Note 3 — Discontinued Operations

In the first quarter of 2025, the Company announced its Board of Directors was actively exploring options for its wholly owned subsidiary, SensiML. This decision by the Company and its 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 QuickLogic's eFPGA IP and ruggedized FPGA business, the Company will focus all of its resources on leveraging and growing the cornerstones of its 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 include Software as a Service (SaaS) subscriptions for development, per unit license fees when deployed in production, and proof-of-concept services. Preliminary discussions have commenced with potential strategic partners regarding the possible sale of SensiML of its assets. As of January 7, 2025, the Company began accounting for the SensiML subsidiary in accordance with ASC 205-20, Discontinued Operations.

As of June 29, 2025, there have not been any new material developments regarding the disposal of SensiML. The Company expects to complete the disposal of SensiML within 12 months from the announcement date.

The following table provides details relating to major classes of assets and liabilities for discontinued operations classified as held for sale as of June 29, 2025, and December 29, 2024 (in thousands):

The following table provides details related to internal-use software held by SensiML, the business held for sale as of June 29, 2025, and December 29, 2024 (in thousands):

The following table provides details related to intangible assets held by SensiML, the business held for sale as of June 29, 2025, and December 29, 2024 (in thousands):

The Company recorded depreciation and amortization expense for discontinued operations of $0 for the three and six months ended June 29, 2025 and $0.2 million and $0.4 million for the three and six months ended June 30, 2024, respectively. No interest was capitalized for any period presented. Additionally, as of January 7, 2025, depreciation and amortization of assets held by SensiML has been discontinued.

Depreciation and amortization expense for the three and six months ended June 30, 2024 included approximately $168 thousand and $327 thousand, respectively, of amortization expense related to capitalized internal-use software.

For its trades receivable, the Company provides an allowance for credit losses based on historical experience and a specific identification basis. As of June 29, 2025 and December 29, 2024, the allowance for credit losses from discontinued operations was $30 thousand. The Company did not record any credit loss expense in discontinued operations for the six months ended June 29, 2025 and June 30, 2024.

The following table provides details relating to major line items constituting income (loss) for discontinued operations classified as held for sale for the three and six months ended June 29, 2025 and June 30, 2024 (in thousands):

For the three and six months ended June 29, 2025, the Company has incurred $21 thousand and $162 thousand, respectively, in costs in connection with the disposal of SensiML. These costs are primarily comprised of one-time termination benefits and are included within the 'Restructuring Costs' line item in the Company's unaudited condensed consolidated statement of operations, as well as in the table above. The Company does not expect total costs incurred in connection with the disposal of SensiML to differ materially from the expenses already recognized in the six months ended June 29, 2025.

The following is a breakdown of revenue from discontinued operations by product family (in thousands):

The following distributors and customers accounted for 10% or more of the Company's revenue from discontinued operations for the periods presented:

The following distributors and customers accounted for 10% or more of the Company's accounts receivable from discontinued operations as of the dates presented:

The following table provides the expenses from discontinued operations related to operating leases for the three and six months ended June 29, 2025 and June 30, 2024 (in thousands):

Stock-based compensation expense from discontinued operations for the three and six months ended June 29, 2025 and June 30, 2024 was as follows (in thousands):