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.

Risk Factor Summary

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

Risks Related to Our Common Stock

Risks Related to Our Industry and Global and Economic Conditions

Risks Related to Our Products

Risks Related to Our Customers and Partners

PART I

ITEM 1. BUSINESS

General

QuickLogic Corporation was founded in 1988 and completed its reincorporation in Delaware in 1999. We develop programmable logic semiconductor technologies, including embedded Field Programmable Gate Array ("eFPGA") intellectual property ("IP") and specialized FPGA devices used in a range of applications requiring adaptable hardware functionality. Our technologies enable customers to incorporate programmable logic into custom semiconductor devices or deploy standalone programmable devices to implement system control, hardware acceleration, and other configurable functions.

We are a fabless semiconductor company whose primary offerings include eFPGA IP licensing, discrete FPGA devices, and related development tools and software. Semiconductor companies license our eFPGA IP to integrate programmable logic blocks into their application-specific integrated circuits ("ASICs") and system-on-chip ("SoC") devices. Our discrete FPGA devices enable customers to implement custom hardware functionality in applications requiring flexibility, low power consumption, and long product life cycles. 

Our programmable logic technologies are used in a variety of markets, including aerospace and defense, industrial and infrastructure systems, data processing and computing platforms, and certain embedded and edge computing applications. The combination of programmable silicon technologies, software tools, and design resources enables customers to efficiently incorporate field-programmable hardware capabilities into both custom silicon and system-level products.

Certain of our programmable logic technologies are designed for applications requiring deterministic hardware operation, security, and long operational lifetimes, including aerospace, defense, and industrial systems, where reliable electronics are critical to system performance.

We also support government-sponsored initiatives focused on strengthening trusted microelectronics capabilities and advancing radiation-tolerant programmable logic technologies used in aerospace, defense, and other mission-critical systems. 

Our current product offerings include our eFPGA IP licensing business and associated professional services, which consist of development and integration of eFPGA technology into customer semiconductor devices, as well as a range of FPGA silicon products, including EOS™, ArcticLink® III, PolarPro®3, PolarPro II, PolarPro®, and Eclipse II products. Our mature products include FPGA families such as PASIC®3 and QuickRAM®, as well as programming hardware and design software tools that support the development and deployment of programmable logic designs.

We collaborate with a range of ecosystem partners on co-marketing, co-selling, and technology initiatives supporting our IP and silicon platforms. These partners include semiconductor IP providers, semiconductor design service companies, semiconductor foundries, semiconductor assembly and test providers, and other technology companies that support the development and deployment of programmable silicon solutions.

Our eFPGA IP is currently developed across a range of semiconductor manufacturing process technologies, including Intel 18A and process nodes such as 12nm, 16nm, 22nm, 28nm, 40nm, 65nm, 90nm, 130nm, 250nm, and 350nm with a roadmap targeting additional advanced semiconductor nodes. Our licensable IP is generated using our automated IP generator tool, Australis™, which enables the creation of customized eFPGA IP architectures that can be integrated into customer ASIC and SoC designs. This automated architecture generation capability allows customers to incorporate programmable logic into custom semiconductor devices with limited ongoing development involvement from QuickLogic, enabling a scalable IP licensing model.

As a fabless semiconductor company, we rely on third-party semiconductor foundries and manufacturing partners to fabricate, assemble, and test our silicon products. We work with multiple manufacturing partners to support a range of product volumes and applications, including the development of certain programmable logic technologies designed for use in semiconductor manufacturing environments operated within the United States.

Our EOS S3™ and ArcticLink® III silicon platforms combine mixed-signal physical functionality and fixed-function logic alongside programmable logic resources. Integrating these capabilities allows customers to implement cost-effective and energy-efficient system architectures while retaining the flexibility of programmable hardware. These platforms are designed to take advantage of semiconductor manufacturing nodes that enable reduced power consumption and smaller die sizes. 

For cost-sensitive applications, we utilize small form-factor packaging options that reduce device cost and minimize printed circuit board space requirements for customers. For applications requiring enhanced environmental reliability, including certain aerospace and defense systems, we support packaging options designed for ruggedized operating environments.

We expect that future revenue growth will depend on the continued adoption of our eFPGA IP technologies, the introduction of new FPGA devices, and the ongoing demand for our existing programmable logic products. Our growth strategy includes expanding our eFPGA IP business, developing additional programmable logic devices and architectures, and supporting the integration of programmable logic technologies into a broad range of semiconductor and system-level applications. 

Available Information

Our corporate headquarters are located at 2220 Lundy Avenue, San Jose, California 95131. We can be reached at (408) 990-4000, and our website address is www.quicklogic.com. The information on our website is not incorporated herein by reference and is not a part of this Form 10-K. Our common stock trades on the Nasdaq Capital Market under the symbol “QUIK.” Our annual reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K, and amendments to such reports are available, free of charge, on our website home page as soon as reasonably practicable after we electronically file such materials with, or furnish them to, the Securities and Exchange Commission, or the SEC. Copies of the materials filed by the Company with the SEC are also available on the SEC’s website at www.sec.gov. A copy of our Code of Conduct and Ethics is posted on our website at https://ir.quicklogic.com/governance-docs. Any amendments to or waiver from this Code of Conduct and Ethics will be posted to this page on our website.

Fiscal Year

Our fiscal year ends on the Sunday closest to December 31. References to Fiscal Years 2025 and 2024 refer to the Fiscal Years ended December 28, 2025 and December 29, 2024, respectively.

Industry Background

Historically, system processing capability was built using a homogeneous architecture consisting primarily of a single type of processing technology, such as a general-purpose processor or programmable logic device. In recent years, semiconductor system architectures have increasingly adopted heterogeneous processing models that combined multiple types of compute resources. Examples include the integration of one or more general purpose processor cores (such as Arm® or RISC-V) together with programmable logic or specialized hardware accelerators. These heterogeneous architectures allow system designers to partition application workloads across different types of compute resources so that each workload is executed on the most efficient processing element. This approach often improves system performance, energy efficiency, and flexibility.

Heterogeneous architectures can be implemented in several ways, including the use of multiple discrete semiconductor devices on a printed circuit board, multiple integrated IP blocks within a monolithic semiconductor device, or multiple semiconductor devices (such as chiplets) integrated together within an advanced package. These approaches allow system designers to combine different processing technologies to achieve the desired balance of performance, power consumption, flexibility, and cost.

An important underlying trend in the aerospace and defense and industrial markets is the increasing fragmentation and specialization of system functionality. System designers in these markets often require hardware solutions that can be rapidly developed, modified, and extended over long product life cycles while supporting evolving algorithms, communications protocols, and application requirements. As a result, system developers increasingly prioritize development time, design flexibility, and non-recurring engineering ("NRE") costs over the lowest possible bill of materials cost.

We believe these industry trends are influencing the relative demand among several classes of core semiconductor technologies. The primary classes of non-memory semiconductor devices include the following:

ASSP devices are offered broadly to the market and typically implement standardized functionality. As a result, system designers may need to combine multiple ASSP devices to implement the desired system architecture, which can increase system cost, power consumption, and board complexity. In addition, when standards evolve or new application requirements emerge, suitable ASSP devices may not yet exist to implement the desired functionality.

System designers can customize hardware functionality using programmable logic devices, ASICs, or software-programmable processors. Each class of semiconductor device presents different trade-offs between development cost, unit cost, flexibility, and development risk. ASICs may provide the lowest unit cost at high production volumes but typically involve significant development time, engineering cost, and design risk. Programmable logic devices provide a lower development risk and faster time-to-market because functionality can be configured after fabrication. As programmable logic technologies have evolved and device costs have declined over time, the production volumes required to justify a fully custom ASIC solution have increased.

FPGA technology has historically enabled system designers to develop and deploy application-specific hardware functionality with relatively fast development cycles and lower upfront engineering costs compared to ASICs. FPGAs are widely used across multiple end-markets, including aerospace and defense, industrial systems, computing, communications, embedded systems, and consumer electronics.

According to a recent research report published by Markets and Markets, the global FPGA market was valued at approximately $11.7 billion in 2025 and is projected to grow to approximately $19.3 billion by 2030, reflecting continued adoption of programmable logic technologies across a range of markets. Growth in the FPGA market is driven by increasing demand for hardware acceleration, adaptable system architectures, and the ability to support evolving algorithms and application requirements.

More recently, the emergence of eFPGA IP has expanded the use of programmable logic beyond discrete FPGA devices. eFPGA technology allows semiconductor companies to integrate programmable logic blocks directly into ASIC and SoC devices, enabling designers to incorporate adaptable hardware acceleration and configurable functionality within custom silicon designs. This approach can improve system integration, reduce latency, and enable post-silicon flexibility while maintaining the performance and power efficiency advantages of ASIC architectures.

The aerospace and defense and industrial markets often require semiconductor solutions capable of operating in demanding environments and supporting long product life cycles. In these markets, system designers frequently require specialized functionality, extended temperature operation, radiation tolerance, and high reliability. When suitable standard semiconductor devices are not available, designers may turn to programmable logic devices or custom ASIC development to meet these requirements.

QuickLogic FPGA technologies have historically been used in certain segments of these markets where characteristics such as instant-on operation, energy efficiency, deterministic hardware behavior, and protection of intellectual property are important. In addition, we have increasingly focused on providing programmable logic technologies that support mission-critical applications requiring secure and reliable hardware operations. 

Since 2022, QuickLogic has also entered into multiple contracts related to embedded FPGA technologies with customers servicing the aerospace and defense market. Advances in our Australis IP generator technology, participation in industry technology ecosystems, and the development of programmable logic technologies designed for demanding operating environments have contributed to increased engagement with customers in the defense industrial base. We believe these trends may support continued growth opportunities for programmable logic technologies in aerospace, defense, and other mission-critical markets.

Markets and Product Technology

We market our programmable logic technologies, including FPGA devices and eFPGA IP, primarily to Defense Industrial Base contractors, U.S. Government entities, system original equipment manufacturers ("OEMs"), and fabless semiconductor companies. These customers utilize our programmable logic technologies to incorporate adaptable hardware functionality within system-level designs or custom semiconductor devices.

Our technologies enable customers to implement customized hardware functionality while supporting characteristics such as low power consumption, design flexibility, rapid development cycles, long product life cycles, and reduce total cost of ownership. Depending on customer requirements, solutions may incorporate our programmable logic technologies together with semiconductor IP, software tools, and design resources that support the development and deployment of programmable hardware functionality.

Through the use of our programmable silicon platforms, semiconductor IP, software tools, and architecture expertise, we support the development of energy-efficient hardware solutions that combine the benefits of fixed-function semiconductor devices with the flexibility and adaptability of programmable logic technologies. In certain cases, we develop IP, software, or firmware internally, while in other cases, we collaborate with third parties to integrate mixed-signal interfaces, logic functions, or software components required to complete a customer solution.

Our product technology consists of four major elements:

1. Programmable Logic Technology

Our programmable logic technologies enable our customers to customize hardware functionality within semiconductor devices or system-level platforms. We support two primary classes of programmable logic architectures: reprogrammable logic and one-time programmable ("OTP") logic.

Reprogrammable logic architectures allow hardware functionality to be configured and updated after manufacturing. Our reprogrammable programmable logic technology is primarily based on SRAM configuration elements and forms the foundation of our eFPGA IP and certain programmable logic silicon devices. These architectures can be implemented using standard semiconductor foundry process technologies, including conventional CMOS logic processes that incorporate foundry-provided SRAM memory elements.

In certain specialized applications, reprogrammable logic architectures may incorporate alternative non-volatile memory technologies such as magnetoresistive random-access memory ("MRAM"). These architectures can support operating environments that require enhanced reliability characteristics, including certain radiation-tolerant applications.

Our second class of programmable logic technology is our ViaLink® OTP architecture. ViaLink is a proprietary and patented antifuse-based programmable logic technology that provides non-volatility, instant-on operation, very low standby power consumption, low dynamic power, and compact device form factors. OTP architectures are commonly used in applications requiring secure and deterministic hardware operation.

 2. Semiconductor Intellectual Property

We develop semiconductor IP cores that may be licensed to customers or integrated into our own programmable logic devices. Our licensable programmable logic IP is referred to as eFPGA IP.

Our eFPGA IP enables semiconductor companies to integrate programmable logic blocks directly into ASICs or SoC devices. This capability allows customers to incorporate adaptable hardware acceleration, system control functions, and configurable digital logic within custom semiconductor designs.

Our eFPGA IP architectures are generated using our automated IP generator tool, Australis™, which enables the creation of customized programmable logic architectures that can be integrated into customer semiconductor designs. The Australis™ architecture generation process allows our customers to incorporate programmable logic functionality with limited ongoing development involvement from QuickLogic, supporting a scalable IP licensing and support model.

In addition to programmable logic architectures, we may also provide other IP blocks that customers can integrate alongside eFPGA IP within their designs. These may include signal processing functions, digital filtering blocks, hardware acceleration functions, processor offload engines, and various interface and bus connectivity components.

3. FPGA User Tools

We develop and support software tools that enable customers to design, configure, and deploy programmable logic functionality within our FPGA devices, eFPGA IP architectures, and programmable silicon platforms. As programmable logic devices are manufactured in an unconfigured state, system designers must configure the programmable logic resources to implement their desired hardware functionality using a set of design and programming tools commonly referred to as FPGA User Tools. 

Our FPGA User Tools support two general approaches: proprietary development tools and open-source tool flows. Historically, FPGA vendors have provided proprietary tool chains to support device configuration and design development. For certain mature products, we continue to support proprietary FPGA development tools.

For our newer programmable logic platforms and eFPGA IP technologies, we support open-source FPGA development flows, as well as hybrid tool environments. Our Aurora development platform combines open-source FPGA development tools with selected proprietary technology elements, including logic synthesis capabilities based on industry-standard synthesis tools. This approach enables customers to use a flexible development environment while maintaining compatibility with established semiconductor design workflows.

4. Silicon Platforms

We offer programmable silicon platforms that include both discrete FPGA devices and SoC devices incorporating programmable logic resources.

Our discrete FPGA devices have historically been based on our ViaLink® OTP programmable logic technology and more recently, also incorporate reprogrammable programmable logic architectures using SRAM or other memory technologies for configuration.

In addition to standalone FPGA devices, we develop silicon platforms that integrate programmable logic together with fixed-function hardware blocks and mixed-signal capabilities. These SoC platforms include products such as ArcticLink®, EOS S3™, EOS S3 LV™, and EOS S3AI™.

By integrating programmable logic together with hard-wired logic blocks and mixed-signal functions, these platforms allow customers to implement energy-efficient system architectures while retaining the flexibility to customize hardware functionality through programmable logic. Hard-wired IP blocks provide optimized performance and power efficiency for commonly used functions, while the programmable logic fabric enables customers to adapt the platform to specific application requirements.

This combination of programmable logic, fixed-function hardware, and mixed-signal capabilities enables us to deliver semiconductor solutions that can be customized for a variety of application requirements while supporting reduced system complexity, lower power consumption, and efficient system integration.

