| Page |
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| PART I |
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| ITEM 1. | Business | 6 |
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| ITEM 1A. | Risk Factors | 14 |
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| ITEM 1B. | Unresolved Staff Comments | 27 |
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| ITEM 1C. | Cybersecurity | 27 |
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| ITEM 2. | Properties | 28 |
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| ITEM 3. | Legal Proceedings | 28 |
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| ITEM 4. | Mine Safety Disclosures | 28 |
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| PART II |
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| ITEM 5. | Market for the Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities | 28 |
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| ITEM 6. | Reserved | 29 |
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| ITEM 7. | Management’s Discussion and Analysis of Financial Condition and Results of Operations | 30 |
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| ITEM 7A. | Quantitative and Qualitative Disclosures About Market Risk | 41 |
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| ITEM 8. | Financial Statements and Supplementary Data | 42 |
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| ITEM 9. | Changes in and Disagreements with Accountants on Accounting and Financial Disclosure | 77 |
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| ITEM 9A. | Controls and Procedures | 77 |
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| ITEM 9B. | Other Information | 77 |
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| ITEM 9C. | Disclosure Regarding Foreign Jurisdictions that Prevent Inspections | 77 |
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| PART III |
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| ITEM 10. | Directors, Executive Officers and Corporate Governance | 78 |
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| ITEM 11. | Executive Compensation | 78 |
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| ITEM 12. | Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters | 78 |
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| ITEM 13. | Certain Relationships, Related Transactions, and Director Independence | 78 |
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| ITEM 14. | Principal Accounting Fees and Services | 78 |
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| PART IV |
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| ITEM 15. | Exhibits and Financial Statement Schedules | 79 |
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| Signatures | | 82 |
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FORWARD-LOOKING STATEMENT AND RISK FACTOR SUMMARY
Forward-Looking Statements
This Annual Report on Form 10-K, including the information contained in "Management’s Discussion and Analysis of Financial Condition and Results of Operations", as well as information contained in “Risk Factors” in Item 1A and elsewhere in this Annual Report on Form 10-K, contains “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934 regarding our business, financial condition, results of operations, and prospectus. We intend that these forward-looking statements be subject to the safe harbors created by those provisions. Forward-looking statements are generally written in the future tense and/or are preceded by words such as “will,” “may,” “should,” “forecast,” “could,” “expect,” “suggest,” “believe,” “anticipate,” “intend,” “plan,” "future," "potential," "target," "seek," "continue," "if," or other similar words.
The forward-looking statements contained in this Annual Report involve a number of risks and uncertainties, many of which are outside of our control. Factors that could cause actual results to differ materially from projected results include, but are not limited to, risks associated with (i) the conversion of our design opportunities into revenue; (ii) the commercial and technical success of our new products and our successful introduction of products and solutions incorporating emerging technologies or standards; (iii) our dependence on our relationships with third parties to manufacture our products and solutions; (iv) our dependence upon single suppliers to fabricate and assemble our products; (v) the liquidity required to support our future operating and capital requirements; (vi) our ability to accurately estimate quarterly revenue; (vii) our expectations about market and product trends; (viii) our future plans for partnerships and collaborations; (ix) our dependence upon a few customers for a significant portion of our total revenue; (x) our ability to forecast demand for our products; (xi) our dependence on our international business operations; (xii) our ability to attract and retain key personnel; (xiii) our ability to remain competitive in our industry; (xiv) our ability to protect our intellectual property rights; (xv) our ability to prevent cyberattacks and protect our data; (xvi) pandemics, epidemics, or other widespread public health problems, such as the COVID-19 pandemic, which could impact the global economy, and (xvii) global hostilities, including the invasion of Ukraine by Russia and resulting regional instability, and the continued hostilities and armed conflict in the Middle East, which could adversely impact the global supply chain, disrupt our operations, or negatively impact the demand for our products in our primary end markets*. Although we believe that the assumptions underlying the forward-looking statements contained in this Annual Report are reasonable, any of the assumptions could be inaccurate, and therefore, there can be no assurance that such statements will be accurate. The risks, uncertainties, and assumptions referred to above that could cause our results to differ materially from the results expressed or implied by such forward-looking statements include, but are not limited to, those discussed under the heading “Risk Factors” in Part I, Item 1A hereto and the risks, uncertainties, and assumptions discussed from time to time in our other public filings and public announcements. All forward-looking statements included in this document are based on information available to us as of the date hereof. In light of the significant uncertainties inherent in the forward-looking statements included herein, the inclusion of such information should not be regarded as a representation by us or any other person that the results or conditions described in such statements, or our objectives and plans will be achieved. Furthermore, past performance in operations and share price is not necessarily indicative of future performance. We disclaim any intention or obligation to update or revise any forward-looking statements, whether as a result of new information, future events, or otherwise.*
As used herein, "QuickLogic," the "Company," "we," "our," and similar terms include QuickLogic Corporation and its subsidiaries, unless the context indicates otherwise.
