What changed in this filing

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Item 1. Financial Statements

2024-05-15 compared with 2023-11-15 · 290 added, 482 removed, 236 unchanged (77% of the section changed)

5 unchanged sentences

Cash, cash equivalents and restricted cash

$ 18,625  

$ 19,201  

Accounts receivable, net of allowance for doubtful accounts of $ 16 and $ 18 , as of October 1, 2023 and January 1, 2023, respectively

$ 27,399 $ 24,606

Accounts receivable, net of allowance for doubtful accounts of $ 24 and $ 34 , as of March 31, 2024 and December 31, 2023, respectively

Contract assets

2 unchanged sentences

Total current assets

28,063  

27,940  

35,309 34,630

Property and equipment, net

3 unchanged sentences

Non-marketable equity investment

$ 36,549  

$ 32,586  

$ 51,929 $ 47,792

LIABILITIES AND STOCKHOLDERS' EQUITY

1 unchanged sentence

Revolving line of credit

$ 15,000  

$ 20,000 $ 20,000

Trade payables

1 unchanged sentence

Deferred revenue

Notes payable, current

Lease liabilities, current

Total current liabilities

22,052  

20,022  

28,471 29,630

Long-term liabilities:

Lease liabilities, non-current

Notes payable, non-current

Other liabilities, non-current

Total liabilities

22,509  

20,691  

29,682 30,897

Commitments and contingencies (see Note 11)

5 unchanged sentences

200,000 authorized;

13,906 and 13,202 shares issued and outstanding as of October 1, 2023 and January 1, 2023, respectively

14,422 and 14,118 shares issued and outstanding as of March 31, 2024 and December 31, 2023, respectively

Additional paid-in capital

321,623  

317,174  

327,680 322,436

Accumulated deficit

( 307,597 )  

( 305,447 ) ( 305,555 )

Total stockholders' equity

14,040  

11,895  

22,247 16,895

TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY

$ 36,549  

$ 32,586  

$ 51,929 $ 47,792

See accompanying notes to unaudited condensed consolidated financial statements.

3 unchanged sentences

Three Months Ended

Nine Months Ended

$ 6,665  

$ 3,459  

$ 13,719  

$ 12,096  

Cost of revenue

3 unchanged sentences

Total operating expenses

10,767  

Operating income (loss)

( 1,240 )  

( 2,046 )  

Interest expense

( 48 )  

( 44 )  

( 156 )  

Interest income and other (expense) income, net

( 36 )  

( 60 )  

( 99 )  

Interest income and other income (expense), net

Income (loss) before income taxes

( 1,344 )  

( 2,301 )  

Provision for income taxes

(Benefit from) provision for income taxes

Net income (loss)

$ 1,192  

$ ( 1,347 )  

$ ( 2,305 )  

Net income (loss) per share:

$ 0.09  

$ ( 0.11 )  

$ ( 0.17 )  

$ 0.08  

$ ( 0.11 )  

$ ( 0.17 )  

Weighted average shares outstanding:

13,859  

12,664  

13,377  

12,401  

14,131  

12,664  

13,377  

12,401  

Net income (loss) equals comprehensive income (loss) for all periods presented.

3 unchanged sentences

(in thousands)

Nine Months Ended

Cash flows from operating activities:

$ ( 2,305 )  

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

Three Months Ended

Cash flows provided by (used in) operating activities:

Net income (loss)

Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities:

Depreciation and amortization

2 unchanged sentences

Write-down of inventories and reclassifications

Gain on disposal of equipment

Changes in operating assets and liabilities:

1 unchanged sentence

Contract assets

( 2,028 )  

( 142 )  

( 1,343 )  

Trade payables

( 836 )  

Accrued liabilities

1 unchanged sentence

Lease liabilities

( 298 )  

Other long-term liabilities

Net cash used in operating activities

( 118 )  

Cash flows from investing activities:

Net cash provided by (used in) operating activities

Cash flows provided by (used in) investing activities:

Capital expenditures for property and equipment

( 2,015 )  

Capitalized internal-use software

( 422 )  

Net cash used in investing activities

( 2,437 )  

Cash flows from financing activities:

Payment of finance lease obligations

( 435 )  

Net cash provided by (used in) investing activities

Cash flows provided by (used in) financing activities:

Payment of notes payable

Proceeds from notes payable

Proceeds from line of credit

45,000  

Repayment of line of credit

( 45,000 )  

Proceeds from issuance of common stock

Proceeds from issuance of common stock to investors

Stock issuance cost

( 20 )  

Net cash provided by financing activities

Net cash provided by (used in) financing activities

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

( 576 )  

Cash, cash equivalents and restricted cash at beginning of period

19,201  

19,605  

Cash, cash equivalents and restricted cash at end of period

$ 18,625  

$ 20,036  

Supplemental disclosures of cash flow information:

1 unchanged sentence

Income taxes paid

Supplemental disclosures of noncash financing and investing items

Purchases of fixed assets with financing lease

Supplemental disclosures of non-cash financing and investing items

Purchases of fixed assets with financing arrangements

Stock-based compensation capitalized as internal-use software

Purchases of property and equipment in accounts payable

$ 2,296  

See accompanying notes to unaudited condensed consolidated financial statements.

QUICKLOGIC CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’

CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY

(In thousands)

Stockholders'

Balance at January 1, 2023

13,202  

$ 317,174  

$ ( 305,292 )  

$ 11,895  

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

Balance at December 31, 2023

Issuance of common stock from private placement, net of stock issuance cost

Common stock issued under stock plans and employee stock purchase plans

Stock-based compensation

( 1,228 )  

Balance at April 2, 2023

13,686  

320,181  

( 306,520 )  

13,675  

Common stock issued under stock plans and employee stock purchase plan

Stock-based compensation

( 2,269 )  

Balance at July 2, 2023

13,725  

320,950  

( 308,789 )  

12,175  

Common stock issued under stock plans and employee stock purchase plan

Common stock offering, net of issuance costs

Stock-based compensation

Balance at October 1, 2023

13,906  

$ 321,623  

$ ( 307,597 )  

$ 14,040  

Balance at March 31, 2024

Stockholders'

Balance at January 1, 2023

11,863  

$ 310,222  

$ ( 301,025 )  

$ 9,209  

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

Issuance of common stock from private placement, net of stock issuance cost

Common stock issued under stock plans and employee stock purchase plans

Stock-based compensation

( 1,164 )  

Balance at April 2, 2023

12,362  

312,087  

( 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 )  

Common stock issued under stock plans and employee stock purchase plan

Common stock offering, net of issuance costs

Stock-based compensation

( 1,347 )  

Balance at October 2, 2022

13,110  

$ 316,355  

$ ( 304,060 )  

$ 12,308  

See accompanying notes to unaudited condensed consolidated financial statements.

