QUICKLOGIC Corp 10-K

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA INDEX TO CONSOLIDATED FINANCIAL STATEMENTS Page Report of Independent Registered Public Accounting Firm (Frank, Rimerman + Co. LLP, PCAOB ID: 1596 ) 43 Consolidated Balance Sheets as of December 28, 2025 and December 29, 2024 45 Consolidated Statements of Operations for the Fiscal Years 2025 and 2024 46 Consolidated Statements of Cash Flows for the Fiscal Years 2025 and 2024 47 Consolidated Statements of Stockholders’ Equity for the Fiscal Years 2025 and 2024 48 Notes to Consolidated Financial Statements 49 42 Table of Contents Report of Independent Registered Public Accounting Firm To the Board of Directors and Stockholders of QuickLogic Corporation Opinion on the Consolidated Financial Statements We have audited the accompanying consolidated balance sheets of QuickLogic Corporation and Subsidiaries (collectively, the “Company”) as of December 28, 2025 and December 29, 2024, and the related consolidated statements of operations, stockholders’ equity, and cash flows, for the years then ended, and the related notes (collectively referred to as the “consolidated financial statements”). In our opinion, the consolidated financial statements present fairly, in all material respects, the consolidated financial position of the Company as of December 28, 2025 and December 29, 2024, and the results of its operations and its cash flows for each of the two years ended December 28, 2025, in conformity with accounting principles generally accepted in the United States of America. Basis for Opinion These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s consolidated financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (“PCAOB”) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the U.S. Securities and Exchange Commission (“SEC”) and the PCAOB. We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits, we are required to obtain an understanding of internal control over financial reporting, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion. Our audits included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. We believe that our audits provide a reasonable basis for our opinion. Critical Audit Matter The critical audit matter communicated below is a matter arising from the current period audit of the consolidated financial statements that were communicated or required to be communicated to the audit committee and that: (1) relate to accounts or disclosures that are material to the consolidated financial statements and (2) involved our especially challenging, subjective, or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing separate opinions on the critical audit matter or on the accounts or disclosures to which it relates. Revenue Recognition of Professional Services Contracts As described in Notes 1 and 15 to the consolidated financial statements, the Company’s eFPGA-related professional services revenue was approximately $9.4 million for the year ended December 28, 2025. eFPGA-related professional services contracts often include promises to transfer intellectual property licenses to customize hardware products and to provide professional services and technical support services to customers. Judgment is required by management to allocate the transaction price to the separately identifiable performance obligations in the contract based on each performance obligation’s relative standalone selling price. eFPGA intellectual property is rarely sold on a standalone basis, and as such, management is required to estimate the standalone selling price related to each performance obligation. Management uses a variety of methods to determine the standalone selling price of each performance obligation, including an adjusted market assessment approach, residual approach or the expected cost plus a margin approach, depending on the characteristics and context of the deliverables. We have identified the determination of the standalone selling price as a critical audit matter. Auditing this element of revenue recognition involved especially challenging auditor judgment in the determination of distinct performance obligations and an increased extent of auditor effort due to; (i) the use of significant management judgment in determining the standalone selling price when observable inputs are not readily available and (ii) the inherent, unique nature of each performance obligation within each professional service contract. 43 Table of Contents How the Critical Audit Matter Was Addressed in the Audit Our audit procedures related to the determination of the standalone selling price of professional services contracts, and the associated assumptions that the Company identified, included the following, among others: • Evaluating the internal controls related to the Company’s review and application of the revenue recognition guidance and determining if those controls were designed and implemented appropriately. • Evaluating the appropriateness of management's methodology used to determine the standalone selling price for a sample of contracts including: • Obtaining and reading contract source documents, including master agreements, and other related documents. • Assessing management’s application of the methodology based on the relevant guidance under Accounting Standards Codification Topic 606, Revenue from Contracts with Customers. • Evaluating the appropriateness of management’s determination of the standalone selling price, including: • Assessing assumptions utilized by management in determining the standalone selling price when comparative information is not readily observable. • Corroborating management’s assumptions through review of similar contracts when available and applicable depending on the nature of the contract. • Performing inquiries with individuals outside of the accounting department to corroborate management’s assertions and assumptions and performing sensitivity analysis to unobservable inputs. • Testing the application of management’s methodology to each selected professional services contract. • Testing the mathematical accuracy of management’s calculations of the standalone selling price of a selection of professional services contracts. /s/ Frank, Rimerman + Co. LLP We have served as the Company's auditor since 2024. San Francisco, California March 27, 2026 44 Table of Contents QUICKLOGIC CORPORATION CONSOLIDATED BALANCE SHEETS (in thousands, except par value amount) December 28, December 29, 2025 2024 ASSETS Current assets: Cash and cash equivalents $ 18,840 $ 21,859 Accounts receivable 2,809 2,426 Contract assets 217 2,682 Inventories 956 940 Prepaid expenses and other current assets 1,399 1,666 Assets of business held for disposal, net 2 31 Total current assets 24,223 29,604 Property and equipment, net 18,233 15,699 Capitalized internal-use software, net 1,117 711 Right of use assets, net 464 758 Intangible assets, net 339 378 Non-marketable equity investment — 300 Inventories, non-current 187 718 Note receivable, non-current — 1,292 Other assets 241 117 Assets of business held for disposal, net — 2,356 TOTAL ASSETS $ 44,804 $ 51,933 LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Revolving line of credit $ 15,000 $ 18,000 Trade payables 2,251 3,097 Accrued liabilities 1,779 1,587 Deferred revenue 64 444 Notes payable, current 1,870 1,928 Lease liabilities, current 321 284 Liabilities of business held for disposal — 57 Total current liabilities 21,285 25,397 Long-term liabilities: Lease liabilities, non-current 126 447 Notes payable, non-current 926 1,202 Total liabilities 22,337 27,046 Commitments and Contingencies (Note 16) Stockholders' equity: Preferred stock, $ 0.001 par value; 10,000 shares authorized; no shares issued or outstanding — — Common stock, $ 0.001 par value; 200,000 shares authorized; 17,290 and 15,336 shares issued and outstanding as of December 28, 2025 and December 29, 2024, respectively 17 15 Additional paid-in capital 346,662 334,268 Accumulated deficit ( 324,212 ) ( 309,396 ) Total stockholders' equity 22,467 24,887 TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 44,804 $ 51,933 The accompanying notes form an integral part of these Consolidated Financial Statements. 45 Table of Contents QUICKLOGIC CORPORATION CONSOLIDATED STATEMENTS OF OPERATIONS (in thousands, except per share amounts) Fiscal Years 2025 2024 Revenue $ 13,774 $ 19,651 Cost of revenue 10,740 7,558 Gross profit 3,034 12,093 Operating expenses: Research and development 5,295 5,846 Selling, general and administrative 9,283 8,767 Impairment charges 300 — Restructuring costs 75 — Operating income (loss) ( 11,919 ) ( 2,520 ) Interest expense ( 370 ) ( 406 ) Interest income and other (expense) income, net ( 28 ) 24 Income (loss) from continuing operations before income taxes ( 12,317 ) ( 2,902 ) (Benefit from) provision for income taxes 18 3 Net income (loss) from continuing operations $ ( 12,335 ) $ ( 2,905 ) Net income (loss) from discontinued operations, net of taxes $ ( 2,481 ) $ ( 936 ) Net income (loss) $ ( 14,816 ) $ ( 3,841 ) Net income (loss) from continuing operations per share: (1) Basic $ ( 0.76 ) $ ( 0.20 ) Diluted $ ( 0.76 ) $ ( 0.20 ) Net income (loss) per share: Basic $ ( 0.91 ) $ ( 0.26 ) Diluted $ ( 0.91 ) $ ( 0.26 ) Weighted average shares: (1) Basic 16,243 14,510 Diluted 16,243 14,510 (1) Note: Net income (loss) equals total comprehensive income (loss) for all years presented. Additionally, the Company notes that income taxes related to discontinued operations were immaterial in nature for the periods presented and as such, only net income (loss) from discontinued operations was reported in the consolidated statements of operations. The accompanying notes form an integral part of these Consolidated Financial Statements. 46 Table of Contents QUICKLOGIC CORPORATION CONSOLIDATED STATEMENTS OF CASH FLOWS (in thousands) Fiscal Years 2025 2024 Cash flows provided by (used in) operating activities: Net income (loss) $ ( 14,816 ) $ ( 3,841 ) Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities: Depreciation and amortization 5,372 3,976 ROU asset amortization 294 269 Stock-based compensation 3,319 4,606 Write-down of inventories 613 82 Impairment of investment in non-affiliate 300 — Impairment of assets held by SensiML entity 2,355 — Expected credit loss expense 7 ( 4 ) Non-cash interest expense 11 — Loss on disposal of equipment 5 — Changes in operating assets and liabilities: Accounts receivable ( 379 ) ( 807 ) Contract assets 2,465 927 Inventories ( 98 ) 289 Other assets ( 361 ) 233 Trade payables ( 1,833 ) ( 3,601 ) Accrued liabilities 158 ( 1,081 ) Deferred revenue ( 390 ) ( 598 ) Lease liabilities ( 284 ) ( 298 ) Other long-term liabilities — ( 125 ) Net cash provided by (used in) operating activities ( 3,262 ) 27 Cash flows provided by (used in) investing activities: Capital expenditures for property and equipment ( 3,164 ) ( 5,404 ) Capitalized internal-use software ( 525 ) ( 967 ) Purchases of intangible assets — ( 94 ) Net cash provided by (used in) investing activities ( 3,689 ) ( 6,465 ) Cash flows provided by (used in) financing activities: Payment of notes payable ( 2,151 ) ( 1,384 ) Proceeds from notes payable — — Proceeds from line of credit 60,000 78,000 Repayment of line of credit ( 63,000 ) ( 80,000 ) Proceeds from issuance of common stock 308 310 Proceeds from issuance of common stock to investors 9,252 6,810 Stock issuance costs ( 496 ) ( 24 ) Net cash provided by (used in) financing activities 3,913 3,712 Net increase (decrease) in cash, cash equivalents and restricted cash ( 3,038 ) ( 2,726 ) Cash, cash equivalents and restricted cash at the beginning of the period 21,880 24,606 Cash, cash equivalents, and restricted cash at the end of the period $ 18,842 $ 21,880 Supplemental disclosures of cash flow information: Interest paid $ 368 $ 344 Income taxes paid $ 23 $ 33 Supplemental schedule of non-cash investing and financing activities from continuing operations: Purchases of assets with financing arrangements $ 1,806 $ 3,107 Stock-based compensation capitalized as internal-use software $ 50 $ 49 Stock-based compensation capitalized as tooling and fixed assets $ — $ 9 Purchases of property and equipment in accounts payable and accrued liabilities $ 973 $ 2,041 The accompanying notes form an integral part of these Consolidated Financial Statements. 47 Table of Contents QUICKLOGIC CORPORATION CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (in thousands) Common Stock Par Value Additional Paid-In Accumulated Total Stockholders' Shares Amount Capital Deficit Equity Balance at December 31, 2023 14,118 14 322,436 ( 305,555 ) 16,895 Common stock issued under stock plans and employee stock purchase plans 572 — 310 — 310 Common stock offering, net of issuance costs 646 1 6,758 — 6,759 Stock-based compensation — — 4,764 — 4,764 Net loss — — — ( 3,841 ) ( 3,841 ) Balance at December 29, 2024 15,336 15 334,268 ( 309,396 ) 24,887 Common stock issued under stock plans and employee stock purchase plans 497 1 307 — 308 Common stock offering, net of issuance costs 1,457 1 8,718 — 8,719 Stock-based compensation — — 3,369 — 3,369 Net loss — — — ( 14,816 ) ( 14,816 ) Balance at December 28, 2025 17,290 $ 17 $ 346,662 $ ( 324,212 ) $ 22,467 The accompanying notes form an integral part of these Consolidated Financial Statements. 48 Table of Contents NOTE 1 — THE COMPANY AND BASIS OF PRESENTATION QuickLogic Corporation was founded in 1988 and completed its reincorporation in Delaware in 1999. The Company is a fabless semiconductor company specializing in programmable logic technologies, including embedded FPGA ("eFPGA") intellectual property ("IP") and programmable logic semiconductor devices. The Company licenses its eFPGA IP to semiconductor companies for integration into application-specific integrated circuits ("ASICs") and system-on-chips ("SoCs") devices, and also develops and sells programmable logic semiconductor devices, including discrete FPGAs. These technologies enable customers to incorporate configurable hardware functionality into custom semiconductor devices and electronic systems. The Company's programmable logic technologies are used in a variety of markets, including aerospace and defense systems, industrial and infrastructure systems, computing platforms, and semiconductor devices developed by fabless semiconductor companies. The Company's products, software tools, and IP enable customers to efficiently implement programmable hardware functionality within custom semiconductor designs and system-level products. In the first quarter of 2025, the Company discontinued operations at its wholly-owned subsidiary, SensiML Corporation ("SensiML"), and began actively exploring options for the possible sale of SensiML or its assets. Furthermore, the Company started accounting for the SensiML subsidiary in accordance with ASC 205 - 20, Discontinued Operations. At the balance sheet date of December 28, 2025, the Company impaired all of the SensiML non-cash assets to a zero value and redesignated SensiML as a disposal asset within Discontinued Operations in accordance with ASC 205 - 20 and ASC 360 - 10. Furthermore, the Company has incurred $ 0.2 million in costs in connection with the planned disposition of SensiML in the Fiscal Year ended December 28, 2025. These costs consisted primarily of one -time termination benefits and are split between the ‘Restructuring Costs’ line item and ‘Net Income (Loss) from Discontinued Operations, Net of Taxes’ line item in the Company’s consolidated statements of operations. See Note 3 for additional information of discontinued operations. All other notes to these consolidated financial statements present the results of continuing operations and exclude amounts related to discontinued operations for all periods presented. QuickLogic’s Fiscal Year ends on the Sunday closest to December 31. Fiscal Years 2025 and 2024 ended on December 28, 2025 and December 29, 2024 , respectively. Liquidity The Company has financed its operations and capital investments through the sale of common stock, financing arrangements, operating leases, a revolving line of credit, and cash flows from operations. As of December 28, 2025 , the Company’s principal sources of liquidity consisted of cash and cash equivalents of $ 18.8 million, inclusive of a $ 15 million advance from its Revolving Facility with Heritage Bank of Commerce ("Heritage Bank") and $ 8.7 million in net proceeds from the Company's sale of common stock in the Fiscal Year ended December 28, 2025 . 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 arrangements. Purchase obligations are largely comprised of open purchase order commitments to suppliers. The Company's risk associated with the purchase obligations is limited to the termination liability provisions within those contracts and as such, the Company does not believe they represent a material liquidity risk. See Note 8 for additional information. 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 a loan agreement. See Note 8 for additional information. On February 25, 2025 , the Company entered into an At Market Sales Agreement (the "Sales Agreement") with Needham & Company, LLC, as sales agent (the "Agent"). Pursuant to the Sales Agreement, the Company is able to offer and sell, from time to time, through the Agent, shares of the Company's common stock, par value of $ 0.001 per share, having an aggregate offering price of up to $ 20,000,000 (the "ATM Offering"). From February 25, 2025 to August 14, 2025 , the Company sold 713 thousand shares under the ATM Offering, resulting in net cash proceeds of approximately $ 4.2 million. Issuance costs related to the ATM Offering were $ 339 thousand. On March 6, 2025 , the Company entered into common stock purchase agreements with certain institutional investors and their affiliated entities for the sale of an aggregate of 256 thousand shares of 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 $ 1.5 million. Issuance costs related to the offering were $ 20 thousand. On August 14, 2025 , the Company filed a new Registration Statement on Form S- 3 (File No 333 - 289610 ) ("New Registration Statement") with the SEC to replace the Company's expiring Registration Statement on Form S- 3, under which the Company 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 in an aggregate amount of up to $ 125,000,000 . The Company's registration statement became effective August 22, 2025. In connection with the New Registration Statement, the Company filed a sales agreement prospectus whereby the Company amended, restated, and renewed its ATM program, allowing the Company to sell an aggregate offering price of up to $ 20,000,000 (the "Amended ATM Offering"). The Company also amended and restated its At Market Sales Agreement with the Agent on August 14, 2025. The $ 20,000,000 of shares of the Company's common stock that may be sold under the Amended ATM Offering is included in the $ 125,000,000 of its securities that may be sold under the New Registration Statement. 