Competitive Strengths

We believe several characteristics of our technology and business model differentiate us within the programmable logic and semiconductor IP markets, including:

Programmable Logic Expertise

QuickLogic has developed programmable logic technologies over several decades and we have extensive experience in the design and deployment of FPGA architectures and related development tools. Our experience spans multiple semiconductor process technologies, programmable logic architectures, and end markets that require adaptable hardware functionality.

Embedded FPGA Intellectual Property Platform

Our eFPGA IP enables semiconductor companies to integrate programmable logic blocks into ASICs and SoC devices. This capability allows customers to incorporate configurable hardware functionality within custom semiconductor designs while maintaining the performance and power advantages of ASIC architectures.

Our automated IP generation platform, Australis™, enables the development of customized programmable logic architectures for integration into customer designs. This automated architecture generation capability allows us to support a scalable IP licensing model while enabling customers to efficiently integrate programmable logic into their semiconductor products.

Flexible Programmable Logic Architectures

Our programmable logic technologies support multiple configuration approaches, including reprogrammable architectures and OTP architectures. These architectures enable customers to select programmable logic technologies that best meet their requirements in flexibility, power consumption, security, and reliability.

Long Life Cycle and Mission-Critical Applications

Certain of our programmable logic technologies are used in applications requiring long product life cycles, deterministic operation, and reliable system behavior. These characteristics are important in markets such as aerospace and defense, industrial systems, and infrastructure applications where systems may operate for extended periods and hardware reliability is critical.

Scalable Ecosystem and Development Tools

We support our programmable logic technologies with development tools and software platforms that allow customers to design and deploy hardware functionality using our FPGA devices and eFPGA IP architectures. Our support for both proprietary and open-source development flows enables customers to integrate programmable logic functionality within established semiconductor and system design workflows.

Fabless Manufacturing Model

As a fabless semiconductor company, we utilize third-party foundries, assembly providers, and testing partners to manufacture our silicon devices. This model allows us to leverage advanced semiconductor manufacturing technologies without maintaining internal wafer fabrication facilities, enabling us to focus our resources on programmable logic architecture development and customer engagement.

Marketing, Sales, and Customers

We monetize our programmable logic technologies primarily through the sale of FPGA semiconductor devices and the licensing of eFPGA IP. In connection with eFPGA IP licensing engagements, we may also provide professional engineering services to support the integration of programmable logic technology into customer semiconductor designs. In certain cases, our licensing arrangements may include royalty payments based on customer production volumes.

Our technologies enable customers to incorporate adaptable hardware functionality into semiconductor devices or system-level products. Customers utilize our programmable logic technologies either through our discrete FPGA devices or by integrating our eFPGA IP directly into ASICs or SoC designs. These technologies allow system designers to implement hardware acceleration, system control functions, and configurable digital logic while maintaining low power consumption and design flexibility.

eFPGA technology provides ASIC and SoC developers with the ability to incorporate programmable hardware functionality directly within custom semiconductor devices. This capability enables designers to support evolving application requirements, implement hardware acceleration functions, and reduce the risk associated with fixed-function semiconductor architectures.

We recognize that many of our target markets require integrated hardware solutions that combine programmable logic with other semiconductor and system technologies. Accordingly, we collaborate with a range of industry partners to develop solutions that incorporate programmable silicon platforms, semiconductor IP, packaging technologies, development tools, and other supporting technologies. These collaborations allow us to support the performance, power efficiency, form factor, and life cycle requirements of our customers' systems.

We recognize that our markets require a range of solutions, and we intend to work with market-leading companies to combine silicon solution platforms, packaging technology, FPGA User Tools, sensor software algorithms, software drivers, and firmware, to meet the product proliferation, high bandwidth, time-to-market, time-in-market, and form factor requirements of our customers. We intend to continue to define and implement compelling solutions for our target customers and partners.

We believe our programmable logic technologies address several important requirements for system designers, including low power consumption, platform flexibility, rapid development cycles, extended product life cycles, and reduced total cost of ownership. 

We sell our products through a combination of direct sales personnel and sales channel partners in North America, Europe, and Asia. Our direct sales organization focuses on strategic customer engagements and technical support, while our channel partners and distributors support product availability and regional sales activities. In addition to our corporate headquarters in San Jose, California, we maintain international sales operations in Japan and the United Kingdom.

Customers typically purchase our FPGA devices through authorized distributors. We currently work with a network of distributors in North America, Europe, and Asia to support our global sales activities. Customers licensing our eFPGA IP generally enter into licensing agreements directly with QuickLogic.

We serve customers across several markets, including aerospace and defense, industrial systems, computing platforms, and semiconductor companies developing custom ASIC or SoC devices. Certain customers in aerospace, defense, and industrial markets continue to utilize our existing FPGA device platforms, while semiconductor companies increasingly license our eFPGA IP to integrate programmable logic into custom semiconductor designs.

One customer represented approximately 44% and another customer represented approximately 11% of our total revenue from continuing operations for the year ended December 28, 2025. One customer represented 56% of our total revenue from continuing operations for the year ended December 29, 2024. In addition, a significant portion of our revenue is derived from customers located outside the United States. See Note 15 to the consolidated financial statements for additional information.

Backlog

We do not believe that backlog as of any particular date is indicative of future results. The majority of our quarterly silicon shipments are typically booked during the quarter. Our silicon sales are made primarily pursuant to standard purchase orders issued by OEM customers and distributors. Our eFPGA IP and design service contracts are typically made pursuant to license agreements and development contracts. Development contracts can span several months to several quarters in duration. 

Competition

The semiconductor industry is highly competitive and characterized by rapid technological change, evolving industry standards, and frequent new product introductions. We compete with a range of semiconductor companies that provide programmable logic devices, semiconductor IP, or alternative technologies that can perform similar system functions.

In the market for eFPGA IP, our competitors include other semiconductor IP providers and technology companies developing programmable logic architectures for integration into ASICs and SoC devices. These competitors may include both established semiconductor companies and smaller venture-backed companies.

In the market for discrete FPGA devices, we compete with suppliers of programmable logic devices including Lattice Semiconductor Corporation, Microchip Technology Inc. (which acquired Microsemi Corporation), Advanced Micro Devices, Inc. (which acquired Xilinx, Inc.), and Intel Corporation (whose programmable logic business operates under the Altera brand). These companies offer a broad range of applications and performance requirements.

Competition within the programmable logic market is influenced by several factors, including product performance, power consumption, device density, development tools, IP availability, product life cycle support, and the ability to meet specific application requirements. In certain applications, programmable logic devices also compete with alternative semiconductor solutions, including ASICs, ASSPs, and software-programmable processors.

We believe our programmable logic technologies compete effectively in applications that benefit from configurable hardware functionality, low power consumption, flexible system architectures, and long product life cycle support.

Research and Development

Our research and development activities are primarily focused on advancing our programmable logic technologies, including eFPGA IP, FPGA semiconductor devices, and associated software development tools. Our solutions combine programmable silicon platforms with semiconductor IP, FPGA development tools, software drivers, and other supporting system software.

Our future success depends in large part on our ability to execute on existing development programs involving eFPGA IP technologies and FPGA devices, as well as securing additional design engagements with semiconductor and system companies seeking to integrate programmable logic technologies into their products.

We have made, and expect to continue to make, substantial investments in research and development ("R&D"). Our R&D expenses from continuing operations were $5.3 million, or 38% of revenue and $5.8 million, or 30% of revenue for the Fiscal Years ended December 28, 2025 and December 29, 2024, respectively. Research and development expenses for the year ended December 28, 2025 reflect increases in employee compensation, depreciation, and expenses associated with financing arrangements.

Manufacturing

As a fabless semiconductor company, we rely on third-party manufacturing partners for wafer fabrication, package assembly, and device testing. This approach allows us to leverage the manufacturing scale and process technologies of established semiconductor suppliers while focusing our internal resources on programmable logic architecture development, product design, and customer engagement. 

For our commercial products, we outsource wafer fabrication primarily to GlobalFoundries and Taiwan Semiconductor Manufacturing Company Limited ("TSMC"). Packaging and assembly services for our commercial products are provided by third-party semiconductor assembly and test providers, including Amkor Technology, Inc. Integra Technologies, Inc., and Golden Altos Corporation.

GlobalFoundries manufactures several of our programmable silicon platforms, including EOS S3™, EOS S3 LV™, and EOS S3AI™ devices using a 40-nanometer complementary metal oxide semiconductor ("CMOS") process, and PolarPro® 3E, ArcticLink® III VX and BX products using a 65-nanometer CMOS process. We also have recently used GlobalFoundries 12nm process for a new FPGA device test chip. TSMC manufactures certain of our mature FPGA products, including PASIC® 3 and QuickRAM® devices, using 0.35-micron CMOS process, and Eclipse® devices using a 0.25-micron CMOS process. We purchase wafers from these suppliers primarily on a purchase order basis.

Outsourcing wafer fabrication allows us to benefit from the manufacturing scale, process technologies, and operational efficiencies of leading semiconductor foundries. We may establish additional foundry relationships in the future as required to support new product development, customer requirements, or supply chain diversification. For certain products used in aerospace, defense, and government-related applications, we may be required to source wafer fabrication, packaging, and testing services from suppliers that meet specific security, traceability, and quality standards. In these cases, we work with manufacturing partners that support trusted microelectronics programs and maintain appropriate certifications and operational controls required by U.S. government customers.

Employees and Human Capital

As of December 28, 2025, we had fifty-one employees worldwide, of which forty-three employees were located in the United States. We believe our future success depends in part on our continued ability to attract, hire, and retain qualified personnel. None of our employees are represented by a labor union and we believe our employee relations are favorable. We recognize that in order to drive innovation and operational excellence, we must attract, develop, motivate, and retain highly qualified talent. The well-being of employees is a key priority and includes a dynamic and welcoming workplace that promotes inclusive diversity, fosters collaboration, encourages employees to bring their best ideas to work every day, and promotes work-life balance. The principal purposes of our equity and cash incentive plans are to attract, retain, and reward personnel through the granting of stock-based and cash-based compensation awards, in order to increase shareholder value and the success of our company by motivating such individuals to perform to the best of their abilities and achieve our objectives.

We monitor employee turnover rates by region and globally. Approximately 33% of our employees have been employed by us for more than 10 years and approximately 24% have been employed by us for more than 20 years. The average tenure is 9.6 years. Our turnover rate was 21% for the fiscal year ended December 28, 2025. Excluding the disposition of SensiML, our turnover rate was 16% for the fiscal year ended December 28, 2025. We believe our compensation philosophy, along with the career growth and development opportunities promote longer employee tenure and reduce voluntary turnover.

Intellectual Property

We believe that it is important to maintain a large patent portfolio to protect our innovations. We currently hold twenty-two active U.S. patents and have five pending applications for additional U.S. patents. Our patents contain claims covering various aspects of programmable integrated circuits, programmable interconnect structures, and programmable metal hardware products. In Europe and Asia, we hold five patents and have zero pending applications. Our issued patents expire between 2026-2042.

In most cases, revenue will decline from a decrease in demand for our mature products long before the expiration of pending or issued patents relating to the underlying technology in such products. The decision to cease maintaining a patent is made based on the importance of the patent in our current or future product offerings.

We have five registered trademarks with the U.S. Patent and Trademark Office.

With regard to certain patents, the U.S. Government has an irrevocable, non-exclusive, royalty-free license, pursuant to which the U.S. Government may use or authorize others to use the inventions covered by such patents.

Information About Our Executive Officers and Directors

Our executive officers are appointed by, and serve at the discretion of, our Board of Directors. There are no family relationships among our directors and officers.

The following table sets forth certain information concerning our current executive officers and directors as of March 27, 2026:

Brian C. Faith joined QuickLogic in June 1996 and has served as President and Chief Executive Officer since June 2016. Prior to his appointment as Chief Executive Officer, Mr. Faith served as Vice President of Worldwide Marketing and Vice President of Worldwide Sales & Marketing from 2008 and 2016. During his tenure at QuickLogic, Mr. Faith has held a variety of managerial and executive leadership positions spanning engineering, product line management, marketing, and sales. Mr. Faith has served on the board of the Global Semiconductor Alliance (GSA) and previously served as Chairman of the Marketing Committee for the CE-ATA Organization. He holds a Bachelor of Science degree in Computer Engineering from Santa Clara University and has served as an Adjunct Lecturer at Santa Clara University, teaching courses related to programmable logic.

Elias Nader joined QuickLogic in February 2022, bringing more than three decades of leadership experience across the semiconductor and technology industries, including over 20 years in senior executive roles. Before joining QuickLogic, Mr. Nader served as Senior Vice President and Chief Financial Officer at Pixelworks, Inc. (2019-2022), where he led all global General and Administrative functions and partnered closely with the Board of Directors to drive strategic and operational initiatives. Prior to Pixelworks, Inc., Mr. Nader held several key leadership positions at Sigma Designs, Inc., including Senior Vice President, Chief Financial Officer and Corporate Secretary (2013-2017), followed by his appointment as interim Chief Executive Officer (2017-2019). Earlier in his career, he held executive roles at Dionex Corporation and interWave Communications, further broadening his operational and financial expertise. Mr. Nader serves on the Boards of Directors of Immersion Corporation (IMMR) and Barnes & Noble Education Group (BNED), where he provides strategic, financial, and operational oversight. He holds a Bachelor of Science degree in Accounting with a Minor in Economics, as well as an MBA in International Business, all from San Jose State University.

Rajiv Jain joined QuickLogic in August 1992. Mr. Jain has served as our Vice President of Worldwide Operations since April 2014. Prior to this role, Mr. Jain served as QuickLogic’s Senior Director of Operations and Development Engineering from 2011 to 2014, Senior Director of System Solutions and Process Technology from 2009 to 2011, Director of Process Technology from 1997 to 2009, and Senior Process Technologist from 1992 to 1997. Prior to joining QuickLogic, Mr. Jain was a Senior Yield Engineer at National Semiconductor from 1991 to 1992, where he focused on BiCMOS product yield improvements, and at Monolithic Memories from 1985 to 1988, where he focused on BiPolar product yield and engineering wafer sort improvements. Mr. Jain holds a Master’s degree in Chemical Engineering from the University of California, Berkeley and a B.S. degree in Chemical Engineering from the University of Illinois, Champaign/Urbana.

Timothy Saxe (Ph.D.) joined QuickLogic in May 2001. Dr. Saxe has served as our Senior Vice President of Engineering and Chief Technology Officer since August 2016 and Senior Vice President and Chief Technology Officer since November 2008. Previously, Dr. Saxe held a variety of executive leadership positions in QuickLogic including Vice President of Engineering and Vice President of Software Engineering. Dr. Saxe was Vice President of FLASH Engineering at Actel Corp., a semiconductor manufacturing company, from November 2000 to February 2001. Dr. Saxe joined GateField Corp., a design verification tools and services company formerly known as Zycad, in June 1983 and was a founder of their semiconductor manufacturing division in 1993. Dr. Saxe became GateField’s Chief Executive Officer in February 1999 and served in that capacity until Actel Corp. acquired GateField in November 2000. Dr. Saxe holds a B.S.E.E. degree from North Carolina State University, and an M.S.E.E. degree and a Ph.D. in Electrical Engineering from Stanford University.

