Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to filing requirements for the past 90 days. Yes ☒ NO ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ NO ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act:

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

The number of outstanding shares of the registrant’s common stock, par value $0.001 per share, was ~~8,660,382~~21,607,633 as of ~~August 5, 2021.~~May 9, 2022.

	June 30,			December 31,			March 31,			December 31,
	2021			2020			2022			2021
	(unaudited)						(unaudited)
ASSETS
Current assets
Cash and cash equivalents	$	13,475		$	5,889		$	3,791		$	5,893
Short-term investments		6,091			—			5,993			9,267
Accounts receivable, net		632			701			2,106			2,436
Inventories		1,026			599			4,521			3,824
Tax credits and receivables								1,117			1,099
Prepaid expenses and other		388			668			1,333			1,159
Total current assets		21,612			7,857			18,861			23,678

Long-term investments		3,484			—			2,399			2,928
Property and equipment, net		96			121			2,042			2,349
Intangible assets, net								7,852			8,355
Goodwill								9,946			9,946
Right-of-use lease asset, net		205			303			770			617
Other		17			17			78			78
Total assets	$	25,414		$	8,298		$	41,948		$	47,951

LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities
Accounts payable	$	89		$	76		$	1,941		$	1,937
Accrued expenses and other		1,350			1,300			2,373			2,903
Deferred revenue		147			15			361			375
Short-term lease liability		201			201			422			379
PPP note payable, current		—			244
Total current liabilities		1,787			1,836			5,097			5,594
Convertible notes payable		—			3,092
PPP note payable		—			335

Long-term lease liability		10			103			411			288
Total liabilities		1,797			5,366			5,508			5,882
Commitments and contingencies (Note 4)

Commitments and contingencies (Note 5)
Stockholders’ equity
Preferred stock, $0.01 par value; 20,000 shares authorized; NaN issued and outstanding		—			—			—			—
Common stock, $0.001 par value; 120,000 shares authorized; 8,660 shares and 3,554 shares issued and outstanding at June 30, 2021 and December 31, 2020, respectively		8			3
Common stock, $0.001 par value; 120,000 shares authorized; 21,588 shares and 21,579 shares issued and outstanding at March 31, 2022 and December 31, 2021, respectively								22			22
Additional paid-in capital		268,806			245,548			160,408			159,246
Accumulated other comprehensive loss		(4	)		—			(37	)		—
Accumulated deficit		(245,193	)		(242,619	)		(123,953	)		(117,199	)
Total stockholders’ equity		23,617			2,932			36,440			42,069
Total liabilities and stockholders’ equity	$	25,414		$	8,298		$	41,948		$	47,951

The accompanying notes are an integral part of these condensed consolidated financial statements.

	Three Months Ended						Six Months Ended						Three Months Ended
	June 30,						June 30,						March 31,
	2021			2020			2021			2020			2022			2021
Net revenue
Product	$	1,017		$	1,679		$	2,195		$	2,747		$	3,204		$	1,051
Royalty and other		151			289			311			481			199			50
Total net revenue		1,168			1,968			2,506			3,228			3,403			1,101
Cost of net revenue		444			604			939			1,134			1,590			619
Gross profit		724			1,364			1,567			2,094			1,813			482
Operating expenses
Research and development		1,222			985			2,381			1,946			6,003			2,787
Selling, general and administrative		1,287			964			2,358			2,099			2,546			1,307
Total operating expenses		2,509			1,949			4,739			4,045			8,549			4,094
Loss from operations		(1,785	)		(585	)		(3,172	)		(1,951	)		(6,736	)		(3,612	)
Interest expense		—			(56	)		(30	)		(111	)		—			(513	)
Other income, net		580			2			628			18
Other expense, net														(18	)		(32	)
Net loss		(1,205	)		(639	)		(2,574	)		(2,044	)	$	(6,754	)	$	(4,157	)
Deemed dividend for warrant exercise price adjustment		—			(392	)		—			(392	)
Net loss attributable to common stockholders	$	(1,205	)	$	(1,031	)	$	(2,574	)	$	(2,436	)

Net loss per share attributable to common stockholders
Basic and diluted	$	(0.18	)	$	(0.32	)	$	(0.44	)	$	(0.88	)
Shares used in computing net loss per share
Basic and diluted		6,857			3,265			5,865			2,780


Other comprehensive loss, net of tax:
Net unrealized loss on available-for-sale securities		(3	)		—			(4	)		—			(37	)		—
Comprehensive loss	$	(1,208	)	$	(1,031	)	$	(2,578	)	$	(2,436	)	$	(6,791	)	$	(4,157	)


Net loss per share
Basic and diluted													$	(0.34	)	$	(0.79	)
Shares used in computing net loss per share
Basic and diluted														19,769			5,241

The accompanying notes are an integral part of these condensed consolidated financial statements.

Accumulated

Additional

Other

Common Stock

Paid-In

Comprehensive

Accumulated

Shares

Amount

Capital

Loss

Deficit

Total

Balance as of December 31, 2020

3,554

$
3

$
245,548

$
—

$
(242,619
)

$
2,932

Issuance of common stock under stock plan, net

16

—

(2
)

—

—

(2
)
Exercise of warrants

1,033

1

2,477

—

—

2,478

Issuance of common stock for payment of accrued interest

43

—

140

—

—

140

Sale of common stock, net of placement costs

1,488

2

6,815

—

—

6,817

Stock-based compensation

—

—

68

—

—

68

Unrealized loss on available-for-sale investments

—

—

—

(1
)

—

(1
)
Net loss

—

—

—

—

(1,369
)

(1,369
)
Balance as of March 31, 2021

6,134

$
6

$
255,046

$
(1
)

$
(243,988
)

$
11,063

Issuance of common stock under stock plan, net

2

—

—

—

—

—

Exercise of warrants

706

1

1,695

—

—

1,696

Sale of common stock, net of placement costs

1,818

1

11,968

—

—

11,969

Stock-based compensation

—

—

97

—

—

97

Unrealized loss on available-for-sale investments

—

—

—

(3
)

—

(3
)
Net loss

—

—

—

—

(1,205
)

(1,205
)
Balance as of June 30, 2021

8,660

$
8

$
268,806

$
(4
)

$
(245,193
)

$
23,617

Accumulated

Additional

Other

Common Stock

Paid-In

Comprehensive

Accumulated

Shares

Amount

Capital

Loss

Deficit

Total

Balance as of December 31, 2019

2,179

$
2

$
243,281

$
—

$
(238,447
)

$
4,836

Issuance of common stock for release of awards

20

—

(1
)

—

—

(1
)
Exercise of pre-funded warrants

116

—

2

—

—

2

Stock-based compensation

—

—

68

—

—

68

Net loss

—

—

—

—

(1,405
)

(1,405
)
Balance as of March 31, 2020

2,315

$
2

$
243,350

$
—

$
(239,852
)

$
3,500

Issuance of common stock for release of awards

1

—

—

—

—

—

Sale of common stock, net of placement costs

1,218

1

1,618

—

—

1,619

Deemed dividend for warrant exercise price adjustment

—

—

392

—

(392
)

—

Stock-based compensation

—

—

66

—

—

66

Net loss

—

—

—

—

(639
)

(639
)
Balance as of June 30, 2020

3,534

$
3

$
245,426

$
—

$
(240,883
)

$
4,546

								Accumulated
					Additional			Other
	Common Stock				Paid-In			Comprehensive			Accumulated
	Shares		Amount		Capital			Loss			Deficit			Total
Balance as of December 31, 2021		21,579	$	22	$	159,246		$	—		$	(117,199	)	$	42,069
Issuance of common stock under stock plan, net		9		—		(9	)		—			—			(9	)
Stock-based compensation		—		—		1,171			—			—			1,171
Unrealized loss on available-for-sale securities		—		—		—			(37	)		—			(37	)
Net loss		—		—		—			—			(6,754	)		(6,754	)
Balance as of March 31, 2022		21,588	$	22	$	160,408		$	(37	)	$	(123,953	)	$	36,440

								Accumulated
					Additional			Other
	Common Stock				Paid-In			Comprehensive			Accumulated
	Shares		Amount		Capital			Loss			Deficit			Total
Balance as of December 31, 2020		5,241	$	5	$	102,361		$	—		$	(106,287	)	$	(3,921	)
Stock-based compensation		—		—		1,177			—			—			1,177
Net loss		—		—		—			—			(4,157	)		(4,157	)
Balance as of March 31, 2021		5,241	$	5	$	103,538		$	—		$	(110,444	)	$	(6,901	)

The accompanying notes are an integral part of these condensed consolidated financial statements.

	Six Months Ended						Three Months Ended
	June 30,						March 31,
	2021			2020			2022			2021
Cash flows from operating activities:
Net loss	$	(2,574	)	$	(2,044	)	$	(6,754	)	$	(4,157	)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization		36			82			776			277
Stock-based compensation		165			134			1,171			1,177
Accrued interest		30			112
Amortization of lease right-of-use asset		98			43
Change in operating lease liability		(93	)		(50	)
Gain on settlement of convertible notes payable and accrued interest, net		(48	)		—
Gain on extinguishment of PPP Note		(579	)		—
Change in fair value of warrant liability								—			39
Amortization of debt discount								—			348
Accrued interest expense								—			165
Amortization of lease right-of-use assets								121			60
Change in operating lease liabilities								(107	)		(58	)
Other								152			9
Changes in assets and liabilities:
Accounts receivable		69			574			331			688
Inventories		(427	)		(48	)		(698	)		155
Tax credits and receivables								(17	)		(246	)
Prepaid expenses and other assets		280			221			(175	)		121
Accounts payable		13			(170	)		4			133
Deferred revenue and other liabilities		276			(19	)		(544	)		37
Net cash used in operating activities		(2,754	)		(1,165	)		(5,740	)		(1,252	)
Cash flows from investing activities:
Purchases of property and equipment		(11	)		(12	)		(76	)		(9	)
Proceeds from maturities of short-term investments		—			300
Purchases of investments		(9,579	)		—
Purchases of intangible assets								(20	)		—
Proceeds from maturities of marketable securities								4,240			—
Purchases of marketable securities and investments								(497	)		—
Net cash provided by (used in) investing activities		(9,590	)		288			3,647			(9	)
Cash flows from financing activities:
Proceeds from sale of common stock, net		18,785			1,619
Proceeds from exercise of common stock warrants		4,174			2
Repayment of convertible notes payable		(3,027	)		—
Proceeds from PPP note		—			579
Taxes paid to net share settle equity awards		(2	)		(1	)		(9	)		—
Net cash provided by financing activities		19,930			2,199
Net increase in cash and cash equivalents		7,586			1,322
Net proceeds from loan facility								—			552
Net cash provided by (used in) financing activities								(9	)		552
Net decrease in cash and cash equivalents								(2,102	)		(709	)
Cash and cash equivalents at beginning of period		5,889			6,053			5,893			1,711
Cash and cash equivalents at end of period	$	13,475		$	7,375		$	3,791		$	1,002
Supplemental disclosure:
Issuance of convertible notes in settlement of accrued interest	$	—		$	112
Settlement of accrued interest through issuance of common shares	$	123		$	—
Fair value of warrant exercise price adjustment considered as deemed dividend	$	—		$	392
Recognition of right-of-use asset and lease liability							$	274		$	—
Unrealized loss on securities							$	37		$	—

The accompanying notes are an integral part of these condensed consolidated financial statements.

