What changed in this filing

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Item 1. Financial Statements

2021-08-18 compared with 2021-05-19 · 212 added, 114 removed, 441 unchanged (43% of the section changed)

7 unchanged sentences

$ 22,748  

Accounts receivable, net of allowances for doubtful accounts of $0

Accounts receivable, net of allowances for doubtful accounts of $ 32 and $ 0 , respectively

Other current assets

31 unchanged sentences

10,000 shares authorized;

no shares issued and outstanding  

Common stock, $ 0.001 par value;

200,000 authorized;

11,448 and 11,094 shares issued and outstanding as of April 4, 2021 and January 3, 2021, respectively

11,512 and 11,094 shares issued and outstanding as of July 4, 2021 and January 3, 2021, respectively

Additional paid-in capital

5 unchanged sentences

12,487  

TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY

6 unchanged sentences

Three Months Ended

Six Months Ended

July 4,  

June 28,  

July 4,  

June 28,  

$ 2,882  

$ 2,196  

$ 5,122  

$ 4,354  

Cost of revenue

5 unchanged sentences

Loss from operations

( 1,980 )  

( 2,895 )  

( 4,670 )  

Interest expense

( 32 )  

( 183 )  

( 64 )  

Gain on forgiveness of debt

Interest income and other income (expense), net

( 45 )  

( 52 )  

Loss before income taxes

Provision for income taxes

( 2,057 )  

( 3,006 )  

( 3,594 )  

Provision for (benefit from) income taxes

( 27 )  

$ ( 2,062 )  

$ ( 2,979 )  

$ ( 3,751 )  

Net loss per share:

Basic and diluted

$ ( 0.18 )  

$ ( 0.35 )  

$ ( 0.33 )  

Weighted average shares outstanding:

Basic and diluted

11,485  

11,374  

Net loss equals comprehensive loss for all periods presented.

3 unchanged sentences

(in thousands)

Three Months Ended

Six Months Ended

Cash flows from operating activities:

7 unchanged sentences

( 1,192 )  

Allowance for bad debt

Changes in operating assets and liabilities:

2 unchanged sentences

Trade payables

Accrued liabilities

Deferred revenue  

Accrued liabilities and deferred revenue

Other long-term liabilities

11 unchanged sentences

( 156 )  

Proceeds from paycheck protection program loan

Proceeds from line of credit

6 unchanged sentences

( 485 )  

Net cash (used in) financing activities

Net cash (used in) provided by financing activities

( 493 )  

Net decrease in cash, cash equivalents and restricted cash

Net (decrease) increase in cash, cash equivalents and restricted cash

( 3,752 )  

11 unchanged sentences

Balance at January 3, 2021

11,094  

$ 306,885  

$ ( 294,409 )  

$ 12,487  

Common stock issued under stock plans and employee stock purchase plan

( 484 )  

Stock-based compensation

( 1,689 )  

Balance at April 4, 2021

11,448  

306,769  

( 296,098 )  

10,682  

Common stock issued under stock plans and employee stock purchase plan

Stock-based compensation

( 2,062 )  

Balance at July 4, 2021

11,512  

$ 307,117  

$ ( 298,160 )  

$ 8,969  

Stockholders'

Balance at December 29, 2019

$ 297,073  

$ ( 283,258 )  

$ 13,823  

Common stock issued under stock plans and employee stock purchase plan

Common stock issued for SensiML acquisition

( 25 )  

Stock-based compensation

( 398 )  

( 3,165 )  

Balance at March 29, 2020

296,650  

( 286,423 )  

10,235  

Common stock issued under stock plans and employee stock purchase plan

( 31 )  

Common stock offering, net of issuance costs of $ 1.1 million

Stock-based compensation

( 2,979 )  

Balance at June 28, 2020

10,912  

$ 305,013  

$ ( 289,402 )  

$ 15,622  

See accompanying Notes to Unaudited Condensed Consolidated Financial Statements

13 unchanged sentences

10 -K for the year ended January 3, 2021 , which was filed with the Securities and Exchange Commission (“SEC”) on March 23, 2021.

Operating results for the three months ended April 4, 2021 are not necessarily indicative of the results that may be expected for the full year.

Operating results for the three and six months ended July 4, 2021 are not necessarily indicative of the results that may be expected for the full year.

QuickLogic's fiscal year ends on the Sunday closest to December 

31 and each fiscal quarter ends on the Sunday closest to the end of each calendar quarter.

QuickLogic's first fiscal quarters for 2021 and 2020 ended on April 4, 2021 and March 29, 2020 , respectively.

