QUICKLOGIC Corp

Previous wording

QuickLogic Corporation was founded in 1988 and reincorporated in Delaware in 1999. We provide innovative, programmable silicon and software platforms to enable our customers to develop custom hardware products in a fast time-to-market and cost-effective way. Specifically, we are a fabless semiconductor company with a variety of products: embedded FPGA ("eFPGA") intellectual property ("IP"), low power, multi-core semiconductor system-on-chips ("SoCs"), discrete FPGAs, and AI software. Our customers can use our eFPGA IP for hardware acceleration and pre-processing in their Application Specific Integrated Circuit (ASIC) products, our SoCs to run our customers' software and build their hardware around, and our discrete FPGAs to implement their custom functionality. The Analytics Toolkit from SensiML Corporation ("SensiML"), our wholly-owned subsidiary, provides an end-to-end Artificial Intelligence / Machine Learning solution with accurate sensor algorithms using AI technology. The full range of platforms, software tools, and eFPGA IP enables the practical and efficient adoption of AI, voice, and sensor processing across Aerospace, and Defense, Consumer/Industrial IoT, and Consumer Electronics markets.

Current wording

QuickLogic Corporation was founded in 1988 and reincorporated in Delaware in 1999. We provide innovative, programmable silicon and software platforms to enable our customers to develop custom hardware products in a fast time-to-market and cost-effective way. Specifically, we are a fabless semiconductor company with a variety of products: embedded FPGA ("eFPGA") intellectual property ("IP"), low power, multi-core semiconductor system-on-chips ("SoCs"), discrete FPGAs, and AI software. Our customers can use our eFPGA IP for hardware acceleration and pre-processing in their Application Specific Integrated Circuit (ASIC) products, our SoCs to run our customers' software and build their hardware around, and our discrete FPGAs to implement their custom functionality. The Analytics Toolkit from SensiML Corporation ("SensiML"), our wholly-owned subsidiary, provides an end-to-end Artificial Intelligence / Machine Learning solution with accurate sensor algorithms using AI technology. The full range of products, software tools, and eFPGA IP enables the practical and efficient field programmability for our customers across Aerospace, and Defense, Consumer/Industrial IoT, and Consumer Electronics markets.

Previous wording

Our new products include the following: eFPGA IP Licensing business, associated professional services, consisting of development and integration of eFPGA technology into custom semiconductor solutions, our silicon products consisting of EOS™, QuickAI™, ArcticLink® III, PolarPro®3, PolarPro II, PolarPro, and Eclipse II products. In addition to delivering our own semiconductor solutions, our new products category includes our AI/ML Software Platform from our wholly-owned subsidiary company, SensiML, which includes Software as a Service (SaaS) subscriptions for development, per unit license fees when deployed in production, and proof-of-concept services, all of which are also included in the new products revenue category. Our mature products include primarily FPGA families named PASIC®3 and QuickRAM®, as well as programming hardware and design software.

Current wording

Our new products include the following: eFPGA IP Licensing business, associated professional services, consisting of development and integration of eFPGA technology into custom semiconductor solutions, and our silicon products consisting of EOS™, QuickAI™, ArcticLink® III, PolarPro®3, PolarPro II, PolarPro, and Eclipse II products. In addition to delivering our own semiconductor solutions, our new products category includes our AI/ML Software Platform from our wholly-owned subsidiary company, SensiML, which includes Software as a Service (SaaS) subscriptions for development, per unit license fees when deployed in production, and proof-of-concept services, all of which are also included in the new products revenue category. Our mature products include primarily FPGA families named PASIC®3 and QuickRAM®, as well as programming hardware and design software.

Previous wording

For our IP and silicon platforms, we collaborate with multiple partners on co-marketing and/or co-selling initiatives. These partners could have primary business lines in semiconductor IP, Design Services, semiconductor foundry, semiconductor assembly and test, and others. For our AI/ML Software, SensiML collaborates with several microcontroller and sensor manufacturers to integrate the microcontroller and/or sensor manufacturers’ development kits with SensiML’s Analytics Toolkit in order to showcase combined solutions for AI/ML applications. Currently, these collaborations include Infineon Technologies, On Semiconductor Corp., Microchip Technology Inc., Silicon Laboratories, Inc., STMicroelectronics N.V., Arduino, NXP Semiconductors N.V., Raspberry Pi, and Nordic Semiconductor.

Current wording

For our IP and silicon platforms, we collaborate with multiple partners on co-marketing and/or co-selling initiatives. These partners could have primary business lines in semiconductor IP, Design Services, semiconductor foundry, semiconductor assembly and test, and others. For our AI/ML Software, SensiML collaborates with several microcontroller and sensor manufacturers to integrate the microcontroller and/or sensor manufacturers’ development kits with SensiML’s Analytics Toolkit in order to showcase combined solutions for AI/ML applications. Currently, these collaborations include On Semiconductor Corp., Microchip Technology Inc., Silicon Laboratories, Inc., Arduino, NXP Semiconductors N.V., Raspberry Pi, and Nordic Semiconductor.