Owen Bateman joined QuickLogic in February 1997. Mr. Bateman has served as our Vice President of Worldwide Sales since April 2022. Prior to this role, Mr. Bateman served as QuickLogic’s Senior Director of Sales EMEA and USA from 2013 to 2022, and Strategic Accounts, Direct Sales and Channel Sales from 1997 to 2013. Prior to joining QuickLogic, Mr. Bateman held sales and field application engineering positions at Intel and Abacus Polar. Mr. Bateman spent several years in an ASIC design team and completed several successful FPGA and custom ASIC designs. Mr. Bateman holds a Higher National Certificate in Electronic and Microelectronic Engineering from Brooklands College, England.

Andrew Jaros joined QuickLogic in December 2024 as Vice President of IP Sales, bringing over 20 years of leadership experience in semiconductor IP, embedded systems, and business development. Prior to joining QuickLogic, Mr. Jaros most recently served as FlexLogix's World-Wide Vice President of Sales, Marketing, and Solutions Architecture from 2016 to 2024. Prior to joining FlexLogix, Mr. Jaros served eleven years in various management and leadership roles licensing ARC processor IP at Synopsys, Virage Logic, and ARC International. Prior to that, Mr. Jaros managed a sales team covering North America strategic accounts for ARM.  Mr. Jaros started his career as a territory manager for Motorola Semiconductor and holds a B.S. degree in Chemical Engineering from Arizona State University.

Information regarding the backgrounds of our directors is hereby incorporated by reference from our definitive Proxy Statement relating to the 2026 Annual Meeting of Stockholders, which Proxy Statement is anticipated to be filed within 120 days after the end of the Fiscal Year covered by this Annual Report.

ITEM 1A. RISK FACTORS

In addition to other information in this Annual Report on Form 10-K and in other filings we make with the SEC, the following risk factors should be carefully considered in evaluating our business as they may have a significant impact on our business, operating results, and financial condition. If any of the following risks actually occurs, our business, financial condition, results of operations, and future prospects could be materially and adversely affected. Because of the following factors, as well as other variables affecting our operating results, past financial performance should not be considered as a reliable indicator of future performance and investors should not use historical trends to anticipate results or trends in future periods.

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.

We have experienced net losses in the past years as we continue to develop new products, applications, and technologies. Most of our new products and products currently under development are generating stable gross margins as a percentage of revenue year over year. Our mature products also generate stable gross margins due to the markets that they serve. 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 proceeds that we received during Fiscal Year 2025 from the sale of our equity securities or future such offerings, and the credit line we may be able to draw down from Heritage Bank of Commerce or other future banking partners, 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.

If we are unable to generate sufficient sales from our new products or adequate funds are not available when needed, our liquidity, financial condition, and operating results would be materially and adversely affected, and we may not be able to operate our business without significant changes in our operations, or at all.

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. 

Our operating results have varied widely in the past and are likely to do so in the future. In addition, our past operating results may not be an indicator of future operating results.

Factors that could cause our operating results to fluctuate include, without limitation: (i) successful development and market acceptance of our products and solutions; (ii) our ability to accurately forecast product volumes and mix, and to respond to rapid changes in customer demand; (iii) changes in sales volume or expected sales volume, product mix, average selling prices, or production variances that affect gross profit; (iv) the effect of end-of-life programs; (v) a significant change in sales to, or the collectability of accounts receivable from, our largest customers; (vi) our ability to adjust our product features, manufacturing capacity, and costs in response to economic and competitive pressures; (vii) our reliance on subcontract manufacturers for product capacity, yield, and quality; (viii) our competitors’ product portfolio and product pricing policies; (ix) timely implementation of efficient manufacturing technologies; (x) errors in applying or changes in accounting and corporate governance rules; (xi) the issuance of equity compensation awards or changes in the terms of our stock plan or employee stock purchase plan; (xii) mergers or acquisitions; (xiii) the impact of import and export laws and regulations; (xiv) the cyclical nature of the semiconductor industry and general economic, market, political, and social conditions in the countries where we sell our products and the related effect on our customers, distributors, and suppliers; (xv) our ability to obtain capital, debt financing, and insurance on commercially reasonable terms, and (xvi) allocations between our operating expenses and cost of sales. Although certain of these factors are out of our immediate control, unless we can anticipate and be prepared with contingency plans that respond to these factors, our business, results of operations, and financial condition could be materially adversely affected, which could cause our stock price to significantly fluctuate or decline.

We may also encounter periods of industry-wide semiconductor oversupply, resulting in pricing pressure, as well as undersupply, resulting in a risk that we could be unable to fulfill our customers' requirements. The semiconductor industry has historically been characterized by wide fluctuations in the demand for, and supply of, its products. These fluctuations have resulted in circumstances when supply of and demand for semiconductors has been widely out of balance. An industry-wide semiconductor oversupply could result in severe downward pricing pressure from customers. In a market with an undersupply of manufacturing capacity, we would have to compete with larger foundry and assembly customers for limited manufacturing resources. In such an environment, we may be unable to have our products manufactured in a timely manner, at a cost that generates adequate gross profit, or in sufficient quantities. Since we outsource all of our manufacturing and generally have a single source of wafer supply, test, assembly, and programming for our products, we are particularly vulnerable to such supply shortages and capacity limitations. As a result, we may be unable to fulfill orders and may lose customers. Any future industry-wide oversupply or undersupply of semiconductors could therefore, have a material adverse effect on our business, results of operations, and financial condition.

Our margins vary.

Our profit margins vary due to a number of factors, which may include customer demand and shipment volume; capital expenditures and resulting depreciation; our manufacturing processes; product mix; inventory levels; tariffs; freight costs; and new accounting pronouncements or changes in existing accounting practices or standards. In addition, we operate in a highly competitive market environment that might adversely affect pricing for our products. 

Cyberattacks can lead to disruption of business, reduced revenue, increased costs, liability claims, or harm to our reputation or competitive position.

Security vulnerabilities may arise from our hardware, software, employees, contractors, or policies we have deployed, and which may result in external parties gaining access to our networks, data centers, cloud data centers, corporate computers, manufacturing systems, and/or access to accounts we have at our suppliers, vendors, and customers. Due to the actions of outside parties, employee error, malfeasance, or otherwise, an unauthorized party may gain access to our data or our users’ or customers’ data, attack the networks causing denial of service, or attempt to hold our data or systems in ransom. The vulnerability could be caused by inadequate account security practices such as failure to timely remove employee access when terminated. To mitigate these security issues, we have implemented measures throughout our organization, including firewalls, backups, encryption, employee information technology policies, and user account policies. However, there can be no assurance these measures will be sufficient to avoid cyberattacks. If any of these types of security breaches were to occur and we were unable to protect sensitive data, our relationships with our business partners and customers could be materially damaged, our reputation could be materially harmed, and we could be exposed to a risk of litigation and possible significant liability.

If we fail to adequately maintain our infrastructure, we may have outages and data loss. Excessive outages may affect our ability to timely and efficiently deliver products to customers or develop new products and solutions. Such disruptions and data loss may adversely impact our ability to fulfill orders, patent our intellectual property or protect our source code, and interrupt other processes. Delayed sales or lost customers resulting from these disruptions could adversely affect our financial results, stock price, and reputation.

Effective May 25, 2018, the European Union ("EU") implemented the General Data Protection Regulation (“GDPR”) a broad data protection framework that expands the scope of current EU data protection law to non-European Union entities that process, or control the processing of, the personal information of EU subjects. The State of California enacted the California Consumer Privacy Act of 2018 (“CCPA”) effective on January 1, 2020, which contains requirements similar to GDPR for the handling of personal information of California residents, commencing on January 1, 2020. Further, the California Privacy Rights Act (“CPRA”), which was voted into law by California residents in 2020, became enforceable on July 1, 2023 and amends the CCPA, imposes additional data protection obligations on covered companies doing business in California and creates a new California data protection agency specifically tasked to enforce the law, which will likely result in increased regulatory scrutiny of California businesses in the areas of data protection and security. Privacy and security laws, self-regulatory schemes, regulations, standards, and other obligations are constantly evolving, and may conflict with each other, and any such laws, schemes, regulations, and standards may have an adverse impact on our business if we are not able to comply or if compliance requires time and resources for implementation.

Our company's, collaborators’, and contractors’ failure to fully comply with GDPR, CCPA, and other laws could lead to significant fines and require onerous corrective action. In addition, data security breaches experienced by us or our collaborators or contractors could result in the loss of trade secrets or other intellectual property, public disclosure of sensitive commercial data, and the exposure of personally identifiable information (including sensitive personal information) of our employees, customers, collaborators, and others.

Unauthorized use or disclosure of, or access to, any personal information maintained by us or on our behalf, whether through breach of our systems, breach of the systems of our suppliers or vendors by an unauthorized party, or through employee or contractor error, theft or misuse, or otherwise, could harm our business. If any such unauthorized use or disclosure of, or access to, such personal information was to occur, our operations could be seriously disrupted, and we could be subject to demands, claims, and litigation by private parties, and investigations, related actions, and penalties by regulatory authorities. In addition, we could incur significant costs in notifying affected persons and entities and otherwise complying with the multitude of foreign, federal, state, and local laws and regulations relating to the unauthorized access to, or use or disclosure of, personal information. Finally, any perceived or actual unauthorized access to, or use or disclosure of, such information could harm our reputation, substantially impair our ability to attract and retain customers, and have an adverse impact on our business, financial condition, and results of operations.

We may be unable to protect our intellectual property, which could negatively affect our ability to compete.

We believe one of our key competitive advantages results from the collection of proprietary technologies we have developed and acquired since our inception, and the protection of our intellectual property rights is, and will continue to be, important to the success of our business. If we fail to protect these intellectual property rights, competitors could sell products based on technology that we have developed, which could harm our competitive position and decrease our revenue.

We rely on a combination of patents, copyrights, trademarks, trade secrets, contractual provisions, confidentiality agreements, licenses, and other methods, to protect our proprietary technologies. We also enter into confidentiality or license agreements with our employees, consultants, and manufacturing or other business partners, and control access to and distribution of our documentation and other proprietary information. To the extent that any third party has a claim to ownership of any relevant technologies used in our products, we may not be able to recognize the full revenue stream from such relevant technologies.

We have been issued a significant number of U.S. and foreign patents and have a significant number of pending U.S. patent applications. However, a patent may not be issued as a result of any applications or, if issued, claims allowed may not be sufficiently broad to protect our technology. In addition, it is possible that existing or future patents may be challenged, invalidated, or circumvented. We may also be required to license some of our patents to others, including competitors, as a result of our participation in and contribution to development of industry standards. Despite our efforts, unauthorized parties may attempt to copy or otherwise obtain and use our products or proprietary technology. Monitoring unauthorized use of our technology is difficult, and the steps that we have taken may not prevent unauthorized use of our technology, particularly in jurisdictions where the laws may not protect our proprietary rights as fully as in the United States or other developed countries. If our patents do not adequately protect our technology, our competitors may be able to offer products similar to ours, which would adversely impact our business and results of operations. In addition, we have implemented security systems with the intent of maintaining the physical security of our facilities and protecting our confidential information, including our intellectual property. Despite our efforts, we may be subject to breach of these security systems and controls, which may result in unauthorized access to our facilities and labs and/or unauthorized use or theft of the confidential information and intellectual property we are trying to protect. If we fail to protect these intellectual property rights, competitors could sell products based on technology that we have developed, which could harm our competitive position and decrease our revenue.

Certain of our software, as well as that of our customers, may be derived from so-called “open-source” software that is generally made available to the public by its authors and/or other third parties. Some open-source software is made available under certain licenses that impose certain obligations on us in the event we were to distribute derivative works of the open-source software. These obligations may require us to make source code for the derivative works available to the public and/or license such derivative works under a particular type of license, rather than the forms of license we customarily use to protect our intellectual property. While we believe we have complied with our obligations under the various applicable licenses for open-source software, in the event that the copyright holder of any open source software were to successfully establish in court that we had not complied with the terms of a license for a particular work, we could be required to release the source code of that work to the public and/or stop distribution of that work if the license is terminated which could adversely impact our business and results of operations.

Further, governments and courts are considering new issues in intellectual property law with respect to works created by AI technology, which could result in different intellectual property rights in development processes, procedures, and technologies we create with AI technology, which could have a material adverse effect on our business.

We may be unable to adequately protect our intellectual property rights and may face significant expenses as a result of future litigation.

Protection of intellectual property rights is crucial to our business, since that is how we keep others from copying our innovations and those of third parties that are central to our existing and future products. From time to time, we receive letters alleging patent infringement or inviting us to license other parties’ patents. We evaluate these requests on a case-by-case basis. These situations may lead to litigation if we reject the offer to obtain the license.

In the past, we have been involved in litigation relating to our alleged infringement of third-party patents or other intellectual property rights. This type of litigation is expensive and consumes large amounts of management time and attention.

Because it is critical to our success that we continue to prevent competitors from copying our innovations, we intend to continue to seek patent and trade secret protection for our products. The process of seeking patent protection can be long and expensive, and we cannot be certain that any currently pending or future applications will actually result in issued patents or that, even if patents are issued, they will be of sufficient scope or strength to provide meaningful protection or any commercial advantage to us. Furthermore, others may develop technologies that are similar or superior to our technology or design around the patents we own. We also rely on trade secret protection for our technology, in part through confidentiality agreements with our employees, consultants, and other third parties. However, these parties may breach these agreements and we may not have adequate remedies for any breach. In any case, others may come to know about or determine our trade secrets through a variety of methods. In addition, the laws of certain territories in which we develop, manufacture, or sell our products may not protect our intellectual property rights to the same extent as the laws of the United States.

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.

We believe our future success depends upon our ability to attract and retain highly competent personnel. Our employees are at-will and not subject to employment contracts. We could potentially lose the services of any of our senior management personnel at any time due to a variety of factors that could include, without limitation, death, incapacity, military service, personal issues, retirement, resignation, or competing employers. Our ability to execute current plans could be adversely affected by such a loss. We may fail to attract and retain qualified technical, sales, marketing, and managerial personnel required to continue to operate our business successfully. Personnel with the expertise necessary for our business are scarce and competition for personnel with proper skills is intense.

In addition, new hires frequently require extensive training before they achieve desired levels of productivity. Additionally, attrition in personnel can result from, among other things, changes related to acquisitions, retirement, and disability. We may not be able to retain existing key technical, sales, marketing, and managerial employees or be successful in attracting, developing, or retaining other highly qualified technical, sales, marketing, and managerial personnel, particularly at such times in the future as we may need to fill a key position. If we are unable to continue to develop and retain existing executive officers or other key employees or are unsuccessful in attracting new highly qualified employees, our financial condition, cash flows, and results of operations could be materially and adversely affected.

