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Item 1A. Risk Factors

2020-11-06 compared with 2020-08-07 · 39 added, 22 removed, 21 unchanged (74% of the section changed)

Except as set forth below, there have been no material changes to the risk factors set forth in our 2019 Annual Report on Form 10-K for the year ended December 29, 2019, filed with the SEC on March 13, 2020, which includes a detailed discussion of our risk factors at Part I, Item 1A, Risk Factors, which discussion is hereby incorporated by reference into this Part II, Item 1A.

Except as set forth below, there have been no material changes to the risk factors set forth in our 2019 Annual Report on Form 10-K for the year ended December 29, 2019, filed with the SEC on March 13, 2020, which includes a detailed discussion of our risk factors at Part I, Item 1A, Risk Factors, which discussion is hereby incorporated by reference into this Part II, Item 1A.

The COVID-19 pandemic could have a material adverse effect on our business, cash flows and results of operations.

On January 30, 2020, the World Health Organization (“WHO”) declared a global emergency due to the COVID-19 pandemic, and on February 28, 2020, the WHO raised its assessment of the threat from high to very high at a global level.

The outbreak has resulted in significant governmental measures being implemented to control the spread of COVID-19, including, among others, restrictions on travel, business operations and the movement of people in many regions of the world in which the Company operates, and the imposition of shelter-in-place or similarly restrictive work-from-home orders impacting many of the Company’s offices and employees, including those located in the United States.

As a result, the Company has temporarily closed or substantially limited the presence of personnel in its offices in several impacted locations, implemented travel restrictions and withdrawn from various industry events.

The impact of the Company’s work-from-home policy that was implemented to protect its global workforce has contributed to delays in certain operational processes, including its routine quarterly financial statement close process for the first quarter of fiscal 2020.

The Company has also experienced some disruption and delays in its supply chain, customer deployment plans, and logistics challenges, including certain limitations on its ability to access customer fulfillment and service sites.

The Company expects these existing conditions to have an adverse impact on its revenue and results of operations for the third quarter of fiscal 2020 and, possibly, in future quarters during the current and next fiscal year.

The COVID-19 pandemic and its potential effects on the Company’s business in its fiscal 2020 remain dynamic, and the broader implications for its business and results of operations remain uncertain.

These implications could include further disruptions or restrictions on the Company’s ability to source, manufacture or distribute its products, including temporary disruptions to the facilities of its contract manufacturers in China, Taiwan, Philippines and Singapore, or the facilities of its suppliers and their contract manufacturers globally.

The Company expects these existing conditions to have an adverse impact on its revenue and results of operations for the fourth quarter of fiscal 2020 and, possibly, in future quarters during the current and next fiscal year.

Additionally, multiple countries have imposed and may further impose restrictions on business operations and movement of people and products to limit the spread of COVID-19.

Delays in production or delivery of components or raw materials that are part of the Company’s global supply chain due to restrictions imposed to limit the spread of COVID-19 could delay or inhibit its ability to obtain the supply of components and finished goods.

If COVID-19 becomes more prevalent in the locations where the Company, its customers or suppliers conduct business, or the Company experiences more pronounced disruptions in its operations, the Company may experience constrained supply or curtailed demand that may materially adversely impact its business and results of operations.

In addition, any other widespread health crisis that could adversely affect global and regional economies, financial markets and overall demand environment for the Company's products could have a material adverse effect on the Company’s business, cash flows or results of operations.

The risks in our Annual Report on Form 10-K are not the only risks facing our Company.

Additional risks not currently known to us or that we currently deem to be immaterial may also adversely affect our business and results from operations.

Rising concern of international tariffs, including tariffs applied to goods traded between the United States and China, as well as potential export restrictions, could materially and adversely affect our business and results of operations.

Regulatory activity, such as enforcement of U.S.

export control and sanctions laws, and the imposition of tariffs and export regulations, have in the past and may materially limit our ability to make sales to customers in China, which may harm our results of operations and financial condition.

Since the beginning of 2018, there have been several rounds of U.S.

tariffs on Chinese goods taking effect in 2018 and 2019, some of which prompted retaliatory Chinese tariffs on U.S.

Approximately $1.8 million, or 15%, of our total revenue for the year ended December 30, 2018, and approximately $1.1 million, or 11%, of our total revenue for the year ended December 29, 2019 and $56,000 or 1% for the nine months ended September 27, 2020, consisted of sales of our EOS S3 and FPGA products to both OEMs and ODMs in China.

The institution of trade tariffs both globally and between the U.S.

and China specifically carries the risk of negatively affecting China’s overall economic condition, which could have a negative impact on us as we derived and expect to continue to derive a significant amount of revenue from China.

Further escalations of trade conflicts between the United States and China, or other countries where we have operations, may have a material adverse effect on our gross margin.

In addition to recent trade tariffs, if U.S.

export controls expand to place new restrictions on the exportation of our products or a subset of our products, such controls could have a material adverse effect on our operating results.

Moreover, concerns that U.S.

companies may not be reliable suppliers may in the future cause some of our customers to replace our products in favor of products from other suppliers.

Imposition of tariffs or sustained export restrictions could cause a decrease in the sales of our products to customers located in China or other customers selling to Chinese end users, which would directly impact our business and operating results.

Further, changes in United States trade policy could trigger retaliatory actions by affected countries, which could impose restrictions on our ability to do business in or with affected countries or prohibit, reduce, or discourage purchases of our products by foreign customers, leading to increased costs of products that contain our components, increased costs of manufacturing our products, and higher prices of our products in foreign markets.

Changes in, and responses to, United States trade policy could reduce the competitiveness of our products and cause our sales and revenues to drop, which could materially and adversely impact our business and results of operations.

The following Exhibits are filed or incorporated by reference into this report:

Underwriting agreement .

Promissory note between QuickLogic and Heritage bank dated May 6, 2020 .

2009 ESPP Plan as amended

2019 Stock Plan as amended

  31.1

Certification of Brian C.

Faith, Chief Executive Officer, pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

Certification of Suping (Sue) Cheung, Chief Financial Officer, pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

Faith, Chief Executive Officer, pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

  31.2

Certification of Suping (Sue) Cheung, Chief Financial Officer, pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

  32.1

Certification of Brian C.

Faith, Chief Executive Officer, pursuant to 18 U.S.C.

Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

Certification of Suping (Sue) Cheung, Chief Financial Officer, pursuant to 18 U.S.C.

Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

Faith, Chief Executive Officer, pursuant to 18 U.S.C.

Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

  32.2

Certification of Suping (Sue) Cheung, Chief Financial Officer, pursuant to 18 U.S.C.

Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

Inline XBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document.

4 unchanged sentences

Inline XBRL Taxonomy Extension Presentation Linkbase Document

The cover page from the Company’s quarterly report on Form 10-Q for the quarter ended June 28, 2020, has been formatted in Inline XBRL.

The cover page from the Company’s quarterly report on Form 10-Q for the quarter ended September 27, 2020, has been formatted in Inline XBRL.

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.

1 unchanged sentence

/s/ Suping (Sue) Cheung

August 7, 2020

November 6, 2020

Suping (Sue) Cheung

Chief Financial Officer

(as Principal Accounting and Financial Officer and on behalf of the Registrant)

(as Principal Accounting and Financial Officer and on behalf of the  

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 1A. Risk Factors