10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 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: 001-41295

Transphorm, Inc.

(Exact name of registrant as specified in its charter)

Delaware		82-1858829
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)
75 Castilian Drive
Goleta,	California	93117
(Address of principal executive offices)		(Zip Code)

(805) 456-1300

(Registrant’s telephone number, including area code)

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

Title of Each Class	Trading Symbol(s)	Name of Each Exchange on Which Registered
Common Stock, par value $0.0001 per share	TGAN	The Nasdaq Stock Market LLC

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,”

1

“accelerated filer,” “smaller reporting company,” and "emerging growth company" in Rule 12b-2 of the Exchange Act.

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 is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

As of November 2, 2023, 62,002,968 shares of the registrant’s common stock were outstanding.

2

Transphorm, Inc.

FORM 10-Q

Table of Contents

Glossary of Terms and Abbreviations	4
Risk Factor Summary	5
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements	7
Unaudited Condensed Consolidated Balance Sheets as of September 30, 2023 and March 31, 2023	7
Unaudited Condensed Consolidated Statements of Operations for the Three and Six Months Ended September 30, 2023 and 2022	9
Unaudited Condensed Consolidated Statements of Comprehensive Loss for the Three and Six Months Ended September 30, 2023 and 2022	10
Unaudited Condensed Consolidated Statements of Stockholders’ Equity for the Three and Six Months Ended September 30, 2023 and 2022	11
Unaudited Condensed Consolidated Statements of Cash Flows for the Six Months Ended September 30, 2023 and 2022	13
Notes to Unaudited Condensed Consolidated Financial Statements	15
Note Regarding Forward-Looking Statements	28
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations	29
Item 3. Quantitative and Qualitative Disclosures About Market Risk	38
Item 4. Controls and Procedures	38
PART II - OTHER INFORMATION
Item 1. Legal Proceedings	40
Item 1A. Risk Factors	40
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds	59
Item 3. Defaults Upon Senior Securities	59
Item 4. Mine Safety Disclosures	59
Item 5. Other Information	59
Item 6. Exhibits	60
SIGNATURES	61

3

Glossary of Terms and Abbreviations

The following is a glossary of technical terms used in this Quarterly Report on Form 10-Q (this “Report”):

AC – alternating current

AEC-Q101 – Automotive Electronic Council’s electronic components stress qualification standard

AFSW – Aizu Fujitsu Semiconductor Wafer Solution Limited, the wafer fabrication facility located in Aizu Wakamatsu, Japan that is owned by GaNovation, our joint venture company

DC – direct current

Epi/Epiwafer/Epimaterials – GaN device layers grown on a substrate, from which active GaN-based devices are subsequently manufactured in a wafer fabrication facility

FET – field effect transistor, a type of switching transistor

GaN – gallium nitride

JEDEC – Joint Electron Device Engineering Council, an independent semiconductor engineering trade organization and standardization body that represents all areas of the electronics industry

MOCVD – metal organic chemical vapor deposition, a technique for layering GaN layers onto substrates such as a silicon substrate and making the starting GaN semiconductor material (i.e., an epiwafer)

Power converters / Inverters – electronic systems used to convert electricity from AC to DC (such as a charger), DC-AC (such as an inverter) or in some cases AC-AC or DC-DC within the systems converting from one voltage level to another

4

Risk Factor Summary

Our business is subject to significant risks and uncertainties that make an investment in us speculative and risky. Below we summarize what we believe are the principal risk factors but these risks are not the only ones we face, and you should carefully review and consider the full discussion of our risk factors in the section titled “Risk Factors,” together with the other information in this Report. If any of the following risks actually occurs (or if any of those listed elsewhere in this Report occur), our business, reputation, financial condition, results of operations, revenue, and future prospects could be seriously harmed. Additional risks and uncertainties that we are unaware of, or that we currently believe are not material, may also become important factors that adversely affect our business.

•We have a history of losses, anticipate increasing our operating expenses and capital expenditures in the future, and may not be able to achieve or maintain profitability.

•If we do not successfully complete the asset-based debt financing initiatives we are pursuing or raise other capital, we believe that our existing cash and cash equivalents and forecasted revenue will be sufficient to fund our operations into the first half of January 2024.

•Our strategic review process may not result in us entering into or completing a transaction, and may not lead to increased stockholder value.

•Our recurring operating losses and our current operating plans raise substantial doubt about our ability to continue as a going concern. We need to raise capital to support our business, and this capital may be unavailable on attractive terms, if at all, and could dilute your investment.

•Our joint venture arrangement involves numerous risks, including risks relating to the lack of full control of the joint venture, potential disagreements with our joint venture partner about how to manage the joint venture, conflicting interests of the joint venture, requirements to fund the joint venture and its business not being profitable.

•Our quarterly results of operations are likely to vary from period to period, which could cause the market price of our common stock to fluctuate or decline.

•We are exposed to foreign currency exchange rate fluctuations. Although we hedge certain currency risks, our hedging strategies may not be successful in mitigating our risks and changes in foreign currency exchange rates may adversely affect our financial condition, cash flows and results of operations.

•We may not be able to develop new technologies and products to satisfy changes in customer demand or industry standards, and our competitors could develop products that decrease the demand for our products.

•Our sales cycles can be long and unpredictable, and our sales efforts require considerable time and expense.

•We must commit resources to development, design and production prior to receipt of purchase commitments and could lose some or all of the associated investment.

•Unfavorable worldwide economic conditions (including inflation), may negatively affect our business, financial condition and results of operations.

•We compete in highly competitive markets, and competitive pressures from existing and new companies may adversely impact our business and operating results.

•We rely on third-party channel partners to sell our products. If our partners fail to perform, our ability to sell our products and services could be limited, and if we fail to optimize our channel partner model going forward, our operating results could be harmed.

•We rely on limited sources of wafer fabrication, packaged products fabrication and product testing, the loss of which could delay and limit our product shipments.

5

•We rely on third parties for supply of raw materials and parts, assembly and test services, and transportation, among other things, and we generally cannot control their availability or conditions of supply or services.

•Because we depend on third-party manufacturers to build portions of our products, we are susceptible to manufacturing delays and pricing fluctuations that could prevent us from shipping customer orders on time, if at all, or on a cost-effective basis, which may result in the loss of sales, income and customers.

•Our business could be adversely affected by health epidemics or pandemics.

•An earthquake, terrorist attack or other man-made natural disaster could negatively impact our business and operating results.

•The loss of one or more key employees or our inability to attract and retain qualified personnel could harm our business.

•If we fail to effectively manage our growth, our business, financial condition and results of operations would be harmed.

•We are subject to a number of risks associated with international sales and operations.

•Investments in us may be subject to U.S. foreign investment regulations which may impose conditions on or limit certain investors’ ability to purchase or hold our common stock, potentially limiting our ability to enter into or maintain strategic relationships and making our common stock less attractive to investors.

•We are subject to government regulation, including import, export and economic sanctions laws and regulations that may expose us to liability and increase our costs.

•Our sales to government customers subject us to uncertainties regarding fiscal funding approvals, renegotiations or terminations at the discretion of the government, as well as audits and investigations, which could result in litigation, penalties and sanctions including early termination, suspension and debarment.

•Any failure by us to protect our proprietary technologies or maintain the right to use certain technologies may negatively affect our ability to compete.

•If we fail to comply with our obligations under any license, collaboration or other agreements, we may be required to pay damages and could lose certain intellectual property rights.

•Any failure to maintain effective internal controls over our financial reporting could materially and adversely affect us.

•We have identified a material weakness in our internal control over financial reporting that, if not properly remediated, could result in material misstatements in our consolidated financial statements in future periods.

•Sales of substantial amounts of our common stock in the public markets, or the perception that such sales might occur, could cause the market price of our common stock to decline significantly, even if our business is doing well.

•We could be subject to certain liquidated damages pursuant to the registration rights agreements we entered into with certain holders of our securities.

•Our principal stockholders and management have substantial control over us and could delay or prevent a change in corporate control.

•Anti-takeover provisions in our charter documents could make an acquisition of us more difficult and may prevent attempts by our stockholders to replace or remove our management.

6

PART I - FINANCIAL INFORMATION

Item 1. Financial Statements

Transphorm, Inc.

Condensed Consolidated Balance Sheets (unaudited)

(in thousands, except share and per share data)

	September 30, 2023		March 31, 2023
Assets
Current assets:
Cash and cash equivalents	$	6,152	$	15,527
Restricted cash	—		500
Accounts receivable, net of allowance for doubtful accounts of $263 and $0 at September 30, 2023 and March 31, 2023, respectively, including related parties (Note 11)	4,571		4,396
Inventory	9,776		8,406
Prepaid expenses and other current assets	1,426		1,859
Total current assets	21,925		30,688
Property and equipment, net	7,857		7,890
Operating lease right-of-use assets	2,719		3,033
Goodwill	963		1,079
Intangible assets, net	173		321
Investment in joint venture	—		715
Other assets	652		726
Total assets	$	34,289	$	44,452
Liabilities and stockholders’ equity
Current liabilities:
Accounts payable and accrued expenses, including related parties (Note 11)	$	6,198	$	7,895
Accrued interest	—		180
Unfunded commitment in joint venture	59		—
Accrued payroll and benefits	1,557		1,458
Operating lease liabilities	525		404
Revolving credit facility	—		12,000
Total current liabilities	8,339		21,937
Operating lease liabilities, net of current portion	2,259		2,670
Other liabilities	—		230
Total liabilities	10,598		24,837
Commitments and contingencies (Note 7)
Stockholders’ equity:
Preferred stock, $0.0001 par value; 5,000,000 shares authorized and none issued and outstanding as of September 30, 2023 and March 31, 2023	—		—

7

Common stock, $0.0001 par value; 750,000,000 shares authorized as of September 30, 2023 and March 31, 2023, and 61,981,134 and 57,047,013 shares issued and outstanding as of September 30, 2023 and March 31, 2023, respectively	6		6
Additional paid-in capital	255,249		230,272
Accumulated deficit	(229,424)		(209,236)
Accumulated other comprehensive loss	(2,140)		(1,427)
Total stockholders’ equity	23,691		19,615
Total liabilities and stockholders’ equity	$	34,289	$	44,452

See accompanying notes to unaudited condensed consolidated financial statements.

8

Transphorm, Inc.

Condensed Consolidated Statements of Operations (unaudited)

(in thousands, except share and per share data)

	Three Months Ended September 30,				Six Months Ended September 30,
	2023		2022		2023		2022
Revenue, net, including related parties (Note 11)	$	5,010	$	3,670	$	10,893	$	8,826
Cost of goods sold	3,836		3,232		7,631		7,282
Gross profit	1,174		438		3,262		1,544
Operating expenses:
Research and development	3,022		1,830		5,891		3,570
Sales and marketing	1,708		1,066		3,190		2,149
General and administrative	2,942		3,044		7,458		6,361
Total operating expenses	7,672		5,940		16,539		12,080
Loss from operations	(6,498)		(5,502)		(13,277)		(10,536)
Interest expense	—		184		8		366
Loss in joint venture	721		684		1,581		1,266
Other income, net	(90)		(375)		(290)		(820)
Loss before tax expense	(7,129)		(5,995)		(14,576)		(11,348)
Tax expense	—		—		—		—
Net loss	$	(7,129)	$	(5,995)	$	(14,576)	$	(11,348)
Deemed dividend related to warrant modification and issuance of Inducement Warrants (Note 8)	—		—		5,612		—
Net loss attributable to common stockholders	$	(7,129)	$	(5,995)	$	(20,188)	$	(11,348)
Net loss per share - basic and diluted	$	(0.12)	$	(0.10)	$	(0.33)	$	(0.20)
Weighted average common shares outstanding - basic and diluted	61,138,691		56,619,662		61,071,729		55,518,297

See accompanying notes to unaudited condensed consolidated financial statements.

9

Transphorm, Inc.

Condensed Consolidated Statements of Comprehensive Loss (unaudited)

(in thousands)

	Three Months Ended September 30,				Six Months Ended September 30,
	2023		2022		2023		2022
Net loss	$	(7,129)	$	(5,995)	$	(14,576)	$	(11,348)
Other comprehensive loss, net of tax:
Foreign currency translation adjustments	(226)		(264)		(713)		(657)
Other comprehensive loss, net of tax	(226)		(264)		(713)		(657)
Comprehensive loss	$	(7,355)	$	(6,259)	$	(15,289)	$	(12,005)

See accompanying notes to unaudited condensed consolidated financial statements.

10

Transphorm, Inc.

Condensed Consolidated Statements of Changes in Stockholders’ Equity (unaudited)

For the Three Months Ended September 30, 2023 and 2022

(in thousands, except share data)

	Preferred Stock			Common Stock							Accumulated Other Comprehensive Loss		Total Stockholders’ Equity
	Number of Shares	Amount		Number of Shares	Amount		Additional Paid-in Capital		Accumulated Deficit
Balance at June 30, 2023	—	$	—	59,374,057	$	6	$	247,027	$	(222,295)	$	(1,914)	$	22,824
Restricted stock units vested	—	—		288,115	—		—		—		—		—
Restricted stock units surrendered due to net share settlement to satisfy employee tax liability	—	—		(85,796)	—		(287)		—		—		(287)
Issuance of common stock, net of issuance costs (Note 8)	—	—		2,404,758	—		7,595						7,595
Stock-based compensation	—	—		—	—		914		—		—		914
Other comprehensive loss	—	—		—	—		—		—		(226)		(226)
Net loss	—	—		—	—		—		(7,129)		—		(7,129)
Balance at September 30, 2023	—	$	—	61,981,134	$	6	$	255,249	$	(229,424)	$	(2,140)	$	23,691
Balance at June 30, 2022	—	$	—	56,588,042	$	6	$	227,512	$	(183,991)	$	(1,589)	$	41,938
Stock options exercised	—	—		9,061	—		36		—		—		36
Restricted stock units vested	—	—		30,805	—		—		—		—		—
Restricted stock units surrendered due to net share settlement to satisfy employee tax liability	—	—		(1,568)	—		(6)		—		—		(6)
Stock-based compensation	—	—		—	—		636		—		—		636
Other comprehensive loss	—	—		—	—		—		—		(264)		(264)
Net income	—	—		—	—		—		(5,995)		—		(5,995)
Balance at September 30, 2022	—	$	—	56,626,340	$	6	$	228,178	$	(189,986)	$	(1,853)	$	36,345

See accompanying notes to unaudited condensed consolidated financial statements.

11

Transphorm, Inc.

Condensed Consolidated Statements of Changes in Stockholders’ Equity (unaudited)

For the Six Months Ended September 30, 2023 and 2022

(in thousands, except share data)

	Preferred Stock			Common Stock							Accumulated Other Comprehensive Loss		Total Stockholders’ Equity
	Number of Shares	Amount		Number of Shares	Amount		Additional Paid-in Capital		Accumulated Deficit
Balance at March 31, 2023	—	$	—	57,047,013	$	6	$	230,272	$	(209,236)	$	(1,427)	$	19,615
Restricted stock units vested	—	—		299,560	—		—		—		—		—
Restricted stock units surrendered due to net share settlement to satisfy employee tax liability	—	—		(86,045)	—		(288)		—		—		(288)
Stock warrant exercise and deemed dividend related to warrant modification, net of issuance costs (Note 8)	—	—		1,815,848	—		7,921		(753)		—		7,168
Deemed dividend related to issuance of Inducement Warrants (Note 8)	—	—		—	—		4,859		(4,859)		—		—
Issuance of common stock, net of issuance costs (Note 8)	—	—		2,904,758	—		9,569		—		—		9,569
Stock-based compensation	—	—		—	—		2,916		—		—		2,916
Other comprehensive loss	—	—		—	—		—		—		(713)		(713)
Net loss	—	—		—	—		—		(14,576)		—		(14,576)
Balance at September 30, 2023	—	$	—	61,981,134	$	6	$	255,249	$	(229,424)	$	(2,140)	$	23,691
Balance at March 31, 2022	—	$	—	53,379,307	$	5	$	211,190	$	(178,638)	$	(1,196)	$	31,361
Stock options exercised	—	—		13,422	—		56		—		—		56
Restricted stock units vested	—	—		35,180	—		—		—		—		—
Restricted stock units surrendered due to net share settlement to satisfy employee tax liability	—	—		(1,568)	—		(6)		—		—		(6)
Issuance of common stock, net of issuance costs	—	—		3,199,999	1		15,719		—		—		15,720
Stock-based compensation	—	—		—	—		1,219		—		—		1,219
Other comprehensive loss	—	—		—	—		—		—		(657)		(657)
Net loss	—	—		—	—		—		(11,348)		—		(11,348)
Balance at September 30, 2022	—	$	—	56,626,340	$	6	$	228,178	$	(189,986)	$	(1,853)	$	36,345

See accompanying notes to unaudited condensed consolidated financial statements.

12

Transphorm, Inc.

Condensed Consolidated Statements of Cash Flows (unaudited)

(in thousands)

	Six Months Ended September 30,
	2023		2022
Cash flows from operating activities:
Net loss	$	(14,576)	$	(11,348)
Adjustments to reconcile net loss to net cash used in operating activities:
Provision for inventory	139		56
Depreciation and amortization	613		465
Amortization of operating lease right-of-use assets	268		286
Provision for doubtful accounts	263		—
Stock-based compensation	2,916		1,219
Interest cost	—		4
Gain on sale of equipment	(48)		(110)
Loss in joint venture	1,581		1,266
Changes in fair value of derivative instruments	171		—
Changes in operating assets and liabilities:
Accounts receivable	(437)		941
Inventory	(1,509)		(2,692)
Prepaid expenses and other current assets	426		(97)
Other assets	74		(521)
Accounts payable, accrued expenses, and other liabilities	(2,615)		904
Deferred revenue	—		(83)
Accrued payroll and benefits	99		160
Operating lease liabilities	(245)		(263)
Net cash used in operating activities	(12,880)		(9,813)
Cash flows from investing activities:
Purchases of property and equipment	(590)		(4,026)
Proceeds from sale of equipment	48		110
Investment in joint venture	(807)		(1,537)
Net cash used in investing activities	(1,349)		(5,453)
Cash flows from financing activities:
Proceeds from stock option exercise	—		56
Proceeds from issuance of common stock	9,936		16,000
Cost associated with issuance of common stock and warrants	(117)		(280)
Payment for taxes related to net share settlement of restricted stock units	(288)		(6)
Proceeds from exercise of stock warrants	7,263		—
Loan repayment	(12,000)		—
Net cash provided by financing activities	4,794		15,770
Effect of foreign exchange rate changes on cash, cash equivalents and restricted cash	(440)		(443)
Net (decrease) increase in cash, cash equivalents and restricted cash	(9,875)		61
Cash, cash equivalents and restricted cash at beginning of period	16,027		33,435
Cash and cash equivalents at end of period	6,152		33,496

13

Restricted cash at end of period	—		500
Cash, cash equivalents and restricted cash at end of period	$	6,152	$	33,996
Supplemental disclosures of cash flow information:
Interest expense paid	$	188	$	362
Supplemental non-cash investing activity:
Property and equipment in accounts payable and accrued expenses	$	58	$	—
Supplemental non-cash financing activity:
Stock warrant exercise and deemed dividend related to warrant modification	$	753	$	—
Deemed dividend related to issuance of Inducement Warrants	4,859		—
Rights offering costs in accounts payable and accrued liabilities	345		—
Operating lease right-of-use asset obtained in exchange for operating lease liabilities	—		3,598

See accompanying notes to unaudited condensed consolidated financial statements.

14

Transphorm, Inc.

Notes to Unaudited Condensed Consolidated Financial Statements

Note 1 - Business and Basis of Presentation

Transphorm Technology, Inc. (“Transphorm Technology”), a wholly owned subsidiary of Transphorm, Inc., was founded in 2007 to develop GaN semiconductor components used in power conversion.

Throughout these notes, “the Company,” “Transphorm,” “we,” “us” and “our” refer to Transphorm, Inc. and its direct and indirect wholly-owned subsidiaries. Transphorm Technology and its subsidiaries hold all material assets and conduct all business activities and operations of the Company. Transphorm Technology’s activities to date have been primarily performing research and development, establishing manufacturing infrastructure, market sampling, product launch, hiring personnel, and raising capital to support and expand these activities. Transphorm Japan, Inc. (“TPJ”) was established in Japan in February 2014 to secure the Company’s production capacity and establish a direct presence in Asian markets. Transphorm Aizu, Inc. (“Transphorm Aizu”) was established in Japan to manage the financial transactions around Aizu Fujitsu Semiconductor Wafer Solution Limited (“AFSW”), the wafer fabrication facility located in Aizu Wakamatsu, Japan that is owned by GaNovation, the joint venture company in which the Company has a non-controlling interest. Transphorm Japan Epi, Inc. (“TJE”) was established in Japan in 2019 to enable the operational capacity of the MOCVD reactors held in Aizu.

Going Concern

The accompanying unaudited condensed consolidated financial statements have been prepared assuming that the Company will continue as a going concern. However, considering the Company’s working capital of $13.6 million as of September 30, 2023, historical losses (during the year ended March 31, 2023 and six months ended September 30, 2023, the Company’s net loss was $30.6 million and $14.6 million, respectively), and future expected losses, there is substantial doubt about the Company’s ability to continue as a going concern for the next twelve months from the issuance of these financial statements.

In response to the factors noted above, management intends to raise additional working capital to fund operations through the issuance of stock to investors, debt financing, and/or license of intellectual property. However, there is no assurance that the Company will be successful in raising additional capital. If the Company is unable to secure additional funding, the Company believes that its existing cash and cash equivalents and forecasted revenue will be sufficient to fund its operations into the first half of January 2024. If the Company does not obtain any other financing, the Company would need to cease operations, liquidate its assets, and may seek the protection of applicable bankruptcy laws.

The Company’s ability to sustain operations is dependent on its ability to successfully market and sell its products and its ability to raise capital through additional financings until it is able to achieve profitability with positive cash flows. To the extent sufficient financing is not available, the Company may not be able to, or may be delayed in, developing its offerings and meeting its obligations. The Company will continue to evaluate its projected expenditures relative to its available cash and evaluate financing alternatives in order to satisfy its working capital and other cash requirements. The accompanying unaudited condensed consolidated financial statements do not reflect any adjustments that might result from the outcome of these uncertainties.

Basis of Presentation

The accompanying unaudited condensed consolidated financial statements reflect all adjustments of a normal and recurring nature that are necessary for a fair presentation of the results for the interim period ended September 30, 2023, but are not necessarily indicative of the results that will be reported for the entire fiscal year or any other interim period. Certain information and footnote disclosures normally included in annual consolidated financial statements prepared in accordance with U.S. Generally Accepted Accounting Principles (“GAAP”) have been condensed or omitted. The aforementioned unaudited condensed consolidated financial statements are prepared in conformity with GAAP and in accordance with the instructions to Form 10-Q pursuant to the rules and regulations

15

of the Securities and Exchange Commission. The interim information should be read in conjunction with the Company’s Annual Report on Form 10-K for the fiscal year ended March 31, 2023. The consolidated balance sheet as of March 31, 2023 is derived from those audited financial statements.

Significant Accounting Policies

Descriptions of the Company’s significant accounting policies are included in Note 2 - Summary of Significant Accounting Policies in the notes to consolidated financial statements in the Company’s Annual Report on Form 10-K for the fiscal year ended March 31, 2023.

Accounting Standard Adopted

Financial Instruments - In June 2016, the Financial Accounting Standards Board (“FASB”) issued ASU 2016-13, Financial Instruments - Credit Losses (Topic 326), Measurement of Credit Losses on Financial Instruments (“ASU 2016-13”). The standard changed the methodology for measuring credit losses on financial instruments and the timing of when such losses are recorded. ASU 2016-13 is effective for the Company’s fiscal year ending March 31, 2024. The Company adopted this standard effective April 1, 2023 and the adoption did not have a material effect on the condensed consolidated financial statements.

Recently Issued Accounting Standards under Evaluation

Debt - In August 2020, the FASB issued ASU 2020-06, Debt—Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging—Contracts in Entity’s Own Equity (Subtopic 815-40), Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity, to address the complexity in accounting for certain financial instruments with characteristics of liabilities and equity. Among other provisions, the amendments in this ASU significantly change the guidance on the issuer’s accounting for convertible instruments and the guidance on the derivative scope exception for contracts in an entity’s own equity such that fewer conversion features will require separate recognition, and fewer freestanding instruments, like warrants, will require liability treatment. ASU 2020-06 is effective for fiscal years beginning after December 15, 2021, excluding entities eligible to be smaller reporting companies as defined by the SEC. As the Company is a smaller reporting company, the ASU is effective for fiscal years beginning after December 15, 2023. The Company is currently evaluating the impact of this new standard on its consolidated financial statements and the adoption is not expected to have a significant impact on the consolidated financial statements.

Loss Per Share

Basic loss per share is calculated by dividing the Company’s net loss applicable to common shareholders by the weighted average number of common shares during the period. Net loss applicable to common shareholders is calculated as follows for each interim period as follows (in thousands except for number of shares):

	Three Months Ended September 30,				Six Months Ended September 30,
	2023		2022		2023		2022
Net loss available to common shareholders	$	(7,129)	$	(5,995)	$	(14,576)	$	(11,348)
Deemed dividend related to warrant modification (Note 8)	—		—		(753)		—
Deemed dividend related to Inducement Warrants (Note 8)	—		—		(4,859)		—
Net loss attributable to common stockholders	(7,129)		(5,995)		(20,188)		(11,348)
Weighted average common shares outstanding - basic and diluted	61,138,691		56,619,662		61,071,729		55,518,297
Net loss per share	$	(0.12)	$	(0.10)	$	(0.33)	$	(0.20)

16

Diluted earnings per share is calculated by dividing the Company’s net loss available to common shareholders by the diluted weighted average number of shares outstanding during the year. The diluted weighted average number of shares outstanding is the basic weighted number of shares adjusted for any potentially dilutive debt or equity. Potentially dilutive shares are excluded from the computation of diluted loss per share during periods in which losses are reported since the result would be antidilutive.

Excluded from diluted loss per share for the three months ended September 30, 2023 and 2022 were 1,426,944 shares and 3,643,320 shares, respectively, because their inclusion would have been antidilutive. Excluded from diluted loss per share for the six months ended September 30, 2023 and 2022 were 1,003,724 shares and 3,615,397 shares, respectively, because their inclusion would have been antidilutive.

Note 2 - Revenue Recognition

Revenue, net including related parties, disaggregated by contract type is as follows (in thousands):

	Three Months Ended September 30,				Six Months Ended September 30,
	2023		2022		2023		2022
Commercial product and service	3,549		$	3,163	6,552		$	7,596
Government	1,461		507		4,341		1,230
Revenue, net	$	5,010	$	3,670	$	10,893	$	8,826

Revenue from related parties is as follows and included in Commercial product and service revenue (in thousands):

	Three Months Ended September 30,				Six Months Ended September 30,
	2023		2022		2023		2022
Commercial product and service	$	1,467	$	1,428	$	3,042	$	3,164

Government revenue for the three and six months ended September 30, 2023 was primarily derived from a contract with the National Security Technology Accelerator (“NSTXL”) which was awarded in May 2023, in which the Company may receive up to $15.2 million over the period from the first quarter of fiscal 2024 through the third quarter of fiscal 2026 for developing and manufacturing advanced GaN epiwafer materials in accordance with statements of work, and in support of an agreement between NSTXL and the U.S. Government. As of September 30, 2023, $7.5 million of the total $15.2 million has been funded by the U.S. Government. Government revenue for the three and six months ended September 30, 2022 was primarily derived from contracts with the U.S. Navy, which ended in December 2022.

Note 3 - Concentration of Credit Risk and Significant Customers

The Company manages its credit risk associated with exposure to distributors and direct customers on outstanding accounts receivable through the application of credit approvals and other monitoring procedures. Credit sales, which are mainly on credit terms of 30 to 60 days, are only made to customers who meet the Company's credit standards, while sales to new customers or customers with low credit ratings are usually made on an advance payment basis. The Company closely monitors the aging of accounts receivable from its distributors and direct customers, and regularly reviews their financial positions, where available.

Significant customers are those that represent 10% or more of revenue or accounts receivable.

17

Total revenues, by percentage, from individual customers representing 10% or more of total revenues in the respective periods were as follows:

	Three Months Ended September 30,		Six Months Ended September 30,
	2023	2022	2023	2022
Customer A	18.6%	*	18.5%	10.4%
Customer B	*	11.2%	*	12.3%
Customer C	18.5%	30.4%	13.2%	32.7%
Customer D	*	29.8%	*	16.7%
Customer E	*	*	*	*
Customer F	29.1%	*	39.8%	*

* Less than 10% of total

Accounts receivable, by percentage, from individual customers representing 10% or more of accounts receivable are set forth in the following table:

	September 30, 2023	March 31, 2023
Customer A	17.8%	26.2%
Customer B	*	*
Customer C	14.5%	12.8%
Customer D	*	38.2%
Customer E	*	10.6%
Customer F	31.9%	*

* Less than 10% of total

Customers A and D are related parties and Customer B is a government agency. JCP Capital Management, LLC Limited (“JCP Capital”) is a majority stockholder of Customer C. See Note 5 - Investment in Joint Venture and Note 11 - Related Party Transactions. Customer F is NSTXL.