There may be some effects of system outages or data security breaches, which could adversely affect our operations, financial results, or reputation.

We face risks from electrical or telecommunications outages, computer hacking, or other general system failures. We rely heavily on our internal information and communications systems and on systems or support services from third parties to manage our operations efficiently and effectively. Any of these are subject to failure. System-wide or local failures that affect our information processing could have a material adverse effect on our business, financial condition, results of operations, and cash flows. Further, insurance coverage does not generally protect from normal wear and tear, which can affect system performance. Any applicable insurance coverage for an occurrence could prove to be inadequate. Coverage may be or become unavailable or inapplicable to any risks then prevalent.

Our company’s global operations are subject to risks and uncertainties.

Many of our products are manufactured outside of the United States at manufacturing facilities operated by our suppliers in Asia and South Asia. In addition, most of our domestic customers sell their products outside of North America, thereby indirectly exposing us to risks associated with foreign commerce and economic instability. We continue to maintain overseas sales offices.

International operations are subject to certain risks inherent in conducting business outside the U.S., such as changes in currency exchange rates, tax laws, price and currency exchange controls, export and import restrictions, environmental regulations, protection of intellectual property rights, nationalization, expropriation, and other governmental action. Accordingly, our operations and revenue are subject to a number of risks associated with foreign commerce, including the following: (i) staffing and managing foreign offices; (ii) managing foreign distributors; (iii) collecting amounts due; (iv) political and economic instability; (v) foreign currency exchange fluctuations; (vi) changes in tax laws, import and export regulations, tariffs, and freight rates; (vii) timing and availability of export licenses; (viii) supplying products that meet local environmental regulations; and (ix) inadequate protection of intellectual property rights. In addition, we incur costs in foreign countries that may be difficult to reduce quickly because of employee-related laws and practices in those foreign countries. Our global operations also may be adversely affected by political events and domestic or international terrorist events and hostilities. Current events, including the conflict in the Middle East (including the recent conflict between the U.S. and Iran), the Russia-Ukraine military conflict, rising tensions with Taiwan, potential disruption caused by pandemics, and potential changes in tariffs, trade restrictions, immigration policies, and tax reform proposals, create a level of uncertainty for multi-national companies. As U.S. companies continue to expand globally, increased complexity exists due to the possibility of renegotiated trade deals, revised international tax law treaties, and changes to the U.S. corporate tax code. These uncertainties could have a material adverse effect on our business and our results of operations and financial condition. As we continue to expand our business globally, our success will depend, in part, on our ability to anticipate and effectively manage these and other risks.

We may not be able to achieve the anticipated synergies and benefits from business acquisitions.

We continue to seek acquisitions of businesses that we believe can complement our current business activities, both financially and strategically. Acquisitions, involve many complexities, including, but not limited to, risks associated with the acquired business’ past activities, difficulties in integrating personnel and human resource programs, integrating technology systems and other infrastructures under our control, unanticipated expenses and liabilities, and the impact on our internal controls and compliance with the regulatory requirements under the Sarbanes-Oxley Act of 2002. There is no guarantee that our acquisitions will increase the profitability and cash flow of the Company, and our efforts could cause unforeseen complexities and additional cash outflows, including financial losses. As a result, the realization of anticipated synergies or benefits from acquisitions may be delayed or substantially reduced.

Litigation could adversely impact our consolidated financial position.

We have been and may be in the future involved in various litigation matters arising in the ordinary course of business, including, but not limited to, litigation relating to employment matters, commercial transactions, intellectual property matters, contracts, environmental matters, and matters related to compliance with governmental regulations. Litigation is inherently uncertain and unpredictable. The potential risks and uncertainties include, but are not limited to, such factors as the costs and expenses of litigation and the time and attention required of management to attend to litigation. An unfavorable resolution of any particular legal claim or proceeding, and/or the costs and expenses incurred in connection with a legal claim or proceeding, could have a material and adverse effect on our results of operations and financial condition.

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.

Actual events involving limited liquidity, defaults, non-performance, or other adverse developments that affect financial institutions or other companies in the financial services industry or the financial services industry generally, or concerns or rumors about any events of these kinds, have in the past and may in the future lead to market-wide liquidity problems. We regularly maintain cash balances at financial institutions in amounts exceeding the Federal Deposit Insurance Corporation ("FDIC") insurance limit. If a financial institution in which we hold such funds fails, or is subject to significant adverse conditions in the financial or credit markets, we could lose all or a portion of our uninsured funds, or be subject to a delay in accessing all or a portion of our funds. If we are unable to access all or a significant portion of our funds for any extended period of time, we may not be able to pay our operational expenses or make other payments, including to our vendors and employees, and we may be subject to other operational challenges, any of which could adversely impact our liquidity and financial performance. If any parties with whom we conduct business are unable to access funds, such parties’ ability to pay their obligations to us or to enter into new commercial arrangements requiring additional payments to us could be adversely affected.

In addition, investor concerns regarding the U.S. or international financial systems could result in less favorable commercial financing terms, including higher interest rates or costs and tighter financial and operating covenants, or systemic limitations on access to credit and liquidity sources, thereby, making it more difficult for us to acquire financing on acceptable terms or at all. Any material declines in available funding or our ability to access our cash, cash equivalents, and liquidity resources could adversely impact our ability to meet our operating expenses, financial and contractual obligations, or result in breaches of our contractual obligations or result in violations of federal or state wage and hour laws. Any of these impacts could have material adverse impacts on our operations and liquidity.

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 operations and the operations of our suppliers are vulnerable to interruption by fire, earthquake, power loss, flood, terrorist acts, and other catastrophic events beyond our control. In particular, our headquarters are located near earthquake fault lines in the San Francisco Bay Area. In addition, we rely on certain suppliers to manufacture our products and would not be able to qualify an alternate supplier of our products for several quarters. Our suppliers often hold significant quantities of our inventories, which, in the event of a disaster, could be destroyed. If there is an earthquake or other catastrophic event near our headquarters, our customers’ facilities, our distributors' facilities, or our suppliers’ facilities, our business could be seriously harmed.

In addition, any catastrophic event, the failure of our computer systems or networks, including due to computer viruses, security breaches, war, or acts of terrorism, could significantly disrupt our operations. Specifically, any prolonged health threat globally could adversely affect the economies and financial markets of many countries, resulting in an economic downturn that could impact our operating results. The occurrence of any of these events could also affect our customers, distributors, and suppliers and produce similar disruptive effects upon their business, which would likely impact our sales and cause a decline in our revenue.

We do not maintain sufficient business interruption and other insurance policies to compensate us for all losses that may occur. Any losses or damages incurred by us as a result of a catastrophic event or any other significant uninsured loss could have a material adverse effect on our business.

Our insurance may not adequately cover certain risks and, as a result, our financial condition and results may be adversely affected.

We carry insurance customary for companies in our industry, including, but not limited to, liability, property, and casualty; workers' compensation; cyber liability; and business interruption insurance. We also insure our employees for basic medical expenses. In addition, we have insurance contracts that provide director and officer liability coverage for our directors and officers. Other than the specific areas mentioned above, we are self-insured with respect to most other risks and exposures, and the insurance we carry in many cases is subject to a significant policy deductible or other limitation before coverage applies. Based on management's assessment and judgment, we have determined that it is more cost effective to self-insure against certain risks than to incur the insurance premium costs. The risks and exposures for which we self-insure include, but are not limited to, certain natural disasters, certain product defects, certain matters for which we indemnify third parties, political risk, certain theft, patent infringement, and employment practice matters. Should there be a catastrophic loss due to an uninsured event (such as an earthquake) or a loss due to adverse occurrences in any area in which we are self-insured, our financial condition or operating results could 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.

Pandemics, epidemics, or other widespread public health problems, such as the COVID-19 pandemic, could negatively impact our business. Outbreaks have, and could again, result in significant government measures to control the spread of disease, including, among others, restrictions on travel, manufacturing, and the movement of employees. If, for example, pandemics were to occur in ways that significantly disrupt the manufacture, shipment, and purchasing of our products or the products of our customers, this may materially negatively impact our operating results and our overall business. Disruptions to manufacturing and shipping could also constrain our supplies, leading to operational delays, disruptions, and inflationary pressures.

The ultimate impact of a pandemic and its potential effects on our business depends on many factors that are not within our control. If a pandemic occurs, this could lead to disruptions or restrictions on our ability to source, manufacture, or distribute our products, including temporary disruptions to the facilities of our contract manufacturers in China, Taiwan, the Philippines, and Singapore, or the facilities of our suppliers and their contract manufacturers globally. Additionally, countries may impose restrictions on business operations and movement of people and products to limit the spread of a pandemic. Delays in production or delivery of components or raw materials that are part of our global supply chain due to restrictions imposed to limit the spread of a pandemic could delay or inhibit our ability to obtain the supply of components and finished goods. If the impact of a pandemic occurs in the locations where we, our customers, or suppliers conduct business, or we experience pronounced disruptions in our operations, we may experience constrained supply or curtailed demand that may materially adversely impact our business, cash flows, and results of operations.

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.

Generally accepted accounting principles in the United States (“GAAP”) are promulgated by and are subject to the interpretation of the Financial Accounting Standards Board (“FASB”) and the SEC. New accounting pronouncements or taxation rules and varying interpretations of accounting pronouncements or taxation practices have occurred and may occur in the future. Any future changes in accounting pronouncements or taxation rules or practices may have a significant effect on how we report our results and may even affect our reporting of transactions completed before the change is effective. In addition, a review of existing or prior accounting practices may result in a change in previously reported amounts. This change to existing rules, future changes, if any, or the questioning of current practices may adversely affect our reported financial results, our ability to remain listed on the Nasdaq Capital Market, or the way we conduct our business and subject us to regulatory inquiries or litigation.

We may have increased difficulty attracting and retaining qualified, outside board members.

The directors and management of publicly traded corporations are increasingly concerned with the extent of their personal exposure to lawsuits and shareholder claims, as well as governmental and creditor claims that may be made against them in connection with their positions with publicly held companies. Outside directors are becoming increasingly concerned with the availability of directors’ and officers’ liability insurance to pay on a timely basis the costs incurred in defending shareholder claims. Directors’ and officers’ liability insurance is expensive and difficult to obtain. The SEC and the Nasdaq Capital Market have also imposed higher independence standards and certain special requirements on directors of public companies. Accordingly, it may become increasingly difficult to attract and retain qualified outside directors to serve on our board of directors.

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.

Due to our relatively long product delivery cycle and the inability of our customers in the rapidly evolving end markets to confirm product requirements on a timely basis, we may have low visibility to product demand or estimated revenue in any given quarter. If our suppliers cannot provide us with accurate delivery lead times, we may not be able to deliver products to our customers in a timely fashion. Furthermore, our ability to respond to increased demand is limited to inventories on hand or on order, the capacity available at our contract manufacturers, and our capacity to program products to customer specifications. If we fail to accurately estimate customer demand, or if our available capacity is less than needed to meet customer demand, we may not be able to accurately estimate our quarterly revenue, which may have a material adverse effect on our results of operations and financial condition, and our stock price could materially fluctuate as a result.

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.

In February 2025, and subsequently refreshed in August 2025, the Company implemented an “at-the-market” program with Needham & Company, LLC, as sales agent (the “ATM Offering”) that allows us to sell, from time to time, shares of the Company’s Common Stock, having an aggregate offering price of up to $20,000,000. From February 2025 through Fiscal Year 2025, the outstanding shares of our Common Stock have increased by 1.2 million shares as a result of sales pursuant to the ATM Offering. We may issue additional shares of Common Stock to raise cash to bolster our liquidity, to repay, refinance, redeem or exchange indebtedness (including expenses, accrued interest, and premium, if any), for working capital, to finance strategic initiatives and future acquisitions, or for other purposes. Additional issuances will dilute the ownership interest of our common stockholders. Investors who purchase shares in our ATM Offering at different times will likely pay different prices, and so may experience different outcomes in their investment results. We will have discretion, subject to market demand, to vary the timing, prices, and numbers of shares sold, and there is no minimum or maximum sales price. Investors may experience declines in the value of their shares as a result of share sales made at prices lower than the prices they paid. In addition, future issuances of Common Stock, including through our ATM Offering, could depress the market price of our common stock and impair our ability to raise capital through the sale of additional equity securities. We cannot predict the effect that future sales of our common stock or other equity-related securities would have on the market price 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.

Our common stock is listed on the Nasdaq Capital Market (“Nasdaq”). In order to maintain that listing, we must satisfy minimum financial and other continued listing requirements and standards, including those regarding director independence and independent committee requirements, minimum stockholders' equity, minimum share price, and certain corporate governance requirements.

There can be no assurances that we will be able to maintain compliance with the applicable listing standards of Nasdaq. In the event that our common stock is delisted from Nasdaq and is not eligible for quotation on another market or exchange, trading of our common stock could be conducted in the over-the-counter market or on an electronic bulletin board established for unlisted securities, such as the Pink Sheets or the OTC Markets. In such event, it could become more difficult to dispose of, or obtain accurate price quotations for, our common stock, and there would likely also be a reduction in our coverage by securities analysts and the news media, which could cause the price of our common stock to decline further. Also, it may be difficult for us to raise additional capital if we are not listed on a major exchange.

The market price of our common stock may fluctuate significantly and could lead to securities litigation.

Stock prices for many companies in the technology and emerging growth sectors have experienced wide fluctuations that have often been unrelated to the operating performance of such companies. In the past, securities class action litigation has often been brought against companies following periods of volatility in the market price of their securities. In the future, we may be the subject of similar litigation. Securities litigation could result in substantial costs and divert management’s attention.

Our certificate of incorporation, our bylaws, and Delaware law contain provisions that could discourage a takeover that is beneficial to stockholders.

Provisions of our certificate of incorporation, our bylaws, and Delaware law could have the effect of discouraging takeover attempts that certain stockholders might deem to be in their interest. These anti-takeover provisions may make us a less attractive target for a takeover bid or merger, potentially depriving shareholders of an opportunity to sell their shares of common stock at a premium over prevailing market prices as a result of a takeover bid or merger.

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 price of our common stock.

As directed by Section 404 of the Sarbanes-Oxley Act of 2002, the SEC adopted rules requiring public companies to include a report of management on the companies’ internal control over financial reporting in their annual reports on Form 10-K, including an assessment by management of the effectiveness of the filing company’s internal control over financial reporting. In addition, the independent registered public accounting firm auditing a public company’s financial statements must attest to the effectiveness of the company’s internal control over financial reporting. There is a risk that in the future, we may identify internal control deficiencies that suggest that our controls are no longer effective. This could result in an adverse reaction in the financial markets due to a loss of confidence in the reliability of our financial statements, which could cause the market price of our common stock to decline and make it more difficult for us to finance our operations.

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. 

Our ability to compete successfully in the highly competitive semiconductor industry depends on elements both within and outside of our control. We face significant competition within each of our product lines from major global semiconductor companies, as well as smaller companies focused on specific market niches. In addition, companies not currently in direct competition with us may introduce competing products in the future. 

