Note 14 - Information Concerning Product Lines, Geographic Information, and Revenue Concentration

12 Months Ended

Dec. 29, 2024

Notes to Financial Statements

Segment Reporting Disclosure [Text Block]

NOTE 14 — INFORMATION CONCERNING SEGMENTS, PRODUCT LINES, GEOGRAPHIC INFORMATION, ACCOUNTS RECEIVABLE AND REVENUE CONCENTRATION

The Company identifies its business segments based on business activities, management responsibility, and geographic location. For all periods presented, the Company operated in a single reportable business segment.

The Company has one reportable operating segment based on how its Chief Operating Decision Maker (CODM) manages the business and in a manner consistent with the availability of discrete financial information and the internal reporting provided to the CODM. The CODM, the Company's Chief Executive Officer (CEO), reviews detailed income statements, balance sheets, and sales reports in order to assess performance of the Company. The CODM does not review assets at a different asset level or category than at the consolidated level and the consolidated statements of operations are presented to the CODM without further disaggregation. Significant segment expenses also include depreciation, amortization, and stock-based compensation, which are disclosed within the consolidated statements of cash flows. The Company does not have any significant intra-entity sales or transfers.

Sales, operating income, and net income are some of the key variables monitored by the CODM and management when determining the Company's financial condition and operating performance. The CODM uses sales, operating income (loss), and net income (loss) to evaluate income generated in deciding whether to reinvest profits into the segment or to use such profits for other purposes, such as for acquisitions or share repurchases. These key variables are also used to monitor budget versus actual results, as well as in competitive analyses by benchmarking to the Company’s competitors.

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

	Fiscal Years
	2024		2023		2022
New products	$	16,128	$	18,211	$	11,675
Mature products		3,984		2,987		4,505
Total revenue	$	20,112	$	21,198	$	16,180

New products revenue consists of revenues from the sale of hardware products manufactured on 180 nanometer or smaller semiconductor processes, eFPGA IP license, professional services, QuickAI and SensiML AI software as a service (SaaS) revenues. Mature products include all products produced on semiconductor processes larger than 180 nanometer. Associated royalty revenues are included within their respective device's classification.

The following is a breakdown of new products revenue (in thousands): 

	Fiscal Years
	2024		2023		2022
Hardware products	$	2,547	$	1,230	$	3,757
eFPGA IP		13,120		16,839		7,545
SaaS & Other		461		142		373
Total new products revenue	$	16,128	$	18,211	$	11,675

eFPGA IP revenue is comprised primarily of eFPGA intellectual property license revenue, eFPGA-related professional services revenue, and eFPGA-related support and maintenance revenue. eFPGA-IP revenue related to professional services was approximately $13.1 million, $16.6 million, and $7.4 million in the Fiscal Years ended December 29, 2024,  December 31, 2023, and January 1, 2023, respectively.

Contract assets were approximately $2.7 million, $3.6 million, and $2.0 million at December 29, 2024, December 31, 2023, and January 1, 2023, respectively and were included under current assets on the Company's consolidated balance sheets. Changes in the Company's contract asset balance resulted from the Company gaining the unconditional right to invoice its customers for previously recognized revenue, partially offset by additional revenue recognition in the period for contracts that contain a different payment schedule than the Company's revenue recognition timeline. The Company expects to invoice the $2.7 million in contract assets as of December 29, 2024 by the end of fiscal Q3'25.

Contract liabilities of $0.5 million, $1.1 million, and $0.3 million were included in deferred revenue on the Company's consolidated balance sheets at December 29, 2024, December 31, 2023, and January 1, 2023, respectively. In the twelve months ended December 29, 2024, the Company recognized the previously outstanding contract liabilities as of December 31, 2023 of $1.1 million as revenue. The Company expects to recognize the $0.5 million in deferred revenues as of December 29, 2024 using the output time-based method through the end of Q2'25.

Of its remaining unsatisfied performance obligations not currently on the Company's balance sheet, the Company expects to recognize $4.7 million by Q3'25, either through the input time-based method or the output method, recognizing revenue as deliverables such as IP and various technologies and training are transferred or provided to the customer. For the majority of the Company's contracts, payment schedules are in place and cash receipts will not always follow the timeline of the Company's revenue recognition policies. As such, the Company will typically record contract assets and liabilities on its consolidated balance sheet in relation to these contracts.

During the year ended January 1, 2023, the Company entered into a multiple-year agreement with a customer to provide professional services over multiple phases of which each phase has to be separately approved prior to commencement of work. Other contractual terms include a termination for convenience clause including the enforceable right to payment for performance completed to date.

The Company assessed the agreement under ASC 606 noting the following judgments, estimates, and conclusions:

•   Each funded phase comprised a separate contract.

•   There were monthly performance obligations associated with stated milestones.

•   The application of the output method resulted in the allocation of the transaction price for the contract on a straight-line basis for the stated milestones.

•   Further, revenue for the contract is recognized at a point in time when control of the asset is transferred to and accepted by the customer.

Associated with this agreement, the Company recognized professional services revenue amounting to $10.9 million and $14.8 million and $3.3 million for the fiscal years ended December 29, 2024, December 31, 2023 and January 1, 2023, respectively. As of December 29, 2024 and December 31, 2023, the Company had $2.6 million and $3.6 million, respectively, in contract assets on its consolidated balance sheets associated with this agreement.

The Company derives revenue from sales to customers located in North America, Europe and Asia Pacific. North America includes revenue from the United States. Revenue from the United States was $16.9 million or 84% of total revenue, $18.6 million or 88% of total revenue, and $10.6 million or 67% of total revenue in the years ended December 29, 2024,  December 31, 2023, and January 1, 2023, respectively. The Company attributes revenues from external customers to individual countries based on the end customer's country, if available. If not available, the Company will utilize the country of the furthest entity in the supply chain for which the country is known, such as the distributor or assembly.

The following is a breakdown of revenue by shipping destination (in thousands): 

	Fiscal Years
	2024		2023		2022
Asia Pacific	$	2,199	$	1,965	$	3,558
North America		17,196		18,644		10,912
Europe		717		589		1,710
Total revenue	$	20,112	$	21,198	$	16,180

The following distributors and customers accounted for 10% or more of the Company's revenue for the periods presented. Distributor amounts represent revenue from the Company's goods and services sold to a distributor. Customer amounts represent revenues from both distributor and from the Company to an end customer. As such, revenue to a distributor may also include information related to customers.

	Fiscal Years
	2024			2023			2022
Distributor "A"		11	%		*			15	%
Distributor "B"		*			*			12	%
Customer "A"		54	%		70	%		20	%
Customer "C"		*			*			16	%
Customer "F"		*			*			12	%

* Represents less than 10% of revenue as of the date presented.

The following distributors and customers accounted for 10% or more of the Company's accounts receivable and contract asset balance as of the dates presented:

	December 29,			December 31,
	2024			2023
Distributor "A"		10	%		*
Distributor "D"		12	%		*
Customer "A"		50	%		86	%
Customer "K"		10	%		*

* Represents less than 10% of trade accounts receivable and contract assets, net, as of the date presented.

Approximately 0.1% and 0.4% of the Company’s long-lived assets, including property and equipment and other assets, were located outside the United States as of December 29, 2024 and December 31, 2023, respectively.