What changed in this filing

/stocks — the workspaceLOADING

Item 1. Financial Statements

2022-08-17 compared with 2022-05-18 · 236 added, 151 removed, 347 unchanged (53% of the section changed)

44 unchanged sentences

200,000 authorized;

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

12,428 and 11,863 shares issued and outstanding as of July 3, 2022 and January 2, 2022, respectively

Additional paid-in capital

12 unchanged sentences

Three Months Ended

$ 4,096  

$ 2,240  

Six Months Ended

Cost of revenue

4 unchanged sentences

Loss from operations

( 1,009 )  

Interest expense

( 33 )  

Gain on forgiveness of debt

Interest income and other income (expense), net

( 123 )  

Loss before income taxes

( 1,165 )  

(Benefit from) provision for income taxes

$ ( 1,164 )  

Provision for income taxes

Net loss per share:

Basic and diluted

$ ( 0.10 )  

Weighted average shares outstanding:

Basic and diluted

12,126  

11,264  

________________________

Note:

Net loss equals comprehensive loss for all periods presented.

See accompany notes to unaudited condensed consolidated financial statements

See accompanying notes to unaudited condensed consolidated financial statements.

QUICKLOGIC CORPORATION

1 unchanged sentence

(in thousands)

Three Months Ended

Six Months Ended

Cash flows from operating activities:

$ ( 1,164 )  

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

2 unchanged sentences

Write-down of inventories and reclassifications

( 26 )  

Gain on disposal of equipment

Gain on forgiveness of debt

Bad debt expense

Changes in operating assets and liabilities:

Accounts receivable

( 287 )  

( 188 )  

Trade payables

1 unchanged sentence

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

( 98 )  

Proceeds from line of credit

15,000  

Repayment of line of credit

( 15,000 )  

Proceeds from issuance of common stock

3 unchanged sentences

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  

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

Issuance of common stock under public stock offering, net of stock issuance cost

Common stock issued under stock plans and employee stock purchase plans

5 unchanged sentences

( 302,189 )  

Common stock issued under stock plans and employee stock purchase plan

Stock-based compensation

( 524 )  

Balance at July 3, 2022

12,428  

$ 312,686  

$ ( 302,713 )  

$ 9,985  

Stockholders'

13 unchanged sentences

10,682  

Common stock issued under stock plans and employee stock purchase plan

Stock-based compensation

( 2,062 )  

Balance at July 4, 2021

11,512  

$ 307,117  

$ ( 298,160 )  

$ 8,969  

See accompanying notes to unaudited condensed consolidated financial statements

Notes to unaudited condensed consolidated financial statements

Notes to unaudited condensed consolidated financial statements

Note 1 —

11 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 months ended April 3, 2022 are not necessarily indicative of the results that may be expected for the full fiscal year.

Operating results for the three and six months ended July 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 first fiscal quarter for 2022 and 2021 ended on April 3, 2022  and April 4, 2021 , respectively.

QuickLogic's second fiscal quarter for 2022 and 2021 ended on July 3, 2022  and July 4, 2021 , respectively.

COVID- 19 - Impact on Business 

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.

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 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.

The Company has financed its operations and capital investments through public and private offerings of our common stock, finance and operating leases, and borrowing under a revolving line of credit with Heritage Bank (the "Revolving Facility"), partially offset by cash used in operations.

In addition to the Company's $ 18.5  million of cash, cash equivalents and restricted cash, as of 

July 3, 2022  other sources of liquidity included a $ 15.0  million drawn down from the Revolving Facility and $ 1.6  million in net proceeds from the Company's sale of common stock in 

six months ended July 3, 2022 .

The Company was in compliance with all the Heritage Bank Revolving Facility loan covenants as of 

July 3, 2022 .

As of July 3, 2022 , the Company had $ 15.0  million outstanding on the Revolving Facility with an interest rate of 5.25 %.

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.