COVID- 19 - Impact on Business

QuickLogic's second fiscal quarters for 2021 and 2020 ended on July 4, 2021 and June 28, 2020 , respectively.

COVID- 19 - Impact on Business 

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 social and economic impact of the COVID- 19 outbreak has continued to increase exponentially since this declaration.

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 outbreak has resulted in significant governmental measures being implemented to control the spread of COVID- 19 and countries across the world continue to manage repeated waves of the pandemic, including variant strains of COVID- 19 amid uneven progress toward vaccination.

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 further shelter-in-place or similarly restrictive work-from-home orders would impact many of the Company’s offices and employees, including those located in the United States.

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

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.

As such, while COVID- 19  has had an impact on the Company's financial results on the 

three months ended April 4, 2021 , the COVID- 19 pandemic and its potential effects on the Company’s business in its fiscal 2021 remain dynamic, and the broader implications for its business and future results of operations remain uncertain.

three and six months ended July 4, 2021 , the COVID- 19 pandemic and its potential effects on the Company’s business in its fiscal 2021 remain dynamic, and the broader implications for its business and future results of operations remain uncertain and cannot be predicted.

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.

7 unchanged sentences

In January 2020, the Company implemented a restructuring plan to lower annual operating expenses. The restructuring plan was approved by the Company’s Board of Directors on January 24, 2020.

Pursuant to the restructuring plan, the Company recorded $ 479,000 restructuring costs during the first quarter of 2020, consisting primarily of employee severance related costs and facilities costs.

There were no restructuring charges incurred in the quarter ended April 4, 2021.

Pursuant to the restructuring plan, the Company recorded $ 34,000 and $ 513,000 restructuring costs for the three and six months ended June 28, 2020, respectively, consisting primarily of employee severance related costs and facilities costs.

There were no restructuring charges incurred for the three and six months ended 

July 4, 2021.

Liquidity 

The Company has financed its operations and capital investments through sales of common stock, finance and operating leases, a revolving line of credit and cash flows from operations.

As of April 4, 2021 , the Company's principal sources of liquidity consisted of cash, cash equivalents and restricted cash of $ 20.9  million, including $ 15.0  million drawn down from its revolving line of credit with Heritage Bank of Commerce (“Heritage Bank”) and $ 1.2  

million loan received under the Paycheck Protection Program (“PPP”) which was subsequently forgiven.

On September 28, 2018, the Company entered into a Loan and Security Agreement (the "Loan Agreement"), with Heritage Bank.

The Loan Agreement provided for, among other things, a revolving line of credit facility (the “Revolving Facility”) with aggregate commitments of $ 9.0 million.

On December 21, 2018, the Company entered into an Amended and Restated Loan and Security Agreement (the “Amended and Restated Loan Agreement”) with Heritage Bank to replace in its entirety the Loan Agreement.

The Amended and Restated Loan Agreement increased the Revolving Facility from $ 9.0 million to $ 15.0 million. The Amended and Restated Loan Agreement requires the Company to maintain at least $ 3.0 million in unrestricted cash at Heritage Bank.

On November 6, 2019, the Company entered into a First Amendment to the Amended and Restated Loan Agreement with Heritage Bank to extend the maturity date for one year through September 28, 2021 ( the "First Amendment").

Under this First Amendment, the Revolving Facility advances shall bear interest, on the outstanding daily balance thereof, at a rate per annum equal to the greater of (i) one half of one percentage point ( 0.50 %) above the Prime Rate, or (ii) five and one half of one percentage points ( 5.50 %).

On December 11, 2020, the Company entered into a Second Amendment (the “Second Amendment”) to the Amended and Restated Loan Agreement with Heritage Bank.

As of July 4, 2021 , the Company's principal sources of liquidity consisted of cash, cash equivalents and restricted cash of $ 19.0  million, including $ 15.0  million drawn down from its revolving line of credit with Heritage Bank of Commerce (“Heritage Bank”) and $ 1.2  million loan received under the Paycheck Protection Program (“PPP”) which was forgiven in January of 2021.

On December 11, 2020, the Company entered into a Second Amendment (the “Second Amendment”) to the Amended and Restated Loan Agreement with Heritage Bank originally entered into on December 21, 2018 ( the "Amended and Restated Loan Agreement").

The Second Amendment extended the loan maturity date for one year through September 28 2022, and amended the interest to a rate per annum equal to one half of one percentage point ( 0.50 %) above the prime rate.

The Company was in compliance with all loan covenants as of April 4, 2021 .