Some of the factors that could materially and adversely affect our business, financial condition, results of operations, and cash flows, but are not limited to, the following:
Risks Related to Our Business
| • | We have incurred losses in the past years. We may not be able to generate sufficient revenue or raise additional financing to fund future losses, and we may not be able to sustain sufficient liquidity, and as a result, our financial condition and operating results could be materially and adversely affected. |
| • | Our future operating results are likely to fluctuate and therefore, may fail to meet expectations, which could materially adversely affect our business, results of operations, and financial condition. |
| • | Cyberattacks can lead to disruption of business, reduced revenue, increased costs, liability claims, or harm to our reputation or competitive position. |
| • | We may be unable to protect our intellectual property, which could negatively affect our ability to compete. |
| • | We may be unable to adequately protect our intellectual property rights and may face significant expenses as a result of future litigation. |
| • | We may be unable to successfully grow our business if we fail to compete effectively with others to attract and retain our executive officers, and other key management or technical personnel. |
| • | There may be some effects of system outages or data security breaches, which could adversely affect our operations, financial results, or reputation. |
| • | Our company’s global operations are subject to risks and uncertainties. |
| • | We may not be able to achieve the anticipated synergies and benefits from business acquisitions. |
| • | Litigation could adversely impact our consolidated financial position. |
| • | If a financial institution holding our funds fails, we may not be able to pay our operational expenses or make other payments, which could adversely impact our liquidity and financial performance. Deterioration of financial markets may result in our inability to borrow on favorable terms, which could adversely impact our ability to pursue our growth and other strategic initiatives. |
| • | Our business is subject to political, economic, and health risks, natural disasters, and other catastrophic events, which could have a material adverse effect on our business operations. |
| • | Our insurance may not adequately cover certain risks and, as a result, our financial condition and results may be adversely affected. |
| • | Pandemics or other widespread public health problems could adversely affect our business, results of operations, and financial condition in a material way. |
| • | Changes to existing accounting pronouncements or taxation rules or practices may cause adverse income fluctuations or affect our reported financial results or how we conduct our business. |
| • | We may have increased difficulty attracting and retaining qualified, outside board members. |
Risks Related to Our Common Stock
| • | We may be unable to accurately estimate quarterly revenue, which could adversely affect the trading price of our stock. |
| • | There has been recent dilution and there may continue to be additional future dilution of our Common Stock, including as a result of the Company's ATM Offering (as defined below), which could adversely affect the market price of shares of our Common Stock. |
| • | If we do not maintain compliance with the listing requirements of the Nasdaq Capital Market, our common stock could be delisted, which could, among other things, reduce the price of our common stock and the levels of liquidity available to our stockholders. |
| • | The market price of our common stock may fluctuate significantly and could lead to securities litigation. |
| • | Our certificate of incorporation, our bylaws, and Delaware law contain provisions that could discourage a takeover that is beneficial to stockholders. |
| • | If, in the future, we conclude our internal control over financial reporting is not effective, investors could lose confidence in the reliability of our financial statements, which could result in a decrease in the value of our common stock. |
Risks Related to Our Industry and Global and Economic Conditions
| • | The semiconductor industry is highly competitive, and has experienced significant consolidation, and if we are unable to compete effectively or identify attractive opportunities for consolidation, it could materially adversely affect our business and results of operations. |
| • | The semiconductor business is subject to downward price pressure. |
| • | Both we and our customers are subject to laws, regulations, and similar requirements, changes to which may adversely affect our business, results of operations, and financial condition. |
Risks Related to Our Products
