8.09
8.30
5.62

7.84
8.41
2.84
5.32
5.46
4.70
3.19
6.65
4.22
6.33
5.52

299,414 $
161,432 $
1,081,111 $
735,451 $
411,522 $
1,118,669 $
935,148 $
536,608 $
77,260 $
114,069 $
5,470,684 $

3.40
4.06
4.97
5.30
5.77
6.44
7.10
7.75
8.09
8.30
6.01

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Stock-based compensation

The Company recognized $2.5 million, $3.0 million and $2.9 million of stock-based compensation expense

for the years ended March 31, 2023, 2022 and 2021, respectively, as follows:

2023

Year Ended March 31,
2022
(In thousands)

2021

346
Cost of revenues. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
1,509
Research and development . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
999
Selling, general and administrative . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 2,469 $ 2,993 $ 2,854

1,316
951

1,676
1,069

202 $

248 $

Stock-based compensation expense in the years ended March 31, 2023, 2022 and 2021 included $211,000,

$260,000 and $276,000, respectively, related to the Company’s Employee Stock Purchase Plan.

No tax benefit was recognized in either fiscal 2023 or fiscal 2022 due to a full valuation allowance. There

were no windfall tax benefits realized from exercised stock options recognized in fiscal 2023 or fiscal 2022.
Compensation cost capitalized within inventory at March 31, 2023 and 2022 was not material. As of March 31,
2023, the Company’s total unrecognized compensation cost was $4.4 million, which will be recognized over the
weighted average period of 1.74 years. The Company calculated the fair value of stock-based awards in the periods
presented using the Black-Scholes option pricing model and the following weighted average assumptions:

2023

Year Ended March 31,
2022

2021

Stock Option Plans:
Risk-free interest rate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.95 - 4.27 % 0.66
Expected life (in years) . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.55 - 5.00
Volatility . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49.2 - 53.1 % 47.7
Dividend yield . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Employee Stock Purchase Plan:
Risk-free interest rate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.54 - 4.54 % 0.04
Expected life (in years) . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Volatility . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49.3 - 58.2 % 45.6
Dividend yield . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

— %

0.50

- 1.62 % 0.22 - 0.42 %
5.00
- 49.1 % 41.9 - 47.6 %
— %

— %

5.00

- 0.07 % 0.12 - 0.15 %
0.50
- 57.4 % 67.1 - 68.6 %
— %

— %

0.50

The weighted average fair value of options granted during the years ended March 31, 2023, 2022 and 2021

was $1.38, $2.29 and $2.55, respectively.

NOTE 12—RELATED PARTY TRANSACTION

The Company incurred non-recurring engineering service expense and manufacturing services of
approximately $240,000, $397,000 and $482,000 during the fiscal years ended March 31, 2023, 2022 and 2021,
respectively, from Wistron Neweb Corp (“WNC”) in connection with the manufacturing of single-APU PCIe
boards, to be used in the Company’s in-place associative computing product. Haydn Hsieh, a member of the
Company’s board of directors, is the Chairman and Chief Strategy Officer of WNC. The amount owed to WNC, of
$8,000 and $32,000 at March 31, 2023 and 2022, respectively, is included in accounts payable in the Consolidated
Balance Sheets.

NOTE 13—SEGMENT AND GEOGRAPHIC INFORMATION

Based on its operating management and financial reporting structure, the Company has determined that it has

one reportable business segment: the design, development and sale of integrated circuits.

The following is a summary of net revenues by geographic area based on the location to which product is

shipped:

2023

Year Ended March 31,
2022
(In thousands)

2021

United States . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 14,435 $ 15,517 $ 12,375
2,454
China . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
4,074
Singapore . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
5,555
Netherlands . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2,395
Germany . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
876
Rest of the world . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$ 29,691 $ 33,384 $ 27,729

2,108
5,731
5,172
3,471
1,385

1,582
4,941
3,087
4,474
1,172

All sales are denominated in United States dollars.

The locations and net book value of long-lived assets and operating lease right-of-use assets are as follows:

United States . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
Taiwan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Israel . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

NOTE 14—ACQUISITION

March 31,

2023

2022

(In thousands)

7,453 $ 7,027
407
814
8,107 $ 8,248

177
477

On November 23, 2015, the Company acquired all of the outstanding capital stock of privately held
MikaMonu Group Ltd. (“MikaMonu”), a development-stage, Israel-based company that specialized in in-place
associative computing for markets including big data, computer vision and cyber security. MikaMonu, located in Tel
Aviv, held 12 United States patents and had a number of pending patent applications.