49 Table of Contents From August 14, 2025 through Fiscal Year ended December 28, 2025 , the Company sold 487 thousand shares under the Amended ATM Offering, resulting in net cash proceeds of approximately $ 3.1 million. Issuance costs related to the Amended ATM Offering were $ 98 thousand. Issuance costs for the Company's ATM Offering and Amended ATM Offering are recorded on a pro-rata basis reflective of the percentage of shares sold to total shares available for sale under the ATM Offering and Amended ATM Offering, respectively. On December 5, 2024 , the Company entered into common stock purchase agreements with certain institutional investors and their affiliated entities for the sale of an aggregate of 424 thousand shares of 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 $ 3.2 million. Issuance costs related to the offering were $ 27 thousand. On March 13, 2024 , the Company entered into common stock purchase agreements with certain institutional investors for the sale of an aggregate of 223 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 $ 3.5 million. Issuance costs related to the offering were $ 24 thousand. Refer to Note 12 for additional information. 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 $ 8.7 million in net proceeds from its Fiscal Year 2025 stock offerings, its revenues from operations, and the available financial resources from the Revolving Facility with Heritage Bank or a new debt agreement with an alternative lender, will be sufficient to fund its operations and capital expenditures and provide adequate working capital for the next twelve months. On April 28, 2023, the Company converted accounts receivable for a customer in the amount of approximately $ 1.16 million to notes receivable (the "Original Note"). At the time, the Original Note bore an interest rate of 3.0 % compounded monthly. On June 28, 2023, the Company cancelled the Original Note and entered into a revised promissory note ("Second Revised Note") with the customer, where the interest rate changed to 4.69 % compounded monthly, or a 4.8 % effective annual interest rate, accruing from the date of the Original Note. On June 27, 2024, the Company cancelled the Second Revised Note and entered into a revised promissory note ("Current Note") with the customer, where the interest rate changed to 10.0 % per annum. Accrued but unpaid interest was compounded monthly, accruing from the date of the Current Note. Additionally, if not prepaid prior to the Current Note maturity date of the earlier of (i) 24 months from June 28, 2024 or (ii) the closing of the customer's Series B financing, the principal and all accrued and unpaid interest was due and payable to the Company. If an event of default occurred, the interest rate would increase to 15.31 %. All other terms of the Note remained the same. As of December 31, 2023 , the related note receivable balance was $ 1.2 million, including $ 37 thousand in accrued interest. As of December 29, 2024 , the related note receivable balance was $ 1.3 million, including $ 129 thousand in accrued interest. In the fourth quarter of 2025, the Company signed an agreement that cancelled the Current Note and extinguished the note receivable balance and all accrued interest as of November 10, 2025 in the amount of $ 1.4 million, which included $ 240 thousand in accrued interest, in exchange for an irrevocable license to utilize software components owned by the customer into future releases of the Company's Aurora FPGA User Tools. The irrevocable license is being accounted for under ASC 360 and is included within the 'Property and Equipment, net' line item on the Company's consolidated balance sheet. The Company notes this was a non-cash transaction; an exchange of a non-cash asset, the note receivable, for another non-cash asset, a software license. Refer to the Company's consolidated statements of cash flows for additional information on cash paid for the acquisition of tangible and intangible assets. In accordance with ASC 205 - 40, Presentation of Financial Statements - Going Concern , management evaluated whether conditions or events, considered in the aggregate, raise concerns about the Company's ability to meet its obligations as they become due within one year after the date that the consolidated financial statements are issued. As part of this evaluation, management identified conditions and events related primarily to the maturity of the Company's current revolving credit facility on December 31, 2026. Management has concluded that the Company will have sufficient liquidity to meet its obligations as they become due within one year after the date the consolidated financial statements are issued. In anticipation of the maturity of the current revolving credit facility, management signed a term sheet with Sunflower Bank, N.A., who has approved with their credit committee, a $ 10 million credit facility where parties have agreed upon all material terms, with a maturity date that extends beyond one year after the date the consolidated financial statements are issued. The Company expects to execute definitive agreements with Sunflower Bank, N.A. during the second quarter. 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 the Company's ArcticLink® and PolarPro® platforms, ArcticPro™, EOS S3 SoC, 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’ 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 and development expenditures; the timing of new product introductions; production volumes; product quality; sales and marketing efforts; the value and liquidity of its investment portfolio; changes in operating assets and liabilities; the ability to obtain or renew debt financing and to remain in compliance with the terms of existing credit facilities; the ability to raise funds from the sale of equity in the Company; the issuance and exercise of stock options and participation in the Company’s employee stock purchase plan; and other factors related to the uncertainties of the industry and global economics. Over the longer term, the Company anticipates that sales generated from its new product offerings, existing cash and cash equivalents, together with financial resources from its Revolving Facility with Heritage Bank, assuming renewal of the Revolving Facility or entry into a new debt agreement with an alternative lender prior to the expiration of the revolving line of credit on December 31, 2026 , and its ability to raise additional capital in the public capital markets will be sufficient to satisfy its operations and capital expenditures. However, the Company cannot provide any assurance that it will be able to raise additional capital, if required, or that such capital will be available on terms acceptable to the Company. The inability of the Company to generate sufficient sales from its new product offerings and/or raise additional capital if needed could have a material adverse effect on the Company’s operations and financial condition, including its ability to maintain compliance with its lender’s financial covenants. Principles of Consolidation The consolidated financial statements have been prepared in accordance with Generally Accepted Accounting Principles, in the United States of America or ("US GAAP"), and the applicable rules and regulations of the Securities and Exchange Commission, ("SEC"), and include the accounts of QuickLogic and its wholly-owned subsidiaries. All intercompany accounts and transactions have been eliminated. Certain prior period amounts and disclosures in the consolidated financial statements and accompanying notes have been reclassified or modified to conform to the current period's presentation. 50 Table of Contents Critical Accounting Policies and Use of Estimates The preparation of these 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 and 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 consolidated financial statements. Revenue Recognition The Company recognizes revenue in accordance with Accounting Standards Codification ("ASC") Topic 606 and related Accounting Standards Updates ("ASUs"). The Company earns revenue from principal activities by (i) delivering standard hardware products and (ii) delivering and providing eFPGA IP products and professional services, as well as (iii) other miscellaneous revenue. In accordance with ASC 606, the Company applies a five -step model for recognizing revenue 1. Identification of the contract, or contracts, with a customer, 2. Identification of the performance obligations in the contract, 3. Determination of the transaction price. The Company estimates the transaction price based on the amount expected to be received for transferring the performance obligations in the contract, which may include both fixed consideration and variable consideration. The Company's contracts with customers containing variable consideration are generally sales-based royalties, which is fully constrained, 4. Allocation of the transaction price to the performance obligations in the contract, and 5. Recognition of revenue when, or as, the Company satisfies a performance obligation. When entering into a new contract, the Company evaluates certain factors including the customer’s ability to pay, or credit risk. The following is a description of the Company's revenue recognition policy by principal activity: Hardware Product Revenue The Company generates revenue by supplying standard hardware products, which must be programmed before they can be used in an application. Standard hardware products may be programmed by the Company, distributors, end customers, or third parties. Contracts with customers for hardware products generally do not include other performance obligations such as services, extended warranties, or other material rights. The Company's promise to transfer hardware products is identified as a distinct performance obligation. The Company recognizes revenue on hardware products when it transfers control of the promised products to the customer. Transfer of control of hardware products occurs when its performance obligation is satisfied, which typically occurs upon shipment from the Company's manufacturing site or headquarters. The Company recognizes revenue in an amount that reflects the consideration it expects to receive in exchange for those products, which also represents the standalone selling price ("SSP") of its performance obligation. Hardware product prices are fixed. The Company elected a practical expedient in which it does not assess whether a contract has a significant financing component since its standard payment terms are less than one year. The Company allocates the transaction price of customer contracts to each distinct product based on its relative SSP. The sale of hardware products does not typically involve significant judgment or estimates by management. However, the Company does record an allowance for hardware product sales returns, which requires some judgment by management. Hardware Product Sales Return Allowance While the terms and conditions of the sale of hardware products generally do not allow for refunds or product returns other than for warranty repairs, the Company does record an allowance for hardware product sales returns. The allowance for sales returns is based on a historical returns analysis of the prior four quarters that is performed on a quarterly basis. Amounts recorded for hardware product sales returns were $ 2 thousand and $ 1 thousand for the Fiscal Years ended December 28, 2025 and December 29, 2024 , respectively, on the Company's consolidated statements of operations. While hardware product sales returns have not been material to the Company in recent reporting periods, the Company notes there is an inherent uncertainty in estimating this allowance. In the case where actual results may significantly vary from management estimates, the Company may be required to make future adjustments to its revenues and operating results. 51 Table of Contents eFPGA IP Revenue eFPGA IP revenue is comprised of eFPGA intellectual property license revenue, eFPGA-related professional services revenue, and eFPGA-related support and maintenance revenue. The Company recognizes eFPGA intellectual property revenue from licensing its eFPGA intellectual property to customers and recognizes eFPGA-related professional services revenue from the fees associated with the custom development and integration of the Company's technology solutions into hardware products. The Company recognizes eFPGA revenue from support and maintenance services for post-implementation customer support ratably over the service term. Renewals of support and maintenance contracts create new performance obligations for which the Company recognizes as revenue ratably over the service term. The majority of the Company's revenue is derived from sales of eFPGA IP licenses and professional services. eFPGA IP contractual arrangements often include promises to transfer intellectual property licenses, to customize hardware products, and to provide professional services and technical support services. The Company must determine whether the promised goods and services are distinct performance obligations that should be accounted for separately or are a single, combined performance obligation and should be accounted for together. In accordance with ASC 606, the Company must evaluate whether the customer can benefit from each good or service on its own or together with other resources that are readily available to the customer and whether the transfer of each good or service can be separately identifiable. The Company also must evaluate when control of the performance obligation is transferred to and accepted by the customer. The Company notes these determinations, in addition to identifying contractual terms and conditions within the contract, including termination for convenience clauses, enforceable rights to payment for performance completed-to-date, and consideration of the alternative use of the asset require significant judgment. In these judgments, the Company considers the context of the contract, historical experience with similar contracts, and the interdependency of the promised goods and services. Additionally, judgment is required by management to allocate the transaction price to the separately identifiable performance obligations in the contract. The Company allocates the transaction price of the contract to each performance obligation based on its relative SSP. The Company rarely sells eFPGA intellectual property licenses on a standalone basis. Generally, the Company will provide eFPGA-related professional services and support and maintenance services to customers in conjunction with eFPGA IP licenses based on unique contractual arrangement terms and conditions. As such, the Company is required to estimate the SSP for each performance obligation. In instances where the SSP is not directly observable because the Company does not sell the promised goods or services separately, the Company typically determines the SSP using either the adjusted market assessment approach, residual approach, or the expected cost plus a margin approach, depending on the characteristics and context of the deliverable. The selected method is applied by the Company consistently for similar arrangements and deliverables. The factors used to select the most appropriate estimation method, as well as select the most appropriate SSP include, but are not limited to, the extent of internal costs required to provide the promised performance obligation, margins achieved on standalone sales of similar products, profit objectives, cost structure, location-specific factors, and competition. In other instances, the Company may have more than one SSP for individual performance obligations due to the stratification of those items by classes of customers and circumstances. In these instances, the Company may use information such as its overall pricing objectives, taking into consideration market conditions and other factors, including the value of its contracts, customer type, customer tier, type of the technology used, customer demographics, and geographic locations, among other factors. The Company also provides eFPGA-related professional services on a time-and-material basis. Generally, the Company satisfies eFPGA-related contractual performance obligations over time as the customer simultaneously receives and consumes the benefits provided by the Company’s performance as it performs, the Company's performance creates or enhances an asset that the customer controls as it is created or enhanced, or the Company’s performance does not create an asset with an alternative use to the Company and the Company has an enforceable right to payment for performance completed to date. When the Company satisfies performance obligations over time, it recognizes revenue by applying an over-time methodology that depicts the Company’s performance toward satisfaction of the performance obligation. The Company’s over-time methodologies include, but are not limited to the following: • Revenue recognition model measured using an input method such as units of labor, • Revenue recognition model measured using an output method reflecting a generally consistent effort to satisfy performance obligations throughout the contractual arrangement term, • Revenue recognition model measured using an output method such as the specific deliverables produced, • Revenue recognition model measured using an input method such as time and material for professional engineering services. For revenue derived from time and material inputs, the Company estimates a fully-burdened overhead rate for the labor and any materials required. Due to the nature of the work performed under contractual arrangements, the selection and application of an over-time methodology is complex and involves significant judgment. In the case of the selection of an input method, the key factors reviewed by management to estimate costs to complete each contract include, but are not limited to, the estimated labor days-effort necessary to complete the project, budgeted hours, hourly cost to the Company, profit margins, and engineering hours at cut-off when projects extend beyond a reporting period. In the case of the selection of an output method, key factors reviewed by management include, but are not limited to, the specific deliverables specified in the contracts with customers and the duration of performance, inclusive of delays. The Company has methods and controls in place for tracking labor-days incurred in completing eFPGA IP contracts, as well as quantifying changes in estimates used within the chosen methodology. Management considers labor-days to be a critical estimate as any significant variation of labor and time required to complete a contractual arrangement could cause a revenue claw-back from prior periods and deferral of revenue to future periods. When the expected consideration from a revenue contract with a customer is less than the expected costs of fulfilling the contract, the Company is required to first impair any capitalized costs associated with the contract. The Company is also required to recognize a provision for contract losses as a liability on its balance sheet. This would result in an unfavorable impact to income from operations. 