| • | If we fail to successfully develop, introduce, and sell new products and other new solutions or if our design opportunities do not generate the revenue we expect, we may be unable to compete effectively in the future and our future gross margins and operating results will be lower. |
| • | If a market for our new products does not develop, or if our products do not meet customer needs, the loss of or reduction in orders could adversely affect our revenue and harm our business's financial condition, operating results, and cash flows. |
| • | Our products are subject to a lengthy sales cycle and our customers may cancel or change their product plans after we have expended substantial time and resources on the design of their products. |
| • | If we fail to adequately forecast demand for our products, we may incur product shortages or excess product inventories. |
| • | Our business could be adversely affected by undetected errors or defects in our products. |
| • | We will be unable to compete effectively if we fail to anticipate product opportunities based upon emerging technologies and standards or fail to develop products and solutions that incorporate these technologies and standards in a timely manner. |
| • | Changes to U.S. or foreign tax, trade policy, government incentives, and tariff and import/export regulations may have a material adverse effect on our business, financial condition, and results of operations. |
| • | We are subject to stringent U.S. export and import control laws and regulations. Unfavorable changes in these laws and regulations or U.S. government licensing policies, our failure to secure timely U.S. government authorizations under these laws and regulations, or our failure to comply with these laws and regulations could have a material adverse effect on our business, financial condition, and results of operations. |
| • | Rising concern of potential export restrictions could materially and adversely affect our business and results of operations. |
| • | Our business could suffer as a result of tariffs and trade sanctions or similar actions. |
| • | Exchange rate fluctuations could adversely affect our company’s results of operations and financial condition. |
| • | We have implemented import and export control procedures to comply with United States regulations, but we are still exposed to potential risks from import and export activity. |
Risks Related to Our Customers and Partners
| • | We currently depend on a limited number of significant customers, for a significant portion of our revenue, and the loss of, or reduction in orders from, such significant customers could adversely affect our revenue and harm our business financial condition, operating results, and cash flows. |
| • | Our revenue from U.S. Government contracts depends on the continued availability of funding from the U.S. Government, and, accordingly, we have the risk that funding for our existing contracts may be canceled or diverted to other uses or delayed or that funding for new programs will not be available. |
| • | Failure to comply with laws, regulations, or contractual provisions applicable to our business could cause us to lose government customers or our ability to contract with the U.S. and other governments. |
| • | We depend upon partnering with other companies to offer other solutions into our platform. |
| • | We depend on our relationships with third parties to manufacture our new hardware products. |
| • | We depend upon third parties for silicon IP, RTL, design, physical design, verification, and assembly of our silicon platforms and any failure to meet our requirements in a timely fashion may adversely affect our time to market and revenue. |
| • | We depend upon partnering with other companies to develop IP, reference platforms, algorithms, and system software. |
| • | We depend upon third parties to fabricate, assemble, test, and program our products, and to provide logistics services. Any problems with these third parties could adversely affect our business, results of operations, and financial condition. |
| • | We entered into informal partnerships with certain third parties for the development of solutions. Our business could be adversely affected if such informal partnerships fail to grow as we expected. |
| • | Our solutions face competition from suppliers of ASSPs, integrated application processors, radiation-tolerant and radiation hardened FPGAs, low-power MCUs, ASICs, and eFPGA IP. |
| • | We may engage in manufacturing, distribution, or technology agreements that involve numerous risks, including the use of cash, erosion of margins due to royalty obligations or revenue sharing, and diversion of resources. |
| • | We have entered and will continue to enter into strategic licensing and collaborative partnerships and relationships with third parties. The anticipated benefits of these partnerships and relationships may never materialize and these partnerships and relationships may instead disrupt our business and harm our financial condition. |