Note 4 - Balance Sheet Components

Inventory

Inventory consists of the following as of the dates presented (in thousands):

	September 30, 2023		March 31, 2023
Raw materials	$	4,959	$	5,167
Work in process	2,343		1,719
Sub-assembly	1,509		809
Finished goods	965		711
Total	$	9,776	$	8,406

Property and equipment

Property and equipment, net consist of the following as of the dates presented (in thousands):

18

	September 30, 2023		March 31, 2023
Machinery and equipment	$	14,079	$	11,124
Computer equipment and software	883		887
Furniture and fixtures	70		75
Leasehold improvements	5,095		5,069
Construction in progress	3,506		6,446
Property and equipment, gross	23,633		23,601
Less: accumulated depreciation	(15,776)		(15,711)
Property and equipment, net	$	7,857	$	7,890

The Company recorded depreciation and amortization expense related to property and equipment, net of $0.3 million and $0.2 million for the three months ended September 30, 2023 and 2022, respectively. The Company recorded depreciation and amortization expense related to property and equipment, net of $0.5 million and $0.3 million for the six months ended September 30, 2023 and 2022, respectively.

Intangible assets

The carrying values of intangible assets as of the dates presented, respectively, consist of the following (in thousands, except years):

	September 30, 2023
	Gross		Accumulated Amortization		Foreign Exchange Rate Changes		Net		Estimated Useful Life (in years)
Patents	$	2,963	$	(2,790)	$	—	$	173	10
Developed Technology - 150 V	560		(517)		(43)		—		6
Developed Technology - 600 V	1,701		(1,570)		(131)		—		6
Total	$	5,224	$	(4,877)	$	(174)	$	173

	March 31, 2023
	Gross		Accumulated Amortization		Foreign Exchange Rate Changes		Net		Estimated Useful Life (in years)
Patents	$	2,963	$	(2,642)	$	—	$	321	10
Developed Technology - 150 V	560		(517)		(43)		—		6
Developed Technology - 600 V	1,701		(1,570)		(131)		—		6
Total	$	5,224	$	(4,729)	$	(174)	$	321

The Company recorded amortization expenses related to intangible assets of $0.1 million for each of the three and six months ended September 30, 2023 and 2022.

Estimated future amortization expenses related to intangible assets as of September 30, 2023 were as follows (in thousands):

Year Ending March 31,
2024	$	148
2025	25
Total	$	173

19

Goodwill

Changes in the carrying amount of goodwill were as follows (in thousands):

Balance as of March 31, 2022	$	1,180
Foreign currency translation adjustments	(101)
Balance as of March 31, 2023	$	1,079
Foreign currency translation adjustments	(116)
Balance as of September 30, 2023	$	963

There have been no impairment losses recorded to date.

Accounts payable and accrued expenses

Accounts payable and accrued expenses consist of the following as of the dates presented (in thousands):

	September 30, 2023		March 31, 2023
Accounts payable	$	4,044	$	2,781
Manufacturing production costs	811		506
Legal fees	305		596
Audit fees	12		318
Consulting fees	176		256
Insurance	64		—
Deposit liability	—		2,950
Other	786		488
Accrued expenses	$	2,154	$	5,114
Total Accounts payable and accrued expenses	$	6,198	$	7,895

Note 5 - Investment in Joint Venture

From April 1, 2022 through April 10, 2023, JCP Capital and Transphorm were responsible for 75% and 25%, respectively, of the funding obligations and losses of AFSW (through GaNovation). Beginning April 10, 2023, JCP Capital and Transphorm are responsible for 67.5% and 32.5%, respectively, of the funding obligations and losses of AFSW (through GaNovation). Notwithstanding this allocation of funding responsibilities, JCP Capital’s total funding obligations or investment shall not exceed $35 million and Transphorm’s total funding obligations or investment shall not exceed $12 million for the three-year period beginning August 1, 2021. As of September 30, 2023, the Company had provided $6.1 million of the Company’s $12.0 million commitment to GaNovation.

20

The Company’s investment activities in GaNovation for the periods presented are summarized below (in thousands):

	Three Months Ended September 30,				Six Months Ended September 30,
	2023		2022		2023		2022
Beginning Balance	$	662	$	339	$	715	$	143
Investment	—		759		807		1,537
Loss	(721)		(684)		(1,581)		(1,266)
Ending Balance	$	(59)	$	414	$	(59)	$	414

Summarized financial information of GaNovation for the periods indicated are as follows (in thousands):

	Three Months Ended September 30,				Six Months Ended September 30,
	2023		2022		2023		2022
Sales	$	2,737	$	3,211	$	5,721	$	6,032
Gross loss	(1,850)		(2,211)		(4,202)		(4,248)
Net loss	(2,218)		(2,703)		(4,865)		(5,154)

Note 6 - Debts

Revolving Credit Facility

The Company entered into a Loan and Security Agreement (“LSA”) with Nexperia on April 4, 2018 which provided a $10.0 million revolving loan (Tranche C Loan) that was scheduled to mature at the earlier of (i) April 3, 2021, and (ii) the date a Change of Control (as defined in the LSA) of the Company occurs. Interest payable by the Company accrues on the outstanding principal amount of the loans during such period at a rate of 6% per annum. The credit facility was secured against certain of the Company’s U.S. patents not relating to MOCVD or epiwafer technology. On March 1, 2021, the maturity of the Tranche C Loan of $10.0 million was extended to May 18, 2021. On May 18, 2021, the maturity of the Tranche C Loan was extended to the earlier of April 4, 2023 or the occurrence of specified change of control events, and the $2.0 million Tranche B-1 Loan was converted into a Tranche C-1 Loan (the “Tranche C Loans” together with the Tranche C Loan) with the same terms and conditions as the existing Tranche C Loan.

As of September 30, 2023, there were no revolving loans outstanding, as the LSA with Nexperia terminated upon repayment of the principal and interest amount in full on April 4, 2023. There was no interest expense for the three months ended September 30, 2023. For the six months ended September 30, 2023, the Company recorded interest expense of $8,000. For the three and six months ended September 30, 2022, the Company recorded interest expense of $0.2 million and $0.4 million, respectively.

Note 7 - Commitments and Contingencies

Cooperation Agreement

On December 30, 2022, and effective as of December 18, 2022, the Company entered into a cooperation agreement (the “Cooperation Agreement”) with GaNext (Zhuhai) Technology Co., Ltd (“GaNext”). Among other things, the Cooperation Agreement calls for certain royalties including a royalty due to the Company in the event that GaNext utilizes epiwafers not provided by the Company (such royalties are based on time and volume with a minimum floor), and a royalty payable by the Company in the event the Company utilizes certain future platform that may be developed independently by GaNext (such royalties are based on time and volume, and half the amount per wafer of the royalties GaNext would pay the Company when utilizing epiwafers not provided by the Company). As of

21

September 30, 2023, no amounts have been earned by or due to either party and, thus, no amounts have been recorded in the condensed consolidated financial statements.

Contingencies

During the ordinary course of business, the Company may become a party to legal proceedings incidental to its business. The Company accrues contingent liabilities when it is probable that future expenditures will be made and such expenditures can be reasonably estimated. Legal cost is expensed as incurred.

On April 5, 2022, Joel Newman, an alleged holder of the Company’s common stock, filed a complaint in the Delaware Court of Chancery derivatively against the Company’s directors and KKR Phorm Investors L.P. (“Phorm”). On July 11, 2022, the plaintiff filed an amended complaint. Among other things, the complaint alleged that the directors and Phorm (as an alleged controlling stockholder) breached their fiduciary duties, and that Phorm was unjustly enriched, because the terms of the November 5, 2021 private placement in which Phorm participated were allegedly unfairly favorable to Phorm. Defendants moved to dismiss the complaint and, on August 31, 2023, the Court granted defendants’ motion to dismiss.

The Company is not aware of any material legal claims or assessments other than disclosed above. Although the results of litigation and claims are inherently unpredictable, management believes (in consultation with legal counsel) there was not at least a reasonable possibility that the Company had incurred a material loss with respect to any loss contingencies as of September 30, 2023 and through the issuance of these financial statements.

Indemnification

The Company from time to time enters into types of contracts that contingently require the Company to indemnify parties against third-party claims. These contracts primarily relate to: (1) real estate leases, under which the Company may be required to indemnify property owners for environmental and other liabilities and for other claims arising from the Company’s use of the applicable premises; (2) agreements with the Company’s officers, directors, and employees, under which the Company may be required to indemnify such persons from liabilities arising out of their relationship; (3) indemnifying customers in the event of product failure; and (4) agreements with outside parties that use the Company’s intellectual property, under which the Company may indemnify for copyright or patent infringement related specifically to the use of such intellectual property.

Historically, the Company has not been required to make payments under these obligations, and no liabilities have been recorded for these obligations in the Company’s condensed consolidated financial statements.

Note 8 - Stockholders’ Equity

As of September 30, 2023, 750,000,000 shares of common stock are authorized, of which 61,981,134 shares of common stock were issued and outstanding, and 5,000,000 shares of preferred stock are authorized, none of which were issued and outstanding. The Company’s Board of Directors has the ability to designate the rights, preferences and privileges for the preferred stock.

Common Stock

22

Common stockholders are entitled to dividends, as and when declared by the Company’s Board of Directors, subject to the priority dividend rights of the holders of any then-outstanding preferred stock. There have been no dividends declared to date. The holder of each share of common stock is entitled to one vote.

The Company has reserved shares of common stock for future issuance as of the date presented as follows:

	September 30, 2023
Equity incentive plans	11,275,762
Common stock warrants	4,027,929
Total	15,303,691

Warrant Repricing and Issuance

On April 3, 2023, the Company entered into warrant exercise inducement offer letters with certain holders of outstanding warrants to purchase shares of the Company’s common stock (such holders, the “Exercising Holders,” and such warrants, the “Existing Warrants”), pursuant to which the Exercising Holders agreed to exercise, for cash, Existing Warrants to purchase, in the aggregate, 1,815,848 shares of the Company’s common stock, in exchange for the Company’s agreement to (i) lower the exercise price of the Existing Warrants to $4.00 per share and (ii) issue new warrants (the “Inducement Warrants”) to the Exercising Holders to purchase, in the aggregate, up to 2,269,810 shares of the Company’s common stock.

The Inducement Warrants have an exercise price of $5.00 per share, provide for a cashless exercise feature, and are exercisable until April 3, 2026. Certain Exercising Holders have contractually agreed to restrict their ability to exercise the Inducement Warrants issued to them if the holder (together with such holder’s affiliates, and any persons acting as a group together with such holder or any of such holder’s affiliates) would beneficially own a number of shares in excess of 9.99% of the shares of the Company’s common stock then outstanding. At the holder’s option, upon notice to the Company, the holder may increase or decrease this beneficial ownership limitation not to exceed 19.99% of the shares of common stock then outstanding, with any such increase becoming effective upon 61 days’ prior notice to the Company.

The Company determined that the modification was not executed in contemplation of an imminent equity offering, financing transaction nor represented compensation for goods and services and is not within the scope of another ASC Topic. As such, the Company concluded that the $0.8 million incremental fair value of the modified warrants and the $4.9 million fair value of the Inducement Warrants should be treated as deemed dividends to the warrant holder in accordance with ASC Subtopic 815-40 – Derivatives and Hedging – Contracts in Entity’s Own Equity.

Private Placement of Common Stock and Warrants

On April 3, 2023, the Company entered into securities purchase agreements with two accredited investors that are affiliated with each other (the “Purchasers”) pursuant to which the Company agreed to sell to the Purchasers in a private placement (the “Private Placement”) for an aggregate purchase price of $2.0 million (i) an aggregate of 500,000 shares (the “Shares”) of the Company’s common stock at a purchase price of $4.00 per share and (ii) warrants to purchase an aggregate of 250,001 shares of the Company’s common stock (the “Warrants”). The Warrants have an exercise price of $5.00 per share, provide for a cashless exercise feature, and are exercisable until April 3, 2026.

On April 3, 2023, the Company entered into a registration rights agreement (the “Registration Rights Agreement”) with the Purchasers, pursuant to which the Company agreed to register the Shares and the shares of Common Stock issuable upon exercise of the Warrants (collectively, the “Registrable Securities”) for resale. Under the terms of the Registration Rights Agreement, the Company is obligated, subject to certain exceptions, to (i) no later than 30 days after the closing of the Private Placement, file a registration statement with the Securities and Exchange Commission (the “SEC”) covering the resale or other disposition of the Registrable Securities, (ii) use its commercially

23

reasonable efforts to cause such registration statement to become effective no later than 60 days after such registration statement is first filed with the SEC, and (iii) use its commercially reasonable efforts to keep such registration statement effective for up to three years after the date on which such registration statement is declared effective by the SEC. The registration statement was filed and declared effective within the time period required by the Registration Rights Agreement.

The Company received $7.3 million from the exercise of the Existing Warrants by the Exercising Holders and $2.0 million from the Purchasers in the Private Placement, for total aggregate gross proceeds of approximately $9.3 million (before deducting legal costs of $0.1 million).

The following warrants to purchase common stock were outstanding as of September 30, 2023:

Number of Warrant Shares	Exercise Price		Expiration Date
650,000	$	6.00	October 4, 2024
360,938	6.00		November 5, 2024
67,568	9.25		December 7, 2024
281,081	9.25		December 10, 2024
10,116	8.48		December 10, 2025
45,000	3.30		December 23, 2025
84,000	4.00		April 3, 2026
2,519,811	5.00		April 3, 2026
6,046	34.74		5 years after an initial public offering of the Company
3,369	54.41		5 years after an initial public offering of the Company
4,027,929

The following table summarizes stock warrant activity for the periods presented:

	Number of Warrant Shares
Outstanding at March 31, 2023	3,323,966
Stock warrants issued	2,519,811
Stock warrants exercised	(1,815,848)
Outstanding and exercisable at September 30, 2023	4,027,929

Rights Offering

On July 5, 2023, the Company distributed to all holders of record of its common stock as of 5:00 p.m., Eastern Daylight Time, on June 26, 2023, for each share of common stock held as of June 26, 2023, one non-transferable subscription right. Each subscription right carried with it (i) a basic subscription right, which entitled the holder to purchase 0.07655623 of a share of common stock and (ii) an over-subscription privilege, which entitled a holder that had exercised its basic subscription right in full to subscribe for additional shares of common stock that were offered in the rights offering, to the extent other holders did not exercise their basic subscription rights in full. The subscription price was $3.30 per whole share of common stock.

The Company completed the rights offering in August 2023 and issued 2,404,758 shares of common stock, which generated approximately $7.9 million in gross proceeds (before deducting legal costs of $0.3 million).

24

Note 9 - Stock-Based Compensation

Out-of-Period Adjustment

For the six months ended September 30, 2023, the Company recorded a $0.4 million out-of-period adjustment to stock-based compensation expense and additional paid-in-capital related to prior periods. The adjustment was a correction of an error to properly reflect (i) the grant date fair value of awards and (ii) the straight-lining of stock-based compensation expense for graded-vested awards under ASC 718, Compensation – Stock Compensation and in accordance with the Company’s stock-based compensation expense recognition policy election. The Company assessed that this error was not material to the historical financial statements in any individual period or in the aggregate, the current interim period and its forecasted results for the full 2024 fiscal year and did not result in the previously issued financial statements being materially misstated.

Option Modification

During the six months ended September 30, 2023, the Company recognized $0.5 million in incremental compensation cost as a result of an amendment to a former employee’s option agreements to allow for an extended post termination exercise period.

Note 10 - Fair Value Measurements

FASB ASC 820, Fair Value Measurements and Disclosures, establishes a three-tier fair value hierarchy for disclosure of fair value measurements as follows:

•Level 1 - Unadjusted quoted prices in active markets for identical assets and liabilities.

•Level 2 - Inputs (other than quoted prices included within Level 1) that are observable, unadjusted quoted prices in markets that are not active, or other inputs that are observable or can be corroborated by observable market data of substantially the full term of the related assets or liabilities.

•Level 3 - Inputs reflect management’s best estimate of what market participants would use in pricing the asset or liability at the measurement date. Inputs are unobservable for the asset or liability. Consideration is given to the risk inherent in the valuation technique and the risk inherent in the inputs to the model.

The categorization of a financial instrument within the valuation hierarchy is based upon the lowest level of input that is significant to the fair value measurement.

25

Foreign Currency Forward and Option Contracts

In December 2022, the Company entered into four quarterly tiered collar contracts consisting of foreign currency forward and option contracts to manage the foreign exchange risk associated with certain foreign currency-denominated assets and liabilities, specifically those associated with its Japanese operations. The contracts have quarterly maturities ending January 2024.

As a result of foreign currency fluctuations, the U.S. dollar equivalent values of the Company’s foreign currency-denominated assets and liabilities change. The Company has not elected to account for these contracts as hedge instruments and as such, gains and losses on these contracts are included in other income (expense), net in the Company's condensed consolidated statements of operations, along with foreign currency gains and losses of the related foreign currency-denominated assets and liabilities associated with these foreign currency forward and option contracts. During the three and six months ended September 30, 2023, the Company recognized net losses of $39,000 and $0.2 million, respectively, associated with these contracts.

As the forward contract and option model employs market observable inputs such as spot currency rates and forward points, the Company has determined that the inputs used to value its derivatives fall within Level 2 of the fair value hierarchy.

The following table presents the fair value of derivative instruments recognized in the Company's condensed consolidated balance sheets as of September 30, 2023 (in thousands):

	Derivative Not Designated as Hedging Instruments		Gross Amounts of Recognized Assets and Liabilities		Gross Amounts Offset in the Balance Sheet		Net Amounts of Assets and Liabilities Presented in the Balance Sheet
Accounts payable and accrued expenses	$	106	$	106	$	—	$	106
Net	$	106	$	106	$	—	$	106

Note 11 - Related Party Transactions                                                                                                                                                                                                                                                                                

The Company entered into the following related party transactions for the periods indicated (in thousands):

26

	Three Months Ended September 30,				Six Months Ended September 30,
	2023		2022		2023		2022
Joint Venture-GaNovation:
Product sale	$	313	$	1,094	$	579	$	1,472
Service fees	64		—		131		—
Inventory purchase	100		69		113		249
Fixed asset purchase	60		—		68		—
Cost of goods sold	1,194		867		2,452		1,708
Research and development expense	53		90		85		188
Consumption tax	82		77		142		219
Employee and related benefits	30		43		62		90
Yaskawa:
Revenue per a cooperation and development agreement	223		223		443		770
Nexperia:
Product sale	931		77		2,019		856
License and service fee income	—		35		—		66
Reimbursements in license maintenance fee	25		38		50		75
Interest expense	—		184		8		366

As of September 30, 2023, total due to and from related parties were as follows (in thousands):

	September 30, 2023		March 31, 2023
Due from (included in Accounts receivable, net):
Joint venture	$	171	$	1,713
Stockholder and noteholder	1,089		1,152
Total due from related parties	$	1,260	$	2,865
Due to (included in Accounts payable and accrued expenses):
Joint venture	$	1,575	$	968
Stockholder and noteholder	99		93
Total due to related parties	$	1,674	$	1,061

Note 12 - Subsequent Events

The Company has evaluated subsequent events through the issuance of these financial statements and is not aware of any material items that would require disclosure in the notes to the financial statements or would be required to be recognized as of September 30, 2023.

27

Note Regarding Forward-Looking Statements

This Report, including the sections titled “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” contains express or implied forward-looking statements that are based on our management’s belief and assumptions and on information currently available to our management. All statements other than statements of historical fact contained in this Report are forward-looking statements. In some cases, you can identify forward-looking statements by terminology such as “may,” “could,” “will,” “would,” “should,” “expect,” “plan,” “anticipate,” “believe,” “estimate,” “intend,” “predict,” “seek,” “contemplate,” “project,” “continue,” “potential,” “ongoing” or the negative of these terms or other comparable terminology. These forward-looking statements include, but are not limited to, statements about:

•our ability to successfully complete our asset-based debt financing initiatives as expected, and whether such debt financing raises the amounts we hope for;

•our ability to initiate and successfully execute a strategic review of opportunities to enhance stockholder value, or enter into a transaction on acceptable terms, or at all;

•the implementation of our business model and strategic plans for our business, technologies and products;

•our costs in meeting our contractual obligations, including the cash flow impact of operating AFSW, and our ability to maintain our contracts for their expected durations;

•the rate and degree of market acceptance of any of our products or GaN technology in general, including changes due to the impact of (i) new GaN fabrication sources, (ii) the performance of GaN technology, whether perceived or actual, relative to competing semiconductor materials, and (iii) the performance of our products, whether perceived or actual, compared to competing GaN-based, silicon-based and other products;

•the timing and success of product releases by us and our customers;

•our ability to develop new products and technologies;

•our future financial performance, including our expectations regarding our revenue, expenses, ongoing losses, and capital requirements;

•our needs for additional financing, ability to obtain additional funds for our operations and our intended use of any such funds;

•our receipt and timing of any royalties or other payments under any current or future collaboration, license or other agreements or arrangements, including the credit risks of our customers;

•our ability to obtain, maintain, enforce, defend and enhance our intellectual property rights;

•the strength and marketability of our intellectual property portfolio;

•our dependence on current and future collaborators for developing, manufacturing or otherwise bringing our products to market;

•the ability of our third party supply and manufacturing partners to meet our current and future business needs;

•the throughput of our fabrication facilities and third party foundries, as well as the ability of such facilities and foundries to ramp up production;

28

•our expectations regarding our classification in future periods as a “smaller reporting company,” as defined under the Securities Exchange Act of 1934 (the “Exchange Act”), and an “emerging growth company,” as defined under the JOBS Act;

•the total addressable market and growth rates of the markets in which we compete;

•the competitive landscape of our industry;

•our expectations regarding the performance of our products; and

•the impact of government regulation and developments relating to us, our competitors or our industry.

We caution you that the foregoing list may not contain all of the forward-looking statements made in this Report.    

You should not rely upon forward-looking statements as predictions of future events. We have based the forward-looking statements contained in this Report primarily on our current expectations and projections about future events and trends that we believe may affect our business, financial condition, results of operations, and prospects. The outcome of the events described in these forward-looking statements is subject to significant risks, uncertainties, and other factors, including those described in the section titled “Risk Factors” and elsewhere in this Report. Moreover, we operate in a very competitive and rapidly changing environment. New risks and uncertainties emerge from time to time and it is not possible for us to predict all risks and uncertainties that could have an impact on the forward-looking statements contained in this Report. We cannot assure you that the results, events, and circumstances reflected in the forward-looking statements will be achieved or occur, and actual results, events, or circumstances could differ materially from those described in the forward-looking statements.

Neither we nor any other person assumes responsibility for the accuracy and completeness of any of these forward-looking statements. Moreover, the forward-looking statements made in this Report relate only to events as of the date on which the statements are made. We undertake no obligation to update any forward-looking statements made in this Report to reflect events or circumstances after the date of this Report or to reflect new information or the occurrence of unanticipated events, except as required by law. We may not actually achieve the plans, intentions, or expectations disclosed in our forward-looking statements and you should not place undue reliance on our forward-looking statements. Our forward-looking statements do not reflect the potential impact of any future acquisitions, mergers, dispositions, joint ventures, or investments we may make.

In addition, statements that “we believe” and similar statements reflect our beliefs and opinions on the relevant subject. These statements are based upon information available to us as of the date of this Report, and while we believe such information forms a reasonable basis for such statements, such information may be limited or incomplete, and our statements should not be read to indicate that we have conducted an exhaustive inquiry into, or review of, all potentially available relevant information. These statements are inherently uncertain and investors are cautioned not to unduly rely upon these statements.

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.

The following discussion and analysis of our financial condition and results of operations should be read in conjunction with our historical financial statements and the related notes thereto contained in this Report. Some of the information contained in this discussion and analysis or set forth elsewhere in this Report, including information with respect to our plans and strategy for our business, includes forward-looking statements that involve risks and uncertainties. You should review the sections titled “Note Regarding Forward-Looking Statements” and “Risk Factors” for a discussion of forward-looking statements and important factors that could cause actual results to differ materially from the results described in or implied by the forward-looking statements contained in the following discussion and analysis.

Overview

29

We are a pioneer, and a market and technology leader, in the wide-bandgap GaN power electronics field for high voltage power conversion applications. We deliver high quality and reliable GaN devices with high performance, while providing application design support to a growing customer base. Our GaN devices allow customers to design smaller, lighter and cooler power systems that create increased functional value in end products including smartphone power adapters, smartphone chargers, power supplies for datacenter servers and automotive electric vehicles, among other applications. We deploy our unique vertically integrated innovation model that leverages one of the industry’s most experienced GaN engineering teams (with over 300 years of combined experience) at every development stage: device design, materials growth, device fabrication, packaging, circuits and application support. This approach, backed by one of the GaN power industry’s largest intellectual property portfolios with access to over 1,000 world-wide patents, has yielded the industry’s first automotive-grade AEC-Q101 and JEDEC qualified high voltage GaN FETs. Our innovations are designed to move power electronics beyond the limitations of silicon and provide our customers with the potential to achieve higher efficiency (e.g., titanium-class performance in power supplies), higher power density and, in some designs, an overall lower system cost.

Since our inception, we have devoted substantial resources to the research and development of GaN power devices and the protection and enhancement of our intellectual property and have incurred significant operating losses. Our net loss was $14.6 million and $11.3 million for the six months ended September 30, 2023 and 2022, respectively. As of September 30, 2023, our accumulated deficit was $229.4 million. Substantially all of our operating losses have resulted from expenses incurred in connection with research and development activities and from general and administrative costs associated with our operations.

Our revenue for the six months ended September 30, 2023 was $10.9 million, of which $3.0 million was from related parties. Our revenue for the six months ended September 30, 2022 was $8.8 million, of which $3.2 million was from related parties. For the six months ended September 30, 2023 and 2022, we had three and four customers, respectively, that each accounted for more than ten percent of our revenue. Together, these customers accounted for 71.5% and 72.1% of our revenues during the six months ended September 30, 2023 and 2022, respectively.

We expect to continue to incur significant expenses and operating losses for the foreseeable future. We expect our expenses will increase in connection with our ongoing activities as we:

•add sales and field applications personnel and incur related expenses to support operational growth;

•increase activity directly related to promoting our products to increase revenue;

•acquire additional MOCVD reactor capacity; and

•add financial accounting and management systems and select personnel and incur additional legal and accounting expense as we operate as a public company.

Recent Developments

Rights Offering

On July 5, 2023, we distributed to all holders of record of our common stock as of 5:00 p.m., Eastern Daylight Time, on June 26, 2023, for each share of common stock held as of June 26, 2023, one non-transferable subscription right. Each subscription right carried with it (i) a basic subscription right, which entitled the holder to purchase 0.07655623 of a share of common stock and (ii) an over-subscription privilege, which entitled a holder that had exercised its basic subscription right in full to subscribe for additional shares of common stock that were offered in the rights offering, to the extent other holders did not exercise their basic subscription rights in full. The subscription price was $3.30 per whole share of common stock. We completed the rights offering in August 2023 and issued 2,404,758 shares of common stock, which generated approximately $7.9 million in gross proceeds (before deducting legal costs of $0.3 million). We intend to use the net proceeds for working capital and other general corporate purposes.

30

We are also pursuing debt and equity financing that, if consummated and together with forecasted revenue, would provide us with working capital into the fiscal year ending March 31, 2025. However, there is no assurance that we will be successful in closing the debt financing or raising additional capital on terms acceptable to us or at all, or that we will achieve our revenue forecasts. If we are unable to secure any additional funding, we believe that our existing cash and cash equivalents and forecasted revenue will be sufficient to fund our operations into the first half of January 2024. If we do not obtain any other financing, we would need to cease operations, liquidate our assets, and may seek the protection of applicable bankruptcy laws. Because all of our liabilities are senior to our common stock in our capital structure, any such liquidation or bankruptcy would likely result in the complete loss of your investment in our common stock. Therefore, trading in our securities is highly speculative and poses substantial risks. All statements contained herein regarding our future strategy, operations and potential growth are contingent upon our ability to obtain additional financing through the successful execution of our debt financing initiatives, or otherwise.