Previous wording

Our eFPGA IP is currently developed on 12nm, 16nm, 22nm, 28nm, 40nm, 65nm, 90nm, 130nm, and 250nm process nodes with a roadmap to more advanced nodes. The licensable IP is generated by our automated compiler tool called Australis™, which enables our engineers to create an eFPGA IP for our licensees that they can then integrate into their SoC without significant involvement by QuickLogic. We believe this flow enables a scalable development and support model for QuickLogic. For our eFPGA strategy, we typically work with semiconductor manufacturing partners prior to this IP being licensed to a SoC company.

Current wording

Our eFPGA IP is currently developed on 12nm, 16nm, 22nm, 28nm, 40nm, 65nm, 90nm, 130nm, and 250nm process nodes with a roadmap to more advanced, sub 10nm nodes. The licensable IP is generated by our automated compiler tool called Australis™, which enables our engineers to create an eFPGA IP for our licensees that they can then integrate into their SoC without significant involvement by QuickLogic. We believe this flow enables a scalable development and support model for QuickLogic. For our eFPGA strategy, we typically work with semiconductor manufacturing partners prior to this IP being licensed to a SoC company.

Previous wording

In order to grow our revenue from its current level, we depend upon increased revenue from our new products, including existing new product platforms and platforms currently in development. We expect our business growth to be driven mainly by eFPGA IP and our silicon solutions, with additional contributions from SensiML AI Software. Therefore, our revenue growth needs to be strong enough to enable us to sustain profitability while we continue to invest in the development, sale, and marketing of our new solution platforms, IP, and software.

Current wording

In order to grow our revenue from its current level, we depend upon increased revenue from our new products, including existing new product platforms and platforms currently in development. We expect our business growth to be driven mainly by eFPGA IP and our silicon solutions. Therefore, our revenue growth needs to be strong enough to enable us to sustain profitability while we continue to invest in the development, sale, and marketing of our new solution platforms, IP, and software.

Previous wording

Our embedded FPGA technology gives ASIC and SoC developers the benefit of flexibility to make design changes post-manufacturing changes at very fast time-to- and time-in-market, while keeping power consumption low. Our multi-core sensor processing products such as ArcticLink 3 S1, ArcticLink 3 S2, EOS 3, EOS S3 LV, and EOS S3AI provide an extremely power-efficient approach for real-time multi-modal (vision, motion, voice, location, biometric, and environmental) sensor processing independently of the cloud. Our SensiML Analytics Toolkit is cutting-edge software that enables ultra-low power IoT endpoints that implement AI to transform raw sensor data into meaningful insight at the device itself. The toolkit also provides an end-to-end development platform spanning data collection, labeling, algorithm and firmware auto generation, and testing.

Current wording

Our embedded FPGA technology gives ASIC and SoC developers the benefit of flexibility to make post-manufacturing design changes at very fast time-to- and time-in-market, while keeping power consumption low. Our multi-core sensor processing products such as ArcticLink 3 S1, ArcticLink 3 S2, EOS 3, EOS S3 LV, and EOS S3AI provide an extremely power-efficient approach for real-time multi-modal (vision, motion, voice, location, biometric, and environmental) sensor processing independently of the cloud. Our SensiML Analytics Toolkit is cutting-edge software that enables ultra-low power IoT endpoints that implement AI to transform raw sensor data into meaningful insight at the device itself. The toolkit also provides an end-to-end development platform spanning data collection, labeling, algorithm and firmware auto generation, and testing.

Previous wording

Customers typically order our products through our distributors. Currently, we have eight active distributors in North America and a network of seventeen active distributors and sales representatives throughout Europe and Asia to support our international business. eFPGA IP customers and SensiML SaaS subscribers typically enter into licensing agreements directly with QuickLogic and SensiML, respectively.

Current wording

Customers typically order our products through our distributors. Currently, we have fourteen active distributors in North America and a network of nineteen active distributors and sales representatives throughout Europe and Asia to support our international business. eFPGA IP customers and SensiML SaaS subscribers typically enter into licensing agreements directly with QuickLogic and SensiML, respectively.

Previous wording

New products revenue for the Fiscal Year ended December 31, 2023 was $18.2 million, an increase of $6.5 million as compared to the Fiscal Year ended January 1, 2023. Of the $18.2 million in new products revenue, approximately $16.8 million was generated from eFPGA IP revenue, primarily eFPGA-related professional engineering services, as compared to approximately $7.5 million in the Fiscal Year ended January 1, 2023. Mature products revenue for the Fiscal Year ended December 31, 2023 was $3.0 million, a decrease of $1.5 million compared to the Fiscal Year ended January 1, 2023. We shipped new products into multiple end market segments including Aerospace and Defense, Industrial, IoT, Consumer, and SaaS revenue from the new Artificial Intelligence ("AI") market beginning in the Fiscal Year ended December 31, 2023. We reported a net loss of$0.3 million for the Fiscal Year ended December 31, 2023 compared to a net loss of$4.3 million in the Fiscal Year ended January 1, 2023.