Notes to unaudited condensed consolidated financial statements

Note 1 —

The Company and Basis of Presentation

QuickLogic Corporation ("QuickLogic" or, the "Company"), was founded in 

1988  and reincorporated in Delaware in 

 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 or IoT hardware products, Military, Aerospace and Defense products.

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").

Starting in late 

2021, the Company increased its professional engineering services business related to its eFPGA products for both civilian and military applications.

The Company’s wholly owned subsidiary, SensiML Corp.

("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.

SensiML Analytics toolkit is an end-to-end software suite that provides OEMs a straightforward process for developing pattern matching sensor algorithms using machine learning technology that are optimized for ultra-low power consumption.

Notes to unaudited condensed consolidated financial statements

Note 1 — The Company and Basis of Presentation

QuickLogic Corporation was founded in 1988 and reincorporated in Delaware in 1999.

The Company provides innovative, programmable silicon and software platforms to enable its customers to develop custom hardware products in a fast time-to-market and cost-effective way.

Specifically, QuickLogic is a fabless semiconductor company with a variety of products:

embedded FPGA ("eFPGA") intellectual property ("IP"), low power, multi-core semiconductor system-on-chips ("SoCs"), discrete FPGAs, and AI software.

QuickLogic's customers can use its eFPGA IP for hardware acceleration and pre-processing in their Application Specific Integrated Circuit ("ASIC") products, the Company's SoCs to run its customers' software and build their hardware around, and the Company's discrete FPGAs to implement their custom functionality.

The Analytics Toolkit from SensiML Corporation ("SensiML"), the Company's wholly-owned subsidiary, provides an end-to-end Artificial Intelligence / Machine Learning solution with accurate sensor algorithms using AI technology.

The full range of platforms, software tools, and eFPGA IP enables the practical and efficient adoption of AI, voice, and sensor processing across Aerospace and Defense, Consumer/Industrial IoT, and Consumer Electronics markets.

The accompanying interim condensed consolidated financial statements are unaudited.

In the opinion of the Company’s management, these statements have been prepared in accordance with the United States generally accepted accounting principles (“U.S.

GAAP”), and include all adjustments, consisting only of normal recurring adjustments, necessary to provide a fair statement of results for the interim periods presented.

The Company recommends that these interim unaudited condensed consolidated financial statements be read in conjunction with the Company's Form 

10 -K for the year ended January 1, 2023, which was filed with the Securities and Exchange Commission (“SEC”) on March 28, 2023.

Operating results for the three and nine months ended October 1, 2023 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 quarter for 2023 and 2022 ended on October 1, 2023  and October 2, 2022 , respectively.

2023 Cybersecurity Incident

On January 20, 2023, the Company detected a ransomware infection affecting a limited number of IT systems, including systems that contained personal information of our employees.

Upon detection of the incident, the Company promptly began an assessment of all Company IT systems, notified law enforcement, and engaged legal counsel and other incident response professionals.

Through counsel, the Company retained a leading cybersecurity forensics firm to review and investigate the incident.

We have completed our forensic work and have found no impact on our financial systems.

For potentially affected individuals or entities whose personally identifiable data may have been accessed, we are providing free credit monitoring services to them.

The Company is voluntarily taking steps to further secure its IT infrastructure, systems, and security.

The Company believes the incident has not had nor will have a material impact on its business operations, ability to service its customers, or financial results.

The Company carries insurance, including cyber insurance, commensurate with its size and the nature of its operations.

Liquidity 

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

As of October 1, 2023 , the Company's principal sources of liquidity consisted of cash, cash equivalents and restricted cash of $ 18.6  million, inclusive of a $ 15.0  million advance from its Revolving Facility, and $ 2.3 million in net proceeds from the Company's sale of common stock in the nine months ended October 1, 2023 .

The Company's restricted cash balance as of October 1, 2023 was $ 0.1 million and relates to amounts pledged as cash security for the use of credit cards.

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

October 1, 2023 .

As of October 1, 2023 , the Company had $ 15.0  million outstanding on the Revolving Facility with an interest rate of 9.00 %.

In the opinion of the Company’s management, these statements have been prepared in accordance with the United States generally accepted accounting principles (“U.S.

GAAP”), and include all adjustments, consisting only of normal recurring adjustments, necessary to provide a fair statement of results for the interim periods presented.

The Company recommends that these interim unaudited condensed consolidated financial statements be read in conjunction with the Company's Form 10 -K for the year ended December 31, 2023 , which was filed with the Securities and Exchange Commission (“SEC”) on March 27, 2024 .

Operating results for the three months ended March 31, 2024 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 2024 and 2023 ended on March 31, 2024 and April 2, 2023 , respectively.

The Company has one reportable business segment based on how its Chief Operating Decision Maker ("CODM") manages the business and in a manner consistent with the internal reporting provided to the CODM.

The CODM, the Company's Chief Executive Officer ("CEO"), reviews detailed income statements, balance sheets, and sales reports in order to assess performance of the Company.

Sales and operating income are some of the key variables monitored by the CODM and management when determining the Company's financial condition and operating performance.

The Company has financed its operations and capital investments through the sale of common stock, financing arrangements, operating leases, a revolving line of credit with Heritage Bank (the "Revolving Facility"), and cash flows from operations.

As of March 31, 2024 , the Company's principal sources of liquidity consisted of cash, cash equivalents and restricted cash of $ 27.4 million, inclusive of a $ 20.0 million advance from its Revolving Facility and $ 3.5 million in net proceeds from the Company's sale of common stock in the three months ended March 31, 2024 .

The Company's restricted cash balance as of March 31, 2024 was $ 0.1 million and relates to amounts pledged as cash security for the use of credit cards.

The Company was in compliance with all the Revolving Facility loan covenants as of March 31, 2024 .