Peraso Inc., formerly known as MoSys, Inc. (the Company), was incorporated in California in 1991 and reincorporated in 2000 in Delaware.The Company ~~provides both integrated circuits (ICs)~~is a fabless semiconductor company specializing in the development of mmWave technology, including 60GHz and 5G products, and derives revenue from selling semiconductor devices, licensing of intellectual property (IP) ~~solutions~~and performance of non-recurring engineering services (NRE). The Company also manufactures and sells memory semiconductor devices that enable fast, intelligent data access and decision making for a wide range of markets.

~~The Company’s primary product line is marketed~~On September 14, 2021, the Company and its subsidiaries, 2864552 Ontario Inc. (Callco) and 2864555 Ontario Inc. (Canco), entered into an Arrangement Agreement (the Arrangement Agreement) with Peraso Technologies Inc. (Peraso Tech), a corporation existing under the ~~Accelerator Engine name~~laws of the province of Ontario, to acquire all of the issued and ~~includes~~outstanding common shares of Peraso Tech (the Peraso Shares), including those Peraso Shares to be issued in connection with the ~~Bandwidth Engine IC products, which integrate~~conversion or exchange of secured convertible debentures and common share purchase warrants of Peraso Tech, as applicable, by way of a statutory plan of arrangement (the Arrangement) under the ~~Company’s proprietary, 1T-SRAM high-density embedded memory~~Business Corporations Act (Ontario). On December 17, 2021, following the satisfaction of the closing conditions set forth in the Arrangement Agreement, the Arrangement was completed and ~~a highly-efficient serial interface protocol resulting in a monolithic memory IC solution optimized for memory bandwidth and transaction access performance.~~, ~~In 2020,~~ the Company changed its name to “Peraso Inc.” and began ~~offering~~trading on the Nasdaq Stock Market (the Nasdaq) under the symbol “PRSO.”

For accounting purposes, the legal subsidiary, Peraso Tech, has been treated as the accounting acquirer and the Company, the legal parent, has been treated as the accounting acquiree. The transaction was accounted for ~~license~~as a reverse acquisition in accordance with Accounting Standards Codification (ASC) No. 805, Business Combinations (ASC 805). Accordingly, these condensed consolidated financial statements are a continuation of Peraso Tech’s consolidated financial statements prior to December 17, 2021 and exclude the ~~first~~statements of ~~its~~ ~~Virtual Accelerator Engine products which consist~~operations and comprehensive loss, statement of ~~software, firmware~~stockholders’ equity (deficit) and ~~related IP. This new product line will include multiple function accelerator platform products, which target specific application functions and will use a common software interface~~statements of cash flows of the Company prior to ~~allow performance scalability over multiple hardware environments.~~December 17, 2021. See Note 2 for additional disclosure.

The accompanying condensed consolidated financial statements of the Company have been prepared without audit.

The condensed consolidated balance sheet as of December 31, ~~2020~~2021 has been derived from the audited consolidated financial statements at that date. Certain information and disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States (GAAP) have been condensed or omitted in accordance with ~~these~~the rules and regulations of the Securities and Exchange Commission (SEC). The information in this report should be read in conjunction with the Company’s consolidated financial statements and notes thereto included in its most recent annual report on Form 10-K filed with the SEC.

In the opinion of management, the accompanying unaudited condensed consolidated financial statements reflect all adjustments (consisting only of normal recurring adjustments) necessary to summarize fairly the Company’s financial position, results of operations and cash flows for the interim periods presented. The operating results for the three ~~and six~~ months ended ~~June 30, 2021~~March 31, 2022 are not necessarily indicative of the results that may be expected for the year ending December 31, ~~2021~~2022 or for any other future period.

The condensed consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries. All significant intercompany transactions and balances have been eliminated in consolidation. The Company’s fiscal year ends on December 31 of each calendar year.

The Company is subject to risks from, among other things, competition associated with the industry in general, other risks associated with financing, liquidity requirements, rapidly changing customer requirements, limited operating history and the volatility of public markets.

The global outbreak of the coronavirus disease 2019 (COVID-19) was declared a pandemic by the World Health Organization and a national emergency by the U.S. government in March 2020. This has negatively affected the U.S. and global economy, disrupted global supply chains, significantly restricted travel and transportation, resulted in mandated closures and orders to “shelter-in-place” and created significant disruption of the financial markets. The full extent of the COVID-19 impact on the Company’s operational and financial performance will depend on future developments, including the duration and spread of the pandemic and related actions taken by U.S. and foreign government agencies to prevent disease spread, all of which are uncertain, out of the Company’s control, and cannot be ~~predicted.~~

The preparation of financial statements in accordance with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at

the date of the financial statements and the reported amounts of revenues and expenses recognized during the reported period. Material estimates may include assumptions made in determining reserves for uncollectible receivables, inventory write-downs, impairment of long-term assets, purchase price allocations, valuation allowance on deferred tax assets, accruals for potential liabilities and assumptions made in valuing equity instruments. Actual results could differ from those estimates.

The Company has invested its excess cash in money market accounts, certificates of deposit, ~~commercial paper,~~ corporate debt, government-sponsored enterprise bonds and municipal bonds and considers all highly liquid debt instruments purchased with an original maturity of three months or less to be cash equivalents. Investments with original maturities greater than three months and remaining maturities less than one year are classified as short-term investments. Investments with remaining maturities greater than one year are classified as long-term investments. Management generally determines the appropriate classification of securities at the time of purchase. All securities are classified as available-for-sale. The Company’s available-for-sale short-term and long-term investments are carried at fair value, with the unrealized holding gains and losses reported in accumulated other comprehensive ~~income.~~income (loss). Realized gains and losses and declines in the value judged to be ~~other than temporary~~other-than-temporary are included in the other income, net line item in the condensed consolidated statements of ~~operations and comprehensive loss.~~operations. The cost of securities sold is based on the specific identification method.

The Company measures the fair value of financial instruments using a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value into three broad levels:

Level 1—Inputs used to measure fair value are unadjusted quoted prices that are available in active markets for the identical assets or liabilities as of the reporting date.

Level 2—Pricing is provided by third party sources of market information obtained through the Company’s investment advisors, rather than models. The Company does not adjust for, or apply, any additional assumptions or estimates to the pricing information it receives from advisors. The Company’s Level 2 securities ~~may~~ include cash equivalents and available-for-sale securities, which ~~consist~~consisted primarily of certificates of deposit, corporate debt, and government agency and municipal debt securities from issuers with high-quality credit ratings. The Company’s investment advisors obtain pricing data from independent sources, such as Standard & Poor’s, Bloomberg and Interactive Data Corporation, and rely on comparable pricing of other securities because the Level 2 securities are not actively traded and have fewer observable transactions. The Company considers this the most reliable information available for the valuation of the securities.

Level 3—Unobservable inputs that are supported by little or no market activity and reflect the use of significant management judgment are used to measure fair value. These values are generally determined using pricing models for which the assumptions utilize management’s estimates of market participant assumptions. The determination of fair value for Level 3 investments and other financial instruments involves the most management judgment and subjectivity.

The carrying amounts of financial assets and liabilities, such as cash and cash equivalents, accounts receivable, accounts payable, notes payable and other payables, approximate their fair values because of the short maturity of these instruments. The carrying values of lease obligations and long-term financing obligations approximate their fair values because interest rates on these obligations are based on prevailing market interest rates.

The Company establishes an allowance for doubtful accounts to ensure that its trade receivables balances are not overstated due to uncollectibility. The Company performs ongoing customer credit evaluations within the context of the industry in which it operates and generally does not require collateral from its customers. A specific allowance of up to 100% of the invoice value is provided for any problematic customer balances. Delinquent account balances are written off after management has determined that the likelihood of collection is remote. The Company grants credit only to customers deemed creditworthy in the judgment of management. The allowance for doubtful accounts receivable was ~~$41,000 at June 30, 2021~~0 as of March 31, 2022 and approximately $61,000 as of December 31, ~~2020.~~2021.

The Company values its inventories at the lower of cost, which approximates actual cost on a first-in, first-out basis, or net realizable value. Costs of inventories primarily consisted of material and third party assembly costs. The Company records inventory reserves for estimated obsolescence or unmarketable inventories based upon assumptions about future demand and market conditions. Once a reserve is established, it is maintained until the product to which it relates is sold or otherwise disposed of. If actual market conditions are less favorable than those expected by management, additional adjustment to inventory valuation may be required. Charges for obsolete and slow-moving inventories are recorded based upon an analysis of specific identification of obsolete inventory items and

quantification of slow moving inventory items. The Company recorded write-downs of inventory of approximately $114,000 during the three months ended March 31, 2022, and recorded 0 ~~material~~ write-downs of inventory during the ~~six~~three months ended ~~June 30, 2021~~March 31, 2021.

The Company is registered for the ~~year ended~~Canadian federal and provincial goods and services taxes. As such, the Company is obligated to collect from third parties, and is entitled to claim sales taxes paid on its expenses and capital expenditures incurred in Canada.

In addition, as a Canadian Controlled Private Corporation (CCPC), the Company is also a part of the Scientific Research and Experimental Development (SR&ED) Program, which uses tax incentives to encourage Canadian businesses of all sizes and in all sectors to conduct research and development (R&D) in Canada. As a part of the program, the Company may be entitled to a receivable in the form of tax credit or incentive. The Company records refundable tax credits as a reduction of expense and receivable when the Company can reasonably estimate the amounts and it is more likely than not, they will be received.

A government refund or subsidy that is compensation for expenses or losses already incurred, or for which there are no future related costs, is recognized in the statement of operations in the period in which it becomes receivable.

As of December ~~31, 2020.~~17, 2021, Peraso Tech ceased to be a CCPC and is no longer eligible for the expenditure refund program. However, it is eligible for a tax credit of 15% on qualified SR&ED expenditures. Unused tax credits can be carried back three years or forward for 20 years

Intangible assets are recorded at cost and amortized on a straight-line method over their estimated useful lives of three to ten years. The Company regularly reviews the carrying value and estimated lives of its long-lived assets and finite-lived intangible assets to determine whether indicators of impairment may exist which warrant adjustments to carrying values or estimated useful lives. The determinants used for this evaluation include management’s estimate of the asset’s ability to generate positive income from operations and positive cash flow in future periods as well as the strategic significance of the assets to the Company’s business objective. Should an impairment exist, the impairment loss would be measured based on the excess of the carrying amount of the long-lived asset group over the asset’s fair value.