Current wording

New products revenue for the Fiscal Year ended December 29, 2024 was $16.1 million, a decrease of $2.1 million as compared to the Fiscal Year ended December 31, 2023. Of the $16.1 million in new products revenue, approximately $13.1 million was generated from eFPGA IP revenue, primarily eFPGA-related professional engineering services, as compared to approximately $16.8 million in the Fiscal Year ended December 31, 2023. Mature products revenue for the Fiscal Year ended December 29, 2024 was $4.0 million, an increase of $1.0 million compared to the Fiscal Year ended December 31, 2023. We shipped new products into multiple end market segments including Aerospace and Defense, Industrial, IoT, Consumer, and SaaS revenue from the new Artificial Intelligence ("AI") market beginning in the Fiscal Year ended December 29, 2024. We reported a net loss of$3.8 million for the Fiscal Year ended December 29, 2024 compared to a net loss of$0.3 million in the Fiscal Year ended December 31, 2023.

Previous wording

We have experienced net losses in the past years and expect to experience losses in at least some of the fiscal quarters during 2024 as we continue to develop new products, applications, and technologies. Our new hardware products and hardware products currently under development are generating stable gross margins year over year and higher margins than our mature products due to the markets that we have targeted, and the larger order quantities associated with these new products. New eFPGA products have been generating higher gross margins as a percentage of revenue. Whether we can achieve cash flow levels sufficient to support our operations cannot be accurately predicted, and our investment portfolio is subject to a degree of interest rate and liquidity risk. Unless such cash flow levels are achieved, in addition to the $2.3 million and $3.5 million in proceeds that we received in March 2023and March 2024, respectively, fromthe sale of our equity securities, and the revolving line of credit we may be able to draw down from Heritage Bank of Commerce, we may need to obtain additional funds through strategic divestiture, or sell debt or equity securities, or some combination thereof, to provide funding for our operations. Such additional funding may not be available on commercially reasonable terms, or at all.

Current wording

We have experienced net losses in the past years and expect to experience losses in at least some of the fiscal quarters during 2025 as we continue to develop new products, applications, and technologies. Our new hardware products and hardware products currently under development are generating stable gross margins year over year and higher margins than our mature products due to the markets that we have targeted, and the larger order quantities associated with these new products. New eFPGA products have been generating higher gross margins as a percentage of revenue. Whether we can achieve cash flow levels sufficient to support our operations cannot be accurately predicted, and our investment portfolio is subject to a degree of interest rate and liquidity risk. Unless such cash flow levels are achieved, in addition to the $3.2 million, $3.5 million, and $2.3 million in net proceeds that we received in December 2024, March 2024, and March 2023, respectively, fromthe sale of our equity securities, and the revolving line of credit we may be able to draw down from Heritage Bank of Commerce, we may need to obtain additional funds through strategic divestiture, or sell debt or equity securities, or some combination thereof, to provide funding for our operations. Such additional funding may not be available on commercially reasonable terms, or at all.

Previous wording

We recognized hardware product revenue of approxima tely $4.0 million, or 19% of total revenue, $8.1 million, or 50% of total revenue, and $9.6 million, or 76% of total revenue, in the Fiscal Years ended December 31, 2023, January 1, 2023, and January 2, 2022, respectively.

Current wording

We recognized hardware product revenue of approxima tely $6.1 million, or 30% of total revenue, $4.0 million, or 19% of total revenue, and $8.1 million, or 50% of total revenue, in the Fiscal Years ended December 29, 2024, December 31, 2023, and January 1, 2023, respectively.

Previous wording

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, we do 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 $8 thousand, $2 thousand and a sales return reversal of $13 thousand for the years ended December 31, 2023, January 1, 2023, and January 2, 2022, respectively, on our consolidated statements of operations. While hardware product sales returns have not been material to the company in recent reporting periods, we note there is an inherent uncertainty in estimating this allowance. In the case where actual results may significantly vary from management estimates, we may be required to make future adjustments to our revenues and operating results.

Current wording

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, we do 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 $1 thousand, $8 thousand, and $2 thousand for the years ended December 29, 2024, December 31, 2023, and January 1, 2023, respectively, on our consolidated statements of operations. While hardware product sales returns have not been material to the company in recent reporting periods, we note there is an inherent uncertainty in estimating this allowance. In the case where actual results may significantly vary from management estimates, we may be required to make future adjustments to our revenues and operating results.

Previous wording

Additionally, judgment is required by management to allocation the transaction price to the separately identifiable performance obligations in the contract. We allocate the transaction price of the contract to each performance obligation based on its relative SSP. We rarely sell eFPGA intellectual property licenses on a standalone basis. Generally, we 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, we are required to estimate the SSP for each performance obligation.

Current wording

Additionally, judgment is required by management to allocate the transaction price to the separately identifiable performance obligations in the contract. We allocate the transaction price of the contract to each performance obligation based on its relative SSP. We rarely sell eFPGA intellectual property licenses on a standalone basis. Generally, we 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, we are required to estimate the SSP for each performance obligation.

Previous wording

In instances where the SSP is not directly observable because we do not sell the promised goods or services separately, we typically determine the SSP using either the adjusted market assessment approach or the expected cost plus a margin approach, depending on the characteristics and context of the deliverable. The selected method is applied by us 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.