As of March 31, 2024 , the Company had $ 20.0 million outstanding on the Revolving Facility with an interest rate of 9.00 %.

On March 13, 2024 , the Company entered into common stock purchase agreements with certain institutional investors and their affiliated entities for the sale of an aggregate of 223 thousand shares of common stock, par value $ 0.001 , in a registered direct offering, resulting in net cash proceeds of approximately $ 3.5 million.

Issuance costs related to the offering were negligible.

The purchase price for each share of common stock was $ 16.00 .

See Note 9 for additional information.

On March 21, 2023 , the Company entered into common stock purchase agreements with certain investors for the sale of an aggregate of 450 thousand shares of its common stock, in a registered direct offering pursuant to an effective shelf registration statement on Form S- 3, resulting in net cash proceeds of approximately $ 2.3 million.

Issuance costs related to the offering were immaterial.

The purchase price for each share of common stock in the Share Placement was $ 5.14 .

On April 28, 2023 , the Company converted accounts receivable for a customer in the amount of approximately $ 1.16 million to notes receivable (the "Note").

4 unchanged sentences

All other terms of the Note remained the same.

On March 21, 2023, 

the Company entered into common stock purchase agreements with certain investors for the sale of an aggregate of 450 thousand shares of common stock, par value $ 0.001 , in a registered direct offering, resulting in net cash proceeds of approximately $ 2.3  million.

Issuance costs related to the offering were negligible.

The purchase price for each share of common stock was $ 5.14 .

See Note 7  for additional information.

As of March 31, 2024, the related note receivable balance was $ 1.21 million, including $ 54 thousand in accrued interest.

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 as of October 1, 2023, together with its revenues from operations, and the 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. 

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

Based on past performance and current expectations, the Company believes that its existing cash and cash equivalents, together with $ 3.5 million gross cash proceeds from the March 13, 2024 financing, its revenues from operations, and the 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.

Various factors 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 ArcticLink®

and PolarPro®

platforms, ArcticPro™, EOS 

S3  SoC, Quick AI solution, QuickAI™, SensiML Analytics Toolkit, Eclipse II products, and eFPGA IP licenses and professional services;

market acceptance of existing and new products including solutions based on the Company's ArcticLink® and PolarPro® platforms, ArcticPro™, EOS S3 SoC, Quick AI solution, QuickAI™, SensiML Analytics Toolkit, Eclipse II products, and eFPGA IP license and professional services;

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’

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;

11 unchanged sentences

the ability to raise funds from the sale of equity in the Company;

the ability to capitalize on synergies with our 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, existing cash and cash equivalents, together with financial resources from its Revolving Facility with Heritage Bank, 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 line of credit in 

December 2024, 

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

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.

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.

Principles of Consolidation

11 unchanged sentences

The preparation of these unaudited condensed consolidated financial statements in conformity with U.S.

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.

Although these estimates are based on the Company’s knowledge of current events and actions it 

undertake in the future, actual results 

may materially differ from these estimates and assumptions in regard to revenue recognition;

and the valuation of inventories including identification of excess quantities, market value and obsolescence.

The methods, estimates and judgments we use in applying our most critical accounting policies have a significant impact on the results we report in our consolidated financial statements.

The SEC has defined critical accounting policies as those that are most important to the portrayal of our financial condition and results of operations and require us to make our most difficult and subjective judgments, often as a result of the need to make estimates of matters that are inherently uncertain.

Based on this definition, our critical accounting estimates include revenue recognition and determination of the standalone selling price for certain distinct performance obligations (such as for IP licensing and professional services contracts) and the assessment of excess, obsolete, and unsaleable inventories.

We believe that we apply judgments and estimates in a consistent manner and that such consistent application results in consolidated financial statements and accompanying notes that fairly represent all periods presented.

However, any factual errors or errors in these judgments and estimates 

have a material impact on our financial statements. For additional information, please refer to the Company's most recent Annual Report on Form 10 -K which was filed with the SEC on 

March 28, 2023.

GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosures of commitments and contingencies at the date of the financial statements, and the reported amounts of revenues and expenses during the reporting periods.

The methods, estimates, and judgments the Company uses in applying its most critical accounting policies have a significant impact on the results it reports in its consolidated financial statements.

The SEC has defined critical accounting policies as those that are most important to the portrayal of the Company's financial condition and results of operations and requires it to make its most difficult and subjective judgments, often as a result of the need to make estimates of matters that are inherently uncertain.

Although these estimates are based on the Company’s knowledge of current events and actions it may undertake in the future, actual results may ultimately materially differ from these estimates and assumptions.

Areas where management uses subjective judgment include, but are not limited to, revenue recognition, inventory valuation, including the identification of excess quantities, market value, and obsolescence, and valuation of goodwill and long-lived and intangible assets.

The Company believes that it applies judgments and estimates in a consistent manner and that such consistent application results in consolidated financial statements and accompanying notes that fairly represent all periods presented.

However, any factual errors or errors in these judgments and estimates may have a material impact on the Company's financial statements.

For additional information, please refer to the Company's most recent Annual Report on Form 10 -K, which was filed with the SEC on March 27, 2024 .

Concentration of Risk

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

The Company's accounts receivable and note receivable are 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 does 

not  require collateral.

See Note 10,  Information Concerning Product Lines, Geographic Information and Revenue Concentration, for information regarding concentrations associated with accounts receivable.

As of October 1, 2023 and January 1, 2023, the Company had $ 15.0 million of revolving debt outstanding with Heritage Bank;

the revolving debt carried an interest rate of 9.00 % and 8.00 % per annum, respectively.

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

See Note 12, Information Concerning Product Lines, Geographic Information and Revenue Concentration, for information regarding concentrations associated with accounts receivable.

As of March 31, 2024 and December 31, 2023 , the Company had $ 20.0 million of revolving debt outstanding with Heritage Bank;

the revolving debt carried an interest rate of 9.00 % 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 agreement.

1 unchanged sentence

The maturity date for advances under the revolving debt agreement is December 31, 2025 .

At October 1, 2023, the Company had utilized a significant portion of the revolving debt, and as a result, it maintains a substantial amount of cash deposits with Heritage Bank.

At March 31, 2024 , the Company had utilized a significant portion of the revolving debt, and as a result, it maintains a substantial amount of cash deposits with Heritage Bank.

The concentration of cash with one financial institution poses certain risks.