As previously announced, we are engaged in a strategic review of opportunities to enhance stockholder value which may include, among other things, strategic partnerships with third parties with equity or debt investment, a sale of the Company or certain of our assets, strategic licensing or other financing alternatives. Our strategic plans are not yet finalized and are subject to market conditions and other uncertainties. There can be no assurance that any strategic review will be successful, that it will result in a transaction on terms acceptable to us or our stockholders, or at all, or will result in increased stockholder value.

Warrant Repricing and Issuance

On April 3, 2023, we entered into warrant exercise inducement offer letters with certain holders of then-outstanding warrants (the “Exercising Holders”), pursuant to which the Exercising Holders agreed to exercise, for cash, warrants to purchase, in the aggregate, 1,815,848 shares of common stock, in exchange for our agreement to (i) lower the exercise price of such warrants to $4.00 per share and (ii) issue new warrants (the “Inducement Warrants”) to the Exercising Holders to purchase, in the aggregate, up to 2,269,810 shares of common stock at an exercise price of $5.00 per share. We received aggregate gross proceeds of approximately $7.3 million from the exercise of warrants by the Exercising Holders.

The Inducement Warrants have an exercise price of $5.00 per share and are exercisable until April 3, 2026. Certain Exercising Holders have contractually agreed to restrict their ability to exercise the Inducement Warrants issued to them if the holder (together with such holder’s affiliates, and any persons acting as a group together with such holder or any of such holder’s affiliates) would beneficially own a number of shares in excess of 9.99% of the shares of the Company’s common stock then outstanding. At the holder’s option, upon notice to the Company, the holder may increase or decrease this beneficial ownership limitation not to exceed 19.99% of the shares of common stock then outstanding, with any such increase becoming effective upon 61 days’ prior notice to the Company.

Private Placement of Common Stock and Warrants

On April 3, 2023, we entered into securities purchase agreements with two accredited investors that are affiliated with each other (the “Purchasers”) pursuant to which we agreed to sell to the Purchasers in a private placement for an aggregate purchase price of $2.0 million (i) an aggregate of 500,000 shares of our common stock at a purchase price of $4.00 per share and (ii) warrants to purchase an aggregate of 250,001 shares of the our common stock (the “Private Placement Warrants”). The Private Placement Warrants have an exercise price of $5.00 per share and are exercisable until April 3, 2026.

Key Factors Affecting Our Performance

A number of industry factors affect our business, including:

Overall Demand for Products and Applications Using GaN Devices. Our potential for growth depends significantly on the adoption of GaN materials and devices in the power markets and GaN epiwafer material products in the radio frequency markets, the expansion of the use of GaN devices in infrastructure, IT, datacenter,

31

industrial, automotive and consumer applications such as fast charger/adapter and gaming power supplies, and our ability to win new designs for these applications. Demand also fluctuates based on various market cycles, fluctuations in supply chains, trade and tariff terms, and the competitive dynamics in each of the respective markets. These uncertainties make demand difficult to forecast for us and our customers.

Intense and Constantly Evolving Competitive Environment. Competition in the industries we serve is intense. Many companies have made significant investments in product development and production equipment. To remain competitive, market participants must continuously increase product performance, reduce costs and develop improved ways to serve their customers. To address these competitive pressures, we have invested in research and development activities to support new product development, lower product costs and deliver higher levels of performance to differentiate our products in the market.

Governmental Trade and Regulatory Conditions. Our potential for growth, as with most multinational companies, depends on a balanced and stable trade, political, economic and regulatory environment among the countries where we do business. Changes in trade policy such as the imposition of tariffs or export bans to specific customers or countries could reduce or limit demand for our products in certain markets.

Technological Innovation and Advancement. Innovations and advancements in materials and power technologies continue to expand the potential commercial application for our products. However, new technologies or standards could emerge or improvements could be made to existing technologies that could reduce or limit the demand for our products.

Intellectual Property Issues. We rely on patented and non-patented proprietary information relating to product development, manufacturing capabilities and other core competencies of our business. Protection of intellectual property is critical. Therefore, filing additional patent applications, entering into confidentiality and non-disclosure agreements, and other security measures are important. While we have a strong patent portfolio comprising access to over 1,000 worldwide patents (directly owned or licensed) and there is no actual or, to our knowledge, threatened litigation against us for patent-related matters, litigation or threatened litigation is a common method to effectively enforce or protect intellectual property rights. Such action may be initiated by or against us and could require significant management time and be costly.    

Components of Results of Operations

Revenue

Our revenue currently consists of (1) commercial product sales and service contracts, (2) government contracts, and (3) licensing contracts. Products are sold to distributors and end-users in various sectors such as, the gaming, industrial, IT, and consumer products industries.

Cost of Goods Sold

Cost of goods sold consists of (1) direct product costs incurred for the raw materials and manufacturing services for our products, (2) fixed product costs primarily relating to production, manufacturing and personnel and (3) depreciation expenses consisting primarily of expenses related to our fixed assets. In future periods, we expect our cost of goods sold attributable to direct product costs to increase proportionately with increases in revenue, and our cost of goods sold attributable to fixed product costs to remain substantially flat or moderately increase in connection with increases in revenue.

Operating Expenses

Research and Development. Research and development expenses consist primarily of compensation and related costs for personnel, including stock-based compensation and employee benefits as well as costs associated with design, fabrication, packaging and testing of GaN devices. In addition, research and development expenses include depreciation expenses related to our fixed assets and an allocation of our information technology (IT) and facilities

32

costs. We expense research and development expenses as incurred. As we continue to invest in developing our technology for new products, we expect research and development expenses in future periods to remain flat or moderately increase in absolute dollars and decrease as a percentage of revenue.

Sales and Marketing. Sales and marketing expenses consist primarily of compensation and related costs for personnel, including stock-based compensation and employee benefits, and associated travel costs. Sales and marketing expenses also include costs associated with our support of business development efforts with distributors in Europe and Asia, and costs related to trade shows and marketing programs, and an allocation of our information technology (IT) and facilities costs. We expense sales and marketing expenses as incurred. As we increase our sales and expand our sales force and our marketing organization, we expect sales and marketing expenses in future periods to increase in absolute dollars.

General and Administrative. General and administrative expenses consist primarily of compensation and related costs for personnel, including stock-based compensation, employee benefits and travel. In addition, general and administrative expenses include third-party consulting, legal, audit, and accounting services, rent, facilities and information technology, and amortization of our intangible assets. We expect general and administrative expenses in future periods to increase in absolute dollars due to additional legal, accounting, insurance, investor relations and other costs associated with being a public company, as well as other costs associated with growing our business.

Interest Expense

Interest expense consists of interest associated with our revolving credit facility with Nexperia.

Equity Loss in Joint Venture

Equity loss in joint venture consists of expenditures to cover the losses associated with our 32.5% share ownership of GaNovation beginning April 10, 2023 and our 25% share ownership of GaNovation from August 1, 2021 to April 9, 2023. The potential magnitude of equity loss in joint venture may increase in the future based upon the level of operating expenses incurred by GaNovation, which wholly owns AFSW.

Other Income, Net

Other income, net of other expenses, consists primarily of interest income and income generated from subleasing a portion of our research and development facility located in California.

Tax Expense

Tax expense consists primarily of income taxes in certain foreign and state jurisdictions in which we conduct business.

33

Results of Operations

Comparison of the Three Months Ended September 30, 2023 and 2022

The following table sets forth our unaudited condensed consolidated statements of operations data for the periods indicated (in thousands, except percentages):

	Three Months Ended September 30,				Change
	2023		2022		Amount		Percentage
Revenue, net	$	5,010	$	3,670	$	1,340	36.5	%
Cost of goods sold	3,836		3,232		604		18.7	%
Gross profit	1,174		438		736		168.0	%
Operating expenses:
Research and development	3,022		1,830		1,192		65.1	%
Sales and marketing	1,708		1,066		642		60.2	%
General and administrative	2,942		3,044		(102)		(3.4)	%
Total operating expenses	7,672		5,940		1,732		29.2	%
Loss from operations	(6,498)		(5,502)		(996)		18.1	%
Interest expense	—		184		(184)		(100.0)	%
Loss in joint venture	721		684		37		5.4	%
Other income, net	(90)		(375)		285		(76.0)	%
Loss before tax expense	(7,129)		(5,995)		(1,134)		18.9	%
Tax expense	—		—		—
Net loss	$	(7,129)	$	(5,995)	$	(1,134)	18.9	%

Revenue increased $1.3 million, or 36.5%, to $5.0 million for the three months ended September 30, 2023 from $3.7 million for the same period in 2022. The increase is due primarily to a $1.0 million increase in government contract revenue resulting from the NSTXL contract awarded in May 2023, combined with a $0.4 million increase in commercial product and services revenue as compared to the same period in 2022.

Cost of goods sold increased $0.6 million, or 18.7%, to $3.8 million for the three months ended September 30, 2023 from $3.2 million for the same period in 2022, due primarily to costs directly associated with increased sales.

Gross profit increased $0.7 million, or 168.0%, to $1.2 million for the three months ended September 30, 2023 from $0.4 million for the same period in 2022. Gross profit margin increased 11.5% to 23.4% for the three months ended September 30, 2023 from 11.9% for the same period in 2022. The increase is due primarily to an increase in government contract revenue associated with the NSTXL contract awarded in May 2023.

Research and development expense increased $1.2 million, or 65.1%, to $3.0 million for the three months ended September 30, 2023 from $1.8 million for the same period in 2022, due primarily to a $0.7 million increase in employee payroll costs resulting from increased research and development activities and a $0.2 million increase in stock-based compensation.

Sales and marketing expense increased $0.6 million, or 60.2%, to $1.7 million for the three months ended September 30, 2023 from $1.1 million for the same period in 2022, due primarily to an increase in costs related to payroll expense.

General and administrative expense decreased $0.1 million, or 3.4%, to $2.9 million for the three months ended September 30, 2023 from $3.0 million for the same period in 2022, due primarily to a reduction in legal and payroll costs, partially offset by an increase in bad debt expense.

34

There was no interest expense recorded for the three months ended September 30, 2023, as we repaid the outstanding amount of the revolving credit facility with Nexperia in full on April 4, 2023. Interest expense was $0.2 million for the revolving credit facility for the same period in 2022.

Loss in joint venture was $0.7 million for each of the three months ended September 30, 2023 and 2022.

Other income, net was $0.1 million for the three months ended September 30, 2023 compared to $0.4 million for the same period in 2022, due primarily to a decrease in sublease income as a result of the amendment of our subleasing contract during the current quarter.

Comparison of the Six Months Ended September 30, 2023 and 2022

The following table sets forth our unaudited condensed consolidated statements of operations data for the periods indicated (in thousands, except percentages):

	Six Months Ended September 30,				Change
	2023		2022		Amount		Percentage
Revenue, net	$	10,893	$	8,826	$	2,067	23.4	%
Cost of goods sold	7,631		7,282		349		4.8	%
Gross profit	3,262		1,544		1,718		111.3	%
Operating expenses:
Research and development	5,891		3,570		2,321		65.0	%
Sales and marketing	3,190		2,149		1,041		48.4	%
General and administrative	7,458		6,361		1,097		17.2	%
Total operating expenses	16,539		12,080		4,459		36.9	%
Loss from operations	(13,277)		(10,536)		(2,741)		26.0	%
Interest expense	8		366		(358)		(97.8)	%
Loss in joint venture	1,581		1,266		315		24.9	%
Other income, net	(290)		(820)		530		(64.6)	%
Loss before tax expense	(14,576)		(11,348)		(3,228)		28.4	%
Tax expense	—		—		—
Net loss	$	(14,576)	$	(11,348)	$	(3,228)	28.4	%

Revenue increased $2.1 million, or 23.4%, to $10.9 million for the six months ended September 30, 2023 from $8.8 million for the same period in 2022. The increase is due primarily to a $3.1 million increase in government contract revenue resulting from the NSTXL contract awarded in May 2023, offset by a $1.0 million decrease in commercial product and services revenue, due primarily to a reduction in sales volume of commercial products.

Cost of goods sold increased $0.3 million, or 4.8%, to $7.6 million for the six months ended September 30, 2023 from $7.3 million for the same period in 2022, due primarily to a larger reduction in service revenue which carries a higher margin in comparison to commercial product revenue.

Gross profit increased $1.7 million, or 111.3%, to $3.3 million for the six months ended September 30, 2023 from $1.5 million for the same period in 2022. Gross profit margin increased 12.5% to 29.9% for the six months ended September 30, 2023 from 17.5% for the same period in 2022, due primarily to the increase in government contract revenue associated with the NSTXL contract awarded in May 2023.

Research and development expense increased $2.3 million, or 65.0%, to $5.9 million for the six months ended September 30, 2023 from $3.6 million for the same period in 2022, due primarily to a $1.6 million increase in

35

employee payroll costs resulting from increased research and development activities and a $0.5 million increase in stock-based compensation expense primarily resulting from an out-of-period adjustment.

Sales and marketing expense increased $1.0 million, or 48.4%, to $3.2 million for the six months ended September 30, 2023 from $2.1 million for the same period in 2022, due primarily to an increase in costs related to payroll and stock-based compensation expense.

General and administrative expense increased $1.1 million, or 17.2%, to $7.5 million for the six months ended September 30, 2023 from $6.4 million for the same period in 2022, due primarily to a $1.0 million increase in stock-based compensation expense resulting from an out-of-period adjustment and option modification, and a $0.3 million increase in bad debt expense, partially offset by a reduction in payroll and legal expenses.

Interest expense was $8,000 for our revolving credit facility with Nexperia for the six months ended September 30, 2023, as we repaid the outstanding amount in full on April 4, 2023. Interest expense was $0.4 million for the revolving credit facility for the same period in 2022.

Loss in joint venture was $1.6 million for the six months ended September 30, 2023, compared with $1.3 million for the same period in 2022 due to an increase in our percentage ownership of the joint venture that owns AFSW.

Other income, net was $0.3 million for the six months ended September 30, 2023 compared to $0.8 million for the same period in 2022, due primarily to a decrease in sublease income as a result of the amendment of our subleasing contract during the current quarter.

Liquidity and Capital Resources

Our principal sources of liquidity have been cash generated by issuing stock and promissory notes and, more recently, cash generated from sales. During the six months ended September 30, 2023, we raised gross proceeds of $7.3 million from the exercise of warrants, $2.0 million from selling shares of our common stock in a private placement, and $7.9 million from selling shares of our common stock in the rights offering, but also used $12.2 million of cash to repay the revolving loan with Nexperia when it matured on April 4, 2023 and used $12.9 million of cash in operations.

As of September 30, 2023, we had cash and cash equivalents of $6.2 million, other current assets of $15.8 million and current liabilities of $8.3 million, resulting in working capital of $13.6 million.

Management plans to raise additional working capital to fund operations through the issuance of stock to investors, debt financing, and/or license of intellectual property. We are pursuing conventional debt and equity financing that, if consummated and together with forecasted revenue, would provide us with working capital into the fiscal year ending March 31, 2025. However, there is no assurance that we will be successful in closing the debt financing or raising additional capital on terms acceptable to us or at all, or that we will achieve our revenue forecasts. If we are unable to raise additional capital, we believe that our existing cash and cash equivalents and forecasted revenue will be sufficient to fund our operations into the first half of January 2024. The accompanying condensed consolidated financial statements have been prepared assuming that the Company will continue as a going concern. However, considering our working capital, historical net losses, and future expected losses, there is substantial doubt about the Company’s ability to continue as a going concern for the next twelve months from the issuance of these financial statements.

If we do not obtain any other financing, we would need to cease operations, liquidate our assets, and may seek the protection of applicable bankruptcy laws. Because all of liabilities are senior to our common stock in our capital structure, any such liquidation or bankruptcy would likely result in the complete loss of your investment in our common stock. Therefore, trading in our securities is highly speculative and poses substantial risks.

36

Our ability to sustain operations is dependent on our ability to successfully market and sell our products and our ability to raise capital through additional financings until we are able to achieve profitability with positive cash flows. To the extent sufficient financing is not available, we may not be able to, or may be delayed in, developing our offerings and meeting our obligations. We will continue to evaluate our projected expenditures relative to our available cash and to evaluate financing alternatives in order to satisfy our working capital and other cash requirements. Our future capital requirements will depend on many factors including our revenue growth rate, billing frequency, the current global macroeconomic environment, the timing and extent of spending to support further sales and marketing and research and development efforts, and our obligations to GaNovation. The current global macroeconomic environment may make it more difficult or preclude us from raising additional capital, increase our costs of capital and otherwise adversely affect our business, results of operations, financial condition and liquidity.

As previously announced, we are engaged in a strategic review of opportunities to enhance stockholder value which may include, among other things, strategic partnerships with third parties with equity or debt investment, a sale of the Company or certain of our assets, strategic licensing, or other financing alternatives. Our strategic plans are not yet finalized and are subject to market conditions and other uncertainties. There can be no assurance that any strategic review will be successful, that it will result in a transaction on terms acceptable to us or our stockholders, or at all, or will result in increased stockholder value. If we are unable to successfully execute our strategic review, or enter into a transaction on acceptable terms, we may be required to delay, limit or terminate our operations or restructure our liabilities, including potentially under the protection of applicable bankruptcy laws.

The accompanying condensed consolidated financial statements do not reflect any adjustments that might result from the outcome of the above uncertainties.

Cash Flows

The following table shows a summary of our cash flows for the periods presented (in thousands):

	Six Months Ended September 30,				Change
	2023		2022
Net cash (used in) provided by:
Operating activities	$	(12,880)	$	(9,813)	$	(3,067)
Investing activities	(1,349)		(5,453)		4,104
Financing activities	4,794		15,770		(10,976)
Effect of foreign exchange rate changes on cash, cash equivalents, and restricted cash	(440)		(443)		3
Net (decrease) increase in cash, cash equivalents, and restricted cash	$	(9,875)	$	61	$	(9,936)

Operating Activities

Net cash used in operating activities was $12.9 million and $9.8 million for the six months ended September 30, 2023 and 2022, respectively. The increase of $3.1 million was attributable primarily to a $3.2 million increase in net loss, a $3.5 million decrease in accounts payable, accrued expenses and other liabilities, and a $1.4 million increase in accounts receivable, offset by a $1.7 million increase in stock-based compensation, $1.2 million decrease in inventory, and a $0.6 million decrease in other assets.

Investing Activities

Net cash used in investing activities was $1.3 million and $5.5 million for the six months ended September 30, 2023 and 2022, respectively. The decrease of $4.1 million was attributable primarily to a $3.4 million decrease in purchases of property and equipment and a $0.7 million decrease in investment in joint venture.

37

Financing Activities

Net cash provided by financing activities was $4.8 million and $15.8 million for the six months ended September 30, 2023 and 2022, respectively. The decrease of $11.0 million was attributable to the repayment of the Nexperia revolving facility of $12.0 million and a decrease of $6.1 million in the proceeds from the sale of our common stock, offset by $7.3 million of proceeds from the exercise of warrants in comparison to the same period in 2022.

Critical Accounting Policies and Estimates

There have been no material changes to our critical accounting policies and estimates as described in our Annual Report on Form 10-K for the fiscal year ended March 31, 2023.

JOBS Act Accounting Election

We are an emerging growth company, as defined in the JOBS Act. The JOBS Act provides that an emerging growth company can take advantage of an extended transition period for complying with new or revised accounting standards. This provision allows an emerging growth company to either early adopt or delay the adoption of some accounting standards until those standards would otherwise apply to private companies. We have elected to use the extended transition period under the JOBS Act until the earlier of the date we (i) are no longer an emerging growth company or (ii) affirmatively and irrevocably opt out of the extended transition period provided in the JOBS Act. As a result, our financial statements may not be comparable to companies that comply with new or revised accounting pronouncements as of public company effective dates.

Item 3. Quantitative and Qualitative Disclosures About Market Risk.

As a “smaller reporting company,” we are not required to provide the information required by this Item.

Item 4. Controls and Procedures.

Inherent Limitations on Effectiveness of Controls

Our management, including our principal executive officer and principal financial officer, does not expect that our disclosure controls and procedures or our internal control over financial reporting will prevent or detect all errors and all fraud. A control system, no matter how well-designed and operated, can provide only reasonable, not absolute, assurance that the control system's objectives will be met. 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. Further, because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that misstatements due to error or fraud will not occur or that all control issues and instances of fraud, if any, have been detected.

Evaluation of Disclosure Controls and Procedures

Our disclosure controls and procedures are designed to ensure that information we are required to disclose in reports we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms, and that such information is accumulated and communicated to our management, including our 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.

Our management, with the participation of our chief executive officer and our chief financial officer, evaluated the effectiveness of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act) as of the end of the period covered by this Report. Based on this evaluation, management, including our chief executive officer and our chief financial officer, concluded that as of September 30, 2023, our disclosure

38

controls and procedures were not effective because of a material weakness in our internal control over financial reporting.

As disclosed in our Annual Report on Form 10-K for the fiscal year ended March 31, 2023, our current staffing resources in our finance department are insufficient to support the complexity of our financial reporting requirements. We did not have adequate staff members with technical accounting knowledge and financial reporting experience, and as a result we have had an inadequate level of precision, evidence or timeliness in the performance of review controls as it relates to inventory, joint venture accounting, right of use asset and lease liability, accrual of expenses, revenue and financial reporting, including consideration of impairment, foreign currency impact and tax disclosure.

Management has initiated the corrective actions and procedures to remediate the identified material weakness, including hiring additional personnel with technical accounting knowledge and financial reporting experience, and has started to implement processes to support the complexity of our financial statements. However, our ability to continue these remediation efforts is contingent upon our ability to raise significant additional funding.

Changes in Internal Control Over Financial Reporting

Except as described above, there was no change in our internal control over financial reporting identified in connection with the evaluation required by Rule 13a-15(d) and 15d-15(d) of the Exchange Act that occurred during the period covered by this Report that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

39

PART II - OTHER INFORMATION

Item 1. Legal Proceedings.

From time to time, we may become involved in litigation or other legal proceedings. We are not currently a party to any litigation or legal proceedings that, in the opinion of our management, are likely to have a material adverse effect on our business. Regardless of outcome, litigation can have an adverse impact on us because of defense and settlement costs, diversion of management resources and other factors.

On April 5, 2022, Joel Newman, an alleged holder of our common stock, filed a complaint in the Delaware Court of Chancery derivatively against our directors and KKR Phorm Investors L.P. (“Phorm”). On July 11, 2022, plaintiff filed an amended complaint. Among other things, the complaint alleges that the directors and Phorm (as an alleged controlling stockholder) breached their fiduciary duties, and that Phorm was unjustly enriched, because the terms of the November 5, 2021 private placement in which Phorm participated were allegedly unfairly favorable to Phorm. Defendants moved to dismiss the complaint and, on August 31, 2023, the Court granted defendants’ motion to dismiss.

Item 1A. Risk Factors.

An investment in our securities is highly speculative and involves a high degree of risk. We face a variety of risks that may affect our operations or financial results and many of those risks are driven by factors that we cannot control or predict. Investors should carefully consider the risks described below and all of the other information set forth in this Report, before deciding to invest in our common stock. If any of the risks described below occur, our business, financial condition, results of operations and prospects could be materially adversely affected. In that case, the market price of our common stock would likely decline and investors could lose all or a part of their investment. Only those investors who can bear the risk of loss of their entire investment should consider an investment in our securities. Additional risks and uncertainties not presently known to us or that we currently deem immaterial may also impair our operations.

Risks Related to Our Business and the Industry in Which We Operate

We have a history of losses, anticipate increasing our operating expenses in the future, and may not be able to achieve or maintain profitability. If we cannot achieve or maintain profitability, stockholders could lose all or part of their investment.

Since our inception in 2007, we have generated minimal revenue and substantial net losses as we have devoted our resources to the development of our technology, and our business model has not been proven. As of September 30, 2023, we had an accumulated deficit of $229.4 million. For the six months ended September 30, 2023 and 2022, our net loss was $14.6 million and $11.3 million, respectively. We expect our operating expenses to increase in the future as we expand our sales and marketing efforts and continue to invest in our infrastructure and the research and development of our technologies. These efforts may be more costly than we expect, and we may not be able to increase our revenue to offset our increased operating expenses. Our revenue growth may be slower than anticipated or our revenue may decline for a number of other reasons, including slower growth of, or reduced demand for, GaN power management solutions, increased competition, or any failure to capitalize on growth opportunities. If we are unable to generate sufficient revenue, we may never become profitable or be able to maintain any future profitability. If this were to occur, our stockholders could lose all or part of their investment.

If we do not successfully complete the debt financing initiatives we are pursuing or raise other capital, we believe that our existing cash and cash equivalents and forecasted revenue will be sufficient to fund our operations into the first half of January 2024.

We are pursuing conventional debt financing initiatives that, if consummated and together with forecasted revenue, would provide us with working capital into the fiscal year ending March 31, 2025. There can be no assurance that we will be successful in closing the debt financing or that we will achieve our revenue forecasts.

40

If we are unable to secure any additional funding, we believe that our existing cash and cash equivalents and forecasted revenue will be sufficient to fund our operations into first half of January 2024. If we do not obtain any other financing, we would need to cease operations, liquidate our assets, and may seek the protection of applicable bankruptcy laws. Because all of our liabilities are senior to our common stock in our capital structure, any such liquidation or bankruptcy would likely result in the complete loss of your investment in our common stock. Therefore, trading in our securities is highly speculative and poses substantial risks.

Filing for bankruptcy would have a material adverse effect on our business, financial condition, results of operations and liquidity. If the bankruptcy proceeding was under Chapter 11 of the U.S. Bankruptcy Code, our senior management would be required to spend a significant amount of time and effort dealing with the reorganization instead of focusing exclusively on our business operations. Bankruptcy protection or any other liquidation proceedings would also make it very difficult to retain management and other key personnel necessary to operate our business, and we may lose our suppliers, customers and business partners, all of which would reduce the value of our assets and any potential value to our stockholders.

Our strategic review process may not result in us entering into or completing a transaction, and may not lead to increased stockholder value.

As previously announced, we are engaged in a strategic review of opportunities to enhance stockholder value which may include, among other things, strategic partnerships with third parties with equity or debt investment, a sale of the Company or certain of our assets, strategic licensing, or other financing alternatives. Our strategic plans are not yet finalized and are subject to market conditions, the interest of third parties in a potential transaction with us, and other uncertainties. There can be no assurance that our strategic review process will be successful, will result in a transaction on terms acceptable to us or our stockholders, or at all, or will result in increased stockholder value. Further, our strategic review process could be time consuming, require us to incur significant costs, negatively impact our ability to attract, retain and motivate key employees, and expose us to potential litigation in connection with the process or any resulting transaction. In addition, speculation regarding any developments related to our strategic review process and perceived uncertainties related to our future could cause our stock price to fluctuate significantly.

If we are unable to successfully execute our strategic review, or enter into a transaction on acceptable terms, we may be required to delay, limit or terminate our operations, liquidate our assets or restructure our liabilities, including potentially under the protection of applicable bankruptcy laws, any of which could result in the complete loss of your investment in our common stock.

Our ability to continue as a going concern will depend on us being able to raise significant additional capital to fund our operations, and this capital may be unavailable on attractive terms, if at all, and could dilute your investment.

Our recurring operating losses and current operating plans raise substantial doubt about our ability to continue as a going concern for the next twelve months. We currently incur and historically have incurred losses from operations and expect to do so in the foreseeable future. During the six months ended September 30, 2023, we raised gross proceeds of $7.3 million from the exercise of warrants, $2.0 million from selling shares of our common stock in a private placement, and $7.9 million from selling shares of our common stock in the rights offering, but also used $12.2 million of cash to repay our revolving loan with Nexperia when it matured on April 4, 2023 and used $12.9 million of cash in operations. As of September 30, 2023, we had $6.2 million in cash and cash equivalents.

We will be required to engage in additional equity or debt financings to secure additional funds. If we close one or more additional equity or convertible debt financings, our stockholders may experience significant dilution of their ownership interests, the rights given to new equityholders may be superior to those of our common stockholders and the per share value of our common stock could decline. Furthermore, if we engage in debt financing, the holders of debt would have priority over the holders of our common stock, and we may be required to accept terms that restrict our ability to run our business or incur additional indebtedness. Any debt financing could also contain restrictive covenants that may impact how we run our business and could result in the loan being paid back in full immediately

41

if we are in non-compliance. In addition, the current global macroeconomic environment may make it more difficult or preclude us from raising additional capital, increase our costs of capital and otherwise adversely affect our business, results of operations, financial condition and liquidity. If we are unable to raise additional capital when needed or on acceptable terms, we may not be able to, among other things:

•continue our business and operations;

•develop or enhance our products;

•continue to expand our sales and marketing and research and development organizations;

•acquire complementary technologies, products or businesses;

•expand operations, in the United States or internationally;

•hire, train and retain employees; or

•respond to competitive pressures or unanticipated working capital requirements.