The Company determines the amount of a potential goodwill impairment by comparing the fair value of the reporting unit with its carrying amount. To the extent the carrying value of a reporting unit exceeds its fair value, a goodwill impairment charge is recognized.

The Company has determined that it has a single reporting unit for purposes of performing its goodwill impairment test. As the Company uses the market approach to determine the step one fair value of the reporting unit, the price of its common stock is an important component of the fair value calculation. If the Company’s stock price experiences significant price and volume fluctuations, this will impact the fair value of the reporting unit, which can lead to potential impairment in future periods. The Company reviews goodwill for impairment on an annual basis or whenever events or changes in circumstances indicate the carrying value of an asset may not be recoverable. The Company first assesses qualitative factors to determine whether it is more-likely-than-not that the fair value of the reporting unit is less than the carrying amount as a basis for determining whether it is necessary to perform an impairment test. If the qualitative assessment warrants further analysis, the Company compares the fair value of the reporting unit to its carrying value. The fair value of the reporting unit is determined using the market approach. If the fair value of the reporting unit exceeds the carrying value of net assets of the reporting unit, goodwill is not impaired. If the carrying value of the reporting unit’s goodwill exceeds its fair value, then the Company must record an impairment charge equal to the difference.

ASC No. 842, Leases (ASC 842) requires an entity to recognize a right-of-use asset and a lease liability for all leases with terms longer than 12 months. The Company adopted ASC 842 utilizing the modified retrospective transition method. The Company elected the practical expedient afforded in ASC 842 in which the Company did not reassess whether any contracts that existed prior to adoption have or contain leases or the classification of its existing leases.

The Company recognizes revenue in accordance with Financial Accounting Standards Board (FASB) ASC Topic 606, Revenue from Contracts with Customers, and its amendments (ASC 606). As described below, the analysis of contracts under ASC 606 supports the recognition of revenue at a point in time, resulting in revenue recognition timing that is materially consistent with the Company’s historical practice of recognizing product revenue when title and risk of loss pass to the customer.

The Company generates revenue primarily from sales of ICintegrated circuits and module products, performance of engineering services and licensing of its ~~IP.~~intellectual property. Revenues are recognized when control is transferred to customers in amounts that reflect the consideration the Company expects to be entitled to receive in exchange for those goods. Revenue recognition is evaluated through the following five steps: (i) identification of the contract, or contracts, with a customer; (ii) identification of the performance obligations in the contract; (iii) determination of the transaction price; (iv) allocation of the transaction price to the performance obligations in the contract; and (v) recognition of revenue when or as a performance obligation is satisfied.

Revenue is recognized when performance obligations under the terms of a contract with a customer are satisfied.

The majority of the ~~Company’s~~Company's contracts have a single performance obligation to transfer products. Accordingly, the Company recognizes revenue when title and risk of loss have been transferred to the customer, generally at the time of shipment of products. Revenue is measured as the amount of consideration the Company expects to receive in exchange for transferring products and is generally based upon a negotiated, formula, list or fixed price. The Company sells its products both directly to customers and through distributors generally under agreements with payment terms typically ~~less than~~ 60 ~~days.~~days or less.

The Company may record an estimated allowance, at the time of shipment, for future returns and other charges against revenue consistent with the terms of sale.

The Company’s licensing contracts typically provide for royalties based on the licensee’s use of the Company’s memory technology in its currently shipping commercial products. The Company estimates its royalty revenue in the calendar quarter in which the licensee uses the licensed technology. Payments are ~~generally~~ received in the subsequent quarter. The Company also generates revenue from licensing its technology. The Company recognizes license fees as revenue at the point of time when the control of the license has been transferred and the Company has no continuing performance obligations to the customer.

Engineering and development contracts with customers generally contain a single performance obligation that is delivered over time. Revenue is recognized using an output method that is consistent with the satisfaction of the performance obligation as a measure of progress.

The Company’s contract liabilities consist of advance customer payments and deferred revenue. The Company classifies advance customer payments and deferred revenue as current or non-current based on the timing of when the Company expects to recognize revenue. As of December 31, 2021, contract liabilities were in a current position and included in deferred revenue.

During the ~~six~~three months ended ~~June 30, 2021,~~March 31, 2022, the Company recognized 0approximately $15,000 of revenue that had been included in deferred revenue as of December 31, ~~2020.~~2021.

The Company does not have significant financing components, as payments from customers are typically due within 60 days of invoicing, and the Company has elected the practical expedient to net value financing components that are less than one year. Shipping and handling costs are generally incurred by the customer, and, therefore, are not recorded as revenue.

Cost of net revenue consists primarily of direct and indirect costs of IC product ~~sales and engineering personnel~~sales.

A grant or subsidy that is compensation for expenses or losses already incurred, or for which there are no future related costs, ~~directly related to maintenance and support services specified in licensing agreements. Maintenance and support typically include engineering support to assist~~is recognized in the ~~commencement~~statement of ~~production~~operations in the period in which it becomes receivable.

Starting in 2020, certain Canadian businesses, which experienced a drop in revenue during the COVID-19 pandemic, became eligible for a rent and wage subsidy from the government. The Company’s subsidiary, Peraso Tech, began receiving this subsidy on a monthly basis beginning in the fourth quarter of ~~a licensee’s products.~~2020.

~~As of June 30,~~During the three months ended March 31, 2021, the Company ~~had~~recognized payroll subsidies of $425,525 as a reduction in the ~~following warrants outstanding (share amounts~~associated wage costs and rent subsidies of $77,780 as a reduction of operating expenses in ~~thousands):~~ the condensed consolidated statement of operations.

The Company periodically issues stock options and restricted stock awards to employees and non-employees. The Company accounts for such grants based on ASC No. 718, whereby the value of the award is measured on the date of grant and recognized as compensation expense on a straight-line basis over the vesting period. The fair value of the Company’s stock options is estimated using the Black-Scholes-Merton Option Pricing (Black Scholes) model, which uses certain assumptions related to risk-free interest rates, expected volatility, expected life of the options, and future dividends. Compensation expense is recorded based upon the value derived from the Black-Scholes model. The assumptions used in the Black-Scholes model could materially affect compensation expense recorded in future periods.

The functional currency of the Company is the U.S dollar. All foreign currency transactions are initially measured and recorded in an entity’s functional currency using the exchange rate on the date of the transaction. All monetary assets and liabilities are remeasured at the end of each reporting period using the exchange rate at that date. All non-monetary assets and related expense, depreciation or amortization are not subsequently remeasured and are measured using the historical exchange rate. An average exchange rate may be used to recognize income and expense items earned or incurred evenly over a period. Foreign exchange gains and losses resulting from the settlement of such transactions are recognized in the statement of operations, except for the gains and losses arising from the conversion of the carrying amount of the foreign currency denominated convertible preferred shares into the functional currency that are presented as adjustment to the net loss to arrive at net loss attributable to common stockholders.

Basic net ~~income (loss)~~loss per share is computed by dividing net ~~income (loss)~~loss for the period by the weighted-average number of shares of common stock outstanding during the period. Diluted net ~~income (loss)~~loss per share gives effect to all potentially dilutive ~~shares of~~ common ~~stock~~shares outstanding during the period. Potentially dilutive ~~shares of~~ common ~~stock~~shares consist of incremental shares of common stock issuable upon the exercise of stock options, vesting of stock awards and ~~shares issuable in conjunction with convertible notes.~~exercise of warrants.

The following table sets forth securities outstanding that were excluded from the computation of diluted net loss per share as their inclusion would be anti-dilutive (in thousands):

In June 2016, the FASB issued Accounting Standards Update (ASU) No. 2016-13, Financial Instruments—Credit Losses. This ASU added a new impairment model (known as the current expected credit loss (CECL) model) that is based on expected losses rather than incurred losses. Under the new guidance, an entity recognizes an allowance for its estimate of expected credit losses and applies to most debt instruments, trade receivables, lease receivables, financial guarantee contracts, and other loan commitments. The CECL model does not have a minimum threshold for recognition of impairment losses and entities will need to measure expected credit losses on assets that have a low risk of loss. This update is effective for fiscal years beginning after December 15, 2022, including interim periods within those fiscal years

for smaller reporting companies. The Company is still evaluating the impact of this accounting guidance on its results of operations and financial position.

In August 2020, the FASB issued ASU No. 2020-06 (ASU 2020-06), Debt—Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging—Contracts in Entity’s Own Equity (Subtopic 815-40): Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity. The ASU will simplify the accounting for convertible instruments by reducing the number of accounting models for convertible debt instruments and convertible preferred stock. Limiting the accounting models will result in fewer embedded conversion features being separately recognized from the host contract as compared with current GAAP. Convertible instruments that continue to be subject to separation models are (1) those with embedded conversion features that: i) are not clearly and closely related to the host contract, ii) meet the definition of a derivative, and iii) do not qualify for a scope exception from derivative accounting and (2) convertible debt instruments issued with substantial premiums for which the premiums are recorded as paid-in capital. The ASU also amends the guidance for the derivatives scope exception for contracts in an entity’s own equity to reduce form-over-substance-based accounting conclusions. ASU 2020-06 will be effective for the Company January 1, 2024, and early adoption is permitted, but no earlier than January 1, 2021, including interim periods within that year. The Company is currently evaluating what effect(s) the adoption of ASU 2020-06 may have on its financial statements, but the Company does not believe the impact of the ASU will be material to its financial position, results of operations and cash flows. The effect will largely depend on the composition and terms of the Company’s financial instruments at the time of adoption.

As discussed in Note 1, on September 14, 2021, the Company and its newly formed subsidiaries Callco and Canco entered into the Arrangement Agreement with Peraso Tech.

On December 17, 2021, following the satisfaction of the closing conditions set forth in the Arrangement Agreement, including approvals from the stockholders of the Company and Peraso Tech, the Arrangement was completed.

Pursuant to the completion of the Arrangement, each Peraso Share that was issued and outstanding immediately prior to December 17, 2021 was converted into the right to receive 0.045239122387267 (the Exchange Ratio) newly issued shares of common stock of the Company or shares of Canco, which are exchangeable for shares of the Company’s common stock (Exchangeable Shares) at the election of each former Peraso Tech stockholder. In addition, all of Peraso Tech’s outstanding stock options and other securities exercisable or exchangeable for, or convertible into, and any other rights to acquire Peraso Shares were exchanged for securities exercisable or exchangeable for, or convertible into, or other rights to acquire the Company’s common stock. Immediately following the completion of the Arrangement, the former security holders of Peraso Tech owned approximately 61%, on a fully-diluted basis, of the Company’s common stock, and the former shareholders of Peraso Tech, as a group, obtained control of the Company. While the Company was the legal acquirer of Peraso Tech, Peraso Tech was deemed to be the acquirer for accounting purposes.