As of April 4, 2021 , the Company had $ 15.0  million of outstanding revolving line of credit with an interest rate of 3.75 %.

The Company was in compliance with all loan covenants as of July 4, 2021 .

As of July 4, 2021 , the Company had $ 15.0  million of outstanding revolving line of credit with an interest rate of 3.75 %.

On May 6, 2020, the Company entered into a loan agreement with Heritage Bank for a loan of $ 1.2 million pursuant to the PPP under the Coronavirus Aid, Relief, and Economic Security Act enacted on March 27, 2020, or CARES Act.

1 unchanged sentence

On June 22, 2020, the Company closed an underwritten public offering of 2.5 million shares of common stock, $ 0.001 par value per share at a price of $ 3.50 per share.

The Company received total gross proceeds from the offering of approximately $ 8.8  million, including and incurred stock issuance costs of approximately $ 1.1 million.

Under the terms of the Underwriting Agreement, the Company the underwriter a 30 -day option to purchase up to an additional 375,000 shares of common stock to cover overallotments.

On July 21, 2020, the underwriter's exercised the option to purchase 141,733 additional shares of common stock in connection with the offering, resulting in additional gross proceeds to the Company of approximately $ 0.5 million and incurred additional stock issuance costs of approximately $ 52,000 Total gross proceeds received from this offering was approximately $ 9.3 million and incurred total stock issuance costs of approximately $ 1.2 million.

The Company received gross proceeds from the offering of approximately $ 8.8 million and incurred stock issuance costs of approximately $ 1.1 million.

Under the terms of the underwriting agreement, the Company granted the underwriter a 30 -day option to purchase up to an additional 375,000 shares of common stock to cover overallotments.

On July 21, 2020 the underwriter's partially exercised the option to purchase 141,733 additional shares of common stock in connection with the offering, resulting in additional gross proceeds to the Company of approximately $ 496,000  and incurred additional stock issuance costs of approximately $ 52,000 .

Total gross proceeds received from this offering was approximately $ 9.3 million and incurred total stock issuance costs of approximately $ 1.2 million.

Net proceeds received from this offering after deducting stock issuance costs was approximately $ 8.1 million.

1 unchanged sentence

Based on past performance and current expectations, the Company believes that its existing cash and cash equivalents, together with available financial resources from the Revolving Facility with Heritage Bank, will be sufficient to fund its operations and capital expenditures and provide adequate working capital for the next twelve months. 

We continue to monitor our financial performance to ensure sufficient liquidity to fund operations and execute on our business plan. 

Various factors can affect the Company’s liquidity, including, among others:

34 unchanged sentences

See Note 10  to the Unaudited Condensed Consolidated Financial Statements for information regarding concentrations associated with accounts receivable.

Note 2 —

Significant Accounting Policies

During the three -month period ended April 4, 2021 , there were no changes in the Company's significant accounting policies from its disclosures in the Annual Report on Form 10 -K for the year ended January 3, 2021 , except for the new accounting standards adopted during the three months ended April 4, 2021 .

During the six months period ended July 4, 2021 , there were no changes in the Company's significant accounting policies from its disclosures in the Annual Report on Form 10 -K for the year ended January 3, 2021 , except for the new accounting standards adopted during the six months ended July 4, 2021 .

For a discussion of the significant accounting policies, please see the Annual Report on Form 10 -K for the fiscal year ended January 3, 2021 , filed with the SEC on March 

For a discussion of the new accounting standards adopted during the first three months of 2021 , see “New Accounting Pronouncements”

For a discussion of the new accounting standards adopted during the 

six months of 2021 , see “New Accounting Pronouncements”

Fair Value Measurements

The Company’s cash, cash equivalents and restricted cash include money market account balance of $ 20.9 million and $ 22.7  million as of April 4, 2021 and January 3, 2021 , respectively.

The Company’s cash, cash equivalents and restricted cash include money market account balance of $ 19.0 million and $ 22.7  million as of July 4, 2021 , and January 3, 2021 , respectively.

Fair value of the Company’s money market account balance with Heritage Bank equals to book value.

Restricted cash

Cash, cash equivalent and restricted cash includes an amount of $ 100,000 p ledged as cash security related to the use of credit cards as of April 4, 2021 and January 3, 2021 .

Cash, cash equivalent and restricted cash includes an amount of $ 100,000 p ledged as cash security related to the use of credit cards as of July 4, 2021  , and January 3, 2021 .

New Accounting Pronouncements

15 unchanged sentences

In computing diluted net loss per share, the weighted average stock price for the period is used in determining the number of shares assumed to be purchased from the exercise of stock options and warrants.