Our failure to do any of these things could harm our business, financial condition and results of operations or require us to restructure our liabilities, including potentially under the protection of applicable bankruptcy laws.

Our joint venture arrangement involves numerous risks, including risks relating to the lack of full control of the joint venture (although key business decisions require unanimous consent), potential disagreements with our joint venture partner about how to manage the joint venture, conflicting interests of the joint venture, requirements to fund the joint venture and its business not being profitable.

We are party to a joint venture agreement with a third party for the ownership and operations of GaNovation, which wholly owns AFSW, a wafer fabrication facility located in Aizu Wakamatsu, Japan that we rely on for all of our GaN fab-wafer requirements. From August 1, 2021 to April 9, 2023, we held a 25% interest in GaNovation. Pursuant to our joint venture agreement, our interest in GaNovation increased to 32.5%, effective April 10, 2023. Accordingly, we are currently responsible for 32.5% of the funding obligations and losses of AFSW through our ownership interest in GaNovation, subject to a maximum of $12.0 million for the three-year period beginning August 1, 2021. As of September 30, 2023, we have provided $6.1 million of this $12.0 million commitment to GaNovation. Since its inception, GaNovation’s primary business activity has related to the businesses of AFSW. For as long as we have had an ownership interest in AFSW, it has operated at a loss. Our share of the operating losses incurred by our joint venture during the six months ended September 30, 2023 and the years ended March 31, 2023 and 2022 was $1.6 million, $2.7 million and $4.0 million, respectively. We expect our loss in joint venture will increase during the year ended March 31, 2024 as compared to the year ended March 31, 2023 due to the increase in our ownership interest in GaNovation from 25% to 32.5%, effective April 10, 2023.

In the future, we may enter into additional joint venture arrangements, including the addition of partners in AFSW or GaNovation,which could reduce our cash-funding obligations to AFSW. Although we take steps to carefully select our partners, our current and any future joint ventures may not be successful. Our joint venture partners may have economic, business or legal interests or goals that are inconsistent with ours, or those of the joint venture. Moreover, if our joint venture partners fail to invest in the joint venture in the manner that is anticipated or otherwise fail to meet their contractual obligations, the joint venture may be unable to adequately perform and conduct its operations, requiring us to make additional investments or perform additional services to ensure the adequate performance and delivery of products and/or services to the joint venture’s customers, which could have a material adverse effect on our business, financial condition, results of operations and cash flows. Failure by us, or an entity in which we have a joint venture interest, to adequately manage the risks associated with such joint venture could have a material adverse effect on the financial condition or results of operations of our joint venture and, in turn, our business, financial condition, cash flows and results of operations.

42

Our quarterly results of operations are likely to vary from period to period, which could cause the market price of our common stock to fluctuate or decline.

Our results of operations have varied from period to period, and we expect that our quarterly results of operations will continue to vary as a result of a number of factors, many of which are outside of our control and may be difficult to predict, including:

•our ability to raise additional financing in both the short and long-term to continue our operations;

•our ability to attract new and retain existing customers, including due to our perceived or actual financial condition;

•the budgeting cycles and purchasing practices of customers;

•the timing and length of our sales cycles, including the ability of our customers to design-in successfully with GaN power solutions;

•changes in customer requirements or market needs, including market acceptance of GaN technology;

•the timing and impact of new product introductions by us or our competitors or any other change in the competitive landscape of the semiconductor industry, including consolidation among our customers or competitors;

•deferral of orders from customers in anticipation of new products or product enhancements announced by us or our competitors;

•our ability to execute on our growth strategy and operating plans;

•our ability to successfully expand our business domestically and internationally;

•our ability to successfully compete with other companies in our market;

•changes in our pricing policies or those of our competitors;

•any disruption in, or termination of, our relationship with channel partners;

•insolvency or credit difficulties confronting our customers, affecting their ability to purchase or pay for our products, or confronting our key suppliers, which could disrupt our supply chain;

•the cost and potential outcomes of potential future litigation;

•general economic conditions, both domestic and in our foreign markets; and

•the amount and timing of operating costs and capital expenditures related to the expansion of our business.

Any of the above factors, individually or in the aggregate, may result in significant fluctuations in our quarterly operating results. As a result of this variability, our historical results of operations should not be relied upon as an indication of future performance. Moreover, this variability and unpredictability could result in our failure to follow through on our operating plans or meet the expectations of investors for any period. If we fail to follow through on our operating plans or meet such expectations for these or other reasons, the market price of our common stock could fall substantially.

43

We are exposed to foreign currency exchange rate fluctuations. Although we hedge certain currency risks, our hedging strategies may not be successful in mitigating our risks and changes in foreign currency exchange rates may adversely affect our financial condition, cash flows and results of operations.

We are exposed to fluctuations in foreign currency exchange rates, primarily the Japanese Yen, from our international operations. We translate revenues and other results denominated in foreign currencies into U.S. dollars for our condensed consolidated financial statements. If the U.S. dollar strengthens relative to foreign currencies, particularly the Japanese Yen, there will be a negative impact on our operating results upon translation of those foreign operating results into the U.S. dollar and may distort period to period comparisons. For example, our loss from foreign currency exchange rate fluctuations was $0.7 million for each of the six months ended September 30, 2023 and 2022. While we recently began to hedge against certain exchange rate risks in an effort to minimize the impact of currency exchange rate fluctuations, we typically enter into hedging contracts with maturities of up to 12 months, leaving us exposed to longer term changes in exchange rates. These hedges may not fully offset the negative impacts on our financial condition from currency exchange rate fluctuations. To the extent that these hedges are inadequate, or if there are significant currency exchange rate fluctuations in currencies for which we do not have hedges in place, our reported financial results could be materially adversely affected. Furthermore, if a financial counterparty to our hedges experiences financial difficulties or is otherwise unable to honor the terms of the foreign currency hedge, we may experience material financial losses.

We may not be able to develop new technologies and products to satisfy changes in customer demand or industry standards, and our competitors could develop products that decrease the demand for our products.

Rapidly changing technologies and industry standards, along with frequent new product introductions, characterize the industries of many of our customers and potential customers. Our financial performance depends, in part, on our ability to design, develop, manufacture, assemble, test, market and support new products and enhancements on a timely and cost-effective basis.

Our products have not been proven commercially on the scale of conventional power semiconductor products. The principal focus of our research and development activities has been to improve processes and support our ongoing development of GaN power management solutions. These projects are subject to various risks and uncertainties we are not able to control, including changes in customer demand or industry standards and the introduction of new or superior technologies by others. Moreover, any failure by us in the future to develop new technologies or timely react to changes in existing technologies could materially delay our development of new products, which could result in product obsolescence, decreased revenues and a loss of our market share to our competitors. In addition, products or technologies developed by others may render our products or technologies obsolete or non-competitive. Further, if our products are not in compliance with prevailing industry standards, such non-compliance could materially and adversely affect our financial condition, cash flows and results of operations.

Our sales cycles can be long and unpredictable, and our sales efforts require considerable time and expense. As a result, our revenue is difficult to predict and may vary substantially from period to period, which may cause our results of operations to fluctuate significantly.

Our results of operations may fluctuate, in part, because of the resource intensive nature of our sales efforts, the length and variability of our sales cycle and the short-term difficulty in adjusting our operating expenses. To the extent our competitors develop products that our prospective customers view as equivalent or superior to ours, the average duration of our sales cycles may increase, and our sales efforts may be less successful. Because the length of time required to close a sale varies substantially from customer to customer, it is difficult to predict exactly when, or even if, we will make a sale with a potential customer. As a result, individual sales have, in some cases, occurred in quarters subsequent to or in advance of those we anticipated, or have not occurred at all, which makes it difficult for us to forecast our revenue accurately in any quarter. Because a substantial portion of our expenses are relatively fixed in the short term, our results of operations will suffer if our revenue falls below expectations in a particular quarter, which could cause the market price of our common stock to decline.

44

We must commit resources to development, design and production prior to receipt of purchase commitments and could lose some or all of the associated investment.

Our sales are typically made pursuant to individual purchase orders, rather than pursuant to long-term supply contracts. Many of these purchase orders may be revised or canceled without penalty. As a result, we typically must commit resources to the design, development, and production of products without any advance purchase commitments from customers. Any inability to sell a product after we devote resources to it could materially and adversely affect our financial condition, cash flows and results of operations.

Unfavorable worldwide economic conditions (including inflation), may negatively affect our business, financial condition and results of operations.

The global economic downturn and volatility and adverse conditions in the capital and credit markets have negatively affected levels of business and consumer spending, heightening concerns about the likelihood of a global recession and potential default of various national bonds and debt backed by individual countries. Such developments, as well as the politics impacting these, could adversely affect our financial results. Uncertainty about worldwide economic conditions poses a risk as businesses may further reduce or postpone spending in response to reduced budgets, tight credit, negative financial news and declines in income or asset values, which could adversely affect our business, financial condition and results of operations and increase the volatility of our stock price.

Inflation has also risen globally to historically high levels. If the inflation rate continues to increase, the costs of labor and other expenses could also increase. There is no assurance that our revenues will increase at the same rate that costs could increase. Inflation and government efforts to combat inflation, such as raising the benchmark interest rate, have increased and could continue to increase market volatility and have an adverse effect on the financial market and global economy. Such adverse conditions could negatively impact demand for our products, which could adversely affect our business, financial condition and results of operations.

We compete in highly competitive markets, and competitive pressures from existing and new companies may adversely impact our business and operating results.

The markets in which we compete are highly competitive. We expect competition to intensify in the future as existing competitors and new market entrants introduce new products into our markets. This competition could result in increased pricing pressure, reduced profit margins, increased sales and marketing expenses, and the loss of market share, any of which could seriously harm our business, financial condition and results of operations. If we do not keep pace with product and technology advances and otherwise keep our product offerings competitive, there could be a material and adverse effect on our competitive position, revenue and prospects for growth. Many of our existing competitors, such as silicon-based product providers (e.g., Infineon, ST Microelectronics, Toshiba and ON Semiconductor), silicon carbide-based product providers (e.g., Rohm, Infineon and Wolfspeed) and other high-voltage GaN product providers (e.g., Power Integrations, Infineon, Panasonic, GaN Systems, Navitas, Texas Instruments and Innoscience), have, and some of our potential competitors could have, substantial competitive advantages such as:

•greater name recognition, longer operating histories and larger customer bases;

•larger sales and marketing budgets and resources;

•broader distribution and established relationships with channel partners and customers;

•broader and deeper product lines;

•greater customer support resources;

•greater resources to make acquisitions;

45

•lower labor and research and development costs;

•substantially greater financial and other resources; and

•larger scale manufacturing operations.

In addition, some of our larger competitors have substantially broader product offerings and may be able to leverage their relationships with channel partners and customers based on other products to gain business in a manner that discourages users from purchasing our products, including by selling at zero or negative margins or product bundling. Potential customers may also prefer to purchase from their existing suppliers rather than a new supplier regardless of product performance or features. As a result, even if the features of our products are superior, customers may not purchase our products. In addition, innovative start-up companies, and larger companies that are making significant investments in research and development, may invent similar or superior products and technologies that compete with our products. Our current and potential competitors may also establish cooperative relationships among themselves or with third parties that may further enhance their resources. If we are unable to compete successfully, or if competing successfully requires us to take costly actions in response to the actions of our competitors, our business, financial condition and results of operations could be adversely affected.

We rely on third-party channel partners to sell our products. If our partners fail to perform, our ability to sell our products and services could be limited, and if we fail to optimize our channel partner model going forward, our operating results could be harmed.

A portion of our revenue is generated through sales by our channel partners, which include distributors and resellers. To the extent our channel partners are unsuccessful in selling our products, we are unable to enter into arrangements with, and retain, a sufficient number of effective channel partners in each of the regions in which we sell products or we are unable to keep our channel partners motivated to sell our products, our ability to sell our products and our operating results could be harmed. The termination of our relationship with any significant channel partner may adversely impact our sales and operating results.

We rely on limited sources of wafer fabrication, packaged products fabrication and product testing, the loss of which could delay and limit our product shipments.

AFSW currently satisfies all of our GaN fab-wafer requirements (i.e., when a GaN epiwafer undergoes various processes at a wafer fabrication facility). While we believe AFSW has sufficient capacity for our near-term business needs and is reasonably scalable as our demand for throughput increases, any disruption in the AFSW fabrication facilities may severely impact our supply. In the event we are unable to continuously sustain the AFSW fabrication facility, securing supply from another source and adapting our process at such source would lead to a significant set of challenges, additional costs and delays.

We also utilize relatively standard back-side wafer processing services such as wafer-thinning and wafer back-side metalization from foundries in Asia. These suppliers also offer such services to other companies, which may lead to us not having access to adequate capacity for our needs and our customers’ needs. We may have less control over delivery schedules and overall support versus other customers and users of those facilities. If the wafer foundries we use are unable or unwilling to manufacture our products in our required volumes, or at specified times, we may have to identify and qualify acceptable additional or alternative foundries. This qualification process could typically take three to six months and we may not find sufficient capacity in a timely manner or at an acceptable cost to satisfy our production requirements.

We additionally use outsourced assembly and test providers (“OSATs”) for packaging and testing of our products. We utilize multiple OSATs for various package types and a single OSAT for each type of package. These OSATs may take time, or may be unable, to respond if our throughput demands increase, particularly if we expect a rapid increase in production and could harm our ability to meet unexpected rises in demand in an acceptable time frame. If the OSATs we use are unable or unwilling to package and test our products in our required volumes, or at specified times, we may have to identify and qualify acceptable additional or alternative OSATs. This qualification process

46

would typically take three to nine months and we may not find sufficient capacity in a timely manner or at an acceptable cost to satisfy our production requirements.

Some companies that supply products to our customers are similarly dependent on a limited number of suppliers. These other companies’ products may represent important components of power adapters, inverters and other products into which our products are designed. If these companies are unable to produce the volumes demanded by our customers, our customers may be forced to slow down or halt production on the equipment for which our products are designed, which could materially impact our order levels.

We rely on third parties for supply of raw materials and parts, assembly and test services, and transportation, among other things, and we generally cannot control their availability or conditions of supply or services.

We rely on third-party suppliers and service providers, including raw material and components suppliers, OSATs, freight carriers and distributors, in manufacturing our products. This reliance involves several risks, including reduced control over availability, capacity utilization, delivery schedules, costs, and supply chain allocations. We currently source all of our package and test requirements from OSATs that are located predominantly in the Philippines and to a lesser extent in Taiwan and China. Since these OSATs might also provide services to our competitors, periods of increased industry demand may result in capacity constraints.

We obtain our wafer products from our joint venture wafer fabrication facility located in Japan, and we manufacture our epi-wafers at our facilities in California and Japan. In the future, we plan to additionally obtain our epi-wafers from a facility in Taiwan. With respect to suppliers and other service providers located in Taiwan, geopolitical changes in China-Taiwan relations could disrupt their operations, which could adversely affect our ability to scale certain products and as a result, could adversely affect our business and results of operations.

Our and our vendors’ manufacturing processes require availability of certain raw materials and supplies. Limited or delayed access to these items could adversely affect our results of operations. In certain instances, one of our vendors may be the sole source of highly specialized processing services or materials. If such vendor is unable or unwilling to manufacture and deliver components to us on the time schedule and of the quality or quantity that we require, we may be forced to seek to engage an additional or replacement vendor, which could result in additional expenses and delays in product development or shipment of product to our customers. If additional or replacement vendors are not available, we may also experience delays in product development or shipment which could, in turn, result in the temporary or permanent loss of customers and as a result could adversely affect our business and results of operations.

We cannot predict the extent to which the United States or other countries will impose quotas, duties, tariffs, taxes or other similar restrictions on the import or export of goods in the future, nor can we predict future trade policy or the terms of any renegotiated trade agreements and their impact on our business. The adoption and expansion of trade restrictions, the occurrence of a trade war, or other governmental action related to tariffs or trade agreements or policies has the potential to adversely impact demand for our products, our costs, our customers, our suppliers, and the U.S. economy, which in turn could have a material adverse effect on our business, financial condition and results of operations.

Because we depend on third-party manufacturers to build portions of our products, we are susceptible to manufacturing delays and pricing fluctuations that could prevent us from shipping customer orders on time, if at all, or on a cost-effective basis, which may result in the loss of sales, income and customers.

We depend on third-party manufacturers to build several stages of our products. Our reliance on these third-party manufacturers reduces our control over the manufacturing process and exposes us to risks, including reduced control over quality assurance, product costs, and product supply and timing. Any manufacturing disruption by these third-party manufacturers could severely impair our ability to fulfill orders. Our reliance on third-party manufacturers also creates the potential for infringement or misappropriation of our intellectual property. If we are unable to manage our relationships with third-party manufacturers effectively, or if our third-party manufacturers experience delays or disruptions for any reason, increased manufacturing lead-times, capacity constraints or quality control problems in

47

their manufacturing operations, or if they otherwise fail to meet our future requirements for timely delivery, our ability to ship products to our customers would be severely impaired, and our business and results of operations would be seriously harmed.

Our business could be adversely affected by the effects of health epidemics or pandemics in regions where we or third parties on which we rely have manufacturing or other business operations.

The effects of health epidemics or pandemics could materially affect our operations globally, including at our headquarters in California and at our subsidiaries in Japan. For example, government authorities implemented numerous measures to try to contain the COVID-19 virus, such as travel bans and restrictions, quarantines, shelter-in-place or stay-at-home orders, and business shutdowns. During the COVID-19 pandemic, we also took precautionary measures intended to minimize the risk of the virus to our employees, our customers, and the communities in which we operate, including requiring our employees to work remotely at times unless they could not perform their essential functions remotely and temporarily suspending all non-essential travel, which negatively impacted our customer success efforts and sales and marketing efforts during that time. As a result of the COVID-19 pandemic, some of our customers experienced delays in their internal development programs and design cycles with our GaN products, which led to postponements of their orders of our products and postponements of determinations that our products will be used in their designs for new products under development with corresponding delays in their market introduction and our achievement of revenues. We may continue to experience an adverse impact to our business as a result of the continued global economic impact of the pandemic.

An earthquake, terrorist attack or other man-made or natural disaster could negatively impact our business and operating results.

The occurrence of any catastrophic event, including an earthquake, fire, flood, tsunami, the effects of climate change, or other weather event, power loss, telecommunications failure, software or hardware malfunctions, epidemic or pandemic diseases, cyber-attack, military conflict or war, or terrorist attack, could materially impair our operations globally. For example, our principal executive offices and primary epiwafer operating facilities are situated near Santa Barbara, California, and most of our major suppliers, which are wafer foundries and assembly houses, are located in areas that have been subject to severe earthquakes and are susceptible to other disasters such as tropical storms, typhoons or tsunamis. In the event of a disaster, such as an earthquake and tsunami in Japan, we or one or more of our major suppliers may be temporarily unable to continue operations and may suffer significant property damage. Any interruption in our ability, or that of our major suppliers, to continue operations could delay the development and shipment of our products and have a substantial negative impact on our financial results. As part of our risk management policy, we maintain insurance coverage at levels that we believe are appropriate for our business. However, in the event of an accident or incident at these facilities, we cannot assure you that the amounts or coverage of insurance will be sufficient to satisfy any damages and losses, particularly as climate change continues to increase the risk of climate-related natural disasters.

We rely on our management team and other key employees and will need additional personnel to grow our business. The loss of one or more key employees or our inability to attract and retain qualified personnel could harm our business.

Our future success is substantially dependent on our ability to attract, retain and motivate the members of our management team and other key employees throughout our organization. The loss of one or more members of our management team or other key employees could materially impact our sales or our research and development programs and materially harm our business, financial condition, results of operations and prospects. We do not maintain key person life insurance policies on any of our management team members or key employees. Competition for highly skilled personnel is intense. We may not be successful in attracting or retaining qualified personnel to fulfill our current or future needs. For positions in our offices near Santa Barbara, California in particular, we may experience challenges hiring new and mid-level employees in part due to the high local housing costs. Our competitors may be successful in recruiting and hiring members of our management team or other key employees, and it may be difficult for us to find suitable replacements on a timely basis, on competitive terms, or at all.

48

If we fail to effectively manage our growth, our business, financial condition and results of operations would be harmed.

We are a development stage company with 129 employees as of September 30, 2023 and are subject to the strains of ongoing development and growth, which has placed significant demands on our management and our operational and financial infrastructure. To manage any growth effectively, we must continue to improve our operational, financial and management systems and controls by, among other things:

•effectively attracting, training and integrating new employees, particularly members of our sales, applications and research and development teams;

•further improving our key business applications, processes and IT infrastructure to support our business needs;

•enhancing our information and communication systems to ensure that our employees and offices around the world are well coordinated and can effectively communicate with each other and our channel partners and customers; and

•appropriately documenting and testing our IT systems and business processes.

These and other improvements in our systems and controls will require significant capital expenditures and the allocation of valuable management and employee resources. If we fail to implement these improvements effectively, or do not have the financial resources to pursue and implement these actions in full, or at all, our ability to manage growth and ensure ongoing operation of key business systems would be impaired, and our business, financial condition and results of operations would be harmed.

We are subject to a number of risks associated with international sales and operations.

We have small teams that are engaged in marketing, selling and supporting our products internationally. As a result, we must hire and train experienced personnel to staff and manage our foreign operations. To the extent that we experience difficulties in recruiting, training, managing and retaining international employees, particularly managers and other members of our international sales team, we may experience difficulties in sales productivity in, or market penetration of, foreign markets. We also enter into strategic distributor and reseller relationships with companies in certain international markets where we do not have a local presence. If we are not able to maintain successful strategic distributor and reseller relationships with our international channel partners or recruit additional channel partners, our future success in these international markets could be limited.

Investments in us may be subject to U.S. foreign investment regulations which may impose conditions on or limit certain investors’ ability to purchase or hold our common stock, potentially limiting our ability to enter into or maintain strategic relationships and making our common stock less attractive to investors.

Under section 721 of the U.S. Defense Production Act of 1950, as amended (the “DPA”), the U.S. President has the power to disrupt or block certain foreign investments in U.S. businesses if the President determines that such a transaction threatens U.S. national security. The Committee on Foreign Investment in the United States (“CFIUS”) has the authority to conduct national security reviews of certain foreign investments. CFIUS may clear a transaction, negotiate or impose mitigation measures as a perquisite to granting clearance of a transaction, or recommend that the President impose conditions or block the transaction or force divestment if the transaction has closed. The Foreign Investment Risk Review Modernization Act (“FIRRMA”), enacted in 2018, amended the DPA to, among other things, expand CFIUS’s jurisdiction beyond acquisitions of control of U.S. businesses. Now, CFIUS also has jurisdiction over certain foreign non-controlling investments in U.S. businesses that involve critical technology or critical infrastructure, or that collect and maintain sensitive personal data of U.S. citizens (“TID U.S. Businesses”). We are a TID U.S. Business because we develop and design technologies that would be considered critical technologies. Certain foreign investments in TID U.S. Businesses are subject to mandatory filing with CFIUS. We

49

have received and may continue to receive foreign investments, some of which may be subject to CFIUS jurisdiction. The enhanced scrutiny and potential restrictions on the ability of foreign persons to invest in us could limit our ability to engage in strategic transactions that could benefit our stockholders, including a change of control, and could also affect the price that an investor may be willing to pay for our common stock.

We are subject to government regulation, including import, export and economic sanctions laws and regulations that may expose us to liability and increase our costs.

Our products and technology are subject to U.S. export controls, including the U.S. Department of Commerce’s Export Administration Regulations and economic and trade sanctions regulations administered by the U.S. Treasury Department’s Office of Foreign Assets Controls. These regulations may limit the export of our products and technology, and provision of our services outside of the United States, or may require export authorizations, including by license, a license exception, or other appropriate government authorizations and conditions, including annual or semi-annual reporting. Export control and economic sanctions laws may also include prohibitions on the sale or supply of certain of our products to embargoed or sanctioned countries, regions, governments, persons, and entities. In addition, various countries regulate the importation of certain products, through import permitting and licensing requirements, and have enacted laws that could limit our ability to distribute our products. The exportation, re-exportation, and importation of our products and technology and the provision of services, including by our partners, must comply with these laws or else we may be adversely affected, through reputational harm, government investigations, penalties, and a denial or curtailment of our ability to export our products and technology. Complying with export control and sanctions laws may be time-consuming and may result in the delay or loss of sales opportunities. Although we take precautions to prevent our products and technology from being provided in violation of such laws, our products and technology may have previously been, and could in the future be, provided inadvertently in violation of such laws, despite the precautions we take. If we are found to be in violation of U.S. sanctions or export control laws, it could result in substantial fines and penalties for us and for the individuals working for us. Export or import laws or sanctions policies are subject to rapid change and have been the subject of recent U.S. and non-U.S. government actions. Changes in export or import laws or sanctions policies, may adversely impact our operations, delay the introduction and sale of our products in international markets, or, in some cases, prevent the export or import of our products and technology to certain countries, regions, governments, persons, or entities altogether, which could adversely affect our business, financial condition and results of operations.

Our sales to government customers subject us to uncertainties regarding fiscal funding approvals, renegotiations or terminations at the discretion of the government, as well as audits and investigations, which could result in litigation, penalties and sanctions including early termination, suspension and debarment.

Our multi-year contracts signed with agencies and departments of the U.S. government are generally subject to annual fiscal funding approval and may be renegotiated or terminated at the discretion of the government. Termination, renegotiation or the lack of funding approval for a contract could adversely affect our sales, revenue and reputation. Additionally, our government contracts are generally subject to requirements that are not typically present in commercial contracts, such as various Federal Acquisition Regulation or Defense Federal Acquisition Regulation clauses. These clauses place certain requirements upon us such as compliance with equal opportunity employment, safeguarding of contractor information systems, executive compensation restrictions and reporting of certain lobbying activities. Government contracts are also subject to audits and investigations. Failure to meet contractual requirements could result in various civil and criminal actions and penalties, and administrative sanctions, including termination of contracts, refund of a portion of fees received, forfeiture of profits, suspension of payments, fines and suspensions or debarment from doing business with the government, any of which could materially adversely affect our business, financial condition and results of operations.

Failure to comply with anti-bribery, anti-corruption and anti-money laundering laws could subject us to penalties and other adverse consequences.

We are subject to the U.S. Foreign Corrupt Practices Act (“FCPA”) and other anti-corruption, anti-bribery, and anti-money laundering laws in the jurisdictions in which we do business, both domestic and abroad. These laws generally prohibit us and our employees from improperly influencing government officials or commercial parties in order to

50

obtain or retain business, direct business to any person or gain any improper advantage. The FCPA and similar applicable anti-bribery and anti-corruption laws also prohibit our third-party business partners, representatives and agents from engaging in corruption and bribery. We and our third-party business partners, representatives and agents may have direct or indirect interactions with officials and employees of government agencies or state-owned or affiliated entities. We may be held liable for the corrupt or other illegal activities of these third-party business partners and intermediaries, our employees, representatives, contractors, channel partners and agents, even if we do not explicitly authorize such activities. These laws also require that we keep accurate books and records and maintain internal controls and compliance procedures designed to prevent any such actions. Any violation of the FCPA or other applicable anti-bribery, anti-corruption laws and anti-money laundering laws could result in whistleblower complaints, adverse media coverage, investigations, imposition of significant legal fees, loss of export privileges, severe criminal or civil sanctions or suspension or debarment from U.S. government contracts, substantial diversion of management’s attention, drop in stock price or overall adverse consequences to our business, all of which may have an adverse effect on our reputation, business, financial condition, and results of operations.

Our business may be affected by litigation and government investigations.

We may from time to time receive inquiries and subpoenas and other types of information requests from government authorities and others and we may become subject to claims and other actions related to our business activities. While the ultimate outcome of investigations, inquiries, information requests and legal proceedings is difficult to predict, defense of litigation claims can be expensive, time-consuming and distracting, and adverse resolutions or settlements of those matters may result in, among other things, modification of our business practices, costs and significant payments, any of which could have a material adverse effect on our business, financial condition, results of operations and prospects.

Risks Related to Our Intellectual Property

Any failure by us to protect our proprietary technologies or maintain the right to use certain technologies may negatively affect our ability to compete.

To compete effectively, we must protect our intellectual property. We rely on a combination of patents, trademarks, copyrights, trade secret laws, confidentiality procedures and licensing arrangements to protect our intellectual property rights. We hold numerous patents and have a number of pending patent applications. However, our portfolio of patents evolves as new patents are issued and older patents expire and the expiration of patents could have a negative effect on our ability to prevent competitors from duplicating certain or all of our products.

We might not succeed in obtaining patents from any of our pending applications. Even if we are awarded patents, they may not provide any meaningful protection or commercial advantage to us, as they may not be of sufficient scope or strength, or may not be issued in all countries where our products can be sold. In addition, our competitors may be able to design around our patents.

