quicklo20211003

quicklo20211003_10q.htm

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

(Mark One)

☒	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934

For the Quarterly Period Ended July 3, 2022

☐	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934

For the Transition Period From To

COMMISSION FILE NUMBER: 000-22671

QUICKLOGIC CORPORATION

(Exact name of registrant as specified in its charter)

Delaware

77-0188504

(State or other jurisdiction of

incorporation or organization)

(I.R.S. Employer

Identification No.)

2220 Lundy Avenue, San Jose, CA 95131-1816

(Address of principal executive offices including zip code))

(408) 990-4000

(Registrant's telephone number, including area code)

Securities registered pursuant Section 12(b) of the act:

Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock, par value $.001 per share	QUIK	The Nasdaq Capital Market

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See definition of “large accelerated filer,” “accelerated filer”, “smaller reporting company” and "emerging growth company" in Rule 12b-2 of the Exchange Act.

Large accelerated filer	☐	Accelerated Filer	☐
Non-accelerated filer	☒	Smaller Reporting Company	☒
		Emerging growth company	☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Securities Exchange Act). Yes ☐ No ☒

As of August 12, 2022, there were 12,591,225 shares of registrant’s common stock, par value $0.001 per share, outstanding.

Table of Contents

QUICKLOGIC CORPORATION

FORM 10-Q

July 3, 2022

TABLE OF CONTENTS

		Page
Part I - Financial Information		3

Item 1.	Unaudited Condensed Consolidated Financial Statements	3

	Consolidated Balance Sheets	3

	Consolidated Statements of Operations	4

	Consolidated Statements of Cash Flows	5

	Consolidated Statements of Changes in Stockholders’ Equity	6

	Notes to Unaudited Condensed Consolidated Financial Statements	7

Item 2.	Management's Discussion and Analysis of Financial Condition and Results of Operations	15

Item 3.	Quantitative and Qualitative Disclosures About Market Risk	24

Item 4.	Controls and Procedures	24

Part II - Other Information		24

Item 1.	Legal Proceedings	24

Item 1A.	Risk Factors	24

Item 3.	Defaults Upon Senior Securities	24

Item 6.	Exhibits	24

Signatures		25

Table of Contents

PART I. Financial Information

Item 1. Financial Statements

QUICKLOGIC CORPORATION

UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS

(in thousands, except par value amount)

	*July 3,*			*January 2,*
	*2022*			*2022*
ASSETS
Current assets:
Cash, cash equivalents and restricted cash	$	18,546		$	19,605
Accounts receivable, net of allowances for doubtful accounts of $62		3,560			1,294
Inventories		2,212			2,078
Other current assets		1,201			1,181
Total current assets		25,519			24,158
Property and equipment, net		607			499
Capitalized internal-use software, net		1,343			1,241
Right of use assets		1,141			1,529
Intangible assets		699			752
Goodwill		185			185
Investment in privately-held non-affiliate		300			300
Other assets		195			309
TOTAL ASSETS	$	29,989		$	28,973

LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Revolving line of credit	$	15,000		$	15,000
Trade payables		1,898			934
Accrued liabilities		1,652			1,665
Deferred revenue		142			455
Lease liabilities, current		705			819
Total current liabilities		19,397			18,873
Long-term liabilities:
Lease liabilities, non-current		482			744
Other liabilities, non-current		125			147
Total liabilities		20,004			19,764
Commitments and contingencies (see Note 10)		—			—
Stockholders' equity:
Preferred stock, $0.001 par value; 10,000 shares authorized; no shares issued and outstanding		—			—
Common stock, $0.001 par value; 200,000 authorized; 12,428 and 11,863 shares issued and outstanding as of July 3, 2022 and January 2, 2022, respectively		12			12
Additional paid-in capital		312,686			310,222
Accumulated deficit		(302,713	)		(301,025	)
Total stockholders' equity		9,985			9,209
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY	$	29,989		$	28,973

See accompanying notes to unaudited condensed consolidated financial statements.