The acquisition was accounted for as a purchase under authoritative guidance for business combinations. The

purchase price of the acquisition was allocated to the intangible assets acquired, with the excess of the purchase
price over the fair value of assets acquired recorded as goodwill. The Company performs a goodwill impairment test
in February of each fiscal year and if certain events or circumstances indicate that an impairment loss may have been
incurred, on an interim basis.

Consideration

Under the terms of the acquisition agreement, the Company paid the former MikaMonu shareholders initial

cash consideration of approximately $4.9 million. The Company is also required to pay the former MikaMonu
shareholders future contingent consideration consisting of retention payments and “earnout” payments, as described
below.

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The Company made cash retention payments of $2.5 million to the three former MikaMonu shareholders in

installments over a four-year period, that were conditioned on the continued employment of Dr. Avidan Akerib,
MikaMonu’s co-founder and chief technologist. The retention amount of $2.5 million was deposited in escrow. Of
this amount, $743,000, $750,000 and $1.0 million was paid to the former MikaMonu shareholders during the
quarters ended December 31, 2017, 2018 and 2019, respectively. The Company is not required to make any further
retention payments.

The Company will also make “earnout” payments to the former MikaMonu shareholders in cash or shares of
the Company’s common stock, at the Company’s discretion, during a period of up to ten years following the closing
if certain product development milestones and revenue targets for products based on the MikaMonu technology are
achieved. Earnout amounts of $750,000 were paid in the fiscal year ended March 31, 2019 based on the achievement
of certain product development milestones. Additional payments, up to a maximum of $30.0 million, equal to 5% of
net revenues from the sale of qualifying products in excess of certain thresholds, will be made quarterly through
December 31, 2025.

The portion of the retention payment contingently payable to Dr. Akerib (approximately $1.2 million) was
recorded as compensation expense over the period that his services were provided to the Company. The portion of
the retention payment made to the other former MikaMonu shareholders (approximately $1.3 million) plus the
maximum amount of the potential earnout payments as of March 31, 2023 totals approximately $32.0 million. The
Company determined that the fair value of this contingent consideration liability was $5.8 million at the acquisition
date. The contingent consideration liability is included in contingent consideration, non-current on the Consolidated
Balance Sheets at March 31, 2023 and 2022 in the amount of $1.1 million and $2.7 million, respectively.

At each reporting period, the contingent consideration liability is re-measured to fair value with changes

recorded in selling, general and administrative expenses in the Consolidated Statements of Operations. Re-
measurement of the contingent consideration liability resulted in an increase (reduction) in fair value for the years
ended March 31, 2023, 2022 and 2021 of ($1.9 million), ($1.6 million) and $229,000, respectively. See Note 7 for
the valuation of contingent consideration.

NOTE 15—EMPLOYEE BENEFIT PLANS

The Company provides a defined contribution retirement plan (the “Retirement Plan”), which qualifies under

Section 401(k) of the Internal Revenue Code of 1986. The Retirement Plan covers essentially all United States
employees. Eligible employees may make contributions to the Retirement Plan up to 15% of their annual
compensation, but no greater than the annual IRS limitation for any plan year. The Retirement Plan does not provide
for Company contributions.

The Company provides a defined contribution retirement plan (the “Taiwan Pension Plan”) that covers

essentially all of its employees located in Taiwan. The Company makes contributions to the Taiwan Pension Plan
equal to 6% of eligible compensation and employees can make voluntary contributions of up to 6% of eligible
compensation. All contributions are fully vested.

The Company provides a defined contribution retirement plan (the “Pension Plan”) that covers essentially all

of its employees located in Israel. Eligible employees may make contributions to the Pension Plan up to 6% of
eligible compensation, and the Company contributes up to 15.83% of eligible compensation. All contributions are
fully vested.

Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure

None.

Item 9A. Controls and Procedures

Management’s Evaluation of Disclosure Controls and Procedures

We maintain “disclosure controls and procedures,” as defined in Rules 13a-15(e) and 15d-15(e) under the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), that are designed to ensure that information
required to be disclosed by a company in the reports that it files or submits under the Exchange Act is recorded,
processed, summarized and reported, within the time periods specified in the SEC’s rules and forms. Disclosure
controls and procedures include, without limitation, controls and procedures designed to ensure that information
required to be disclosed by a company in the reports that it files or submits under the Exchange Act is accumulated
and communicated to the company’s management, including its principal executive officer and principal financial
officer, as appropriate to allow timely decisions regarding required disclosure. Management recognizes that any
controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of
achieving their objectives and management necessarily applies its judgment in evaluating the cost-benefit
relationship of possible controls and procedures.