If we are unable to compete effectively, our competitive position could be weakened relative to our peers, which would have a material adverse effect on our business and results of operations. Our future success depends on many factors, including the development of new technologies and effective commercialization and customer acceptance of our products and our ability to increase our position in our current markets, expand into adjacent and new markets, and optimize operational performance. Products or technologies developed by competitors may render our products or technologies obsolete or noncompetitive. We also may be unable to market and sell our products if they are not competitive on the basis of price, quality, technical performance, features, system compatibility, customized design, innovation, availability, delivery timing, and reliability. If we fail to compete effectively on developing strategic relationships with customers and customer sales and technical support, our sales and revenue may be materially adversely affected.

The semiconductor industry has experienced, and may continue to experience, significant consolidation among companies and vertical integration among customers. Larger competitors resulting from consolidations may have certain advantages over us, and we may be at a competitive disadvantage if we fail to identify attractive opportunities to acquire companies to expand our business. Consolidation among competitors and integration among customers could erode our market share, impair our capacity to compete, and require us to restructure operations, any of which could have a material adverse effect on our business.

In addition, some of our competitors may receive governmental subsidies or other incentives that give them a competitive advantage over us. For example, the U.S. and the European Union have enacted legislation to provide funding and incentives for semiconductor research, development, and manufacturing in their respective regions. If we are unable to access such funding or incentives, or if our competitors receive more funding or incentives than we do, we may be at a disadvantage in developing and producing new or improved products or technologies, which could adversely affect our market share, revenue, and profitability.

The semiconductor business is subject to downward price pressure.

Historically, the market for our products has been characterized by declining selling prices. With the recent supply chain shortages and materials price increases, we anticipate that our average selling prices will fluctuate in future periods, although the timing and amount of these fluctuations cannot be predicted with any certainty. The pricing pressure in the semiconductor industry in past years has been due to a large number of factors, many of which were not easily foreseeable, such as industry-wide excess manufacturing capacity, weak economic growth, and at times, the slowdown in capital spending. Similar to past years, recent unfavorable economic conditions have resulted in a tightening of the credit markets. If signs of improvement in the global economy do not progress as expected and global economic conditions worsen, we may experience a decline in our average selling prices. In addition, our competitors have in the past, and may again in the future, lower prices in order to increase their market share. Despite the recent industry-wide price increases being implemented, prices may reduce in the future as the supply chain becomes more normalized again. In that event, downward price pressure in the industry may harm our competitive position and materially and adversely affect our financial condition, cash flows, and results of operations.

Global supply chain constraints have not had a material impact on our business. While we have experienced some volatilities with input material costs and supplier costs in accordance with domestic and global economic conditions, none of these have had a material impact to our business during our Fiscal Year 2025. We do not expect material increases in costs over the next twelve months. However, we expect to be subject to continued, broader-based inflationary, labor, and supplier cost increases in alignment with domestic and global economic conditions. We expect any increases in costs to be dilutive to our gross profit and we may be limited in our ability to offset any increased costs with price increases to customers. This may have a negative impact on our results from operations and cash flows.

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.

Both we and our customers are subject to laws, regulations, and similar requirements that affect our business, results of operations, and financial condition, including, but not limited to, the areas of commerce, import and export control, financial disclosures, intellectual property, income and other taxes, anti-trust, anti-corruption, labor, environmental, health, and safety. Our compliance in these areas may be costly, especially in areas where there are inconsistencies between the various jurisdictions in which we operate. While we have implemented policies and procedures to comply with laws and regulations, there can be no assurance that our employees, contractors, suppliers, or agents will not violate such laws and regulations or our policies. Any such violation or alleged violation could materially and adversely affect our business, financial condition, cash flows, and results of operations. Any changes or potential changes to laws, regulations, or similar requirements, or our ability to respond to these changes, may significantly increase our costs to maintain compliance or result in our decision to limit our business, products, or jurisdictions in which we operate, any of which could materially and adversely affect our results of operations and financial condition. Federal and state regulatory agencies, including the United States Federal Communications Commission and the various state public utility commissions and public service commissions, regulate most of our domestic telecommunications customers. Similar government oversight also exists in the international market. While we may not be directly affected by this legislation, such regulation of our customers may negatively impact our business. For instance, the sale of our products may be affected by the imposition upon certain of our customers of common carrier tariffs and the taxation of telecommunications services. These regulations are continuously reviewed and changed by the various governmental agencies. Changes in current or future laws or regulations, in the United States or elsewhere, could materially and adversely affect our results of operations and financial condition.

The Dodd-Frank Wall Street Reform and Consumer Protection Act includes provisions regarding certain minerals and metals, known as conflict minerals, mined from the Democratic Republic of Congo and adjoining countries. These provisions require companies to undertake due diligence procedures and report on the use of conflict minerals in their products, including products manufactured by third parties. Compliance with these provisions has caused and will continue to cause us to incur costs to determine whether our supply chain is conflict-free, and we may face difficulties if our suppliers are unwilling or unable to verify the source of their materials. Our ability to source these minerals and metals may also be adversely impacted. In addition, our customers may require that we provide them with a certification and our inability to do so may disqualify us as a supplier.

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.

The market for differentiated IP and semiconductor products is highly competitive and dynamic. To compete successfully, we must obtain access to advanced fabrication capacity and dedicate significant resources to specify, design, develop, manufacture, and sell new or enhanced solutions that provide increasingly higher levels of performance, low power consumption, new features meeting current and emerging industry standards, reliability, and/or cost savings to our customers. Our revenue is subject to fluctuation in a short period of time and our ability to grow our business depends on accelerating our design win activity. We often make significant investments in eFPGA IP development, software and silicon platform development, selling, and marketing, long before we generate revenue, if any, from our efforts. Some of the markets we are targeting typically have higher volumes and greater price pressure than our traditional business. In addition, we quote opportunities in anticipation of future cost reductions and may aggressively price products to gain market share. In order to react quickly to opportunities or to obtain favorable wafer prices, we make significant investments in and commitments to purchase inventories and capital equipment before we have firm commitments from customers.

We expect our business growth to be driven by new products, which currently include our eFPGA IP licenses and professional services, EOS™, ArcticLink® III, PolarPro®3, PolarPro II, PolarPro, and Eclipse II products. The new product revenues growth of our new products needs to be strong enough to achieve profitability. The gross margin associated with our eFPGA IP is generally higher than the gross margin of our devices. Within our device revenue, gross margins of mature products, as well as new products sold to Aerospace and Defense customers, are generally higher than when selling the same products to higher volume IoT and/or Consumer customers. While we expect revenue and gross profit growth from new products will offset the expected decline in revenue and gross profit from our mature products, there is no assurance whether or when this will occur. In order to increase our revenue from its current level, we depend upon increased revenue from our existing new products, especially solutions based on our eFPGA IP solution platforms, mature FPGAs, and the development of additional new products and solutions.

If (i) we are unable to design, produce, and sell new products and other products and solutions that meet design specifications, address customer requirements, and generate sufficient revenue and gross profit; (ii) market demand for our new products and other products fails to materialize; (iii) we are unable to obtain adequate fabrication capacity on a timely basis; (iv) we are unable to develop new silicon platforms or solutions in a timely manner; or (v) our customers do not successfully introduce products incorporating our hardware products, or choose a competing offering, our revenue and gross margin of the new products will be materially harmed, which could have an overall adverse and potentially disproportionate effect on our business, results of operations, and financial condition.

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.

We have history and experience in developing, selling, and supporting FPGA products and incorporating FPGA IP developed by us into our platform solutions. The eFPGA market is a developing market with unknown requirements and demand. Our current FPGA architectures and their performance may not be a good fit for the eFPGA market. eFPGA IP is designed for specific foundry/process node combinations, and the ones we have chosen to target may be different from what our customers require. The software developed by us for eFPGA may be delayed or may not meet the needs of the eFPGA market. The support required by a customer to incorporate the eFPGA may be much higher than expected, which may delay new engagements or lead to higher costs. The incorporated eFPGA IP may have an unexpected result in the customer’s chip leading to compensation demands. The expected NRE and royalty rates we expect to charge for the eFPGA may not be competitive, which may have a material adverse effect on our business, results of operations, and financial condition.

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.

Our customers often evaluate our products for six months or more before designing them into their systems, and they may not commence volume shipments for up to an additional six to twelve months, if at all. During this lengthy sales cycle, our potential customers may cancel or change their product plans. Customers may also discontinue products incorporating our hardware products at any time or they may choose to replace our products with lower-cost semiconductors. In addition, we are working with leading customers in our target markets to define our future products. If customers cancel, reduce, or delay product orders from us, or choose not to release products that incorporate our hardware products after we have spent substantial time and resources developing products or assisting customers with their product design, our revenue levels may be less than anticipated and our business, results of operations, and financial condition may be materially adversely affected.

If we fail to adequately forecast demand for our products, we may incur product shortages or excess product inventories.

Our agreements with certain suppliers require us to provide forecasts of our anticipated manufacturing orders and place binding manufacturing commitments in advance of receiving purchase orders from our customers. We are limited in our ability to increase or decrease our forecasts under such agreements. Other manufacturers supply us with products on a purchase order basis. The allocation of capacity is determined solely by our suppliers, over which we have no direct control. Additionally, we may place orders with our suppliers in advance of customer orders to allow us to quickly respond to changing customer demand or to obtain favorable product costs. Furthermore, we provide our suppliers with equipment that is used to program our products to customer specifications. The programming equipment is manufactured to our specifications and has significant order lead times. These factors may result in product shortages or excess product inventories. Obtaining additional supply in the face of product, programming equipment, or capacity shortages may be costly, or not possible, especially in the short-term since most of our products and programming equipment are supplied by a single supplier. If we fail to adequately forecast demand for our products, our business, the relationship with our customers, and our results of operations and financial condition could be materially adversely affected.

Our business could be adversely affected by undetected errors or defects in our products.

Difficulties encountered during the complex semiconductor manufacturing process can render a substantial percentage of semiconductor hardware products nonfunctional. New manufacturing techniques or fluctuations in the manufacturing process may change the performance, distribution, and yield of our products. We have, in the past, experienced manufacturing runs that have contained substantially reduced or no functioning hardware products, or that generated hardware products with below-normal performance characteristics. Our reliance on third-party suppliers may extend the period of time required to analyze and correct these problems. Once corrected, our customers may be required to redesign or re-qualify their products. As a result, we may incur substantially higher manufacturing costs, shortages of inventories, or reduced customer demand.

Yield fluctuations frequently occur in connection with the manufacture of newly introduced products, with changes in product architecture, and with manufacturing at new facilities, on new fabrication processes, or in conjunction with new back-end manufacturing processes. Newly introduced solutions and products are often more complex and more difficult to produce, increasing the risk of manufacturing-related defects. New manufacturing facilities or processes are often more complex and take a period of time to achieve the expected quality levels and manufacturing efficiencies. While we test our products, including our software development tools, they may still contain errors or defects that are found after we have commenced commercial production. Undetected errors or defects may also result from new manufacturing processes or when new intellectual property is incorporated into our products. If our products or software development tools contain undetected or unresolved defects, we may lose market share, experience delays in or loss of market acceptance, reserve or scrap inventories, or be required to issue a product recall. In addition, we would be at risk of product liability litigation if defects in our products were discovered. Although we attempt to limit our liability to end users through disclaimers of special, consequential, and indirect damages and similar provisions, we cannot provide assurance that such limitations of liability will be legally enforceable.

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.

We spend significant resources designing and developing silicon solution platforms, IP, and software and reference designs and adopting emerging technologies. We intend to develop additional products and solutions and to adopt new technologies in the future. If system manufacturers adopt alternative standards or technologies, if an industry standard or emerging technology that we have targeted fails to achieve broad market acceptance, if customers choose low-power offerings from our competitors, or if we are unable to bring the technologies or solutions to market in a timely and cost-effective manner, we may be unable to generate significant revenue from our research and development efforts. As a result, our business, results of operations, and financial condition could be materially adversely affected and we may be required to write off related inventories and long-lived assets.

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.

Changes in U.S. or foreign international tax, social, political, regulatory, and economic conditions or in laws and policies governing foreign trade, manufacturing, development, and investment in the territories or countries where we currently sell our products or conduct our business have in the past and could in the future adversely affect our business. The U.S. government has in the past, and may in the future, instituted or proposed changes in trade policies that included the negotiation or termination of trade agreements, the imposition of higher tariffs on imports into the U.S., economic sanctions on individuals, corporations or countries, and other government regulations affecting trade between the U.S. and other countries where we conduct our business. For example, in 2025 and 2026, the current presidential administration announced new tariffs on imports from many countries including Canada, China, and Mexico. These new tariffs have not had a significant impact on the Company, however, any new tariffs and other changes in U.S. trade policy could trigger retaliatory actions by affected countries, which may adversely impact our business.

On April 14, 2025, the BIS announced the initiation of investigations into the effects on U.S. national security of imports of semiconductors under Section 232 of the Trade Expansion Act of 1962. The scope of the investigation includes semiconductors, semiconductor manufacturing equipment, and their derivative products including semiconductor substrates and bare wafers, legacy chips, leading-edge chips, microelectronics, and other components. While the results of this investigation are currently unknown, the investigation may result in additional tariffs and trade restrictions, which may adversely impact our business.

In addition, the U.S. government has in the past, and may in the future, adopted policies that discourage corporations from outsourcing manufacturing and production activities to foreign jurisdictions, including through tariffs or penalties on goods manufactured outside the U.S., which may require us to change the way we conduct business. Political changes and trends such as populism, protectionism, economic nationalism and sentiment toward multinational companies, and resulting changes to trade, tax or other laws and policies may be disruptive to our businesses. These changes in U.S. and foreign laws and policies have the potential to adversely impact the U.S. economy or certain sectors thereof, our industry, and the global demand for our products, and as a result, could 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.

Our business is subject to stringent U.S. import and export control laws and regulations, as well as economic sanctions laws and regulations. We are required to import and export our products, software, technology, and services, as well as run our operations in the United States, in full compliance with such laws and regulations, which include the EAR, the ITAR, and economic sanctions administered by the Treasury Department’s OFAC. Similar laws that impact our business exist in other jurisdictions. These foreign trade controls prohibit, restrict, or regulate our ability to, directly or indirectly, export, deemed export, re-export, deemed re-export, or transfer certain hardware, technical data, technology, software, or services to certain countries and territories, entities, and individuals, and for end uses. If we are found to be in violation of these laws and regulations, it could result in civil and criminal, monetary and non-monetary penalties, the loss of export or import privileges, debarment, and reputational harm.

Changes in U.S. foreign trade control laws and regulations, or reclassifications of our products or technologies, may restrict our operations. The inability to secure and maintain necessary licenses and other authorizations could negatively impact our ability to compete successfully or to operate our business as planned. Any changes in the export control regulations or U.S. government licensing policy, such as those necessary to implement U.S. government commitments to multilateral control regimes, may restrict our operations. Given the great discretion the government has in issuing or denying such authorizations to advance U.S. national security and foreign policy interests, there can be no assurance we will be successful in our future efforts to secure and maintain necessary licenses, registrations, or other U.S. government regulatory approvals.