Current wording

In instances where the SSP is not directly observable because we do not sell the promised goods or services separately, we typically determine 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 us 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.

Previous wording

We recognized eFPGA IP revenue of approximately $16.8 million, or 79% of total revenue, $7.5 million, or 47% of total revenue, and $2.7 million, or 21% of total revenue, in the Fiscal Years ended December 31, 2023, January 1, 2023, and January 2, 2022, respectively.

Current wording

We recognized eFPGA IP revenue of approximately $13.1 million, or 65% of total revenue, $16.8 million, or 79% of total revenue, and $7.5 million, or 47% of total revenue, in the Fiscal Years ended December 29, 2024, December 31, 2023, and January 1, 2023, respectively.

Previous wording

We recognized SaaS and Other Revenue of approxim ately$0.4 million, or 2%of total revenue, $0.6 million, or 3% of total revenue, and $0.4 million, or 3% of total revenue, in the Fiscal Years ended December 31, 2023, January 1, 2023, and January 2, 2022, respectively.

Current wording

We recognized SaaS and Other Revenue of approxim ately$0.9 million, or 4%of total revenue, $0.4 million, or 2% of total revenue, and $0.6 million, or 3% of total revenue, in the Fiscal Years ended December 29, 2024, December 31, 2023, and January 1, 2023, respectively.

Previous wording

Goodwill represents the excess fair value of consideration transferred over the fair value of net assets acquired in a business combination. The carrying value of our goodwill is not amortized but is annually tested for impairment during our fourth fiscal quarter, and more often if there is an indicator of impairment. We either perform a qualitative assessment under ASC 350, including the consideration of factors such as macroeconomic conditions, industry and market considerations, and overall financial performance, or a quantitative assessment under ASU No. 2017-14, which involves comparing the carrying value of the reporting unit to its fair value. Subsequent to our annual impairment testing in the fourth quarters of 2023 and 2022, there were no indicators of impairment that gave cause for additional impairment testing of goodwill. No impairment of goodwill has been recognized to date.

Current wording

Goodwill represents the excess fair value of consideration transferred over the fair value of net assets acquired in a business combination. The carrying value of $0.2 million associated with our goodwill is not amortized but is annually tested for impairment during our fourth fiscal quarter, and more often if there is an indicator of impairment. We either perform a qualitative assessment under ASC 350, including the consideration of factors such as macroeconomic conditions, industry and market considerations, and overall financial performance, or a quantitative assessment under ASU No. 2017-14, which involves comparing the carrying value of the reporting unit to its fair value. Subsequent to our annual impairment testing in the fourth quarters of 2024 and 2023, there were no indicators of impairment that gave cause for additional impairment testing of goodwill. No impairment of goodwill has been recognized to date.

Previous wording

We review the recoverability of our long-lived assets annually and when events or changes in circumstances occur that indicate that the carrying value of the asset or asset group may not be recoverable. We assess possible impairment based on our ability to recover the carrying value of the asset or asset group from the expected future pre-tax cash flows (undiscounted and without interest charges) of the related operations, as well as the useful lives applied to the assets. If these cash flows are less than the carrying value of the asset or asset group, an impairment loss is recognized for the difference between the estimated fair value and the carrying value, and the carrying value of the related assets is reduced by this difference. The measurement of impairment requires management to estimate future cash flows and the fair value of long-lived assets. In estimating future cash flows and the fair value of our long-lived assets, we consider changes in legal factors and the business climate, product and technology obsolescence, and competition. We performed an annual impairment assessment in the fourth quarters of 2023 and 2022 and deemed no impairment was necessary for the current or prior year. Subsequent to our annual impairment testing in the fourth quarters of 2023 and 2022, there were no indicators of impairment that gave cause for additional impairment testing of our long-lived assets. Additionally, we did not recognize any gains or losses on the disposal of equipment in the year ended December 31, 2023 and recognized gains on disposal of equipment of $27 thousand in the year ended January 1, 2023.

Current wording

Acquired intangible assets with finite useful lives are amortized on a straight-line basis over the periods benefited. We review the recoverability of our long-lived assets annually and when events or changes in circumstances occur that indicate that the carrying value of the asset or asset group may not be recoverable. We assess possible impairment based on our ability to recover the carrying value of the asset or asset group from the expected future pre-tax cash flows (undiscounted and without interest charges) of the related operations, as well as the useful lives applied to the assets. If these cash flows are less than the carrying value of the asset or asset group, an impairment loss is recognized for the difference between the estimated fair value and the carrying value, and the carrying value of the related assets is reduced by this difference. The measurement of impairment requires management to estimate future cash flows and the fair value of long-lived assets. In estimating future cash flows and the fair value of our long-lived assets, we consider changes in legal factors and the business climate, product and technology obsolescence, and competition. We performed an annual impairment assessment in the fourth quarters of 2024 and 2023 and deemed no impairment was necessary for the current or prior year. Subsequent to our annual impairment testing in the fourth quarters of 2024 and 2023, there were no indicators of impairment that gave cause for additional impairment testing of our long-lived assets. No impairment of intangible assets has been recognized to date. Additionally, we did not recognize any gains or losses on the disposal of equipment in the years ended December 29, 2024 or December 31, 2023.