In addition, pursuant to the terms of the Arrangement Agreement, (i) certain warrants to purchase Peraso Shares outstanding immediately prior to the closing of the Arrangement were exercised in consideration for the issuance of Peraso Shares; (ii) each convertible debenture of Peraso Tech outstanding immediately prior to the closing of the Arrangement and all principal and accrued but unpaid interest thereon was converted into Peraso Shares at a conversion price equal to the conversion price set out in each such debenture; and (iii) each outstanding option to purchase Peraso Shares (each, a Peraso Option) was exchanged for a replacement option to purchase such number of shares of common stock that was equal to the product of (a) the number of Peraso Shares subject to the Peraso Options immediately before the closing of the Arrangement and (b) the Exchange Ratio, rounded down to the nearest whole number of shares of common stock.

Upon the closing of the Arrangement, an aggregate of 9,295,097 Exchangeable Shares and 3,558,151 shares of common stock were issued to the holders of Peraso Shares. Of such shares, pursuant to the terms of the Agreement, the Company held in escrow an aggregate of 1,312,878 Exchangeable Shares and 502,567 shares of common stock

(collectively, the Escrow Shares). The Escrow Shares are escrowed pursuant to the terms of an escrow agreement on a pro rata basis from the aggregate consideration received by the holders of Peraso Shares, subject to the offset by the Company for any losses in accordance with the Agreement. Such Escrow Shares shall be released, subject to any offset claim, upon the satisfaction of the earlier of: (a) any date following the first anniversary of December 17, 2021 and prior to December 17, 2024 where the volume weighted average price of the common stock for any 20 trading days within a period of 30 consecutive trading days is at least $8.57 per share, subject to adjustment for stock splits or other similar transactions; (b) the date of any sale of all or substantially all of the assets or shares of the Company; or (c) the date of any bankruptcy, insolvency, restructuring, receivership, administration, wind-up, liquidation, dissolution, or similar event involving the Company. All and any voting rights and other stockholder rights, other than with respect to dividends and distributions, with respect to the Escrow Shares are suspended until the Escrow Shares are released from escrow.

In connection with the Arrangement, on December 15, 2021, the Company filed the Certificate of Designation of Series A Special Voting Preferred Stock with the Secretary of State of the State of Delaware to designate Series A Special Voting Preferred Stock (the Special Voting Share) in accordance with the terms of the Arrangement Agreement in order to enable the holders of Exchangeable Shares to exercise their voting rights. Each Exchangeable Share is exchangeable for one share of common stock of the Company and while outstanding, the Special Voting Share enables holders of Exchangeable Shares to cast votes on matters for which holders of the common stock are entitled to vote, and by virtue of the share terms relating to the Exchangeable Shares, to receive dividends that are economically equivalent to any dividends declared with respect to the shares of common stock.

The Exchangeable Shares, which can be converted into common stock at the option of the holder and have the same voting rights as common stock, are similar in substance to shares of common stock and, therefore, have been included in the determination of outstanding common stock.

Pursuant to ASC 805, the transaction was accounted for as a reverse acquisition because: (i) the stockholders of Peraso Tech owned the majority of the outstanding common stock of the Company after the share exchange; (ii) Peraso Tech appointed a majority of the Company’s board of directors; and (iii) Peraso Tech determined the officers of the Company.

In the reverse acquisition, the accounting acquirer did not issue any consideration to the accounting acquiree, rather the accounting acquiree issued its equity shares to the owners of the accounting acquirer in exchange for the accounting acquirer’s shares. The acquisition date fair value of the consideration transferred by the accounting acquirer for its interest in the accounting acquiree was calculated by Peraso Tech, as the fair value of the consideration effectively transferred. In accordance with ASC 805, the consideration effectively transferred between the Company (a public company as the accounting acquiree) and Peraso Tech (a private company as the accounting acquirer), was calculated as the fair value of the Company’s equity including the fair value of its common shares outstanding and its warrants, plus the portion of the share-based award fair value allocated to the pre-combination service of the accounting acquiree’s awards. The fair value of the total consideration effectively transferred was determined to be $37.6 million.

The following table summarizes the final allocation of the purchase price to the net assets acquired based on the respective fair value of the acquired assets and assumed liabilities of the accounting acquiree, which is the Company.

Unaudited proforma results of operations for the three months ended March 31, 2021 are included below as if the business combination occurred on January 1, 2021. This summary of the unaudited pro forma results of operations is not necessarily indicative of what the Company’s results of operations would have been had Peraso Tech been acquired at the beginning of 2021, nor does it purport to represent results of operations for any future periods.

The estimated fair values of financial instruments outstanding were (in thousands):

The following table represents the Company’s fair value hierarchy for its financial assets (cash equivalents and investments) (in thousands):

~~(1) Includes $2.0 million in cash and cash equivalents on the accompanying condensed consolidated balance sheet due to original maturities of less than three months.~~ There were 0 transfers in or out of Level 1 and Level 2 securities during the ~~six~~three months ended ~~June 30, 2021~~March 31, 2022 or ~~2020.~~December 31, 2021.

The Company has three facility leases that it accounts for under ASC 842, and these include the operating leases for its corporate facility in San Jose, California, and facilities in Toronto and Waterloo, Ontario, Canada. The San Jose lease expires in July 2022, and the Waterloo and Toronto leases expire in September 2022 and December 2023, respectively. On March 1, 2022 the Company entered into a 36 month finance lease agreement for the lease of equipment resulting in the recognition of a right-of-use asset and lease liability on the balance sheet of approximately $274,000.

The right-to-use assets and corresponding liabilities for the facility leases were measured at the present value of the future minimum lease payments. The discount rate used to measure the lease assets and liabilities were 8%. Lease expense is recognized on a straight-line basis over the lease term.

Future minimum payments under the leases at March 31, 2022 are listed in the table below (in thousands):

Rent expense was approximately $0.1 million for each of the three month periods ended March 31, 2022 and 2021. In addition to the minimum lease payments, the Company is responsible for property taxes, insurance and certain other operating costs related to the leased facilities and equipment.

In the ordinary course of business, the Company enters into contractual arrangements under which it may agree to indemnify the counterparties from any losses incurred relating to breach of representations and warranties, failure to perform certain covenants, or claims and losses arising from certain events as outlined within the particular contract, which may include, for example, losses arising from litigation or claims relating to past performance. Such indemnification clauses may not be subject to maximum loss clauses. The Company has also entered into indemnification agreements with its officers and directors. No material amounts were reflected in the Company’s condensed consolidated financial statements for the ~~six~~three months ended ~~June 30,~~March 31, 2022 and 2021 ~~or 2020~~ related to these indemnifications.

The Company has not estimated the maximum potential amount of indemnification liability under these agreements due to the limited history of prior claims and the unique facts and circumstances applicable to each particular agreement. To date, the Company has not made any ~~material~~ payments related to these indemnification agreements.

The Company warrants certain of its products to be free of defects generally for a period of three years. The Company estimates its warranty costs based on historical warranty claim experience and includes such costs in cost of net revenues. Warranty costs were not material for the three months ended March 31, 2022 and 2021.

The Company is not a party to any legal proceeding that the Company believes is likely to have a material adverse effect on its condensed consolidated financial position or results of operations. From time to time the Company may be subject to legal proceedings and claims in the ordinary course of business. These claims, even if not meritorious, could result in the expenditure of significant financial resources and diversion of management efforts.

Note 5.6. Business Segments, Concentration of Credit Risk and Significant Customers

The Company ~~operates~~determined its reporting units in accordance with ASC 280, Segment Reporting (ASC 280). Management evaluates a reporting unit by first identifying its operating segments under ASC 280. The Company then evaluates each operating segment to determine if it includes one or more components that constitute a business. If there are components within an operating segment that meet the definition of a business, the Company evaluates those components to determine if they must be aggregated into one or more reporting units. If applicable, when determining if it is appropriate to aggregate different operating segments, the Company determines if the segments are economically similar and, if so, the operating segments are aggregated.

Management has determined that the Company has 1 ~~business~~consolidated operating segment. The Company’s reporting segment reflects the manner in which its chief operating decision maker reviews results and allocates resources. The Company’s reporting segment meets the definition of an operating segment and ~~uses 1 measurement~~does not include the aggregation of ~~profitability for its business. Net revenue is attributed to the United States and to all foreign countries based on the geographical location of the customer.~~

The Company recognized revenue from ~~shipment~~shipments of product, ~~and~~ licensing of its technologies and performance of services to customers by geographical location as follows (in thousands):

NaN customers accounted for ~~95%~~67% of accounts receivable as of ~~June 30, 2021.~~March 31, 2022. NaN customers accounted for ~~86%~~96% of accounts receivable as of December 31, ~~2020.~~2021.

The Company determines deferred tax assets and liabilities based upon the differences between the financial statement and tax bases of the Company’s assets and liabilities using tax rates in effect for the year in which the Company expects the differences to affect taxable income. A valuation allowance is established for any deferred tax assets for which it is more likely than not that all or a portion of the deferred tax assets will not be realized.

The Company files U.S. federal and state and foreign income tax returns in jurisdictions with varying statutes of limitations. All tax returns from 2015 to 2020 may be subject to examination by the Internal Revenue Service, California and other states. Returns filed in foreign jurisdictions may be subject to examination for the years 2011 to 2020. As of ~~June 30, 2021,~~March 31, 2022, the Company has 0t recorded any liability for unrecognized tax benefits related to uncertain tax positions.

In 2010, the Company adopted the 2010 Equity Incentive Plan and later amended it in 2014, 2017 and 2018 (the Amended 2010 Plan). The Amended 2010 Plan was terminated in August 2019 and remains in effect as to outstanding equity awards granted prior to the date of expiration. ~~As of June 30, 2021, no~~NaN new awards may be made under the Amended 2010 ~~Plan, and equity awards for approximately 115,358 shares were outstanding.~~Plan.

In August 2019, the Company’s stockholders approved the 2019 Stock Incentive Plan (the 2019 Plan), and it replaced the Amended 2010 Plan. The 2019 Plan authorizes the board of directors or the compensation committee of the board of directors to grant a broad range of awards including stock options, stock appreciation rights, restricted stock, performance-based awards, and restricted stock units. Under the 2019 Plan, 182,500 shares ~~have been~~were initially reserved for issuance. ~~The~~

In November 2021, in connection with the approval of the Arrangement, the Company’s stockholders approved an amendment increasing the number of shares reserved for issuance under the 2019 Plan provides for annual option grants or other awards to the Company’s non-employee directors to acquire up to 2,000 shares and for a one-time grant of an option or other award to a non-employee director to acquire up to 6,000 shares upon his or her initial appointment or election to the board of directors.by 3,106,937 shares.

