Note 1 — The Company and Basis of Presentation

QuickLogic Corporation ("QuickLogic" or the "Company") was founded in 1988 and completed its reincorporation in Delaware in 1999. The Company is a fabless semiconductor company specializing in embedded Field Programmable Gate Array ("eFPGA") hard intellectual property ("IP"), Strategic Radiation Hardened and Antifuse FPGAs, and ruggedized programmable logic solutions.

The Company licenses its eFPGA IP to semiconductor companies for integration into application-specific integrated circuits ("ASICs") and system-on-chips ("SoCs") devices and develops and sells programmable logic semiconductor devices, including discrete eFPGAs. These technologies enable customers to incorporate configurable hardware functionality into custom semiconductor devices and electronic systems.

The Company's programmable logic technologies are used in a variety of markets, including aerospace and defense systems, industrial and infrastructure systems, computing platforms, and semiconductor devices developed by fabless semiconductor companies. The Company's products, software tools, and IP enable customers to efficiently implement programmable hardware functionality within custom semiconductor devices and electronic systems.

In the first quarter of 2025, the Company discontinued operations at its wholly-owned subsidiary, SensiML Corporation ("SensiML"), and began actively exploring options for the possible sale of SensiML or its assets. Furthermore, the Company started accounting for the SensiML subsidiary in accordance with ASC 205-20, Discontinued Operations. At the balance sheet date of December 28, 2025, the Company impaired all SensiML non-cash assets to a zero value and redesignated SensiML as a disposal asset within Discontinued Operations in accordance with ASC 205-20 and ASC 360-10. The Company has incurred $0.2 million in costs in connection with the SensiML disposal to date. These costs consisted primarily of one-time termination benefits and related marketing and selling efforts. See Note 3 for additional information of discontinued operations. All other notes to these unaudited condensed consolidated financial statements present the results of continuing operations and exclude amounts related to discontinued operations for all periods presented, unless otherwise stated.

The accompanying interim condensed consolidated financial statements are unaudited. In the opinion of the Company’s management, these statements have been prepared in accordance with the United States generally accepted accounting principles (“U.S. GAAP”), and include all adjustments, consisting only of normal recurring adjustments, necessary to provide a fair statement of results for the interim periods presented. The Company recommends that these interim unaudited condensed consolidated financial statements be read in conjunction with the Company's Form 10-K for the year ended December 28, 2025, which was filed with the Securities and Exchange Commission (“SEC”) on March 27, 2026. Operating results for the three and six months ended June 28, 2026 are not necessarily indicative of the results that may be expected for the full fiscal year.

QuickLogic's fiscal year ends on the Sunday closest to December 31 and each fiscal quarter ends on the Sunday closest to the end of each calendar quarter. QuickLogic's second fiscal quarter for 2026 and 2025 ended on June 28, 2026 and June 29, 2025, respectively.

Liquidity 

The Company has financed its operations and capital investments through the sale of common stock, financing arrangements, operating leases, and cash flows from operations. As of June 28, 2026, the Company's principal sources of liquidity consisted of cash and cash equivalents from continuing operations of $18.5 million, inclusive of a $5.0 million advance from its Revolving Credit Facility and $9.5 million in net proceeds from the Company's sale of common stock in the six months ended June 28, 2026.

In the second quarter of 2026, the Company entered into (i) a Loan and Security Agreement (the "Credit Agreement"), by and between Sunflower Bank, N.A. ("Sunflower Bank") and (ii) a Promissory Note of the Company (the "Note"), providing for a $10.0 million secured revolving credit facility ("Revolving Credit Facility"). The Revolving Credit Facility matures on April 24, 2029 and accrues interest at a rate equal to the greater of (i) 5.50% and (ii) Prime Rate plus 0.50%. In addition to paying interest on outstanding borrowings under the Revolving Credit Facility, the Company is required to pay an annual facility fee of $30 thousand. Subsequently, the Company terminated its revolving line of credit with Heritage Bank of Commerce in May 2026. See Note 8 for additional information.

The Company was in compliance with the Revolving Credit Facility loan covenants as of June 28, 2026. As of June 28, 2026, the Company had $5.0 million outstanding on the Revolving Credit Facility with an interest rate of 7.25%.

On February 25, 2025, the Company entered into an At Market Issuance Sales Agreement with Needham & Company, LLC, as sales agent (the "Agent"). On August 14, 2025, the Company amended and restated its At Market Issuance Sales Agreement with the Agent (the "Sales Agreement") in connection with filing a New Registration statement (as defined below). Pursuant to the Sales Agreement, the Company may offer and sell, from time to time, through the Agent, shares of the Company's common stock, par value of $0.001 per share, having an aggregate offering price of up to $20,000,000.

On August 14, 2025, the Company filed a new Registration Statement on Form S-3 (File No 333-289610) ("New Registration Statement") with the SEC to replace the Company's expiring Registration Statement on Form S-3, under which the Company may sell, from time-to-time, common stock, preferred stock, depositary shares, warrants, debt securities, and units, individually or as units comprised of one or more of the other securities or a combination thereof in an aggregate amount of up to $125,000,000. The Company's registration statement became effective August 22, 2025.

In connection with the New Registration Statement, the Company filed a sales prospectus whereby it amended, restated, and renewed its ATM program, allowing the Company to sell an aggregate offering price of up to $20,000,000 (the "Amended ATM Offering"). The $20,000,000 shares of the Company's common stock that may be sold under the Amended ATM Offering are included in the $125,000,000 of the Company's securities that may be sold under the New Registration Statement.