For the three months ended April 4, 2021 and March 29, 2020 ,  

304,000  and 699,000  shares of common stock, respectively, associated with equity awards and the estimated number of shares to be purchased under the current offering period of the 2009 Employee Stock Purchase Plan were outstanding.

For the three and six months ended July 4, 2021 and June 28, 2020 ,  

254,895 and 626,178 shares of common stock, respectively, associated with equity awards and the estimated number of shares to be purchased under the current offering period of the 2009 Employee Stock Purchase Plan were outstanding.

These shares were not included in the computation of diluted net loss per share, as they were considered anti-dilutive due to the net losses the Company experienced during these periods.

Warrants to purchase up to 386,000 shares were issued in connection with May 29, 2018 stock offering were not included in the diluted loss per share calculation of the three months ended April 4, 2021 and March 29, 2020 , as they were also considered anti-dilutive due to the net loss the Company experienced during these periods. 

Warrants to purchase up to 386,100 shares were issued in connection with May 29, 2018, stock offering were not included in the diluted loss per share calculation of the three and six months ended July 4, 2021 and June 28, 2020 , as they were also considered anti-dilutive due to the net loss the Company experienced during these periods. 

Balance Sheet Components

The following table provides details relating to certain balance sheet line items as of April 4, 2021 , and January 3, 2021 (in thousands):

The following table provides details relating to certain balance sheet line items as of July 4, 2021 , and January 3, 2021 (in thousands):

Raw materials

6 unchanged sentences

$ 1,066  

Property and equipment, net:

21 unchanged sentences

Revolving Line of Credit

As of April 4, 2021 and January 3, 2021 , the Company had $ 15.0 million of revolving debt outstanding with an interest rates of 3.75 % per annum.

As of July 4, 2021 and January 3, 2021 , the Company had $ 15.0 million of revolving debt outstanding with an interest rates of 3.75 % per annum.

The Bank has a first priority security interest in substantially all of the Company's tangible and intangible assets to secure any outstanding amounts under the Amended and Restated Loan Agreement.

The Company was in compliance with all loan covenants under the Amended and Restated Loan Agreement as of the end of the current reporting period.

Interest expense recognized were $ 32,000  and $ 80,000  for the quarters ended April 

4, 2021 and March 29, 2020, respectively. 

Interest expense recognized were $ 22,000  and $ 172,000  for the three months ended July 4, 2021 and June 28, 2020, respectively, and $ 46,000 and $ 242,000 for the six months ended July 4, 2021 and June 28, 2020, respectively.

Payroll Protection Program Loan

5 unchanged sentences

The Company applied for loan forgiveness in the fourth quarter of fiscal 2020 in accordance with the terms of the CARES Act. 

On January 26, 2021, the Company received notice from Heritage Bank that amounts under the PPP Note had been forgiven. The gain related to the loan forgiveness of approximately $ 1.2 million is reported in other income as gain on forgiveness of debt on the Company’s Unaudited Condensed Statements of Operations for the quarter ended April 4, 2021 .

Note 6  —

3 unchanged sentences

Finance leases are generally two to 

As of April 4, 2021 , the balance of right-of-use assets was approximately $ 1.7  million and the lease liability was approximately $ 1.8  million for operating and finance leases for the headquarters in San Jose and for the operating subsidiaries SensiML in Oregon and SensiML in India.

As of July 4, 2021 , the balance of right-of-use assets was approximately $ 1.5  million and the lease liability was approximately $ 1.6  million for operating and finance leases for the headquarters in San Jose and for the operating subsidiaries of SensiML in Oregon and SensiML in India.

The lease term of the San Diego facility expired in July 

1 unchanged sentence

On July 10, 2020, the Indian subsidiary leased a smaller office premises of approximately 1,100 square feet for a period of eleven months to accommodate the reduced headcount.

Effective July 2020, the rental expense of the unused office in India is expensed to restructuring charges.

Effective July 2020, the rental expense of the unused office in India were expensed to restructuring charges.

The lease term of the Indian facility expired in July 2021.

Total rent expense for the three months ended 

April 4, 2021 and March 29, 2020 was approximately $ 107,000 and $ 147,000 , respectively.

July 4, 2021 and June 28, 2020 was approximately $ 106,000 and $ 158,000 , respectively.

Total rent expense for the six months ended July 4, 2021 and June 28, 2020 was approximately $ 213,000 and $ 305,000 , respectively.