Based on the evaluation of our disclosure controls and procedures as of March 31, 2023, our Chief Executive

Officer and Chief Financial Officer concluded that, solely as a result of the material weakness in the Company's
internal control over financial reporting, as of such date, our disclosure controls and procedures were not effective.
The material weakness resulted in a significant adjustment to the fair value of the contingent consideration liability
in the current period. Management corrected this misstatement prior to issuance of the financial statements for the
fiscal year ended March 31, 2023. Additionally, management has performed an analysis to ensure no other material
errors resulted from this control failure.

Management’s Report on Internal Controls Over Financial Reporting

Our management is responsible for establishing and maintaining adequate internal control over financial
reporting as defined in Rule 13a-15(f) of the Exchange Act. Because of its inherent limitations, internal control over
financial reporting may not prevent or detect misstatements and can only provide reasonable assurance with respect
to financial statement preparation. Also, projections of any evaluation of effectiveness to future periods are subject
to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance
with the policies or procedures may deteriorate. Management conducted an assessment of our internal control over
financial reporting based on the framework established in 2013 by the Committee of Sponsoring Organizations of
the Treadway Commission in Internal Control-Integrated Framework. Based on the assessment, management
concluded that, as of March 31, 2023, our internal control over financial reporting was not effective.

During its review, management determined that the material weakness, which was identified in the course of
preparing our financial statements for the fiscal year ended March 31, 2022, remained un-remediated at March 31,
2023. Specifically, management concluded that it did not design and maintain adequate controls over the review of
forecasts and the probability of achievement of the forecast used to calculate the contingent consideration liability,
used in the goodwill impairment test and used in the recoverability test over intangible assets.

Because we are a non-accelerated filer, our independent registered public accounting firm is not required to

attest to or issue a report on the effectiveness of our internal control over financial reporting.

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Remediation Plans for Material Weakness in Internal Control over Financial Reporting

We are committed to maintaining a strong internal control environment. In response to the identified material

weakness above, we, with the oversight of the Audit Committee of the Board of Directors, will take comprehensive
actions to remediate the material weakness in internal control over financial reporting. We will re-evaluate the
process and procedures involved in developing forecasts used for the calculation of the contingent consideration
liability, used in the goodwill impairment test and used in the recoverability test for intangible assets. The
remediation efforts are intended both to address the identified material weakness, and to enhance our overall
financial control environment. We continue to evaluate and work to improve our controls and procedures and
internal control over financial reporting. Until this material weakness is remediated, we plan to continue to perform
additional analyses and other procedures to ensure our consolidated financial statements are prepared in accordance
with GAAP.

Changes in Internal Control Over Financial Reporting

Except for our identification and assessment of the material weakness described above, there were no changes

in our internal control over financial reporting that occurred during the quarter ended March 31, 2023 that have
materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

Our management, including our Chief Executive Officer and Chief Financial Officer, does not expect that our
disclosure controls and procedures or our internal controls will prevent all errors and all fraud. A control system, no
matter how well conceived and operated, can provide only reasonable, not absolute assurance that the objectives of
the control system are met. Further, the design of a control system must reflect the fact that there are resource
constraints, and the benefits of controls must be considered relative to their costs. Because of the inherent limitations
in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances
of fraud, if any, within GSI Technology, Inc. have been detected.

Item 9B. Other Information

Not applicable.

Item 9C. Disclosure Regarding Foreign Jurisdictions that Prevent Inspections

Not applicable.

PART III

The SEC allows us to include information required in this report by referring to other documents or reports

we have already filed or will soon be filing. This is called “incorporation by reference.” We intend to file our
definitive proxy statement for our 2023 annual meeting of stockholders (the “Proxy Statement”) pursuant to
Regulation 14A not later than 120 days after the end of the fiscal year covered by this report, and certain information
therein is incorporated in this report by reference.

Item 10. Directors, Executive Officers and Corporate Governance

The information required by this item with respect to executive officers is set forth in Part I of this Annual
Report on Form 10-K and the remaining information required by this item is incorporated by reference from the
sections entitled “Proposal No. 1 - Election of Directors” and “Corporate Governance” to be included in the Proxy
Statement.