During the six months ended June 28, 2026, the Company sold 903 thousand shares under the Amended ATM Offering, resulting in net cash proceeds of approximately $9.5 million. Issuance costs related to the Amended ATM Offering were $297 thousand. In the six months ended June 29, 2025, the Company sold 678 thousand shares under the prior ATM offering, resulting in net cash proceeds of approximately $4.1 million. Issuance costs related to the prior ATM offering were $157 thousand. See Note 10 for additional information.

On March 6, 2025, the Company entered into Common Stock Purchase Agreements with certain institutional investors and their affiliated entities for the sale of an aggregate of 256 thousand shares of common stock, par value $0.001, in a registered direct offering, resulting in net cash proceeds of approximately $1.5 million. Issuance costs related to the offering were $20 thousand. The purchase price for each share of common stock was $5.93. See Note 10 for additional information.

The Company currently uses its cash to fund its working capital, to accelerate the development of next-generation products, and for general corporate purposes. Based on past performance and current expectations, the Company believes that its existing cash and cash equivalents, together with the $9.5 million in net cash proceeds from its Amended ATM Offering, its revenues from operations, and available financial resources from its Revolving Credit Facility will be sufficient to fund its operations and capital expenditures and provide adequate working capital for the next twelve months.

Various factors affect the Company’s liquidity, including, among others: the level of revenue and gross profit as a result of the cyclicality of the semiconductor industry; the conversion of design opportunities into revenue; market acceptance of existing and new products including solutions based on the Company's ArcticLink® and PolarPro® platforms, ArcticPro™, EOS S3 SoC, Eclipse II products, and eFPGA IP license and professional services; the timing, milestones, and payments related to our government contracts; fluctuations in revenue as a result of product end-of-life; fluctuations in revenue as a result of the stage in the product life cycle of its customers’ products; costs of securing access to and availability of adequate manufacturing capacity; levels of inventories; wafer purchase commitments; customer credit terms; the amount and timing of research and development expenditures; the timing of new product introductions; production volumes; product quality; sales and marketing efforts; the value and liquidity of its investment portfolio; changes in operating assets and liabilities; the ability to obtain or renew debt financing and to remain in compliance with the terms of existing credit facilities; the ability to raise funds from the sale of equity in the Company; the issuance and exercise of stock options and participation in the Company’s employee stock purchase plan; and other factors related to the uncertainties of the industry and global economics. 

Over the longer term, the Company anticipates that sales generated from its new product offerings, existing cash and cash equivalents, together with financial resources from its Revolving Credit Facility, and its ability to raise additional capital in the public capital markets will be sufficient to satisfy its operations and capital expenditures. However, the Company cannot provide any assurance that it will be able to raise additional capital, if required, or that such capital will be available on terms acceptable to the Company. The inability of the Company to generate sufficient sales from its new product offerings and/or raise additional capital if needed could have a material adverse effect on the Company’s operations and financial condition, including its ability to maintain compliance with its lender’s financial covenants.

Principles of Consolidation

The unaudited condensed consolidated financial statements have been prepared in accordance with U.S. GAAP, and the applicable rules and regulations of the SEC, and include the accounts of QuickLogic and its wholly-owned subsidiaries. All intercompany accounts and transactions have been eliminated in consolidation.

Foreign Currency

The functional currency of the Company's non-U.S. operations is the U.S. dollar. Accordingly, all monetary assets and liabilities of these foreign operations are translated into U.S. dollars at current period-end exchange rates and non-monetary assets and related elements of expense are translated using historical exchange rates. Income and expense elements are translated to U.S. dollars using the average exchange rates in effect during the period. Gains and losses from the foreign currency transactions of these subsidiaries are recorded as interest income and other expense, net in the unaudited condensed consolidated statements of operations, and are insignificant for all periods presented.

Uses of Estimates

The preparation of these unaudited condensed consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosures of commitments and contingencies at the date of the condensed consolidated financial statements and the reported amounts of revenues and expenses during the reporting periods.

The methods, estimates, and judgments the Company uses in applying its most critical accounting policies have a significant impact on the results it reports in its consolidated financial statements. The SEC has defined critical accounting policies as those that are most important to the portrayal of the Company's financial condition and results of operations and requires it to make its 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 the Company’s knowledge of current events and actions it may undertake in the future, actual results may ultimately materially differ from these estimates and assumptions. Areas where management uses 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 long-lived and intangible assets. The Company believes that it applies 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 the Company's consolidated financial statements. For additional information, please refer to the Company's most recent Annual Report on Form 10-K, which was filed with the SEC on March 27, 2026.

Concentration of Risk

The Company's accounts receivable are denominated in U.S. dollars and are derived primarily from sales to customers located in North America, Asia Pacific, and Europe. The Company performs ongoing credit evaluations of its customers and does not require collateral. See Note 13, Information Concerning Segments, Product Lines, Geographic Information, Accounts Receivable, and Revenue Concentration, for information regarding concentrations associated with accounts receivable.

In connection with its Revolving Credit Facility as of June 28, 2026, the Company maintains a substantial amount of cash deposits with Sunflower Bank. The concentration of cash with one financial institution poses certain risks. For instance, adverse developments affecting financial institutions, companies in the financial services industry, or the financial services industry, such as actual events or concerns involving liquidity, defaults, or non-performance, could adversely impact the stability of Sunflower Bank, leading to additional financial risks for the Company.

Any material decline in available funding or the Company's ability to access its cash, cash equivalents, and liquidity resources, inclusive of those at Sunflower Bank, could adversely impact its ability to meet its operating expenses, financial and contractual obligations, or result in breaches of its contractual obligations. Any of these impacts could have material adverse impacts on the Company's operations and liquidity.