For instance, adverse developments affecting financial institutions, companies in the financial services industry, or the financial services industry, such as actual events or concerns involving liquidity, defaults, or non-performance, could adversely impact the stability of Heritage Bank, leading to additional financial risks for the Company.

Any material decline in available funding or our ability to access our cash, cash equivalents, and liquidity resources, inclusive of those at Heritage Bank, could adversely impact our ability to meet our operating expenses, financial and contractual obligations, or result in breaches of our contractual obligations.

Any of these impacts could have material adverse impacts on our operations and liquidity.

Significant Accounting Policies

During the 

three and nine months ended October 1, 2023  there were no changes to the Company's significant accounting policies from its disclosures in the Annual Report on Form 10 -K for the year ended January 1, 2023 .

For a discussion of the significant accounting policies, please see the Annual Report on Form 

10 -K for the fiscal year ended 

January 1, 2023, filed with the SEC on 

Reclassification

Certain amounts in the statement of cash flows for the nine months ended October 2, 2022 were reclassified to conform with the current period presentation.

These reclassifications were within cash flows from operating activities with no impact to the net cash used in operating activities for the period.

Any material decline in available funding or the Company's ability to access its cash, cash equivalents, and liquidity resources, inclusive of those at Heritage Bank, could adversely impact its ability to meet its operating expenses, financial and contractual obligations, or result in breaches of its contractual obligations.

Any of these impacts could have material adverse impacts on the Company's operations and liquidity.

Note 2 — Significant Accounting Policies

During the three months ended March 31, 2024 , there were no changes to the Company's significant accounting policies from its disclosures in the Annual Report on Form 10 -K for the year ended December 31, 2023 .

For a discussion of the significant accounting policies, please see the Annual Report on Form 10 -K for the fiscal year ended December 31, 2023 , filed with the SEC on March 27, 2024 .

In the three months ended March 31, 2024, there we no observable indicators of impairment for the non-marketable equity investment.

Furthermore, utilizing the probability-of-default method to determine the current expected credit loss for the Company's note receivable, the Company determined the associated current expected credit loss to be de minimis as of March 31, 2024.

Financing Arrangements, Non-Cash Activities, & Correction of an Error

The Company previously classified certain licensed tooling software as leased assets and liabilities under ROU assets and financing lease liabilities pursuant to lease accounting under ASC 842, Leases.

Upon further analysis, the Company determined these amounts are intangible assets subject to amortization in accordance with ASC 350, Intangibles, Goodwill, and Other and financed through financing arrangements.

As a result, the Company corrected immaterial errors to revise its statement of cash flows for the three months ended April 2, 2023 .

Cash payments on notes payable during the three months ended April 2, 2023 were $ 0.2 million, instead of presented as payments of finance lease obligations.

Proceeds from notes payable during the three months ended April 2, 2023 were $ 0.1 million, instead of increases in accrued liabilities and other long-term liabilities.

Additionally, $ 0.2 million was added to the depreciation and amortization adjustment for amortization of software tools financed through financing arrangements for the three months ended April 2, 2023 .

Additionally, non-cash activities of $ 0.9 million related to deferred charges and fixed assets in AP were removed from the statement of cash flows.

Purchases of property and equipment with financing arrangements were $ 0.4 million for the three months ended April 2, 2023 .

Purchases of property and equipment in accounts payable was $ 22 thousand for the three months ended April 2, 2023 .

The Company has determined the correction of these errors did not have a material impact on the Company's financial statements, including net income and the balance of accumulated deficit as of and for the three months ended April 2, 2023 .

Additional Classifications in the Statement of Cash Flows

To conform with current quarter's classifications on the statement of cash flows, the Company has added the following classification lines:

ROU asset amortization, Changes in lease liabilities, and Proceeds from issuance of common stock to investors.

These reclassifications to the Statement of Cash Flows for the three months ended April 2, 2023 were not material.

Recent Accounting Standards 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.

2020 - 06 becomes effective for the Company on January 1, 2024.

Early adoption is permitted, but no earlier than fiscal years beginning after December 15, 2020, including interim periods within those fiscal years.

The Board specified that an entity should adopt the guidance as of the beginning of its annual fiscal year.

The Company early adopted ASU No.

2020 - 06 on January 2, 2023 and it had no  material impact on the Company's consolidated financial statements or related disclosures.

Recent 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.

For public business entities, the amendments in this Update are effective for fiscal years beginning after 

December 15, 2023, 

and interim periods within those fiscal years.

Early adoption is permitted for both interim and annual financial statements that have 

not  yet been issued or made available for issuance.

The adoption of this ASU is 

not  expected to have an impact on the Company's consolidated financial statements or disclosures.

Net Income (Loss) Per Share

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

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.

For public business entities, the amendments in this Update are effective for fiscal years beginning after December 15, 2023, and interim periods within those fiscal years.

Early adoption is permitted for both interim and annual financial statements that have not yet been issued or made available for issuance.

The Company adopted ASU No.

2020 - 06 on January 1, 2024 and it had no material impact on the Company's consolidated financial statements or related disclosures.

Recent Accounting Standards Not Yet Adopted

In December 2023, the FASB issued ASU No.

2023 - 09, Income Taxes (Topic 740 ) Improvements to Income Tax Disclosures to enhance the transparency and decision usefulness of income tax disclosures by providing information to better assess how an entity's operations and related tax risks and tax planning and operational opportunities affect its tax rate and prospects for future cash flows.

For public entities, the amendments in this Update are effective for fiscal years beginning after December 15, 2024.

Early adoption is permitted for annual financial statements that have not yet been issued or made available for issuance.

The adoption of this ASU is not expected to have a material impact on the Company's consolidated financial statements or disclosures.

In November 2023, the FASB issued ASU No.

2023 - 07, Segment Reporting (Topic 280 ) Improvements to Disclosures About Reportable Segments to enhance disclosures about significant segment expenses, among other interim disclosure requirements.

For public entities, the amendments in this Update are effective for fiscal years beginning after December 15, 2023, and interim periods beginning after December 15, 2024.

Early adoption is permitted.

The adoption of this ASU is not expected to have a material impact on the Company's consolidated financial statements or disclosures.

Note 3 — Net Income (Loss) Per Share

Basic net income (loss) per share was computed by dividing net income (loss) available by the weighted average number of common shares outstanding during the period.