The following table provides the expenses related to operating and finance leases (in thousands):

Three Months Ended

Six Months Ended

June 28, 2020

Operating lease costs:

2 unchanged sentences

The following table provides the details of supplemental cash flow information.

The right-of-use assets obtained in exchange for new finance and operating lease liabilities represent the new operating and finance leases entered into during the three months ended April 4, 2021 and March 29, 2020 (in thousands):

Three Months Ended

The right-of-use assets obtained in exchange for new finance and operating lease liabilities represent the new operating and finance leases entered into during the six months ended July 4, 2021 and June 28, 2020 (in thousands):

Six Months Ended

Cash paid for amounts included in the measurement of lease liabilities:

3 unchanged sentences

Right-of-use assets obtained in exchange for finance lease obligations

The following table provides the details of right-of-use assets and lease liabilities as of April 4, 2021 and January 3, 2021 (in thousands):

The following table provides the details of right-of-use assets and lease liabilities as of July 4, 2021 and January 3, 2021 (in thousands):

Right-of-use assets:

1 unchanged sentence

$ 1,134  

Finance leases

10 unchanged sentences

$ 1,882  

The following table provided the details of future lease payments for operating and finance leases as of April 4, 2021 (in thousands):

The following table provided the details of future lease payments for operating and finance leases as of July 4, 2021 (in thousands):

Operating Leases

Finance Leases

2021 (Remaining period)  

Total lease payments

Interest  

( 92 )  

1 unchanged sentence

$ 1,045  

The following table provides the details of lease terms and discount rates as of April 4, 2021 and January 3, 2021 :

The following table provides the details of lease terms and discount rates as of July 4, 2021 and January 3, 2021 :

Right-of-use assets:

1 unchanged sentence

Operating leases

Finance leases  

Weighted-average discount rates:

1 unchanged sentence

6.00 %  

Finance leases  

5.50 %  

4 unchanged sentences

Under the 2019 Plan, 357,143 shares of common stock were made available for grants, plus any shares subject to any outstanding options or other awards granted under the Company’s 2009 Stock Plan that expire, including the 299,070 shares then available, or which are forfeited, cancelled, returned to the Company for failure to satisfy vesting requirements, settled for cash or otherwise terminated without payment being made thereunder.

As of April 4, 2021 , approximately 538,000  shares of the Company’s common stock were reserved for issuance under the 2019 Plan.

The 2019 Plan was amended and restated by the Board of Directors on March 5,2020 and approved by the Company’s stockholders on April 22, 2020 to, among other things, reserve an additional 550,000 shares of common stock for issuance under the 2019 Plan. The 2019 Plan was amended and restated by the Board of Directors on March 3, 2021 and approved by the Company’s stockholders on May 12, 2021 

to, among other things, reserve an additional 600,000 shares of common stock for issuance under the 2019 Plan. As of July 4, 2021 , approximately 1,158,052 shares of the Company’s common stock were available for issuance under the 2019 Plan.

2009 Employee Stock Purchase Plan

5 unchanged sentences

The amendment, among other things, extend the term of the plan until March 5, 2029 and reserved an additional 300,000 shares of common stock for issuance under the 2009 ESPP.

As of April 4, 2021 , approximately 341,926  shares of the Company’s common stock were reserved for issuance under the 2009 ESPP.

As of July 4, 2021 , approximately 281,859 shares of the Company’s common stock were reserved for issuance under the 2009 ESPP.

Note 8  —

Stock-Based Compensation

Stock-based compensation expense included in the Company's consolidated financial statements for the three months ended April 4, 2021 and March 29, 2020 was as follows (in thousands):

Stock-based compensation expense included in the Company's consolidated financial statements for the three and six months ended July 4, 2021 and June 28, 2020 was as follows (in thousands):

Three Months Ended

Six Months Ended

Cost of revenue

1 unchanged sentence

Selling, general and administrative

During the three months ended March 29, 2020, the Company reversed stock-based compensation expense related to the cancellation of certain unvested performance-based RSUs and restructuring-related terminations.

During the six months ended June 28, 2020 , the Company reversed stock-based compensation expense related to the cancellation of certain unvested performance-based RSUs and restructuring-related terminations. During the second quarter of 2020, the Company issued fully vested RSUs in lieu of cash for variable compensation to certain employees.

No stock-based compensation was capitalized during any period presented above.

No stock options were granted during the three and six months ended July 4, 2021  and June 28, 2020.