Table of Contents

QUICKLOGIC CORPORATION

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(in thousands, except per share amounts)

	*Three Months Ended*						*Six Months Ended*
	*July 3,*			*July 4,*			*July 3,*			*July 4,*
	*2022*			*2021*			*2022*			*2021*
Revenue	$	4,541		$	2,882		$	8,637		$	5,122
Cost of revenue		1,997			1,416			3,632			2,512
Gross profit		2,544			1,466			5,005			2,610
Operating expenses:
Research and development		1,190			1,652			2,523			3,539
Selling, general and administrative		1,981			1,794			4,118			3,741
Total operating expenses		3,171			3,446			6,641			7,280
Loss from operations		(627	)		(1,980	)		(1,636	)		(4,670	)
Interest expense		(22	)		(32	)		(55	)		(64	)
Gain on forgiveness of debt		—			—			—			1,192
Interest income and other income (expense), net		142			(45	)		19			(52	)
Loss before income taxes		(507	)		(2,057	)		(1,672	)		(3,594	)
Provision for income taxes		17			5			16			157
Net loss	$	(524	)	$	(2,062	)	$	(1,688	)	$	(3,751	)
Net loss per share:
Basic and diluted	$	(0.04	)	$	(0.18	)	$	(0.14	)	$	(0.33	)
Weighted average shares outstanding:
Basic and diluted		12,412			11,485			12,269			11,374

Note: Net loss equals comprehensive loss for all periods presented.

See accompanying notes to unaudited condensed consolidated financial statements.

Table of Contents

QUICKLOGIC CORPORATION

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(in thousands)

	*Six Months Ended*
	*July 3,*			*July 4,*
	*2022*			*2021*
Cash flows from operating activities:
Net loss	$	(1,688	)	$	(3,751	)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization		334			323
Stock-based compensation		860			570
Write-down of inventories and reclassifications		54			229
Gain on disposal of equipment		(76	)		—
Gain on forgiveness of debt		—			(1,192	)
Bad debt expense		—			32
Changes in operating assets and liabilities:
Accounts receivable		(2,266	)		(407	)
Inventories		(188	)		254
Other assets		(6	)		82
Trade payables		1,161			569
Accrued liabilities		87			266
Deferred revenue		(313	)		24
Other long-term liabilities		(22	)		189
Net cash used in operating activities		(2,063	)		(2,812	)
Cash flows from investing activities:
Capital expenditures for property and equipment		(117	)		(174	)
Capitalized internal-use software		(285	)		(273	)
Net cash used in investing activities		(402	)		(447	)
Cash flows from financing activities:
Payment of finance lease obligations		(198	)		(156	)
Proceeds from line of credit		30,000			30,000
Repayment of line of credit		(30,000	)		(30,000	)
Proceeds from issuance of common stock		1,604			148
Taxes paid related to settlement of equity awards		—			(485	)
Net cash provided by (used in) financing activities		1,406			(493	)
Net (decrease) increase in cash, cash equivalents and restricted cash		(1,059	)		(3,752	)
Cash, cash equivalents and restricted cash at beginning of period		19,605			22,748
Cash, cash equivalents and restricted cash at end of period	$	18,546		$	18,996

See accompanying notes to unaudited condensed consolidated financial statements.

Table of Contents

QUICKLOGIC CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY

(In thousands)

					*Additional*					*Total*
	*Common Stock*				*Paid-In*		*Accumulated*			*Stockholders'*
	*Shares*		*Amount*		*Capital*		*Deficit*			*Equity*
Balance at January 2, 2022		11,863	$	12	$	310,222	$	(301,025	)	$	9,209
Issuance of common stock under public stock offering, net of stock issuance cost		310		—		1,482		—			1,482
Common stock issued under stock plans and employee stock purchase plans		189		—		—		—			—
Stock-based compensation		—		—		383		—			383
Net loss		—		—		—		(1,164	)		(1,164	)
Balance at April 3, 2022		12,362		12		312,087		(302,189	)		9,910
Common stock issued under stock plans and employee stock purchase plan		66		—		122		—			122
Stock-based compensation		—		—		477		—			477
Net loss		—		—		—		(524	)		(524	)
Balance at July 3, 2022		12,428	$	12	$	312,686	$	(302,713	)	$	9,985

