What changed in this filing

/stocks — the workspaceLOADING

Item 1. Financial Statements

2021-11-17 compared with 2021-08-18 · 162 added, 129 removed, 524 unchanged (36% of the section changed)

33 unchanged sentences

Lease liabilities, non-current

Other long-term liabilities

Other liabilities, non-current

Total liabilities

8 unchanged sentences

200,000 authorized;

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

11,790 and 11,094 shares issued and outstanding as of October 3, 2021 and January 3, 2021, respectively

Additional paid-in capital

13 unchanged sentences

Three Months Ended

Six Months Ended

July 4,  

June 28,  

July 4,  

June 28,  

Nine Months Ended

October 3,  

September 27,  

October 3,  

September 27,  

$ 3,858  

8 unchanged sentences

Total operating expenses

11,273  

11,045  

Loss from operations

9 unchanged sentences

( 59 )  

( 52 )  

Loss before income taxes

16 unchanged sentences

11,023  

11,441  

Net loss equals comprehensive loss for all periods presented.

3 unchanged sentences

(in thousands)

Six Months Ended

Nine Months Ended

September 27,

Cash flows from operating activities:

$ ( 3,751 )  

Adjustments to reconcile net loss to net cash used in operating activities:

4 unchanged sentences

Gain on forgiveness of debt

( 1,192 )  

Allowance for bad debt

1 unchanged sentence

Accounts receivable

( 407 )  

Trade payables

2 unchanged sentences

Net cash used in operating activities

( 2,812 )  

Cash flows from investing activities:

Capital expenditures for property and equipment

( 174 )  

Capitalized internal-use software

( 273 )  

Net cash used in investing activities

( 447 )  

Cash flows from financing activities:

Payment of finance lease obligations

( 156 )  

Proceeds from paycheck protection program loan

Proceeds from line of credit

30,000  

27,000  

Repayment of line of credit

( 30,000 )  

Proceeds from issuance of common stock, net of issuance costs

Proceeds from issuance of common stock

Proceeds from equity funding, net of issuance costs

Taxes paid related to settlement of equity awards

( 485 )  

Net cash (used in) provided by financing activities

( 493 )  

Net cash provided by financing activities

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

( 3,752 )  

Cash, cash equivalents and restricted cash at beginning of period

22,748  

21,548  

Cash, cash equivalents and restricted cash at end of period

$ 18,996  

$ 26,398  

See accompanying Notes to Unaudited Condensed Consolidated Financial Statements.

25 unchanged sentences

$ 8,969  

Common stock issued under stock plans and employee stock purchase plan

Common stock offering, net of issuance costs of $45

Stock-based compensation

( 1,282 )  

Balance at October 3, 2021

11,790  

$ 309,036  

$ ( 299,442 )  

$ 9,606  

Stockholders'

22 unchanged sentences

$ 15,622  

Common stock issued under stock plans and employee stock purchase plan

( 13 )  

Stock issuance costs

Stock-based compensation

( 2,065 )  

Balance at September 27, 2020

11,068  

$ 305,703  

$ ( 291,467 )  

$ 14,247  

See accompanying Notes to Unaudited Condensed Consolidated Financial Statements

5 unchanged sentences

The Company enables Original Equipment Manufacturers (“OEMs”) to maximize battery life for highly differentiated, immersive user experiences with smartphone, wearable, hearable, tablet and internet-of-Things (“IoT devices”).

QuickLogic delivers these benefits through industry leading ultra-low power customer programmable System on Chip (“SoC”) semiconductor solutions, embedded software, and algorithm solutions for always-on voice and sensor processing and enhanced visual experiences. The Company is a fabless semiconductor provider of comprehensive, flexible sensor processing solutions, ultra-low power display bridges, and ultra-low power Field Programmable Gate Arrays (“FPGAs”).

QuickLogic delivers these benefits through industry leading ultra-low power customer programmable System on Chip (“SoC”) semiconductor solutions, embedded software, and algorithm solutions for always-on voice and sensor processing and enhanced visual experiences. The Company is a fabless semiconductor provider of comprehensive, flexible sensor processing solutions, ultra-low power display bridges, ultra-low power Field Programmable Gate Arrays (“FPGAs”), and embedded FPGA (eFPGA) intellectual property (IP).

The Company’s wholly owned subsidiary, SensiML Corporation (“SensiML”) provides Analytics Toolkit, which is used in many of the applications where the Company’s ArcticPro™, eFPGA intellectual property (“IP”) plays a critical role.

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

Operating results for the three and nine months ended October 3, 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 second fiscal quarters for 2021 and 2020 ended on July 4, 2021 and June 28, 2020 , respectively.