Stock-Based Compensation Award Activity

The following table summarizes the activity in the shares available for grant under the 2019 Plan during the three months ended April 4, 2021 (in thousands):

The following table summarizes the activity in the shares available for grant under the 2019 Plan during the six months ended July 4, 2021 (in thousands):

Shares Available for Grants

Balance at January 3, 2021

RSUs granted  

RSUs forfeited or expired  

PRSUs forfeited or expired  

Balance at April 4, 2021

Authorized shares

Options cancelled

RSUs forfeited or expired

PRSUs forfeited or expired

Balance at July 4, 2021

Stock Options

The following table summarizes stock options outstanding and stock option activity under the 2009 Plan and the 2019 Plan, and the related weighted average exercise price, for the three months ended April 4, 2021 :

(in thousands)

3 unchanged sentences

Forfeited or expired

Balance outstanding at April 4, 2021

( 11 )  

Exercisable at April 4, 2021

$ 19.59  

Vested and expected to vest at April 4, 2021

Balance outstanding at July 4, 2021

$ 29.31  

There was no stock option activities for the quarters 

three months ended April 4, 2021 and March 29, 2020 .

Total stock-based compensation related to stock options was approximately $ 0  and $ 14,000  for the 

three months ended April 4, 2021 and March 29, 2020 , respectively.

As of April 4, 2021 , the fair value of unvested stock options, net of forfeitures, was $ 0 . 

Exercisable at July 4, 2021

$ 29.31  

Vested and expected to vest at July 4, 2021

$ 29.31  

No stock options were granted during the three and six months ended July 4, 2021  and June 28, 2020.

Total stock-based compensation related to stock options was approximately $ 0  and $ 14,000  for the three months ended July 4, 2021 and June 28, 2020 respectively, and $ 0 and $ 28,000 for the six months ended July 4, 2021 and June 28, 2020 , respectively.

As of July 4, 2021 , the fair value of unvested stock options, net of forfeitures, was $ 0 . 

Restricted Stock Units

2 unchanged sentences

In general, the Company's policy is to withhold shares in settlement of employee tax withholding obligations upon the vesting of RSUs.

The stock-based compensation expense related to RSUs and PRSUs was approximately $ 338,000  for the 

three months ended April 4, 2021  and a reversal of stock-based compensation expense of $ 418,000  for the 

three months ended 

March 29, 2020 .

As of April 4, 2021 and March 29, 2020 , there was approximately $ 373,000  million and $ 2.4  million, respectively, in unrecognized compensation expense related to RSUs.

The remaining unrecognized stock-based compensation expense is expected to be recorded over a weighted average period of 1.65  years.

A summary of activity for the Company's RSUs and PRSUs for the three months ended April 4, 2021 is as follows:

The stock-based compensation expense related to RSUs and PRSUs was approximately $ 165,920 and $ 719,000 for the three months ended July 4, 2021 and June 28, 2020 respectively, and $ 503,943 and $ 306,000 for the six months ended July 4, 2021  and June 28, 2020 respectively.

Due to the cancellation of certain performance based RSUs and cancellations relating to restructuring, which was implemented in January 2020, the Company reversed stock-based compensation previously recorded resulting in a credit to the stock-based compensation during the six months ended June 28, 2020.

As of July 4, 2021 and June 28, 2020 , there was approximately $ 225,011  and $ 1.7  million, respectively, in unrecognized compensation expense related to RSUs.

The remaining unrecognized stock-based compensation expense as of July 4, 2021 is expected to be recorded over a weighted average period of 1.17  years.

A summary of activity for the Company's RSUs and PRSUs for the six months ended July 4, 2021 is as follows:

RSUs & PRSUs Outstanding

2 unchanged sentences

$ 4.99  

Granted  

Vested  

( 458 )  

Forfeited  

( 258 )  

Nonvested at April 4, 2021

Nonvested at July 4, 2021

$ 5.46  

Employee Stock Purchase Plan

Total stock-based compensation related to the Company's ESPP was approximately $ 30,000  and $ 0  for the 

three months ended April 4, 2021 and March 29, 2020 , respectively.

Total stock-based compensation related to the Company's ESPP was approximately $ 36,000  and $ 8,000  for the three months ended July 4, 2021 and June 28, 2020, respectively, and $ 66,000  and $ 8,000 for the six months ended July 4, 2021 and June 28, 2020 , respectively.

Note 9  —

The Company recorded a net income tax expense of $ 152,000  and $ 18,000  for the three months ended April 4, 2021 and March 29, 2020 , respectively.

A majority of the income tax expense for the first quarter of 2021  relates to the Company's foreign subsidiaries, which are cost-plus entities.

