QuickLogic(QUIK) - 2024 Q2 - Quarterly Report

Part I - Financial Information Item 1. Unaudited Condensed Consolidated Financial Statements Q2 2023 unaudited financials reflect decreased revenue, increased net loss, and improved operating cash flow Consolidated Balance Sheets Total assets increased to $34.4M, liabilities to $22.2M, and equity to $12.2M as of July 2, 2023 Balance Sheet Items (in thousands) | Balance Sheet Items (in thousands) | July 2, 2023 | January 1, 2023 | | :--- | :--- | :--- | | Assets | | | | Cash, cash equivalents and restricted cash | $20,565 | $19,201 | | Accounts receivable, net | $937 | $2,689 | | Total current assets | $28,015 | $27,940 | | Total Assets | $34,376 | $32,586 | | Liabilities & Equity | | | | Revolving line of credit | $15,000 | $15,000 | | Total current liabilities | $21,579 | $20,022 | | Total Liabilities | $22,201 | $20,691 | | Total stockholders' equity | $12,175 | $11,895 | Consolidated Statements of Operations Q2 2023 revenue decreased 35.7% to $2.9M, with net loss widening to $2.3M Statement of Operations (in thousands, except per share) | Statement of Operations (in thousands, except per share) | Q2 2023 | Q2 2022 | Six Months 2023 | Six Months 2022 | | :--- | :--- | :--- | :--- | :--- | | Revenue | $2,921 | $4,541 | $7,054 | $8,637 | | Gross Profit | $1,203 | $2,544 | $3,593 | $5,005 | | Loss from operations | $(2,226) | $(627) | $(3,326) | $(1,636) | | Net loss | $(2,269) | $(524) | $(3,497) | $(1,688) | | Net loss per share (Basic and diluted) | $(0.17) | $(0.04) | $(0.26) | $(0.14) | Consolidated Statements of Cash Flows Net cash used in operations improved to $0.2M, with financing providing $2.1M from stock issuance Cash Flows (in thousands) | Cash Flows (in thousands) | Six Months Ended July 2, 2023 | Six Months Ended July 3, 2022 | | :--- | :--- | :--- | | Net cash used in operating activities | $(232) | $(2,063) | | Net cash used in investing activities | $(530) | $(402) | | Net cash provided by financing activities | $2,126 | $1,406 | | Net increase (decrease) in cash | $1,364 | $(1,059) | Notes to Unaudited Condensed Consolidated Financial Statements Notes cover semiconductor/eFPGA IP, a non-material cyber incident, $2.3M stock offering, and a $15M contract extension - The company's business focuses on ultra-low power customer programmable System on Chip (SoC) semiconductor solutions, embedded software, and eFPGA intellectual property (IP) for markets including IoT, Military, Aerospace, and Defense[19] - A ransomware infection was detected on January 20, 2023, but the company believes it has not had and will not have a material impact on business operations or financial results[22][23] - On March 21, 2023, the company raised approximately $2.3 million in net cash proceeds from a registered direct offering of 450,000 shares of common stock[27][56] - For the three months ended July 2, 2023, revenue was highly concentrated, with Customer 'A' accounting for 47%, Customer 'B' for 12%, and Customer 'C' for 11% of total revenue[74] - Subsequent to the quarter end, on August 11, 2023, the company signed an extension to an existing eFPGA IP and Design Services contract for approximately $15 million, with work extending into 2024[82] Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations Management discusses Q2 2023 revenue decrease of 36% to $2.9M and a $2.3M net loss, with sufficient liquidity Results of Operations Q2 2023 revenue decreased 36% to $2.9M, gross margin contracted to 41%, and operating expenses increased 8% Revenue Breakdown (in thousands) | Revenue Breakdown (in thousands) | Q2 2023 | Q2 2022 | % Change | | :--- | :--- | :--- | :--- | | New products | $2,233 | $3,131 | (29)% | | Mature products | $688 | $1,410 | (51)% | | Total revenue | $2,921 | $4,541 | (36)% | New Product Revenue Detail (in thousands) | New Product Revenue Detail (in thousands) | Q2 2023 | Q2 2022 | % Change | | :--- | :--- | :--- | :--- | | Hardware products | $366 | $1,464 | (75)% | | eFPGA IP and professional services | $1,857 | $1,617 | 15% | | SaaS & Other | $10 | $50 | (80)% | - Gross profit in Q2 2023 decreased 53% to $1.2 million (41% margin) from $2.5 million (56% margin) in Q2 2022, reflecting lower revenues and higher tooling/software costs on eFPGA projects[109] - R&D expenses increased by 26% year-over-year to $1.5 million in Q2 2023, while SG&A expenses decreased by 3% to $1.9 million[111] Liquidity and Capital Resources Liquidity includes $20.6M cash and $2.3M from stock sale, deemed sufficient for the next twelve months - The company's primary liquidity sources as of July 2, 2023, included $20.6 million in cash, cash equivalents, and restricted cash, which incorporates a $15.0 million advance from its Revolving Facility[131] - The company was in compliance with all loan covenants for its Revolving Facility, which had $15.0 million outstanding at an interest rate of 8.75% as of July 2, 2023[134] - Management believes that existing cash, revenues from operations, and the Revolving Facility will be sufficient to fund operations and capital expenditures for the next twelve months[135] Item 3. Quantitative and Qualitative Disclosures About Market Risk This section is not applicable for the current reporting period - Not Applicable[151] Item 4. Controls and Procedures Disclosure controls were effective as of July 2, 2023, with no material changes in internal control - Management, including the CEO and CFO, concluded that disclosure controls and procedures were effective at a reasonable assurance level as of July 2, 2023[152] - No changes in internal control over financial reporting occurred during the quarter that have materially affected, or are reasonably likely to materially affect, the company's internal controls[154] Part II - Other Information Item 1. Legal Proceedings The company reported no legal proceedings during the period - None[157] Item 1A. Risk Factors No material changes to risk factors previously disclosed in the 2022 Annual Report on Form 10-K - There have been no material changes to the risk factors set forth in the 2022 Annual Report on Form 10-K[158] Item 3. Defaults Upon Senior Securities The company reported no defaults upon senior securities - None[159] Item 6. Exhibits This section lists exhibits filed, including CEO and CFO certifications per Sarbanes-Oxley Act - The report includes certifications from the Chief Executive Officer and Chief Financial Officer pursuant to Sections 302 and 906 of the Sarbanes-Oxley Act of 2002[160]