Previous wording

Total revenue increased approximately $5 million, or 31% in Fiscal Year ended December 31, 2023 as compared to the Fiscal Year ended January 1, 2023. The increase in total revenue was comprised of an increase of $6.5 million in new product revenue, partially offset by a decrease of $1.5 million in mature product revenue.

Current wording

Total revenue decreased approximately $1.1 million, or (5)% in Fiscal Year ended December 29, 2024 as compared to the Fiscal Year ended December 31, 2023. The decrease in total revenue was comprised of a decrease of $2.1 million in new product revenue, partially offset by an increase of $1.0 million in mature product revenue.

Previous wording

The increase in new product revenue was primarily driven by an increase in eFPGA IP revenue, partially offset by a decrease in new hardware product revenue and SaaS & Other revenue. eFPGA IP revenue is comprised primarily of eFPGA intellectual property revenue, eFPGA-related professional services revenue, and eFPGA-related support and maintenance revenue. eFPGA IP revenue increased approximately $9.3 million, or 123%, as compared to the Fiscal Year ended January 1, 2023. The increase in eFPGA IP revenue was primarily comprised of a $9.2 million increase in eFPGA-related professional services revenue. SaaS & Other revenue decreased approximately $0.2 million, or (62)% as compared to the Fiscal Year ended January 1, 2023. The decrease in SaaS & Other revenue was driven by a $0.1 million decrease each in both software-related professional services revenue and SaaS-related revenue. New hardware revenue decreased by approximately $2.5 million, or (67)%, in the Fiscal Year ended December 31, 2023 compared to the Fiscal Year endedJanuary 1, 2023. The decrease in new hardware product revenue was primarily comprised of a reduction of $1.0 million in display product revenue, $0.9 million in connectivity product revenue, and $0.7 million in sensor product revenue.

Current wording

The decrease in new product revenue was primarily driven by a decrease in eFPGA IP revenue, partially offset by increases in new hardware product revenue and SaaS & Other revenue. eFPGA IP revenue is comprised primarily of eFPGA intellectual property revenue, eFPGA-related professional services revenue, and eFPGA-related support and maintenance revenue. eFPGA IP revenue decreased approximately $3.7 million, or (22)%, as compared to the Fiscal Year ended December 31, 2023. The decrease in eFPGA IP revenue was primarily comprised of a $3.5 million decrease in eFPGA-related professional services revenue. SaaS & Other revenue increased approximately $0.3 million, or 225% as compared to the Fiscal Year ended December 31, 2023. The increase in SaaS & Other revenue was driven by a $0.3 million increase in SaaS IP revenue. New hardware revenue increased by approximately $1.3 million, or 107%, in the Fiscal Year ended December 29, 2024 compared to the Fiscal Year endedDecember 31, 2023. The increase in new hardware product revenue was primarily comprised of an increase of $1.1 million in connectivity product revenue and $0.2 million in display product revenue.

Previous wording

Contract liabilities (deferred revenue) associated with eFPGA-related professional services revenue was $1.0 million and $0.2 million and were included in deferred revenue on the consolidated balance sheets as of December 31, 2023 and January 1, 2023, respectively. Contract assets associated with eFPGA-related professional services revenue was $3.6 million and $2.0 million on the consolidated balance sheets as of December 31, 2023 and January 1, 2023, respectively.

Current wording

Contract liabilities (deferred revenue) associated with eFPGA-related professional services revenue was $0.4 million and $1.0 million and were included in deferred revenue on the consolidated balance sheets as of December 29, 2024 and December 31, 2023, respectively. Contract assets associated with eFPGA-related professional services revenue was $2.7 million and $3.6 million on the consolidated balance sheets as of December 29, 2024 and December 31, 2023, respectively.

Previous wording

Gross profit in Fiscal Year 2023 compared to Fiscal Year 2022 increased approximately $5.7 million, or 65%. The change in gross profit reflects an increase in revenue of $5.0 million, or 31%, accompanied by a decrease in cost of revenue of $0.7 million, or (9)%. The increase in revenue was driven by a $6.5 million increase in new product revenue, primarily growth in eFPGA IP professional services revenue, partially offset by a $1.5 million decrease in mature product revenue. The $0.7 million decrease in cost of revenue was comprised of a decrease in product costs resulting from lower devices volumes and a decrease in R&D expense allocations to cost of revenues, partially offset by an increase in inventory reserves and contract manufacturer ("CM") costs.

Current wording

Gross profit in Fiscal Year 2024 compared to Fiscal Year 2023 decreased approximately $2.6 million, or (18)%. The change in gross profit reflects a decrease in revenue of $1.1 million, or (5)%, accompanied by an increase in cost of revenue of $1.5 million, or 23%. The decrease in revenue was driven by a $2.1 million decrease in new product revenue, primarily due to reductions in eFPGA IP professional services revenue, partially offset by a $1.0 million increase in mature product revenue. The $1.5 million increase in cost of revenue was primarily comprised of increases in labor, tooling, and tooling-related depreciation expense, offset by decreases in consulting costs, all collectively associated with performing for revenue contracts, including device production, and additionally further offset by changes in inventory reserves.

