What changed in this filing

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Item 1. Financial Statements

2022-05-18 compared with 2021-11-17 · 170 added, 358 removed, 328 unchanged (62% of the section changed)

7 unchanged sentences

$ 19,605  

Accounts receivable, net of allowances for doubtful accounts of $62 and $0 , respectively

Accounts receivable, net of allowances for doubtful accounts of $ 62

Other current assets

6 unchanged sentences

Intangible assets

Investment in privately-held non-affiliate

$ 29,774  

13 unchanged sentences

Long-term liabilities:

Notes payable, non-current

Lease liabilities, non-current

10 unchanged sentences

200,000 authorized;

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

12,362 and 11,863 shares issued and outstanding as of April 3, 2022 and January 2, 2022, respectively

Additional paid-in capital

4 unchanged sentences

Total stockholders' equity

12,487  

TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY

6 unchanged sentences

Three Months Ended

Nine Months Ended

October 3,  

September 27,  

October 3,  

September 27,  

$ 4,096  

$ 2,240  

$ 8,980  

$ 6,134  

Cost of revenue

2 unchanged sentences

Selling, general and administrative

Restructuring costs

Total operating expenses

11,273  

11,045  

Loss from operations

( 1,009 )  

( 2,046 )  

( 5,931 )  

Interest expense

( 33 )  

( 36 )  

( 99 )  

Gain on forgiveness of debt

3 unchanged sentences

( 1,165 )  

( 2,055 )  

( 4,897 )  

Provision for (benefit from) income taxes

( 21 )  

$ ( 1,282 )  

$ ( 2,065 )  

(Benefit from) provision for income taxes

$ ( 1,164 )  

2 unchanged sentences

$ ( 0.10 )  

$ ( 0.19 )  

$ ( 0.44 )  

Weighted average shares outstanding:

2 unchanged sentences

11,264  

11,441  

________________________

Note:

Net loss equals comprehensive loss for all periods presented.

See accompanying Notes to Unaudited Condensed Consolidated Financial Statements.

See accompany notes to unaudited condensed consolidated financial statements

QUICKLOGIC CORPORATION

1 unchanged sentence

(in thousands)

Nine Months Ended

September 27,

Three Months Ended

Cash flows from operating activities:

$ ( 1,164 )  

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

1 unchanged sentence

Stock-based compensation

Write-down of inventories

Write-off of equipment

Write-down of inventories and reclassifications

( 26 )  

Gain on forgiveness of debt

Allowance for bad debt

Changes in operating assets and liabilities:

Accounts receivable

( 287 )  

( 188 )  

Trade payables

Accrued liabilities and deferred revenue

Accrued liabilities

Deferred revenue

( 388 )  

Other long-term liabilities

( 22 )  

Net cash used in operating activities

( 700 )  

Cash flows from investing activities:

Capital expenditures for property and equipment

( 10 )  

Capitalized internal-use software

( 139 )  

Net cash used in investing activities

( 149 )  

Cash flows from financing activities:

Payment of finance lease obligations

Proceeds from paycheck protection program loan

( 98 )  

Proceeds from line of credit

15,000  

Repayment of line of credit

( 15,000 )  

Proceeds from issuance of common stock

Proceeds from equity funding, net of issuance costs

Taxes paid related to settlement of equity awards

Net cash provided by financing activities

Net cash provided by (used in) financing activities

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

Cash, cash equivalents and restricted cash at beginning of period

19,605  

22,748  

Cash, cash equivalents and restricted cash at end of period

$ 20,140  

$ 20,935  

See accompanying notes to unaudited condensed consolidated financial statements.