QuickLogic's third fiscal quarters for 2021 and 2020 ended on October 3, 2021  and September 27, 2020 , respectively.

COVID- 19 - Impact on Business 

1 unchanged sentence

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 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.

2 unchanged sentences

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

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.

three and nine  months ended October 3, 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 $ 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.

Pursuant to the restructuring plan, the Company recorded $ 624,000 restructuring costs during the nine  months ended September 27, 2020, consisting primarily of employee severance related costs and facilities costs.

There were no restructuring charges incurred for the nine  months ended October 3,2021.

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 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.

As of October 3, 2021 , the Company's principal sources of liquidity consisted of cash, cash equivalents and restricted cash of $ 19.6  million, including $ 15.0  million drawn down from its revolving line of credit with Heritage Bank of Commerce (“Heritage Bank”), $ 1.2  million loan received under the Paycheck Protection Program (“PPP”) which was forgiven in January of 2021, and net proceeds of $ 1.0 million from the Company's sale of common stock in September 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 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 August 16, 2021, the Company entered into a Third Amendment to the Amended and Restated Loan Agreement with Heritage Bank (the "Third Amendment"). The Third Amendment (a) amended 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. 

The Company was in compliance with all loan covenants as of October 3, 2021 .

As of October 3, 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.

6 unchanged sentences

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

On September 22, 2021, the Company entered into a Share Subscription Agreement for the sale of 125,000 shares of our common stock (the “Private Placement”).

On September 30, 2021, the Company entered into a Common Stock Purchase Agreement for the sale of 73,664 shares of our common stock, in a registered direct offering pursuant to our effective shelf registration statement on Form S- 3 (File No.

333 - 230352 ) (the “Registered Direct Offering,”

and together with the Private Placement, the “Share Placements”). The net proceeds to the Company from the Share Placements in aggregate, after deducting equity issuance costs of approximately $ 45,000 , was approximately $ 1.0  milli on.

The Company currently uses its cash to fund its working capital to accelerate the development of next generation products and for general corporate purposes.

10 unchanged sentences

The inability of the Company to generate sufficient sales from its new product offerings and/or raise additional capital if needed could have a material adverse effect on the Company’s operations and financial condition, including its ability to maintain compliance with its lender’s financial covenants.

On November 16, 2021, we entered into a Fourth Amendment to extend the Amended and Restated Loan Agreement with Heritage Bank to extend the maturity date to December 31, 2023. 

Principles of Consolidation

25 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 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 .

During the nine months period ended October 3, 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 nine months ended October 3, 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 

six months of 2021 , see “New Accounting Pronouncements”

nine months of 2021 , see “New Accounting Pronouncements”

Included in the results for the third quarter of fiscal 2021, was IP Licensing revenue of approximately $ 1.0 million related to an agreement the Company signed in August 2021. 

The Company allocated the total transaction price to each separate performance obligation on a relative stand alone selling price basis.

The Company expects the remaining performance obligations to be delivered by December 2021.

Fair Value Measurements

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.

The Company’s cash, cash equivalents and restricted cash include money market account balance of $ 19.6 million and $ 22.7  million as of October 3, 2021 , and January 3, 2021 , respectively.

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

The Company's money market account primarily consists of cash.

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 July 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 October 3, 2021 , and January 3, 2021 .

New Accounting Pronouncements

3 unchanged sentences

These changes include elimination to the exceptions for ( 1 ) Intra-period tax allocation, ( 2 ) Deferred tax liabilities related to outside basis differences, and ( 3 ) Year-to-date losses in interim periods.  The Company adopted this standard prospectively effective January 4, 2021, with an insignificant impact to the Unaudited Condensed Consolidated Financial Statements.

New accounting pronouncements not yet adopted

In August 2020, the FASB issued ASU No.

9 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 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.

For the three and nine months ended October 3, 2021 and September 27, 2020 ,  

690,719 and 979,363  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 386,100 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. 

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 nine months ended October 3, 2021 and September 27, 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 July 4, 2021 , and January 3, 2021 (in thousands):

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

Raw materials

6 unchanged sentences

$ 1,157  

$ 1,066  

Property and equipment, net:

21 unchanged sentences

Revolving Line of Credit

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.

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

Heritage 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 $ 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.

Interest expense recognized were $ 21,941  and $ 28,146  for the three  months ended October 3, 2021 and September 27, 2020, respectively, and $ 68,109  and $ 270,521  for the nine  months ended October 3, 2021 and September 27, 2020, respectively.

Payroll Protection Program Loan

On May 6, 2020, the Company entered into a $ 1.2 million PPP loan agreement with Heritage Bank (“PPP Loan”) under the CARES Act as implemented by the U.S.