Rising concern of potential export restrictions could materially and adversely affect our business and results of operations.

If U.S. export controls expand to place new restrictions on the exportation of our products or a subset of our products, such controls could have a material adverse effect on our operating results. Moreover, concerns that U.S. companies may not be reliable suppliers may, in the future, cause some of our customers to replace our products in favor of products from other suppliers.

Further, changes in United States trade policy could trigger retaliatory actions by affected countries, which could impose restrictions on our ability to do business in or with affected countries or prohibit, reduce, or discourage purchases of our products by foreign customers, leading to increased costs of products that contain our components, increased costs of manufacturing our products, and higher prices of our products in foreign markets. Changes in, and responses to, United States trade policy could reduce the competitiveness of our products and cause our sales and revenues to drop, which could materially and adversely impact our business and results of operations.

Our business could suffer as a result of tariffs and trade sanctions or similar actions.

The imposition by the United States of tariffs, sanctions, or other restrictions on goods exported from the United States or imported into the United States or countermeasures imposed in response to such government actions could adversely affect our operations or our ability to sell our products globally, which could adversely affect our operating results and financial condition. Beginning in 2018, the U.S. government imposed significant additional tariffs on many items imported from China, which have since been raised to between 7.5% and 100% on certain products. China responded by imposing significant tariffs on many items imported from the United States. Recently, U.S. government leaders have increased their frequency of discussion of the imposition of stronger tariffs, sanctions, and other restrictions on goods exported from the United States or imported into the United States, and non-U.S. government leaders have increased their discussion of countermeasures. For example, in February 2025, the United States imposed an additional 10% tariff on imports of Chinese-origin goods and steel and aluminum imports. China announced plans to impose retaliatory tariffs on certain U.S.-origin goods and implemented new trade controls restricting the export of tungsten, tellurium, bismuth, molybdenum, and indium. As the February 2025, U.S. executive order contains provisions allowing for further increases in the scope and amount of tariffs in the event of retaliatory countermeasures, the future of existing tariffs, and the possibility for new tariffs, remains very uncertain. Such escalations in these trade measures may directly impair our business by increasing trade-related costs or disrupting established supply chains and may indirectly impair our business by causing a negative effect on global economic conditions and financial markets. The ultimate impact of these trade measures is uncertain and may be affected by various factors, including whether and when such trade measures are implemented, the timing when such measures may become effective, and the amount, scope, or nature of such trade measures.

Additional changes or threatened changes in U.S. trade measures have affected and may continue to affect trade involving additional countries as well, including Mexico, Canada, Colombia, Taiwan, the United Kingdom, and the member countries of the European Union. Each of these measures or threatened measures may instigate reciprocal countermeasures by affected countries, potentially accelerating further increases in trade measures. If the President were to impose significant new tariffs against the European Union, Taiwan, or any other country or countries, the macroeconomic effect of any such tariffs could be significant. The tariff threatened against Taiwan may specifically target imports of semiconductor products, which, if imposed, could seriously and negatively affect our business and the U.S. economy overall. The materials subject to these tariffs may impact the cost or availability of raw materials used by our suppliers or in our customers’ products. The imposition of further tariffs by the United States on a broader range of imports, or further retaliatory trade measures taken in response to additional tariffs, could increase costs in our supply chain or reduce demand of our customers’ products, either of which could adversely affect our results of operations. Any increase in trade-related costs associated with such measures may impair the profitability of such international production, may strain our suppliers’ ability to reliably provide inputs necessary to produce these items, and may otherwise affect our partners’ abilities to provide our products at previously contracted prices. Our business and financial results could be negatively affected as a result.

Exchange rate fluctuations could adversely affect our company’s results of operations and financial condition.

We denominate sales of our products to foreign countries exclusively in U.S. dollars. As a result, any increase in the value of the U.S. dollar relative to the local currency of a foreign country will increase the price of our products in that country so that our products become relatively more expensive to customers in their local currency, which may cause sales of our products in that foreign country to decline. If the local currency of a foreign country in which we conduct business strengthens against the U.S. dollar, our payroll and other local expenses will be higher, and since sales are transacted in U.S. dollars, would not be offset by any increase in revenue. To the extent any such risks materialize, our business, results of operations, and financial condition could be materially adversely affected.

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.

Our products, solutions, technology, and software are subject to import and export control laws and regulations which, in some instances, may impose restrictions on business activities, or otherwise require licenses or other authorizations from agencies such as the U.S. Department of State, U.S. Department of Commerce, and U.S. Department of the Treasury. These restrictions may impact deliveries to customers or limit development and manufacturing alternatives. We have import and export licensing and compliance procedures in place for purposes of conducting our business consistent with U.S. and applicable international laws and regulations, and we periodically review these procedures to maintain compliance with the requirements relating to import and export regulations. If we are not able to remain in compliance with import and export regulations, we might be subject to investigation, sanctions, or penalties by regulatory authorities. Such penalties can include civil, criminal, or administrative remedies such as loss of export privileges. We cannot be certain as to the outcome of an evaluation, investigation, inquiry, or other action or the impact of these items on our operations. Any such action could adversely affect our financial results and the market price of our common stock.

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.

A small number of end-customers represented a significant portion of our total revenue in our Fiscal Year ended December 28, 2025. During our Fiscal Year ended December 28, 2025, two customers accounted for 44% and 11%, respectively, of our total revenue from continuing operations. We expect this high level of customer concentration to decrease as we continue to market our solutions to additional Aerospace and Defense, Industrial, Computing, and Communications customers. As in the past, future demand from these customers may fluctuate significantly from quarter to quarter. Customers typically order products with short, requested delivery lead times, and do not provide a commitment to purchase products past the period covered by purchase orders, which may be rescheduled or canceled. In addition, our manufacturing lead times are longer than the delivery lead times requested by these customers, and we make significant purchases of inventory and capital expenditures in anticipation of future demand. If revenue from any significant customer were to decline substantially, we may be unable to offset this decline with increased revenue and gross margin from other customers and we may purchase excess inventories. These factors could have a material adverse impact on our business, results of operations, and financial condition.

We may make a significant investment in long-lived assets for the production of our products based upon historical and expected demand. If demand for our products or gross margin generated from our products does not meet our expectations or if we are unable to collect amounts due from significant customers, we may be required to write off inventories, provide for uncollectible accounts receivable, or incur charges against long-lived assets, which may have a material adverse effect on our business, results of operations, and financial condition.

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.

We perform work on a number of contracts with the U.S. Department of Defense and other agencies and departments of the U.S. Government, including subcontracts with government prime contractors. Sales under contracts with the U.S. Government, including sales under contracts with the U.S. Department of Defense, as prime contractor or subcontractor, represented 44% of our total net sales from continuing operations in 2025. Performance under government contracts has inherent risks that could have a material effect on our business, results of operations, and financial condition.

Government contracts are conditioned upon the continuing availability of Congressional appropriations, and the failure of Congress to appropriate funds for programs in which we participate could negatively affect our results of operations. U.S. Government operation under a continuing resolution could impact the business by preventing new programs from starting as planned and by limiting funding on existing programs. U.S. Government shutdowns have resulted in delays in anticipated contract awards and delayed payments of invoices and any new shutdown or increase in shutdowns could have similar or worse effects. Any renewed emphasis on Federal deficit and debt reduction could lead to a further decrease in overall defense spending. Budgetary concerns could result in future contracts being awarded more on price than on other competitive factors, and smaller defense budgets could result in government in-sourcing of programs and more intense competition on programs that are not in-sourced, which could result in lower revenues and profits.

The new Presidential administration has announced plans to significantly cut federal spending and the size of the federal government and has taken steps to reduce and reorganize the federal workforce at many agencies. It is unclear how such cuts, if implemented, could impact our current and future business with the U.S. government. If cuts to government personnel lead to staff shortages or disorganization at certain federal agencies, we may experience delays in obtaining contract awards or payments, the loss of current or future contracts, or delays in obtaining necessary permits, licenses, or registrations. 

Rising inflation and other factors also may result in a shift in U.S. defense spending between various programs based on priorities, which may result in a reduction or loss of expected revenues on programs in which we participate.

Changes in policy and budget priorities by the U.S. Presidential Administration could impact our business. It is also not uncommon for the U.S. Department of Defense to delay the timing of awards or change orders for major programs for six to twelve months. These delays by the U.S. Government could impact our revenues. Uncertainty over budgets or priorities with the U.S. Presidential Administration could result in further delays in funding and the timing of awards, and changes in funded programs that could have a material impact on our revenues.

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. 

As a government contractor, we must comply with laws, regulations, and contractual provisions relating to the formation, administration, and performance of government contracts and inclusion on government contract vehicles, which affect how we and our partners do business with government agencies. As a result of actual or perceived noncompliance with government contracting laws, regulations, or contractual provisions, we may be subject to audits and internal investigations which may prove costly to our business financially, divert management time, or limit our ability to continue selling our platforms and services to our government customers. These laws and regulations may impose other added costs on our business, and failure to comply with these or other applicable regulations and requirements, could lead to claims for damages from our channel partners, penalties, and termination of contracts and suspension or debarment from government contracting for a period of time with government agencies. Any such damages, penalties, disruption, or limitation in our ability to do business with a government could adversely impact, and could have a material adverse effect on, our business, results of operations, financial condition, public perception, and growth prospects.

We depend upon partnering with other companies to offer other solutions into our platform.

In addition to working directly with our customers, we partner with other companies that are experts in certain technologies to create more complete solutions. The depth of these relationships varies depending on the partner and the dynamics of the end market being targeted, but these relationships are typically a co-marketing relationship that includes joint account calls, promotional activities, and/or engineering collaboration and developments. The propriety code provided by these partners may be an integral part of the solutions that we offer our customers. If we are unable to obtain competitive pricing (NRE, royalty) and prompt quality support from our partner, our solution may not be competitive. In addition, if the quality of our partner’s solution does not meet our customer’s requirements, it may delay or prevent the incorporation of our product by the customer. There may also be delays and additional expenses to improve or update the partner’s solution to meet current market needs. If we are unable to maintain a close working relationship with our partners, it would hinder our ability to continue to develop and introduce leading solutions effectively in the future, which may have a material adverse effect on our business, results of operations, and financial condition.

We depend on our relationships with third parties to manufacture our new hardware products.

We depend upon GlobalFoundries, TSMC, SkyWater Technologies, Honeywell Aerospace, Amkor Technology, Inc., Integra Specialty Products, and Golden Altos Corp. to manufacture our new hardware products. The inability of any one of these companies to continue manufacture of our new hardware products for any reason would require us to identify and qualify a new foundry to manufacture our new hardware products. This would be time-consuming, difficult, and result in unforeseen operational problems. Alternate foundries might not be available to fabricate our new hardware products, or if available, might be unwilling or unable to offer services on acceptable terms and our ability to operate our business or deliver our products to our customers could be severely impaired.

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.

Our move to a variable cost or outsourced engineering development model allows us access to the best design resources for developing new silicon platforms. This includes access to leading edge silicon IP, as well as RTL design and physical design expertise. However, outsourcing the design of a complex silicon platform typically involves multiple companies in multiple locations, which may increase the risk of costly design errors. Any delays or errors in the design of our new silicon platforms could significantly increase the cost of development, as well as adversely affect our time to market, which may have a material adverse effect on our business, results of operations, and financial condition.

We depend upon partnering with other companies to develop IP, reference platforms, algorithms, and system software.

In addition to working directly with our customers, we partner with other companies that are experts in certain technologies to develop additional intellectual property, reference platforms, algorithms, and system software to provide application solutions. We also work with IoT processor manufacturers and companies that supply sensor, storage, networking, or graphics components for embedded systems. The depth of these relationships varies depending on the partner and the dynamics of the end market being targeted but is typically a co-marketing relationship that includes joint account calls, promotional activities, and/or engineering collaboration and developments, such as reference designs. If we are unable to license new technologies or maintain a close working relationship with our partners, fail to continue to develop and introduce leading technologies, or if these technologies fail to generate the revenue we expect, we may not be able to compete effectively in the future, which may have a material adverse effect on our business, results of operations, and financial condition.

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 contract with third parties to fabricate, assemble, test, and program our hardware products, and vendors for logistics. In general, each of our hardware products is fabricated, assembled, and programmed by a single supplier, and the loss of a supplier, transfer of manufacturing to a new location, expiration of a supply agreement, or the inability of our suppliers to manufacture our products to meet volume, performance, quality, and cost targets could have a material adverse effect on our business. Our relationship with our suppliers could change as a result of a merger or acquisition. If, for any reason, these suppliers or any other vendor becomes unable or unwilling to continue to provide services of acceptable quality, at acceptable costs, and in a timely manner, our ability to operate our business or deliver our products to our customers could be severely impaired. We would have to identify and qualify substitute suppliers, which could be time-consuming, difficult, and result in unforeseen operational problems, or we could announce an end-of-life program for these products. Alternate suppliers might not be available to fabricate, assemble, test, and program our hardware products or, if available, might be unwilling or unable to offer services on acceptable terms. In addition, if competition for wafer manufacturing capacity increases, if we need to migrate to more advanced wafer manufacturing technology, or if competition for assembly services increases, we may be required to pay or invest significant amounts to secure access to this capacity. The number of companies that provide these services is limited and some of them have limited operating histories and financial resources. In the event our current suppliers refuse or are unable to continue to provide these services to us, or if we are unable to secure sufficient capacity from our current suppliers on commercially reasonable terms, we may be unable to procure services from alternate suppliers in a timely manner, if at all. Moreover, our reliance on a limited number of suppliers subjects us to reduced control over delivery schedules, quality assurance, and costs. This lack of control may cause unforeseen product shortages or may increase our costs to manufacture and test our products.

We utilize third-party logistics services, including transportation, warehouse, and shipping services. These service providers are subject to interruptions that affect their ability to service us, including the availability of transportation services, disruptions related to work stoppages, volatility in fuel prices, and security incidents or natural events at manufacturing, shipping, or receiving points, or along transportation routes.

In the event any of our third-party suppliers or vendors were to experience financial, operational, production, or quality assurance difficulties resulting in a reduction or interruption in supply or providing services to us, our business, results of operations, and financial condition may be materially adversely affected.

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 approach to developing solutions for potential customers involves developing solutions for and aligning our roadmap with application processor, sensor, and flash memory vendors. We have entered into informal partnerships with other parties that involve the development of solutions that interface with their hardware products or standards. These informal partnerships also may involve joint marketing campaigns and sales calls. If the informal partnerships do not grow as expected or if they are significantly reduced or terminated by acquisition or other means, our business, results of operations, and financial condition could be materially adversely affected, and we may be required to write off related inventories and long-lived assets.