There can be no assurance that an issued patent will remain valid and enforceable in a court of law through the entire patent term. Should the validity of a patent be challenged, the legal process associated with defending the patent can be costly and time consuming. Issued patents can be subject to oppositions, interferences and other third party challenges that can result in the revocation of the patent or limit patent claims such that patent coverage lacks sufficient breadth to protect subject matter that is commercially relevant. Competitors may be able to circumvent our patents. In cases where market ramp of our products may encounter delays it is possible that some patents or licensed patents covering the product has expired or will be in force for only a short period of time following such market ramp. We cannot predict with any certainty if any third party U.S. or foreign patent rights, or other proprietary rights, will be deemed infringed by the use of our technology. Nor can we predict with certainty which, if any, of these rights will or may be asserted against us by third parties.

To protect our product technology, documentation and other proprietary information, we enter into confidentiality agreements with our employees, customers, consultants and strategic partners. We require our employees to acknowledge their obligation to maintain confidentiality with respect to our products. Despite these efforts, we

51

cannot guarantee that these parties will maintain the confidentiality of our proprietary information in the course of future employment or working with other business partners. We develop, manufacture and sell our products in Asia and other countries that may not protect our intellectual property rights to the same extent as the laws of the United States. This makes piracy of our technology and products more likely. Steps we take to protect our proprietary information may not be adequate to prevent theft of our technology. We may not be able to prevent our competitors from independently developing technologies and products that are similar to or better than ours.

Vigorous protection and pursuit of intellectual property rights or positions characterize the semiconductor industry. This often results in expensive and lengthy litigation. We, and our customers or suppliers, may be accused of infringing patents or other intellectual property rights owned by third parties in the future. An adverse result in any litigation against us or a customer or supplier could force us to pay substantial damages, stop manufacturing, using and selling the infringing products, spend significant resources to develop non-infringing technology, discontinue using certain processes or obtain licenses to use the infringing technology. In addition, we may not be able to develop non-infringing technology or find appropriate licenses on reasonable terms or at all.

Patent disputes in the semiconductor industry between industry participants are often settled through cross-licensing arrangements. Our portfolio of patents may not have the breadth to enable us to settle an alleged patent infringement claim through a cross-licensing arrangement, especially for patent disputes brought by non-practicing entities (patent holders who do not manufacture products but only seek to monetize patent rights) that cannot be settled through cross-licensing and cannot be avoided through cross-licensing with industry practitioners. We may therefore be more exposed to third-party claims than some of our larger competitors and customers.

Customers may make claims against us in connection with infringement claims made against them that are alleged to relate to our products or components included in our products, even where we obtain the components from a supplier. In such cases, we may incur monetary losses due to cost of defense, settlement or damage award and non-monetary losses as a result of diverting valuable internal resources to litigation support. To the extent that claims against us or our customers relate to third-party intellectual property integrated into our products, there is no assurance that we will be fully or even partially indemnified by our suppliers against any losses.

Furthermore, we may initiate claims or litigation against third parties for infringing our proprietary rights or to establish the validity of our proprietary rights. This could consume significant resources and divert the efforts of our technical and management personnel, regardless of the litigation’s outcome.

If we fail to comply with our obligations under any license, collaboration or other agreements, we may be required to pay damages and could lose certain intellectual property rights.

Our current licenses impose, and any future licenses we enter into are likely to impose, various development, commercialization, funding, milestone, royalty, diligence, sublicensing, insurance, patent prosecution and enforcement and other obligations on us. If we breach any of these obligations, or use the intellectual property licensed to us in an unauthorized manner, we may be required to pay damages and the licensor may have the right to terminate the license, which could result in us being unable to develop, manufacture and sell products that are covered by the licensed technology or could enable a competitor to gain access to the licensed technology. Moreover, our licensors may own or control intellectual property that has not been licensed to us and, as a result, we may be subject to claims, regardless of their merit, that we are infringing or otherwise violating the licensor’s rights in such unlicensed intellectual property. The amount of our future royalty obligations will depend on the technology and intellectual property we use in products that we successfully develop, manufacture and commercialize, if any. Therefore, even if we successfully develop and commercialize products, we may be unable to achieve or maintain profitability.

Additionally, our option agreement with Nexperia establishes the parameters pursuant to which Nexperia, in certain limited instances (some of which may be beyond our control), is permitted to exercise an option (the “Option”) to acquire our wholly owned subsidiary, Transphorm Japan Epi, Inc. (“TJE”). In general, the Option is exercisable upon (i) certain acquisitions of securities or assets of us or our subsidiaries by a Competitor (as defined in the option agreement) that results in us, directly or indirectly, owning less than a majority of TJE, which acquisition is followed

52

by any material breach (that is not cured within a specified time period) by us or a subsidiary of our obligations with respect to epiwafer supply to Nexperia under our supply agreement with Nexperia, or (ii) the unilateral termination by us of the supply agreement. While TJE’s epiwafer capacity currently is not required for production of our products, if such a “forced sale” event were to happen in the future, we could be required to purchase a portion of our epiwafer requirements from a third party. This could impact our epiwafer costs, reduce any overall profits, or cause us to lose a portion of our capacity, requiring us to generate more epiwafer capacity earlier than planned. This would result in greater capital expenditure than anticipated, which could have a material adverse effect on our business, financial condition, results of operations and prospects.

Risks Related to Our Financial Control Environment

Being a public company can be administratively burdensome and expensive.

As a public reporting company, we are subject to the information and reporting requirements of the Securities Act, the Exchange Act and other federal securities laws, rules and regulations related thereto, including compliance with the Sarbanes-Oxley Act of 2002 (the “Sarbanes-Oxley Act”), and the Dodd-Frank Wall Street Reform and Consumer Protection Act. In addition, we are subject to the listing standards of the Nasdaq Capital Market. Our management and other personnel will need to devote a substantial amount of time to these compliance initiatives. Among other things, we are required to:

•maintain and evaluate a system of internal controls over financial reporting in compliance with the requirements of Section 404 of the Sarbanes-Oxley Act and the related rules and regulations of the SEC and the Public Company Accounting Oversight Board;

•maintain policies relating to disclosure controls and procedures;

•prepare and distribute periodic reports in compliance with our obligations under federal securities laws;

•institute a more comprehensive compliance function, including with respect to corporate governance; and

•involve, to a greater degree, our outside legal counsel and accountants in the above activities.

The costs of preparing and filing annual and quarterly reports, proxy statements and other information with the SEC and furnishing audited reports to stockholders is expensive and compliance with these rules and regulations will require us to continue to hire additional financial reporting, internal controls and other finance personnel, and will continue to involve a material increase in regulatory, legal and accounting expenses and the attention of our board of directors and management. In addition, being a public company makes it more expensive for us to obtain director and officer liability insurance. In the future, we may be required to accept reduced coverage or incur substantially higher costs to obtain this coverage. These factors could also make it more difficult for us to attract and retain qualified executives and members of our board of directors.

Any failure to maintain effective internal controls over our financial reporting could materially and adversely affect us.

Section 404 of the Sarbanes-Oxley Act requires us to include in our annual reports on Form 10-K an assessment by management of the effectiveness of our internal controls over financial reporting. However, for as long as we remain an emerging growth company or a smaller reporting company, we will not be required to include an attestation report on internal control over financial reporting issued by our independent registered public accounting firm.

We are continuing to develop and refine our disclosure controls and other procedures that are designed to ensure that information required to be disclosed by us in the reports that we will file with the SEC is recorded, processed, summarized, and reported within the time periods specified in SEC rules and forms and that information required to be disclosed in reports under the Exchange Act is accumulated and communicated to our principal executive and

53

financial officers. We are also continuing to improve our internal control over financial reporting. We have expended, and anticipate that we will continue to expend, significant resources in order to maintain and improve the effectiveness of our disclosure controls and procedures and internal control over financial reporting. Despite our efforts, there is a risk that we will not be able to conclude that our internal control over financial reporting is effective as required by Section 404. For example, in connection with the audit of our consolidated financial statements for the years ended March 31, 2023 and 2022, the three-month transition period ended March 31, 2021 and the year ended December 31, 2020, we identified material weaknesses in our internal control over financial reporting. We cannot predict the outcome of our testing in future periods. If we identify additional material weaknesses in the future or are unable to remediate the material weakness we currently have, our financial statements may be inaccurate and investors could lose confidence in the reliability of our financial statements, which in turn could negatively affect the market price of our common stock. In addition, if we are unable to continue to meet these requirements, we may not be able to remain listed on the Nasdaq Capital Market.

We have identified a material weakness in our internal control over financial reporting that, if not properly remediated, could result in material misstatements in our consolidated financial statements in future periods.

We have limited accounting and financial reporting personnel and other resources with which to address our internal controls and related procedures. In connection with the audit of our consolidated financial statements for the years ended March 31, 2023 and 2022, we identified one material weakness in our internal control over financial reporting related to insufficient personnel with technical accounting knowledge and financial reporting experience resulting in inadequate performance of review controls with respect to certain areas of our financial statements. Accordingly, we were not able to assert that our internal control over financial reporting was effective as of March 31, 2023 or March 31, 2022. A material weakness is a deficiency, or a combination of deficiencies, in internal control over financial reporting such that there is a reasonable possibility that a material misstatement of our annual or interim financial statements will not be prevented or detected on a timely basis. A deficiency in internal control exists when the design or operation of a control does not allow management or employees, in the normal course of performing their assigned functions, to prevent or detect misstatements on a timely basis.

Management has initiated corrective actions and procedures to remediate the identified material weakness, including hiring additional personnel with technical accounting knowledge and financial reporting experience, and has started to implement processes to support the complexity of our financial statements. We anticipate that these initiatives will be at least partially, if not fully, implemented by March 31, 2024. However, our ability to continue these remediation efforts is contingent upon our ability to raise significant additional funding. Remediation of the material weakness will require management attention and cause us to incur additional expenses, and is dependent on our ability to raise significant additional funding to support our operations, including these initiatives. If we fail to remediate the material weakness, or if we are unable to maintain effective controls and procedures in the future, our ability to record, process, summarize and report financial information accurately and within the time periods specified in SEC rules and forms could be adversely affected. This failure could negatively affect the market price and trading liquidity of our common stock, cause investors to lose confidence in our reported financial information, subject us to civil and criminal investigations and penalties, and generally materially and adversely impact our business and financial condition.

If our estimates or judgments relating to our critical accounting policies are based on assumptions that change or prove to be incorrect, our results of operations could fall below the expectations of investors, resulting in a decline in the market price of our common stock.

The preparation of financial statements in conformity with generally accepted accounting principles in the United States requires management to make estimates and assumptions that affect the amounts reported in our financial statements. Significant assumptions and estimates used in preparing our financial statements include those related to assets, liabilities, revenue, expenses and related disclosures. We base our estimates on historical experience and on various other assumptions that we believe to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets, liabilities, equity, revenue and expenses that are not readily apparent from other sources. Our results of operations may be adversely affected if our assumptions change

54

or if actual circumstances differ from those in our assumptions, which could cause our results of operations to fall below the expectations of investors, resulting in a decline in the market price of our common stock.

Changes in accounting rules and regulations, or interpretations thereof, could result in unfavorable accounting charges or require us to change our compensation policies.

Accounting methods and policies for companies such as ours, including policies governing revenue recognition, leases, research and development and related expenses, and accounting for stock-based compensation, are subject to review, interpretation and guidance from our auditors and relevant accounting authorities, including the SEC. Changes to accounting methods or policies, or interpretations thereof, may require us to reclassify, restate or otherwise change or revise our historical financial statements, including those contained in this Report.

Our ability to use our net operating loss carryforwards and certain other tax attributes may be limited.

We have incurred substantial losses during our history, do not expect to become profitable in the near future and may never achieve profitability. To the extent that we continue to generate taxable losses, unused losses will carry forward to offset future taxable income, if any, until such unused losses expire. Under Sections 382 and 383 of the Internal Revenue Code of 1986, as amended, if a corporation undergoes an “ownership change,” generally defined as a greater than 50% change (by value) in its equity ownership over a three-year period, the corporation’s ability to use its pre-change net operating loss carryforwards (“NOLs”), and other pre-change tax attributes (such as research tax credits) to offset its post-change income or taxes may be limited. The Merger, our prior equity offerings and other changes in our stock ownership may have resulted in ownership changes. In addition, we may experience ownership changes in the future as a result of subsequent shifts in our stock ownership, some of which are outside of our control. As a result, if we earn net taxable income, our ability to use our pre-change NOLs to offset U.S. federal taxable income may be subject to limitations, which could potentially result in increased future tax liability to us. In addition, at the state level, there may be periods during which the use of NOLs is suspended or otherwise limited, which could accelerate or permanently increase state taxes owed.

Risks Related to Ownership of Our Common Stock

We are an “emerging growth company” and we cannot be certain if the reduced reporting requirements applicable to emerging growth companies will make our common stock less attractive to investors.

We are an “emerging growth company” as defined in the JOBS Act. For as long as we continue to be an emerging growth company, we may take advantage of exemptions from various reporting requirements that are applicable to other public companies that are not emerging growth companies, including (1) not being required to comply with the auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act, (2) reduced disclosure obligations regarding executive compensation in our periodic reports and proxy statements, and (3) exemptions from the requirements of holding a nonbinding advisory vote on executive compensation and stockholder approval of any golden parachute payments not previously approved. We could be an emerging growth company until the last day of our fiscal year ending March 31, 2026, although circumstances could cause us to lose that status earlier.

Under the JOBS Act, emerging growth companies can also delay adopting new or revised accounting standards until such time as those standards apply to private companies. We have elected to use the extended transition period under the JOBS Act until the earlier of the date we (i) are no longer an emerging growth company or (ii) affirmatively and irrevocably opt out of the extended transition period provided in the JOBS Act. As a result, our financial statements may not be comparable to companies that comply with new or revised accounting pronouncements as of public company effective dates.

Even after we no longer qualify as an emerging growth company, we may still qualify as a “smaller reporting company” which would allow us to take advantage of many of the same exemptions from disclosure requirements including not being required to comply with the auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act and reduced disclosure obligations regarding executive compensation. If we rely on these exemptions,

55

investors may find our common stock less attractive, which could result in a less active trading market, if any, for our common stock and more volatility or a decline in our stock price.

We are a smaller reporting company, and we cannot be certain if the reduced disclosure requirements applicable to smaller reporting companies will make our common stock less attractive to investors.

We are currently a “smaller reporting company,” meaning that we are not an investment company, an asset-backed issuer, or a majority-owned subsidiary of a parent company that is not a smaller reporting company and the market value of our stock held by non-affiliates, or our public float, is less than $250 million. In the event our public float increases, we will remain a smaller reporting company if we continue to have annual revenues of less than $100 million during our most recently completed fiscal year and our public float is less than $700 million. If we are still considered a smaller reporting company at such time as we cease being an “emerging growth company,” we will be required to provide additional disclosure in our SEC filings. However, similar to emerging growth companies, smaller reporting companies are able to provide simplified executive compensation disclosures in their filings; are exempt from the provisions of Section 404(b) of the Sarbanes-Oxley Act requiring that independent registered public accounting firms provide an attestation report on the effectiveness of internal control over financial reporting; and have certain other decreased disclosure obligations in their SEC filings, including, among other things, only being required to provide two years of audited financial statements in annual reports. Decreased disclosures in our SEC filings due to our status as a smaller reporting company may make it harder for investors to analyze our results of operations and financial prospects, and may cause some investors not to invest in or hold our stock.

Our principal stockholders and management have substantial control over us and could delay or prevent a change in corporate control.

As of November 2, 2023, KKR Phorm Investors L.P. (“Phorm”) beneficially owned approximately 39.7% of our outstanding common stock, and our executive officers and directors, together with holders of ten percent or more of our outstanding common stock and their respective affiliates, beneficially owned approximately 41.6% of our outstanding common stock. As a result, these stockholders, acting together, or Phorm individually, have the ability to significantly impact the outcome of matters submitted to our stockholders for approval, including the election of directors and any merger, consolidation, or sale of all or substantially all of our assets. In addition, these stockholders, acting together or Phorm individually, have the ability to significantly impact the management and affairs of our company. Pursuant to the terms of a stockholders agreement with Phorm (the “Phorm Stockholders Agreement”), Phorm has the right to nominate (i) a majority of the board so long as it beneficially owns at least 40% of our then-outstanding shares of common stock, (ii) 33% of the directors (rounded up to the nearest whole number) so long as it beneficially owns at least 20% but less than 40% of our then-outstanding shares of common stock, and (iii) 10% of the directors (rounded up to the nearest whole number) so long as it beneficially owns at least 10% but less than 20% of our then-outstanding shares of common stock. Further, pursuant to the Phorm Stockholders Agreement, so long as Phorm beneficially owns 20% or more of the outstanding shares of our common stock, we will take all necessary action to cause a director nominated by Phorm to serve as chair of our board of directors.

The interests of these stockholders may not be the same as or may even conflict with your interests. The concentration of ownership and Phorm’s rights under the Phorm Stockholders Agreement might decrease the market price of our common stock by:

•delaying, deferring, or preventing a change in control of the company, which could deprive our stockholders of an opportunity to receive a premium for their common stock as part of a sale of our company or our assets and might affect the prevailing market price of our common stock;

•impeding a merger, consolidation, takeover, or other business combination involving us; or

•discouraging a potential acquirer from making a tender offer or otherwise attempting to obtain control of the company.

56

The significant concentration of stock ownership may also adversely affect the trading price of our common stock due to investors’ perception that conflicts of interest may exist or arise.

Sales of substantial amounts of our common stock in the public markets, or the perception that such sales might occur, could cause the market price of our common stock to decline significantly, even if our business is doing well.

Sales of a substantial number of shares of our common stock into the public market, particularly sales by our directors, executive officers and principal stockholders, or the perception that these sales might occur in large quantities, could cause the market price of our common stock to decline. If our stockholders sell, or the market perceives that our stockholders intend to sell, a substantial amount of our common stock in the public market, the market price of our common stock could decline significantly.

We could be subject to certain liquidated damages pursuant to the registration rights agreement we entered into with certain holders of our securities.

Pursuant to registration statements that were declared effective by the SEC on January 27, 2021, December 1, 2021, December 27, 2021, July 13, 2022 and May 1, 2023 (collectively, the “Resale Registration Statements”), we registered shares of our common stock for resale by the stockholders named therein. Pursuant to the registration rights agreements we entered into with certain holders of our securities, subject to certain exceptions, if (i) the Resale Registration Statements cease to remain continuously effective or such holders are otherwise not permitted to utilize the Resale Registration Statements to resell their registrable securities for a period of more than 15 consecutive trading days, or (ii) trading of our common stock is suspended or halted for more than three full, consecutive trading days, we could be subject to certain liquidated damages up to a maximum amount equal to the aggregate purchase price paid by the holders for their registrable securities.

If securities or industry analysts do not publish research or reports about our business, or if they issue an adverse or misleading opinion regarding our stock, our stock price and trading volume could decline.

The trading market for our common stock will be influenced by the research and reports that industry or securities analysts publish about us or our business. We cannot assure you that brokerage firms will provide analyst coverage of our company in the future, or continue such coverage if started. In addition, investment banks may be less likely to agree to underwrite secondary offerings on our behalf than they might if we became a public reporting company by means of an underwritten initial public offering, because they may be less familiar with our company as a result of more limited coverage by analysts and the media, which could harm our ability to raise additional funding in the future. The failure to receive research coverage or support in the market for our shares will have an adverse effect on our ability to develop a liquid market for our common stock, which will negatively impact the trading price of our common stock.

If any of the analysts who cover us issue an adverse or misleading opinion regarding us or if our operating results fail to meet the expectations of analysts, our stock price would likely decline. If one or more of these analysts cease coverage of us or fail to publish reports on us regularly, we could lose visibility in the financial markets, which in turn could cause our stock price or trading volume to decline.

Anti-takeover provisions in our charter documents could make an acquisition of us more difficult and may prevent attempts by our stockholders to replace or remove our management.

Provisions in our amended and restated certificate of incorporation and in our amended and restated bylaws may delay or prevent an acquisition of us or a change in our management. These provisions include a classified board of directors, a prohibition on actions by written consent of our stockholders, supermajority voting requirements to amend certain provisions of our certificate of incorporation and bylaws, and the ability of our board of directors to issue preferred stock without stockholder approval. Although we believe these provisions collectively will provide for an opportunity to receive higher bids by requiring potential acquirers to negotiate with our board of directors, they would apply even if the offer may be considered beneficial by some stockholders. In addition, these provisions

57

may frustrate or prevent any attempts by our stockholders to replace or remove then-current management by making it more difficult for stockholders to replace members of the board of directors, which is responsible for appointing the members of management. In addition, we have opted out of the provisions of Section 203 of the Delaware General Corporation Law (“DGCL”), which generally prohibit a Delaware corporation from engaging in any of a broad range of business combinations with any interested stockholder for a period of three years following the date on which the stockholder became an interested stockholder. However, our amended and restated certificate of incorporation provides substantially the same limitations as are set forth in Section 203 but also provides that Phorm and its affiliates and any of their direct or indirect transferees and any group as to which such persons are a party do not constitute interested stockholders for purposes of this provision.

Our bylaws designate the Court of Chancery of the State of Delaware as the sole and exclusive forum for certain types of actions and proceedings that may be initiated by our stockholders, and also provide that the federal district courts will be the exclusive forum for resolving any complaint asserting a cause of action arising under the Securities Act, each of which could limit our stockholders’ ability to obtain a favorable judicial forum for disputes with us or our directors, officers, employees or agents.

Our bylaws provide that, unless we consent in writing to an alternative forum, the Court of Chancery of the State of Delaware, or if the Court of Chancery does not have jurisdiction, the federal district court for the District of Delaware, will be the sole and exclusive forum for (i) any derivative action or proceeding brought on our behalf, (ii) any action asserting a claim of breach of a fiduciary duty owed by any of our directors, stockholders, officers or other employees to us or our stockholders, (iii) any action asserting a claim arising pursuant to any provision of the DGCL or our certificate of incorporation or bylaws (as either may be amended from time to time) or (iv) any action asserting a claim that is governed by the internal affairs doctrine, in each case subject to the Court of Chancery having personal jurisdiction over the indispensable parties named as defendants therein and the claim not being one which is vested in the exclusive jurisdiction of a court or forum other than the Court of Chancery or for which the Court of Chancery does not have subject matter jurisdiction. Our bylaws also provide that, unless we consent in writing to the selection of an alternative forum, the federal district courts of the United States will be the exclusive forum for the resolution of any complaint asserting a cause of action arising under the Securities Act.

Any person or entity purchasing or otherwise acquiring any interest in any of our securities shall be deemed to have notice of and to have consented to these provisions of our bylaws. These exclusive-forum provisions may limit a stockholder’s ability to bring a claim in a judicial forum that it finds favorable for disputes with us or our directors, officers, employees or agents, which may discourage such lawsuits against us and our directors, officers, employees and agents even though an action, if successful, might benefit our stockholders. Stockholders who do bring a claim in the Court of Chancery could face additional litigation costs in pursuing any such claim, particularly if they do not reside in or near Delaware. The Court of Chancery or a federal district court may also reach different judgments or results than would other courts, including courts where a stockholder considering an action may be located or would otherwise choose to bring the action, and such judgments or results may be more favorable to us than to our stockholders. Alternatively, if a court were to find either of these provisions of our bylaws inapplicable to, or unenforceable in respect of, one or more of the specified types of actions or proceedings, we may incur additional costs associated with resolving such matters in other jurisdictions, which could have a material adverse effect on our business, financial condition or results of operations.

We do not intend to pay dividends for the foreseeable future so any returns will be limited to changes in the value of our common stock.

We have never declared nor paid cash dividends on our capital stock. We currently intend to retain any future earnings to finance the operation and expansion of our business, and we do not expect to declare or pay any dividends in the foreseeable future. Any future determination about the payment of dividends will be made at the discretion of our board of directors and will depend upon our results of operations, cash flows and financial condition, operating and capital requirements, contractual restrictions, including any loan or debt financing agreements, and such other factors as our board of directors deems relevant. As a result, stockholders must rely on sales of their common stock after price appreciation as the only way to realize any future gains on their investment, which may never occur.

58

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.

None.

Item 3. Defaults Upon Senior Securities.

None.

Item 4. Mine Safety Disclosures.

Not applicable

Item 5. Other Information.

Securities Trading Plans of Directors and Executive Officers

During the three months ended September 30, 2023, none of our directors or officers (as defined in Rule 16a-1(f) under the Exchange Act adopted or terminated a “Rule 10b5-1 trading arrangement” or “non-Rule 10b5-1 trading arrangement,” as those terms are defined in Item 408 of Regulation S-K, except as described in the table below:

Name (Title)	Action Taken	Date Action Taken	Type of Trading Arrangement(1)	Duration(2)	Aggregate Number of Securities Subject to Trading Arrangement
Katharina McFarland (Director)	Adopt	8/17/2023	Rule 10b5-1 Trading Arrangement	10/15/2024	Indeterminable(3)
Kelly Smales (Director)	Adopt	8/17/2023	Rule 10b5-1 Trading Arrangement	10/15/2024	Indeterminable(4)

(1)    Each trading arrangement marked as a “Rule 10b5-1 Trading Arrangement” is intended to satisfy the affirmative defense of Rule 10b5-1(c), as amended (the “Rule”).

(2)    Each trading arrangement permits transactions through and including the earlier to occur of (a) the completion of all sales or (b) the date listed in the table. Each trading arrangement marked as a “Rule 10b5-1 Trading Arrangement” permits transactions to begin only upon expiration of the applicable mandatory cooling-off period under the Rule.

(3)    This trading arrangement provides for the sale of up to (i) 30,937 shares of common stock issuable upon exercise of outstanding stock options held by Ms. McFarland, and (ii) 35% of an indeterminable number of shares of common stock to be received upon the vesting of restricted stock units (“RSUs”) that may be awarded to Ms. McFarland, after the date on which the trading arrangement was adopted, pursuant to the Company’s Outside Director Compensation Policy (the “Compensation Policy”). The actual number of RSUs that may be awarded to Ms. McFarland pursuant to the Compensation Policy will depend on Ms. McFarland’s continued service on the Company’s board of directors, the Company’s closing stock price on the date an RSU is awarded, and the dollar value of each RSU award that is received in lieu of cash compensation for serving, as applicable, as Chair of the Board, Lead Independent Director or as the chair or a member of a committee of the Board.

(4)    This trading arrangement provides for the sale of up to (i) 4,375 shares of common stock held by Ms. Smales, (ii) 3,720 shares of common stock issuable the vesting of outstanding RSUs held by Ms. Smales, and (iii) 35% of an indeterminable number of shares of common stock to be received upon the vesting of RSUs that may be awarded to Ms. Smales, after the date on which the trading arrangement was adopted, pursuant to the Compensation Policy. The actual number of RSUs that may be awarded to Ms. Smales pursuant to the Compensation Policy will depend on Ms. Smales’s continued service on the Company’s board of directors, the Company’s closing stock price on the date an RSU is awarded, and the dollar value of each RSU award that is received in lieu of cash compensation for serving, as applicable, as Chair of the Board, Lead Independent Director or as the chair or a member of a committee of the Board.

59

Item 6. Exhibits.

			Incorporated by Reference
Exhibit Number	Exhibit Description	Filed with this Report	Form	Exhibit No.	Filing Date	SEC File No.
10.1	Transphorm, Inc. Key Executive Change in Control and Severance Plan		8-K	10.1	July 27, 2023	001-41295
10.2	Transphorm, Inc. Executive Incentive Compensation Plan		8-K	10.1	August 8, 2023	001-41295
31.1	Certification of Chief Executive Officer Pursuant to Section 302 of Sarbanes-Oxley Act of 2002	X
31.2	Certification of Chief Financial Officer Pursuant to Section 302 of Sarbanes-Oxley Act of 2002	X
32.1	Certification of Chief Executive Officer and Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002	X
101.INS	Inline XBRL Instance Document	X
101.SCH	Inline XBRL Taxonomy Extension Schema Document	X
101.CAL	Inline XBRL Taxonomy Extension Calculation Linkbase Document	X
101.DEF	Inline XBRL Taxonomy Extension Definition Linkbase Document	X
101.LAB	Inline XBRL Taxonomy Extension Label Linkbase Document	X
101.PRE	Inline XBRL Taxonomy Extension Presentation Linkbase Document	X
104	Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101)	X

60

SIGNATURES

Pursuant to the requirements 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.