52 Table of Contents Other Miscellaneous Revenue Other miscellaneous revenue is comprised primarily of royalties from licensing the Company’s technology. The Company recognizes royalty revenue on the later of (i) the subsequent sale or usage, or (ii) satisfaction of a performance obligation to which some or all of the sales-based royalty has been allocated. Practical Expedients, Elections, and Exemptions • Taxes collected from customers and remitted to government authorities and that are related to the sales of the Company's products are excluded from revenues. • Sales commissions are expensed when incurred because the amortization period would have been one year or less. These costs are recorded in selling, general, and administrative expense in the consolidated statements of operations. • The Company does not disclose the value of unsatisfied performance obligations for (i) contracts with original expected lengths of one year or less or (ii) contracts for which it recognizes revenue at the amount to which it has the right to invoice for the services performed. Valuation of Inventories Hardware product inventories are stated at the lower of standard cost or net realizable value. Standard cost approximates actual cost on a first -in, first -out basis. The Company routinely evaluates quantities and values of its inventories in light of current market conditions and trends and records reserves for quantities in excess of demand and for product obsolescence. The evaluation may take into consideration historic usage, expected demand, anticipated sales price, the stage in the product life cycle of the Company's customers’ products, new product development schedules, the effect new products might have on the sale of existing products, product obsolescence, customer design activity, customer concentrations, and product merchantability, among other factors. Actual consumption of inventories could differ from forecasted demand and this difference could have a material impact on the Company's gross margin and inventory balances based on additional provisions for excess or obsolete inventories or a benefit from inventories previously written down. The Company also regularly reviews the cost of inventories against estimated market value and records a lower of cost or market reserve for inventories that have a cost in excess of estimated market value, which could have a material impact on its hardware product gross margin and hardware product inventory balances based on additional write-downs to net realizable value or a benefit from inventories previously written down. Estimates of market value for the Company's products require subjective criteria such as anticipated demand and market acceptance for unique products. Differences between these estimates and actual results could result in gross margin volatilities from period to period. The Company's hardware products have historically had an unusually long product life cycle and obsolescence has not been a significant factor in the valuation of inventories. However, as the Company continues to develop new products, the Company believes its new product life cycle may be shorter, which could increase the potential for obsolescence. A significant decrease in demand could result in an increase in excess inventory on hand. Although the Company makes every effort to ensure the accuracy of its forecasts of future product demand, any significant unanticipated changes in demand or frequent new product developments could have a significant impact on the value of its inventory and its results of operations. Goodwill Goodwill represents the excess fair value of the purchase price over the fair value of identifiable net assets acquired. Goodwill is not amortized but is tested for impairment annually during the Company's fourth fiscal quarter and interim periods if events or changes in circumstances (triggering events) indicate that the carrying amount of goodwill may not be recoverable, in accordance with ASC 350. The Company's annual goodwill impairment test performed in the fourth quarter of Fiscal Year 2024 indicated that no impairment was identified. As of December 28, 2025, the Company determined that the criteria for a held-for-sale classification for the SensiML subsidiary were no longer met. As run-off operations at the SensiML subsidiary concluded in Fiscal Year 2025, the Company decided to account for the SensiML subsidiary as an asset group held for disposal in accordance with ASC 360 - 10. As a result of this classification, the Company evaluated the recoverability, or undiscounted cash flows expected to result from the disposition of the SensiML subsidiary, including goodwill associated with the SensiML acquisition, to determine fair value of the asset group. In its evaluation, the Company determined that such goodwill was fully impaired, and accordingly, recorded an impairment of that goodwill in the amount of $ 0.2 million in accordance with ASC 350 - 20 and ASC 205 - 20. Long-Lived and Intangible Assets The Company’s long-lived assets include property and equipment, software, tooling, furniture and fixtures, leasehold improvements, and internally developed software. These assets are stated at cost less accumulated depreciation and amortization. Depreciation and amortization of long-lived assets is recognized on a straight-line basis over the estimated useful lives of the assets, which generally range from one to ten years. Internal-use software is generally amortized over five years and leasehold improvements are amortized over the shorter of the lease term or the estimated useful life of the asset, generally three to five years. Determining the useful lives of long-lived assets requires management judgment. In estimating useful lives, the Company considers factors including technological obsolescence, competition, historical product life cycles, and industry and market conditions. Refer to Note 6 for additional information on the useful life ranges of the Company's long-lived assets. The Company recognizes assets for pre-production development and tooling costs for which there is an alternative use to the Company. These assets are classified as 'tooling' within property and equipment and are depreciated over their estimated useful lives, generally seven years. Tooling may include both tangible and intangible assets, including but not limited to, mask sets and other semiconductor production tooling used in the manufacture of customer-specific products. Refer to Note 5 for additional information. 53 Table of Contents The Company capitalizes costs related to the development and enhancement of internally used engineering software, hosted services platforms provided to customers, and certain enterprise-level operational systems as internal-use software. Capitalization of internally developed software for internal-use begins when the application development stage is reached and management determines that the project is probable for completion and the software will be used to perform the function intended. Costs incurred during the application development stage, including upgrades and enhancements, are capitalized and amortized on a straight-line basis over their estimated lives, generally five to seven years. Costs incurred during the planning stage and post-implementation activities are expensed as incurred. Acquired intangible assets with finite useful lives are amortized on a straight-line basis over the periods benefited. The Company reviews the recoverability of its long-lived assets annually and when events or changes in circumstances indicate that the carrying value of an asset group may not be recoverable. Recoverability is assessed based on the expected future undiscounted cash flows of the asset group. If the carrying value exceeds the expected future undiscounted cash flows, an impairment loss is recognized for the difference between the carrying value and the estimated fair value of the asset group. In estimating future cash flows and fair value, the Company considers changes in legal factors, the business climate, technological obsolescence, and competitive conditions. The Company's annual impairment assessments performed in the fourth quarters of Fiscal Years 2025 and 2024 indicated that no impairment of long-lived or intangible assets held by continuing operations was identified. As of December 28, 2025, the Company determined that the criteria for a held-for-sale classification for the SensiML subsidiary were no longer met. As run-off operations at the SensiML subsidiary concluded in Fiscal Year 2025, the Company decided to account for the SensiML subsidiary as an asset group held for disposal in accordance with ASC 360 - 10. As a result of this classification, the Company evaluated the recoverability, or undiscounted cash flows expected to result from the disposition of the SensiML subsidiary, including its long-lived and intangible assets, to determine the fair value of the asset group. In its evaluation, the Company decided to record impairment charges to reduce the carrying value of the long-lived and intangible assets within the SensiML subsidiary asset group. The impairment charges of $ 2.2 million, reduced the carrying value of the long-lived and intangible assets within the SensiML subsidiary asset group to $ 0 . Additionally, the Company recognized a loss of $5 thousand on the disposal o f equipment in the Fiscal Year December 28, 2025 . The Company did not recognize any gains or losses on the disposal of equipment in the year ended December 29, 2024 . NOTE 2 — OTHER RELEVANT ACCOUNTING POLICIES Cash Equivalents The Company considers all short-term, highly liquid investments with an original or a remaining maturity at purchase of ninety days or less to be cash equivalents. The Company’s investment portfolio included in cash equivalents is generally comprised of investments that meet high credit quality standards. The Company’s investment portfolio consists of money market accounts and funds. Contract Balances Due to the terms in contractual agreements with customers, the timing of revenue recognition may differ from the timing of invoicing to customers, and these timing differences result in accounts receivables, contract assets, or contract liabilities on the Company’s consolidated balance sheets. The Company records a contract asset when revenue is recognized prior to invoicing if the Company does not have the unconditional right to invoice the customer. The Company records a contract liability (deferred revenue) when revenue is recognized subsequent to invoicing and also when consideration is received in advance of satisfying performance obligations. Balances in contract assets are transferred to accounts receivable when the Company has an unconditional right to invoice the customer. Balances in contract liabilities (deferred revenue) are recognized as revenue once the performance obligations are satisfied, as control of goods and services are transferred to the customer, all revenue recognition criteria have been met, and any constraints have been resolved. Payment terms and conditions vary by term of contracts with the customer. The Company's contracts do not include a significant financing component. The Company's invoicing terms provide customers with simplified and predictable ways of purchasing the Company's goods and services and not to facilitate financing arrangements. The timing between invoicing and when payment is due is not significant. The Company defers costs until related revenue is recognized. The Company had contract asset s associated with eFPGA-related revenues of approximately $ 0.2 million, $ 2.7 million, and $ 3.6 million and contract liabilities (reflected as deferred revenue) associated with eFPGA-related revenue s of $ 0.1 million, $ 0.4 million, and $ 1.0 million on the consolidated balance sheets at December 28, 2025 , December 29, 2024 , and December 31, 2023 , respectively. Assets Recognized from Costs to Obtain a Contract with a Customer The Company recognizes an asset for the incremental costs of obtaining a contract with a customer if it expects the benefit of those costs to be longer than one year. The Company has concluded that none of the costs it has incurred to obtain and fulfill its ASC 606 contracts during the years ended December 28, 2025 and December 29, 2024 met the capitalization criteria and as such, there are no costs deferred nor recognized as assets on the consolidated balance sheets at December 28, 2025 and December 29, 2024 . Current Expected Credit Losses The current expected credit loss ("CECL") reserve required under ASU 2016 - 13 "Financial Instruments - Credit Losses - Measurement of Credit Losses on Financial Instruments (Topic 326 )" ("ASU 2016 - 13" ), reflects the Company's current estimate of potential credit losses related to its financing receivables and contract assets. As of December 31, 2023 and December 29, 2024, the Company's CECL reserve was $0 . Subsequent changes to the CECL reserve are recognized through a provision for or reversal of current expected credit loss reserve on the Company's consolidated statements of operations. ASU 2016 - 13 specifies the reserve should be based on relevant information about past events, including historical loss experience, market conditions, and reasonable and supportable macroeconomic forecasts for the duration of each financing receivable. For each financing receivable and contract asset, the Company performs an annual quantitative assessment of the impact of CECL using a probability-of-default method. This includes estimating the probability that the loan will default before its maturity (probability of default) and the amount of the loss if the loan defaults (loss given default). These two factors result in an expected loss percentage that is applied to the balance of each financing receivable to determine the expected credit loss. The Company adjusts these factors for current conditions, including the financial condition of the borrower, the probability that it will grant the borrower a concession through modification of the loan terms, and reasonable and supportable forecasts of future losses as necessary. 54 Table of Contents During the Fiscal Year ended December 28, 2025, the Company cancelled the Current Note for its financing receivable in exchange for a software license. Refer to Note 1 and Note 10 for additional information. For its trade accounts receivable, the Company estimates the current expected credit loss at the end of each reporting period based on the aging of the trade receivable balance, current and historical customer trends, and communications with its customers. Amounts are written off only after considerable collection efforts have been made and the amounts are determined to be uncollectible. The Company provides an allowance for credit losses for its trade accounts receivable based on both historical experience and a specific identification basis. As of December 28, 2025 and December 29, 2024 , the allowance for credit losses was $ 0 thousand in its consolidated balance sheets. No credit loss expense was recognized for the Fiscal Years ended December 28, 2025 and December 29, 2024 . Leases The Company accounts for leases under ASC 842 and related ASUs. Under ASC 842, all significant lease arrangements are generally recognized at the lease commencement date. Right-of-use ("ROU") assets and lease liabilities are recorded in the Company's consolidated balance sheets. The Company determines if an arrangement is a lease at inception, including considering whether the Company has the right to obtain substantially all of the economic benefits from and direct the use of an identified asset for a period of time. When an arrangement is a lease, the Company determines if it is an operating lease or a finance lease. Lease liabilities represent the present value of the Company's future lease payments over the expected lease term, which includes options to extend or terminate the lease when it is reasonably certain those options will be exercised. The present value of a lease liability is determined using the Company's incremental collateralized borrowing rate at lease inception. ROU assets represent the Company's right to control the use of the leased asset during the lease and are recognized in an amount equal to the lease liability for leases with an initial term greater than 12 months. An ROU asset may also include lease payments related to initial direct costs and prepayments and excludes lease incentives. The Company does not apply lease recognition requirements to lease arrangements having terms of twelve months or less. Instead, it recognizes payments in the consolidated statements of operations as rental costs on a straight-line basis over the lease term. The Company has lease agreements which contain lease and non-lease components; non-lease components are generally accounted for separately. The Company’s ROU assets were approximately $ 0.5 million and $ 0.8 million and lease liabilities were approximately $ 0.4 million and $ 0.7 million on the Company’s consolidated balance sheets at December 28, 2025 and December 29, 2024 , respectively. See Note 9 for additional information. Fair Value of Financial Instruments Fair value is an exit price, representing the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants. As such, fair value is a market-based measurement that is determined based on assumptions that market participants would use in pricing an asset or a liability. Assets and liabilities recorded at fair value are measured and classified in accordance with a three -tier fair value hierarchy based on the observability of the inputs available in the market used to measure fair value: • Level 1 - Observable inputs that reflect quoted prices (unadjusted) for identical assets or liabilities in active markets. • Level 2 - Inputs that are based upon quoted prices for similar instruments in active markets, quoted prices for identical or similar instruments in markets that are not active, and model-based valuation techniques for which all significant inputs are observable in the market or can be derived from observable market data. Where applicable, these models project future cash flows and discount the future amounts to a present value using market-based observable inputs including interest rate curves, foreign exchange rates, and credit ratings. • Level 3 - Unobservable inputs that are supported by little or no market activities. The fair value hierarchy requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. The determination of fair value involves the use of appropriate valuation methods and relevant inputs into valuation models. The carrying value of cash equivalents, accounts receivable, accounts payable, and accrued liabilities approximate their fair values due to their relatively short maturities. The Company's financial assets as of Fiscal Year ended December 29, 2024 consisted of an investment in non-marketable equity without a readily determinable fair value. In the Fiscal Year ended January 2, 2022, the Company recognized revenue from a contractual arrangement with an unaffiliated customer on the sale of eFPGA IP. The eFPGA IP included an eFPGA intellectual property license, know-how, and eFPGA-related professional services. Consideration in the contractual arrangement was comprised of cash and non-cash consideration. Non-cash consideration consisted of shares of common stock in the customer. The customer was, and continues to be, a privately-held company and its common stock is not publicly traded. The Company applied significant judgement to estimate the fair value of the shares as a portion of the total contractual consideration. The Company recognized a $ 0.3 million non-marketable equity investment on its consolidated balance sheet and a corresponding amount in deferred revenue. This deferred revenue was recognized as revenue during the year ended January 1, 2023. 