Diluted net income (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 income (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 periods in which the Company has reported a net loss, diluted net loss per share attributable to common stockholders is the same as basic net loss per share attributable to common stockholders as dilutive common shares are not assumed to have been issued if their effect is anti-dilutive.  For periods in which the Company has reported a net income, diluted net income per share attributable to common stockholders is different from basic net income per share attributable to common stockholders as dilutive common shares would increase the amount of shares outstanding reduced by the amounts of treasury shares repurchased from the proceeds at the average market price for the period. 

For the three months ended October 1, 2023, 925 thousand shares of common stock associate 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.

Of these, a 276 thousand share equivalent was determined to be dilutive and included in the computation of diluted net income per share for the period.

For periods in which the Company has reported a net income, diluted net income per share attributable to common stockholders is different from basic net income per share attributable to common stockholders as dilutive common shares would increase the amount of shares outstanding reduced by the amounts of treasury shares repurchased from the proceeds at the average market price for the period.

For the three months ended March 31, 2024 , 0.7 million shares of common stock 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.

Of these, a 0.4 million share equivalent was determined to be dilutive and included in the computation of diluted net income per share for the period.

Estimated proceeds for the dilutive shares were determined to be $ 59 thousand, which resulted in a reduction of dilutive shares by 4,127 using the treasury stock method at an average market price of $ 14.39 .

For the nine months ended October 1, 2023 and the three and nine months ended October 2, 2022, 

925 thousand and 398 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 the 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. The warrants were exercisable through May 29, 2023 at a price of $ 19.32 per share.

For the three months ended April 2, 2023 , 0.7 million shares of common stock 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 this period.

Warrants to purchase up to 386 thousand shares that were issued in connection with the 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.

The warrants were exercisable through May 29, 2023 at a price of $ 19.32 per share.

The warrants expired unexercised on May 29, 2023 .

Balance Sheet Components

The following table provides details relating to certain balance sheet line items as of October 1, 2023 , and January 1, 2023 (in thousands):

Accounts receivable:

Trade account receivables

$ 2,707  

Allowance for doubtful accounts

( 16 )  

$ 2,689  

Note 4 — Balance Sheet Components

The following table provides details relating to certain balance sheet line items as of March 31, 2024 , and December 31, 2023 (in thousands):

Work-in-process

$ 1,898  

$ 1,826  

$ 1,555 $ 1,602

Finished goods

$ 2,030  

$ 2,493  

$ 1,923 $ 2,029

Prepaid expenses and other current assets:

2 unchanged sentences

Other prepaid taxes, royalties, and other prepaid expenses

$ 1,726  

$ 1,570  

$ 2,128 $ 1,561

Property and equipment, net:

$ 10,487  

$ 10,133  

$ 3,862  

$ 10,510 $ 10,503

Software tools

Furniture and fixtures

Leasehold improvements

16,766  

12,467  

25,433 22,199

Accumulated depreciation and amortization

( 12,219 )  

$ 4,547  

( 13,013 ) ( 13,251 )

$ 12,420 $ 8,948

Capitalized internal-use software, net:

Capitalized internal-use software

$ 2,921  

$ 2,370  

$ 3,742 $ 3,491

Accumulated amortization

( 1,255 )  

$ 1,666  

$ 1,514  

( 1,595 ) ( 1,422 )

$ 2,147 $ 2,069

Intangible assets, net:

Intangible assets

$ 1,156 $ 1,156

Accumulated amortization

( 646 ) ( 619 )

Accrued liabilities:

Accrued compensation

$ 1,293  

$ 570 $ 1,910

Accrued employee benefits

Accrued payroll tax

$ 2,047  

$ 1,509  

( 1 ) In the nine months ended October 1 2023, the Company capitalized $ 3.86 million related to tooling to be utilized under its long-term professional services contracts.

The tooling will be depreciated over an estimated useful life of seven years.

Note 5  —

Debt Obligations

$ 1,545 $ 2,673

The Company capitalized $ 3.96 million in pre-production design and development costs as tooling to be utilized under its long-term professional services contracts for the three months ended March 31, 2024 .

No pre-production design and development costs were capitalized for the three months ended April 2, 2023 .

The capitalized assets recognized in the period are owned by the Company.

The Company recorded depreciation and amortization expense of $ 0.8 million and $ 0.4 million for the three months ended March 31, 2024 and April 2, 2023 , respectively.

No interest was capitalized for any period presented.

Depreciation and amortization expense included approximately $ 0.2 million and $ 0.1 million of amortization expense related to capitalized internal-use software for the three months ended March 31, 2024 and April 2, 2023 , respectively.

Note 5 — Property, Plant, and Equipment

Property, plant, and equipment are stated at cost, less accumulated depreciation and amortization.

Depreciation begins at the time the asset is placed in service.

Maintenance and repairs are charged to operations as incurred.

Depreciation is computed using the straight-line method over the following estimated useful lives of the assets:

Software tools 1 - 2 years

Furniture and fixtures

Leasehold improvements

The amortization period of leasehold improvements made at the inception of the lease is directly related to the initial lease term, while the amortization period for subsequent leasehold improvements is directly related to the initial lease term adjusted for extensions.

Note 6 — Intangible Assets

The following table provides the details of the carrying value of intangible assets recorded from the 2019 acquisition of SensiML at March 31, 2024 (in thousands):

March 31, 2024

Remaining Useful Life

Gross Carrying Amount

Accumulated Amortization

Net Carrying Amount

Developed technology

4.75 $ 959 $ ( 503 ) $ 456

Customer relationships

— 81 ( 81 ) —

Trade names and trademarks

4.75 116 ( 62 ) 54

Total acquired identifiable intangible assets

$ 1,156 $ ( 646 ) $ 510

The following table provides the details of future annual amortization of intangible assets, based upon the current useful lives at March 31, 2024 (in thousands):

Annual Fiscal Years

2024 (remaining period)

Note 7 — Debt Obligations

Revolving Line of Credit

As of October 1, 2023 and January 1, 2023 , the Company had $ 15.0 million of revolving debt outstanding with an interest rate of 9.00 % a nd 8.00 % per annum, respectively.

As of March 31, 2024 and December 31, 2023 , the Company had $ 20.0 million of revolving debt outstanding with an interest rate of 9.00 % 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 agreement.

