Company: AIP
Filing Date: 2025-05-13
Form Type: 10-Q
Source: 0001667011-25-000022
Chunk: 17

Company: Arteris, Inc.
Filing Date: 2025-05-13
Form: 10-Q
Item: Part I, Item 1
Chunk 17
---
 the geographic mix of worldwide earnings which are taxed at different rates, and the impact of losses in jurisdictions with full valuation allowances, has resulted in a decrease in the income tax provision for the period ended March 31, 2025 compared to the period ended March 31, 2024.The Company’s management continuously evaluates the need for a valuation allowance and, as of March 31, 2025, concluded that a full valuation allowance on its federal, state, and certain foreign jurisdictions deferred tax assets was still appropriate.

As of March 31, 2025 and 2024, the Company’s gross liability for unrecognized tax benefits was $3.6 million and $3.5 million, respectively. The Company’s practice is to recognize interest and/or penalties related to income tax matters in income tax expense. As of March 31, 2025 and 2024, the Company had immaterial accrued interest or penalties related to its unrecognized tax benefits. If any unrecognized tax benefits are realized, it would not result in any income tax benefit as the Company currently has a full valuation allowance against the deferred tax assets in which there is currently an uncertain tax benefit. 

18

14. RELATED PARTY TRANSACTIONS

The Company defines related parties as directors, executive officers, nominees for director, stockholders that have significant influence over the Company, or are a greater than 10% beneficial owner of the Company’s capital and their affiliates or immediate family members. Transchip Technology (Nanjing) Co., Ltd. (Transchip), an equity method investee of the Company, is also deemed as a related party.On November 15, 2024, the Company entered into a design services licensing collaboration agreement with Transchip. This arrangement gives Transchip a non-exclusive license right to make design house offerings using certain of the Company's products. The Company retains the manufacturing and royalty related rights in relation to the Company’s products used in the design house offerings. The Company recognized accounts receivable of $0.7 million as of March 31, 2025 under this arrangement. Revenue related to this arrangement was not material for the three months ended March 31, 2025.In November 2020, the Company entered into a lease agreement with Isabelle Geday, a former member of the board of directors, who resigned from her position as director of the Company effective March 27, 2025. The lease payments were less than $0.1 million for both the three months ended March 31, 2025 and