55 Table of Contents In determining the fair value of the investment at acquisition of the common stock, the Company applied the Black-Scholes Option Pricing model using a back-solve technique and applied significant judgment to quantify inputs used in the model, in accordance with the AICPA Accounting and Valuation Guide, Valuation of Privately Held Company Equity Securities Issued as Compensation ( 2013 ) . The Company had neither significant influence nor control over the investee. Post-acquisition, the Company accounted for the non-marketable equity investment under a practical expedient under ASC 321, in which equity investments without a readily determinable fair value are measured to fair value at “cost minus impairment.” Under the “cost minus impairment” method, when the non-marketable equity investment is determined to be impaired on the basis of a qualitative assessment, the carrying value of the non-marketable equity security is adjusted to fair value and is measured at cost, less any impairment. The carrying value of non-marketable equity securities was classified within Level 3 of the fair value hierarchy. The Company reviewed its non-marketable equity investment for impairment periodically. Any losses, should they occur, from impairments of non-marketable equity investments were to be recorded in the statements of operations within interest income and other (expense) income, net. The non-marketable equity investment was classified as a non-current asset on the consolidated balance sheets. There was no impairment assessed as of December 29, 2024 . In the second quarter of 2025, the Company determined there were observable indicators of impairment for its non-marketable equity investment. As such, the Company realized a full impairment of its non-marketable equity investment in the amount of $ 0.3 million. See Note 10 for additional information. Variable Interest Entities A variable interest entity (VIE) is a legal entity that 1 ) does not have sufficient equity at risk to finance its activities without additional subordinated financial support or 2 ) is structured such that equity investors lack the ability to make significant decisions relating to the entity’s operations through voting or similar rights and/or do not substantively participate in the gains and losses of the entity. Consolidation of a VIE by its primary beneficiary is not solely based on majority voting interest, but is based on whether the reporting entity has a controlling financial interest in the VIE. To have a controlling financial interest, the reporting entity must have the power to direct the activities of a VIE that most significantly impact the VIE's economic performance, as well as the obligation to absorb losses or the right to receive benefits that could potentially be significant to the VIE. When the Company enters into various arrangements with unaffiliated entities in the normal course of business, it assesses the entity to determine whether it qualifies as a VIE and if so, whether the Company is the primary beneficiary and should consolidate the entity. These assessments include a review of the entity's capital structure, related contractual relationships and terms, nature of the entity’s operations and purpose, nature of the entity’s interests issued, and the Company's involvement with the entity, including the breadth of the Company's decision-making ability and its ability to influence activities that significantly affect the economic performance of the VIE. As of December 30, 2024, the Company held one interest in a VIE; its $ 0.3 million equity investment in an unaffiliated entity. The VIE’s activities consist of the development and commercialization of certain semiconductor technology, which are financed primarily through investors. The Company's involvement was that of a passive equity investor and creditor without any active involvement in the management or direction of the VIE’s activities. In the second quarter of 2025, the Company realized a full impairment of its equity investment in the unaffiliated entity. Refer to Note 10 for additional information. Cost of Revenues The Company records costs of revenues associated with hardware product revenue and eFPGA IP revenue. Hardware product costs include the cost of materials, contract manufacturing fees, shipping costs, and quality assurance. Hardware product costs also include indirect costs such as warranty, excess and obsolete inventory charges, general overhead costs, and depreciation and amortization of certain capitalized software. eFPGA IP costs include costs related to services under contractual agreements over the term of their respective agreements. These costs are primarily comprised of employee salary and benefits and other employee-related costs to perform work on revenue-generating contracts with customers, software tool utilization costs, and contract engineering costs. At times, the Company reclassifies certain costs and expenses to better attribute usage of labor and resources to their functional utilization. The Company allocated $ 7.6 million and $ 4.8 million of R&D expenses associated with the performance of its revenue contracts to costs of revenues in the 2025 and 2024 annual fiscal periods, respectively. Hardware Product Warranty Costs The Company warrants product hardware against defects in material and workmanship under normal use for twelve months from the date of shipment. The Company’s liability is limited to the cost of repair or replacement of the defective part. The Company does not consider activities related to such warranties to be a separate performance obligation under ASC 606. The terms and conditions of sale generally do not allow for refunds or product returns other than for warranty repairs. The Company does not have significant product warranty-related costs or liabilities for the Fiscal Years ended December 28, 2025 and December 29, 2024 . Foreign Currency Transactions All of the Company’s revenue transactions and inputs to its cost of revenues are denominated in U.S. dollars. The Company conducts sales and marketing activities in various countries outside of the United States. The Company's foreign operations' monetary assets and liabilities are translated into U.S. dollars at current period-end exchange rates and non-monetary assets and related elements of expense are translated using historical exchange rates. The Company's foreign operations' income and expenses are transacted in local foreign currency and translated to U.S. dollars using the average exchange rates in effect during the period. Gains and losses from the foreign currency transactions of the Company's foreign operations are recorded as interest income and other (expense) income, net in the consolidated statements of operations. The impact from foreign currencies was not significant for each of the Fiscal Years ended December 28, 2025 and December 29, 2024 . Operating expenses denominated in foreign currencies represented approximately 7 % and 7 % of t otal operating expenses for the Fiscal Years ended December 28, 2025 , and December 29, 2024 , respectively. The Company incurred a majority of such foreign currency expenses in the United Kingdom, Taiwan, and Japan in the Fiscal Years ended December 28, 2025 and December 29, 2024 . The Company does not use derivative financial instruments to hedge its exposure to fluctuations in foreign currency and therefore, is susceptible to fluctuations in foreign exchange gains or losses in its results of operations in future reporting periods. 56 Table of Contents Advertising Advertising and promotion expenses are charged to “selling, general, and administrative” expense in the consolidated statements of operations as incurred. Advertising and promotion expense s were $ 81 thousand and $ 42 thousand for the Fiscal Years ended December 28, 2025 and December 29, 2024 , respectively. Defined Contribution Post-Retirement Benefit Plans In the third quarter of 2024, the Company started an employer match program for its 401 (k) post-retirement benefit plan. The Company recognized $ 0.2 million and $ 0.1 million in associated matching contribution expenses for the Fiscal Years ended December 28, 2025 and December 29, 2024 , respectively. Stock-Based Compensation The Company grants stock-based compensation under its stock plan (the "Plan") to eligible employees and non-employee directors and grants stock-based compensation under an employee stock purchase plan ("ESPP") for all eligible employees. The Company accounts for stock-based compensation under the provisions of the amended authoritative guidance and related interpretations, which require the measurement and recognition of expense related to the fair value of stock-based compensation awards. The fair value of stock-based compensation awards is measured at the grant date and re-measured upon modification, as appropriate. The Company uses the Black-Scholes option pricing model to estimate the fair value of employee stock options and rights to purchase shares. The fair value of restricted stock awards, restricted stock units, and performance-based restricted stock units is based on the closing price of the Company’s common stock on the date of grant. Using the Black-Scholes pricing model requires the Company to develop highly subjective assumptions, including the expected term of awards, expected volatility of its stock, expected risk-free interest rate, and expected dividend rate over the term of the award. The expected term of awards is based primarily on the Company's historical experience with similar grants. The expected stock price volatility for both stock options and ESPP shares is based on the historic volatility of the Company's stock, using the daily average of the opening and closing prices, and measured using historical data appropriate for the expected term. The risk-free interest rate assumption approximates the risk-free interest rate of a Treasury Constant Maturity bond with a maturity appropriate for the expected term of stock awards under the Plan or the maturity appropriate for the term of the purchase period for the ESPP. The dividend yield assumption is based on the Company's intent not to issue a dividend under its dividend policy. This fair value is expensed over the requisite service period of the award. Stock-based compensation expense is measured at the grant date based on the fair value of the award less expected forfeitures, over the requisite service period, which is typically the vesting period. Expected forfeitures are an estimate based on the historical pre-vest cancellation experience and is applied to all share-based awards. Equity compensation awards that contain a service condition are expensed using the straight-line attribution method over the req uisite service period. Performance-based awards are expected to vest based on the achievement of a performance goal and are expensed over the estimated vesting period, which is estimated by management. The Company regularly reviews the assumptions used to compute the fair value of its stock-based awards and it revises its assumptions as appropriate. See Notes 13 and 14 for additional information. Interest Income The Company's interest income is comprised of interest earned on its money market accounts and financing receivables. As of December 29, 2024, the Company had one note receivable related to the conversion of accounts receivable for a customer. Interest was accrued as earned and is reflected as an increase in the balance of the note receivable, as well as recognized as interest income on the Company's consolidated statements of operations. As of December 28, 2025, the Company cancelled the Current Note for its financing receivable in exchange for a software license. Refer to Note 1 and Note 10 for additional information. Accounting for Income Taxes As part of the process of preparing the Company's consolidated financial statements, the Company is required to estimate its income taxes in each of the jurisdictions in which it operates. This process involves estimating the Company's actual current tax exposure together with assessing temporary differences resulting from different tax and accounting treatment of items, such as deferred revenue, allowance for credit losses, the impact of equity awards, depreciation and amortization, and employee-related accruals. These differences result in deferred tax assets and liabilities, which are included on the Company's consolidated balance sheets. The Company must then assess the likelihood that its deferred tax assets will be recovered from future taxable income. To the extent the Company believes that recovery is not likely, it must establish a valuation allowance. To the extent the Company establishes a valuation allowance or increases this allowance in a period, it must include an expense within the tax provision in the consolidated statements of operations. The Company accounts for uncertainty in income taxes using a two -step approach for recognizing and measuring uncertain tax positions. The first step is to evaluate the tax position for recognition by determining if the weight of available evidence indicates that it is more likely than not that the position will be sustained on audit, including resolution of related appeals or litigation processes, if any. The second step is to measure the tax benefit as the largest amount that is more than 50% likely of being realized upon settlement. The Company classifies the liability for unrecognized tax benefits as current to the extent that it anticipates payment (or receipt) of cash within one year. Interest and penalties related to uncertain tax positions are recognized in the provision for (benefit from) income taxes. Accrued interest and penalties are included within the accrued liabilities in the consolidated balance sheets. Comprehensive Income (Loss) The net income (loss) in the consolidated statements of operations for each of the Fiscal Y ears ended December 28, 2025 and December 29, 2024 is the same as the consolidated comprehensive income (loss). The Company has no reportable items for other comprehensive income ("OCI") under comprehensive income nor under accumulated other comprehensive income on its consolidated balance sheets. 57 Table of Contents Concentrations of Credit and Suppliers Financial instruments, which potentially subject the Company to concentrations of credit risk, consist principally of cash and cash equivalents and accounts receivable. Cash and cash equivalents are maintained with high-quality institutions, however, the Company regularly maintain cash balances at these financial institutions in amounts exceeding the Federal Deposit Insurance Corporation ("FDIC") insurance limit. The Company’s accounts receivables are denominated in U.S. dollars and are derived primarily from sales to customers located in North America, Europe and Asia Pacific. The Company performs ongoing credit evaluations of its customers and generally does not require c ollateral. See Note 15 for information regarding concentrations assoc iated with accounts receivable. The Company depends on a limited number of contract manufacturers, subcontractors, and suppliers for wafer fabrication, assembly, programming, and testing of its hardware products and for the supply of programming equipment. These services are typically provided by one supplier for each of the Company’s hardware products. The Company generally purchases these single or limited source services through standard purchase orders. Since the Company relies on independent subcontractors to perform these services, it cannot directly control its product delivery schedules, costs, or quality levels. The Company’s future success also depends on the financial viability of its independent subcontractors. Business Combinations When the Company acquires a business, it allocates the purchase price to the acquired tangible assets and assumed liabilities, including deferred revenue, liabilities associated with the fair value of contingent consideration, and acquired identifiable intangible assets with finite lives. Any residual purchase price is recorded as goodwill. The allocation of the purchase price requires the Company to make significant estimates in determining the fair values of these acquired assets and assumed liabilities, intangible assets with finite useful lives, and goodwill. These estimates are based on information obtained from management of the acquired companies, the Company's assessment of this information, and historical experience. These estimates can include, but are not limited to, the cash flows that an acquired business is expected to generate in the future, the cash flows that specific assets acquired with that business are expected to generate in the future, the appropriate weighted average cost of capital, and the cost savings expected to be derived from acquiring an asset. These estimates are inherently uncertain and unpredictable, and if different estimates were used, the purchase price for the acquisition could be allocated to the acquired assets and assumed liabilities differently from the allocation that the Company has made to the acquired assets and assumed liabilities. In addition, unanticipated events and circumstances may occur that may affect the accuracy or validity of such estimates, and if such events occur, the Company may be required to adjust the value allocated to acquired assets or assumed liabilities and may impact the useful life assigned to intangible assets with finite useful lives, which would impact amortization expense of intangible assets with finite useful lives and results of operations. The Company recognizes assets acquired (including goodwill and identifiable intangible assets with finite useful lives) and liabilities assumed at fair value on the acquisition date. Subsequent changes to the fair value of such assets acquired and liabilities assumed are recognized in earnings, after the expiration of the measurement period, a period not to exceed 12 months from the acquisition date. Acquisition-related expenses and acquisition-related restructuring costs are recognized in the consolidated statements of operations in the period in which they are incurred. SensiML Disposal Group (representing the SensiML business) and Discontinued Operations SensiML, a wholly-owned subsidiary of the Company acquired in a prior business combination, was previously evaluated as a business held for sale. During the fourth fiscal quarter of 2025, the Company determined that the criteria for held-for-sale classification were no longer met because the anticipated sale of the SensiML business did not occur within the previously expected time frame and management reassessed the expected timing of a potential disposition. Accordingly, the Company evaluated the recoverability, or undiscounted cash flows expected to result from the disposal of the SensiML asset group (representing the SensiML subsidiary) and recorded impairment charges that reduced the carrying value of the long-lived and intangible assets and goodwill associated with the SensiML business. As run-off operations at the SensiML subsidiary concluded in Fiscal Year 2025, the Company determined that a classification of asset group held for disposal for the SensiML subsidiary, in accordance with ASC 360 - 10, was appropriate. Additionally, its results of operations are presented as discontinued operations in the consolidated financial statements. Losses recognized during Fiscal Year 2025 primarily relate to impairment charges recorded in connection with the evaluation of the recoverability of the SensiML asset group, as well as limited ongoing costs to maintain certain infrastructure and administrative functions pending disposition of the business. The Company continues to pursue strategic alternatives for the SensiML business, including a potential sale or other disposition. Remaining expenses associated with the SensiML business are not material and primarily relate to minimal infrastructure and administrative costs necessary to maintain the entity and its technology environment pending disposition. Refer to Note 3 for additional information regarding the disposal group and the related impairment charges. 