8 unchanged sentences

$ 9,209  

Common stock issued under stock plans and employee stock purchase plan

( 484 )  

Issuance of common stock under Public Stock Offering, net of stock issuance costs  

Common stock issued under stock plans and employee stock purchase plans

Stock-based compensation

5 unchanged sentences

$ 9,910  

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  

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'

Balance at December 29, 2019

$ 297,073  

$ ( 283,258 )  

$ 13,823  

Common stock issued under stock plans and employee stock purchase plan

( 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

Balance at January 3, 2021

11,094  

2 unchanged sentences

$ 12,487  

Common stock issued under stock plans and employee stock purchase plan

Common stock issued under stock plans and employee stock purchase plans

( 484 )  

Stock issuance costs

Stock-based compensation

( 1,689 )  

Balance at September 27, 2020

Balance at April 4, 2021

11,448  

8 unchanged sentences

or “Company”) was founded in 1988 and reincorporated in Delaware in 1999.

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, ultra-low power Field Programmable Gate Arrays (“FPGAs”), and embedded FPGA (eFPGA) intellectual property (IP).

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. 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”).

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 2, 2022 , which was filed with the Securities and Exchange Commission (“SEC”) on March 22, 2022.

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.

Operating results for the three months ended April 3, 2022 are not necessarily indicative of the results that may be expected for the full fiscal 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 third fiscal quarters for 2021 and 2020 ended on October 3, 2021  and September 27, 2020 , respectively.

QuickLogic's first fiscal quarter for 2022 and 2021 ended on April 3, 2022  and April 4, 2021 , 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 and countries across the world continue to manage repeated waves of the pandemic, including variant strains of COVID- 19 amid increasing, yet 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 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.

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.

It is difficult to accurately predict the full impact that COVID- 19 will have on the Company's future results from operations, financial condition, liquidity and cash flows due to numerous uncertainties, including the duration and severity of the pandemic and related containment measures.

The Company will continue to closely monitor the pandemic's associated effects on all aspects of the business.

Restructuring 

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 $ 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.

There have been no material changes due to the impact of the Covid- 19 pandemic on our business from that disclosed in our most recently filed Annual Report.

Our most recent Annual Report on Form 10 -K for the year ended January 2, 2022 as filed with the SEC on March 22, 2022 provides additional information about our business and operations.

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 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.

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.

On January 26, 2021, the Company received notice from Heritage Bank that amounts under the loan agreement had been forgiven. See Note 5 to these Unaudited Condensed Consolidated Financial Statements for the details.

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 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.

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 has financed its operations and capital investments through sales of common stock, finance and operating leases, a revolving line of credit with Heritage Bank (the "Revolving Facility"), and cash flows used in operations.

In addition to the Company's $ 20.1  million of cash, cash equivalents and restricted cash as of April 3, 2022 , other sources of liquidity included a $ 15.0 million drawn down from the Revolving Facility and $ 1.5 million in net proceeds from the Company's sale of common stock in February 2022.

The Company was in compliance with all loan covenants as of April 3, 2022 .

As of April 3, 2022 , the Company had $ 15.0  million in an outstanding revolving line of credit with an interest rate of 4.00 %.

On February 9, 2022, the Company entered into common stock purchase agreements with certain investors for the sale of an aggregate of 310,000 shares of common stock, par value $ 0.001 , in a registered direct offering.

These share placements resulted in net cash proceeds of approximately $1.5 million.

Issuance costs related to this offering were negligible.

The purchase price for each share of common stock in this placement was $ 4.78 .

The Company currently intends to use the net proceeds from the financing for working capital, the development of next generation eFPGA-based products, including AI and open-source hardware or software, and general corporate purposes.

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

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. 

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, 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:

the level of revenue and gross profit as a result of the cyclicality of the semiconductor industry, the conversion of design opportunities into revenue, the market acceptance of existing and new products including solutions based on its ArcticLink ®

, PolarPro ®

platforms, eFPGA, EOS S3 SoC, Quick AI solution, and SensiML software tools, the fluctuations in revenue as a result of product end-of-life, the fluctuations in revenue as a result of the stage in the product life cycle of its customers’

products, the costs of securing access to and availability of adequate manufacturing capacity, the levels of inventories and wafer purchase commitments, customer credit terms, the amount and timing of research and development expenditures, the timing of new product introductions, production volumes and product quality, sales and marketing efforts, the value and liquidity of its investment portfolio, changes in operating assets and liabilities, the ability to obtain or renew debt financing and to remain in compliance with the terms of existing credit facilities, the ability to raise funds from the sale of equity in the Company, the ability to capitalize on synergies with our newly acquired subsidiary SensiML;

the issuance and exercise of stock options and participation in the Company’s employee stock purchase plan and other factors related to the uncertainties of the industry and global economics.