		Transphorm, Inc.
Date:	November 13, 2023	By:	/s/ Primit Parikh
			Primit Parikh
			President and Chief Executive Officer
			(Principal Executive Officer)
		By:	/s/ Cameron McAulay
			Cameron McAulay
			Chief Financial Officer
			(Principal Financial and Accounting Officer)

61

EX-31.1

Exhibit 31.1

Certification of Chief Executive Officer

Pursuant to

Exchange Act Rules 13a-14(a) and 15d-14(a),

As Adopted Pursuant to

Section 302 of the Sarbanes-Oxley Act of 2002

I, Primit Parikh, certify that:

1.I have reviewed this Quarterly Report on Form 10-Q of Transphorm, Inc. (the “registrant”);

2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4.The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a.Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b.Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c.Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d.Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5.    The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a.All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b.Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date:	November 13, 2023	By:	/s/ Primit Parikh
			Primit Parikh
			President and Chief Executive Officer
			(Principal Executive Officer)

EX-31.2

Exhibit 31.2

Certification of Chief Financial Officer

Pursuant to

Exchange Act Rules 13a-14(a) and 15d-14(a),

As Adopted Pursuant to

Section 302 of the Sarbanes-Oxley Act of 2002

I, Cameron McAulay, certify that:

1.I have reviewed this Quarterly Report on Form 10-Q of Transphorm, Inc. (the “registrant”);

2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4.The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a.Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b.Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c.Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d.Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5.    The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a.All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b.Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date:	November 13, 2023	By:	/s/ Cameron McAulay
			Cameron McAulay
			Chief Financial Officer
			(Principal Financial and Accounting Officer)

EX-32.1

Exhibit 32.1

Certifications of Chief Executive Officer and Chief Financial Officer

Pursuant to

18 U.S.C. Section 1350,

As Adopted Pursuant to

Section 906 of the Sarbanes-Oxley Act of 2002

In accordance with 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, Primit Parikh, President and Chief Executive Officer of Transphorm, Inc. (the “registrant”), and Cameron McAulay, Chief Financial Officer of the registrant, each hereby certifies that, to the best of their knowledge:

1.The registrant’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2023 to which this Certification is attached as Exhibit 32.1 (the “Report”), fully complies with the requirements of Section 13(a) or Section 15(d) of the Securities Exchange Act of 1934, as amended; and

2.The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the registrant.

Date:	November 13, 2023	By:	/s/ Primit Parikh
			Primit Parikh
			President and Chief Executive Officer
			(Principal Executive Officer)
			/s/ Cameron McAulay
			Cameron McAulay
			Chief Financial Officer
			(Principal Financial and Accounting Officer)

XML

Cover - shares	6 Months Ended
	Sep. 30, 2023	Nov. 02, 2023
Cover [Abstract]
Document Type	10-Q
Document Quarterly Report	true
Document Period End Date	Sep. 30, 2023
Document Transition Report	false
Entity File Number	001-41295
Entity Registrant Name	Transphorm, Inc.
Entity Incorporation, State or Country Code	DE
Entity Tax Identification Number	82-1858829
Entity Address, Address Line One	75 Castilian Drive
Entity Address, City or Town	Goleta,
Entity Address, State or Province	CA
Entity Address, Postal Zip Code	93117
City Area Code	805
Local Phone Number	456-1300
Title of 12(b) Security	Common Stock, par value $0.0001 per share
Trading Symbol	TGAN
Security Exchange Name	NASDAQ
Entity Current Reporting Status	Yes
Entity Interactive Data Current	Yes
Entity Filer Category	Non-accelerated Filer
Entity Small Business	true
Entity Emerging Growth Company	true
Entity Ex Transition Period	false
Entity Shell Company	false
Entity Common Stock, Shares Outstanding		62,002,968
Entity Central Index Key	0001715768
Document Fiscal Year Focus	2024
Current Fiscal Year End Date	--03-31
Document Fiscal Period Focus	Q2
Amendment Flag	false

XML

Condensed Consolidated Balance Sheets (unaudited) - USD ($) $ in Thousands	Sep. 30, 2023	Mar. 31, 2023
Current assets:
Cash and cash equivalents	$ 6,152	$ 15,527
Restricted cash	0	500
Accounts receivable, net of allowance for doubtful accounts of $263 and $0 at September 30, 2023 and March 31, 2023, respectively, including related parties (Note 11)	4,571	4,396
Inventory	9,776	8,406
Prepaid expenses and other current assets	1,426	1,859
Total current assets	21,925	30,688
Property and equipment, net	7,857	7,890
Operating lease right-of-use assets	2,719	3,033
Goodwill	963	1,079
Intangible assets, net	173	321
Investment in joint venture	0	715
Other assets	652	726
Total assets	34,289	44,452
Current liabilities:
Accounts payable and accrued expenses, including related parties (Note 11)	6,198	7,895
Accrued interest	0	180
Unfunded commitment in joint venture	59	0
Accrued payroll and benefits	1,557	1,458
Operating lease liabilities	525	404
Revolving credit facility	0	12,000
Total current liabilities	8,339	21,937
Operating lease liabilities, net of current portion	2,259	2,670
Other liabilities	0	230
Total liabilities	10,598	24,837
Commitments and contingencies (Note 7)
Stockholders’ equity:
Preferred stock, $0.0001 par value; 5,000,000 shares authorized and none issued and outstanding as of September 30, 2023 and March 31, 2023	0	0
Common stock, $0.0001 par value; 750,000,000 shares authorized as of September 30, 2023 and March 31, 2023, and 61,981,134 and 57,047,013 shares issued and outstanding as of September 30, 2023 and March 31, 2023, respectively	6	6
Additional paid-in capital	255,249	230,272
Accumulated deficit	(229,424)	(209,236)
Accumulated other comprehensive loss	(2,140)	(1,427)
Total stockholders’ equity	23,691	19,615
Total liabilities and stockholders’ equity	$ 34,289	$ 44,452

XML

Condensed Consolidated Balance Sheets (unaudited) (Parenthetical) - USD ($) $ in Thousands	Sep. 30, 2023	Mar. 31, 2023
Statement of Financial Position [Abstract]
Accounts receivable, net of allowance for doubtful accounts	$ 263	$ 0
Preferred stock, par value per share (in usd per share)	$ 0.0001	$ 0.0001
Preferred stock, shares authorized (in shares)	5,000,000	5,000,000
Preferred stock, shares issued (in shares)	0	0
Preferred stock, shares outstanding (in shares)	0	0
Common stock, par value (in usd per share)	$ 0.0001	$ 0.0001
Common stock, shares authorized (in shares)	750,000,000	750,000,000
Common stock, shares issued (in shares)	61,981,134	57,047,013
Common stock, shares outstanding (in shares)	61,981,134	57,047,013

XML

Condensed Consolidated Statements of Operations (unaudited) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Sep. 30, 2023	Sep. 30, 2022	Sep. 30, 2023	Sep. 30, 2022
Income Statement [Abstract]
Revenue, net, including related parties (Note 11)	$ 5,010	$ 3,670	$ 10,893	$ 8,826
Cost of goods sold	3,836	3,232	7,631	7,282
Gross profit	1,174	438	3,262	1,544
Operating expenses:
Research and development	3,022	1,830	5,891	3,570
Sales and marketing	1,708	1,066	3,190	2,149
General and administrative	2,942	3,044	7,458	6,361
Total operating expenses	7,672	5,940	16,539	12,080
Loss from operations	(6,498)	(5,502)	(13,277)	(10,536)
Interest expense	0	184	8	366
Loss in joint venture	721	684	1,581	1,266
Other income, net	(90)	(375)	(290)	(820)
Loss before tax expense	(7,129)	(5,995)	(14,576)	(11,348)
Tax expense	0	0	0	0
Net loss	(7,129)	(5,995)	(14,576)	(11,348)
Deemed dividend related to warrant modification and issuance of Inducement Warrants (Note 8)	0	0	5,612	0
Net loss attributable to common stockholders	(7,129)	(5,995)	(20,188)	(11,348)
Net loss attributable to common stockholders	$ (7,129)	$ (5,995)	$ (20,188)	$ (11,348)
Net loss per share - basic (in usd per share)	$ (0.12)	$ (0.10)	$ (0.33)	$ (0.20)
Net loss per share - diluted (in usd per share)	$ (0.12)	$ (0.10)	$ (0.33)	$ (0.20)
Weighted average common shares outstanding - basic (in shares)	61,138,691	56,619,662	61,071,729	55,518,297
Weighted average common shares outstanding - diluted (in shares)	61,138,691	56,619,662	61,071,729	55,518,297

XML

Condensed Consolidated Statements of Comprehensive Loss (unaudited) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Sep. 30, 2023	Sep. 30, 2022	Sep. 30, 2023	Sep. 30, 2022
Statement of Comprehensive Income [Abstract]
Net loss	$ (7,129)	$ (5,995)	$ (14,576)	$ (11,348)
Other comprehensive loss, net of tax:
Foreign currency translation adjustments	(226)	(264)	(713)	(657)
Other comprehensive loss, net of tax	(226)	(264)	(713)	(657)
Comprehensive loss	$ (7,355)	$ (6,259)	$ (15,289)	$ (12,005)

XML

Condensed Consolidated Statements of Changes in Stockholders’ Equity (unaudited) - USD ($) $ in Thousands	Total	Common Stock	Additional Paid-in Capital	Accumulated Deficit	Accumulated Other Comprehensive Loss
Beginning balance (in shares) at Mar. 31, 2022		53,379,307
Beginning balance at Mar. 31, 2022	$ 31,361	$ 5	$ 211,190	$ (178,638)	$ (1,196)
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Stock options exercised (in shares)		13,422
Stock options exercised	56		56
Restricted stock units vested (in shares)		35,180
Restricted stock units surrendered due to net share settlement to satisfy employee tax liability (in shares)		(1,568)
Restricted stock units surrendered due to net share settlement to satisfy employee tax liability	(6)		(6)
Issuance of common stock, net of issuance costs (in shares)		3,199,999
Issuance of common stock, net of issuance costs	15,720	$ 1	15,719
Stock-based compensation	1,219		1,219
Other comprehensive loss	(657)				(657)
Net income (Loss)	(11,348)			(11,348)
Ending balance (in shares) at Sep. 30, 2022		56,626,340
Ending balance at Sep. 30, 2022	36,345	$ 6	228,178	(189,986)	(1,853)
Beginning balance (in shares) at Mar. 31, 2022		53,379,307
Beginning balance at Mar. 31, 2022	31,361	$ 5	211,190	(178,638)	(1,196)
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Net income (Loss)	$ (30,600)
Ending balance (in shares) at Mar. 31, 2023	57,047,013	57,047,013
Ending balance at Mar. 31, 2023	$ 19,615	$ 6	230,272	(209,236)	(1,427)
Beginning balance (in shares) at Jun. 30, 2022		56,588,042
Beginning balance at Jun. 30, 2022	41,938	$ 6	227,512	(183,991)	(1,589)
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Stock options exercised (in shares)		9,061
Stock options exercised	36		36
Restricted stock units vested (in shares)		30,805
Restricted stock units surrendered due to net share settlement to satisfy employee tax liability (in shares)		(1,568)
Restricted stock units surrendered due to net share settlement to satisfy employee tax liability	(6)		(6)
Stock-based compensation	636		636
Other comprehensive loss	(264)				(264)
Net income (Loss)	(5,995)			(5,995)
Ending balance (in shares) at Sep. 30, 2022		56,626,340
Ending balance at Sep. 30, 2022	$ 36,345	$ 6	228,178	(189,986)	(1,853)
Beginning balance (in shares) at Mar. 31, 2023	57,047,013	57,047,013
Beginning balance at Mar. 31, 2023	$ 19,615	$ 6	230,272	(209,236)	(1,427)
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Restricted stock units vested (in shares)		299,560
Restricted stock units surrendered due to net share settlement to satisfy employee tax liability (in shares)		(86,045)
Restricted stock units surrendered due to net share settlement to satisfy employee tax liability	(288)		(288)
Stock warrant exercise and deemed dividend related to warrant modification, net of issuance costs (Note 8) (in shares)		1,815,848
Stock warrant exercise and deemed dividend related to warrant modification, net of issuance costs (Note 8)	7,168		7,921	(753)
Deemed dividend related to issuance of Inducement Warrants (Note 8)	0		4,859	(4,859)
Issuance of common stock, net of issuance costs (in shares)		2,904,758
Issuance of common stock, net of issuance costs	9,569	$ 0	9,569
Stock-based compensation	2,916		2,916
Other comprehensive loss	(713)				(713)
Net income (Loss)	$ (14,576)			(14,576)
Ending balance (in shares) at Sep. 30, 2023	61,981,134	61,981,134
Ending balance at Sep. 30, 2023	$ 23,691	$ 6	255,249	(229,424)	(2,140)
Beginning balance (in shares) at Jun. 30, 2023		59,374,057
Beginning balance at Jun. 30, 2023	22,824	$ 6	247,027	(222,295)	(1,914)
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Restricted stock units vested (in shares)		288,115
Restricted stock units surrendered due to net share settlement to satisfy employee tax liability (in shares)		(85,796)
Restricted stock units surrendered due to net share settlement to satisfy employee tax liability	(287)		(287)
Issuance of common stock, net of issuance costs (in shares)		2,404,758
Issuance of common stock, net of issuance costs	7,595		7,595
Stock-based compensation	914		914
Other comprehensive loss	(226)				(226)
Net income (Loss)	$ (7,129)			(7,129)
Ending balance (in shares) at Sep. 30, 2023	61,981,134	61,981,134
Ending balance at Sep. 30, 2023	$ 23,691	$ 6	$ 255,249	$ (229,424)	$ (2,140)

XML

Condensed Consolidated Statements of Cash Flows (unaudited) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended		12 Months Ended
	Sep. 30, 2023	Sep. 30, 2022	Sep. 30, 2023	Sep. 30, 2022	Mar. 31, 2023
Cash flows from operating activities:
Net loss	$ (7,129)	$ (5,995)	$ (14,576)	$ (11,348)	$ (30,600)
Adjustments to reconcile net loss to net cash used in operating activities:
Provision for inventory			139	56
Depreciation and amortization			613	465
Amortization of operating lease right-of-use assets			268	286
Provision for doubtful accounts			263	0
Stock-based compensation			2,916	1,219
Interest cost			0	4
Gain on sale of equipment			(48)	(110)
Loss in joint venture			1,581	1,266
Changes in fair value of derivative instruments			171	0
Changes in operating assets and liabilities:
Accounts receivable			(437)	941
Inventory			(1,509)	(2,692)
Prepaid expenses and other current assets			426	(97)
Other assets			74	(521)
Accounts payable, accrued expenses, and other liabilities			(2,615)	904
Deferred revenue			0	(83)
Accrued payroll and benefits			99	160
Operating lease liabilities			(245)	(263)
Net cash used in operating activities			(12,880)	(9,813)
Cash flows from investing activities:
Purchases of property and equipment			(590)	(4,026)
Proceeds from sale of equipment			48	110
Investment in joint venture			(807)	(1,537)
Net cash used in investing activities			(1,349)	(5,453)
Cash flows from financing activities:
Proceeds from stock option exercise			0	56
Proceeds from issuance of common stock			9,936	16,000
Cost associated with issuance of common stock and warrants			(117)	(280)
Payment for taxes related to net share settlement of restricted stock units			(288)	(6)
Proceeds from exercise of stock warrants			7,263	0
Loan repayment			(12,000)	0
Net cash provided by financing activities			4,794	15,770
Effect of foreign exchange rate changes on cash, cash equivalents and restricted cash			(440)	(443)
Net (decrease) increase in cash, cash equivalents and restricted cash			(9,875)	61
Cash, cash equivalents and restricted cash at beginning of period			16,027	33,435	33,435
Cash and cash equivalents at end of period	6,152	33,496	6,152	33,496	15,527
Restricted cash at end of period	0	500	0	500
Cash, cash equivalents and restricted cash at end of period	$ 6,152	$ 33,996	6,152	33,996	$ 16,027
Supplemental disclosures of cash flow information:
Interest expense paid			188	362
Supplemental non-cash investing activity:
Property and equipment in accounts payable and accrued expenses			58	0
Supplemental non-cash financing activity:
Stock warrant exercise and deemed dividend related to warrant modification			753	0
Deemed dividend related to issuance of Inducement Warrants			4,859	0
Rights offering costs in accounts payable and accrued liabilities			345	0
Operating lease right-of-use asset obtained in exchange for operating lease liabilities			$ 0	$ 3,598

XML

Business and Basis of Presentation

6 Months Ended

Sep. 30, 2023

Organization, Consolidation and Presentation of Financial Statements [Abstract]

Business and Basis of Presentation

Business and Basis of Presentation

Transphorm Technology, Inc. (“Transphorm Technology”), a wholly owned subsidiary of Transphorm, Inc., was founded in 2007 to develop GaN semiconductor components used in power conversion.

Throughout these notes, “the Company,” “Transphorm,” “we,” “us” and “our” refer to Transphorm, Inc. and its direct and indirect wholly-owned subsidiaries. Transphorm Technology and its subsidiaries hold all material assets and conduct all business activities and operations of the Company. Transphorm Technology’s activities to date have been primarily performing research and development, establishing manufacturing infrastructure, market sampling, product launch, hiring personnel, and raising capital to support and expand these activities. Transphorm Japan, Inc. (“TPJ”) was established in Japan in February 2014 to secure the Company’s production capacity and establish a direct presence in Asian markets. Transphorm Aizu, Inc. (“Transphorm Aizu”) was established in Japan to manage the financial transactions around Aizu Fujitsu Semiconductor Wafer Solution Limited (“AFSW”), the wafer fabrication facility located in Aizu Wakamatsu, Japan that is owned by GaNovation, the joint venture company in which the Company has a non-controlling interest. Transphorm Japan Epi, Inc. (“TJE”) was established in Japan in 2019 to enable the operational capacity of the MOCVD reactors held in Aizu.

Going Concern

The accompanying unaudited condensed consolidated financial statements have been prepared assuming that the Company will continue as a going concern. However, considering the Company’s working capital of $13.6 million as of September 30, 2023, historical losses (during the year ended March 31, 2023 and six months ended September 30, 2023, the Company’s net loss was $30.6 million and $14.6 million, respectively), and future expected losses, there is substantial doubt about the Company’s ability to continue as a going concern for the next twelve months from the issuance of these financial statements.

In response to the factors noted above, management intends to raise additional working capital to fund operations through the issuance of stock to investors, debt financing, and/or license of intellectual property. However, there is no assurance that the Company will be successful in raising additional capital. If the Company is unable to secure additional funding, the Company believes that its existing cash and cash equivalents and forecasted revenue will be sufficient to fund its operations into the first half of January 2024. If the Company does not obtain any other financing, the Company would need to cease operations, liquidate its assets, and may seek the protection of applicable bankruptcy laws.

The Company’s ability to sustain operations is dependent on its ability to successfully market and sell its products and its ability to raise capital through additional financings until it is able to achieve profitability with positive cash flows. To the extent sufficient financing is not available, the Company may not be able to, or may be delayed in, developing its offerings and meeting its obligations. The Company will continue to evaluate its projected expenditures relative to its available cash and evaluate financing alternatives in order to satisfy its working capital and other cash requirements. The accompanying unaudited condensed consolidated financial statements do not reflect any adjustments that might result from the outcome of these uncertainties.

Basis of Presentation

The accompanying unaudited condensed consolidated financial statements reflect all adjustments of a normal and recurring nature that are necessary for a fair presentation of the results for the interim period ended September 30, 2023, but are not necessarily indicative of the results that will be reported for the entire fiscal year or any other interim period. Certain information and footnote disclosures normally included in annual consolidated financial statements prepared in accordance with U.S. Generally Accepted Accounting Principles (“GAAP”) have been condensed or omitted. The aforementioned unaudited condensed consolidated financial statements are prepared in conformity with GAAP and in accordance with the instructions to Form 10-Q pursuant to the rules and regulations

of the Securities and Exchange Commission. The interim information should be read in conjunction with the Company’s Annual Report on Form 10-K for the fiscal year ended March 31, 2023. The consolidated balance sheet as of March 31, 2023 is derived from those audited financial statements.

Significant Accounting Policies

Descriptions of the Company’s significant accounting policies are included in Note 2 - Summary of Significant Accounting Policies in the notes to consolidated financial statements in the Company’s Annual Report on Form 10-K for the fiscal year ended March 31, 2023.

Accounting Standard Adopted

Financial Instruments - In June 2016, the Financial Accounting Standards Board (“FASB”) issued ASU 2016-13, Financial Instruments - Credit Losses (Topic 326), Measurement of Credit Losses on Financial Instruments (“ASU 2016-13”). The standard changed the methodology for measuring credit losses on financial instruments and the timing of when such losses are recorded. ASU 2016-13 is effective for the Company’s fiscal year ending March 31, 2024. The Company adopted this standard effective April 1, 2023 and the adoption did not have a material effect on the condensed consolidated financial statements.

Recently Issued Accounting Standards under Evaluation

Debt - In August 2020, the FASB issued ASU 2020-06, Debt—Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging—Contracts in Entity’s Own Equity (Subtopic 815-40), Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity, to address the complexity in accounting for certain financial instruments with characteristics of liabilities and equity. Among other provisions, the amendments in this ASU significantly change the guidance on the issuer’s accounting for convertible instruments and the guidance on the derivative scope exception for contracts in an entity’s own equity such that fewer conversion features will require separate recognition, and fewer freestanding instruments, like warrants, will require liability treatment. ASU 2020-06 is effective for fiscal years beginning after December 15, 2021, excluding entities eligible to be smaller reporting companies as defined by the SEC. As the Company is a smaller reporting company, the ASU is effective for fiscal years beginning after December 15, 2023. The Company is currently evaluating the impact of this new standard on its consolidated financial statements and the adoption is not expected to have a significant impact on the consolidated financial statements.

Loss Per Share

Basic loss per share is calculated by dividing the Company’s net loss applicable to common shareholders by the weighted average number of common shares during the period. Net loss applicable to common shareholders is calculated as follows for each interim period as follows (in thousands except for number of shares):

	Three Months Ended September 30,				Six Months Ended September 30,
	2023		2022		2023		2022
Net loss available to common shareholders	$	(7,129)	$	(5,995)	$	(14,576)	$	(11,348)
Deemed dividend related to warrant modification (Note 8)	—		—		(753)		—
Deemed dividend related to Inducement Warrants (Note 8)	—		—		(4,859)		—
Net loss attributable to common stockholders	(7,129)		(5,995)		(20,188)		(11,348)
Weighted average common shares outstanding - basic and diluted	61,138,691		56,619,662		61,071,729		55,518,297
Net loss per share	$	(0.12)	$	(0.10)	$	(0.33)	$	(0.20)

Diluted earnings per share is calculated by dividing the Company’s net loss available to common shareholders by the diluted weighted average number of shares outstanding during the year. The diluted weighted average number of shares outstanding is the basic weighted number of shares adjusted for any potentially dilutive debt or equity. Potentially dilutive shares are excluded from the computation of diluted loss per share during periods in which losses are reported since the result would be antidilutive.Excluded from diluted loss per share for the three months ended September 30, 2023 and 2022 were 1,426,944 shares and 3,643,320 shares, respectively, because their inclusion would have been antidilutive. Excluded from diluted loss per share for the six months ended September 30, 2023 and 2022 were 1,003,724 shares and 3,615,397 shares, respectively, because their inclusion would have been antidilutive.

XML

Revenue Recognition

6 Months Ended

Sep. 30, 2023

Revenue from Contract with Customer [Abstract]

Revenue Recognition

Revenue Recognition

Revenue, net including related parties, disaggregated by contract type is as follows (in thousands):

	Three Months Ended September 30,				Six Months Ended September 30,
	2023		2022		2023		2022
Commercial product and service	3,549		$	3,163	6,552		$	7,596
Government	1,461		507		4,341		1,230
Revenue, net	$	5,010	$	3,670	$	10,893	$	8,826

Revenue from related parties is as follows and included in Commercial product and service revenue (in thousands):

	Three Months Ended September 30,				Six Months Ended September 30,
	2023		2022		2023		2022
Commercial product and service	$	1,467	$	1,428	$	3,042	$	3,164

Government revenue for the three and six months ended September 30, 2023 was primarily derived from a contract with the National Security Technology Accelerator (“NSTXL”) which was awarded in May 2023, in which the Company may receive up to $15.2 million over the period from the first quarter of fiscal 2024 through the third quarter of fiscal 2026 for developing and manufacturing advanced GaN epiwafer materials in accordance with statements of work, and in support of an agreement between NSTXL and the U.S. Government. As of September 30, 2023, $7.5 million of the total $15.2 million has been funded by the U.S. Government. Government revenue for the three and six months ended September 30, 2022 was primarily derived from contracts with the U.S. Navy, which ended in December 2022.

XML

Concentration of Credit Risk and Significant Customers

6 Months Ended

Sep. 30, 2023

Risks and Uncertainties [Abstract]

Concentration of Credit Risk and Significant Customers

Concentration of Credit Risk and Significant Customers

The Company manages its credit risk associated with exposure to distributors and direct customers on outstanding accounts receivable through the application of credit approvals and other monitoring procedures. Credit sales, which are mainly on credit terms of 30 to 60 days, are only made to customers who meet the Company's credit standards, while sales to new customers or customers with low credit ratings are usually made on an advance payment basis. The Company closely monitors the aging of accounts receivable from its distributors and direct customers, and regularly reviews their financial positions, where available.

Significant customers are those that represent 10% or more of revenue or accounts receivable.

Total revenues, by percentage, from individual customers representing 10% or more of total revenues in the respective periods were as follows:

	Three Months Ended September 30,		Six Months Ended September 30,
	2023	2022	2023	2022
Customer A	18.6%	*	18.5%	10.4%
Customer B	*	11.2%	*	12.3%
Customer C	18.5%	30.4%	13.2%	32.7%
Customer D	*	29.8%	*	16.7%
Customer E	*	*	*	*
Customer F	29.1%	*	39.8%	*

* Less than 10% of total

Accounts receivable, by percentage, from individual customers representing 10% or more of accounts receivable are set forth in the following table:

	September 30, 2023	March 31, 2023
Customer A	17.8%	26.2%
Customer B	*	*
Customer C	14.5%	12.8%
Customer D	*	38.2%
Customer E	*	10.6%
Customer F	31.9%	*

* Less than 10% of total

Customers A and D are related parties and Customer B is a government agency. JCP Capital Management, LLC Limited (“JCP Capital”) is a majority stockholder of Customer C. See Note 5 - Investment in Joint Venture and Note 11 - Related Party Transactions. Customer F is NSTXL.

XML

Balance Sheet Components

6 Months Ended

Sep. 30, 2023

Organization, Consolidation and Presentation of Financial Statements [Abstract]

Balance Sheet Components

Balance Sheet Components

Inventory

Inventory consists of the following as of the dates presented (in thousands):

	September 30, 2023		March 31, 2023
Raw materials	$	4,959	$	5,167
Work in process	2,343		1,719
Sub-assembly	1,509		809
Finished goods	965		711
Total	$	9,776	$	8,406

Property and equipment

Property and equipment, net consist of the following as of the dates presented (in thousands):

	September 30, 2023		March 31, 2023
Machinery and equipment	$	14,079	$	11,124
Computer equipment and software	883		887
Furniture and fixtures	70		75
Leasehold improvements	5,095		5,069
Construction in progress	3,506		6,446
Property and equipment, gross	23,633		23,601
Less: accumulated depreciation	(15,776)		(15,711)
Property and equipment, net	$	7,857	$	7,890

The Company recorded depreciation and amortization expense related to property and equipment, net of $0.3 million and $0.2 million for the three months ended September 30, 2023 and 2022, respectively. The Company recorded depreciation and amortization expense related to property and equipment, net of $0.5 million and $0.3 million for the six months ended September 30, 2023 and 2022, respectively.

Intangible assets

The carrying values of intangible assets as of the dates presented, respectively, consist of the following (in thousands, except years):

	September 30, 2023
	Gross		Accumulated Amortization		Foreign Exchange Rate Changes		Net		Estimated Useful Life (in years)
Patents	$	2,963	$	(2,790)	$	—	$	173	10
Developed Technology - 150 V	560		(517)		(43)		—		6
Developed Technology - 600 V	1,701		(1,570)		(131)		—		6
Total	$	5,224	$	(4,877)	$	(174)	$	173

	March 31, 2023
	Gross		Accumulated Amortization		Foreign Exchange Rate Changes		Net		Estimated Useful Life (in years)
Patents	$	2,963	$	(2,642)	$	—	$	321	10
Developed Technology - 150 V	560		(517)		(43)		—		6
Developed Technology - 600 V	1,701		(1,570)		(131)		—		6
Total	$	5,224	$	(4,729)	$	(174)	$	321

The Company recorded amortization expenses related to intangible assets of $0.1 million for each of the three and six months ended September 30, 2023 and 2022.