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 face competition from companies that offer FPGAs that can be adopted for hardware differentiation that is similar in functionality, physical size, power consumption, and price to what we offer with our programmable logic-based solutions. We also face competition from low-power MCU companies. While MCUs cannot be customized at the hardware level for product differentiation, they do have the ability to run custom software algorithms written in standard C code, which may yield similar functionality to what we can provide with our products. Companies that supply ASICs, which may be purchased for a lower price at higher volumes, may have greater logic capacity, additional features, and higher performance than our products. If we are unable to successfully compete with companies that supply ASSPs, FPGAs, MCUs, ASICs, or eFPGA IP in any of the following areas, our business, results of operations, and financial condition will be materially adversely affected: (i) the development of new products, solutions, and advanced manufacturing technologies; (ii) the quality, power characteristics, performance characteristics, price, and availability of hardware products, programming hardware, and software development tools; (iii) the ability to engage with companies that provide synergistic products and services, including algorithms that may be preloaded into our device at configuration; (iv) the incorporation of industry standards in our products and solutions; (v) the diversity of product offerings available to customers; and (vi) the quality and cost-effectiveness of design, development, manufacturing, and marketing efforts.

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 into and, in the future, intend to enter into agreements that involve numerous risks, including the use of significant amounts of our cash; royalty obligations or revenue sharing; diversion of resources from other development projects or market opportunities; our ability to collect amounts due under these contracts; and market acceptance of related products and solutions. If we fail to recover the cost of these or other assets from the cash flow generated by the related products, our assets will become impaired, and our results of operations and financial condition could be materially adversely affected.

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.

We have entered into strategic licensing and collaborative partnerships and relationships with third parties and will continue to enter into such partnerships and relationships with the goal of acquiring or gaining access to new and innovative semiconductor products and technologies, as well as other technologies which can be used to add to the differentiation of our emerging products, on a timely basis. Negotiating and performing under these arrangements involves significant time and expense, and we cannot provide assurance that the anticipated benefits of these arrangements will ever materialize or that the products or technologies involved will ever be commercialized or that, as a result, we will not have written down a portion or all of our investment. The arrangements with some third parties contain conditions and contingencies (such as a condition to raise a certain amount of capital), and we cannot provide assurance that we will meet all the conditions under these arrangements. We may end up owing various obligations and commitments to third parties related to these arrangements. Such arrangements can magnify several risks for us, including loss of control over the development and development timeline of products being developed with third parties. Accordingly, we face increased risk that development activities may result in products that are not commercially successful or that are not available in a timely fashion. In addition, any third party with whom we enter into a development, product collaboration, or technology licensing arrangement may fail to commit sufficient resources to the project, change its policies or priorities, and abandon or fail to perform its obligations related to the collaboration. The failure to timely develop commercially successful products through our development projects or strategic investment activities as a result of any of these and other challenges could have a material adverse effect on our business, results of operations, and financial condition. Other challenges and risks presented by use of strategic partnerships include the acquisition of a partner with which we have a strategic relationship by an unaffiliated third party that either delays or jeopardizes the original intent of the partnering relationship or investment.

ITEM 1B. UNRESOLVED STAFF COMMENTS

Not applicable.

ITEM 1C. CYBERSECURITY

ITEM 2. PROPERTIES

Our principal administrative, sales, marketing, research and development, and final testing facility is located in a building of approximately 24,164 square feet of premises located at 2220 Lundy Avenue, San Jose, California, which is under lease until June 14, 2027. We lease flexible workspace on a monthly basis for sales offices where we have direct employees, including London, England and Taipei, Taiwan. We believe that our existing facilities are adequate for our current needs.

ITEM 3. LEGAL PROCEEDINGS

From time to time, we are 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 third-party assertions will be resolved without costly litigation in a manner that is not adverse to our financial position, results of operations, or cash flows or without requiring royalty or other payments in the future, which may adversely impact gross profit. We are not currently a party to any material pending legal proceedings.

ITEM 4. MINE SAFETY DISCLOSURES

Not applicable.

PART II

ITEM 5. MARKET FOR THE REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES

Common Stock Information

Our common stock is currently traded on the Nasdaq Capital Market under the symbol QUIK.

The closing price of our common stock on the Nasdaq was $ 9.32 per share on March 20, 2026. As of March 20, 2026, there were 17,720,435 shares of common stock outstanding that were held of record by 72 stockholders. The actual number of stockholders is greater than this number of holders of record since this number does not include stockholders whose shares are held in trust by other entities.

Dividend Policy

We have never declared or paid any dividends on our capital stock. We currently expect to retain future earnings, if any, for use in the operation and expansion of our business and do not anticipate paying any cash dividends in the foreseeable future.

Equity Compensation Plan Information

The information required by this item regarding equity compensation plans is set forth under the caption "Equity Compensation Plan Summary" in our Proxy Statement which information is incorporated by reference herein.

Stock Performance Graph

The following graph compares the cumulative total return to stockholders of our common stock from January 3, 2021 to December 28, 2025 to the cumulative total return over such period of (i) the S&P 500 Index and (ii) the S&P Semiconductors Index. The graph assumes that $100 was invested on January 3, 2021 in QuickLogic’s common stock and in each of the other two indices and the reinvestment of all dividends, if any, through December 28, 2025.

The information contained in the Performance Graph shall not be deemed to be “soliciting material” or to be “filed” with the SEC, nor shall such information be incorporated by reference into any future filing under the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended, except to the extent that QuickLogic specifically incorporates it by reference into any such filing. The graph is presented in accordance with SEC requirements. Stockholders are cautioned against drawing any conclusions from the data contained therein, as past results are not necessarily indicative of future performance.

 

The stock price performance included in this graph is not necessarily indicative of future stock price performance.

ITEM 6. [RESERVED]

ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following discussion of our financial condition and results of operations should be read in conjunction with the financial statements and related notes included in this Annual Report on Form 10-K. This discussion may contain forward-looking statements based upon current expectations that involve risks and uncertainties including those discussed under Part I, Item 1A, “Risk Factors.” These risks and uncertainties may cause actual results to differ materially from those discussed in the forward-looking statements.

Overview

QuickLogic Corporation was founded in 1988 and completed its reincorporation in Delaware in 1999. We are a fabless semiconductor company specializing in programmable logic technologies, including embedded FPGA ("eFPGA") intellectual property ("IP") and programmable logic semiconductor devices. Our technologies enable semiconductor companies and system developers to incorporate configurable hardware functionality into custom semiconductor devices and electronic systems.

We generate revenue primarily through the sale of FPGA semiconductor devices and the licensing of eFPGA IP for integrating into application-specific integrated circuits ("ASICs") and system-on-chip ("SoC") devices. In connection with these engagements, we may also provide professional engineering services to support customer integration efforts and may receive royalties based on customer production volumes.

Our programmable logic technologies are used across a range of markets including aerospace and defense systems, industrial and infrastructure systems, computing platforms, and semiconductor devices developed by fabless semiconductor companies. These technologies enable system designers to implement adaptable hardware functionality, accelerate data processing workloads, and support evolving application requirements while maintaining low power consumption and design flexibility.

Our growth strategy focuses on expanding adoption of our eFPGA IP, continuing development of programmable logic semiconductor devices, and supporting customers integrating programmable logic technologies into custom semiconductor designs and mission-critical electronic systems.

New products revenue from continuing operations for the Fiscal Year ended December 28, 2025 was $10.5 million, a decrease of $5.2 million as compared to the Fiscal Year ended December 29, 2024. Of the $10.5 million in new products revenue from continuing operations, approximately $9.5 million was generated from eFPGA IP revenue, primarily eFPGA-related professional engineering services, as compared to approximately $13.1 million in the Fiscal Year ended December 29, 2024. Mature products revenue from continuing operations for the Fiscal Year ended December 28, 2025 was $3.3 million, a decrease of $0.7 million compared to the Fiscal Year ended December 29, 2024. We shipped new products into multiple end market segments including Aerospace and Defense, Industrial, IoT, and Consumer beginning in the Fiscal Year ended December 28, 2025.

We reported a net loss from continuing operations of $12.3 million for the Fiscal Year ended December 28, 2025, compared to a net loss from continuing operations of $2.9 million in the Fiscal Year ended December 29, 2024. 

We have experienced net losses in the past years and expect to experience losses in at least some of the fiscal quarters during 2026 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 $8.7 million and $6.8 million in net proceeds that we received from our 2025 and 2024 sales of our equity securities, respectively, and the revolving line of credit we may be able to draw down from Heritage Bank of Commerce, or any future similar banking partners, 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.

Impact of Supply Chain Disruptions on Business

We continue to experience increased product and logistics costs and impacts from the worldwide semiconductor supply shortage. The semiconductor supply shortage is due, in part, to increased demand across multiple industries, resulting in a slowdown in production schedules. The semiconductor supply shortage is also impacting our supply chain and our ability to meet demand for some of our customers.

Our Employees and Customers

Our employees are critical to our ability to develop and support our programmable logic technologies and serve our customers. We seek to maintain a collaborative work environment that supports innovation, operational execution, and technical expertise across our engineering, product development, sales, and administrative teams.

We offer competitive compensation and benefits programs designed to attract, retain, and motivate qualified employees. Our workforce includes personnel located in the United States and internationally, and many of our employees operate in hybrid or remote work environments depending on their role and responsibilities.

We emphasize collaboration among our employees and with our customers in order to support the development and deployment of programmable logic technologies and solutions. Our teams work closely with customers to support design, integration, and deployment of our programmable logic devices and IP technologies in a range of semiconductor and system-level applications.

Critical Accounting Policies and Estimates

The methods, estimates, and judgments we use in applying our most critical accounting policies have a significant impact on the results we report in our consolidated financial statements. The SEC has defined critical accounting policies as those that are most important to the portrayal of our financial condition and results of operations and require us to make our most difficult and subjective judgments, often as a result of the need to make estimates of matters that are inherently uncertain.

Although these estimates are based on our knowledge of current events and actions we may undertake in the future, actual results may ultimately materially differ from these estimates and assumptions. Areas where we use 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. We believe that we apply judgments and estimates in a consistent manner and that such consistent application results in consolidated financial statements and accompanying notes that fairly represent all periods presented. However, any factual errors or errors in these judgments and estimates may have a material impact on our consolidated financial statements.

Revenue Recognition

We recognize revenue in accordance with Accounting Standards Codification ("ASC") Topic 606 and related Accounting Standards Updates ("ASUs").

We earn 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, we apply a five-step model for recognizing revenue:

When entering into a new contract, we evaluate certain factors including the customer’s ability to pay, or credit risk.

The following is a description of our revenue recognition policy by principal activity:

Hardware Product Revenue

We generate 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 us, 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. Our promise to transfer hardware products is identified as a distinct performance obligation. We recognize revenue on hardware products when we transfer control of the promised products to the customer. Transfer of control of hardware products occurs when our performance obligation is satisfied, which typically occurs upon shipment from our manufacturing site or headquarters. We recognize revenue in an amount that reflects the consideration we expect to receive in exchange for those products, which also represents the standalone selling price ("SSP") of our performance obligation. Hardware product prices are fixed. We elected a practical expedient in which we do not assess whether a contract has a significant financing component since our standard payment terms are less than one year. We allocate 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, we do record an allowance for hardware product sales returns, which requires some judgment by management.

We recognized hardware product revenue of approximately $4.2 million, or 31% of total revenue from continuing operations and $6.1 million, or 31% of total revenue from continuing operations in the Fiscal Years ended December 28, 2025 and December 29, 2024, respectively.

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, 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 $2 thousand and $1 thousand for the Fiscal Years ended December 28, 2025 and December 29, 2024, 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.

eFPGA IP Revenue

eFPGA IP revenue is comprised of eFPGA intellectual property revenue, eFPGA-related professional services revenue, and eFPGA-related support and maintenance revenue. We recognize eFPGA intellectual property revenue from licensing our eFPGA intellectual property to customers and recognize eFPGA-related professional services revenue from the fees associated with the custom development and integration of our technology solutions into hardware products. We recognize 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 we recognize as revenue ratably over the service term. The majority of our 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. We 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, we 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. We also must evaluate when control of the performance obligation is transferred to and accepted by the customer. We note 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, we consider 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. 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.

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.

In other instances, we 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, we may use information such as our 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. We also provide eFPGA-related professional services on a time-and-material basis.

Generally, we satisfy eFPGA-related contractual performance obligations over time as the customer simultaneously receives and consumes the benefits provided by our performance as we perform, our performance creates or enhances an asset that the customer controls as it is created or enhanced, or our performance does not create an asset with an alternative use to the company and we have an enforceable right to payment for performance completed to date. When we satisfy performance obligations over time, we recognize revenue by applying an over-time methodology that faithfully depicts our performance toward satisfaction of the performance obligation.

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. We have 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. We consider 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, we are required to first impair any capitalized costs associated with the contract. We are also required to recognize a provision for contract losses as a liability on our balance sheet. This would result in an unfavorable impact to income from operations.

We recognized eFPGA IP revenue of approximately $9.5 million, or 69% of total revenue from continuing operations and $13.1 million, or 67% of total revenue from continuing operations in the Fiscal Years ended December 28, 2025 and December 29, 2024, respectively.

Other Miscellaneous Revenue

Other miscellaneous revenue is comprised primarily of royalties from licensing our technology. We recognize 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.

We recognized Other Miscellaneous Revenue of approximately $0.1 million, or 0.5% of total revenue from continuing operations and $0.4 million, or 2.2% of total revenue from continuing operations in the Fiscal Years ended December 28, 2025 and December 29, 2024, respectively.

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. We routinely evaluate quantities and values of our inventories in light of current market conditions and trends and record 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 our 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 our gross margin and inventory balances based on additional provisions for excess or obsolete inventories or a benefit from inventories previously written down. We also regularly review the cost of inventories against estimated market value and record 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 our 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 our 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.

Our 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 we continue to develop new products, we believe our 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 we make every effort to ensure the accuracy of our 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 our inventory and our 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 our 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. Our annual goodwill impairment test performed in the fourth quarter of Fiscal Year 2024 indicated that no impairment was identified. As of December 28, 2025, we 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, we 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, we 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 our evaluation, we 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

Continuing Operations

Results of Operations

The following table sets forth the percentage of revenue for certain items in our statements of operations for the periods indicated:

Comparison of Fiscal Years 2025 and 2024

Revenue. The table below sets forth the changes in revenue for Fiscal Year ended December 28, 2025, compared to Fiscal Year ended December 29, 2024 (in thousands, except percentage data):

New products revenue consists of revenues from the sale of hardware products manufactured on 180 nanometer or smaller semiconductor processes and 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

Total revenue decreased approximately $5.9 million, or (30)% in Fiscal Year ended December 28, 2025 as compared to the Fiscal Year ended December 29, 2024. The decrease in total revenue was comprised of a decrease of $5.2 million in new product revenue and a decrease of $0.7 million in mature product revenue.

New Products Revenue. The table below sets forth the changes in new products revenue for Fiscal Year ended December 28, 2025, compared to Fiscal Year ended December 29, 2024 (in thousands, except percentage data):

The decrease in new product revenue was primarily driven by a decrease in eFPGA IP 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 $3.6 million, or (28)%, as compared to the Fiscal Year ended December 29, 2024. The decrease in eFPGA IP revenue was primarily comprised of a $3.7 million decrease in eFPGA-related professional services revenue. New hardware revenue decreased by approximately $1.6 million, or (61)%, in the Fiscal Year ended December 28, 2025 compared to the Fiscal Year ended December 29, 2024. The decrease in new hardware product revenue was primarily comprised of a decrease of $1.6 million in connectivity product revenue.