Over the longer term, the Company anticipates that sales generated from its new product offerings and existing cash and cash equivalents, with financial resources from its Revolving Facility with the Heritage Bank and its ability to raise additional capital in the public capital markets, will be sufficient to satisfy its operations and capital expenditures.

the level of revenue and gross profit as a result of the cyclicality of the semiconductor industry, the conversion of design opportunities into revenue, market acceptance of existing and new products including solutions based on its eFPGA IP, ArcticLink ®

, and PolarPro ®

platforms, eFPGA, EOS S3 SoC, Quick AI solution, and SensiML software fluctuations in revenue as a result of product end-of-life, fluctuations in revenue as a result of the stage in the product life cycle of its customers’

products, costs of securing access to and availability of adequate manufacturing capacity; levels of inventories; wafer purchase commitments; customer credit terms; the amount and timing of research; development expenditures; the timing of new product introductions; production volumes; product quality; sales and marketing efforts; the value and liquidity of its investment portfolio; changes in operating assets and liabilities; the ability to obtain or renew debt financing and to remain in compliance with the terms of existing credit facilities; the ability to raise funds from the sale of equity in the Company; the issuance and exercise of stock options and participation in the Company’s employee stock purchase plan and other factors related to the uncertainties of the industry and global economics.

Over the longer term, the Company anticipates that sales generated from its new product offerings and existing cash and cash equivalents, together with financial resources from its Revolving Facility, assuming renewal of the Revolving Facility or the Company entering into a new debt agreement with an alternative lender prior to the expiration of the Revolving Facility in December 2023, 

and its ability to raise additional capital in the public capital markets, will be sufficient to satisfy its operations and capital expenditures.

However, the Company cannot provide any assurance that it will be able to raise additional capital, if required, or that such capital will be available on terms acceptable to the Company.

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

8 unchanged sentences

dollars using the average exchange rates in effect during the period.

Gains and losses from the foreign currency transactions of these subsidiaries are recorded as interest income and other income (expense), net in the unaudited condensed consolidated statements of operations.

Gains and losses from the foreign currency transactions of these subsidiaries are recorded as interest income and other expense, net in the unaudited condensed consolidated statements of operations.

Uses of Estimates

1 unchanged sentence

GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosures of contingent assets and liabilities and the reported amounts of revenue and expenses during the period.

Actual results could differ materially from those estimates, particularly in relation to revenue recognition, the allowance for doubtful accounts, sales returns, valuation of long-lived assets including mask sets, valuation of goodwill, capitalized internal-use software and related amortizable lives and intangibles related to the acquisition of SensiML, including the estimated useful lives of acquired intangible assets, valuation of inventories including identification of excess quantities, market value and obsolescence, measurement of stock-based compensation awards, accounting for income taxes and estimating accrued liabilities.

Contracts with customers often include promises to transfer multiple products and services to a customer.

Determining whether products and services are considered distinct performance obligations that should be accounted for separately versus together may require significant judgment.

Judgment is required to determine the Stand-alone Selling Price (“SSP”) for each distinct performance obligation.

The Company uses a range of amounts to estimate SSP when each of the products and services are sold separately and determines the discount to be allocated based on the relative SSP of the various products and services when products and services sold are bundled.

In instances where SSP is not directly observable, such as when the Company does not sell the product or service separately, it determines the SSP using information that may include market conditions and other observable inputs.

The Company typically has more than one SSP for individual products and services due to the stratification of those products and services by customers.