2 unchanged sentences

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, 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, market acceptance of existing and new products including solutions based on its eFPGA IP, ArcticLink ®

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.

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, 

17 unchanged sentences

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.

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

1 unchanged sentence

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

The Company performs ongoing credit evaluations of its customers and generally does 

not  require collateral.

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 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 

During the 

three and six months ended July 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 

Recent Accounting Standards Adopted

3 unchanged sentences

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.

New Accounting Standards Not Yet Adopted

In June 2022, the FASB issued ASU No.

2022 - 03, Fair Value Measurement (Topic 820 ) Fair Value Measurement of Equity Securities Subject to Contractual Sale Restrictions to clarify the measurement of the fair value of an equity security subject to contractual restrictions that prohibit the sale of an equity security and requires disclosures related to these types of equity securities.

This ASU 2022 - 03 becomes effective for the Company on January 2, 2023 and is not expected to have an impact on the Company's consolidated financial statements or disclosures.

Net Loss Per Share

Basic loss per share is computed by dividing net loss 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 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.

For the three and six months ended July 3, 2022  

July 4, 2021 , 536  thousand and 255  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 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. 

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 periods presented as they were also considered anti-dilutive due to the net loss the Company experienced during these periods. 

Balance Sheet Components

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

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

Accounts receivable:

Trade account receivables

$ 3,295  

$ 1,113  

Allowance for doubtful accounts

( 62 )  

Trade account receivables, net

Unbilled account receivables

Contract assets

$ 3,560  

$ 1,294  

Work-in-process

26 unchanged sentences

Accrued liabilities:

Employee related accruals

$ 1,069  

Accrued compensation

Accrued employee benefits

Accrued payroll tax

$ 1,652  

$ 1,665  

(1) Accrued liabilities-Other is partially comprised of a $100 non-cash lease adjustment offsetting Other Assets in the six months ended July 3, 2022.

Note 5  —

1 unchanged sentence

Revolving Line of Credit

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.

As of July 3, 2022 and January 2, 2022 , the Company had $ 15.0 million of revolving debt outstanding with an interest rate of 5.25 % 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.

Interest expense recognized were $ 14  tho usand and $ 39  thousand for th e  

three and six months ended July 3, 2022 , r espectively, an d $ 22  thousand and $ 46  thou sand for the 

three and six months ended July 4, 2021 , respectively.

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.

three  ( 3 ) month EBITDA;

and (ii) revised 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.

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. 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.

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.

Operating leases generally have lease terms of one to five years.

Finance leases are generally two to 

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 .

Operating leases generally have lease terms of 

one  to 

five  years.

Finance leases are generally 

two  to 

three  years.

July 3, 2022  and 

January 2, 2022 , the balance of right-of-use assets was approximately $ 1.1 million and $ 1.5 million, respectively, and the lease liability was approximately $ 1.2 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 and $ 0.2 million for the 

three and six months ended July 3, 2022  and July 4, 2021 , respectively.

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

Three Months Ended

April 3, 2022

April 4, 2021

Six Months Ended

Operating lease costs:

2 unchanged sentences

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

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

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 3, 2022  and the 

six months ended July 4, 2021  were $ 0 (in thousands):

Six Months Ended

July 3, 2022  

July 4, 2021  

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

2 unchanged sentences

Financing cash flows used for financing leases

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

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

July 3, 2022  

January 2, 2022  

Right-of-use assets:

10 unchanged sentences

$ 1,563  

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

The following table provided the details of future lease payments for operating and finance leases as of July 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 April 3, 2022 and January 2, 2022 :

April 3, 2022

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

January 2, 2022

8 unchanged sentences

4.42 %  

7  —

Employee Stock Plans

On May 10, 2022 

at the Company's Annual Meeting, Company stockholders approved increasing the reservation of the additional shares under the 2019 Stock Plan, as amended on May 10, 2022. 

The approval of an additional 900 thousand shares of common stock increased the total number of available shares to 1.4 million under the 2019 Stock Plan, as amended.