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

Related interest expenses and annual facility fees recognized were $ 30 tho usand and $ 92 thousand for th e  

three and nine months ended October 1, 2023 a nd $ 20 thousand and $ 59 thousand for the three and nine months ended October 2, 2022 , respectively.

Note 6  —

Related interest expenses and annual facility fees recognized were $ 41 thousand for the three months ended March 31, 2024 and $ 33 thousand for the three months ended April 2, 2023 .

Financing Arrangements

The amount of assets purchased through financing arrangements on the balance sheet were $ 1.4 million and $ 1.2 million as of March 31, 2024 and April 2, 2023 , respectively.

The corresponding note payable amount for these financing arrangements was $ 1.4 million and $ 1.3 million as of March 31, 2024 and April 2, 2023 , respectively.

Payments related to financing arrangements were $ 0.2 million for the three months ended March 31, 2024 and April 2, 2023 .

The Company's outstanding financing arrangements as of March 31, 2024 have remaining terms of 0.42 years to 1.99 years, with a weighted average remaining term of 1.60 years.

Stated interest rates for its financing arrangements outstanding as of March 31, 2024 range from 3.75 % to 9.89 %, with a weighted average interest rate of 8.20 %.

The Company's outstanding financing arrangements as of April 2, 2023 had remaining terms of 1.42 years to 2.95 years, with a weighted average remaining term of 2.16 years.

Stated interest rates for its financing arrangements outstanding as of April 2, 2023 ranged from 3.75 % to 9.89 %, with a weighted average interest rate of 6.91 %.

Remaining amounts due to be paid in Fiscal Years 2024 and 2025 as of March 31, 2024 are $ 0.9 million and $ 0.7 million, respectively, less amounts representing interest of $ 0.1 million results in the total notes payable amount of $ 1.4 million.

Note 8 — Leases

The Company's principal research and development and corporate facilities are leased office buildings located in the United States.

These lease facilities are classified as operating leases and have lease terms of 

one  to 

five  years.

The Company maintains sales offices out of which it conducts sales and marketing activities in various countries outside of the United States which are rented under short-term leases. The Company has elected the practical expedient to apply to recognition requirements to short-term leases and recognizes rent payments on short-term leases on a straight-line basis over the lease term.

Finance leases are primarily for engineering design software and have leases terms of generally 

two  to 

three  years.

Total rent expenses were $ 0.1 million and $ 0.3 million for t he 

three and nine months ended October 1, 2023 and 

$ 0.1 million and $ 0.3 million for t he 

three and nine months ended October 2, 2022 , respectively.

Right-of-use assets were approximately $ 1.1 million and $ 1.4 million as of October 1, 2023  and 

January 1, 2023 , respectively.

Lease liabilities were approximately $ 1.1 million and $ 1.4 million as of 

October 1, 2023  and 

January 1, 2023 , respectively.

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

These lease facilities are classified as operating leases and have lease terms of one to five years.

The Company maintains sales offices out of which it conducts sales and marketing activities in various countries outside of the United States which are rented under short-term leases.

The Company has elected the practical expedient to apply to recognition requirements to short-term leases and recognizes rent payments on short-term leases on a straight-line basis over the lease term.

Total rent expenses were $ 0.1 million for t he three months ended March 31, 2024 and April 2, 2023 .

Right-of-use assets were approximately $ 0.9 million and $ 1.0 million as of March 31, 2024 and December 31, 2023 , respectively.

Lease liabilities were approximately $ 0.9 million and $ 1.0 million as of March 31, 2024 and December 31, 2023 , respectively.

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

Three Months Ended

Nine Months Ended

October 1, 2023

October 2, 2022

October 1, 2023

October 2, 2022

March 31, 2024

April 2, 2023

Operating lease costs:

Finance lease costs:

Amortization of ROU asset

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 1, 2023  and  

October 2, 2022  was $ 445 thousand and $ 0 , respectively. 

The following table provides the details of supplemental cash flow information (in thousands):

Nine Months Ended

October 1, 2023  

October 2, 2022  

Three Months Ended

March 31, 2024 April 2, 2023

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

Operating cash flows used for operating leases

Operating cash flows used for finance leases

Financing cash flows used for finance leases

Non-cash ROU assets related to operating leases included in the operating cash flows for the nine months ended October 1, 2023 and October 2, 2022 were $ 274 thousand and $ 257 thousand, respectively.

Non-cash ROU assets related to finance leases included in the financing cash flows for the nine months ended October 1, 2023 and October 2, 2022 were $ 486 thousand and $ 328 thousand, respectively.

The following table provides the details of right-of-use assets and lease liabilities as of October 1, 2023 and January 1, 2023 (in thousands):

October 1, 2023  

January 1, 2023  

Non-cash ROU assets related to operating leases included in the operating cash flows for the three months ended March 31, 2024 and April 2, 2023 were $ 65 thousand and $ 90 thousand, respectively.

The following table provides the details of right-of-use assets and lease liabilities as of March 31, 2024 and December 31, 2023 (in thousands):

March 31, 2024 December 31, 2023

Right-of-use assets:

Operating leases

Finance leases

Total right-of-use assets

$ 1,082  

$ 1,397  

Lease liabilities:

Operating leases

Finance leases

Total lease liabilities

$ 1,105  

$ 1,394  

The following table provided the details of future lease payments for operating and finance leases as of October 1, 2023 (in thousands):

The following table provided the details of future lease payments for operating leases as of March 31, 2024 (in thousands):

Operating Leases

Finance Leases

2024 (remaining period)

1 unchanged sentence

Present value of lease liabilities

The following table provides the details of lease terms and discount rates as of October 1, 2023 and January 1, 2023 :

October 1, 2023

January 1, 2023

The following table provides the details of lease terms and discount rates as of March 31, 2024 and December 31, 2023 :

March 31, 2024

December 31, 2023

Right-of-use assets:

1 unchanged sentence

Operating leases (1)

Finance leases

Weighted-average discount rates:

Operating leases

6.00 %  

Finance leases

6.77 %  

6.00 % 6.00 %

( 1 ) The operating lease relates to the Company's headquarters in San Jose, CA.

On October 24, 2023, the Company renewed its lease at its current location for an additional three years.

The amended lease term will expire on April 14, 2027 with no change in terms.