In these instances, the Company may use information such as the size of the customer, customer tier, type of the technology used, customer demographics, geographic region and other factors in determining the SSP.

Actual results could differ materially from those estimates, particularly in relation to revenue recognition, the allowance for doubtful accounts, sales returns, valuation of long-lived assets including mask sets, valuation of goodwill, capitalized internal-use software and related amortizable lives, fair value measurements, and intangibles related to the acquisition of SensiML, including the estimated useful lives of acquired intangible assets, valuation of inventories including identification of excess quantities, market value and obsolescence, measurement of stock-based compensation awards, accounting for income taxes and estimating accrued liabilities.

For additional information, please refer to the Company's most recent annual report which was filed with the SEC on March 22, 2022.

Concentration of Risk

The Company's accounts receivable are denominated in U.S.

The Company's accounts receivable is denominated in U.S.

dollars and are derived primarily from sales to customers located in North America, Asia Pacific, and Europe.

The Company performs ongoing credit evaluations of its customers and generally does not require collateral.

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

See Note 9, Information Concerning Product Lines, Geographic Information and Revenue Concentration, for information regarding concentrations associated with accounts receivable.

Significant Accounting Policies

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 .

During the three month period ended April 3, 2022 , 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 2, 2022 .

For a discussion of the significant accounting policies, please see the Annual Report on Form 10 -K for the fiscal year ended January 2, 2022 , filed with the SEC on March 

For a discussion of the new accounting standards adopted during the 

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 $ 19.6 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 October 3, 2021 , and January 3, 2021 .

New Accounting Pronouncements

Recently adopted accounting pronouncements

In December 2019, the FASB issued ASU No.

2019 - 12, Simplifying the Accounting for Income Taxes , which removes certain exceptions to the general principles of ASC 740, in order to reduce the cost and complexity of its application.

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.

2020 - 06, Debt —

Debt with Conversion and Other Options (Subtopic 470 - 20 ) and Derivatives and Hedging —

Contracts in Entity ’

s Own Equity (Subtopic 815 - 40 ):

Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity, which address issues identified as a result of the complexity associated with applying generally accepted accounting principles for certain financial instruments with characteristics of liabilities and equity.

This amendment is effective for public business entities that meet the definition of a Securities and Exchange Commission ("SEC") filer, excluding entities eligible to be smaller reporting companies as defined by the SEC, for fiscal years beginning after December 15, 2021, including interim periods within those fiscal years. The Company is currently evaluating the potential impact on its Unaudited Condensed Consolidated Financial Statements.

Recent Accounting Standards Adopted

In May 2021, the Financial Accounting Standards Board ("FASB") issued ASU No.

2021 - 04, Issuer ’

s Accounting for Certain Modifications of Exchanges of Freestanding Equity-Classified Written Call Options to clarify the accounting for modifications or exchanges of freestanding equity-classified written call options, such as warrants, that remain equity classified after modification or exchange.

This ASU became effective for the Company on January 3, 2022 and did not have a material impact on the Company's consolidated financial statements.

Net Loss Per Share

Basic loss per share is computed by dividing net loss available to common stockholders by the weighted average number of common shares outstanding during the period.

Basic loss per share is computed by dividing net loss by the weighted average number of common shares outstanding during the period.

Diluted net loss per share was computed using the weighted average number of common shares outstanding during the period plus potentially dilutive common shares outstanding during the period under the treasury stock method.

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 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.

For the three months ended April 3, 2022 and April 4, 2021 ,  

578  thousand and 304 thousand 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 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. 

Warrants to purchase up to 386 thousand 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 3, 2022 and April 4, 2021 , 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 October 3, 2021 , and January 3, 2021 (in thousands):

Raw materials

The following table provides details relating to certain balance sheet line items as of April 3, 2022 , and January 2, 2022 (in thousands):

Work-in-process

$ 1,698  

$ 1,397  

Finished goods

21 unchanged sentences

$ 1,291  

$ 1,241  

Accrued liabilities:

2 unchanged sentences

$ 1,963  

$ 1,665  

Note 5  —

1 unchanged sentence

Revolving Line of Credit

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 $ 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 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 

two years from the disbursement date.