On May 6, 2020, the Company entered into a $ 1.2 million Payroll Protection Program loan agreement with Heritage Bank (“PPP Loan”) under the CARES Act as implemented by the U.S.

Small Business Administration. The PPP Loan was evidenced by a promissory note (“PPP Note”) dated May 6, 2020 and matured 

3 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 six months ended July 4, 2021 .

Note 6  —

3 unchanged sentences

Finance leases are generally two to 

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.

As of October 3, 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 of SensiML in Oregon and the Company's subsidiary 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 were expensed to restructuring charges.

Effective July 2020, the rental expense of the prior office lease in India was expensed to restructuring charges in the amount of approximately $ 39,000 .

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

Total rent expense for the three months ended 

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.

October 3, 2021 and September 27, 2020 was approximately $ 105,000 and $ 150,000 , respectively.

Total rent expense for the nine months ended October 3, 2021 and September 27, 2020 , as approximately $ 319,000 and $ 455,000 , respectively.

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

Three Months Ended

Six Months Ended

June 28, 2020

Nine Months Ended

October 3, 2021

September 27, 2020

October 3, 2021

September 27, 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 six months ended July 4, 2021 and June 28, 2020 (in thousands):

Six 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 nine months ended October 3, 2021 and September 27, 2020 (in thousands):

Nine Months Ended

September 27,

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 July 4, 2021 and January 3, 2021 (in thousands):

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

Right-of-use assets:

8 unchanged sentences

$ 1,212  

Finance leases

2 unchanged sentences

$ 1,882  

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

The following table provided the details of future lease payments for operating and finance leases as of October 3, 2021 (in thousands):

Operating Leases

4 unchanged sentences

Present value of lease liabilities

$ 1,045  

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

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

Right-of-use assets:

13 unchanged sentences

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.

to, among other things, reserve an additional 600,000 shares of common stock for issuance under the 2019 Plan. As of October 3, 2021 , approximately 642,899 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 July 4, 2021 , approximately 281,859 shares of the Company’s common stock were reserved for issuance under the 2009 ESPP.

As of October 3, 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 and six months ended July 4, 2021 and June 28, 2020 was as follows (in thousands):

Stock-based compensation expense included in the Company's consolidated financial statements for the three and nine months ended October 3, 2021 and September 27, 2020 was as follows (in thousands):

Three Months Ended

Six Months Ended

Nine Months Ended

September 27,

Cost of revenue

1 unchanged sentence

Selling, general and administrative

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.

$ 1,455  

During the nine  months ended September 27, 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.

No stock options were granted during the three and nine months ended October 3, 2021 and September 27, 2020 .

Stock-Based Compensation Award Activity

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):

The following table summarizes the activity in the shares available for grant under the 2019 Plan during the nine months ended October 3, 2021 (in thousands):

Shares Available for Grants

1 unchanged sentence

Authorized shares

PRSU's granted

Options cancelled

1 unchanged sentence

PRSUs forfeited or expired

Balance at July 4, 2021

Balance at October 3, 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 six months ended July 4, 2021 :

(in thousands)

5 unchanged sentences

$ 23.84  

Balance outstanding at July 4, 2021

Balance outstanding at October 3, 2021

$ 29.04  

Exercisable at July 4, 2021

Exercisable at October 3, 2021

$ 29.04  

Vested and expected to vest at July 4, 2021

Vested and expected to vest at October 3, 2021

$ 29.04  

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 . 

No stock options were granted during the three and nine months ended October 3, 2021 and September 27, 2020 .

Total stock-based compensation related to stock options was approximately $ 0  and $ 11,000  for the three months ended October 3, 2021 and September 27, 2020  respectively, and $ 0 and $ 39,000 for the nine months ended October 3, 2021 and September 27, 2020 , respectively.

As of October 3, 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 $ 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.

The stock-based compensation expense related to RSUs and PRSUs was approximately $ 854,000  and $ 231,000  for the three months ended 

October 3, 2021 and September 27, 2020  respectively, and $ 1.4 million and $ 538,000  for the nine months ended October 3, 2021  and September 27, 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:

As of October 3, 2021 and September 27, 2020 , there was approximately $ 2.1 million and $ 1.2  million, respectively, in unrecognized compensation expense related to RSUs.

The remaining unrecognized stock-based compensation expense as of October 3, 2021  is expected to be recorded over a weighted average period of 1.39  years.