Item 11. Executive Compensation

The information required by this item is incorporated by reference from the section entitled “Executive

Compensation” to be included in the Proxy Statement.

Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters

The information required by this item is incorporated by reference from the sections entitled “Principal

Stockholders and Stock Ownership by Management” and “Executive Compensation – Equity Compensation Plan
Information” to be included in the Proxy Statement.

Item 13. Certain Relationships and Related Transactions, and Director Independence

The information required by this item is incorporated by reference from the section entitled “Related Person

Transactions” and “Corporate Governance—Director Independence” to be included in the Proxy Statement.

Item 14. Principal Accountant Fees and Services

The information required by this item is incorporated by reference from the section entitled “Proposal No. 2 -

Ratification of Appointment of Independent Registered Public Accounting Firm” to be included in the Proxy
Statement.

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Item 15. Exhibits and Financial Statement Schedules

PART IV

(a) The following documents are filed as part of this Form:

1. Financial Statements

Report of Independent Registered Public Accounting Firm. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Consolidated Balance Sheets As of March 31, 2023 and 2022 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Consolidated Statements of Operations For the Three Years Ended March 31, 2023, 2022 and 2021 . . . . .
Consolidated Statements of Comprehensive Loss For the Three Years Ended March 31, 2023, 2022

and 2021 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Consolidated Statements of Stockholders’ Equity For the Three Years Ended March 31, 2023, 2022

and 2021 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Consolidated Statements of Cash Flows For the Three Years Ended March 31, 2023, 2022 and 2021 . . . .
Notes to Consolidated Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Page
50
53
54

56
57
58

2. Financial Statement Schedules

Schedules not listed above have been omitted because the information required to be set forth therein is not

applicable, is not required or is shown in the consolidated financial statements or the notes thereto.

3. Exhibits:

The following exhibits are filed herewith:

Exhibit
Number

3.1

3.2

4.1

10.1

Amended and Restated Certificate of Incorporation of Registrant (Incorporated by reference to

Exhibit 3.1 to Registrant’s Current Report on Form 8-K filed on August 26, 2022)

Name of Document

Bylaws of Registrant (Incorporated by reference to Exhibit 3.1 to Registrant’s Current Report on
Form 8-K filed on January 25, 2022)

Description of Registrant's securities registered pursuant to Section 12 of the Securities Exchange

Act of 1934

Form of Indemnity Agreement between Registrant and Registrant’s directors and officers
(Incorporated by reference to identically-numbered exhibit to Registrant’s Registration Statement
on Form S-1 (File No. 333-139885) filed on January 10, 2007)

10.2

(1) 2007 Equity Incentive Plan, as amended (Incorporated by reference to Appendix A to Registrant’s

definitive Proxy Statement filed on July 21,2011)

10.3

(1) 2007 Employee Stock Purchase Plan and form of Subscription Agreement (Incorporated by

reference to identically-numbered exhibit to Registrant’s Registration Statement on Form S-1 (File
No. 333-139885) filed on February 16, 2007)

10.4

(1) Form of Notice of Grant of Stock Option (U.S. Participant) (Incorporated by reference to

Exhibit 99.1 to Registrant’s Current Report on Form 8-K filed on June 4, 2007)

10.5

(1) Form of Notice of Grant of Stock Option (Non-U.S. Participant) (Incorporated by reference to

Exhibit 99.2 to Registrant’s Current Report on Form 8-K filed on June 4, 2007)

10.6

(1) Form of Stock Option Agreement (U.S. Participant) (Incorporated by reference to Exhibit 99.3 to

Registrant’s Current Report on Form 8-K filed on June 4, 2007)

10.7

(1) Form of Stock Option Agreement (Non-U.S. Participant) (Incorporated by reference to Exhibit 99.4

to Registrant’s Current Report on Form 8-K filed on June 4, 2007)

10.8

Intellectual Property Agreement dated August 28, 2009 between GSI Technology, Inc. and Sony
Electronics Inc. (Incorporated by reference to Exhibit 10.2 to Registrant’s Quarterly Report on
Form 10-Q filed on November 16, 2009)

10.9

(2) Master Purchase Agreement dated August 31, 2011 between Registrant and Cisco Systems, Inc.