Under the 2019 Plan, the term of all incentive stock options granted to a person who, at the time of grant, owns stock representing more than 10% of the voting power of all classes of the Company’s stock may not exceed five years. The exercise price of stock options granted under the 2019 Plan must be at least equal to the fair market value of the shares on the date of grant. Generally, awards under the 2019 Plan will vest over a three to four-year period, and options will have a term of 10 years from the date of grant. In addition, the 2019 Plan provides for automatic acceleration of vesting for options granted to non-employee directors upon a change of control of the Company.

In connection with the Arrangement, the Company assumed the Peraso Technologies Inc. 2009 Share Option Plan (the 2009 Plan) and all outstanding options granted pursuant to the terms of the 2009 Plan. Each outstanding, unexercised and unexpired option under the 2009 Plan, whether vested or unvested, was assumed by the Company and converted into options to purchase shares of the Company’s common stock and became exercisable by the holder of such option in accordance with its terms, with (i) the number of shares of common stock subject to each option multiplied by the Exchange Ratio and (ii) the per share exercise price upon the exercise of each option divided by the Exchange Ratio. In connection with the Arrangement, 0 further awards will be made under the 2009 Plan.

The 2009 Plan, the Amended 2010 Plan and the 2019 Plan are referred to collectively as the “Plans.”

~~The expense relating to stock options is recognized on a straight-line basis over~~Stock-Based Compensation Expense

At March 31, 2022, the ~~requisite service period, usually the vesting period, based on the grant-date fair value. The~~ unamortized compensation cost ~~as of June 30, 2021,~~ was ~~$0.1~~approximately $11.4 million related to stock options and is expected to be recognized as expense over a ~~weighted-average~~weighted average period of approximately ~~1.04~~3 years. The ~~expense~~unamortized compensation cost, at March 31, 2022, was $0.2 million related to restricted stock units ~~(RSUs) is generally recognized over a~~ ~~three-year~~ ~~vesting period and is based on the fair value of the underlying stock on the dates of grant. The unamortized~~

~~compensation cost, as of June 30, 2021, was $0.5~~ ~~million related to RSUs~~ and is expected to be recognized as expense over a ~~weighted-average~~weighted average period of approximately ~~0.9~~1.6 years.

For the three ~~and six~~ months ended ~~June 30,~~March 31, 2022 and 2021, ~~and 2020,~~ there were 0 excess tax benefits associated with the exercise of stock options due to the Company’s historical loss positions.

There were 0 stock options granted or exercised during the ~~six~~three months ended ~~June 30, 2021~~March 31, 2022 and ~~2020.~~2021.

The term of all incentive stock options granted to a person who, at the time of grant, owns stock representing more than 10% of the voting power of all classes of the Company’s stock may not exceed five years. The exercise price of stock options granted under the 2019 Plan must be at least equal to the fair market value of the shares on the date of grant. Generally, options granted under the 2019 Plan will vest over a three to four-year period and have a term of 10 years from the date of grant. In addition, the 2019 Plan provides for automatic acceleration of vesting for options granted to non-employee directors upon a change of control (as defined in the 2019 Plan) of the Company.

The following table summarizes the activity in the shares available for grant under the Plans during the ~~six~~three months ended ~~June 30, 2021~~March 31, 2022 (in thousands, except exercise price):

A summary of ~~RSUs~~RSU activity under the Plans is presented below (in thousands, except for fair value):

~~The fair value of the RSU granted during the six months ended June 30, 2021 was $0.4 million.~~

The following table summarizes significant ranges of outstanding and exercisable options as of ~~June 30, 2021~~March 31, 2022 (in thousands, except contractual life and exercise price):

	Options Outstanding						Options Exercisable						Options Outstanding						Options Exercisable
			Weighted												Weighted
			Average												Average
			Remaining		Weighted				Weighted						Remaining		Weighted				Weighted
			Contractual		Average				Average		Aggregate				Contractual		Average				Average		Aggregate
	Number		Life		Exercise		Number		Exercise		Intrinsic		Number		Life		Exercise		Number		Exercise		Intrinsic
Range of Exercise Price	Outstanding		(in Years)		Price		Exercisable		Price		value		Outstanding		(in Years)		Price		Exercisable		Price		value
$1.57 - $14.99		143		7.77	$	2.62		90	$	2.84	$	521		1,534		8.18	$	2.65		621	$	2.50	$	84
$15.00 - $25.59		8		2.24	$	15.00		8	$	15.00	$	—		4		1.49	$	15.00		4	$	15.00	$	—
$25.60 - $143.99		2		2.86	$	41.81		2	$	41.81	$	—		1		2.42	$	50.00		1	$	50.00	$	—
$144.00 - $409.99		5		5.15	$	144.00		5	$	144.00	$	—		5		4.40	$	144.00		5	$	144.00	$	—
$410.00 - $924.00		1		3.69	$	430.64		1	$	430.64	$	—		1		3.00	$	410.00		1	$	410.00	$	—
$1.57 - $924.00		159		7.30	$	10.82		106	$	15.09	$	521		1,545		8.15	$	3.43		632	$	4.42	$	84

~~There was 0 stock options exercised during the six months ended June 30, 2021 and 2020.~~

In February 2021, the Company completed a registered direct offering of securities under an effective registration statement filed with the SEC pursuant to the Securities Act of 1933, as amended. In the offering, the Company sold 1,487,601 shares of common stock at a price of $5.00 per share to institutional investors. Net proceeds of the offering, after placement agent and other fees and expenses paid by the Company, were approximately $6.8 million.

In June 2021, the Company completed a registered direct offering of securities under an effective registration statement filed with the SEC pursuant to the Securities Act of 1933, as amended. In the offering, the Company sold 1,818,181 shares of common stock at a price of $7.15 per share to institutional investors. Net proceeds of the offering, after placement agent and other fees and expenses paid by the Company, were approximately $12.0 million.

During the six months ended June 30, 2021, the Company received a total of $4,174,018 of proceeds from the exercise of 1,739,174 warrants to purchase shares of common stock at a price of $2.40 per share.

As of March ~~2016,~~31, 2022, the Company ~~entered into a 10% Senior Secured Convertible Note Purchase Agreement (the Purchase Agreement) with~~had the ~~purchasers of $8,000,000 principal amount of 10% Senior Secured Convertible Notes due August 15, 2018 (the Notes), at par,~~following warrants outstanding (share amounts in a private placement transaction effected pursuant to an exemption from the registration requirements under the Securities Act of 1933, as amended. Pursuant to amendments to the Notes and related documents in February and October 2018, the interest rate was reduced to 8%, the maturity date of the Notes was extended to August 15, 2023, and the optional conversion price was reduced from $170.00 of Note principal per share of common stock to $11.434 of Note principal per share of common stock.

In accordance with the October 2018 amendment to the Notes, the Company used $7.4 million of the proceeds from a public offering of securities effected in October 2018 to repay a portion of the Notes. Semi-annual interest payments have been made in each of February 2019, August 2019, February 2020 and August 2020 for approximately $78,000, $109,000, $112,000 and $122,000, respectively, in-kind with the issue of additional notes (Interest Notes) to the Purchasers. The Interest Notes have terms identical to the Notes.

The Company issued 42,672 shares of its common stock valued at $139,964 to the Note holder in settlement of the accrued interest of $123,066 for the six month period ended February 15, 2021. The Company recorded a loss of $16,898 on this payment, which was recorded in other income in the condensed consolidated statements of operation.

In January and February 2021, a holder of warrants, who was also the holder of the Notes, exercised warrants to purchase 613,791 shares of the Company’s common stock at an exercise price of $2.40 per share for total proceeds ofthousands):

~~$1,473,098. The proceeds from the exercise of these warrants were used to repay a portion of the principal amount of the Notes.~~

In March 2021, the Company made a repayment of $1,554,173 in settlement of the outstanding principal amount of the Notes, and the Note holder’s security interest was terminated. The Company recorded a gain of $64,757 on the Note settlement, and the gain was recorded in other income in the condensed consolidated statements of operations.

On May 7, 2020, the Company entered into a Promissory Note with Wells Fargo Bank, N.A. (the Lender) in an aggregate principal amount of $579,330 (the PPP Note), pursuant to the Paycheck Protection Program (the PPP) under the CARES Act.

The Company applied to the Lender for forgiveness of the PPP Note, under the terms of the PPP, and, in May 2021, obtained forgiveness for the full amount of the PPP Note and recognized the forgiven amount in other income in the condensed consolidated statements of operations.

On February 5, 2021, March 5, 2021 and September 17, 2021 the Company raised additional funds from the second, third and fourth draws under the SRED financing of $274,715 (CDN$350,000), $274,715 (CDN$350,000) and $745,655 (CDN$950,000) respectively, totaling year to date gross proceeds of $1,295,085 (CDN$1,650,000) net of financing fees of $32,770 (CDN$41,750). The loan agreement for all tranches carried an interest rate of 1.6% per month, compounded monthly (20.98%). The loan was sanctioned against the Company’s tax credit refund.

The ~~Company has 1 lease, which is~~first, second and third draws, including interest of $136,900 (CDN$174,417), were repaid through proceeds from the ~~lease for its corporate facility that expires in July 2022, that it accounts for under Accounting Standards Update No. 2016-02.~~Company’s tax credit refund of $1,093,230 (CDN$1,392,831) and the balance of $184,558 (CDN$ 235,132) was paid from the fourth draw. The ~~right-of-use asset and corresponding liability~~remaining loan balance, including interest, of $816,964 (CDN$1,044,177) was repaid on December 16, 2021.

Interest expense of $513,438 for the ~~facility lease have been measured at the present value~~three months ended March 31, 2021 consisted of, ~~the future minimum lease payments. The~~i) $348,134 of amortization of debt discount ~~rate used to measure the lease asset~~ and ~~liability represents the~~$120,950 of interest ~~rate~~expense on the ~~Notes (8%). Lease~~convertible debt and ii) $44,354 of interest expense ~~is recognized~~ on ~~a straight-line basis over~~ the ~~lease term, and operating lease expense was approximately $0.1 million and $0.1 million for the six months ended June 30, 2021 and 2020, respectively.~~ ~~The Company does not have an option to extend the lease term beyond the current extension.~~SRED financing.