7  —

 Capital Stock

 Issuance of Common Stock

On March 21, 2023, 

the Company entered into common stock purchase agreements with certain investors for the sale of an aggregate of 450  thousand shares of common stock in registered direct offerings pursuant to our effective shelf registration statement on Form S- 3  (File 

333 - 266942 ), resulting in net cash proceeds of approximately $ 2.3 million.

Issuance costs related to the registered direct offering were insignificant.

The lease term expires on April 14, 2027 .

Note 9 — Capital Stock

Issuance of Common Stock

On March 13, 2024, the Company entered into common stock purchase agreements with certain institutional investors and their affiliated entities for the sale of an aggregate of 222,500 thousand shares of common stock, par value $ 0.001 , in a registered direct offering, resulting in net cash proceeds of approximately $ 3.5 million.

The purchase price for each share of common stock was $ 16.00 .

On August 17, 2022, the Company filed a Registration Statement on Form S- 3 (File No.

333 - 266942 ) with the SEC, under which we may sell, from time-to-time common stock, preferred stock, depositary shares, warrants, debt securities, and units, individually or as units comprised of one or more of the other securities or a combination thereof. The Company's registration statement became effective on August 26, 2022.

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 1, 2023  and October 2, 2022  was as follows (in thousands):

The per share purchase price reflects a zero discount based upon the 10 -day volume weighted average price on the day the pricing was agreed.

Issuance costs related to the offering were immaterial.

The purchase price for each share of common stock in the Share Placement was $ 5.14 .

On August 17, 2022, the Company filed a Registration Statement on Form S- 3 (File No.

333 - 266942 ) with the SEC, under which it may sell, from time-to-time common stock, preferred stock, depositary shares, warrants, debt securities, and units, individually or as units comprised of one or more of the other securities or a combination thereof.

The Company's registration statement became effective on August 26, 2022.

Note 10 — Stock-Based Compensation

Stock-based compensation expense included in the Company's consolidated financial statements for the three months ended March 31, 2024 and April 2, 2023 was as follows (in thousands):

Three Months Ended

Nine Months Ended

October 1, 2023

October 2, 2022

October 1, 2023

October 2, 2022

March 31, 2024

April 2, 2023

Cost of revenue

1 unchanged sentence

Selling, general and administrative

$ 1,917  

$ 1,347  

The Company capitalized stock-based compensation amounts to capitalized internal-use software and tooling, net of $ 119 thousand and $ 0 for the  

nine months ended October 1, 2023  and October 2, 2022 , respectively.

$ 1,563 $ 715

The Company capitalized stock-based compensation amounts to capitalized internal-use software and tooling, net of $ 146 thousand and $ 18 thousand for the three months ended March 31, 2024 and April 2, 2023 , respectively.

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 1, 2023  (in thousands):

The following table summarizes the activity in the shares available for grant under the 2019 Plan during the three months ended March 31, 2024 (in thousands):

Shares Available for Grants

Balance at January 1, 2023

Balance at December 31, 2023

Restricted stock units (RSUs) granted

RSUs forfeited or expired

Options expired

Balance at October 1, 2023

Balance at March 31, 2024

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 1, 2023 :

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 March 31, 2024 :

(in thousands)

Balance outstanding at January 1, 2023

$ 24.50  

Forfeited or expired

$ 32.93  

Balance outstanding, exercisable, and vested at October 1, 2023

$ 24.24  

No stock options were granted or exercised during the nine months ended October 1, 2023.

No stock options were granted, exercised, forfeited, or expired during the nine months ended October 2, 2022.

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

nine months ended October 1, 2023 and October 2, 2022 . 

Balance outstanding at December 31, 2023

Activity during period

Balance outstanding, exercisable, and vested at March 31, 2024

60 $ 19.45 2.03 $ 190

No stock options were granted, exercised or forfeited during the three months ended March 31, 2024 and April 2, 2023 .

Total stock-based compensation related to stock options was $ 0 during the three months ended March 31, 2024 and April 2, 2023 .

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.

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.

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 were approximately 

$ 0.6 million  and $ 1.8 million for the 

three and nine months ended October 1, 2023 and approximately 

$ 0.5 million  and $ 1.3 million for the 

three and nine months ended October 2, 2022, respectively.

October 1, 2023 and October 2, 2022 , there was approximately $ 3.7 million  and $ 1.1 million , respectively, in unrecognized compensation expense related to RSUs. The remaining unrecognized stock-based compensation expense as of October 1, 2023  is expected to be recorded over a weighted average period of 1.52  years.

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

nine months ended October 1, 2023  is as follows:

The stock-based compensation expense related to RSUs and PRSUs were approximately $ 1.5 million and $ 0.7 million for the three months ended March 31, 2024 and April 2, 2023 , respectively.

As of March 31, 2024 and April 2, 2023 , there was approximately $ 3.1 million and $ 2.2 million , respectively, in unrecognized compensation expense related to RSUs.

The remaining unrecognized stock-based compensation expense as of March 31, 2024 is expected to be recorded over a weighted average period of 0.81 years.

A summary of activity for the Company's RSUs and PRSUs for the three months ended March 31, 2024 is as follows:

RSUs & PRSUs Outstanding

(in thousands)

Nonvested at January 1, 2023

$ 6.05  

Nonvested at December 31, 2023

Vested and released

( 224 )  

( 15 )  

Nonvested at October 1, 2023

$ 7.02  

Nonvested at March 31, 2024

Employee Stock Purchase Plan

Total stock-based compensation related to the Company's Employee Stock Purchase Plan was approximately $ 25 thousand and $ 100 thousand for the 

three and nine months ended October 1, 2023 , respectively, and $ 20 thousand and $ 54 thousand for the 

three and nine months ended October 2, 2022, respectively.

Note 9 —

The Company recorded a net income tax expense of $ 4 thousand and $ 4 thousand for the 

three and nine months ended October 1, 2023 , respectively, and a net income tax expense of $ 3 thousand and $ 19 thousand for the 

three and nine months ended October 2, 2022 , respectively.

Total stock-based compensation related to the Company's Employee Stock Purchase Plan was approximately $ 28 thousand and $ 30 thousand for the three months ended March 31, 2024 and April 2, 2023 , respectively.

Note 11 — Income Taxes

The Company recorded a net income tax expense of $ 7 thousand for the three months ended March 31, 2024 and April 2, 2023 .