					*Additional*						*Total*
	*Common Stock*				*Paid-In*			*Accumulated*			*Stockholders'*
	*Shares*		*Amount*		*Capital*			*Deficit*			*Equity*
Balance at January 3, 2021		11,094	$	11	$	306,885		$	(294,409	)	$	12,487
Common stock issued under stock plans and employee stock purchase plans		354		—		(484	)		—			(484	)
Stock-based compensation		—		—		368			—			368
Net loss		—		—		—			(1,689	)		(1,689	)
Balance at April 4, 2021		11,448		11		306,769			(296,098	)		10,682
Common stock issued under stock plans and employee stock purchase plan		64		1		146			—			147
Stock-based compensation		—		—		202			—			202
Net loss		—		—		—			(2,062	)		(2,062	)
Balance at July 4, 2021		11,512	$	12	$	307,117		$	(298,160	)	$	8,969

See accompanying notes to unaudited condensed consolidated financial statements

Table of Contents

Notes to unaudited condensed consolidated financial statements

Note 1 — The Company and Basis of Presentation

QuickLogic Corporation (“QuickLogic” or “Company”) was founded in 1988 and reincorporated in Delaware in 1999. The Company enables Original Equipment Manufacturers (“OEMs”) to maximize battery life for highly differentiated, immersive user experiences with smartphone, wearable, hearable, tablet and internet-of-Things (“IoT devices”), military, aerospace and defense products. QuickLogic delivers these benefits through industry leading ultra-low power customer programmable System on Chip (“SoC”) semiconductor solutions, embedded software, and algorithm solutions for always-on voice and sensor processing. The Company is a fabless semiconductor provider of comprehensive, flexible sensor processing solutions, ultra-low power display bridges, and ultra-low power Field Programmable Gate Arrays (“FPGAs”). The Company’s wholly owned subsidiary, SensiML Corporation (“SensiML”) provides Analytics Toolkit, which is used in many of the applications where the Company’s ArcticPro™, eFPGA intellectual property (“IP”) plays a critical role. SensiML Analytics toolkit is an end-to-end software suite that provides OEMs a straightforward process for developing pattern matching sensor algorithms using machine learning technology that are optimized for ultra-low power consumption.

The accompanying interim condensed consolidated financial statements are unaudited. In the opinion of the Company’s management, these statements have been prepared in accordance with the United States generally accepted accounting principles (“U.S. GAAP”), and include all adjustments, consisting only of normal recurring adjustments, necessary to provide a fair statement of results for the interim periods presented. The Company recommends that these interim unaudited condensed consolidated financial statements be read in conjunction with the Company's Form 10-K for the year ended January 2, 2022, which was filed with the Securities and Exchange Commission (“SEC”) on March 22, 2022. Operating results for the three and six months ended July 3, 2022 are not necessarily indicative of the results that may be expected for the full fiscal year.

QuickLogic's fiscal year ends on the Sunday closest to December 31 and each fiscal quarter ends on the Sunday closest to the end of each calendar quarter. QuickLogic's second fiscal quarter for 2022 and 2021 ended on July 3, 2022 and July 4, 2021, respectively.

COVID-19 - Impact on Business

There have been no material changes due to the impact of the Covid-19 pandemic on our business from that disclosed in our most recently filed Annual Report. Our most recent Annual Report on Form 10-K for the year ended January 2, 2022 as filed with the SEC on March 22, 2022 provides additional information about our business and operations.

Liquidity

The Company has financed its operations and capital investments through public and private offerings of our common stock, finance and operating leases, and borrowing under a revolving line of credit with Heritage Bank (the "Revolving Facility"), partially offset by cash used in operations. In addition to the Company's $18.5 million of cash, cash equivalents and restricted cash, as of July 3, 2022 other sources of liquidity included a $15.0 million drawn down from the Revolving Facility and $1.6 million in net proceeds from the Company's sale of common stock in six months ended July 3, 2022.

SEC Form 10-Q filed by QuickLogic Corporation