Financial Analysis

8. COMMITMENTS AND CONTINGENCIES: Legal proceedings In the normal course of business, the Company may become involved in legal disputes regarding various litigation matters. In the opinion of management, any potential liabilities resulting from such claims would not have a material effect on the consolidated financial statements.

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7. NOTES PAYABLE: Notes payable consist of the following: December 31, 2025 (in thousands) Gross Discount Net Notes Payable, Current $ 1,100 $ (172) $ 928 Total Notes Payable $ 1,100 $ (172) $ 928 Senior Secured Loan On October 31, 2025, the Company entered into a securities purchase agreement (the Purchase Agreement) with certain purchasers (the Purchasers), pursuant to which the Company issued and sold to the Purchasers in a private placement: (i) Senior Secured Notes (the Notes) in the aggregate principal amount of $1,100,000 and (ii) warrants (the Note Warrants) exercisable for up to an aggregate of 400,000 shares of the Companys common stock, at an exercise price of $2.75 per share for an aggregate purchase price of $1,000,000. The Notes mature on April 30, 2026 and do not bear interest prior to an event of default. If an event of default occurs, interest will accrue at an interest rate equal to the lesser of 10% of the accrued principal amount due and owing under the Notes per annum or the maximum rate permitted under applicable law. The Notes are not convertible into shares of the Companys common stock. In connection with the issuance of the Notes, on October 31, 2025, the Company and its subsidiaries entered into a security agreement with The Hewlett Fund LP, as collateral agent (the Security Agreement). Pursuant to the Security Agreement, each of the Company and its subsidiaries granted the collateral agent a security interest in substantially all of their assets for …

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10. SHARE-BASED COMPENSATION: On February 23, 2021, the Company approved the 2021 Equity Incentive Plan (2021 Plan), in which a maximum aggregate number of shares of common stock that may be issued under the 2021 Plan is 65,000 shares. Subject to the adjustment provisions of the 2021 Plan, the number of shares of the Companys common stock available for issuance under the 2021 Plan will also include an annual increase on the first day of each fiscal year beginning with 2022 fiscal year and ending on the Companys 2031 fiscal year in an amount equal to the least of: 1) 65,000 shares of the Companys common stock; 2) four percent (4%) of the outstanding shares of the Companys common stock on the last day of the immediately preceding fiscal year; or 3) such number of shares of the Companys common stock as the administrator may determine. At the 2023 Annual Meeting, the Companys stockholders approved an amendment (the 2023 Plan Amendment) to the Companys 2021 Plan, increasing the number of the shares of common stock reserved for issuance under the 2021 Plan from 125,045 shares to 743,106 shares. The Companys Board of Directors (the Board) had previously approved the 2023 Plan Amendment, subject to stockholder approval. At the 2025 Annual Meeting, the Companys stockholders approved an amendment (the 2025 Plan Amendment) to the Companys 2021 Plan, (i) increasing the number of the shares of common stock, reserved for issuance thereunder from 843,692 shares to 1,643,692 shares, and (ii) …

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"11. INCOME TAXES: United States and foreign profit/(loss) from operations before income taxes was as follows: December 31, 2025 2024 United States (2,291) (1,294) Foreign (8,242) (9,035) Loss before income taxes $ (10,533) $ (10,329) The Company adopted ASU 2023-09 ""Income Taxes (Topic 740): Improvements To Income Tax Disclosures"" on a prospective basis beginning with the year ended December 31, 2025. The following table presents required disclosure pursuant to ASU 2023-09 and reconciles the U.S. federal statutory tax amount and rate to our actual global effective amount and rate for the year ended December 31, 2025: For the year ended December 31, 2025 (in thousands) Amount Percentage U.S. federal statutory tax rate $ (2,212) 21.0% State and local income taxes, net of federal income tax effect (1) 1 0.0% Foreign tax effects United Kingdom Statutory tax rate difference between United Kingdom and the United States (326) 3.1% Changes in valuation allowances 1,362 (12.9)% Nondeductible research expense 723 (6.9)% Other (54) 0.5% Effect of changes in tax laws or rates enacted in the current period 0.0% Effect of cross-border tax laws 0.0% Tax credits 0.0% Changes in valuation allowances 364 (3.5)% Nontaxable or nondeductible items Stock compensation 109 (1.0)% Other 1 0.0% Changes in unrecognized tax benefits 0.0% Other adjustments 7 (0.1)% Provision for income taxes and effective tax rate $ (24) 0.2% (1) During the year ended December 31, 2025, state taxes in California made …