Previous wording

In Fiscal Years 2023 and 2022, we capitalized costs associated with internal-use software of approxima tely $1.1 million and $0.7 million, respectively. For Fiscal Years 2023 and 2022, we recognized $0.6 million and $0.4 million, respectively in amortiza tion expense of internal-use software in cost of revenues on our consolidated statements of operations.

Current wording

In Fiscal Years 2024 and 2023, we capitalized costs associated with internal-use software of approxima tely $1.1 million and $1.1 million, respectively. For Fiscal Years 2024 and 2023, we recognized $0.7 million and $0.6 million, respectively in amortiza tion expense of internal-use software in cost of revenues on our consolidated statements of operations.

Previous wording

Our hardware products have historically had a long product life cycle and obsolescence has not been a significant factor in the valuation of inventories. However, as we pursue opportunities in the IoT market and continue to develop new products, we believe our product life cycle may be shorter, which will increase the potential for obsolescence. In general, our standard manufacturing lead times are longer than the binding forecasts we receive from customers. The sale of inventories previously written-off was approximately $0.1 million and $0.2 million in Fiscal Years 2023 and 2022, respectively. We wrote down approximately $0.6 million and $0.2 million to inventory reserves in Fiscal Years 2023 and 2022.

Current wording

Our hardware products have historically had a long product life cycle and obsolescence has not been a significant factor in the valuation of inventories. However, as we pursue opportunities in the IoT market and continue to develop new products, we believe our product life cycle may be shorter, which will increase the potential for obsolescence. In general, our standard manufacturing lead times are longer than the binding forecasts we receive from customers. The sale of inventories previously written-off was approximately $0.1 million and $0.1 million in Fiscal Years 2024 and 2023, respectively. We wrote down approximately $0.1 million and $0.6 million to inventory reserves in Fiscal Years 2024 and 2023.

Previous wording

Research and Development Expenses. Our research and development expenses consist primarily of personnel, overhead and other costs associated with System on Chip ("SoC") and software development, programmable logic design, AI and eFPGA development. R&D expenses were $6.4 million and $5 million in Fiscal Years 2023 and 2022, respectively, which represented 30% and 31%, respectively, of revenue for those periods. The $1.4 million increase in R&D expenses in Fiscal Year 2023 as compared to Fiscal Year 2022 was primarily attributable to increases in employee salary, software maintenance, and financing arrangement expenses and reductions in the allocation of R&D expenses to cost of revenues, partially offset by a decrease in consulting costs, stock-based compensation, and outside services. R&D costs allocable to cost of revenues are included in cost of revenue in the consolidated statements of operations.

Current wording

Research and Development Expenses. Our research and development expenses consist primarily of personnel, overhead, and other costs associated with System on Chip ("SoC") and software development, programmable logic design, and AI and eFPGA development. R&D expenses were $6.5 million and $6.4 million in Fiscal Years 2024 and 2023, respectively, which represented 32% and 30%, respectively, of revenue for those periods. The $0.1 million increase in R&D expenses in Fiscal Year 2024 as compared to Fiscal Year 2023 was primarily attributable to increases in employee salaries, financing arrangement expenses, and reductions in the allocation of R&D expenses to cost of revenues, partially offset by a decrease in consulting costs, software maintenance costs, and amortization expense associated with software tools. R&D costs allocable to cost of revenues are included in cost of revenue in the consolidated statements of operations.

Previous wording

*Selling, General and Administrative Expenses.*Our selling, general and administrative ("SG&A") expenses consist primarily of personnel and related overhead costs for sales, marketing, finance, administration, human resources and general management. SG&A expenses were $8.0 million and $7.6 million in Fiscal Years 2023 and 2022, respectively, which represented 38% and 47%, respectively, of revenue for those periods. The $0.4 million increase in SG&A expenses in Fiscal Year 2023 as compared to Fiscal Year 2022 was primarily attributable to an increase in salaries and stock-based compensation costs, partially offset by a decrease in insurance and accounting and audit expenses.

Current wording

*Selling, General and Administrative Expenses.*Our selling, general and administrative ("SG&A") expenses consist primarily of personnel and related overhead costs for sales, marketing, finance, administration, human resources, and general management. SG&A expenses were $8.8 million and $8.0 million in Fiscal Years 2024 and 2023, respectively, which represented 44% and 38%, respectively, of revenue for those periods. The $0.8 million increase in SG&A expenses in Fiscal Year 2024 as compared to Fiscal Year 2023 was primarily attributable to an increase in salaries and stock-based compensation costs, partially offset by a decrease in incentive compensation.

Previous wording

Income tax expense for the Fiscal Year 2023 and 2022 relates primarily to foreign income tax provision for our India entity.

Current wording

Income tax expense for the Fiscal Year 2024 and 2023 relates primarily to foreign income tax provisions.