58 Table of Contents Recent Accounting Standards Adopted In March 2024, the FASB issued ASU 2024 - 02, Codification Improvements - Amendments to Remove References to Concept Statements to remove references to its concept statements from the FASB Accounting Standards Codification . For public entities, the amendments in this Update are effective for fiscal years beginning after December 15, 2024. Early adoption is permitted for any fiscal year or interim period for which financial statements have not yet been issued or made available for issuance. The Company adopted ASU No. 2024 - 02 prospectively on December 30, 2024 and it had no material impact on the Company's consolidated financial statements or related disclosures. 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 Company adopted ASU No. 2023 - 09 prospectively on December 30, 2024 for its annual fiscal year ending December 28, 2025. Refer to Note 11 for additional information. New Accounting Pronouncements Pending Adoption In December 2025, the FASB issued ASU 2025 - 12, Codification Improvements to make improvements to the Codification arising from technical corrections, unintended application of the Codification, and clarifications. For all entities, the amendments in this Update are effective for annual reporting periods beginning after December 15, 2026, including interim periods within those annual reporting periods. Early adoption is permitted. The Company is currently evaluating the impact of this new guidance on its consolidated financial statements. The adoption of ASU 2025 - 12 is not expected to have a significant impact on the Company's consolidated financial statements. In December 2025, the FASB issued ASU 2025 - 11, Interim Reporting (Topic 270 ): Narrow Scope Improvements to improve the navigability of the interim reporting guidance in ASC 270 and clarify when it applies. For public business entities, the amendments in this Update are effective for interim reporting periods within annual reporting periods beginning after December 15, 2027. Early adoption is permitted. The Company is currently evaluating the impact of this new guidance on its consolidated financial statements. The adoption of ASU 2025 - 11 is not expected to have a significant impact on the Company's consolidated financial statements. In September 2025, the FASB issued ASU 2025 - 06, Intangibles - Goodwill and Other - Internal-Use Software (Subtopic 350 - 40 ) to modernize the accounting for software costs that are accounted for under Subtopic 350 - 40, Intangibles - Goodwill and Other - Internal-Use Software . For all entities, the amendments in this Update are effective for annual reporting periods beginning after December 15, 2027 and interim periods within those annual reporting periods. Early adoption is permitted as of the beginning of an annual reporting period. The Company is currently evaluating the impact of this new guidance on its consolidated financial statements. The adoption of ASU 2025 - 06 is not expected to have a significant impact on the Company's consolidated financial statements. In July 2025, the FASB issued ASU 2025 - 05, Measurement of Credit Losses for Accounts Receivable and Contract Assets to provide a practical expedient related to the estimation of expected credit losses for current accounts receivable and current contract assets that arise from transactions accounted for under ASC 606. For all entities, the amendments in this Update are effective for annual reporting periods beginning after December 15, 2025 and interim periods within those annual reporting periods. Early adoption is permitted. The Company is currently evaluating the impact of this new guidance on its consolidated financial statements. The adoption of ASU 2025 - 05 is not expected to have a significant impact on the Company's consolidated financial statements. In November 2024, the FASB issued 2024 - 03, Income Statement - Reporting Comprehensive Income - Expense Disaggregation Disclosures (Subtopic 220 - 40 ) to improve the disclosures about a public entity's expenses and address requests from investors for more detailed information about the types of expenses in commonly presented expense captions. For public entities, the amendments in this Update are effective for annual reporting periods beginning after December 15, 2026 and interim periods within annual periods beginning after December 15, 2027. Early adoption is permitted. The Company is currently evaluating the impact of this new guidance on its consolidated financial statements. The adoption of ASU 2024 - 03 is not expected to have a significant impact on the Company's consolidated financial statements NOTE 3 — DISCONTINUED OPERATIONS In the first quarter of 2025, the Company announced its Board of Directors was actively exploring options for its wholly owned subsidiary, SensiML. This decision by the Company and its Board of Directors was influenced by recent events, including eFPGA IP design wins with strategic customers, expansion of large government ruggedized FPGA and eFPGA IP contracts, performance improvements of its eFPGA IP products, recent changes in the FPGA market competitor landscape, and an increase in inbound interest from customers of former eFPGA market competitors. With the success of QuickLogic's eFPGA IP and ruggedized FPGA business, the Company will focus all of its resources on leveraging and growing the cornerstones of its core business model. SensiML's Analytics Toolkit provides an end-to-end Artificial Intelligence / Machine Learning development platform with accurate sensor algorithms using AI technology, spanning data collection, labeling, algorithm and firmware auto generation, and testing. This software enables ultra-low power IoT endpoints that implement AI to transform raw sensor data into meaningful insight at the device itself. Revenue streams from SensiML included Software as a Service (SaaS) subscriptions for development, per unit license fees when deployed in production, and proof-of-concept services. 59 Table of Contents Preliminary discussions commenced with potential strategic partners regarding the possible sale of SensiML of its assets throughout Fiscal Year 2025. As of January 7, 2025, the Company began accounting for the SensiML subsidiary in accordance with ASC 205 - 20, Discontinued Operations. During Fiscal Year 2025, the Company continued to evaluate strategic alternatives for SensiML, including a potential sale of the business or its underlying technology assets. As of December 28, 2025, the Company determined that the anticipated sale of SensiML had not occurred within the originally expected time frame and management reassessed the expected timing of a potential disposition. As run-off operations at the SensiML subsidiary concluded in Fiscal Year 2025, the Company determined that a classification of asset group held for disposal for the SensiML subsidiary, in accordance with ASC 360 - 10, was appropriate. Additionally, its results of operations are presented as discontinued operations in the consolidated financial statements. As a result of this reassessment, the Company evaluated the recoverability, or undiscounted cash flows expected to result from the disposition of the SensiML asset group (representing the SensiML subsidiary), including capitalized internal-use software, identifiable intangible assets, and goodwill associated with the SensiML acquisition. Based on this evaluation, the Company recorded impairment charges of approximately $ 2.4 million during the Fiscal Year 2025 to reduce the carrying value of these assets. During Fiscal Year 2025, in connection with the evaluation of the recoverability of the SensiML asset group, the Company forgave approximately $ 7.9 million of intercompany payables owed by SensiML to the parent company. As of December 29, 2024, SensiML owed approximately $ 7.2 million to the parent company. Intercompany payables owed by SensiML to the Company are primarily related to historical funding of operations and development activities. The forgiveness of this intercompany balance was accounted for as a capital contribution to SensiML and was approved by the Company's Board of Directors as a related-party transaction. The transaction had no impact on the Company's consolidated financial statements, as the intercompany balances were eliminated in consolidation. Additionally, the forgiveness of the intercompany payable represented a non-cash capital contribution and had no impact to the Company's consolidated statements of cash flows. Following the impairment, the remaining assets of the SensiML business were reduced to nominal amounts consisting of cash balances. Operations of the SensiML business have substantially ceased, and the losses recognized in Fiscal Year 2025 primarily related to the impairment charges recorded during the year, as well as limited ongoing costs required to maintain certain infrastructure and administrative functions pending disposition of the business. These costs primarily consist of minimal hosting, insurance, information technology support, and facility-related expenses. The Company continues to pursue strategic alternatives for the SensiML business, including a potential sale or other disposition of the entity or its underlying technology assets. The material reduction in assets presented below primarily reflects impairment charges recorded during Fiscal Year 2025 in connection with the evaluation of the recoverability of the SensiML asset group. The following table provides details relating to major classes of assets and liabilities of the SensiML disposal group presented as discontinued operations, excluding intercompany balances that are eliminated in consolidation, as of December 28, 2025 and December 29, 2024 (in thousands): December 28, December 29, 2025 2024 ASSETS Current assets: Cash $ 2 $ 21 Accounts receivable, net of allowance for credit losses of $ 0 and $ 30 , as of December 28, 2025 and December 29, 2024, respectively — 10 Total current assets 2 31 Capitalized internal-use software, net — 1,740 Intangible assets, net — 430 Goodwill — 185 Other assets — 1 TOTAL ASSETS $ 2 $ 2,387 LIABILITIES Current liabilities: Trade payables $ — $ 23 Accrued liabilities — 24 Deferred revenue — 10 Total current liabilities — 57 TOTAL LIABILITIES $ — $ 57 The following table provides details relating to internal-use software held by the SensiML disposal group as of December 29, 2024 (in thousands): December 29, 2024 Capitalized internal-use software, net: Capitalized internal-use software $ 3,808 Less: Accumulated amortization ( 2,068 ) $ 1,740 60 Table of Contents The following table provides details relating to intangible assets held by the SensiML disposal group as of December 29, 2024 (in thousands): Gross Carrying Amount Accumulated Amortization Net Carrying Amount Developed technology $ 959 $ ( 575 ) $ 384 Customer relationships 81 ( 81 ) — Trade names and trademarks 116 ( 70 ) 46 Total intangible assets related to discontinued operations $ 1,156 $ ( 726 ) $ 430 The Company recorded depreciation and amortization expense for discontinued operations of $ 0.0 million and $ 0.8 million for the Fiscal Years ended December 28, 2025 and December 29, 2024 , respectively. No interest was capitalized for any period presented. As of January 7, 2025, depreciation and amortization of assets held by SensiML was discontinued in accordance with ASC 205. Depreciation and amortization expense for the Fiscal Years ended December 28, 2025 and December 29, 2024 included approximately $ 0 and $ 0.7 million, respectively, of amortization expense related to capitalized internal-use software. For its trades receivable, the Company provides an allowance for credit losses based on historical experience and a specific identification basis. As of December 28, 2025 , December 29, 2024 , and December 31, 2023 , the allowance for credit losses from discontinued operations was $ 0 thousand, $ 30 thousand, and $ 34 thousand, respectively. The Company recorded credit loss expense in discontinued operations of $ 7 thousand and $ 6 thousand for the Fiscal Years ended December 28, 2025 and December 29, 2024 , respectively. Accounts receivable related to discontinued operations, net of allowances for credit losses, was $ 2 thousand as of December 31, 2023 . The following table provides details relating to major line items constituting income (loss) for the SensiML group, classified as discontinued operations, for the Fiscal Years ended December 28, 2025 and December 29, 2024 (in thousands): Fiscal Years 2025 2024 Revenue $ 11 $ 461 Cost of revenue 3 668 Gross profit (loss) 8 ( 207 ) Operating expenses: Research and development 27 698 Selling, general and administrative 20 6 Impairment charges 2,355 — Restructuring costs 87 — Interest income and other income (expense), net — 25 Income (loss) from discontinued operations before income taxes ( 2,481 ) ( 936 ) (Benefit from) provision for income taxes — — Net income (loss) from discontinued operations $ ( 2,481 ) $ ( 936 ) Net income (loss) from discontinued operations per share: Basic $ ( 0.15 ) $ ( 0.06 ) Diluted $ ( 0.15 ) $ ( 0.06 ) Weighted average shares outstanding: Basic 16,243 14,510 Diluted 16,243 14,510 The Company has incurred $ 0.1 million in costs in connection with the planned disposition of SensiML in the Fiscal Year ended December 28, 2025 . These costs primarily consist of one -time termination benefits and are included within the 'Restructuring Costs' line item in the table above. The Company does not expect total costs incurred in connection with the disposal of SensiML to differ materially from the expenses already recognized in the Fiscal Year ended December 28, 2025 . Contract liabilities related to discontinued operations were $ 0 , $ 10 thousand, and $ 21 thousand as of December 28, 2025 , December 29, 2024 , and December 31, 2023, respectively. In the Fiscal Year ended December 28, 2025 , all of the $ 10 thousand in deferred revenues related to discontinued operations that were outstanding as of December 29, 2024 were recognized by the Company as revenue. The following table presents disaggregated revenues for discontinued operations by geographical location for the Fiscal Years ended December 28, 2025 and December 29, 2024 (in thousands). Revenue attributed to geographic location is based on the destination of the product or service. All revenues from discontinued operations in North America were in the United States. Fiscal Years 2025 2024 Asia Pacific $ 4 $ 29 North America 6 432 Europe 1 — Total revenue $ 11 $ 461 61 Table of Contents The following customers accounted for 10% or more of the Company's revenue from discontinued operations for the Fiscal Years ended December 28, 2025 and December 29, 2024 : Fiscal Years 2025 2024 Customer "L" 50 % 80 % Customer "O" 34 % * The following customers accounted for 10% or more of the Company's accounts receivable from discontinued operations as of the Fiscal Years ended December 28, 2025 and December 29, 2024 : December 28, December 29, 2025 2024 Customer "L" * 34 % Customer "M" * 65 % The following table provides the expenses from discontinued operations relating to operating leases for the Fiscal Years ended December 28, 2025 and December 29, 2024 (in thousands): Fiscal Years 2025 2024 Operating lease costs from discontinued operations: Fixed $ 4 $ 15 Stock-based compensation expense from discontinued operations for the Fiscal Years ended December 28, 2025 and December 29, 2024 was as follows (in thousands): Fiscal Years 2025 2024 Cost of revenue $ — $ — Research and development ( 32 ) 107 Selling, general and administrative — — Total $ ( 32 ) $ 107 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 from discontinued operations was approximately ($ 32 thousand) and $ 105 thousand for the Fiscal Years ended December 28, 2025 and December 29, 2024 , respectively. Total stock-based compensation in discontinued operations related to the Company's Employee Stock Purchase Plan was approximately $ 0 thousand and $ 2 thousand for the Fiscal Years ended December 28, 2025 and December 29, 2024 , respectively. The following table provides cash flows from discontinued operations for the Fiscal Years ended December 28, 2025 and December 29, 2024 (in thousands): Fiscal Year 2025 2024 Net cash provided by (used in) operating activities $ ( 205 ) $ 39 Net cash provided by (used in) investing activities — ( 608 ) Net cash provided by (used in) financing activities 186 561 The Company capitalized certain stock-based compensation amounts to capitalized internal-use software related to discontinued operations of $ 0 and $ 0.1 million for the Fiscal Years ended December 28, 2025 and December 29, 2024 , respectively. The capitalized stock-based compensation amounts relate to compensation for employees involved in the development of capitalized internal-use software. NOTE 4 — EARNINGS (LOSS) PER SHARE Basic earnings (loss) per share was computed by dividing earnings (loss) available by the weighted average number of common shares outstanding during the period. Diluted earnings (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 earnings (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 earnings per share attributable to common stockholders is different from basic earnings 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. 