The PPP Note bore interest of 1.00 % per annum, with the first six months of interest deferred.

Principal and interest were payable monthly commencing six months after the disbursement date.

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 nine months ended October 3, 2021 .

As of April 3, 2022 and January 2, 2022 , the Company had $ 15.0 million of revolving debt outstanding with an interest rate of 4.00 % and 3.75 % per annum, respectively.

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 agreement.

The Company was in compliance with all loan covenants under the agreement as of the end of the current reporting period.

Interest expense recognized were $ 24  thousand and $ 32 thousand for the three months ended April 3, 2022 and April 4, 2021 , respectively.

On April 4, 2022, the Company entered into a Fifth Amendment (the "Amendment") to the December 21, 2018 Amended and Restated Loan and Security Agreement (as amended, the "Agreement") with Heritage Bank.

The purpose of the Fifth Amendment was primarily to clarify certain terms of the Agreement as follows:

(i) added a definition of "Remaining Months Liquidity" to be defined as the Borrower's unrestricted cash maintained at Bank (including cash in the Pledged Account) minus the outstanding principal amount of the Advances, divided by the absolute value of the average trailing three ( 3 ) month EBITDA;

(ii) as well as revise the minimum cash and remaining months liquidity financial covenants.

The minimum cash covenant was revised such that the balance of unrestricted cash in the pledged account shall at all times exceed the principal amount of all advances owed that are outstanding at any time.

The remaining months liquidity covenant specified that it should not be less than nine months.

The Company does not believe that the clarifications of the terms in the Amendment will have a material impact on the Company's liquidity or utilization of the revolving loan under the Agreement.

Note 6  —

The Company entered into operating leases for office space for its headquarters, for its domestic and foreign subsidiaries and for its sales offices.

The Company entered into operating leases for office space for its headquarters. The Company has elected the practical expedient to apply to recognition requirements to short-term leases for its domestic and foreign subsidiaries and for its sales offices and recognized rent payments on short-term leases on a straight-line basis over the lease term.

Finance leases are primarily for engineering design software.

1 unchanged sentence

Finance leases are generally two to 

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 

2020  and the office was closed.

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 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 

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.

As of April 3, 2022 and January 2, 2022 the balance of right-of-use assets was approximately $ 1.3  million and $ 1.5 million, respectively, and the lease liability was approximately $ 1.4  million and $ 1.6 million, respectively, 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.

Total rent expense was $ 0.1 million for the three months ended 

April 3, 2022 and April 4, 2021 .

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

Three Months Ended

Nine Months Ended

October 3, 2021

September 27, 2020

October 3, 2021

September 27, 2020

April 3, 2022

April 4, 2021

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

Nine Months Ended

September 27,

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 3, 2022 and April 4, 2021  were $ 0 .

Three Months Ended

April 3, 2022

April 4, 2021

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

2 unchanged sentences

Financing cash flows used for financing leases

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 October 3, 2021 and January 3, 2021 (in thousands):

The following table provides the details of right-of-use assets and lease liabilities as of April 3, 2022 and January 2, 2022 (in thousands):

April 3, 2022

January 2, 2022

Right-of-use assets:

Operating leases

$ 1,134  

Finance leases

4 unchanged sentences

Operating leases

$ 1,212  

Finance leases

2 unchanged sentences

$ 1,563  

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

The following table provided the details of future lease payments for operating and finance leases as of April 3, 2022 (in thousands):

Operating Leases

4 unchanged sentences

Present value of lease liabilities

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

The following table provides the details of lease terms and discount rates as of April 3, 2022 and January 2, 2022 :

April 3, 2022

January 2, 2022

Right-of-use assets:

8 unchanged sentences

Note 7  —

Employee Stock Plans

2019 Stock Plan

On April 24, 2019, the Company’s Board of Directors and shareholders approved the 2019 Stock Plan ( “2019 Plan”) to replace the 2009 Stock Plan.