The difference between the estimated annual effective tax rate of 0.80 % and the U.S.

federal statutory tax rate of 21 % is primarily due to the Company's valuation allowance movement in each period presented.

It is more likely than not that the Company will not realize the federal, state, and certain foreign deferred tax assets as of October 1, 2023.

As such, the Company continues to maintain a full valuation allowance against all of its US and certain foreign net deferred tax assets as of October 1, 2023.

Note 10 —

Information Concerning Product Lines, Geographic Information and Revenue Concentration

It is more likely than not that the Company will not realize the federal, state, and certain foreign deferred tax assets as of March 31, 2024 .

As such, the Company continues to maintain a full valuation allowance against all of its US and certain foreign net deferred tax assets as of March 31, 2024 .

Note 12 — Information Concerning Product Lines, Geographic Information and Revenue Concentration

The Company identifies its business segment based on business activities, management responsibility and geographic location.

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

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

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

Three Months Ended

Nine Months Ended

October 1, 2023

October 2, 2022

October 1, 2023

October 2, 2022

$ 6,096  

$ 2,252  

$ 11,384  

$ 8,833  

March 31, 2024

April 2, 2023

$ 4,876 $ 3,055

Mature products

Total revenue

$ 6,665  

$ 3,459  

$ 13,719  

$ 12,096  

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

180  nanometer or smaller semiconductor processes, eFPGA IP license and eFPGA-related professional services, QuickAI and SensiML AI software as a service (SaaS) revenue.

Mature products include all products produced on semiconductor processes larger than 

180  nanometer.

$ 6,007 $ 4,133

New products revenue consists of revenues from the sale of hardware products manufactured on 180 nanometer or smaller semiconductor processes, eFPGA IP license and eFPGA-related professional services, 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

Nine Months Ended

October 1, 2023

October 2, 2022

October 1, 2023

October 2, 2022

March 31, 2024

April 2, 2023

Hardware products

$ 3,607  

eFPGA IP and professional services

10,505  

New products revenue

$ 6,096  

$ 2,252  

$ 11,384  

$ 8,833  

eFPGA IP revenue for the three months ended October 1, 2023 and October 2, 2022 was $ 5.8 million and $ 1.7 million, respectively, which were primarily professional services revenue.

Contract assets related to professional services revenue were $ 4.0 million and $ 1.5 million as of October 1, 2023 and October 2, 2022, respectively.

Contract liabilities related to professional services revenue were $ 304 thousand and $ 165 thousand as of October 1, 2023 and October 2, 2022, respectively.

$ 4,876 $ 3,055

eFPGA IP and professional services revenue for the three months ended March 31, 2024 and April 2, 2023 was $ 4.0 million and $ 2.8 million, respectively, which were primarily professional services revenue.

Contract assets related to professional services revenue were $ 1.1 million and $ 2.3 million as of March 31, 2024 and April 2, 2023 , respectively.

Contract liabilities related to professional services revenue were $ 0.7 million and $ 0.3 million as of March 31, 2024 and April 2, 2023 , respectively.

The tables below present disaggregated revenues by geographical location.

1 unchanged sentence

Substantially all revenues in North America were in the United States.

Revenue in the United States was $ 6.0 million, or 91 % of total revenue, and $ 11.7 million, or 85 % of total revenue for the 

three and nine months ended October 1, 2023 , respectively, and $ 2.3 million, or 67 % of total revenue, and $ 7.8 million, or 64 % of total revenue for the 

three and nine months ended October 2, 2022 , respectively.

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

Revenue in the United States was $ 4.9 million, or 82 % of total revenue, and $ 3.3 million, or 80 % of total revenue for the three months ended March 31, 2024 and April 2, 2023 , respectively.

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

Three Months Ended

Nine Months Ended

October 1, 2023

October 2, 2022

October 1, 2023

October 2, 2022

$ 1,540  

$ 3,114  

March 31, 2024

April 2, 2023

North America

11,739  

Total revenue

$ 6,665  

$ 3,459  

$ 13,719  

$ 12,096  

$ 6,007 $ 4,133

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

Distributor "A"

Distributor "B"

Distributor "C"

* 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:

Distributor "A"

Commitments and Contingencies

The Company's principal contractual commitments include purchase obligations, re-payments of draw-downs from the revolving line of credit, and payments under operating and finance leases.

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

Note 13 — Commitments and Contingencies

The Company's principal contractual commitments include purchase obligations, re-payments of draw-downs from the revolving line of credit, and payments under operating and financing arrangements.

Purchase obligations are largely comprised of open purchase order commitments to suppliers and to subcontractors under professional services agreements.

Our risk associated with the purchase obligations under professional services agreements is limited to the termination liability provisions within those contracts, and as such, we do 

not  believe they represent a material liquidity risk to us.

The Company's risk associated with the purchase obligations under professional services agreements is limited to the termination liability provisions within those contracts, and as such, it does not believe they represent a material liquidity risk to the Company.

Certain wafer manufacturers require the Company to forecast wafer starts several months in advance.

The Company is committed to taking delivery of and paying for a portion of forecasted wafer volume. As of October 1, 2023 , the Company had no significant outstanding commitments for the purchase of wafer inventory.

The Company is committed to taking delivery of and paying for a portion of forecasted wafer volume.

As of March 31, 2024 , the Company had $ 0.1 million in outstanding commitments for the purchase of wafer inventory.

Purchase Obligations

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Purchase obligations are legally binding and amongst other things, specify a minimum or a range of quantities, pricing, and approximate timing of the transaction.

Purchase obligations include amounts that are recorded on the Company's consolidated balance sheets, as well as amounts that are 

not  recorded on the Company's consolidated balance sheets.

As of October 1, 2023 , total outstanding purchase obligations for other goods and services were $ 6.1 million due within the next twelve months, not recorded on the Company's consolidated balance sheet.

Purchase obligations include amounts that are recorded on the Company's consolidated balance sheets, as well as amounts that are not recorded on the Company's consolidated balance sheets.

As of March 31, 2024 , total outstanding purchase obligations for other goods and services were $ 2.9 million due within the next twelve months, not recorded on the Company's consolidated balance sheet.

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.

Absolute assurance cannot be given that any such third -party assertions will be resolved without costly litigation;

in a manner that is not adverse to the Company’s financial position, results of operations or cash flows;

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

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