A summary of activity for the Company's RSUs and PRSUs for the nine months ended October 3, 2021 is as follows:

RSUs & PRSUs Outstanding

4 unchanged sentences

( 262 )  

Nonvested at July 4, 2021

Nonvested at October 3, 2021

$ 5.81  

Employee Stock Purchase Plan

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.

Total stock-based compensation related to the Company's ESPP was approximately $ 31,000  and $ 16,000  for the three months ended October 3, 2021 and September 27, 2020 , respectively, and $ 97,000  and $ 24,000 for the nine months ended October 3, 2021 and September 27, 2020 , respectively.

Note 9  —

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.

The Company recorded a net income tax (benefit) expense of ($ 21,000 ) and $ 10,000  for the three months ended 

October 3, 2021 and September 27, 2020  , respectively; and $ 136,000 and $ 1,000 for the 

nine months ended October 3, 2021 and September 27, 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 July 4, 2021 .

and certain foreign net deferred tax assets as of October 3, 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 July 4, 2021  and January 3, 2021 which would affect the Company's effective tax rate.

The Company had no unrecognized tax benefits as of October 3, 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.

24 unchanged sentences

On December 18, 2019, the FASB issued new guidance ASU 2019 - 12 that simplifies the accounting for income taxes to reduce complexity in accounting standards which the Company adopted on January 4, 2021.

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.

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.

13 unchanged sentences

Three Months Ended

Six Months Ended

Nine Months Ended

September 27,

$ 2,758  

7 unchanged sentences

$ 6,134  

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.

New products include products and related revenues for 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.

The following is a breakdown of revenue by shipment destination (in thousands):

The following is a breakdown of revenue by type (in thousands): 

Three Months Ended

Six Months Ended

Asia Pacific (1)

Nine Months Ended

September 27,

$ 2,858  

1 unchanged sentence

$ 7,830  

$ 6,002  

IP license and other services

Total revenue

$ 3,858  

$ 1,780  

$ 8,980  

$ 6,134  

Device revenue includes new product revenues and mature product revenues, except for IP License and other services.

The following is a breakdown of revenue by shipment destination (in thousands): 

Three Months Ended

Nine Months Ended

September 27,

Asia Pacific (1) (4)

$ 2,440  

$ 1,505  

North America (2)

5 unchanged sentences

Asia Pacific includes revenue from Japan of $739 

,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.

,000, or 19 % of tota l revenue and $ 271,000 or 15 % of total revenue for the three months ended 

October 3, 2021 and September 27, 2020 , respectively.

For the nine months ended October 3, 2021 and September 27, 2020 , revenue from Japan was $ 2.4 million, or 26 % of total revenue, and $ 1.4  million, or 23 % of total revenue, respectively.

North America includes revenue from the United States of $2.6 million or 67 % of total revenue, and $ 1.1  million, or 61 % of total revenue, for the three months ended October 3, 2021 and September 27, 2020 , respectively.

For the nine months ended October 3, 2021 and September 27, 2020  revenue from the United States was $4.4 million, or 49 % of total revenue, and $ 3.3 million, or 54 % of total revenue, respectively.

( 3 ) Europe includes revenue from United Kingdom of $ 273,000 , or 7 % of total revenue and $ 211,000 or 

12 % of total revenue for the three months ended 

October 3, 2021 and September 27, 2020  , respectively.

For the 

nine months ended October 3, 2021 and September 27, 2020 , revenue from United Kingdom of $ 1,379,000 , or 15 % of total revenue, and $ 586,000 or 10 % of total revenue, respectively.

( 4 ) Certain prior period amounts have been reclassified to conform to current period presentation.

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

Nine Months Ended

September 27,

Distributor "A"

4 unchanged sentences

Distributor "A"

Distributor "C"

Distributor "E"

Distributor "P"

Distributor "Q"

Distributor "J"

3 unchanged sentences

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 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 is required to take delivery of and pay for a portion of this forecasted wafer volume. As of October 3, 2021 , and January 3, 2021 , the Company had $ 632,000  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 July 4, 2021 , total outstanding purchase obligations for other goods and services were $ 945,000  due within the next twelve months.

As of October 3, 2021 , total outstanding purchase obligations for other goods and services were $ 1.0  million 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 July 4, 2021 , the Company was not involved in any litigation.

As of October 3, 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 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.

A hearing before the DRP was held on October 7, 2021, subsequent to the end of the Company's third quarter of fiscal 2021.

Based on the facts presented, the Panel is expected to adjudicate the case. 

The due date for closure of these appeals is December 31, 2021 and it is expected that the Panel will pass its orders before this date. 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.

On November 16, 2021, the Company entered into a Fourth Amendment (the “Fourth 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 Fourth Amendment extended the loan maturity date through December 31, 2023.

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