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 241,203 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.

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 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

The 2009 Employee Stock Purchase Plan ( “2009 ESPP”) was adopted in March 

2009 and amended by the Board of Directors in January 2015 and in February 2017, and approved by the Company's stockholders on April 23, 2015 and April 26, 2017, 

to reserve an additional 71,429 and 107,143 shares of common stock, respectively, for issuance under the 2009 ESPP. 

The 2009 ESPP was amended and restated by the Board of Directors on March 5, 2020 

and approved by the Company’s stockholders on April 22, 2020. 

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

Stock-based compensation expense included in the Company's consolidated financial statements for the three months ended April 3, 2022 and April 4, 2021 was as follows (in thousands):

Three Months Ended

Nine Months Ended

September 27,

April 3, 2022

April 4, 2021

Cost of revenue

1 unchanged sentence

Selling, general and administrative

$ 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.

During the three  months ended April 3, 2022, there was no  stock-based compensation expense reversal related to the cancellation of certain unvested performance-based RSUs.

During the three months ended 

April 4, 2021 , the Company reversed stock-based compensation expense related to the cancellation of certain unvested performance-based RSUs.

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

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 nine months ended October 3, 2021 (in thousands):

The following table summarizes the activity in the shares available for grant under the 2019 Plan during the three months ended April 3, 2022 (in thousands):

Shares Available for Grants

Balance at January 2, 2022

Authorized shares

PRSU's granted

Options cancelled

RSUs forfeited or expired

PRSUs forfeited or expired

Balance at October 3, 2021

Balance at April 3, 2022

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 nine months ended October 3, 2021 :

(in thousands)

2 unchanged sentences

$ 27.49  

Forfeited or expired

( 13 )  

$ 23.84  

Balance outstanding at October 3, 2021

Balance outstanding at April 3, 2022

$ 27.49  

Exercisable at October 3, 2021

Exercisable at April 3, 2022

$ 27.49  

Vested and expected to vest at October 3, 2021

Vested and expected to vest at April 3, 2022

$ 27.49  

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 . 

No stock options were granted, exercised, forfeited or expired during the three months ended April 3, 2022 and April 4, 2021 .

Total stock-based compensation related to stock options was approximately $ 0  for the three months ended April 3, 2022 and April 4, 2021 .

As of April 3, 2022 , 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 $ 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 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:

The stock-based compensation expense related to RSUs and PRSUs was approximately $ 0.4 million and $ 0.3  million for the three months ended 

April 3, 2022 and April 4, 2021 , respectively.

As of April 3, 2022 and April 4, 2021 , there was approximately $ 1.3 million and $ 0.4 million, respectively, in unrecognized compensation expense related to RSUs.

The remaining unrecognized stock-based compensation expense as of April 3, 2022  is expected to be recorded over a weighted average period of 1.66  years.

A summary of activity for the Company's RSUs and PRSUs for the three months ended April 3, 2022 is as follows:

RSUs & PRSUs Outstanding

4 unchanged sentences

( 10 )  

Nonvested at October 3, 2021

Nonvested at April 3, 2022

$ 5.71  

Employee Stock Purchase Plan

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.

Total stock-based compensation related to the Company's ESPP was approximately $ 23 thousand and $ 30 thousand for the three months ended 

April 3, 2022 and April 4, 2021 , respectively.

Note 8  —

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’

foreign tax returns relates to the Company's foreign subsidiaries, which are cost-plus entities.

The Company believes it is more likely than not that federal and state net deferred tax assets will not be fully realized.

In assessing the realizability of deferred tax assets, the Company’s management considers whether it is more likely than not that some portion or all of our deferred tax assets will be realized.

The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income during the periods in which those temporary differences become deductible.

A valuation allowance is recorded for loss carryforwards and other deferred tax assets where it is more likely than not that such deferred tax assets will not be realized.