The Company recorded a net income tax expense of $ 5,000 and a net income benefit of $ 27,000 for the three months ended July 4, 2021 and June 28, 2020, respectively, and a net income tax expense of $ 157,000 and a net income tax benefit of $9,000 for the six months ended July 4, 2021 and June 28, 2020 , respectively.

A majority of the income tax expense for the

first quarter of

2021 relates to the Company's foreign subsidiaries, which are cost-plus entities and withholding tax of

$ 125,000 related to

one -time distribution resulting from restructuring in India.

A tax expense resulting from the assessment and statutory closing of prior years’

5 unchanged sentences

Accordingly, the Company continues to maintain a valuation allowance against all of U.S.

and certain foreign net deferred tax assets as of April 4, 2021 .

and certain foreign net deferred tax assets as of July 4, 2021 .

The Company continues to maintain a full valuation allowance against net federal, state and certain foreign deferred tax assets until there is sufficient evidence to support recoverability of the Company’s deferred tax assets.

The Company had no unrecognized tax benefits as of April 4, 2021  and January 3, 2021 which would affect the Company's effective tax rate.

The Company had no unrecognized tax benefits as of July 4, 2021  and January 3, 2021 which would affect the Company's effective tax rate.

The Company does not anticipate any material changes to its unrecognized tax benefits during the next 12 months.

16 unchanged sentences

The Company applied for the loan forgiveness and the application was approved by the lender on January 26, 2021.

The loan was reclassified to cancellation of debt income in Q1 2021 for GAAP and is not taxable for federal purposes according to the CARES Act.

The loan was reclassified to gain on forgiveness of debt in Q1 2021 for GAAP and is not taxable for federal purposes according to the CARES Act.

California has issued specific guidance regarding its conformity to the CARES Act.

No provisions are expected to have a material impact on the Company, except for the business expenses paid out of the PPP loan is not deductible for California tax purposes.

The Company will continue to monitor the guidance released by California and evaluate its impact.

No provisions are expected to have a material impact on the Company, except for that under Assembly Bill 80 ("AB 80" ), which was signed into law on April 29, 2021, the business expenses paid out of the PPP loan is not deductible for publicly-traded companies for California tax purposes.

On June 29, 2020, California Governor Gavin Newsom signed Assembly Bill 85 ("AB 85" ) into law, which temporarily suspends net operating loss deductions for most businesses and limits certain general business credits.

4 unchanged sentences

The majority of the key provisions of the ASU 2019 - 12 does not have a material impact on the Company's consolidated financial statements.

We considered the majority of our non-U.S.

subsidiaries’

undistributed earnings to be permanently reinvested.

Therefore no U.S.

or foreign income taxes have been recorded on the permanently reinvested amount as of July 4, 2021.

Due to potential restructuring plans in India, there may be a one -time distribution in 2021.

As a result, we have recorded withholding taxes of approximately $ 125,000 on the potential one -time distribution.

However, the rest of our foreign subsidiaries’

earnings continue to be permanently reinvested with no deferred tax liabilities necessary.

We considered the majority of our non-U.S.

subsidiaries’

undistributed earnings to be permanently reinvested.

Therefore no U.S.

or foreign income taxes have been recorded on the permanently reinvested amount as of July 4, 2021.

Due to potential restructuring plans in India, there may be a one -time distribution in 2021.

As a result, we have recorded withholding taxes of approximately $ 125,000 on the potential one -time distribution.

However, the rest of our foreign subsidiaries’

earnings continue to be permanently reinvested with no deferred tax liabilities necessary.

10  —

4 unchanged sentences

Three Months Ended

Six Months Ended

$ 1,262  

$ 2,337  

$ 1,306  

Mature products

2 unchanged sentences

$ 2,196  

New products include all products manufactured on 180 nanometer or smaller semiconductor processes, eFPGA IP license, Quick AI and SensiML AI software as a service (“SaaS”) revenues.

$ 5,122  

$ 4,354  

New products include all products manufactured on 180 nanometer or smaller semiconductor processes, eFPGA IP license, Quick AI and SensiML AI software as a service (“SaaS”) revenue.

Mature products include all products produced on semiconductor processes larger than 180 nanometer and includes related royalty revenue.

1 unchanged sentence

Three Months Ended

Six Months Ended

Asia Pacific (1)

$ 1,075  

$ 1,828  

$ 1,185  

North America (2)

2 unchanged sentences

$ 2,196  

Asia Pacific includes revenue from Japan of $ 724,000 , or 32 % of total revenue, and $ 394,000  or 18 % of total revenue, for the three months ended April 4, 2021 and March 29, 2020 , respectively.