~~Future minimum payments under the facility operating lease at June 30, 2021 were as follows (in thousands):~~

~~Supplemental cash flow information related to the operating lease was as follows (in thousands):~~

ITEM 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

This Management’s Discussion and Analysis of Financial Condition and Results of Operations should be read in conjunction with the accompanying condensed consolidated financial statements and notes included in this report. This Form 10-Q contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, which include, without limitation, statements about the market for our technology, our strategy, competition, expected financial performance and capital raising ~~efforts,~~effort., the impacts of COVID-19 on our business, and other aspects of our business identified in our most recent annual report on Form 10-K filed with the Securities and Exchange Commission on March ~~18, 2021~~31, 2022 and in other reports that we file from time to time with the Securities and Exchange Commission. Any statements about our business, financial results, financial condition and operations contained in this Form 10-Q that are not statements of historical fact may be deemed to be forward-looking statements. Without limiting the foregoing, the words “believes,” “anticipates,” “expects,” “intends,” “plans,” “projects” or similar expressions are intended to identify forward-looking statements. Our actual results could differ materially from those expressed or implied by these forward-looking statements as a result of various factors, including the risk factors described under Item 1A of our annual report on Form 10-K for the year ended December 31, ~~2020~~2021 and the risk factors described below under Item 1A of this Form 10-Q. We undertake no obligation to update publicly any forward-looking statements for any reason, except as required by law, even as new information becomes available or events occur in the future.

We were formerly known as MoSys, Inc. (MoSys) and were incorporated in California in 1991 and reincorporated in Delaware in 2000. On September 14, 2021, we and our subsidiaries, 2864552 Ontario Inc. and 2864555 Ontario Inc., entered into an Arrangement Agreement (the Arrangement Agreement) with Peraso Technologies Inc. (Peraso Tech), a corporation existing under the laws of the province of Ontario, to acquire all of the issued and outstanding common shares of Peraso Tech (the Peraso Shares), including those Peraso Shares to be issued in connection with the conversion or exchange of secured convertible debentures and common share purchase warrants of Peraso Tech, as applicable, by way of a statutory plan of arrangement (the Arrangement) under the Business Corporations Act (Ontario). On December 17, 2021, following the satisfaction of the closing conditions set forth in the Arrangement Agreement, the Arrangement was completed and the Company changed its name to “Peraso Inc.” and began trading on the Nasdaq Stock Market under the symbol “PRSO.”

For accounting purposes, the legal subsidiary, Peraso Tech, has been treated as the accounting acquirer and we, the legal parent, have been treated as the accounting acquiree. The transaction has been accounted for as a reverse acquisition in accordance with Accounting Standards Codification (ASC) No. 805, Business Combinations (ASC 805). Accordingly, the financial condition and results of operations discussed herein are a continuation of Peraso Tech’s financial results prior to December 17, 2021 and exclude the financial results of us prior to December 17, 2021. See Note 2 to the condensed consolidated financial statements for additional disclosure.

Our strategy and primary business objective is to be a profitable, ~~intellectual property-rich~~IP-rich fabless semiconductor company offering integrated circuits ~~or ICs,~~(ICs), modules and related ~~software, firmware~~non-recurring engineering services. We specialize in the development of mmWave semiconductors, primarily in the 60 GHz spectrum band for 802.11ad/ay compliant devices and ~~intellectual property, or IP,~~ in the 28/39 GHz spectrum bands for 5G-compliant devices. We derive our revenue from selling semiconductor devices, as well as modules based on using those mmWave semiconductor devices. We have pioneereda high-volumemmWaveproductiontestmethodologyusingstandardlow costproductiontestequipment.Ithas takenusseveralyearsto refineperformanceof thisproductiontestmethodology,and we believe this places us in a leadershippositionin addressingoperationalchallengesof deliveringmmWaveproductsintohigh-volume markets. During 2021, weaugmented ourbusinessmodeland began sellingcompletemmWavemodules.The primary advantageprovidedby a moduleisthesiliconand theantennaareintegratedintoa singledevice.A differentiatingcharacteristicof mmWavetechnologyisthat ~~deliver unparalleled~~theradio frequencyamplifiersmustbe as closeas possibleto the antennato minimizeloss, and, by providinga module,wecan guaranteetheperformanceof the amplifier/antenna interface.

We also acquired a memory bandwidth and access rate performance for high-performance data processing in cloud networking, communications, security appliances, video, test and monitoring, and data center systems. Our solutions deliver time-to-market, performance, power, area and economic benefits for system original equipment manufacturers, or OEMs. Our primary product line, is marketed under the Accelerator Engine name and that comprises our Bandwidth Engine and Programmable HyperSpeed Engine IC products, which integrate our proprietary, 1T-SRAM high-density embedded memory and a highly-efficient serial interface protocol resulting in a monolithic memory IC solution optimized for memory bandwidth and transaction access performance. Our second-generation Bandwidth Engine, or Bandwidth Engine 2, products are expected to be our primary revenue source through at least 2021, and we expect these products to continue to generate significant revenue thereafter. As we are not developing new ICmemory products, from a product development perspective, we continue to leverage our current technologies and core competencies to expand our product offerings without incurring significant additional ~~R&D~~research and development (R&D) expenses. We are developing our Virtual Accelerator Engine, or VAE, product line consisting of software, firmware and IP available for license. This product line will include multiple function accelerator platform products, which target specific application functions and will use a common software interface to allow performance scalability over multiple hardware environments. These function accelerator platform products are hardware agnostic and operate with or without one of our Accelerator Engine ICs. This software-defined, hardware-accelerated platform architecture utilizes an internally developed graphical memory engine architecture to provide flexible data classification and analysis capability. We believe the technology will generate new opportunities that require less up-front architectural changes by system designers and provide a scalable performance roadmap of options using our Accelerator Engine ICs. Despite our limited new IC product development efforts, we believe our current hardware and software/firmware product portfolio positions us for future growth and profitability.

We incurred net losses of approximately ~~$2.6~~$6.8 million for the ~~six~~three months ended ~~June 30, 2021~~March 31, 2022 and ~~$3.8 million and $2.6~~$10.8 million for the ~~years~~year ended December 31, ~~2020 and 2019, respectively,~~2021 and had an accumulated deficit of approximately ~~$245.2~~$124.0 million as of ~~June 30, 2021.~~ March 31, 2022. These and prior year losses have resulted in significant negative cash flows ~~for almost a decade~~ and have ~~necessitated that we~~required us to raise substantial amounts of additional capital during this period. ~~To date, we have primarily financed our operations through multiple offerings of common stock to investors and affiliates, as well as asset sale transactions and one offering of convertible notes.~~

We ~~may continue~~expect to incur operating losses and will need to increase revenues substantially beyond levels that we have attained in the past in order to generate sustainable operating profit and sufficient cash flows to continue doing business without raising additional capital from time to time.

The global outbreak of the coronavirus disease 2019 (COVID-19) was declared a pandemic by the World Health Organization and a national emergency by the U.S. government in March 2020. This has negatively affected the U.S. and global economy, disrupted global supply chains, significantly restricted travel and transportation, resulted in mandated closures and orders to “shelter-in-place” and created significant disruption of the financial markets. The full extent of the COVID-19 impact on our operational and financial performance will depend on future developments, including the duration and spread of the pandemic and related actions taken by the U.S. and foreign government agencies to prevent disease spread, all of which are uncertain, out of our control, and cannot be predicted.

InSince March 2020, ~~Santa Clara County~~certain jurisdictions in ~~California, where~~which we ~~are based,~~operate have issued ~~a ”shelter-in-place” order (the Order) that was effective through the first quarter of 2021.~~’shelter-in-place” orders. We have ~~been complying~~complied with ~~the Order~~these orders and, ~~have~~when such orders were in place, minimized business activities at our ~~San Jose headquarters facility (our only facility) since March 2020.~~facilities. We have implemented a teleworking policy for our employees and contractors to reduce on-site activity at our facility. The Order impacted our ability to produce and ship our IC products in the second half of March 2020, as certain of our vendors in the San Francisco Bay Area closed in accordance with the Order. In April 2020, we resumed shipments of our IC products, as we and our vendors are supporting shipment of components for critical infrastructure.activity.

We remain diligent in continuing to identify and manage risks to our business given the changing uncertainties related to COVID-19. The ultimate impact of the ~~Covid-19~~COVID-19 pandemic on our business and results of operations is uncertain and difficult to predict, and we are closely monitoring impacts, especially to customer programs and our supply chain. We expect that the impacts of the COVID-19 pandemic will continue to have a negative impact on our revenues for the remainder of 2021, although we are not in a position to quantify such impacts. In addition, we have and continue to experience ~~shortages and~~ longer lead times for certain components used to manufacture our IC products. While we believe that our operations personnel are currently in a position to meet expected customer demand levels in the coming quarters, we recognize that unpredictable events could create difficulties in the months ahead. We may not be able to address these difficulties in a timely manner, which could negatively impact our business, results of operations, financial condition and cash flows.

The continued spread of COVID-19 has also led to disruption and volatility in the global capital markets. ~~During the six months ended June 30, 2021, we were able to raise additional capital and make full repayment of our convertible notes payable (see discussion below under Liquidityand in Notes 8 and 9 to the condensed consolidated financial statements included in Part I, Item I of this Form 10-Q), however, if we need~~Our ability to raise additional capital to support operations in the future may be impacted, and we may be unable to access the capital markets and additional capital may only be available to us on terms that could be significantly detrimental to our existing stockholders and to our ~~business.~~ business.

For additional information on risks that could impact our future results, please refer to “Risk Factors” in Part II, Item 1A. of this quarterly report on Form 10-Q.

Revenue is recognized when performance obligations under the terms of a contract with a customer are satisfied. The majority of our contracts have a single performance obligation to transfer products. Accordingly, we recognize revenue when title and risk of loss have been transferred to the customer, generally ~~recognized~~ at the time of shipment of products. Revenue is measured as the amount of consideration we expect to receive in exchange for transferring products and is generally based upon a negotiated, formula, list or fixed price. We sell our ~~customers. An~~products both directly to customers and through distributors generally under agreements with payment terms typically 60 days or less.

We may record an estimated allowance, ~~may be recorded,~~ at the time of shipment, for future returns and other charges against revenue consistent with the terms of sale.

Our licensing contracts typically provide for royalties based on the licensee’s use of our memory technology in ~~their~~its currently shipping commercial products. We estimate its royalty revenue in the ~~period~~calendar quarter in which the licensee uses the licensed technology. Payments are received in the ~~following period.~~subsequent quarter. We also generate revenue from licensing

our technology. We recognize license fees as revenue at the point of time when the control of the license has been transferred and we have no continuing performance obligations to the customer.

The discussion and analysis of our financial condition and results of operations are based upon our condensed consolidated financial statements, which have been prepared in accordance with GAAP. The preparation of these condensed consolidated financial statements requires us to make certain estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses. On an ongoing basis we make these estimates based on our historical experience and on assumptions that we consider reasonable under the circumstances. Actual results may differ from these estimates and reported results could differ under different assumptions or conditions. Our significant accounting policies and estimates are disclosed in Note 1 of the “Notes to Consolidated Financial Statements” in our annual report on Form 10-K for the year ended December 31, ~~2020.~~2021. As of ~~June 30, 2021,~~March 31, 2022, there have been no material changes to our significant accounting policies and estimates.