Estimated future amortization expenses related to intangible assets as of September 30, 2023 were as follows (in thousands):

Year Ending March 31,
2024	$	148
2025	25
Total	$	173

Goodwill

Changes in the carrying amount of goodwill were as follows (in thousands):

Balance as of March 31, 2022	$	1,180
Foreign currency translation adjustments	(101)
Balance as of March 31, 2023	$	1,079
Foreign currency translation adjustments	(116)
Balance as of September 30, 2023	$	963

There have been no impairment losses recorded to date.

Accounts payable and accrued expenses

Accounts payable and accrued expenses consist of the following as of the dates presented (in thousands):

	September 30, 2023		March 31, 2023
Accounts payable	$	4,044	$	2,781
Manufacturing production costs	811		506
Legal fees	305		596
Audit fees	12		318
Consulting fees	176		256
Insurance	64		—
Deposit liability	—		2,950
Other	786		488
Accrued expenses	$	2,154	$	5,114
Total Accounts payable and accrued expenses	$	6,198	$	7,895

XML

Investment in Joint Venture

6 Months Ended

Sep. 30, 2023

Organization, Consolidation and Presentation of Financial Statements [Abstract]

Investment in Joint Venture

Investment in Joint VentureFrom April 1, 2022 through April 10, 2023, JCP Capital and Transphorm were responsible for 75% and 25%, respectively, of the funding obligations and losses of AFSW (through GaNovation). Beginning April 10, 2023, JCP Capital and Transphorm are responsible for 67.5% and 32.5%, respectively, of the funding obligations and losses of AFSW (through GaNovation). Notwithstanding this allocation of funding responsibilities, JCP Capital’s total funding obligations or investment shall not exceed $35 million and Transphorm’s total funding obligations or investment shall not exceed $12 million for the three-year period beginning August 1, 2021. As of September 30, 2023, the Company had provided $6.1 million of the Company’s $12.0 million commitment to GaNovation.

The Company’s investment activities in GaNovation for the periods presented are summarized below (in thousands):

	Three Months Ended September 30,				Six Months Ended September 30,
	2023		2022		2023		2022
Beginning Balance	$	662	$	339	$	715	$	143
Investment	—		759		807		1,537
Loss	(721)		(684)		(1,581)		(1,266)
Ending Balance	$	(59)	$	414	$	(59)	$	414

Summarized financial information of GaNovation for the periods indicated are as follows (in thousands):

	Three Months Ended September 30,				Six Months Ended September 30,
	2023		2022		2023		2022
Sales	$	2,737	$	3,211	$	5,721	$	6,032
Gross loss	(1,850)		(2,211)		(4,202)		(4,248)
Net loss	(2,218)		(2,703)		(4,865)		(5,154)

XML

Debts

6 Months Ended

Sep. 30, 2023

Debt Disclosure [Abstract]

Debts

Debts

Revolving Credit Facility

The Company entered into a Loan and Security Agreement (“LSA”) with Nexperia on April 4, 2018 which provided a $10.0 million revolving loan (Tranche C Loan) that was scheduled to mature at the earlier of (i) April 3, 2021, and (ii) the date a Change of Control (as defined in the LSA) of the Company occurs. Interest payable by the Company accrues on the outstanding principal amount of the loans during such period at a rate of 6% per annum. The credit facility was secured against certain of the Company’s U.S. patents not relating to MOCVD or epiwafer technology. On March 1, 2021, the maturity of the Tranche C Loan of $10.0 million was extended to May 18, 2021. On May 18, 2021, the maturity of the Tranche C Loan was extended to the earlier of April 4, 2023 or the occurrence of specified change of control events, and the $2.0 million Tranche B-1 Loan was converted into a Tranche C-1 Loan (the “Tranche C Loans” together with the Tranche C Loan) with the same terms and conditions as the existing Tranche C Loan.

As of September 30, 2023, there were no revolving loans outstanding, as the LSA with Nexperia terminated upon repayment of the principal and interest amount in full on April 4, 2023. There was no interest expense for the three months ended September 30, 2023. For the six months ended September 30, 2023, the Company recorded interest expense of $8,000. For the three and six months ended September 30, 2022, the Company recorded interest expense of $0.2 million and $0.4 million, respectively.

XML

Commitments and Contingencies

6 Months Ended

Sep. 30, 2023

Commitments and Contingencies Disclosure [Abstract]

Commitments and Contingencies

Commitments and Contingencies

Cooperation Agreement

On December 30, 2022, and effective as of December 18, 2022, the Company entered into a cooperation agreement (the “Cooperation Agreement”) with GaNext (Zhuhai) Technology Co., Ltd (“GaNext”). Among other things, the Cooperation Agreement calls for certain royalties including a royalty due to the Company in the event that GaNext utilizes epiwafers not provided by the Company (such royalties are based on time and volume with a minimum floor), and a royalty payable by the Company in the event the Company utilizes certain future platform that may be developed independently by GaNext (such royalties are based on time and volume, and half the amount per wafer of the royalties GaNext would pay the Company when utilizing epiwafers not provided by the Company). As of

September 30, 2023, no amounts have been earned by or due to either party and, thus, no amounts have been recorded in the condensed consolidated financial statements.

Contingencies

During the ordinary course of business, the Company may become a party to legal proceedings incidental to its business. The Company accrues contingent liabilities when it is probable that future expenditures will be made and such expenditures can be reasonably estimated. Legal cost is expensed as incurred.

On April 5, 2022, Joel Newman, an alleged holder of the Company’s common stock, filed a complaint in the Delaware Court of Chancery derivatively against the Company’s directors and KKR Phorm Investors L.P. (“Phorm”). On July 11, 2022, the plaintiff filed an amended complaint. Among other things, the complaint alleged that the directors and Phorm (as an alleged controlling stockholder) breached their fiduciary duties, and that Phorm was unjustly enriched, because the terms of the November 5, 2021 private placement in which Phorm participated were allegedly unfairly favorable to Phorm. Defendants moved to dismiss the complaint and, on August 31, 2023, the Court granted defendants’ motion to dismiss.

The Company is not aware of any material legal claims or assessments other than disclosed above. Although the results of litigation and claims are inherently unpredictable, management believes (in consultation with legal counsel) there was not at least a reasonable possibility that the Company had incurred a material loss with respect to any loss contingencies as of September 30, 2023 and through the issuance of these financial statements.

Indemnification

The Company from time to time enters into types of contracts that contingently require the Company to indemnify parties against third-party claims. These contracts primarily relate to: (1) real estate leases, under which the Company may be required to indemnify property owners for environmental and other liabilities and for other claims arising from the Company’s use of the applicable premises; (2) agreements with the Company’s officers, directors, and employees, under which the Company may be required to indemnify such persons from liabilities arising out of their relationship; (3) indemnifying customers in the event of product failure; and (4) agreements with outside parties that use the Company’s intellectual property, under which the Company may indemnify for copyright or patent infringement related specifically to the use of such intellectual property.

Historically, the Company has not been required to make payments under these obligations, and no liabilities have been recorded for these obligations in the Company’s condensed consolidated financial statements.

XML

Stockholders' Equity

6 Months Ended

Sep. 30, 2023

Equity [Abstract]

Stockholders' Equity

Stockholders’ Equity

As of September 30, 2023, 750,000,000 shares of common stock are authorized, of which 61,981,134 shares of common stock were issued and outstanding, and 5,000,000 shares of preferred stock are authorized, none of which were issued and outstanding. The Company’s Board of Directors has the ability to designate the rights, preferences and privileges for the preferred stock.

Common Stock

Common stockholders are entitled to dividends, as and when declared by the Company’s Board of Directors, subject to the priority dividend rights of the holders of any then-outstanding preferred stock. There have been no dividends declared to date. The holder of each share of common stock is entitled to one vote.

The Company has reserved shares of common stock for future issuance as of the date presented as follows:

	September 30, 2023
Equity incentive plans	11,275,762
Common stock warrants	4,027,929
Total	15,303,691

Warrant Repricing and Issuance

On April 3, 2023, the Company entered into warrant exercise inducement offer letters with certain holders of outstanding warrants to purchase shares of the Company’s common stock (such holders, the “Exercising Holders,” and such warrants, the “Existing Warrants”), pursuant to which the Exercising Holders agreed to exercise, for cash, Existing Warrants to purchase, in the aggregate, 1,815,848 shares of the Company’s common stock, in exchange for the Company’s agreement to (i) lower the exercise price of the Existing Warrants to $4.00 per share and (ii) issue new warrants (the “Inducement Warrants”) to the Exercising Holders to purchase, in the aggregate, up to 2,269,810 shares of the Company’s common stock.

The Inducement Warrants have an exercise price of $5.00 per share, provide for a cashless exercise feature, and are exercisable until April 3, 2026. Certain Exercising Holders have contractually agreed to restrict their ability to exercise the Inducement Warrants issued to them if the holder (together with such holder’s affiliates, and any persons acting as a group together with such holder or any of such holder’s affiliates) would beneficially own a number of shares in excess of 9.99% of the shares of the Company’s common stock then outstanding. At the holder’s option, upon notice to the Company, the holder may increase or decrease this beneficial ownership limitation not to exceed 19.99% of the shares of common stock then outstanding, with any such increase becoming effective upon 61 days’ prior notice to the Company.

The Company determined that the modification was not executed in contemplation of an imminent equity offering, financing transaction nor represented compensation for goods and services and is not within the scope of another ASC Topic. As such, the Company concluded that the $0.8 million incremental fair value of the modified warrants and the $4.9 million fair value of the Inducement Warrants should be treated as deemed dividends to the warrant holder in accordance with ASC Subtopic 815-40 – Derivatives and Hedging – Contracts in Entity’s Own Equity.

Private Placement of Common Stock and Warrants

On April 3, 2023, the Company entered into securities purchase agreements with two accredited investors that are affiliated with each other (the “Purchasers”) pursuant to which the Company agreed to sell to the Purchasers in a private placement (the “Private Placement”) for an aggregate purchase price of $2.0 million (i) an aggregate of 500,000 shares (the “Shares”) of the Company’s common stock at a purchase price of $4.00 per share and (ii) warrants to purchase an aggregate of 250,001 shares of the Company’s common stock (the “Warrants”). The Warrants have an exercise price of $5.00 per share, provide for a cashless exercise feature, and are exercisable until April 3, 2026.

On April 3, 2023, the Company entered into a registration rights agreement (the “Registration Rights Agreement”) with the Purchasers, pursuant to which the Company agreed to register the Shares and the shares of Common Stock issuable upon exercise of the Warrants (collectively, the “Registrable Securities”) for resale. Under the terms of the Registration Rights Agreement, the Company is obligated, subject to certain exceptions, to (i) no later than 30 days after the closing of the Private Placement, file a registration statement with the Securities and Exchange Commission (the “SEC”) covering the resale or other disposition of the Registrable Securities, (ii) use its commercially

reasonable efforts to cause such registration statement to become effective no later than 60 days after such registration statement is first filed with the SEC, and (iii) use its commercially reasonable efforts to keep such registration statement effective for up to three years after the date on which such registration statement is declared effective by the SEC. The registration statement was filed and declared effective within the time period required by the Registration Rights Agreement.

The Company received $7.3 million from the exercise of the Existing Warrants by the Exercising Holders and $2.0 million from the Purchasers in the Private Placement, for total aggregate gross proceeds of approximately $9.3 million (before deducting legal costs of $0.1 million).

The following warrants to purchase common stock were outstanding as of September 30, 2023:

Number of Warrant Shares	Exercise Price		Expiration Date
650,000	$	6.00	October 4, 2024
360,938	6.00		November 5, 2024
67,568	9.25		December 7, 2024
281,081	9.25		December 10, 2024
10,116	8.48		December 10, 2025
45,000	3.30		December 23, 2025
84,000	4.00		April 3, 2026
2,519,811	5.00		April 3, 2026
6,046	34.74		5 years after an initial public offering of the Company
3,369	54.41		5 years after an initial public offering of the Company
4,027,929

The following table summarizes stock warrant activity for the periods presented:

	Number of Warrant Shares
Outstanding at March 31, 2023	3,323,966
Stock warrants issued	2,519,811
Stock warrants exercised	(1,815,848)
Outstanding and exercisable at September 30, 2023	4,027,929

Rights Offering

On July 5, 2023, the Company distributed to all holders of record of its common stock as of 5:00 p.m., Eastern Daylight Time, on June 26, 2023, for each share of common stock held as of June 26, 2023, one non-transferable subscription right. Each subscription right carried with it (i) a basic subscription right, which entitled the holder to purchase 0.07655623 of a share of common stock and (ii) an over-subscription privilege, which entitled a holder that had exercised its basic subscription right in full to subscribe for additional shares of common stock that were offered in the rights offering, to the extent other holders did not exercise their basic subscription rights in full. The subscription price was $3.30 per whole share of common stock.

The Company completed the rights offering in August 2023 and issued 2,404,758 shares of common stock, which generated approximately $7.9 million in gross proceeds (before deducting legal costs of $0.3 million).

XML

Stock-Based Compensation

6 Months Ended

Sep. 30, 2023

Share-Based Payment Arrangement [Abstract]

Stock-Based Compensation

Stock-Based Compensation

Out-of-Period Adjustment

For the six months ended September 30, 2023, the Company recorded a $0.4 million out-of-period adjustment to stock-based compensation expense and additional paid-in-capital related to prior periods. The adjustment was a correction of an error to properly reflect (i) the grant date fair value of awards and (ii) the straight-lining of stock-based compensation expense for graded-vested awards under ASC 718, Compensation – Stock Compensation and in accordance with the Company’s stock-based compensation expense recognition policy election. The Company assessed that this error was not material to the historical financial statements in any individual period or in the aggregate, the current interim period and its forecasted results for the full 2024 fiscal year and did not result in the previously issued financial statements being materially misstated.

Option Modification

During the six months ended September 30, 2023, the Company recognized $0.5 million in incremental compensation cost as a result of an amendment to a former employee’s option agreements to allow for an extended post termination exercise period.

XML

Fair Value Measurements

6 Months Ended

Sep. 30, 2023

Fair Value Disclosures [Abstract]

Fair Value Measurements

Fair Value Measurements

FASB ASC 820, Fair Value Measurements and Disclosures, establishes a three-tier fair value hierarchy for disclosure of fair value measurements as follows:

•Level 1 - Unadjusted quoted prices in active markets for identical assets and liabilities.

•Level 2 - Inputs (other than quoted prices included within Level 1) that are observable, unadjusted quoted prices in markets that are not active, or other inputs that are observable or can be corroborated by observable market data of substantially the full term of the related assets or liabilities.

•Level 3 - Inputs reflect management’s best estimate of what market participants would use in pricing the asset or liability at the measurement date. Inputs are unobservable for the asset or liability. Consideration is given to the risk inherent in the valuation technique and the risk inherent in the inputs to the model.

The categorization of a financial instrument within the valuation hierarchy is based upon the lowest level of input that is significant to the fair value measurement.

Foreign Currency Forward and Option Contracts

In December 2022, the Company entered into four quarterly tiered collar contracts consisting of foreign currency forward and option contracts to manage the foreign exchange risk associated with certain foreign currency-denominated assets and liabilities, specifically those associated with its Japanese operations. The contracts have quarterly maturities ending January 2024.

As a result of foreign currency fluctuations, the U.S. dollar equivalent values of the Company’s foreign currency-denominated assets and liabilities change. The Company has not elected to account for these contracts as hedge instruments and as such, gains and losses on these contracts are included in other income (expense), net in the Company's condensed consolidated statements of operations, along with foreign currency gains and losses of the related foreign currency-denominated assets and liabilities associated with these foreign currency forward and option contracts. During the three and six months ended September 30, 2023, the Company recognized net losses of $39,000 and $0.2 million, respectively, associated with these contracts.

As the forward contract and option model employs market observable inputs such as spot currency rates and forward points, the Company has determined that the inputs used to value its derivatives fall within Level 2 of the fair value hierarchy.

The following table presents the fair value of derivative instruments recognized in the Company's condensed consolidated balance sheets as of September 30, 2023 (in thousands):

	Derivative Not Designated as Hedging Instruments		Gross Amounts of Recognized Assets and Liabilities		Gross Amounts Offset in the Balance Sheet		Net Amounts of Assets and Liabilities Presented in the Balance Sheet
Accounts payable and accrued expenses	$	106	$	106	$	—	$	106
Net	$	106	$	106	$	—	$	106

XML

Related Party Transactions

6 Months Ended

Sep. 30, 2023

Related Party Transactions [Abstract]

Related Party Transactions

Related Party Transactions                                                                                                                                                                                                                                                                                 The Company entered into the following related party transactions for the periods indicated (in thousands):

	Three Months Ended September 30,				Six Months Ended September 30,
	2023		2022		2023		2022
Joint Venture-GaNovation:
Product sale	$	313	$	1,094	$	579	$	1,472
Service fees	64		—		131		—
Inventory purchase	100		69		113		249
Fixed asset purchase	60		—		68		—
Cost of goods sold	1,194		867		2,452		1,708
Research and development expense	53		90		85		188
Consumption tax	82		77		142		219
Employee and related benefits	30		43		62		90
Yaskawa:
Revenue per a cooperation and development agreement	223		223		443		770
Nexperia:
Product sale	931		77		2,019		856
License and service fee income	—		35		—		66
Reimbursements in license maintenance fee	25		38		50		75
Interest expense	—		184		8		366

As of September 30, 2023, total due to and from related parties were as follows (in thousands):

	September 30, 2023		March 31, 2023
Due from (included in Accounts receivable, net):
Joint venture	$	171	$	1,713
Stockholder and noteholder	1,089		1,152
Total due from related parties	$	1,260	$	2,865
Due to (included in Accounts payable and accrued expenses):
Joint venture	$	1,575	$	968
Stockholder and noteholder	99		93
Total due to related parties	$	1,674	$	1,061

XML

Subsequent Events	6 Months Ended
	Sep. 30, 2023
Subsequent Events [Abstract]
Subsequent Events	Subsequent EventsThe Company has evaluated subsequent events through the issuance of these financial statements and is not aware of any material items that would require disclosure in the notes to the financial statements or would be required to be recognized as of September 30, 2023.

XML

Pay vs Performance Disclosure - USD ($) $ in Thousands	3 Months Ended		6 Months Ended		12 Months Ended
	Sep. 30, 2023	Sep. 30, 2022	Sep. 30, 2023	Sep. 30, 2022	Mar. 31, 2023
Pay vs Performance Disclosure
Net loss	$ (7,129)	$ (5,995)	$ (14,576)	$ (11,348)	$ (30,600)

XML

Insider Trading Arrangements

3 Months Ended

6 Months Ended

Sep. 30, 2023

shares

Sep. 30, 2023

shares

Trading Arrangements, by Individual

Material Terms of Trading Arrangement

During the three months ended September 30, 2023, none of our directors or officers (as defined in Rule 16a-1(f) under the Exchange Act adopted or terminated a “Rule 10b5-1 trading arrangement” or “non-Rule 10b5-1 trading arrangement,” as those terms are defined in Item 408 of Regulation S-K, except as described in the table below:

Name (Title)	Action Taken	Date Action Taken	Type of Trading Arrangement(1)	Duration(2)	Aggregate Number of Securities Subject to Trading Arrangement
Katharina McFarland (Director)	Adopt	8/17/2023	Rule 10b5-1 Trading Arrangement	10/15/2024	Indeterminable(3)
Kelly Smales (Director)	Adopt	8/17/2023	Rule 10b5-1 Trading Arrangement	10/15/2024	Indeterminable(4)

(1)    Each trading arrangement marked as a “Rule 10b5-1 Trading Arrangement” is intended to satisfy the affirmative defense of Rule 10b5-1(c), as amended (the “Rule”).

(2)    Each trading arrangement permits transactions through and including the earlier to occur of (a) the completion of all sales or (b) the date listed in the table. Each trading arrangement marked as a “Rule 10b5-1 Trading Arrangement” permits transactions to begin only upon expiration of the applicable mandatory cooling-off period under the Rule.

(3)    This trading arrangement provides for the sale of up to (i) 30,937 shares of common stock issuable upon exercise of outstanding stock options held by Ms. McFarland, and (ii) 35% of an indeterminable number of shares of common stock to be received upon the vesting of restricted stock units (“RSUs”) that may be awarded to Ms. McFarland, after the date on which the trading arrangement was adopted, pursuant to the Company’s Outside Director Compensation Policy (the “Compensation Policy”). The actual number of RSUs that may be awarded to Ms. McFarland pursuant to the Compensation Policy will depend on Ms. McFarland’s continued service on the Company’s board of directors, the Company’s closing stock price on the date an RSU is awarded, and the dollar value of each RSU award that is received in lieu of cash compensation for serving, as applicable, as Chair of the Board, Lead Independent Director or as the chair or a member of a committee of the Board.

(4)    This trading arrangement provides for the sale of up to (i) 4,375 shares of common stock held by Ms. Smales, (ii) 3,720 shares of common stock issuable the vesting of outstanding RSUs held by Ms. Smales, and (iii) 35% of an indeterminable number of shares of common stock to be received upon the vesting of RSUs that may be awarded to Ms. Smales, after the date on which the trading arrangement was adopted, pursuant to the Compensation Policy. The actual number of RSUs that may be awarded to Ms. Smales pursuant to the Compensation Policy will depend on Ms. Smales’s continued service on the Company’s board of directors, the Company’s closing stock price on the date an RSU is awarded, and the dollar value of each RSU award that is received in lieu of cash compensation for serving, as applicable, as Chair of the Board, Lead Independent Director or as the chair or a member of a committee of the Board.

Non-Rule 10b5-1 Arrangement Adopted

false

Rule 10b5-1 Arrangement Terminated

false

Non-Rule 10b5-1 Arrangement Terminated

false

Katharina McFarland [Member]

Trading Arrangements, by Individual

Name

Katharina McFarland

Title

Director

Rule 10b5-1 Arrangement Adopted

true

Adoption Date

8/17/2023

Arrangement Duration

426 days

Aggregate Available

30,937

30,937

Kelly Smales [Member]

Trading Arrangements, by Individual

Name

Kelly Smales

Title

Director

Rule 10b5-1 Arrangement Adopted

true

Adoption Date

8/17/2023

Arrangement Duration

426 days

Ms.Smales Rule Trading Arrangement, Common Stock [Member] | Kelly Smales [Member]

Trading Arrangements, by Individual

Aggregate Available

4,375

4,375

Ms. Smales Trading Arrangement, Restricted Stock Units [Member] | Ms. Smales [Member]

Trading Arrangements, by Individual

Aggregate Available

3,720

3,720

XML

Business and Basis of Presentation (Policies)

6 Months Ended

Sep. 30, 2023

Organization, Consolidation and Presentation of Financial Statements [Abstract]

Basis of Presentation

Basis of Presentation

The accompanying unaudited condensed consolidated financial statements reflect all adjustments of a normal and recurring nature that are necessary for a fair presentation of the results for the interim period ended September 30, 2023, but are not necessarily indicative of the results that will be reported for the entire fiscal year or any other interim period. Certain information and footnote disclosures normally included in annual consolidated financial statements prepared in accordance with U.S. Generally Accepted Accounting Principles (“GAAP”) have been condensed or omitted. The aforementioned unaudited condensed consolidated financial statements are prepared in conformity with GAAP and in accordance with the instructions to Form 10-Q pursuant to the rules and regulations

of the Securities and Exchange Commission. The interim information should be read in conjunction with the Company’s Annual Report on Form 10-K for the fiscal year ended March 31, 2023. The consolidated balance sheet as of March 31, 2023 is derived from those audited financial statements.

Accounting Standard Adopted and Recently Issued Accounting Standards under Evaluation

Accounting Standard Adopted

Financial Instruments - In June 2016, the Financial Accounting Standards Board (“FASB”) issued ASU 2016-13, Financial Instruments - Credit Losses (Topic 326), Measurement of Credit Losses on Financial Instruments (“ASU 2016-13”). The standard changed the methodology for measuring credit losses on financial instruments and the timing of when such losses are recorded. ASU 2016-13 is effective for the Company’s fiscal year ending March 31, 2024. The Company adopted this standard effective April 1, 2023 and the adoption did not have a material effect on the condensed consolidated financial statements.

Recently Issued Accounting Standards under Evaluation

Debt - In August 2020, the FASB issued ASU 2020-06, Debt—Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging—Contracts in Entity’s Own Equity (Subtopic 815-40), Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity, to address the complexity in accounting for certain financial instruments with characteristics of liabilities and equity. Among other provisions, the amendments in this ASU significantly change the guidance on the issuer’s accounting for convertible instruments and the guidance on the derivative scope exception for contracts in an entity’s own equity such that fewer conversion features will require separate recognition, and fewer freestanding instruments, like warrants, will require liability treatment. ASU 2020-06 is effective for fiscal years beginning after December 15, 2021, excluding entities eligible to be smaller reporting companies as defined by the SEC. As the Company is a smaller reporting company, the ASU is effective for fiscal years beginning after December 15, 2023. The Company is currently evaluating the impact of this new standard on its consolidated financial statements and the adoption is not expected to have a significant impact on the consolidated financial statements.

Loss Per Share

Loss Per ShareBasic loss per share is calculated by dividing the Company’s net loss applicable to common shareholders by the weighted average number of common shares during the period.

