Business context and reporting period
QuickLogic Corporation’s Form 10-K covers the fiscal year ended December 30, 2018; it is an annual report, not a standalone fourth-quarter filing. QuickLogic develops fabless semiconductor platforms, embedded FPGA (eFPGA) IP, and software for AI, voice, and sensor processing. It reported one operating segment. New products accounted for 45% of FY2018 revenue.
Financial performance and liquidity
| Metric | FY2018 | FY2017 |
|---|---|---|
| Revenue | $12.629 million | $12.149 million |
| Gross profit / margin | $6.334 million / 50% | $5.522 million / 45% |
| Operating loss | $13.596 million | $13.950 million |
| Net loss | $13.779 million | $14.131 million |
| Net loss per share, diluted | $0.15 | $0.18 |
| Cash used in operating activities | $12.638 million | $12.938 million |
FY2018 investing cash use was $0.288 million and financing cash inflow was $22.862 million. Year-end cash, cash equivalents and restricted cash totaled $26.463 million; working capital was $15.576 million. The balance sheet reported $15.0 million drawn on a revolving credit line and $0.424 million in capital software lease obligations. The credit line carried a 6% interest rate and required at least $3 million of unrestricted cash at Heritage Bank; the company reported covenant compliance at year-end.
Fourth-quarter revenue was $3.233 million, gross profit $1.672 million (about 52% margin), and net loss $3.065 million. In the comparable 2017 quarter, revenue was $2.981 million and net loss was $3.409 million.
Material changes versus the prior comparable period
- Annual revenue rose 4%. Mature-product revenue increased 9% to $6.894 million, while new-product revenue declined 2% to $5.735 million. Lower display-bridge and connectivity revenue was partly offset by sensor-processing and QuickAI sales.
- Gross margin improved to 50% from 45%, which management attributed to product mix, increased sensor-processing and QuickAI revenue, and lower low-margin display-bridge sales. Inventory write-downs were $0.386 million, versus $0.232 million in 2017.
- Operating expenses increased 2% to $19.930 million, including R&D expense of $9.948 million. The annual net loss narrowed modestly, but operations continued to consume substantial cash.
- In May 2018, QuickLogic raised $13.9 million net through a stock-and-warrant offering. At year-end, common shares outstanding were 95.513 million, compared with 80.536 million a year earlier.
Outlook, risks and unusual items
- Management expected continued losses through at least the fiscal year ending December 29, 2019. It expected revenue growth from eFPGA licensing and QuickAI beginning in 2019, but provided no specific revenue or earnings guidance. The filing says cash and available credit should fund operations and capital expenditures for the next 12 months; longer-term needs may require additional financing.
- QuickLogic depends on converting design opportunities into sales, developing new products and scaling support for emerging eFPGA and endpoint-AI markets. New products generally have lower margins than mature products, and customer evaluation and sales cycles can be lengthy.
- Customer concentration is material: three customers each represented 12%, 10%, and 10% of FY2018 revenue. A distributor accounted for 34%. The company also cited reliance on single or limited-source manufacturers, demand-forecast and inventory risks, price pressure, and exposure to international markets, particularly China.
- On January 3, 2019, after year-end, QuickLogic acquired SensiML in an all-stock transaction with an aggregate stated purchase price of approximately $1.17 million. The filing describes the acquisition as intended to add AI software; anticipated benefits and integration remain uncertain.
- After year-end, QuickLogic repaid $7 million of revolving debt on January 4 and another $5 million on January 8, 2019. The filing also states that Nasdaq notified the company in January 2019 that its share price had failed the $1 minimum bid-price requirement; the initial compliance period ran through July 17, 2019.
- The company adopted ASC 606 in 2018, with no significant reported impact and no opening retained-earnings adjustment. Auditors gave unqualified opinions on the financial statements and internal control over financial reporting.
Important facts for investors to verify
- Post-repayment revolving debt, remaining borrowing availability, and ongoing compliance with the Heritage Bank cash covenant.
- Cash runway against recurring operating cash burn, and whether additional equity or debt financing will be needed.
- Actual 2019 revenue contribution and margins from eFPGA, QuickAI, and SensiML, including evidence that the endpoint-AI business can scale economically.
- Customer and distributor concentration, design-win conversion, and inventory exposure as product demand and product life cycles change.
- Resolution of the Nasdaq minimum-bid-price deficiency and any resulting effect on listing status or dilution.