The number of shares available for future awards as of the date of the Annual Meeting are the sum of ( 1 ) 900 thousand, ( 2 ) the number of shares available for future awards under the plan immediately before such approval which were 522 thousand 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. On May 19, 2022, the Company filed a Registration Statement on Form S- 8  with the SEC to register an additional 

900 thousand shares of its common stock that may be issued under the Company’s 2019 Stock Plan, as amended.

Note 8  —

Stock-Based Compensation

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):

Stock-based compensation expense included in the Company's consolidated financial statements for the three and 

six months ended July 3, 2022  and July 4, 2021  was as follows (in thousands):

Three Months Ended

April 3, 2022

April 4, 2021

Six Months Ended

Cost of revenue

1 unchanged sentence

Selling, general and administrative

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.

There was 

no  stock -based compensation expense reversal related to the cancellation of certain unvested performance-based RSUs for the 

three and six months ended July 3, 2022  and 

July 4, 2021 .

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

No stock options were granted during the three and six months ended July 3, 2022  and 

July 4, 2021 .

Stock-Based Compensation Award Activity

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

The following table summarizes the activity in the shares available for grant under the 2019 Plan during the 

six months ended July 3, 2022  (in thousands):

Shares Available for Grants

1 unchanged sentence

RSUs forfeited or expired

Balance at April 3, 2022

Balance at July 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 three months ended April 3, 2022 :

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 3, 2022 :

(in thousands)

2 unchanged sentences

$ 27.49  

Balance outstanding at April 3, 2022

$ 48.03  

Exercisable at April 3, 2022

Balance outstanding at July 3, 2022

$ 25.42  

Vested and expected to vest at April 3, 2022

Exercisable at July 3, 2022

$ 25.42  

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 . 

Vested and expected to vest at July 3, 2022

$ 25.42  

No stock options were granted, exercised, forfeited or expired during the 

six months ended July 3, 2022 and July 4, 2021 .

Total stock-based compensation related to stock options was $ 0 during the 

six months ended July 3, 2022 and July 4, 2021 . 

As of July 3, 2022 , the fair value of unvested stock options, net of forfeitures, was $ 0 . 

Restricted Stock Units

The Company grants restricted stock units (“RSUs”) and performance restricted stock units ("PRSUs") to employees and directors with various vesting terms.

RSUs entitle the holder to receive, at no cost, one common share for each RSU as it vests.

RSUs entitle the holder to receive, at 

no  cost, 

one  common share for each RSU as it vests.

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 $ 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:

The stock-based compensation expense related to RSUs and PRSUs was approximately $ 0.5 million and $ 0.9 million for the 

three and six months ended July 3, 2022 , respectively, and approximately $ 0.2 million and $ 0.6 million for the 

three and six months ended July 4, 2021 , respectively.

July 3, 2022 and July 4, 2021 , there was approximately $ 1.1 million and $ 0.2 million, respectively, in unrecognized compensation expense related to RSUs. The remaining unrecognized stock-based compensation expense as of July 3, 2022  is expected to be recorded over a weighted average period of 1.47  years.

A summary of activity for the Company's RSUs and PRSUs for the 

six months ended July 3, 2022  is as follows:

RSUs & PRSUs Outstanding

3 unchanged sentences

( 22 )  

( 10 )  

Nonvested at April 3, 2022

$ 5.71  

Nonvested at July 3, 2022

Employee Stock Purchase Plan

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.

Total stock-based compensation related to the Company's Employee Stock Purchase Plan was approximately $ 11 thousand and $ 34 thousand for the 

three and six months ended July 3, 2022 , respectively, and $ 36 thousand and $ 66 thousand for the 

three and six months ended July 4, 2021 , respectively.

Note 8  —

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 Company recorded a net income tax expense of $ 17 thousand and $ 16 thousand for the 

three and six months ended July 3, 2022 , respectively, and $ 5 thousand and $ 0.2 million for the 

three and six months ended July 4, 2021 , respectively.