62 Table of Contents Approximately 0.8 million and 0.7 million shares associated with equity awards and the estimated number of shares to be purchased under the current offering period of the ESPP Plan were outstanding and were not included in the calculation of diluted net loss per share, as they were considered anti-dilutive due to the net loss the Company experienced in the Fiscal Years ended December 28, 2025 and December 29, 2024 , respectively. NOTE 5 — BALANCE SHEET COMPONENTS December 28, December 29, 2025 2024 (in thousands) Inventories, net - current: Work-in-process $ 868 $ 710 Finished goods 88 230 956 940 Inventories, net - non-current: Work-in-process 84 690 Finished goods 103 28 187 718 $ 1,143 $ 1,658 Prepaid expenses and other current assets: Prepaid taxes $ 163 $ 498 Deferred charges 348 792 Other prepaid taxes, royalties, and other prepaid expenses 478 242 Other 410 134 $ 1,399 $ 1,666 Property and equipment: Equipment $ 11,004 $ 9,598 Software tools 3,661 3,402 Tooling 18,428 14,357 Software 1,776 1,776 Furniture and fixtures 54 54 Leasehold improvements 647 647 35,570 29,834 Less: Accumulated depreciation and amortization ( 17,337 ) ( 14,135 ) $ 18,233 $ 15,699 Capitalized internal-use software: Capitalized software held for internal use $ 1,374 $ 798 Less: Accumulated amortization ( 257 ) ( 87 ) $ 1,117 $ 711 Accrued liabilities: Accrued compensation $ 1,459 $ 842 Accrued employee benefits 79 75 Accrued payroll tax 35 124 Other 206 546 $ 1,779 $ 1,587 The majority of the Company's deferred charges balances as of December 28, 2025 and December 29, 2024 relate primarily to the Company's software tools and related subscriptions. The Company amortizes its deferred charges over their estimated useful lives using the straight-line method. As of December 28, 2025 and December 29, 2024 , work-in-process ("WIP") inventories, net consist primarily of $ 0.1 million and $ 0.5 million, respectively, of die wafers and $ 0.8 million and $ 1.0 million, respectively, of tested, unmarked devices held for sale, which are completed upon customer orders, and open work orders. The Company capitalized $ 4.1 million and $ 7.3 million in pre-production design and development costs as tooling to be utilized under its long-term professional services contracts for the Fiscal Years ended December 28, 2025 and December 29, 2024 , respectively. These capitalized assets are owned by the Company. The Company recorded depreciation and amortization expense of $ 5.4 million and $ 3.2 million for the Fiscal Years ended December 28, 2025 and December 29, 2024 , respectively . No interest was capitalized for any period presented. 63 Table of Contents D epreciation and amortization expense included approximately $ 0.2 million and $ 0.1 million in amortization expense of capitalized internal-use software for the Fiscal Years ended December 28, 2025 and December 29, 2024 . Accounts receivable, net of allowances for credit losses of $ 0 thousand, was $ 1.6 million as of December 31, 2023 . NOTE 6 — 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: Useful Lives Equipment 1 - 10 years Tooling 7 years Software 1 - 7 years Furniture and fixtures 5 - 7 years Leasehold improvements 3 - 5 years 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 7 — INTANGIBLE ASSETS The following table provides the details of the carrying value of intangible assets capitalized related to the Company's successful defense of its patents in a lawsuit as of December 28, 2025 (in thousands): December 28, 2025 Remaining Useful Life Gross Carrying Amount Accumulated Amortization Net Carrying Amount Capitalized patent litigation costs 8 $ 418 $ ( 78 ) $ 339 Total intangible assets related to patents $ 418 $ ( 78 ) $ 339 The following table provides the details of the carrying value of intangible assets capitalized related to the Company's successful defense of its patents in a lawsuit as of December 29, 2024 (in thousands): December 29, 2024 Remaining Useful Life Gross Carrying Amount Accumulated Amortization Net Carrying Amount Capitalized patent litigation costs 9 $ 418 $ ( 39 ) $ 378 Total intangible assets related to patents $ 418 $ ( 39 ) $ 378 The following table provides the details of future annual amortization of intangible assets related to our patents, based upon the current useful lives as of December 28, 2025 (in thousands): Amount Annual Fiscal Years 2026 $ 39 2027 39 2028 39 2029 39 2030 39 Thereafter 144 Total $ 339 NOTE 8 — DEBT OBLIGATIONS Revolving Line of Credit On December 21, 2018 , the Company entered into a loan agreement, the QuickLogic Corporation Heritage Bank of Commerce Amended and Restated Loan and Security Agreement (as amended, the "Loan Agreement") with Heritage Bank which among other things, provided a revolving line of credit facility ("Revolving Facility") allowing the Company to draw advances up to $ 15 million. The Revolving Facility, as amended, includes a number of customary and restrictive financial covenants including maintaining certain minimum cash levels with the lender. On December 8, 2023, the Company entered into the Seventh Amendment to the Loan Agreement, which increased the line of credit to $ 20 million. The Revolving Facility bears an annual facility fee of $ 60 thousand, payable each December 31st. Advances under the Revolving Facility bear a variable annual interest rate equal to one half of one percentage point ( 0.50 %) above the prime rate. On March 14, 2025, the Company entered into the Eighth Amendment to the Loan Agreement, which extended the loan maturity date for one year from December 31, 2025 to December 31, 2026. On December 28, 2025 , the Company had a $ 15.0 million outstanding balance on the Revolving Facility with an interest rate of 7.25 %. On December 29, 2024 , the Company had an $ 18.0 million outstanding balance on the Revolving Facility with an interest rate of 8.00 %. 64 Table of Contents The Company was in compliance with all loan covenants under the Loan Agreement, as of the end of the current reporting period. 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 Loan Agreement. Financing Arrangements The Company has acquired certain assets consisting of tooling for performance under revenue contracts with customers, with smaller amounts related to IT infrastructure components, which were financed through financing arrangements. The following table provides details for assets financed through financing arrangements as of December 28, 2025 and December 29, 2024 (in thousands): December 28, December 29, 2025 2024 Assets purchased through financing arrangements $ 5,229 $ 4,562 Less: Accumulated depreciation ( 2,315 ) ( 1,219 ) Assets purchased through financing arrangements, net $ 2,914 $ 3,343 Corresponding note payable for financing arrangements $ 2,796 $ 3,130 Minimum remaining term for outstanding financing arrangements 0.01 0.64 Maximum remaining term for outstanding financing arrangements 2.59 2.32 Weighted average remaining term for outstanding financing arrangements 1.49 1.68 Minimum stated interest rate for outstanding financing arrangements 8.00 % 8.00 % Maximum stated interest rate for outstanding financing arrangements 9.89 % 9.89 % Weighted average stated interest rate for outstanding financing arrangements 8.64 % 8.88 % The following table provides details on payments related to financing arrangements for the Fiscal Years ended December 28, 2025 and December 29, 2024 (in thousands): Year Ended December 28, December 29, 2025 2024 Payments related to financing arrangements $ 2,151 $ 1,384 The following table provides the details of future payments for assets purchased through financing arrangements as of December 28, 2025 (in thousands): Financing Arrangements 2026 $ 2,008 2027 941 2028 26 Total payments 2,975 Less: Interest ( 179 ) Present value of financing arrangements $ 2,796 NOTE 9 — LEASES The Company's principal research and development and corporate facility is a leased office building located at 2220 Lundy Avenue, San Jose, California, 95131. This lease facility is classified as an operating lease. T he Company occupies approximately 24,164 square feet of space. The original five -year lease was entered into in February 2019 and has since been extended to June 14, 2027 under similar terms. Upon expiration, the Company has the ability to extend the term of the lease for an additional period of five years at a base rent equal to the prevailing market rent rate. Due to the Company's uncertainty in renewing the lease upon expiration, the option to renew is not included within the Company's measurement of the related ROU asset and operating lease liability. The Company maintains sales offices out of which it conducts sales and marketing activities in various countries outside of the United States. The sales offices are rented under short-term leases. Total rent expense was approximately $ 0.4 million for each of the Fiscal Years ended December 28, 2025 and December 29, 2024 , respectively. The following table provides the activity related to operating leases (in thousands): December 28, 2025 December 29, 2024 Operating lease costs: Fixed $ 348 $ 360 Short term 16 18 Total $ 364 $ 378 Right-of-use assets obtained in exchange for lease obligations: Operating leases $ — $ 46 65 Table of Contents The following table provides the details of supplemental cash flow information (in thousands): December 28, 2025 December 29, 2024 Cash paid for amounts included in the measurement of lease liabilities: Operating cash flows used for operating leases $ 339 $ 378 Non-cash ROU assets related to operating leases included in the operating cash flows for the fiscal year ended December 28, 2025 and December 29, 2024 were $ 294 thousand and $ 269 thousand, respectively. The following table provides the details of ROU assets and lease liabilities (in thousands): December 28, 2025 December 29, 2024 Right-of-use assets: Operating leases $ 464 $ 758 Lease liabilities: Operating leases $ 447 $ 731 The following table provides the details of future lease payments for operating leases as of December 28, 2025 (in thousands): Annual Fiscal Years Operating 2026 $ 349 2027 128 Total lease payments 477 Less: Interest ( 30 ) Present value of lease liabilities $ 447 The following table provides the details of lease terms and discount rates: December 28, 2025 ROU assets: Weighted-average remaining lease term (years) Operating leases 1.42 Weighted-average discount rates: Operating leases 9.00 % NOTE 10 — FAIR VALUE MEASUREMENTS The Company's cash and cash equivalents balances were $ 18.8 million and $ 21.9 million, including amounts in money market funds, as of December 28, 2025 and December 29, 2024 , respectively. Interest in these funds is earned at a 0.35 % annual percentage rate ( "APR"). Due to the short-term nature of the money market funds, the Company believes that carrying value approximates fair value. During Fiscal Year 2025, in connection with the fair value assessment, or evaluation of the recoverability of the SensiML asset group, the Company estimated the fair value of certain long-lived and intangible assets using valuation techniques that relied on significant unobservable inputs. Due to the absence of observable market transactions and the limited availability of verifiable market data, the valuation relied primarily on management's assumptions regarding potential future economic benefits and market participant considerations. Based on this evaluation, the Company determined that the carrying value of the SensiML asset group was not recoverable and recorded impairment charges as described in Note 3. The inputs used in this valuation would be considered Level 3 within the fair value hierarchy. As these valuations rely on significant unobservable inputs and management judgment, the resulting fair value estimates may differ materially from amounts that could be realized in an actual market transaction. On April 28, 2023, the Company converted accounts receivable for a customer in the amount of approximately $ 1.16 million to notes receivable (the "Original Note"). At the time, the Original Note bore an interest rate of 3.0 % compounded monthly. On June 28, 2023, the Company cancelled the Original Note and entered into a revised promissory note ("Second Revised Note") with the customer, where the interest rate changed to 4.69 % compounded monthly, or a 4.8 % effective annual interest rate, accruing from the date of the Original Note. On June 27, 2024, the Company cancelled the Second Revised Note and entered into a revised promissory note ("Current Note") with the customer, where the interest rate changed to 10.0 % per annum. Accrued but unpaid interest was compounded monthly, accruing from the date of the Current Note. Additionally, if not prepaid prior to the Current Note maturity date of the earlier of (i) 24 months from June 28, 2024 or (ii) the closing of the customer's Series B financing, the principal and all accrued and unpaid interest was due and payable to the Company. If an event of default occurs, the interest rate would increase to 15.31 %. All other terms of the Original Note remained the same. As of December 29, 2024 , the related note receivable balance was $ 1.3 million, including $ 129 thousand in accrued interest. In Fiscal Year 2024, the Company evaluated the note receivable under the current expected credit loss ("CECL") model, which requires the measurement of all expected credit losses for financial assets held at the reporting date based on historical experience, current conditions, and reasonable and supportable forecasts. The Company utilized the probability-of-default method in Fiscal Year 2024 to determine the current expected credit loss for the note receivable. The probability-of-default method represents the likelihood that a receivable that has reached the point of default will not be collected in full. Using this method, the Company measured the current expected credit loss associated with the note receivable to be de minimis as of December 29, 2024. In the fourth fiscal quarter of 2025, the Company entered into an agreement that cancelled the Current Note and extinguished the note receivable balance and all accrued interest as of November 10, 2025 in the amount of $ 1.4 million, which included $ 240 thousand in accrued interest. In exchange, the Company received an unlimited license to utilize certain software components owned by the customer in future releases of the Company's Aurora FPGA User Tools. The Company derecognized the note receivable upon execution of the agreement and recorded the license rights obtained as consideration received in the transaction. The irrevocable license is being accounted for under ASC 360 and is included within the 'Property and Equipment, net' line item on the Company's consolidated balance sheet. 66 Table of Contents In the third quarter of 2021, in connection with a revenue contract with the same non-affiliated customer, the Company received shares of the customer's common stock. The full transaction price under the revenue contract was cash plus a non-cash consideration, which consisted of a certain amount of the customer's equity. The Company considered the non-cash consideration to be an investment in the customer. The full transaction price was the amount of consideration which the Company received under the contract in exchange for transferring the promised goods and services to the customer. Since the non-cash consideration was shares of common stock that were not publicly traded, the fair value was not readily determinable. The Company considered various valuation methods such as market multiples, guideline public company method, and the Black-Scholes Option Pricing model. Due to limited data for the valuation, the Company ultimately selected the Black-Scholes method using back-solve techniques as that was determined to be the most suitable with the available data. The Black-Scholes Option Pricing model is a valuation approach that can be used to determine the value of common shares for companies in which there are no, or infrequent, transactions involving common shares. The Company believed that its valuation method for the non-public equity under this arrangement fell under Level 3 in the fair value hierarchy because the value method relied on unobservable market inputs. The initial fair value of the non-cash consideration is listed below: Fair Value at Valuation Date Using: Total Quoted Prices in Active Markets for Identical Assets (Level I) Significant Other Observable Inputs (Level 2) Significant Unobservable Inputs (Level 3) Non-marketable equity investment $ 300 $ — $ — $ 300 In arriving at the estimated value for the non-cash consideration, the Company utilized inputs relying on significant judgment in accordance with the AICPA Accounting and Valuation Guide, Valuation of Privately Held Company Equity Securities Issued as Compensation ( 2013 ). The key assumptions below were utilized:   • Discount for lack of marketability: 34 % - 41 %. • Expected Term: 4 - 5 Years. • Risk Free Interest Rate: 0.75 % - 0.92 %. • Dividend: 0.00 . • Volatility: 63 % - 78 %. Volatility was estimated by utilizing a selected peer group of companies within the customer's industry with a valuation date as of October 2021. After initial recognition fair value of the non-cash consideration, the Company elected to utilize the practical expedient under ASC 321 by which entities can elect to measure equity securities without readily determinable fair values at “cost minus impairment,” basis for periods subsequent to the acquisition date. Under the “cost minus impairment” methods, when the investment is determined to be impaired on the basis of a qualitative assessment or there is an observable price change in an orderly transaction, entities that have made the election in ASC 321 must remeasure such equity securities at fair value in accordance with ASC 820. ASC 321 indicates that the adjustments to the carrying value of an equity security without a readily determinable fair value should reflect the fair value of the security as of the date that the observable transaction for the similar security took place. Subsequent to the valuation date and through December 29, 2024, there were no observable price changes or indicators of impairment for the non-marketable equity investment. In the second quarter of 2025, the Company determined there were observable indicators of impairment for its non-marketable equity investment. As such, the Company realized a full impairment of its non-marketable equity investment in the amount of $ 0.3 million. NOTE 11 — INCOME TAXES The Company notes that