Product revenue ~~decreased~~increased for the three ~~and~~ months ended ~~June 30, 2021~~March 31, 2022 compared with the same period of ~~2020~~2021 primarily due to ~~lower~~a full quarter contribution of revenues from our memory IC products and increased shipments of our mmWave module products. We commenced selling our module products in the second quarter of 2021. We expect revenues to increase in 2022, as we expect increased sales of our ~~Bandwidth Engine 2~~mmWave products and ~~LineSpeed IC~~full-year contribution of revenues from our memory products.

~~Royalty~~License and other includes ~~license,~~ royalty, non-recurring engineering (NRE), services and ~~related revenues generated from licensing agreements.~~licenses revenues. The ~~decrease~~increase in ~~royalty~~license and other revenue for the three ~~and six~~ months ended ~~June 30, 2021~~March 31, 2022 compared with the same period of ~~2020~~2021 was primarily due to a ~~decrease in~~full quarter contribution of royalty revenues ~~and $0.1 million~~from licensees of ~~non-recurring license revenues recognized during the three months ended June 30, 2020.~~our memory technology.

Cost of net revenue is primarily comprised of direct and indirect costs related to the sale of our IC products.

Cost of net revenue ~~decreased~~increased for the three ~~and six~~ months ended ~~June 30, 2021~~March 31, 2022 when compared with the same ~~periods~~period in ~~2020,~~2021, primarily due to ~~decreased~~increased shipment volumes of our LineSpeed and Bandwidth Engine IC and mmWave module products. Our module products have higher cost of goods sold per unit and generate lower gross profit margin than our IC products.

Gross profit decreased for the three ~~and six~~ months ended ~~June 30, 2021~~March 31, 2022 compared with the same period of ~~2020~~2021 due to the ~~decrease in gross profit attributable to the decreases in revenues.~~increased product shipments.

Our ~~research and development~~R&D expenses include costs related to the development of our ~~IC products and VAE IP.~~products. We expense ~~research and development~~R&D costs as they are incurred.

The increase for the three ~~and six~~ months ended ~~June 30, 2021~~March 31, 2022 compared with the same period of ~~2020~~2021 was primarily due to ~~increases~~the inclusion of a full quarter of expenses related to the former operations of MoSys, amortization of intangible assets in ~~personnel costs due to headcount increases~~the first quarter of 2022 and ~~increases~~recognition of government wage and rent subsidies in ~~consulting costs for development~~the first quarter of ~~our VAE-IP.~~2021 that reduced operating expenses. We expect that total research and development expenses will increase in ~~2021~~2022 compared with ~~2020~~2021, as we ~~incur increased~~will include the operations of MoSys and increase development ~~costs for~~of our ~~VAE IP.~~mmWave products and technologies. In addition, we do not expect to receive any government subsidies in 2022 that would reduce our expenses.

Selling, general and administrative ~~or SG&A,~~(SG&A), expenses consist primarily of personnel and related overhead costs for sales, marketing, finance, human resources and general management.

The increase for the three ~~and six~~ months ended ~~June 30, 2021~~March 31, 2022 compared with the same period of ~~2020~~2021 was primarily due to ~~increases in legal, consulting and professional services fees. We expect total SG&A~~the inclusion of a full quarter of expenses related to ~~remain relatively consistent for~~ the ~~remainder~~former operations of ~~2021.~~MoSys.

Interest expense ~~consisted of interest expense on our senior secured convertible notes (the Notes). As of~~incurred during the quarter ended March 31, 2021 ~~we had~~related to our loans payable, which were repaid ~~the full remaining principal amount of the Notes and accrued interest. We do not expect to incur interest expense~~ during ~~the remainder of~~ 2021. ~~See Note 9 to the condensed consolidated financial statements for additional disclosure.~~

As of ~~June 30, 2021,~~March 31, 2022, we had cash, cash equivalents and investments of ~~$23.1~~$12.2 million and working capital of ~~$19.9~~$13.7 million. We believe that cash generated from our liquidity sources will be sufficient to meet both our short-term and long-term working capital and capital expenditure needs for at least the ~~foreseeable future.~~next twelve months.

Net cash used in operating activities was ~~$2.8~~$5.7 million for the first ~~six~~three months of ~~2021,~~2022, which primarily resulted from our net loss of ~~$2.6~~$6.8 million ~~adjusted for a $0.6 million of gains for debt extinguishment, which was partially offset by $0.2~~and $1.0 million in net changes in assets and liabilities, ~~and~~partially offset by non-cash charges of ~~$0.2 million.~~$0.8 million of depreciation and amortization, $1.2 million of stock based compensation and a $0.1 million

loss on disposal of property and equipment. The changes in assets and liabilities primarily related to the timing of accounts receivable collections, purchases of inventory and other vendor payables and prepayments.

Net cash used in operating activities was ~~$1.2~~$1.3 million for the first ~~six~~three months of ~~2020,~~2021, which primarily resulted from our net loss of ~~$2.0~~$4.2 million, which was partially offset by ~~$0.5~~$0.9 million in net changes in assets and liabilities and non-cash charges of ~~$0.2~~$1.2 million of stock-based compensation, $0.3 million of depreciation and amortization expenses, $0.3 million amortization of debt discount and ~~$0.1~~$0.2 million of accrued interest. The changes in assets and liabilities primarily related to the timing of accounts receivable collections and ~~inventory and~~ other vendor payables and prepayments.

Net cash ~~used in investing activities of $9.6 million for the six months ended June 30, 2021 represented purchases of investments. Net cash~~ provided by investing activities of $3.6 million for the ~~six~~three months ended ~~June 30, 2020 was mainly due to the~~March 31, 2022 represented $4.2 million in proceeds from maturities of short-term investments, partially offset by $0.5 million purchases of ~~$0.3 million.~~short and long-term investments and $0.1 million of purchases of property and equipment. Net cash used in investing activities for the three months ended March 31, 2021 represented approximately $9,000 of purchases of property and equipment.

Net cash used in financing activities for the three months ended March 31, 2022 consisted of taxes paid to net share settle equity awards.

Net cash provided by financing activities ~~of $20.0 million~~ for the ~~six~~three months ended ~~June 30,~~March 31, 2021 ~~primarily~~ consisted of ~~$6.8 million and $12.0 million in~~ net proceeds received from the registered direct offerings of our common stock completed in February 2021 and June 2021, respectively, and $4.2 million of proceeds from the exercise of warrants to purchase shares of common stock at a price of $2.40 per share. We used approximately $3 million of these proceeds to repay in full the outstanding balance of the Notes.

Net cash provided by financing activities of $2.2 million for the six months ended June 30, 2020 primarily consisted of $1.6 million in net proceeds received from the sale of common stock in a registered direct offering of securities completed in April 2020 and $0.6 million of proceeds from an unsecured ~~loan under the Paycheck Protection Program.~~loan.

Our future liquidity and capital requirements are expected to vary from quarter-to-quarter, depending on numerous factors, including:

Our primary need for liquidity is to fund working capital requirements of our ~~business and~~businesses, capital expenditures ~~as well as~~and for general corporate purposes. We expect our cash expenditures to exceed receipts in ~~2021,~~2022, as we do not expect our revenues will ~~not~~ be sufficient to offset our working capital requirements. ~~During the six months ended June 30, 2021, we completed two registered direct offerings of our common stock that generated~~We incurred a net ~~proceeds~~loss of approximately ~~$18.8 million. Also, during 2021, we received proceeds of $4.2~~$6.8 million ~~from the exercise of common stock warrants. During~~for the three months ended ~~June 30,2021, we repaid in full the outstanding principal balance of our Notes. In May 2020, we entered into a Promissory Note with Wells Fargo Bank, N.A. (the Lender) in~~March 31, 2022 and had an ~~aggregate principal amount~~accumulated deficit of approximately ~~$0.6~~$124.0 million ~~(the PPP Note), pursuant~~as of March 31, 2022. These and prior year losses have resulted in significant negative cash flows and have required us to ~~the Paycheck Protection Program (the PPP)~~raise substantial amounts of additional capital during this period. To date, we have primarily financed our operations through multiple equity offerings, issuances of convertible debentures, utilization of loan facilities and government subsidies and credits. However, there can be no assurance that our capital is sufficient to fund operations until such time as we begin to achieve positive cash flows. We have an effective shelf registration statement under ~~the CARES Act. In March 2021,~~which we ~~applied for forgiveness~~could sell additional securities without advance notice.

We may need to raise additional capital, but there can be no assurance that such funding will be available to us on favorable terms, if at all. The failure to raise capital when needed could have a material adverse effect on our business and financial condition. We may not be able to obtain additional financing as needed on acceptable terms, or at all, which may require us to reduce our operating costs and other expenditures, including reductions of ~~the PPP Note under the terms of the PPP,~~personnel, salaries and capital expenditures. Alternatively, or in addition to such potential measures, we may elect to implement additional cost reduction actions as we may determine are necessary and in ~~May 2021,~~our best interests. Any such actions undertaken might limit our opportunities to realize plans for revenue growth and we ~~obtained forgiveness of the full amount of the PPP Note from the Lender. As a result of these activities, at June 30, 2021,~~might not be able to reduce our costs in amounts sufficient to achieve break-even or profitable operations.

~~In the event that~~were to raise additional ~~financing is required~~capital through sales of our equity securities, our stockholders would suffer dilution of their equity ~~ownership, and we may be required to accept other terms that could be significantly detrimental to our existing stockholders and to our business.~~ownership. If we engage in debt financing, we may be required to accept terms that restrict our ability to incur additional indebtedness, prohibit us from paying dividends, repurchasing our stock or making investments, and force us to maintain specified liquidity or other ratios, any of which could ~~be significantly detrimental to~~harm our business, operating results and financial condition. If we need additional capital and cannot raise it on acceptable terms, we may not be able to, among other things:

Our failure to do any of these things could seriously harm our ability to execute our business strategy and may force us to curtail our existing operations or ~~research and development~~R&D plans.

We do not maintain any off-balance sheet arrangements or obligations that are reasonably likely to have a material current or future effect on our financial condition, results of operations, liquidity or capital resources.

See Note 1 to the condensed consolidated financial statements for a discussion of recent accounting policies.

Disclosure Controls and Procedures. Our management is responsible for establishing and maintaining adequate internal control over our financial reporting. Because of inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

Under the supervision and with the participation of our management, including our Chief Executive Officer and Chief Financial Officer, we conducted an evaluation of the effectiveness of the design and operation of our disclosure controls and procedures, as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934. Based on this evaluation, our management concluded that, as of ~~June 30, 2021,~~March 31, 2022, our disclosure controls and procedures were effective.