Contract liabilities (deferred revenue) associated with eFPGA IP revenues were $0.1 million and $0.4 million and were included in deferred revenue on the consolidated balance sheets as of December 28, 2025 and December 29, 2024, respectively. Contract assets associated with eFPGA IP revenues were $0.2 million and $2.7 million on the consolidated balance sheets as of December 28, 2025 and December 29, 2024, respectively.

Gross Profit. The table below sets forth the changes in gross profit for Fiscal Year ended December 28, 2025, compared to Fiscal Year ended December 29, 2024 (in thousands, except percentage data):

Gross profit in Fiscal Year 2025 compared to Fiscal Year 2024 decreased approximately $9.1 million, or (75)%. The change in gross profit reflects a decrease in revenue of $5.9 million, or (30)%, accompanied by an increase in cost of revenue of $3.2 million, or 42%. The decrease in revenue was driven by a $5.2 million decrease in new product revenue, primarily due to reductions in eFPGA IP professional services revenue, accompanied by a $0.7 million decrease in mature product revenue. The $3.2 million increase in cost of revenue was primarily comprised of increases in compensation expense, tooling, and tooling-related depreciation expense, all collectively associated with performing for revenue contracts, in addition to an increase in reserves related to certain wafer product inventory. 

In Fiscal Years 2025 and 2024, we capitalized costs associated with internal-use software of approximately $0.6 million and $0.4 million, respectively. For Fiscal Years 2025 and 2024, we recognized $0.2 million and $0.1 million, respectively in amortization expense of internal-use software in cost of revenues on our consolidated statements of operations.

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 2025 and 2024, respectively. We wrote down approximately $0.6 million and $0.1 million to inventory reserves in Fiscal Years 2025 and 2024, respectively.

Operating Expenses. The table below sets forth the changes in operating expenses for Fiscal Year ended December 28, 2025 compared to Fiscal Year ended December 29, 2024 (in thousands, except percentage data):

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 $5.3 million and $5.8 million in Fiscal Years 2025 and 2024, respectively, which represented 39% and 30%, respectively, of revenue for those periods. The $0.6 million decrease in R&D expenses in Fiscal Year 2025 as compared to Fiscal Year 2024 was primarily attributable to an increase of R&D labor allocations to Cost of Revenues and decreases in salaries and compensation, partially offset by an increase in general allocations and software tool amortization.

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 $9.3 million and $8.8 million in Fiscal Years 2025 and 2024, respectively, which represented 67% and 45%, respectively, of revenue for those periods. The $0.5 million increase in SG&A expenses in Fiscal Year 2025 as compared to Fiscal Year 2024 was primarily attributable to an increase in bonus incentive compensation, partially offset by decreases in stock-based compensation costs.

Impairment Charges. The $0.3 million in impairment charges in Fiscal Year 2025 were attributable to the full impairment of the Company's non-marketable equity investment.

Restructuring Costs: The $75 thousand in restructuring costs in Fiscal Year 2025 were primarily attributable to severance payments for employees within QuickLogic related to SensiML discontinued operations.

Interest Expense and Interest Income and Other (Expense) Income, net. The table below sets forth the changes in interest expense and interest income and other (expense) income, net, for the Fiscal Year ended December 28, 2025, as compared to Fiscal Year ended December 29, 2024 (in thousands, except percentage data):

Interest expense relates primarily to our line of credit facility. Interest income and other (expenses) income, net, relates to the interest earned on our money market accounts and foreign exchange gain or losses recorded.

Provision for Income Taxes. The table below sets forth the changes in provision for income taxes in the Fiscal Year ended December 28, 2025 compared to the Fiscal Year ended December 29, 2024 (in thousands, except percentage data):

Income tax expense for the Fiscal Year 2025 and 2024 relates primarily to US state and foreign income tax provisions.

As of the end of Fiscal Year 2025, our ability to utilize our U.S. deferred tax assets in future periods is uncertain and, accordingly, we have recorded a full valuation allowance against the related U.S. deferred tax assets. We will continue to assess the realizability of deferred tax assets in future periods.

Discontinued Operations

In the first quarter of 2025, we announced our Board of Directors was actively exploring options for our wholly owned subsidiary, SensiML. This decision by the Company and our 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 our eFPGA IP and ruggedized FPGA business, we plan to focus all of our resources on leveraging and growing the cornerstones of our 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 cutting-edge 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. As of January 7, 2025, the Company began accounting for the SensiML subsidiary in accordance with ASC 205-20, Discontinued Operations.

As of December 28, 2025, we 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, we 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, we evaluated the recoverability, or undiscounted cash flows expected to result from the disposition of the SensiML subsidiary. Based on our evaluation, we decided to fully impair the asset group of the SensiML subsidiary in the amount of $2.4 million, constituting a significant portion of the SensiML subsidiary's net loss from discontinued operations of $2.5 million for the Fiscal Year ended December 28, 2025. This is compared to a net loss from discontinued operations of $0.9 million in the Fiscal Year ended December 29, 2024. 

Additionally, we forgave approximately $7.9 million of intercompany payables owed by SensiML to the parent company. 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. Refer to Note 3 for additional information related to the related party transaction.

We marketed our SensiML solutions to OEMs and ODMs offering differentiated Consumer/IoT products, to processor vendors wishing to expand their served available market, and to sensor manufacturers and sensor processing software companies wishing to expand their ecosystems. Our target markets for our SensiML products included Consumer/Industrial IoT and Consumer Electronics. SensiML SaaS subscribers typically entered into licensing agreements directly with SensiML.

Contract liabilities (deferred revenue) associated with SensiML were $0 and $10 thousand and were included in deferred revenue on the consolidated balance sheets as of December 28, 2025 and December 29, 2024, respectively. 

Revenue Recognition

The following is a description of our revenue recognition policy by principal activity for discontinued operations:

SensiML revenues were comprised primarily of software as a service ("SaaS") revenue and software-related professional services revenue. SaaS revenue was generated when we licensed our software to customers and allowed customers to access the software over a short-term subscription basis. We granted the customer the right to access and use software at the outset of the arrangement and throughout the entire term of the arrangement. We recognized SaaS revenue ratably over the license term. We recognized revenue from software-related professional services as services are provided to the customer.

In Fiscal Years 2025 and 2024, we capitalized costs associated with SensiML internal-use software of approximately $0 and $0.7 million, respectively. For Fiscal Years 2025 and 2024, we recognized $0 and $0.7 million, respectively, in amortization expense of SensiML internal-use software in cost of revenues on our consolidated statements of operations.

Key Performance Indicators

Sales, operating income, and net income are some of the key performance indicators that management uses to manage the business. Management uses sales, operating income (loss), and net income (loss) to evaluate the Company's financial condition and operating performance, as well as evaluate income generated in deciding whether to reinvest profits into the Company or to use such profits for other purposes, such as for acquisitions or share repurchases. These key performance indicators are also used to monitor budget versus actual results, as well as in competitive analyses by benchmarking to our competitors.

Liquidity and Capital Resources

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 a revolving facility with Heritage Bank of Commerce ("Heritage Bank"). As of December 28, 2025, our principal sources of liquidity consisted of cash, cash equivalents, and restricted cash of $18.8 million, inclusive of $15.0 million in advances from our $20 million revolving facility. The revolving credit facility with Heritage Bank expires on December 31, 2026.

Our principal contractual commitments include purchase obligations, re-payments of advances from our revolving facility, and payments under financing arrangements and operating leases. Purchase obligations include amounts that are recorded on our consolidated balance sheets, as well as amounts that are not recorded on our consolidated balance sheets. Purchase obligations that are recorded on our consolidated balance sheets are largely comprised of open purchase order commitments to suppliers and to subcontractors. Our risk associated with these purchase obligations is limited to the termination liability provisions within those contracts and as such, we do not believe they represent a material liquidity risk to us. Purchase obligations not recorded on our consolidated balance sheets represent significant future obligations associated with ongoing eFPGA IP revenue contracts. These obligations are dependent on numerous variables and therefore, it is difficult to predict the amount and timing of payments which could differ materially from our estimates.

Credit Agreement

On December 21, 2018, we entered into an Amended and Restated Loan and Security Agreement with Heritage Bank of Commerce (as amended, the "Loan Agreement") which among other things, provided a revolving line of credit facility (as amended, the "Revolving Facility") allowing the us to draw advances up to $15 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 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, we 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, we had a $15.0 million outstanding balance on the Revolving Facility with an interest rate of 7.25%. On December 29, 2024, we had an $18.0 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.

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. See Note 8 to the consolidated financial statements for additional information regarding our Loan Agreement and other debt obligations.

In accordance with ASC 205-40, Presentation of Financial Statements - Going Concern, we evaluated whether conditions or events, considered in the aggregate, raise concerns about our ability to meet our obligations as they become due within one year after the date that the consolidated financial statements are issued. As part of this evaluation, we identified conditions and events related primarily to the maturity of our current revolving credit facility on December 31, 2026. We have concluded that we will have sufficient liquidity to meet our 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, we 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. We expect to execute definitive agreements with Sunflower Bank, N.A. during the second quarter.

Common Stock Offerings

See Note 12 to the consolidated financial statements for additional information regarding our common stock offerings, such as purchase price of shares sold.

Cash Flows

As of December 28, 2025, most of our cash and cash equivalents were invested in a Heritage Bank money market account. As of December 28, 2025, our interest-bearing debt consisted of $2.8 million outstanding under finance arrangements and $15 million outstanding under our Revolving Facility. See Note 8 to the consolidated financial statements for additional information.

Cash balances held at our foreign subsidiaries were approximately $0.1 million and $0.1 million as of December 28, 2025 and December 29, 2024, 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 a part 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.

Our cash flows were as follows (in thousands):

Net Cash provided by (used in) Operating Activities

In Fiscal Year 2025, net cash used in operating activities was $3.3 million, which was primarily due to the Company's net loss of $14.8 million and changes in working capital of $0.7 million, which consisted of a decrease in accounts payable of $1.8 million, a decrease in deferred revenue of $0.4 million, an increase in accounts receivable of $0.4 million, and a decrease in lease liabilities of $0.3 million, partially offset by a decrease in contract assets of $2.5 million and an increase in accrued liabilities of $0.2 million. The Company's net loss and changes in working capital were partially offset by non-cash charges of $12.3 million. Non-cash charges primarily consisted of depreciation and amortization of long-lived assets and certain definite-lived intangible assets of $5.7 million, stock-based compensation expense of $3.3 million, impairment of assets held by SensiML disposal group of $2.4 million, impairment of investments in non-affiliates of $0.3 million, and write-down of inventories of $0.6 million

In Fiscal Year 2024, net cash provided by operating activities was $27 thousand, which was primarily due to non-cash charges of $8.9 million. Non-cash charges consisted of stock-based compensation expense of $4.6 million, depreciation and amortization of long-lived assets and certain definite-lived intangible assets of $4.2 million, and write-downs 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 $5.1 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 inventories of $0.3 million, and a decrease in other assets of $0.2 million.

Net Cash provided by (used in) Investing Activities

Net cash used in investing activities in Fiscal Year 2025 was approximately $3.7 million, which was primarily attributable to capital expenditures related to property and equipment of $3.2 million and the capitalization of internal-use software in the amount of $0.5 million.

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.

Net Cash provided by (used in) Financing Activities

In Fiscal Year 2025, net cash provided by financing activities was $3.9 million, primarily attributable to net proceeds from the issuance of common stock in the amount of $9.1 million, partially offset by $2.2 million in payments related to financing arrangements primarily for tooling related to revenue contracts with customers and $3.0 million in greater payments than borrowings on the Company's revolving line of credit.

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.

We require substantial cash to fund our business. However, we believe that our existing cash and cash equivalents, together with available financial resources from the Revolving Facility and our Amended ATM Offering, will be sufficient to satisfy our operations and capital expenditures over the next twelve months. Our revolving facility will expire on December 31, 2026. Further, any violations of debt covenants may restrict our access to any additional cash draws from the revolving line of credit and may require our immediate repayment of the outstanding debt amounts. After the next twelve months, our cash requirements will depend on many factors, including our level of revenue and gross profit, the market acceptance of our existing and new products, the levels at which we maintain inventories and accounts receivable, costs of securing access to adequate manufacturing capacity, new product development efforts, capital expenditures, and the level of our operating expenses. In order to satisfy our longer-term liquidity requirements, we may be required to raise additional equity or debt financing. There can be no assurance that financing will be available at commercially acceptable terms or at all.

Material Cash Requirements

The following discussion describes the material cash requirements from known contractual obligations and other obligations, and the effect such obligations are expected to have on our liquidity and cash flows in future fiscal periods. The following summarizes our material cash requirements as of December 28, 2025:

Concentration of Suppliers

We depend on a limited number of contract manufacturers, subcontractors, and suppliers for wafer fabrication, assembly, programming, and testing of our hardware products and for the supply of programming equipment. These services are typically provided by one supplier for each of our hardware products. We generally purchase these single or limited source services through standard purchase orders. Since we rely on independent subcontractors to perform these services, we cannot directly control product delivery schedules, costs, or quality levels. Our future success also depends on the financial viability of our independent subcontractors. These subcontract manufacturers produce products for other companies and we must place orders in advance of expected delivery. As a result, we have only a limited ability to react to fluctuations in demand for our products, which could cause us to have an excess or a shortage of inventories of a particular product, and our ability to respond to changes in demand is limited by these suppliers’ ability to provide products with the quantity, quality, cost, and timeliness that we require. The decision not to provide these services to us or the inability to supply these services to us, such as in the case of a natural or financial disaster, would have a significant impact on our business. Increased demand from other companies could result in these subcontract manufacturers allocating available capacity to customers that are larger or have long-term supply contracts in place and we may be unable to obtain adequate foundry and other capacity at acceptable prices, or we may experience delays or interruption in supply. Additionally, volatility of economic, market, social, and political conditions in countries where these suppliers operate may be unpredictable and could result in a reduction in product revenue or increase our cost of revenue and could adversely affect our business, financial condition, and results of operations.

Off-Balance Sheet Arrangements

We do not maintain any off-balance arrangements within the meaning of Item 303(b) of Regulation S-K.

Recently Issued Accounting Pronouncements

See Note 2 to the consolidated financial statements for a full description of recent accounting pronouncements, including the expected dates of adoption and estimated effects on financial condition and results of operations, which is incorporated by reference herein.

ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Not applicable.

QUICKLOGIC CORPORATION

CONSOLIDATED BALANCE SHEETS

(in thousands, except par value amount)

The accompanying notes form an integral part of these Consolidated Financial Statements.

QUICKLOGIC CORPORATION

CONSOLIDATED STATEMENTS OF OPERATIONS

(in thousands, except per share amounts)