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6. LEASES: The Company has operating leases consisting of office space, lab space, and equipment with remaining lease terms of less than 3 years, subject to certain renewal options as applicable. The Company evaluates the nature of each lease at the inception of an arrangement to determine whether it is an operating or financing lease and recognizes the right of use asset and lease liability based on the present value of future minimum lease payments over the expected lease term. The Companys leases do not generally contain an implicit interest rate and therefore the Company uses the incremental borrowing rate it would expect to pay to borrow on a similar collateralized basis over a similar term in order to determine the present value of its lease payments. On May 22, 2025, the Company renewed its lease for research & development, engineering, testing and corporate offices in Manchester, England. The renewed lease term expires in 2028 with an option for the Company to end the lease in 2027. On July 14, 2025, the Company entered into a sublease agreement for its office in Taoyuan City, Taiwan. The lease term expires in 2028 and can be terminated with 60 days notice. The Company is not the lessor in any lease agreement, and no related party transactions for lease arrangements have occurred. The table below presents certain information related to the lease costs for the Companys operating leases for the periods ended: Year Ended December 31, (in thousands) 2025 2024 Operatin …

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Recently Issued Accounting Pronouncement On November 2024, the FASB issued Accounting Standards Update (ASU) No. 2024-03, Income Statement (Topic 220): Reporting Comprehensive Income - Expense Disaggregation Disclosures, Disaggregation of Income Statement Expenses, which requires public companies to disclose, in interim and annual reporting periods, additional information about certain expenses in the financial statements. The amendments in this pronouncement will be effective for annual periods beginning after December 15, 2026, and interim reporting periods beginning after December 15, 2027. Early adoption is permitted and is effective on either a prospective basis or retrospective basis. The Company is currently assessing the potential impacts of adoption on its consolidated financial statements and related disclosures. In July 2025, the FASB issued ASU 2025-05, Financial Instruments - Credit Losses, which provides a practical expedient for estimating expected credit losses for current accounts receivable and current contract assets that arise from transactions accounted for under Topic 606, Revenue from Contracts with Customers. ASU 2025-05 is effective for annual periods beginning after December 15, 2025 and interim periods within those annual reporting periods and should be applied prospectively, with early adoption permitted. The Company is assessing the impact of adopting this standard. In December 2025, the FASB issued ASU 2025-12, Codification Improvements, which cl …

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13. RELATED PARTY TRANSACTIONS: The were no related party transaction during the year ended December 31, 2025.

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14. SEGMENT REPORTING: We manage our business activities on a consolidated basis and operate as a single operating segment. Our income is mostly generated from R&D grants and R&D tax credits. The accounting policies of the semiconductor materials are the same as those described in Note 2 Summary of Significant Accounting Policies. Our CODM is our Chief Executive Officer and President, Ian Jenks. The CODM uses net income, as reported on our Consolidated Statements of Comprehensive Income, in evaluating performance of the segment and determining how to allocate resources of the Company as a whole and making decisions on perspective joint development and collaboration agreements. The CODM does not review assets in evaluating the results of the segment, and therefore, such information is not presented. The following table provides the net losses of the segment: Year Ended December 31, 2025 2024 Revenue $ 697 $ 82 Cost of revenue 272 32 Gross profit 425 50 Other operating income 951 1,017 Operating expenses Research and development 7,017 5,111 General and administrative 7,371 6,342 (Gain)/loss on foreign currency transactions (177) 78 Total operating expenses 14,211 11,531 Loss from operations (12,835) (10,464) Total non-operating income/(expense) 2,302 135 Loss before income taxes (10,533) (10,329) Income tax refund 24 (1) Net loss $ (10,509) $ (10,330) …

