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.

Preliminary discussions commenced with potential strategic partners regarding the possible sale of SensiML or its assets. As of January 7, 2025, the Company began accounting for the SensiML subsidiary in accordance with ASC 205-20, Discontinued Operations and accordingly, depreciation and amortization of assets held by SensiML was discontinued.

During Fiscal Year 2025, the Company continued to evaluate strategic alternatives for SensiML, including a potential sale of the business or its underlying assets. As of December 28, 2025, the Company determined that the anticipated sale of SensiML had not occurred within the originally expected time frame and management reassessed the expected timing of a potential disposition. As run-off operations at the SensiML subsidiary concluded in Fiscal Year 2025, the Company determined that a classification of asset group held for disposal for the SensiML subsidiary, in accordance with ASC 360-10, was appropriate. Additionally, its results of operations are presented as discontinued operations in the unaudited condensed consolidated financial statements. The Company continues to provide for the costs of maintaining SensiML assets until disposal via capital contributions.

As of June 28, 2026, there have not been any new material developments regarding the disposal of SensiML.

The following table provides details relating to major classes of assets and liabilities for discontinued operations classified as held for disposal as of June 28, 2026, and December 28, 2025 (in thousands):

The following table provides details relating to major line items constituting income (loss) for discontinued operations classified as held for disposal for the three and six months ended June 28, 2026 and June 29, 2025 (in thousands):

For the three and six months ended June 28, 2026, the Company has incurred $16 thousand and $27 thousand, respectively, in costs in connection with the disposal of SensiML. For the three and six months ended June 29, 2025, the Company has incurred $21 thousand and $162 thousand, respectively. These costs are primarily comprised of one-time termination benefits and related marketing and selling efforts and are split between the 'Restructuring Costs' line item in the Company's unaudited condensed consolidated statement of operations and in the table above. The Company does not expect total costs to be incurred in connection with the disposal of SensiML to differ materially from those already recognized.

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

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.

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

The following table provides the expenses from discontinued operations related to operating leases for the three and six months ended June 28, 2026 and June 29, 2025 (in thousands):

Stock-based compensation expense from discontinued operations for the three and six months ended June 28, 2026 and June 29, 2025 was as follows (in thousands):