Note 11 - Income Taxes, is presented at the consolidated level, inclusive of continuing and discontinued operations, due to income taxes related to discontinued operations being immaterial in nature for the periods presented. The following table presents the U.S. and foreign components of consolidated income (loss) before income taxes and the provision for (benefit from) income taxes (in thousands): Fiscal Years 2025 2024 Income (loss) before income taxes U.S. $ ( 14,746 ) $ ( 3,782 ) Foreign ( 52 ) ( 56 ) Income (loss) before income taxes $ ( 14,798 ) $ ( 3,838 ) (Benefit from) provision for income taxes: Current: Federal $ — $ — State — ( 2 ) Foreign 18 ( 20 ) Subtotal 18 ( 22 ) Deferred: Federal $ — $ — State — — Foreign — 25 Subtotal — 25 (Benefit from) provision for income taxes $ 18 $ 3 67 Table of Contents The following table presents the rate reconciliation between income tax provisions at the U.S. federal statutory rate and the effective rate reflected in the consolidated statements of operations (in thousands): Fiscal Years 2025 Income tax (benefit) at statutory rate $ ( 3,108 ) 21.0 % State and local income taxes (net of federal income tax effect) - 0.0 % Foreign tax effects 29 ( 0.2 %) Tax credits ( 335 ) 2.3 % Change in valuation allowance 2,706 ( 18.3 %) Nontaxable or nondeductible items Stock compensation 278 ( 1.9 %) Other permanent items 107 ( 0.7 %) Other reconciling items Expired tax attributes 287 ( 1.9 %) Other 54 ( 0.4 %) (Benefit from) provision for income taxes $ 18 ( 0.1 %) Fiscal Years 2024 Income tax (benefit) at statutory rate $ ( 806 ) 21.0 % State taxes ( 2 ) 0.1 % Foreign taxes 17 ( 0.4 %) Stock compensation and other permanent differences 8 ( 0.2 %) 162(m) 147 ( 3.8 %) R&D tax credits ( 543 ) 14.1 % Expired tax attributes 585 ( 15.3 %) Future benefit of deferred tax assets not recognized 597 ( 15.6 %) (Benefit from) provision for income taxes $ 3 ( 0.1 %) Based on the available objective evidence, management believes it is more likely than not that the U.S. net deferred tax assets will not be fully realizable. Accordingly, the Company has provided a full valuation allowance against its U.S. federal and state deferred tax assets at December 28, 2025 . Any future release of the valuation allowance may be recorded as a tax benefit increasing net income. The Company believes it is more likely than not it will be able to realize its foreign deferred tax assets. Deferred tax balances are comprised of the following (in thousands): December 28, 2025 December 29, 2024 Deferred tax assets: Net operating losses $ 47,078 $ 42,488 Accruals and reserves 1,656 1,232 Credits carryforward 7,724 7,342 Depreciation and amortization 3,978 6,086 Stock-based compensation 521 601 Operating lease liability 103 165 Gross deferred tax assets 61,060 57,914 Deferred tax liabilities: Right-of-use asset ( 107 ) ( 172 ) Withholding tax on future distribution ( 125 ) ( 125 ) Gross deferred tax liabilities ( 232 ) ( 297 ) Net deferred tax assets 60,828 57,617 Valuation allowance ( 60,953 ) ( 57,742 ) Total deferred tax liability $ ( 125 ) $ ( 125 ) Beginning January 1, 2022, the Tax Cuts and Jobs Act (the "Tax Act”) eliminated the option to deduct research and development expenditures in the current year and requires taxpayers to capitalize such expenses pursuant to Internal Revenue Code (“IRC”) Section 174. The capitalized expenses are amortized over a 5 -year period for domestic expenses and a 15 -year period for foreign expenses. As a result of this provision of the Tax Act, the Company capitalized $ 0.1 million of research expenses in fiscal year 2025 . As of December 28, 2025 , the Company had federal and state income tax net operating loss ("NOL") carryforwards of approximately $ 190.3 million and $ 101.9 million, respectively. Approximately $ 102.1 million in federal NOLs generated before January 1, 2018 expire beginning in 2026 through 2037. Federal NOLs of $ 88.2 million generated in years after January l, 2018 can be carried forward indefinitely. State NOLs will expire beginning in fiscal year 2028 through 2045. The Company had research credit carryforwards of approximately $ 5.5 million for federal and $ 6.0 million for state income tax purposes as of December 28, 2025 . If not utilized, the federal carryforwards will expire beginning in 2026 through 2045 . The California research credit carryforward can be carried forward indefinitely. 68 Table of Contents Due to the Company's history of losses, it believes that it is more likely than not that the deferred tax assets and benefits from these federal and state NOL and credit carryforwards will not be realized as of December 28, 2025 . Accordingly, the Company established a valuation allowance of $ 61 million, tax-effected, as of the Fiscal Year ended December 28, 2025 due to uncertainties related to its ability to utilize its U.S. deferred tax assets before they expire. Events which may restrict utilization of a company’s net operating loss and credit carryforwards include, but are not limited to, certain ownership change limitations as defined in Internal Revenue Code Section 382 (a) ("Section 382" ) and similar state provisions. In the event the Company has had a change of ownership, utilization of carryforwards could be restricted to an annual limitation. The annual limitation may result in the expiration of net operating loss carryforwards and credit carryforwards before utilization. The Company performed a Section 382 Study related to ownership changes in fiscal year 2023, covering the period starting January 1, 2005 through December 31, 2023. Per the Section 382 Study, there were no Section 382 ownership changes during this period. As a result, the future utilization of the Company's NOL and R&D credit carryovers generated since 2005 are not subject to any limitations, assuming the Company does not experience an ownership change in the future. Foreign withholding taxes associated with the repatriation of earnings of foreign subsidiaries were not provided for on the undistributed earnings of certain foreign subsidiaries as of the end of Fiscal Year 2025 . The Company intends to reinvest these earnings indefinitely in the Company’s foreign subsidiaries. The Company believes that future domestic cash generation will be sufficient to meet future domestic cash needs. In previous years, the Company recorded a deferred tax liability of approximately $ 0.1 million on the undistributed earnings of non-U.S. subsidiaries. During Fiscal Year 2025 , there were no changes to this balance, and at December 28, 2025 , the balance for this deferred tax liability was approximately $ 0.1 million. The foreign withholding taxes are not expected to have a material impact on the Company’s financial position and results of operations. Certain impairment charges recorded during Fiscal Year 2025 did not result in a material tax benefit due to the Company's valuation allowance against its U.S. deferred tax assets. Uncertain Tax Positions Changes in gross unrecognized benefits are as follows (in thousands): Fiscal Years 2025 2024 Beginning balance of unrecognized tax benefits $ 2,730 $ 2,513 Additions (subtractions) for tax positions related to the prior year ( 69 ) ( 63 ) Additions for tax positions related to the current year 210 280 Lapse of statutes of limitations — — Ending balance of unrecognized tax benefits $ 2,871 $ 2,730 Out of $ 2.9 million of unrecognized tax benefits, there are no unrecognized tax benefits that would result in a change in the Company's effective tax rate if recognized in future years. The accrued interest and penalties related to uncertain tax positions were not significant as of December 28, 2025 and December 29, 2024 . The Company is not currently under tax examination in the U.S. and the Company’s historical net operating loss and credit carryforwards may be adjusted by the Internal Revenue Service and other tax authorities until the statute closes on the year in which such tax attributes are utilized. The Company estimates that its unrecognized tax benefits will not change significantly within the next twelve months. 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. The U.S. tax years from 2006 forward remain effectively open to examination due to the carryover of unused net operating losses and tax credits. Significant components of the Company's income taxes paid are as follows (in thousands): Fiscal Years 2025 Federal $ — State and local California 2 New Jersey 8 New York 6 Other states 2 Foreign Japan 4 Other foreign jurisdictions 1 Total income taxes paid $ 23 Fiscal Years 2024 Federal $ — State and local 13 Japan 1 India 15 China 4 Total income taxes paid $ 33 69 Table of Contents NOTE 12 — STOCKHOLDERS’ EQUITY Common and Preferred Stock As of December 28, 2025 , the Company is authorized to issue 200 million shares of common stock and has 10 million shares of authorized but unissued undesignated preferred stock. Without any further vote or action by the Company’s stockholders, the Board of Directors has the authority to determine the powers, preferences, rights, qualifications, limitations, or restrictions granted to or imposed upon any wholly unissued shares of undesignated preferred stock. Issuance of Common Stock On February 25, 2025 , the Company entered into an At Market Sales Agreement (the "Sales Agreement") with Needham & Company, LLC, as sales agent (the "Agent"). Pursuant to the Sales Agreement, the Company is able to offer and sell, from time to time, through the Agent, shares of the Company's common stock, par value of $ 0.001 per share, having an aggregate offering price of up to $ 20,000,000 (the "ATM Offering"). From February 25, 2025 to August 14, 2025 , the Company sold 713 thousand shares under the ATM Offering, resulting in net cash proceeds of approximately $ 4.2 million. Issuance costs related to the ATM Offering were $ 339 thousand. On March 6, 2025 , the Company entered into common stock purchase agreements with certain institutional investors and their affiliated entities for the sale of an aggregate of 256 thousand shares of 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 $ 1.5 million. Issuance costs related to the offering were $ 20 thousand. The purchase price for each share of common stock in the March 2025 offering was $ 5.93 . On August 14, 2025 , the Company filed a new Registration Statement on Form S- 3 (File No 333 - 289610 ) ("New Registration Statement") with the SEC to replace the Company's expiring Registration Statement on Form S- 3, under which the Company 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 in an aggregate amount of up to $ 125,000,000 . The Company's registration statement became effective August 22, 2025. In connection with the New Registration Statement, the Company filed a sales agreement prospectus whereby the Company amended, restated, and renewed its ATM program, allowing the Company to sell an aggregate offering price of up to $ 20,000,000 (the "Amended ATM Offering"). The Company also amended and restated its At Market Sales Agreement with the Agent on August 14, 2025. The $ 20,000,000 of shares of the Company's common stock that may be sold under the Amended ATM Offering is included in the $ 125,000,000 of its securities that may be sold under the New Registration Statement. From August 14, 2025 through Fiscal Year ended December 28, 2025 , the Company sold 487 thousand shares under the Amended ATM Offering, resulting in net cash proceeds of approximately $ 3.1 million. Issuance costs related to the Amended ATM Offering were $ 98 thousand. Issuance costs for the Company's ATM Offering and Amended ATM Offering are recorded on a pro-rata basis reflective of the percentage of shares sold to total shares available for sale under the ATM Offering and Amended ATM Offering, respectively. The Company intends to use the net proceeds from the ATM Offering and Amended ATM Offering for general corporate purposes, which may include, but is not limited to, working capital, licensing or acquiring intellectual property or technologies to incorporate in the Company's products, capital expenditures, to fund possible investments in and acquisitions of complementary businesses, partnerships, or minority investments, or to repay debt. Of the $ 0.5 million in stock issuance costs recognized on the Company's consolidated statements of stockholders' equity for the Fiscal Year ended December 28, 2025, approximately $ 95 thousand were prepaid in Fiscal Year 2024 and amortized in Fiscal Year 2025. Furthermore, $ 11 thousand of the Company's stock issuance costs amortized in Fiscal Year 2025 were unpaid as of December 28, 2025. Refer to the Company's consolidated statements of cash flows for additional information on the cash paid related to stock issuance costs in Fiscal Year 2025. On December 5, 2024 , the Company entered into common stock purchase agreements with certain institutional investors and their affiliated entities for the sale of an aggregate of 424 thousand shares of 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 $ 3.2 million. Issuance costs related to the offering were $ 27 thousand. The purchase price for each share of common stock in the December 2024 offering was $ 7.67 . On March 13, 2024 , the Company entered into common stock purchase agreements with certain institutional investors for the sale of an aggregate of 223 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 $ 3.5 million. Issuance costs related to the offering were $ 24 thousand. The purchase price for each share of common stock in the March 2024 offering was $ 16.00 . 70 Table of Contents NOTE 13 — EMPLOYEE STOCK PLANS 2009 Stock Plan On April 24, 2019, the QuickLogic Corporation 2009 Stock Plan ( "2009 Stock Plan") was replaced by the 2019 Stock Plan and the remaining balance of available shares under the 2009 Stock Plan were cancelled. 2019 Stock Plan On April 24, 2019, the Company’s Board of Directors and shareholders approved the QuickLogic Corporation 2019 Stock Plan ( "2019 Stock Plan"). The 2019 Stock Plan was extended ten years through April 24, 2029. Under the 2019 Stock Plan, 5.0 million shares of common stock were available for grants, plus any shares subject to any outstanding options or other awards granted under the 2009 Stock Plan that expire, are forfeited, cancelled, returned to the Company for failure to satisfy vesting requirements, settled for cash, or otherwise terminated without payment being made thereunder. On December 23, 2019, the Company filed a Certificate of Amendment to the Company's Amended and Restated Certificate of Incorporate with the Secretary State of Delaware to effect a 1 -for- 14 reverse stock split ("Reverse Stock Split"), which became effective on December 23, 2019. As such, 357 thousand shares of common stock were now authorized for grants under the 2019 Stock Plan, plus any shares subject to any outstanding options or other awards granted under the 2009 Stock Plan that expire, are forfeited, cancelled, returned to the Company for failure to satisfy vesting requirements, settled for cash, or otherwise terminated without payment being made thereunder. The Company's Board of Directors approved and on April 22, 2020, stockholders subsequently ratified an increase in the total number of shares available for future awards under the 2019 Stock Plan. The approved increase in the total number of shares available for future awards was 550 thousand shares, for an overall authorized amount of 907 thousand shares, plus any shares subject to any outstanding options or other awards granted under the Company's 2009 Stock Plan that are terminated, canceled, surrendered, or forfeited as of April 22, 2020. On April 28, 2020, the Company filed a Registration Statement on Form S- 8 with the Securities and Exchange Commission to register an additional 550 thousand shares of its common stock that may be issued under the Company’s 2019 Stock Plan. The Company's Board of Directors approved and on May 12, 2021, stockholders subsequently ratified an increase in the total number of shares available for future awards under the 2019 Stock Plan. The approved increase in the total number of shares available for future awards was 600 thousand shares, for an overall authorized amount of 1.5 million shares, plus any shares subject to any outstanding options or other awards granted under the Company's 2009 Stock Plan that are terminated, canceled, surrendered, or forfeited as of May 12, 2021. On May 19, 2021, the Company filed a Registration Statement on Form S- 8 with the Securities and Exchange Commission to register an additional 600 thousand shares of its common stock that may be issued under the Company’s 2019 Stock Plan. The Company's Board of Directors approved and on May 10, 2022, stockholders subsequently ratified an increase in the total number of shares available for future awards under the 2019 Stock Plan. The approved increase in the total number of shares available for future awards was 900 thousand shares, for an overall authorized amount of 2.4 million shares, plus any shares subject to any outstanding options or other awards granted under the Company's 2009 Stock Plan that are terminated, canceled, surrendered, or forfeited as of May 10, 2022. On May 19, 2022, the Company filed a Registration Statement on Form S- 8 with the Securities and Exchange Commission to register an additional 900 thousand shares of its common stock that may be issued under the Company’s 2019 Stock Plan. The Company's Board of Directors approved and on May 8, 2025, stockholders subsequently ratified an increase in the total number of shares available for future awards under the 2019 Stock Plan. The approved increase in the total number of shares available for future awards was 1.1 million shares, for an overall authorized amount of 3.5 million shares, plus any shares subject to any outstanding options or other awards granted under the Company's 2009 Stock Plan that are terminated, canceled, surrendered, or forfeited as of May 8, 2025. On May 15, 2025, the Company filed a Registration Statement on Form S- 8 with the Securities and Exchange Commission to register an additional 1.1 million shares of its common stock that may be issued under the Company’s 2019 Stock Plan. As of December 28, 2025 , approximate ly 584 thousand shares of t he Company’s common stock were reserved for issuance under the 2019 Stock Plan. Options typically vest at a rate of 25 % one year after the vesting commencement date, and one forty - eighth for each month of service thereafter. RSUs typically vest at a rate of 25 % one year after the vesting commencement date, and one eighth every six months thereafter. The Company may implement different vesting schedules in the future with respect to any new equity awards. 