XML

Business and Basis of Presentation (Tables)

6 Months Ended

Sep. 30, 2023

Organization, Consolidation and Presentation of Financial Statements [Abstract]

Schedule of Loss Per Share

Net loss applicable to common shareholders is calculated as follows for each interim period as follows (in thousands except for number of shares):

	Three Months Ended September 30,				Six Months Ended September 30,
	2023		2022		2023		2022
Net loss available to common shareholders	$	(7,129)	$	(5,995)	$	(14,576)	$	(11,348)
Deemed dividend related to warrant modification (Note 8)	—		—		(753)		—
Deemed dividend related to Inducement Warrants (Note 8)	—		—		(4,859)		—
Net loss attributable to common stockholders	(7,129)		(5,995)		(20,188)		(11,348)
Weighted average common shares outstanding - basic and diluted	61,138,691		56,619,662		61,071,729		55,518,297
Net loss per share	$	(0.12)	$	(0.10)	$	(0.33)	$	(0.20)

XML

Revenue Recognition (Tables)

6 Months Ended

Sep. 30, 2023

Revenue from Contract with Customer [Abstract]

Schedule of Disaggregation of Revenue

Revenue, net including related parties, disaggregated by contract type is as follows (in thousands):

	Three Months Ended September 30,				Six Months Ended September 30,
	2023		2022		2023		2022
Commercial product and service	3,549		$	3,163	6,552		$	7,596
Government	1,461		507		4,341		1,230
Revenue, net	$	5,010	$	3,670	$	10,893	$	8,826

Revenue from related parties is as follows and included in Commercial product and service revenue (in thousands):

	Three Months Ended September 30,				Six Months Ended September 30,
	2023		2022		2023		2022
Commercial product and service	$	1,467	$	1,428	$	3,042	$	3,164

XML

Concentration of Credit Risk and Significant Customers (Tables)

6 Months Ended

Sep. 30, 2023

Risks and Uncertainties [Abstract]

Schedules of Concentration of Risk, by Risk Factor

Total revenues, by percentage, from individual customers representing 10% or more of total revenues in the respective periods were as follows:

	Three Months Ended September 30,		Six Months Ended September 30,
	2023	2022	2023	2022
Customer A	18.6%	*	18.5%	10.4%
Customer B	*	11.2%	*	12.3%
Customer C	18.5%	30.4%	13.2%	32.7%
Customer D	*	29.8%	*	16.7%
Customer E	*	*	*	*
Customer F	29.1%	*	39.8%	*

* Less than 10% of total

Accounts receivable, by percentage, from individual customers representing 10% or more of accounts receivable are set forth in the following table:

	September 30, 2023	March 31, 2023
Customer A	17.8%	26.2%
Customer B	*	*
Customer C	14.5%	12.8%
Customer D	*	38.2%
Customer E	*	10.6%
Customer F	31.9%	*

* Less than 10% of total

XML

Balance Sheet Components (Tables)

6 Months Ended

Sep. 30, 2023

Organization, Consolidation and Presentation of Financial Statements [Abstract]

Schedule of Inventory

Inventory consists of the following as of the dates presented (in thousands):

	September 30, 2023		March 31, 2023
Raw materials	$	4,959	$	5,167
Work in process	2,343		1,719
Sub-assembly	1,509		809
Finished goods	965		711
Total	$	9,776	$	8,406

Schedule of Property and Equipment

Property and equipment, net consist of the following as of the dates presented (in thousands):

	September 30, 2023		March 31, 2023
Machinery and equipment	$	14,079	$	11,124
Computer equipment and software	883		887
Furniture and fixtures	70		75
Leasehold improvements	5,095		5,069
Construction in progress	3,506		6,446
Property and equipment, gross	23,633		23,601
Less: accumulated depreciation	(15,776)		(15,711)
Property and equipment, net	$	7,857	$	7,890

Schedule of Carrying Value of Intangible Assets

The carrying values of intangible assets as of the dates presented, respectively, consist of the following (in thousands, except years):

	September 30, 2023
	Gross		Accumulated Amortization		Foreign Exchange Rate Changes		Net		Estimated Useful Life (in years)
Patents	$	2,963	$	(2,790)	$	—	$	173	10
Developed Technology - 150 V	560		(517)		(43)		—		6
Developed Technology - 600 V	1,701		(1,570)		(131)		—		6
Total	$	5,224	$	(4,877)	$	(174)	$	173

	March 31, 2023
	Gross		Accumulated Amortization		Foreign Exchange Rate Changes		Net		Estimated Useful Life (in years)
Patents	$	2,963	$	(2,642)	$	—	$	321	10
Developed Technology - 150 V	560		(517)		(43)		—		6
Developed Technology - 600 V	1,701		(1,570)		(131)		—		6
Total	$	5,224	$	(4,729)	$	(174)	$	321

Schedule of Estimated Future Amortization Expenses Related to Intangible Assets

Estimated future amortization expenses related to intangible assets as of September 30, 2023 were as follows (in thousands):

Year Ending March 31,
2024	$	148
2025	25
Total	$	173

Schedule of Goodwill

Changes in the carrying amount of goodwill were as follows (in thousands):

Balance as of March 31, 2022	$	1,180
Foreign currency translation adjustments	(101)
Balance as of March 31, 2023	$	1,079
Foreign currency translation adjustments	(116)
Balance as of September 30, 2023	$	963

Schedule of Accrued Expenses

Accounts payable and accrued expenses consist of the following as of the dates presented (in thousands):

	September 30, 2023		March 31, 2023
Accounts payable	$	4,044	$	2,781
Manufacturing production costs	811		506
Legal fees	305		596
Audit fees	12		318
Consulting fees	176		256
Insurance	64		—
Deposit liability	—		2,950
Other	786		488
Accrued expenses	$	2,154	$	5,114
Total Accounts payable and accrued expenses	$	6,198	$	7,895

XML

Investment in Joint Venture (Tables)

6 Months Ended

Sep. 30, 2023

Organization, Consolidation and Presentation of Financial Statements [Abstract]

Schedule of Investment Activities in AFSW

The Company’s investment activities in GaNovation for the periods presented are summarized below (in thousands):

	Three Months Ended September 30,				Six Months Ended September 30,
	2023		2022		2023		2022
Beginning Balance	$	662	$	339	$	715	$	143
Investment	—		759		807		1,537
Loss	(721)		(684)		(1,581)		(1,266)
Ending Balance	$	(59)	$	414	$	(59)	$	414

Summarized financial information of GaNovation for the periods indicated are as follows (in thousands):

	Three Months Ended September 30,				Six Months Ended September 30,
	2023		2022		2023		2022
Sales	$	2,737	$	3,211	$	5,721	$	6,032
Gross loss	(1,850)		(2,211)		(4,202)		(4,248)
Net loss	(2,218)		(2,703)		(4,865)		(5,154)

XML

Stockholders' Equity (Tables)

6 Months Ended

Sep. 30, 2023

Equity [Abstract]

Schedule of Convertible Preferred Stock by Class

The Company has reserved shares of common stock for future issuance as of the date presented as follows:

	September 30, 2023
Equity incentive plans	11,275,762
Common stock warrants	4,027,929
Total	15,303,691

Schedule of Stockholders' Equity Note, Warrants or Rights

The following warrants to purchase common stock were outstanding as of September 30, 2023:

Number of Warrant Shares	Exercise Price		Expiration Date
650,000	$	6.00	October 4, 2024
360,938	6.00		November 5, 2024
67,568	9.25		December 7, 2024
281,081	9.25		December 10, 2024
10,116	8.48		December 10, 2025
45,000	3.30		December 23, 2025
84,000	4.00		April 3, 2026
2,519,811	5.00		April 3, 2026
6,046	34.74		5 years after an initial public offering of the Company
3,369	54.41		5 years after an initial public offering of the Company
4,027,929

The following table summarizes stock warrant activity for the periods presented:

	Number of Warrant Shares
Outstanding at March 31, 2023	3,323,966
Stock warrants issued	2,519,811
Stock warrants exercised	(1,815,848)
Outstanding and exercisable at September 30, 2023	4,027,929

XML

Fair Value Measurements (Tables)

6 Months Ended

Sep. 30, 2023

Fair Value Disclosures [Abstract]

Schedule of Derivative Instruments in Consolidated Balance Sheets, Fair Value

The following table presents the fair value of derivative instruments recognized in the Company's condensed consolidated balance sheets as of September 30, 2023 (in thousands):

	Derivative Not Designated as Hedging Instruments		Gross Amounts of Recognized Assets and Liabilities		Gross Amounts Offset in the Balance Sheet		Net Amounts of Assets and Liabilities Presented in the Balance Sheet
Accounts payable and accrued expenses	$	106	$	106	$	—	$	106
Net	$	106	$	106	$	—	$	106

XML

Related Party Transactions (Tables)

6 Months Ended

Sep. 30, 2023

Related Party Transactions [Abstract]

Schedule of Related Party Transactions

The Company entered into the following related party transactions for the periods indicated (in thousands):

	Three Months Ended September 30,				Six Months Ended September 30,
	2023		2022		2023		2022
Joint Venture-GaNovation:
Product sale	$	313	$	1,094	$	579	$	1,472
Service fees	64		—		131		—
Inventory purchase	100		69		113		249
Fixed asset purchase	60		—		68		—
Cost of goods sold	1,194		867		2,452		1,708
Research and development expense	53		90		85		188
Consumption tax	82		77		142		219
Employee and related benefits	30		43		62		90
Yaskawa:
Revenue per a cooperation and development agreement	223		223		443		770
Nexperia:
Product sale	931		77		2,019		856
License and service fee income	—		35		—		66
Reimbursements in license maintenance fee	25		38		50		75
Interest expense	—		184		8		366

As of September 30, 2023, total due to and from related parties were as follows (in thousands):

	September 30, 2023		March 31, 2023
Due from (included in Accounts receivable, net):
Joint venture	$	171	$	1,713
Stockholder and noteholder	1,089		1,152
Total due from related parties	$	1,260	$	2,865
Due to (included in Accounts payable and accrued expenses):
Joint venture	$	1,575	$	968
Stockholder and noteholder	99		93
Total due to related parties	$	1,674	$	1,061

XML

Business and Basis of Presentation - Narrative (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended		12 Months Ended
	Sep. 30, 2023	Sep. 30, 2022	Sep. 30, 2023	Sep. 30, 2022	Mar. 31, 2023
Organization, Consolidation and Presentation of Financial Statements [Abstract]
Working capital	$ 13,600		$ 13,600
Net loss	$ (7,129)	$ (5,995)	$ (14,576)	$ (11,348)	$ (30,600)
Number of anti-dilutive shares (in shares)	1,426,944	3,643,320	1,003,724	3,615,397

XML

Business and Basis of Presentation - Schedule of Loss Per Share (Details) - USD ($) $ / shares in Units, $ in Thousands		3 Months Ended		6 Months Ended		12 Months Ended
	Apr. 03, 2023	Sep. 30, 2023	Sep. 30, 2022	Sep. 30, 2023	Sep. 30, 2022	Mar. 31, 2023
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Net loss available to common shareholders		$ (7,129)	$ (5,995)	$ (14,576)	$ (11,348)	$ (30,600)
Deemed dividend related to warrant modification and issuance of Inducement Warrants (Note 8)		0	0	(5,612)	0
Net loss attributable to common stockholders		(7,129)	(5,995)	(20,188)	(11,348)
Net loss attributable to common stockholders		$ (7,129)	$ (5,995)	$ (20,188)	$ (11,348)
Weighted average common shares outstanding - basic (in shares)		61,138,691	56,619,662	61,071,729	55,518,297
Weighted average common shares outstanding - diluted (in shares)		61,138,691	56,619,662	61,071,729	55,518,297
Net loss per share - basic (in usd per share)		$ (0.12)	$ (0.10)	$ (0.33)	$ (0.20)
Net loss per share - diluted (in usd per share)		$ (0.12)	$ (0.10)	$ (0.33)	$ (0.20)
Warrant
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Deemed dividend related to warrant modification and issuance of Inducement Warrants (Note 8)		$ 0	$ 0	$ (753)	$ 0
Inducement Warrants
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Deemed dividend related to warrant modification and issuance of Inducement Warrants (Note 8)	$ (4,900)	$ 0	$ 0	$ (4,859)	$ 0

XML

Revenue Recognition - Schedule of Disaggregation of Revenue (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Sep. 30, 2023	Sep. 30, 2022	Sep. 30, 2023	Sep. 30, 2022
Disaggregation of Revenue [Line Items]
Revenue, net	$ 5,010	$ 3,670	$ 10,893	$ 8,826
Related Party
Disaggregation of Revenue [Line Items]
Revenue, net	1,467	1,428	3,042	3,164
Commercial product and service
Disaggregation of Revenue [Line Items]
Revenue, net	3,549	3,163	6,552	7,596
Government
Disaggregation of Revenue [Line Items]
Revenue, net	$ 1,461	$ 507	$ 4,341	$ 1,230

XML

Revenue Recognition- Narrative (Details) - National Security Technology Accelerator - USD ($) $ in Millions	1 Months Ended
	May 31, 2023	Sep. 30, 2023
Disaggregation of Revenue [Line Items]
Government contract, amount awarded	$ 15.2
Government contract, total amount funded		$ 7.5

XML

Concentration of Credit Risk and Significant Customers (Details) - Customer Concentration Risk	3 Months Ended		6 Months Ended		12 Months Ended
	Sep. 30, 2023	Sep. 30, 2022	Sep. 30, 2023	Sep. 30, 2022	Mar. 31, 2023
Revenue | Customer A
Concentration Risk [Line Items]
Percentage of revenue or accounts receivable (in percent)	18.60%		18.50%	10.40%
Revenue | Customer B
Concentration Risk [Line Items]
Percentage of revenue or accounts receivable (in percent)		11.20%		12.30%
Revenue | Customer C
Concentration Risk [Line Items]
Percentage of revenue or accounts receivable (in percent)	18.50%	30.40%	13.20%	32.70%
Revenue | Customer D
Concentration Risk [Line Items]
Percentage of revenue or accounts receivable (in percent)		29.80%		16.70%
Revenue | Customer F
Concentration Risk [Line Items]
Percentage of revenue or accounts receivable (in percent)	29.10%		39.80%
Accounts Receivable | Customer A
Concentration Risk [Line Items]
Percentage of revenue or accounts receivable (in percent)			17.80%		26.20%
Accounts Receivable | Customer C
Concentration Risk [Line Items]
Percentage of revenue or accounts receivable (in percent)			14.50%		12.80%
Accounts Receivable | Customer D
Concentration Risk [Line Items]
Percentage of revenue or accounts receivable (in percent)					38.20%
Accounts Receivable | Customer E
Concentration Risk [Line Items]
Percentage of revenue or accounts receivable (in percent)					10.60%
Accounts Receivable | Customer F
Concentration Risk [Line Items]
Percentage of revenue or accounts receivable (in percent)			31.90%

XML

Balance Sheet Components - Schedule of Inventory (Details) - USD ($) $ in Thousands	6 Months Ended
	Sep. 30, 2023	Sep. 30, 2022	Mar. 31, 2023
Organization, Consolidation and Presentation of Financial Statements [Abstract]
Raw materials	$ 4,959		$ 5,167
Work in process	2,343		1,719
Sub-assembly	1,509		809
Finished goods	965		711
Total	9,776		$ 8,406
Inventory write-off	$ 139	$ 56

XML

Balance Sheet Components - Schedule of Property and Equipment, Net (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Sep. 30, 2023	Sep. 30, 2022	Sep. 30, 2023	Sep. 30, 2022	Mar. 31, 2023
Property, Plant and Equipment [Line Items]
Property and equipment, gross	$ 23,633		$ 23,633		$ 23,601
Less: accumulated depreciation	(15,776)		(15,776)		(15,711)
Property and equipment, net	7,857		7,857		7,890
Depreciation	300	$ 200	500	$ 300
Machinery and equipment
Property, Plant and Equipment [Line Items]
Property and equipment, gross	14,079		14,079		11,124
Computer equipment and software
Property, Plant and Equipment [Line Items]
Property and equipment, gross	883		883		887
Furniture and fixtures
Property, Plant and Equipment [Line Items]
Property and equipment, gross	70		70		75
Leasehold improvements
Property, Plant and Equipment [Line Items]
Property and equipment, gross	5,095		5,095		5,069
Construction in progress
Property, Plant and Equipment [Line Items]
Property and equipment, gross	$ 3,506		$ 3,506		$ 6,446

XML

Balance Sheet Components - Schedule of Carrying Value of Intangible Assets (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Sep. 30, 2023	Sep. 30, 2022	Sep. 30, 2023	Sep. 30, 2022	Mar. 31, 2023
Finite-Lived Intangible Assets [Line Items]
Gross	$ 5,224		$ 5,224		$ 5,224
Accumulated Amortization	(4,877)		(4,877)		(4,729)
Foreign Exchange Rate Changes	(174)		(174)		(174)
Net	173		173		321
Amortization expense	100	$ 100	100	$ 100
Patents
Finite-Lived Intangible Assets [Line Items]
Gross	2,963		2,963		2,963
Accumulated Amortization	(2,790)		(2,790)		(2,642)
Foreign Exchange Rate Changes	0		0		0
Net	$ 173		$ 173		$ 321
Estimated Useful Life (in years)	10 years		10 years		10 years
Developed Technology - 150 V
Finite-Lived Intangible Assets [Line Items]
Gross	$ 560		$ 560		$ 560
Accumulated Amortization	(517)		(517)		(517)
Foreign Exchange Rate Changes	(43)		(43)		(43)
Net	$ 0		$ 0		$ 0
Estimated Useful Life (in years)	6 years		6 years		6 years
Developed Technology - 600 V
Finite-Lived Intangible Assets [Line Items]
Gross	$ 1,701		$ 1,701		$ 1,701
Accumulated Amortization	(1,570)		(1,570)		(1,570)
Foreign Exchange Rate Changes	(131)		(131)		(131)
Net	$ 0		$ 0		$ 0
Estimated Useful Life (in years)	6 years		6 years		6 years

XML

Balance Sheet Components - Schedule of Estimated Future Amortization Expenses Related to Intangible Assets (Details) - USD ($) $ in Thousands	Sep. 30, 2023	Mar. 31, 2023
Organization, Consolidation and Presentation of Financial Statements [Abstract]
2024	$ 148
2025	25
Net	$ 173	$ 321

XML

Balance Sheet Components - Goodwill Rollforward (Details) - USD ($) $ in Thousands	6 Months Ended	12 Months Ended
	Sep. 30, 2023	Mar. 31, 2023
Goodwill [Roll Forward]
Balance as of beginning of period	$ 1,079	$ 1,180
Foreign currency translation adjustments	(116)	(101)
Balance as of end of period	963	$ 1,079
Goodwill impairment charges	$ 0

XML

Balance Sheet Components - Schedule of Accounts Payable and Accrued Expenses (Details) - USD ($) $ in Thousands	Sep. 30, 2023	Mar. 31, 2023
Organization, Consolidation and Presentation of Financial Statements [Abstract]
Accounts payable	$ 4,044	$ 2,781
Manufacturing production costs	811	506
Legal fees	305	596
Audit fees	12	318
Consulting fees	176	256
Insurance	64	0
Deposit liability	0	2,950
Other	786	488
Accrued expenses	2,154	5,114
Total Accounts payable and accrued expenses	$ 6,198	$ 7,895

XML

Investment in Joint Venture - Narrative (Details) - USD ($)	Aug. 01, 2021	Sep. 30, 2023
Variable Interest Entity [Line Items]
Term of maximum funding obligations or investment (in years)	3 years
Variable interest entity, amount provided		$ 6,100,000
JCP Capital Management
Variable Interest Entity [Line Items]
Term of maximum funding obligations or investment (in years)	3 years
Variable Interest Entity, Primary Beneficiary | JCP Capital Management
Variable Interest Entity [Line Items]
Maximum funding obligation or investments of primary beneficiary	$ 35,000,000
Variable Interest Entity, Primary Beneficiary | April 1, 2022 through March 31, 2023 | JCP Capital Management
Variable Interest Entity [Line Items]
Percentage of funding obligations and losses (as a percent)	75.00%
Variable Interest Entity, Primary Beneficiary | April 1, 2023 through March 31, 2024 | JCP Capital Management
Variable Interest Entity [Line Items]
Percentage of funding obligations and losses (as a percent)	67.50%
Variable Interest Entity, Not Primary Beneficiary
Variable Interest Entity [Line Items]
Maximum funding obligation or investments of reporting entity	$ 12,000,000	$ 12,000,000
Variable Interest Entity, Not Primary Beneficiary | April 1, 2022 through March 31, 2023
Variable Interest Entity [Line Items]
Percentage of funding obligations and losses (as a percent)	25.00%
Variable Interest Entity, Not Primary Beneficiary | April 1, 2023 through March 31, 2024
Variable Interest Entity [Line Items]
Percentage of funding obligations and losses (as a percent)	32.50%

XML

Investment in Joint Venture - Income statement information (Details) - Variable Interest Entity, Not Primary Beneficiary - GaNovation - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Sep. 30, 2023	Sep. 30, 2022	Sep. 30, 2023	Sep. 30, 2022
Variable Interest Entity [Roll Forward]
Beginning Balance	$ 662	$ 339	$ 715	$ 143
Investment	0	759	807	1,537
Loss	(721)	(684)	(1,581)	(1,266)
Ending Balance	$ (59)	$ 414	$ (59)	$ 414

XML

Investment in Joint Venture - Summarized financial information (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Sep. 30, 2023	Sep. 30, 2022	Sep. 30, 2023	Sep. 30, 2022
Variable Interest Entity [Line Items]
Gross loss	$ 1,174	$ 438	$ 3,262	$ 1,544
Variable Interest Entity, Not Primary Beneficiary | GaNovation
Variable Interest Entity [Line Items]
Sales	2,737,000	3,211	5,721,000	6,032
Gross loss	(1,850,000)	(2,211)	(4,202,000)	(4,248)
Net loss	$ (2,218,000)	$ (2,703)	$ (4,865,000)	$ (5,154)

XML

Debts - Narrative (Details) - USD ($)	3 Months Ended		6 Months Ended
	Sep. 30, 2023	Sep. 30, 2022	Sep. 30, 2023	Sep. 30, 2022	May 18, 2021	Apr. 04, 2018
Debt Instrument [Line Items]
Amount of debt converted					$ 2,000,000
Outstanding balance	$ 0		$ 0
Interest expense	$ 0	$ 200,000	$ 8,000	$ 400,000
Revolving Credit Facility | Tranche C Loan
Debt Instrument [Line Items]
Revolving loan						$ 10,000,000
Interest rate per annum (as a percent)						6.00%

XML

Stockholders' Equity - Narrative (Details) $ / shares in Units, $ in Thousands		1 Months Ended	3 Months Ended		6 Months Ended
	Apr. 03, 2023 USD ($) purchaser $ / shares shares	Aug. 31, 2023 USD ($) shares	Sep. 30, 2023 USD ($) vote shares	Sep. 30, 2022 USD ($)	Sep. 30, 2023 USD ($) vote shares	Sep. 30, 2022 USD ($)	Jul. 05, 2023 subscription_right $ / shares shares	Mar. 31, 2023 shares
Class of Stock [Line Items]
Common stock, shares authorized (in shares)			750,000,000		750,000,000			750,000,000
Common stock, shares outstanding (in shares)			61,981,134		61,981,134			57,047,013
Common stock, shares issued (in shares)			61,981,134		61,981,134			57,047,013
Preferred stock, shares authorized (in shares)			5,000,000		5,000,000			5,000,000
Preferred stock, shares issued (in shares)			0		0			0
Preferred stock, shares outstanding (in shares)			0		0			0
Number of votes, common stock | vote			1		1
Beneficial ownership percentage	9.99%
Increase in beneficial ownership, effectivity, prior notice period	61 days
Deemed dividend related to warrant modification and issuance of inducement warrants | $			$ 0	$ 0	$ 5,612	$ 0
Placement agent fees and closing expenses	30 days
Proceeds from exercise of stock warrants | $					7,263	0
Number of non-transferable subscription right | subscription_right							1
Maximum
Class of Stock [Line Items]
Beneficial ownership percentage	19.99%
Private Placement
Class of Stock [Line Items]
Number of common stock issuable from warrants (in shares)	250,001
Number of purchasers | purchaser	2
Aggregate gross proceeds from closing of offering | $	$ 2,000
Number of shares sold in private placement offering (in shares)	500,000
Price per share (in usd per share) | $ / shares	$ 4.00
Rights Offering
Class of Stock [Line Items]
Aggregate gross proceeds from closing of offering | $		$ 7,900
Number of shares sold in private placement offering (in shares)		2,404,758
Price per share (in usd per share) | $ / shares							$ 3.30
Legal costs | $		$ 300
Sale of stock, subscription (in shares)							0.07655623
Existing Warrant
Class of Stock [Line Items]
Number of common stock issuable from warrants (in shares)	1,815,848
Exercise price (in usd per share) | $ / shares	$ 4.00
Existing Warrant | Private Placement
Class of Stock [Line Items]
Proceeds from exercise of stock warrants | $	$ 9,300
Legal costs | $	100
Existing Warrant | Private Placement By Existing Holders
Class of Stock [Line Items]
Proceeds from exercise of stock warrants | $	7,300
Existing Warrant | Private Placement From Purchasers
Class of Stock [Line Items]
Proceeds from exercise of stock warrants | $	$ 2,000
Inducement Warrants
Class of Stock [Line Items]
Number of common stock issuable from warrants (in shares)	2,269,810
Exercise price (in usd per share) | $ / shares	$ 5.00
Deemed dividend related to warrant modification and issuance of inducement warrants | $	$ 4,900		$ 0	$ 0	$ 4,859	$ 0
Modified Warrant
Class of Stock [Line Items]
Deemed dividend related to warrant modification and issuance of inducement warrants | $	$ 800
Private Placement
Class of Stock [Line Items]
Exercise price (in usd per share) | $ / shares	$ 5.00

XML

Stockholders' Equity - Schedule of Reserved Common Stock (Details)	Sep. 30, 2023 shares
Class of Stock [Line Items]
Common stock reserved for issuance (in shares)	15,303,691
Warrant
Class of Stock [Line Items]
Common stock reserved for issuance (in shares)	4,027,929
Employee Stock Option
Class of Stock [Line Items]
Common stock reserved for issuance (in shares)	11,275,762

XML

Stockholders' Equity - Schedule of Warrants (Details) - $ / shares	6 Months Ended
	Sep. 30, 2023	Mar. 31, 2023
Class of Stock [Line Items]
Number of Warrant Shares	4,027,929	3,323,966
October 4, 2024
Class of Stock [Line Items]
Number of Warrant Shares	650,000
Exercise price (in usd per share)	$ 6.00
November 5, 2024
Class of Stock [Line Items]
Number of Warrant Shares	360,938
Exercise price (in usd per share)	$ 6.00
December 7, 2024
Class of Stock [Line Items]
Number of Warrant Shares	67,568
Exercise price (in usd per share)	$ 9.25
December 10, 2024
Class of Stock [Line Items]
Number of Warrant Shares	281,081
Exercise price (in usd per share)	$ 9.25
December 10, 2025
Class of Stock [Line Items]
Number of Warrant Shares	10,116
Exercise price (in usd per share)	$ 8.48
December 23, 2025
Class of Stock [Line Items]
Number of Warrant Shares	45,000
Exercise price (in usd per share)	$ 3.30
April 3, 2026
Class of Stock [Line Items]
Number of Warrant Shares	84,000
Exercise price (in usd per share)	$ 4.00
Expiring April 3, 2026
Class of Stock [Line Items]
Number of Warrant Shares	2,519,811
Exercise price (in usd per share)	$ 5.00
5 years after an initial public offering of the Company
Class of Stock [Line Items]
Number of Warrant Shares	6,046
Exercise price (in usd per share)	$ 34.74
Expiration period (in years)	5 years
5 years after an initial public offering of the Company
Class of Stock [Line Items]
Number of Warrant Shares	3,369
Exercise price (in usd per share)	$ 54.41
Expiration period (in years)	5 years

XML

Stockholders' Equity - Stock Warrant Activity (Details)	6 Months Ended
	Sep. 30, 2023 shares
Class Of Warrant Or Right, Roll Forward [Roll Forward]
Outstanding and exercisable at beginning of period	3,323,966
Stock warrants issued	2,519,811
Stock warrants exercised	(1,815,848)
Outstanding and exercisable at end of period	4,027,929

XML

Stock-Based Compensation - Narrative (Details) $ in Millions	6 Months Ended
	Sep. 30, 2023 USD ($)
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Incremental cost	$ 0.5
Correction of Error to Properly Reflect the Grant Date Fair Value of Awards and Straight-lining for Graded-Vested Awards Under ASC 718
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Stock based compensation expense	0.4
Adjustment to additional paid-in-capital	$ 0.4

XML

Fair Value Measurements - Narrative (Details) - USD ($) $ in Thousands	3 Months Ended	6 Months Ended
	Sep. 30, 2023	Sep. 30, 2023
Fair Value Disclosures [Abstract]
Derivative net losses	$ 39	$ 200

XML

Fair Value Measurements - Schedule of Derivative Instruments and Hedging Activities (Details) $ in Thousands	Sep. 30, 2023 USD ($)
Fair Value Disclosures [Abstract]
Derivative Not Designated as Hedging Instruments	$ 106
Gross Amounts of Recognized Assets and Liabilities	106
Gross Amounts Offset in the Balance Sheet	0
Net Amounts of Assets and Liabilities Presented in the Balance Sheet	$ 106
Derivative Liability, Statement of Financial Position [Extensible Enumeration]	Accounts payable and accrued expenses, including related parties (Note 11)

XML

Related Party Transactions - Schedule of Related Party Transactions (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Sep. 30, 2023	Sep. 30, 2022	Sep. 30, 2023	Sep. 30, 2022
Related Party Transaction
Revenue, net	$ 5,010	$ 3,670	$ 10,893	$ 8,826
Cost of goods sold	3,836	3,232	7,631	7,282
Research and development	3,022	1,830	5,891	3,570
General and administrative	2,942	3,044	7,458	6,361
Interest expense	0	184	8	366
Related Party
Related Party Transaction
Revenue, net	1,467	1,428	3,042	3,164
Related Party | GaNovation
Related Party Transaction
Research and development	53	90	85	188
Related Party | GaNovation | Product sale
Related Party Transaction
Revenue, net	313	1,094	579	1,472
Related Party | GaNovation | Service fees
Related Party Transaction
Revenue, net	64	0	131	0
Related Party | GaNovation | Inventory purchase
Related Party Transaction
Cost of goods sold	100	69	113	249
Related Party | GaNovation | Fixed asset purchase
Related Party Transaction
Cost of goods sold	60	0	68	0
Related Party | GaNovation | Cost of goods sold
Related Party Transaction
Cost of goods sold	1,194	867	2,452	1,708
Related Party | GaNovation | Consumption tax
Related Party Transaction
General and administrative	82	77	142	219
Related Party | GaNovation | Employee and related benefits
Related Party Transaction
General and administrative	30	43	62	90
Related Party | Yaskawa
Related Party Transaction
Revenue, net	223	223	443	770
Related Party | Nexperia
Related Party Transaction
Interest expense	0	184	8	366
Related Party | Nexperia | Product sale
Related Party Transaction
Revenue, net	931	77	2,019	856
Related Party | Nexperia | License and service fee income
Related Party Transaction
Revenue, net	0	35	0	66
Related Party | Nexperia | Reimbursements in license maintenance fee
Related Party Transaction
Revenue, net	$ 25	$ 38	$ 50	$ 75

XML

Related Party Transactions- Schedule of Total Due to and From Related Parties (Details) - USD ($) $ in Thousands	Sep. 30, 2023	Mar. 31, 2023
Related Party Transaction
Accounts payable and accrued expenses	$ 6,198	$ 7,895
Related Party
Related Party Transaction
Accounts receivable, net	1,260	2,865
Accounts payable and accrued expenses	1,674	1,061
Joint venture
Related Party Transaction
Accounts receivable, net	171	1,713
Accounts payable and accrued expenses	1,575	968
Stockholder and noteholder
Related Party Transaction
Accounts receivable, net	1,089	1,152
Accounts payable and accrued expenses	$ 99	$ 93