North America includes revenue from the United States of $ 1.2  million, or 56 % of total revenue, and $ 942,000 , or 44 % of total revenue, for the 

three months ended April 4, 2021 and March 29, 2020 , respectively.

$ 5,122  

$ 4,354  

Asia Pacific includes revenue from Japan of $9 17

,000, or 32 % of tota l revenue and $ 771,000 or 35 % of total revenue for the quarters ended July 4, 2021 and June 28, 2020, respectively.

For the six months ended July 4, 2021 and June 28, 2020, revenue from Japan was $ 1.6 million, or 32 % of total revenue, and $ 1.2 million, or 27 % of total revenue, respectively.

North America includes revenue from the United States of $562,000, or 19 % of total revenue, and $ 1.3 million, or 58 % of total revenue, for the three months ended July 4, 2021 and June 28, 2020, respectively.

For the six months ended July 4, 2021 and

June 28, 2020 revenue from the United States was $1.8 million, or 35 % of total revenue, and $ 2.2 million, or 51 % of total revenue, respectively.

The following distributors and customers accounted for 10% or more of the Company's revenue for the periods presented:

Three Months Ended

Six Months Ended

Distributor "A"

1 unchanged sentence

Distributor "E"

Customer "E"  

Customer "L"  

Customer "M"  

* Represents less than 10% of revenue as of the dates presented.

2 unchanged sentences

Distributor "C"

Distributor "E"

Distributor "P"

Distributor "Q"  

Customer "N"  

Distributor "Q"

Distributor "J"

* Represents less than 10% of accounts receivable as of the dates presented.

April 4, 2021 , 

3.6 % of the Company's long-lived assets, including property and equipment and other assets, were located outside the United States.

11  —

1 unchanged sentence

The Company's manufacturing suppliers require the forecast of wafer starts several months in advance.

The Company is required to take delivery of and pay for a portion of this forecasted wafer volume. As of April 4, 2021 , and January 3, 2021 , the Company had $ 262,000  and $ 60,000 , respectively, of outstanding commitments for the purchase of wafer and finished goods inventory.

The Company is required to take delivery of and pay for a portion of this forecasted wafer volume. As of July 4, 2021 , and January 3, 2021 , the Company had $ 559,000  and $ 60,000 , respectively, of outstanding commitments for the purchase of wafer and finished goods inventory.

The Company has purchase obligations with certain suppliers for the purchase of other goods and services entered into in the ordinary course of business.

As of April 4, 2021 , total outstanding purchase obligations for other goods and services were $ 810,000 , all of which are due within the next twelve months.

As of July 4, 2021 , total outstanding purchase obligations for other goods and services were $ 945,000  due within the next twelve months.

From time to time, the Company may become involved in legal actions arising in the ordinary course of business including, but not limited to, intellectual property infringement and collection matters.

2 unchanged sentences

or without requiring royalty or other payments which may adversely impact gross profit.

As of April 4, 2021 , the Company was not involved in any litigation.

As of July 4, 2021 , the Company was not involved in any litigation.

India Transfer Pricing Notice

3 unchanged sentences

In addition, on April 30, 2021, the Company filed an appeal with the DRP, citing various issues with the Department's calculations and choice of comparable entities used to arrive at its initial assessment.

The Company does not expect a response to such appeal for six to nine months, or more due in part to the complete closure related to India's COVID- 19 pandemic. 

The Company does not expect a response to such appeal for six to nine months, or more due in part to the complete closure of most governmental offices including the Ministry of Finance related to India's COVID- 19 pandemic. 

The Company is in the process of evaluating the effect such order may have on its foreign tax provision. Such effect, if any, would be to the tax provision and amounts owed under taxes to foreign jurisdictions only.

12  —

Subsequent Events

On August 16, 2021, the Company entered into a Third Amendment (the "Third Amendment") to the Amended and Restated Loan Agreement with Heritage Bank. The Third Amendment (a) waived the Company’s non-compliance with the minimum cash covenant which obligated the Company to maintain at least $ 3.0 million of unrestricted cash at all times and (b) amended this obligation such that the Company shall now be required to maintain unrestricted cash in its accounts at the Bank in an amount of at least $ 3.0 million measured i) immediately prior to the funding of any credit extension, and ii) at all times that any advance is outstanding.

In connection with the Third Amendment, the Company was obligated to pay Heritage Bank a waiver and amendment fee equal to $ 5,000 plus all bank expenses incurred through the date of the Third Amendment.

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 1. Financial Statements