Previous wording

We have historically financed our operating losses and capital investments through the sale of our common stock, financing arrangements, operating leases, and cash flows provided by operations. We also have the ability to draw advances from our revolving facility with Heritage Bank of Commerce ("Heritage Bank"). As of December 31, 2023, our principal sources of liquidity consisted of cash, cash equivalents, and restricted cash of $24.6 million, inclusive of $20 million in advances from our revolving facility.

Current wording

We have historically financed our operating losses and capital investments through the sale of our common stock, financing arrangements, operating leases, and cash flows provided by operations. We also have the ability to draw advances from our revolving facility with Heritage Bank of Commerce ("Heritage Bank"). As of December 29, 2024, our principal sources of liquidity consisted of cash, cash equivalents, and restricted cash of $21.9 million, inclusive of $18 million in advances from our $20 million revolving facility. The revolving credit facility with Heritage Bank expires on December 31, 2025, and the Company fully expects to renew it before expiration.

Previous wording

On December 21, 2018*,*we entered into an Amended and Restated Loan and Security Agreement with Heritage Bank (as amended, the "Loan Agreement") which among other things, provided a revolving facility ("Revolving Facility") allowing us to draw advances up to $15.0 million. The Revolving Facility includes a number of customary and restrictive financial covenants including maintaining certain minimum cash levels with the lender. On December 8, 2023, we entered into the Seventh Amendment to the Loan Agreement, which increased the line of credit to $20.0 million, extended the maturity date from December 31, 2024 to December 31, 2025, and increased the annual facility fee to $60 thousand from $45 thousand, payable each December 31st. Advances under the Revolving Facility bear a variable annual interest rate equal to one-half of one percent (0.50%) above the prime rate. On December 31, 2023, we had a $20.0 million outstanding balance on the Revolving Facility with an interest rate of 9.00%. On January 1, 2023, we had a $15.0 million outstanding balance on the Revolving Facility with an interest rate of 8.00%. We were in compliance with all loan covenants under the Loan Agreement, as of the end of the current reporting period.

Current wording

On December 21, 2018*,*we entered into an Amended and Restated Loan and Security Agreement with Heritage Bank (as amended, the "Loan Agreement") which among other things, provided a revolving facility ("Revolving Facility") allowing us to draw advances up to $15.0 million. The Revolving Facility includes a number of customary and restrictive financial covenants including maintaining certain minimum cash levels with the lender. On December 8, 2023, we entered into the Seventh Amendment to the Loan Agreement, which increased the line of credit to $20.0 million, extended the maturity date from December 31, 2024 to December 31, 2025, and increased the annual facility fee to $60 thousand from $45 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 December 29, 2024, we had an $18 million outstanding balance on the Revolving Facility with an interest rate of 8.00%. On December 31, 2023, we had a $20 million outstanding balance on the Revolving Facility with an interest rate of 9.00%. We were in compliance with all loan covenants under the Loan Agreement, as of the end of the current reporting period.

Previous wording

On March 13, 2024, we entered into common stock purchase agreements with certain institutional investors and their affiliated entities for the sale of an aggregate of 223 thousand shares of common stock 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 immaterial.

Current wording

On March 13, 2024, we entered into common stock purchase agreements with certain institutional investors and their affiliated entities for the sale of an aggregate of 223 thousand shares of common stock 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.

Previous wording

On September 14, 2022 and February 9, 2022, we entered into common stock purchase agreements with certain investors for the sale of an aggregate of 487 thousand and 310 thousand shares of common stock, respectively, in registered direct offerings pursuant to an effective shelf registration statement on Form S-3, resulting in net cash proceeds of approximately $3.2 million and $1.5 million, respectively. Issuance costs related to the September 14, 2022 and the February 9, 2022 offerings were immaterial.

Current wording

On September 14, 2022 and February 9, 2022, we entered into common stock purchase agreements with certain investors for the sale of an aggregate of 487 thousand and 310 thousand shares of common stock, respectively, in registered direct offerings pursuant to an effective shelf registration statement on Form S-3, resulting in net cash proceeds of approximately $3.2 million and $1.5 million, respectively. Issuance costs related to the September 14, 2022 and February 9, 2022 offerings were immaterial.

Previous wording

As of December 31, 2023, most of our cash and cash equivalents were invested in a Heritage Bank money market account. As of December 31, 2023, our interest-bearing debt consisted of $1.4 million outstanding under finance arrangements and $20 million outstanding under our Revolving Facility. See Note 7 to the consolidated financial statements for additional information.

Current wording

As of December 29, 2024, most of our cash and cash equivalents were invested in a Heritage Bank money market account. As of December 29, 2024, our interest-bearing debt consisted of $3.1 million outstanding under finance arrangements and $18 million outstanding under our Revolving Facility. See Note 7 to the consolidated financial statements for additional information.

Previous wording

Cash balances held at our foreign subsidiaries were approximately $0.1 million and $0.2 million as of December 31, 2023 and January 1, 2023, respectively. Earnings from our foreign subsidiaries are currently deemed to be indefinitely reinvested. We do not expect such reinvestment to affect our liquidity and capital resources and we continually evaluate our liquidity needs and ability to meet global cash requirements as apart of our overall capital deployment strategy. Factors which affect our liquidity, capital resources, and global capital deployment strategy include anticipated cash flows, the ability to repatriate cash in a tax efficient manner, funding requirements for operations and investment activities, acquisitions and divestitures, and capital market conditions.

