Company: AIP
Filing Date: 2025-11-04
Form Type: 10-Q
Source: 0001628280-25-048977
Chunk: 19

Company: Arteris, Inc.
Filing Date: 2025-11-04
Form: 10-Q
Item: Part I, Item 1
Chunk 19
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teris IP (Hong Kong) Ltd. (AHK), a wholly-owned subsidiary of the Company, entered into a Share Purchase and Shareholders Agreement with certain investors and Ningbo Transchip Information Consulting Partnership (Limited Partnership) (Management Co), pursuant to which, the Company, certain investors and Management Co subscribed to the registered capital of Transchip Technology (Nanjing) Co., Ltd. (Transchip). The Company’s ownership interest in Transchip’s registered capital was 35.0% on a fully diluted basis as of September 30, 2025. The Company’s loss from its proportionate share of its equity method investment in Transchip was $0.5 million and $0.6 million for the three months ended September 30, 2025 and 2024, respectively, and $2.1 million for both the nine months ended September 30, 2025 and 2024. In September 2025, Transchip entered into a convertible bond investment agreement along with certain investors,  under which Transchip received approximately $5.6 million as a loan in October 2025. Pursuant to the convertible bond investment agreement, the loan will be converted into Transchip’s equity upon the fulfillment of certain conditions, which will result in a dilution of the Company’s ownership in Transchip. The Company did not provide funding under this agreement.The Company reviews its investment in Transchip for impairment if and when circumstances indicate that a decline in fair value below its carrying amount may have occurred. Since Transchip’s formation, it has incurred losses financed primarily through investor capital. Transchip's ability to continue its operations is dependent upon raising additional capital, which it is currently expected to be able to raise. After completing an impairment assessment based on the prevailing facts and circumstances, the Company determined that the impairment condition was not considered other than temporary. As such, no impairment charge was recognized during the three months ended September 30, 2025.

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13. INCOME TAXES

The Company’s effective tax rate was (6.0)% and (5.2)% for the nine months ended September 30, 2025 and 2024, respectively. The Company’s income tax provision was $1.5 million and $1.3 million for the nine months ended September 30, 2025 and 2024, respectively. The change in forecasted foreign withholding tax, changes in the geographic mix of worldwide earnings which are taxed at different rates, and the impact of losses in