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2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND GOING CONCERN: Basis for Presentation These consolidated financial statements have been prepared in accordance with the rules and regulations of the Securities and Exchange Commission and accounting principles generally accepted in the United States of America (US GAAP) as defined by the Financial Accounting Standards Board (FASB) within the FASB Accounting Standards Codification (ASC) and are presented in thousands, except number of shares and per share data. Going Concern As of December 31, 2025, we have incurred recurring losses including net losses of $10.5 million and $10.3 million for the years ended December 31, 2025, and 2024, respectively. Our working capital deficit is $4.4 million as of December 31, 2025. We anticipate operating losses to continue for the foreseeable future due to, among other things, costs related to research funding, further development of our technology and products and expenses related to the commercialization of our products. The Company expects that its cash and cash equivalents of $0.4 million as of December 31, 2025, will not be sufficient to fund its operating expenses and capital expenditure requirements for the 12 months from the issuance of these financial statements and that the Company will require additional capital funding to continue its operations and research development activity thereafter. It is possible this period could be shortened if there are any significant increases in sp …

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9. STOCKHOLDERS EQUITY: Preferred Stock The board of directors has the authority, without further action by the stockholders, to issue up to 10,000,000 shares of preferred stock in one or more series and to fix the rights, preferences, privileges and restrictions thereof. These rights, preferences, and privileges could include dividend rights, conversion rights, voting rights, redemption rights, liquidation preferences, sinking fund terms, and the number of shares constituting any series or the designation of such series, any or all of which may be greater than the rights of common stock. Pursuant to the terms of the Series A-1 Certificate of Designation, on May 7, 2025, the remaining 856 outstanding shares of Series A-1 Preferred Stock automatically converted into an aggregate of 690,788 shares of common stock and pre-funded Class C Warrants to purchase 1,282,412 shares of common stock. The Company filed a Certificate of Elimination with respect to the Series A-1 Certificate of Designation, pursuant to which, effective May 7, 2025, all matters set forth in the Series A-1 Certificate of Designation were eliminated from the Companys Amended and Restated Certificate of Incorporation. As of December 31, 2025, there were no shares of Series A-1 Preferred Stock outstanding. Common Stock Voting Rights Each holder of common stock is entitled to one vote for each share on all matters submitted to a vote of the stockholders, including the election of directors. The Companys amended an …

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"15. SUBSEQUENT EVENTS: 2021 Plan Under the evergreen adjustment provisions of the 2021 Plan, on January 1, 2026, the number of shares of the Companys common stock available for issuance under the 2021 Plan was increased by 273,588. After giving effect to the increase, the total number of shares of common stock that may be issued under the 2021 Plan is 1,916,714. Warrant Exercises Since December 31, 2025 1,930,524 shares of the Companys common stock were issued upon the exercise of 1,930,977 Pre-Funded Warrants and Class C Warrants. January 2026 Registered Direct Offering On January 30, 2026, the Company entered into a securities purchase agreement (the January 2026 RDO Purchase Agreement) with an institutional investor, pursuant to which the Company agreed to sell to such investor 677,129 shares (the Shares) of the Companys common stock, par value $0.0001 per share (the Common Stock) at a purchase price of $0.50 per shareand 683,871 pre-funded warrants (the January 2026 Pre-Funded Warrant) to purchase 683,871 shares of Common Stock at a purchase price of $0.4999 per January 2026 Pre-Funded Warrant and an exercise price of $0.0001 per share (the January 2026 Offering). The Shares were offered by the Company pursuant to its shelf registration statement on Form S-3 (File No. 333-281608), which was declared effective by the Securities and Exchange Commission on August 22, 2024 and a related base prospectus and prospectus supplement thereunder. The gross proceeds from the January …

SubsequentEventsTextBlock · excerpt; the full note is in the filing