Current wording

Cash balances held at our foreign subsidiaries were approximately $0.1 million and $0.1 million as of December 29, 2024 and December 31, 2023, respectively. Earnings from our foreign subsidiaries are currently deemed to be indefinitely reinvested. We do not expect such reinvestment to affect our liquidity and capital resources and we continually evaluate our liquidity needs and ability to meet global cash requirements as apart of our overall capital deployment strategy. Factors which affect our liquidity, capital resources, and global capital deployment strategy include anticipated cash flows, the ability to repatriate cash in a tax efficient manner, funding requirements for operations and investment activities, acquisitions and divestitures, and capital market conditions.

Previous wording

In Fiscal Year 2022, net cash used in operating activities was $4.1 million, which was primarily due to a net loss of $4.3 million and changes in working capital of $3.5 million, partially offset by non-cash charges of $3.7 million. Changes in working capital consisted of an increase in accounts receivable of $1.7 million, an increase in contract assets of $1.7 million, an increase in inventories of $0.6 million, a decrease in lease liabilities of $0.4 million, an increase in other assets of $0.3 million, and a decrease in deferred revenue of $0.2 million, partially offset by an increase in trade payables of $1.5 million. Non-cash charges primarily consisted of stock-based compensation expense of $2.0 million, depreciation and amortization of long-lived assets and certain definite-lived intangible assets of $1.5 million, and write-down of inventories of $0.2 million.

Current wording

In Fiscal Year 2024, net cash provided by operating activities was $27 thousand, which was primarily due to non-cash charges of $8.6 million. Non-cash charges primarily consisted of stock-based compensation expense of $4.6 million, depreciation and amortization of long-lived assets and certain definite-lived intangible assets of $3.9 million, and write-down of inventories of $0.1 million. Non-cash charges were partially offset by a net loss of $3.8 million and changes in working capital of $4.7 million. Changes in working capital consisted of a decrease in trades payable of $3.6 million, a decrease in accrued liabilities of $1.1 million, an increase in accounts receivable of $0.8 million, a decrease in deferred revenue of $0.6 million, and a decrease in lease liabilities of $0.3 million, partially offset by a decrease in contract assets of $0.9 million, a decrease in other assets of $0.6 million, and a decrease in inventories of $0.3 million. Historically, our operating cash flows represented cash used in operating activities.

Previous wording

Net cash used in investing activities in Fiscal Year 2022 was approximately $0.8 million, which was primarily attributable to capital expenditures primarily related to property and equipment of $0.1 million and the capitalization of internal-use software in the amount of $0.7 million.

Current wording

Net cash used in investing activities in Fiscal Year 2024 was approximately $6.5 million, which was primarily attributable to capital expenditures related to property and equipment of $5.4 million, $0.1 million in expenditures related to intangible assets, and the capitalization of internal-use software in the amount of $1.1 million, partially offset by stock-based compensation capitalized to property and equipment and internal-use software in the amount of $9 thousand and $149 thousand, respectively.

Previous wording

Net cash used in investing activities in Fiscal Year 2023 was approximately $6.3 million, which was primarily attributable to capital expenditures related to property and equipment of $5.6 million and the capitalization of internal-use software in the amount of $1.0 million, partially offset by stock-based compensation capitalized to internal-use software in the amount of $0.2 million.

Current wording

Net cash used in investing activities in Fiscal Year 2023 was approximately $6.3 million, which was primarily attributable to capital expenditures primarily related to property and equipment of $5.6 million and the capitalization of internal-use software in the amount of $1.0 million, partially offset by stock-based compensation capitalized to internal-use software in the amount of $0.2 million.

Previous wording

In Fiscal Year 2022, net cash provided by financing activities was $4.5 million, primarily attributable to proceeds from the issuance of common stock in the amount of $4.9 million, partially offset by $0.5 million in payments related to finance arrangements.

Current wording

In Fiscal Year 2024, net cash provided by financing activities was $3.7 million, primarily attributable to proceeds from the issuance of common stock in the amount of $7.1 million, partially offset by $1.4 million in payments related to financing arrangements primarily for tooling related to revenue contracts with customers and $2.0 million in greater payments than borrowings on the Company's revolving line of credit.

Previous wording

In Fiscal Year 2023, net cash provided by financing activities was $6.9 million, primarily attributable to an increase in our revolving credit facility in the amount of $5 million and proceeds from the issuance of common stock in the amount of $2.5 million, partially offset by $0.7 million in payments related to financing arrangements.

Current wording

In Fiscal Year 2023, net cash provided by financing activities was $6.9 million, primarily attributable to an increase in our revolving credit facility in the amount of $5.0 million and proceeds from the issuance of common stock in the amount of $2.5 million, partially offset by $0.7 million in payments related to financing arrangements primarily for tooling related to revenue contracts with customers.