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

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 October 3, 2021  and January 3, 2021 which would affect the Company's effective tax rate.

The Company recorded a net income tax benefit of $ 1 thousand and an income tax expense of $ 0.2 million for the three months ended 

April 3, 2022 and April 4, 2021 , respectively.

The income tax benefit for the first quarter of 2022 relates to t ax benefits from foreign income tax returns related to the Company's foreign subsidiaries, which are cost-plus entities, partially offset by state minimum income taxes.

The difference between the estimated annual effective income tax benefit rate of 4.3 % and the 21 % U.S.

federal statutory expense rate reflects state income taxes, foreign income taxes, the effect of certain permanent differences, and a full valuation allowance against net deferred tax assets.

The valuation allowance primarily resulted from not having sufficient income from deferred tax liability reversals in the appropriate future periods to support the realization of certain deferred tax assets.

Based on the estimated reversal patterns of the Company’s deferred tax assets and liabilities, it is more likely than not that the Company will not realize the federal, state and certain foreign deferred tax assets generated as there is insufficient projected income from reversals of deferred tax liabilities.

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

and certain foreign net deferred tax assets as of April 3, 2022 .

The Company had no unrecognized tax benefits as of April 3, 2022  and January 2, 2022 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.

Accrued interest and penalties related to unrecognized tax benefits are recognized as part of the income tax provision in the condensed consolidated statements of operations.

The Company is subject to U.S.

federal income tax as well as income taxes in many U.S.

The Company is subject to U.S. federal income tax as well as income taxes in many U.S.

states and foreign jurisdictions in which the Company operates.

tax years from 1999 forward remain effectively open to examination due to the carryover of unused net operating losses and tax credits.

Under the Tax Reform Act of 1986, the amount of and the benefit from net operating loss carryforwards and credit carryforwards may be impaired or limited in certain circumstances.

Events which may restrict utilization of a company's net operating loss and credit carryforwards include, but are not limited to, certain ownership change limitations as defined in Internal Revenue Code Section 382 and similar state provisions.

In the event the Company has had a change of ownership, utilization of carryforwards could be restricted to an annual limitation.

The annual limitation may result in the expiration of net operating loss carryforwards and credit carryforwards before utilization.

The Company has not undertaken a study to determine if its net operating losses are limited.

In the event the Company previously experienced an ownership change, or should experience an ownership change in the future, the amount of net operating losses and research and development credit carryovers available in any taxable year could be limited and may expire unutilized.

On March 27, 2020, the United States enacted the Coronavirus Aid, Relief, and Economic Security Act (“CARES Act”) as a result of the Coronavirus pandemic.

The Act includes provisions relating to loan programs for small businesses ("Paycheck Protection Program" or "PPP"), refundable payroll tax credits, deferment of the employer portion of certain payroll taxes, net operating loss carryback periods, alternative minimum tax credit refunds, modifications of the net interest deduction limitations and technical corrections to tax depreciation methods for qualified improvement property.

The Company applied for and received $1.2M of the PPP loan in Q2 2020 and the amount was utilized on qualified business expenses under the guidance of PPP.

On December 27, 2020, the President signed the Consolidated Appropriations Act 2021 (the "Bill") into law.

The Bill confirms the business expenses paid out of PPP loans maybe deducted for federal income tax purposes and the borrower's tax basis and other attributes of the borrower's assets will not be reduced as a result of the loan forgiveness.

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

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 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.

These provisions will be applied retroactively to tax years beginning on or after January 1, 2020 through December 31, 2022.

However, the law provides for a small business exemption for taxpayers with income subject to tax under $1 million.

The Company has evaluated the current legislation and does not anticipate AB 85 to have a material impact on its financial statements.

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.

tax years from 1999 forward remain effectively open to examination due to the carryover of unused net operating losses and tax credits.

9  —

2 unchanged sentences

For all periods presented, the Company operated in a single reportable business segment.