Changes in Internal Control over Financial Reporting. During the ~~six~~three months ended ~~June 30, 2021,~~March 31, 2022, there was no change in our internal control over financial reporting that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

The discussion of legal matters in Note 4 of the Notes to Condensed Consolidated Financial Statements included in Part I, Item 1 of this report under the heading “Legal Matters” is incorporated by reference in response to this Part II, Item 1.

We face many significant risks in our business, some of which are unknown to us and not presently foreseen. These risks could have a material adverse impact on our business, financial condition and results of operations in the future. ~~Except as set forth below, there~~There have been no material changes with respect to the risk factors disclosed under Item 1A of our annual report on Form 10-K for the year ended December 31, ~~2020,~~2021, which we filed with the SEC on March ~~18, 2021.~~

The full effects of COVID-19 and other potential future public health crises, epidemics, pandemics or similar events are uncertain and could have a material and adverse effect on our business, financial condition, operating results and cash flows.

The global outbreak of the coronavirus disease 2019, or COVID-19, was declared a pandemic by the World Health Organization and a national emergency by the U.S. government in March 2020. This has negatively affected the world economy, disrupted global supply chains, significantly restricted travel and transportation, resulted in mandated closures and orders to “shelter-in-place” and created significant disruption of the financial markets. The extent of the impact on our operational and financial performance will depend on future developments, including the duration and spread of the pandemic and related actions U.S. and foreign government agencies continue to take to prevent disease spread, all of which are uncertain, out of our control and cannot be predicted.

In accordance with applicable U.S. governmental ordinances generally exempting essential businesses and/or critical infrastructure workforces from mandated closures and orders to “shelter-in-place,” we are operating in support of essential products and services, subject to limitations and requirements in applicable state and county orders. We have been complying with county and state orders and have implemented a teleworking policy for our employees and contractors and significantly minimized the number of employees who visit our office. Since the outbreak of COVID-19, while we have experienced increased lead times for wafers, substrates and assembly services, and, more recently, shortages, we have experienced minimal impact on our production operations and, to date, have been able to satisfy all customer purchase orders timely. However, a facility closure, work slowdowns or temporary stoppage at one of our manufacturing suppliers could occur, which could have a longer-term impact and could delay our production and ability to conduct business and negatively impact our business, financial condition, operating results and cash flows.

If our workforce is unable to work effectively, including because of illness, quarantines, absenteeism, government actions, facility closures, travel restrictions or other restrictions in connection with the COVID-19 pandemic, our operations will be negatively impacted. We may be unable to produce and sell our IC products, and our costs may increase as a result of the COVID-19 outbreak. The impacts could worsen if there is an extended duration of any COVID-19 outbreak or a resurgence of COVID-19 infection in affected regions after they have begun to experience improvement.

The continued spread of COVID-19 has also led to disruption and volatility in the global capital markets. Although we were able to access the capital markets in connection with our February 2021 and June 2021 registered direct offerings, we may be unable to access the capital markets, and additional capital may only be available to us on terms that could be significantly detrimental to our existing stockholders and to our business.

We are working with our stakeholders, including customers, suppliers and employees, to address the impact of this global pandemic. We continue to monitor the situation, to assess further possible implications to our business, supply chain and customers, and to take actions in an effort to mitigate adverse consequences. Should such disruption continue for an extended period of time, or if and when the pandemic ends, the resumption of normal business operations may be delayed or constrained by lingering effects of the pandemic (including limitations imposed by governmental authorities on our ability to return to normal operating practices). These effects, alone or taken together, could have a material adverse impact on our business, results of operations or financial condition.31, 2022.

Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

Delaware		77-0291941
(State or other jurisdiction		(I.R.S. Employer
of Incorporation or organization)		Identification Number)

PART I —	FINANCIAL INFORMATION	3

Item 1.	Financial Statements (Unaudited):	3

	Condensed Consolidated Balance Sheets as of ~~June 30, 2021~~March 31, 2022 and December 31, ~~2020~~2021	3

	Condensed Consolidated Statements of Operations and Comprehensive Loss for the three ~~and six~~ months ended ~~June 30,~~March 31, 2022 and 2021 ~~and 2020~~	4

	Condensed Consolidated Statements of Stockholders’ Equity (Deficit) for the three ~~and six~~ months ended ~~June 30,~~March 31, 2022 and 2021 ~~and 2020~~	5

	Condensed Consolidated Statements of Cash Flows for the ~~six~~three months ended ~~June 30,~~March 31, 2022 and 2021 ~~and 2020~~	6

	Notes to Condensed Consolidated Financial Statements	7

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	1622

Item 4.	Controls and Procedures	2128

PART II —	OTHER INFORMATION	2228

Item 1.	Legal Proceedings	2228

Item 1A.	Risk Factors	2228

Item 6.	Exhibits	2429

	Signatures	2530


	December 31,
	2021
Assets:	(in thousands)
Cash, cash equivalents and investments	$	19,064
Other current assets		2,558
Other assets		833
Intangibles
Developed technology		5,726
Customer relationships		2,556
		8,282
Goodwill		9,946
Liabilities:
Current liabilities		3,056
	$	37,627

	Three Months Ended
	March 31,
	2022
Right-of-use assets:
Operating leases	$	496
Finance lease		274
Total right-of-use assets	$	770
Lease liabilities:
Operating leases	$	559
Finance lease		274
Total lease liabilities	$	833

	Operating
Year ending December 31,	leases
2022	$	292
2023		305
Total future lease payments		597
Less: imputed interest		(38	)
Present value of lease liabilities	$	559

Large accelerated filer	☐	Accelerated filer	☐
Non-accelerated filer	☒	Smaller reporting company	☒
Emerging growth company	☐


Type	Number of Shares		Exercise Price		Expiration
Common stock		33	$	47.00	January 2023
Common stock		106	$	2.40	October 2023

	Three Months Ended
	March 31, 2021
	(in thousands)
Revenue	$	2,439
Net loss	$	(5,526	)

	June 30, 2021									March 31, 2022
			Unrealized		Unrealized			Fair				Unrealized		Unrealized			Fair
	Cost		Gains		Losses			Value		Cost		Gains		Losses			Value
Cash and cash equivalents	$	13,475	$	0	$	0		$	13,475	$	3,791	$	0	$	0		$	3,791
Short-term investments		6,094		0		(3	)		6,091		6,001		0		(8	)		5,993
Long-term investments		3,485		0		(1	)		3,484		2,428		0		(29	)		2,399
	$	23,054	$	0	$	(4	)	$	23,050	$	12,220	$	0	$	(37	)	$	12,183

	December 31, 2020
			Unrealized		Unrealized		Fair
	Cost		Gains		Losses		Value
Cash and cash equivalents	$	5,889	$	0	$	0	$	5,889

	December 31, 2021
			Unrealized		Unrealized			Fair
	Cost		Gains		Losses			Value
Cash and cash equivalents	$	5,893	$	0	$	0		$	5,893
Short-term investments		9,276		0		(9	)		9,267
Long-term investments		2,935		0		(7	)		2,928
	$	18,104	$	0	$	(16	)	$	18,088

	June 30, 2021								March 31, 2022
	Fair Value		Level 1		Level 2		Level 3		Fair Value		Level 1		Level 2		Level 3
Money market funds	$	8,246	$	8,246	$	—	$	—	$	41	$	41	$	—	$	—
Corporate notes and commercial paper ~~(1)~~	$	11,625	$	—	$	11,625	$	—	$	8,392	$	—	$	8,392	$	—
	$	19,871	$	8,246	$	11,625	$	—	$	8,433	$	41	$	8,392	$	—

				Weighted
				Average
	Number of			Grant-Date
	Shares			Fair Value
Non-vested shares as of January 1, 2021		65		$	3.48
Granted		10		$	3.25
Vested		(17	)	$	3.78
Non-vested shares as of March 31, 2021		58		$	3.35
Granted		59		$	6.70
Vested		(2	)	$	3.11
Non-vested shares as of June 30, 2021		115		$	5.08

	Operating
Year ending December 31,	lease
2021	$	104
2022		113
Total future lease payments		217
Less: imputed interest		(6	)
Present value of lease liabilities	$	211

	June 30,						Change					March 31,						Change
	2021			2020			2020 to 2021					2022			2021			2021 to 2022
	(dollar amounts in thousands)											(dollar amounts in thousands)
Product -three months ended	$	1,017		$	1,679		$	(662	)	(39	)%	$	3,204		$	1,051		$	2,153	205	%
Percentage of total net revenue		87	%		85	%							94	%		95	%
Product -six months ended	$	2,195		$	2,747		$	(552	)	(20	)%
Percentage of total net revenue		88	%		85	%

(a)	Exhibits

	~~10.23(1)~~	~~First Amendment to Executive Severance and Change-In-Control Policy dated April 28, 2021~~
	~~10.24(2)~~	~~Form of Securities Purchase Agreement dated June 7, 2021~~
	31.1*	Rule 13a-14 certification
	31.2*	Rule 13a-14 certification
	32.1**	Section 1350 certifications
	101*	The following financial information from ~~MoSys,~~Peraso Inc.’s quarterly report on Form 10-Q for the period ended ~~June 30, 2021,~~March 31, 2022, filed with the SEC on ~~August 12, 2021,~~May 13, 2022, formatted in Inline Extensible Business Reporting Language (Inline XBRL): (i) the Condensed Consolidated Statements of Operations and Comprehensive Income (Loss) for the three ~~and six~~ months ended ~~June 30,~~March 31, 2022 and 2021, ~~and 2020,~~ (ii) the Condensed Consolidated Balance Sheets as of ~~June 30, 2021~~March 31, 2022 and December 31, ~~2020,~~2021, (iii) the Condensed Consolidated Statements of ~~Changes in~~ Stockholders’ Equity (Deficit) for the three ~~and six~~ months ended ~~June 30,~~March 31, 2022 and 2021, ~~and 2020,~~ (iv) the Condensed Consolidated Statements of Cash Flows for the ~~six~~three months ended ~~June 30,~~March 31, 2022 and 2021, ~~and 2020,~~ and (v) Notes to Condensed Consolidated Financial Statements.
	104*	Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101).

	~~(1)~~	~~Incorporated by reference to Exhibit 10.23 to Form 10-Q filed by the Company on May 13, 2021 (Commission File No. 000-32929)~~
	~~(2)~~	~~Incorporated by reference to Exhibit 10.1 to Form 8-K filed by the Company on June 7, 2021 (Commission File No. 000-32929)~~


Dated: ~~August 12, 2021~~May 13, 2022		~~MOSYS,~~PERASO INC.

	By:	/s/ ~~Daniel Lewis~~Ronald Glibbery
		~~Daniel Lewis~~Ronald Glibbery
		~~President and~~ Chief Executive Officer (Principal Executive Officer)

	By:	/s/ James W. Sullivan
		James W. Sullivan
		~~Vice President of Finance and~~ Chief Financial Officer
		(Principal Financial and Accounting Officer)