A majority of the income tax expense for the three months ended 

July 3, 2022  was related to the Company's foreign subsidiaries, which are cost-plus entities, and state minimum income taxes. A majority of the income tax expense for the 

six months ended July 3, 2022  was related to income tax expense of the Company's foreign subsidiaries and state minimum income taxes, partially offset by tax benefits from foreign income tax returns related to the Company's foreign subsidiaries.

The difference between the estimated annual effective income tax benefit rate of 2.1 % 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.

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.

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

The Company had no unrecognized tax benefits as of July 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.

9  —

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

Note 9  —

Information Concerning Product Lines, Geographic Information and Revenue Concentration

3 unchanged sentences

Three Months Ended

April 3, 2022

April 4, 2021

Six Months Ended

$ 3,131  

$ 1,262  

$ 6,581  

$ 2,337  

Mature products

2 unchanged sentences

$ 2,882  

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.

$ 8,637  

$ 5,122  

New products revenue consists of revenues from the sale of hardware products manufactured on 

180  nanometer or smaller semiconductor processes, eFPGA intellectual property licenses, professional services, and QuickAI and SensiML AI software as a service (“SaaS”) revenue.

Mature products include all products produced on semiconductor processes larger than 

180  nanometer.

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

Three Months Ended

Six Months Ended

Hardware products

$ 1,464  

$ 1,069  

$ 3,299  

$ 2,074  

New products revenue

$ 3,131  

$ 1,262  

$ 6,581  

$ 2,337  

eFPGA IP revenue was $ 1.6 million and $ 3.2 million for the  

three and six months ended July 3, 2022 . eFPGA IP revenue, consisting of intellectual property license revenue and professional services revenue, was $ 1.5 million and $ 3.1 million for the 

three and six months ended July 3, 2022 , respectively, and $ 23 thousand for the 

three and six months ended July 4, 2021 , and IP revenue was $ 0.1 million for the 

three and six months ended July 3, 2022  and $ 125  thousand for the 

three and six months ended July 4, 2021 . 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 July 3, 2022 and 

January 2, 2022, respectively. 

We derive revenue from sales to customers located in North America, Europe and Asia Pacific.

North America revenue from the United States was $ 3.0 million, or 

67 % of total revenue, and $ 5.5 million, or 63 % of total revenue for the 

three and six months ended July 3, 2022 , respectively.

North America revenue from the United States was $ 0.6 million, or 

19 % of total revenue, and $ 1.8 million, or 

35 % of total revenue for the 

three and six months ended July 4, 2021 , respectively. 

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

Three Months Ended

April 3, 2022

April 4, 2021

Asia Pacific (1)

Six Months Ended

$ 1,075  

$ 2,331  

$ 1,828  

North America

2 unchanged sentences

$ 2,882  

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.

$ 8,637  

$ 5,122  

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

Three Months Ended

Six Months Ended

Distributor "A"

1 unchanged sentence

Distributor "E"

Customer "E"  

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

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"

6 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 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 is required to take delivery of and pay for a portion of this forecasted wafer volume. As of July 3, 2022 , the Company had $ 0.6 million of outstanding commitments for the purchase of wafer inventory.

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

As of April 3, 2022 , total outstanding purchase obligations for other goods and services were $ 0.9  million due within the next twelve months.

As of July 3, 2022 , total outstanding purchase obligations for other goods and services were $ 1.2 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 April 3, 2022 , the Company was not involved in any litigation.

11  —

Subsequent Events

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.  

eFPGA Project Agreement

On August 8, 2022, we executed an Agreement (the “Agreement”) with a new customer to develop an eFPGA product in accordance with the customer’s specifications.

Under the terms of the Agreement, we will be paid fees of $ 6.9 million for performing the work over an approximately 12 -month period from the execution date of the Agreement.

Upon successful performance, the Agreement allows for the customer to extend the scope of work to tens of millions of dollars over the span of multiple years.

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