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

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

Three Months Ended

Nine Months Ended

September 27,

$ 2,758  

April 3, 2022

April 4, 2021

$ 3,450  

4 unchanged sentences

$ 2,240  

$ 8,980  

$ 6,134  

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 type (in thousands): 

Three Months Ended

Nine Months Ended

September 27,

$ 2,858  

$ 1,766  

$ 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.

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

New product revenues included  professional engineering services revenue related to eFPGA IP of $ 1.6  million and $ 0 , SaaS revenue of  $ 34 thousand and $ 0.1  million for the three months ended 

April 3, 2022 and April 4, 2021 , respectively.

Contract assets related to professional services revenue of $ 0.1  million and $ 0.3 million were included in accounts receivable on the consolidated balance sheets as of 

April 3, 2022  and 

January 2, 2022 , respectively. Contract liabilities, related to professional services revenue of $ 0 and $ 0.3 million and were included in deferred revenue on the consolidated balance sheets as of 

April 3, 2022  and 

January 2, 2022 , respectively.  Mature products include all products produced on semiconductor processes larger than 180 nanometer.

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

Three Months Ended

Nine Months Ended

September 27,

April 3, 2022

April 4, 2021

Asia Pacific (1)

$ 1,491  

$ 1,505  

North America (2)

2 unchanged sentences

$ 2,240  

$ 8,980  

$ 6,134  

Asia Pacific includes revenue from Japan of $739 

,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.

Asia Pacific includes revenue from Japan of $ 1.4 million , or 33 % of tota l revenue and $ 0.7 million, or 32 % of total revenue for the three months ended 

April 3, 2022 and April 4, 2021 , respectively.

North America includes revenue from the United States of $ 2.4  million or 59 % of total revenue, and $ 1.2 million, or 56 % of total revenue for the three months ended April 3, 2022 and April 4, 2021 , respectively.

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

Three Months Ended

Nine Months Ended

September 27,

Distributor "A"

3 unchanged sentences

The following distributors and customers accounted for 10% or more of the Company's accounts receivable as of the dates presented:

April 3, 2022

January 2, 2022

Distributor "A"

Distributor "C"

Distributor "E"

4 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 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 is required to take delivery of and pay for a portion of this forecasted wafer volume. As of April 3, 2022 , and January 2, 2022 , the Company had $ 0.8 million and $ 0.9  million 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 October 3, 2021 , total outstanding purchase obligations for other goods and services were $ 1.0  million due within the next twelve months.

As of April 3, 2022 , total outstanding purchase obligations for other goods and services were $ 0.9  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 October 3, 2021 , the Company was not involved in any litigation.

India Transfer Pricing Notice

On January 27, 2021, the Company received an order from the Income Tax Department of the Ministry of Finance in India (the "DRP, or "the Department") disputing the transfer pricing rate the Company used for Assessment Years 

2017 - 18, the result of which may affect later years.

It is the intention of the Company to appeal such order as the rate requested by the government of India is not representative of the results of operations of the company, as well as other factors.

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.

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.

As of April 3, 2022 , the Company was not involved in any litigation.

11  —

Subsequent Events

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.

April 4, 2022, the Company entered into a Fifth Amendment to the

December 21, 2018 Amended and Restated Loan and Security Agreement (the "Agreement") with Heritage Bank.

5, Debt Obligations, for additional information.

On May 10, 2022 ( the "Date") at the Company's Annual Meeting, a majority of shareowners approved the proposed Amendment to increase  the number of shares available for future awards under the 2019 Plan by 900,000 shares of common stock. 

The approval of an additional 900,000 shares of common stock on the Date, increases the total number of available shares under the 2019 Plan to 1,422,027 .

The number of 

shares available for future awards as of the date of the Annual Meeting are the sum of ( 1 ) 900,000, ( 2 ) the number of shares available for future awards under the plan immediately before such approval which were 522,027 shares and ( 3 ) any shares subject to outstanding awards under the 2019 Plan or the 2009 Plan, that are terminated, canceled, surrendered, or forfeited which was zero at the Date.  

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