(Incorporated by reference to Exhibit 10.1 to Registrant’s Quarterly Report on Form 10 - Q filed on
November 4, 2011)

10.10

(2) Master Purchase Agreement dated August 31, 2011 between Registrant and Cisco Systems

International B.V. (Incorporated by reference to Exhibit 10.2 to Registrant’s Quarterly Report on
Form 10 - Q filed on November 4, 2011)

10.11

Stock Purchase Agreement dated November 23, 2015 among GSI Technology, Inc., GSI
Technology Holdings, Inc. and MikaMonu Group Ltd. (Incorporated by reference to Exhibit 10.1 to
Registrant’s Current Report on Form 8-K filed on February 4, 2016)

10.12

(1) GSI Technology, Inc. 2016 Equity Incentive Plan (Incorporated by reference to Exhibit 10.1 to

Registrant’s Current Report on Form 8-K/A filed on September 2, 2016)

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10.13

(1) GSI Technology, Inc. 2016 Equity Incentive Plan (Incorporated by reference to Exhibit 10.1 to

Registrant’s Current Report on Form 8-K/A filed on August 26, 2021)

10.14

(1) Form of Notice of Grant of Stock Option (U.S. Participant) under 2016 Equity Incentive Plan

(Incorporated by reference to Exhibit 10.2 to Registrant’s Form 10-Q filed on November 4, 2016)

10.15

(1) Form of Notice of Grant of Stock Option (Non-U.S. Participant) under 2016 Equity Incentive Plan

(Incorporated by reference to Exhibit 10.3 to Registrant’s Form 10-Q filed on November 4, 2016)

10.16

(1) Form of Stock Option Agreement (U.S. Participant) under 2016 Equity Incentive Plan

(Incorporated by reference to Exhibit 10.4 to Registrant’s Form 10-Q filed on November 4, 2016)

10.17

(1) Form of Stock Option Agreement (Non-U.S. Participant) under 2016 Equity Incentive Plan

(Incorporated by reference to Exhibit 10.5 to Registrant’s Form 10-Q filed on November 4, 2016)

10.18

(1) GSI Technology, Inc. Executive Retention and Severance Plan (Incorporated by reference to

Exhibit 10.1 to Registrant’s Current Report on Form 8-K filed on October 3, 2014)

10.19

10.20

10.21

(1) First Amendment to the GSI Technology, Inc. Executive Retention and Severance Plan dated
August 29. 2017 (Incorporated by reference to Exhibit 10.1 to Registrant’s Current Report on
Form 8-K filed on August 31, 2018)

(1) Second Amendment to the GSI Technology, Inc. Executive Retention and Severance Plan dated
August 27. 2020 (Incorporated by reference to Exhibit 10.1 to Registrant’s Current Report on
Form 8-K filed on August 28, 2020)

Factory Lease Agreement for No. 1, 6th Floor, 30 Tai-Yuan Street, Chu-Pei City, Taiwan dated
August 31, 2017 (Incorporated by reference to Exhibit 10.1 to Registrant’s Current Report on
Form 8-K filed on September 27, 2017)

10.22

(1) GSI Technology, Inc. 2021 Variable Compensation Plan (Incorporated by reference to Exhibit 10.1

to Registrant’s Current Report on Form 8-K filed on June 4, 2020)

10.23

Factory Lease Agreement for No. 1, 6th Floor, 30 Tai-Yuan Street, Chu-Pei City, Taiwan dated
August 13, 2020 (Incorporated by reference to Exhibit 10.1 to Registrant’s Current Report on
Form 8-K filed on August 19, 2020)

10.24

(1) GSI Technology, Inc. 2022 Variable Compensation Plan (Incorporated by reference to Exhibit 10.1

to Registrant’s Current Report on Form 8-K filed on June 4, 2021)

10.25

(1) GSI Technology, Inc. 2023 Variable Compensation Plan (Incorporated by reference to Exhibit 10.1

to Registrant’s Current Report on Form 8-K filed on June 3, 2022)

10.26

(1) GSI Technology, Inc. 2024 Variable Compensation Plan (Incorporated by reference to Exhibit 10.1

to Registrant’s Current Report on Form 8-K filed on June 2, 2023)

21.1

23.1

24.1

31.1

31.2

List of Subsidiaries

Consent of Independent Registered Public Accounting Firm – BDO USA, LLP

Power of Attorney (Incorporated by reference to the signature page of this Annual Report on
Form 10-K)

Certification of Lee-Lean Shu, President and Chief Executive Officer, pursuant to Section 302 of
the Sarbanes-Oxley Act of 2002

Certification of Douglas Schirle, Chief Financial Officer, pursuant to Section 302 of the Sarbanes-
Oxley Act of 2002

32.1

Certification of Lee-Lean Shu, President and Chief Executive Officer, and Douglas 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 (embedded within the Inline XBRL documents)

(1) Compensatory plan or management contract.