2009 Employee Stock Purchase Plan The 2009 Employee Stock Purchase Plan ( "2009 ESPP"), was adopted in March 2009 and subsequently approved by the Company's stockholders on April 22, 2009. Under the 2009 ESPP, 2.3 million shares were reserved for issuance. The 2009 ESPP originally extended for ten years until March 6, 2019 and provides for six -month offering periods. Participants purchase shares through payroll deductions of up t o 20 % of an employee’s total compensation (maximum of 20,000 shares per offering period but subject to further limitations as outlined herein). The 2009 ESPP permits the Board of Directors to determine, prior to each offering period, whether participants purchase shares at: (i) 85% of the fair market value of the common stock at the end of the offering period; or (ii) 85% of the lower of the fair market value of the common stock at the beginning or the end of an offering period. 71 Table of Contents The Company's Board of Directors approved and on April 23, 2015, stockholders subsequently ratified an increase in the total number of shares available for sale under the 2009 ESPP. The approved increase in the total number of shares available for sale was 1.0 million shares, for an overall authorized amount of 3.3 million shares. On November 16, 2015, the Company filed a Registration Statement on Form S- 8 with the Securities and Exchange Commission to register an additional 1.0 million shares of its common stock that may be issued under the Company’s 2009 ESPP. The Company's Board of Directors approved and on April 26, 2017, stockholders subsequently ratified an increase in the total number of shares available for sale under the 2009 ESPP. The approved increase in the total number of shares available for sale was 1.5 million shares, for an overall authorized amount of 4.8 million shares. On December 23, 2019, the Company filed a Certificate of Amendment to the Company's Amended and Restated Certificate of Incorporate with the Secretary State of Delaware to effect a 1 -for- 14 reverse stock split, which became effective on December 23, 2019. As such, 343 thousand shares of common stock were now authorized for issuance under the 2009 ESPP and participants could now purchase a maximum of 1,428 shares per six -month offering period. The Company's Board of Directors approved and on April 22, 2020, stockholders subsequently ratified an increase in the total number of shares available for sale under the 2009 ESPP. The approved increase in the total number of shares available for sale was 300 thousand shares, for an overall authorized amount of 643 thousand shares. Additionally, stockholders approved an extension of the term for the 2009 ESPP for ten years until March 5, 2029. On April 28, 2020, the Company filed a Registration Statement on Form S- 8 with the Securities and Exchange Commission to register an additional 407 thousand shares of its common stock that may be issued under the Company’s 2009 ESPP, which consisted of 300 thousand shares approved on April 22, 2020 and the 1.5 million shares approved on April 26, 2017 after accounting for the reverse stock split, or 107 thousand shares. In November 2020, the Board of Directors approved to increase the maximum number of shares available to be purchased per six -month offering from 1,428 shares to 10,000 shares. Additionally, the Board of Directors has determined that, until further notice, future offering periods will be made at 85 % of the lower of the fair market value of the common stock at the beginning or the end of an offering period. The Company's Board of Directors approved and on May 8, 2025, stockholders subsequently ratified an increase in the total number of shares available for sale under the 2009 ESPP. The approved increase in the total number of shares available for sale was 200 thousand shares, for an overall authorized amount of 843 thousand shares. On May 15, 2025, the Company filed a Registration Statement on Form S- 8 with the Securities and Exchange Commission to register an additional 200 thousand shares of its common stock that may be issued under the Company’s 2009 ESPP. Due to a prior administrative error, the increase in the maximum number of shares available to be purchased per six -month offering of 10,000 that was previously approved by the Board of Directors in November 2020 ( "Prior 2020 Approval") was never reflected in an amendment to the 2009 ESPP. In February 2026, the Board ratified the Prior 2020 Approval and authorized the Company to reflect the amendment in the 2009 ESPP. A copy of the amended 2009 ESPP is filed as an exhibit hereto. As of December 28, 2025 , approximate ly 258 thousand shares of t he Company’s common stock were reserved for issuance under the 2009 ESPP Stock Plan. NOTE 14 — STOCK-BASED COMPENSATION The Company provides stock-based incentive compensation awards to eligible employees and non-employee directors. Awards that may be granted under the program include non-qualified and incentive stock options, restricted stock awards, restricted stock units ("RSU"), and performance-based restricted stock units ("PRSU") and are based on the closing price of the Company’s common stock on the date of grant. To date, awards granted under the program consist of stock options, RSUs, and PRSUs. The majority of stock-based awards granted under the program vest over two years. Stock options granted under the program have a maximum contractual term of ten years. Stock-based compensation expense recognized in the Company’s consolidated statements of operations for the years ended December 28, 2025 and December 29, 2024 is as follows (in thousands): Fiscal Years Stock-based compensation expense included in: 2025 2024 Cost of revenue $ 678 $ 852 Research and development 637 978 Selling, general and administrative 2,036 2,669 Total costs and expenses $ 3,351 $ 4,499 Fiscal Years Stock-based compensation expense by type of award: 2025 2024 ESPP $ 185 $ 106 RSU and PRSU 3,166 4,393 Total costs and expenses $ 3,351 $ 4,499 The Company capitalized stock-based compensation amounts to capitalized internal-use software and tooling, net of $ 50 thousand and $ 58 thousand for the Fiscal Years ended December 28, 2025 and December 29, 2024 , respectively. No stock-based compensation was capitalized or included in inventories for the years ended December 28, 2025 and December 29, 2024 . 72 Table of Contents Stock-Based Compensation Award Activity A roll forward of shares available for grant under the 2019 Plan (in thousands) is as follows: Shares Available for Grant Balance at December 31, 2023 595 RSUs and PRSUs granted ( 635 ) Options forfeited or expired 12 RSUs and PRSUs forfeited 93 Balance at December 29, 2024 65 Authorized 1,100 RSUs and PRSUs granted ( 626 ) RSUs and PRSUs forfeited 45 Balance at December 28, 2025 584 No stock options were granted during any of the periods presented. Stock Options A roll forward of stock options under the 2019 Plan is as follows: Number of Shares Weighted Average Exercise Price Weighted Average Remaining Term Aggregate Intrinsic Value (in thousands) (in years) (in thousands) Balance outstanding at December 31, 2023 60 19.45 Forfeited or expired ( 12 ) 48.14 Balance outstanding at December 29, 2024 48 12.05 Forfeited or expired — - Outstanding, exercisable, and vested at December 28, 2025 48 $ 12.05 0.69 $ — The intrinsic value for the stock options, based on the Company’s closing stock pri ce of $ 6.42 per share at December 26, 2025 , the last trading day of the Company’s current reporting period, was $ 0 , which would have b een received by the option holders had all option holders exercised their options as of that date. No options were exercised or granted during the years ended December 28, 2025 and December 29, 2024 . As of December 28, 2025 , there were no unvested stock options. Restricted Stock Units The Company grants RSUs to employees with various vesting terms. RSUs entitle the holder to receive, at no cost, one common share for each restricted stock unit on the date vested. The Company withholds shares in settlement of employee tax withholding obligations on the vesting of restricted stock units. As of December 28, 2025 , there was approximately $ 3.0 million in unrecognized stock-based compensation expense related to RSUs. There was no unrecognized stock-based compensation related to PRSUs as of December 28, 2025 . The remaining unrecognized stock-based compensation expense as of December 28, 2025 is expected to be recorded over a weighted average period of 1.44 years. 73 Table of Contents A roll forward summarizing RSU and PRSU activity and related weighted average grant date fair values is as follows: RSUs Outstanding Number of Shares Weighted Average Grant Date Fair Value (in thousands) Nonvested at December 31, 2023 589 $ 7.35 Granted 635 9.57 Vested ( 532 ) 8.29 Forfeited ( 93 ) 13.16 Nonvested at December 29, 2024 599 7.97 Granted 626 5.03 Vested ( 434 ) 7.64 Forfeited ( 45 ) 8.25 Nonvested at December 28, 2025 746 $ 5.67 2009 ESPP Stock Plan The Company issued 63 thousand shares of common stock at an average price of $ 4.91 per share and 41 thousand shares of common stock at an average price of $ 7.65 per share to employees in the years ended December 28, 2025 and December 29, 2024 , respectively . The weighted average grant date fair value and the weighted-average assumptions used to estimate the fair value of ESPP option rights granted is as follows: Fiscal Years 2025 2024 Expected life (months) 5.9 5.9 Risk-free interest rate 4.12 % 4.71 % Volatility 83 % 64 % Dividend yield — — Weighted average fair value of ESPP options granted $ 2.29 $ 2.93 NOTE 15 — INFORMATION CONCERNING SEGMENTS, PRODUCT LINES, GEOGRAPHIC INFORMATION, ACCOUNTS RECEIVABLE, AND REVENUE CONCENTRATION The Company identifies its business segments based on business activities, management responsibility, and geographic location. For all periods presented, the Company operated in a single reportable business segment. The Company has one reportable operating segment based on how its Chief Operating Decision Maker ("CODM") manages the business and in a manner consistent with the availability of discrete financial information and 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. The CODM does not review assets at a different asset level or category than at the consolidated level and the consolidated statements of operations are presented to the CODM without further disaggregation. Significant segment expenses also include depreciation, amortization, and stock-based compensation, which are disclosed within the consolidated statements of cash flows. The Company does not have any significant intra-entity sales or transfers. Sales, operating income, and net income are some of the key variables monitored by the CODM and management when determining the Company's financial condition and operating performance. The CODM uses sales, operating income (loss), and net income (loss) to evaluate income generated in deciding whether to reinvest profits into the segment or to use such profits for other purposes, such as for acquisitions or share repurchases. These key variables are also used to monitor budget versus actual results, as well as in competitive analyses by benchmarking to the Company’s competitors. The following is a breakdown of revenue by product family (in thousands): Fiscal Years 2025 2024 New products $ 10,464 $ 15,667 Mature products 3,310 3,984 Total revenue $ 13,774 $ 19,651 New products revenue consists of revenues from the sale of hardware products manufactured on 180 nanometer or smaller semiconductor processes and of eFPGA IP licenses, as well as professional services. Mature products include all products produced on semiconductor processes larger than 180 nanometer. Associated royalty revenues are included within their respective device's classification. 74 Table of Contents The following is a breakdown of new products revenue (in thousands): Fiscal Years 2025 2024 Hardware products $ 987 $ 2,547 eFPGA IP 9,477 13,120 Total new products revenue $ 10,464 $ 15,667 eFPGA IP revenue is comprised primarily of eFPGA intellectual property license revenue, eFPGA-related professional services revenue, and eFPGA-related support and maintenance revenue. eFPGA-IP revenue related to professional services was approximately $ 9.4 million and $ 13.1 million in the Fiscal Years ended December 28, 2025 and December 29, 2024 , respectively. Contract assets were approximately $ 0.2 million, $ 2.7 million, and $ 3.6 million at December 28, 2025 , December 29, 2024 , and December 31, 2023 , respectively and were included under current assets on the Company's consolidated balance sheets. Changes in the Company's contract asset balance resulted from the Company gaining the unconditional right to invoice its customers for previously recognized revenue, partially offset by additional revenue recognition in the period for contracts that contain a different payment schedule than the Company's revenue recognition timeline. The Company expects to invoice the $ 0.2 million in contract assets as of December 28, 2025 by the end of fiscal Q1'26 . Contract liabilities of $ 0.1 million, $ 0.4 million, and $ 1.0 million were included in deferred revenue on the Company's consolidated balance sheets at December 28, 2025 , December 29, 2024 , and December 31, 2023 , respectively. In the twelve months ended December 28, 2025 , the Company recognized the previously outstanding contract liabilities as of December 29, 2024 of $ 0.4 million as revenue. The Company expects to recognize the $ 0.1 million in deferred revenues as of December 28, 2025 using the output time-based method through the end of Q4'26 . Of its remaining unsatisfied performance obligations not currently on the Company's balance sheet, the Company expects to recognize $ 50 thousand by Q1'27 , using the input time-based method. For the majority of the Company's contracts, payment schedules are in place and cash receipts will not always follow the timeline of the Company's revenue recognition policies. As such, the Company will typically record contract assets and liabilities on its consolidated balance sheet in relation to these contracts. During the year ended January 1, 2023, the Company entered into a multiple-year agreement with a customer to provide professional services over multiple phases of which each phase has to be separately approved prior to commencement of work. Other contractual terms include a termination for convenience clause including the enforceable right to payment for performance completed to date. The Company assessed the agreement under ASC 606 noting the following judgments, estimates, and conclusions: • Each funded phase comprised a separate contract. • There were monthly performance obligations associated with stated milestones. • The application of the output method resulted in the allocation of the transaction price for the contract on a straight-line basis for the stated milestones. • Further, revenue for the contract is recognized at a point in time when control of the asset is transferred to and accepted by the customer. Associated with this agreement, the Company recognized professional services revenue amounting to $ 6.1 million and $ 10.9 million for the Fiscal Years ended December 28, 2025 and December 29, 2024 , respectively. As of December 28, 2025 and December 29, 2024 , the Company had $ 0.2 million and $ 2.6 million, respectively, in contract assets on its consolidated balance sheets associated with this agreement. The Company derives revenue from sales to customers located in North America, Europe and Asia Pacific. North America includes revenue from the United States. Revenue from the Uni ted States was $ 10.8 million or 79 % of total revenue and $ 16.4 million or 84 % of total revenue in th e Fiscal Years ended December 28, 2025 and December 29, 2024 , respectively. Countries outside of the United States comprising 10% or more of revenue included Malaysia, with $ 1.4 million or 10% of total revenue in the Fiscal Year ended December 28, 2025. The Company attributes revenues from external customers to individual countries based on the end customer's country, if available. If not available, the Company will utilize the country of the furthest entity in the supply chain for which the country is known, such as the distributor or assembly. The following is a breakdown of revenue by shipping destination (in thousands): Fiscal Years 2025 2024 Asia Pacific $ 2,310 $ 2,170 North America 10,900 16,764 Europe 564 717 Total revenue $ 13,774 $ 19,651 The following distributors and customers accounted for 10% or more of the Company's revenue for the periods presented. Distributor amounts represent revenue from the Company's goods and services sold to a distributor. Customer amounts represent revenues from both distributor and from the Company to an end customer. As such, revenue to a distributor may also include information related to customers. Fiscal Years 2025 2024 Distributor "A" 15 % 12 % Customer "A" 44 % 56 % Customer "B" 11 % * * Represents less than 10% of revenue as of the date presented. 75 Table of Contents The following distributors and customers accounted for 10% or more of the Company's accounts receivable and contract asset balance as of the dates presented: December 28, December 29, 2025 2024 Distributor "A" * 10 % Distributor "D" * 12 % Distributor "C" 12 % * Customer "A" 43 % 50 % Customer "K" * 10 % Customer "Q" 13 % * * Represents less than 10% of trade accounts receivable and contract assets, net, as of the date presented. Approxi mately 0.1 % and 0.1 % of the Compa ny’s long-lived assets, including property and equipment and other assets, were located outside the United States as of December 28, 2025 and December 29, 2024 , respectively. NOTE 16 — COMMITMENTS AND CONTINGENCIES Commitments The Company's principal contractual commitments include purchase obligations, re-payments of draw downs from the revolving line of credit, and payments under operating leases and financing arrangements. Purchase obligations are largely comprised of open purchase order commitments to suppliers and to subcontractors under professional services agreements. 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 take delivery of and to pay for a portion of the forecasted wafer volume. The C ompany had $ 0.2 million in non-cancellable purchase commitments with various wafer foundries as of December 28, 2025 . Purchase Obligations Purchase obligations represent contractual agreements to purchase goods or services entered into in the ordinary course of business. 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. The Company had $ 1.8 million of recorded and unrecorded purchase obligations due within the next twelve months as of December 28, 2025 . The Company expects this commitment to be fulfilled over the next twelve months of Fiscal 2026 . Litigation 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 consolidated financial position, results of operations, or cash flows; or without requiring royalty or other payments which may adversely impact gross profit. NOTE 17 — SUBSEQUENT EVENTS In the first quarter of Fiscal Year 2026, the Company sold 403 thousand shares under the Amended ATM Offering, resulting in gross cash proceeds of approximately $ 3.2 million. 76 Table of Contents ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE None.