(2) This exhibit has been filed separately with the Commission pursuant to an application for confidential

treatment which has been granted by the Commission. The confidential portions of this exhibit have been
omitted and marked by asterisks.

Item 16. Form 10-K Summary

Not applicable.

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SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant

has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

June 28, 2023

GSI TECHNOLOGY, INC.

By:

/s/ DOUGLAS M. SCHIRLE
Douglas M. Schirle

Chief Financial Officer

POWER OF ATTORNEY

KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature appears below
constitutes and appoints Lee-Lean Shu and Robert Yau, jointly and severally, his attorneys-in-fact, each with the
power of substitution, for him in any and all capacities, to sign any amendments to this Annual Report on
Form 10- K and to file the same, with exhibits thereto and other documents in connection therewith, with the
Securities and Exchange Commission, hereby ratifying and confirming all that each of said attorneys-in-fact, or his
substitute or substitutes, may do or cause to be done by virtue thereof.

Pursuant to the requirements of the Securities Exchange Act of 1934, this Annual Report on Form 10-K has

been signed below by the following persons on behalf of the Registrant and in the capacities and on the dates
indicated.

Name

Title

Date

/s/ LEE-LEAN SHU
Lee-Lean Shu

President, Chief Executive Officer and Chairman

June 28, 2023

(Principal Executive Officer)

/s/ DOUGLAS M. SCHIRLE
Douglas M. Schirle

Chief Financial Officer
(Principal Financial and Accounting Officer)

June 28, 2023

/s/ ROBERT YAU
Robert Yau

/s/ JACK A. BRADLEY
Jack A. Bradley

/s/ ELIZABETH CHOLAWSKY
Elizabeth Cholawsky

/s/ HAYDN HSIEH
Haydn Hsieh

/s/ RUEY L. LU
Ruey L. Lu

/s/ BARBARA NELSON
Barbara Nelson

Vice President, Engineering, Secretary and
Director

Director

June 28, 2023

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(This page has been left blank intentionally.)

Board of Directors

Executive Officers

Lee-Lean Shu
Chairman of the Board, President and
Chief Executive Officer
GSI Technology, Inc.

Jack A. Bradley
Partner, David Powell Financial Services

Elizabeth Cholawsky
Chief Executive Officer
HG Insights Inc.

Haydn Hsieh
Chairman and Chief Strategy Officer
Wistron NeWeb Corporation

Ruey L. Lu
President
EMPIA Technology

Barbara Nelson
Former Vice President of Western Digital
Corporation

Robert Yau
Vice President, Engineering
GSI Technology, Inc.

Lee-Lean Shu
President and Chief Executive Officer

Didier Lasserre
Vice President, Sales

Douglas Schirle
Chief Financial Officer

Bor-Tay Wu
Vice President, Taiwan Operations

Ping Wu
Vice President, U.S. Operations

Robert Yau
Vice President, Engineering

Avidan Akerib
Vice President, Associative Computing

Annual Meeting of Stockholders
The annual meeting of stockholders
will be held on Thursday, August 24, 2023
at 2:00 p.m. PDT, virtually via audio
webcast at
https://meetnow.global/ MQV6UG2

Corporate Offices
GSI Technology, Inc.
1213 Elko Drive
Sunnyvale, California 94089
408-331-8800
http://www.gsitechnology.com

General Counsel
DLA Piper LLP (US)
East Palo Alto, California

Investor Relations
Hayden IR
Scottsdale, Arizona
646-536-7331

Independent Registered Public
Accounting Firm
BDO USA, LLP
San Jose, California

Transfer Agent and Stock Registrar
First Class/Registered/Certified Mail:
Computershare
P.O. Box 505000
Louisville, KY 40233

Courier Services:
Computershare
462 South 4th Street, Suite 1600
Louisville, KY 40202

Shareholder Services Number:
800-368-5948
Investor Centre™ portal:
www.computershare.com/investor

Additional Information

Additional copies of our annual report on Form 10-K, as filed with the Securities and Exchange

Commission, can be obtained, free of charge, on our Web site or upon written request by mail or e-mail to our
corporate offices, Attention Investor Relations, at the address indicated above.

www.gsitechnology.com

Corporate Office
1213 Elko Drive
Sunnyvale, CA 94089
(cid:23)08-(cid:22)(cid:22)(cid:20)-8(cid:27)(cid:19)(cid:19)