What changed in this filing

/stocks — the workspaceLOADING

Item 1A. Risk Factors

2025-03-28 compared with 2024-03-29 · 906 added, 916 removed, 27 unchanged (99% of the section changed)

Risk Factors.

The following risks could materially and adversely affect our business,

financial condition, cash flows, and results of operations, and could cause the trading price of our common stock to decline.

factors do not identify all of the risks that we face.

Our operations could also be affected by factors that are not presently known to

us or that we currently consider to be immaterial to our operations.

Due to risks and uncertainties, known and unknown, our past financial

results may not be a reliable indicator of future performance, and historical trends should not be used to anticipate results or trends

in future periods.

Refer also to the other information set forth in this Report, including in Part II, Item 7, Management’s Discussion

and Analysis of Financial Condition and Results of Operations , as well as our Consolidated Financial Statements and the related notes

in Part II, Item 15.

Summary of Risk Factors

The following summarizes the

risks and uncertainties that could materially adversely affect our business, financial condition, results of operation and stock price.

following risks could materially and adversely affect our business, financial condition, cash flows, and results of operations, and could

cause the trading price of our common stock to decline.

These risk factors do not identify all of the risks that we face.

Our operations

could also be affected by factors that are not presently known to us or that we currently consider to be immaterial to our operations.

Due to risks and uncertainties, known and unknown, our past financial results may not be a reliable indicator of future performance,

and historical trends should not be used to anticipate results or trends in future periods.

Refer also to the other information set forth

in this Report, including in Part II, Item 7, Management’s Discussion and Analysis of Financial Condition and Results of Operations ,

as well as our Consolidated Financial Statements and the related notes in Part II, Item 15.

of Risk Factors

following summarizes the risks and uncertainties that could materially adversely affect our business, financial condition, results of

operation and stock price.

You should read this summary together with the more detailed description of each risk factor contained below.

● We intend to discontinue the production of our memory products.

● We have a history of losses, and we will need to raise additional

● Our failure to generate the significant capital necessary

or raise additional capital to expand our operations and invest in new products could reduce our ability to compete and could harm our

● We may fail to achieve the intended cost savings and related

benefits from our reduction in workforce and temporary lay-offs.

● Our failure to successfully market our products could seriously

harm our ability to execute our business strategy and may force us to curtail our research and development plans or existing operations.

● Future revenue growth depends on our winning designs with

existing and new customers, retaining current customers, and having those customers design our solutions into their product offerings

and successfully selling and marketing such products.

If we do not continue to win designs in the short term, our product revenue in

the following years will not grow.

● To date, we have not achieved the anticipated benefits of

a fabless semiconductor company.

● Our main objective is the development and sale of our technologies

to service providers, cloud networking, security, test and video system providers and their subsystem and component vendors and, if demand

for these products does not grow, we may not achieve revenue growth and our strategic objectives.

● Our failure to continue to develop new products and enhance

our products on a timely basis could diminish our ability to attract and retain customers.

● Our products have a lengthy sales cycle, which makes it difficult

to predict success in this market and the timing of future revenue.

● The semiconductor industry is cyclical in nature and subject

to periodic downturns, which can negatively affect our revenue.

● Our revenue has been highly concentrated among a small number

of customers, and our results of operations could be harmed if we lose a key revenue source and fail to replace it.

● Our revenue concentration may also pose credit risks which

could negatively affect our cash flow and financial condition.

● Our products must meet exact specifications and defects and

failures may occur, which may cause customers to return or stop buying our products.

● Because we sell our products on a purchase order basis and

rely on estimated forecasts of our customers’ needs, inaccurate forecasts could adversely affect our business.

● We rely on independent foundries and contractors for the manufacture,

assembly, testing and packaging of our integrated circuits and modules, and the failure of any of these third parties to deliver products

or otherwise perform as requested could damage our relationships with our customers and harm our sales and financial results.

● Disruptions in our supply chain due to shortages in the global

semiconductor supply chain could cause delays for customers and impact revenue.

● Any claim that our products or technology infringe third party

IP rights could increase our costs of operation and distract management and could result in expensive settlement costs or the discontinuance

of our technology licensing or product offerings.

In addition, we may incur substantial litigation expense which would adversely affect

our profitability.

● The discovery of defects in our technology and products could

expose us to liability for damages.

● We might not be able to protect and enforce our IP rights

which could impair our ability to compete and reduce the value of our technology.

● Third parties might attempt to gain unauthorized access to

our network or seek to compromise our products and services.

● There may be future sales of our common stock, which could

adversely affect the market price of our common stock and dilute a stockholder’s ownership of common stock.

● Provisions of our certificate of incorporation and bylaws

or Delaware law might delay or prevent a change-of-control transaction and depress the market price of our stock.

● If we are unable to satisfy the continued listing requirements

of the Nasdaq, our common stock could be delisted and the price and liquidity of our common stock may be adversely affected.

Related to Our Business, Operations and Industry

We might not be able to continue as a going concern.

Our consolidated financial

statements as of December 31, 2023 have been prepared under the assumption that we will continue as a going concern for the next twelve

As of December 31, 2023, we had cash and cash equivalents of $1.6 million and an accumulated deficit of $166.0 million.

2024, we completed a public offering of our common stock and warrants for net proceeds of approximately $3.4 million.

We believe that

the net proceeds that we received from our February 2024 offering, together with our existing cash and cash equivalents, will enable us

to meet our capital needs through at least the fourth quarter of 2024.

Our ability to continue as

a going concern is dependent upon our ability to raise additional capital and to achieve sustainable revenues and profitable operations.

We 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.

As a result of

our expected operating losses and cash burn for the foreseeable future and recurring losses from operations, if we are unable to raise

sufficient capital through additional debt or equity arrangements, there will be uncertainty regarding our ability to maintain liquidity

sufficient to operate our business effectively, which raises substantial doubt as to our ability to continue as a going concern.

cannot continue as a viable entity, our stockholders would likely lose most or all of their investment in us.

If we are unable to generate

sustainable operating profit and sufficient cash flows, then our future success will depend on our ability to raise capital.

be certain that raising additional capital, whether through selling additional debt or equity securities or obtaining a line of credit

or other loan, will be available to us or, if available, will be on terms acceptable to us.

If we issue additional securities to raise

funds, these securities may have rights, preferences, or privileges senior to those of our common stock, and our current stockholders

may experience dilution.

If we are unable to obtain funds when needed or on acceptable terms, we may be required to curtail our current

product development programs, cut operating costs, forego future development and other opportunities or even terminate our operations.

Our forecast of the period

of time through which our financial resources will be adequate to support our operating requirements is a forward-looking statement and

involves risks and uncertainties, and actual results could vary as a result of a number of factors, including the factors discussed elsewhere

in this “ Risk Factors ” section.

We have based this estimate on a number of assumptions that may prove to be wrong and

changing circumstances beyond our control may cause us to consume capital more rapidly than we currently anticipate.

Our inability to

obtain additional funding when we need it could seriously harm our business.

We intend to discontinue the production

of our memory products.

Taiwan Semiconductor Manufacturing

Corporation, or TSMC, is the sole foundry that manufactures the wafers used to produce our memory IC products.

TSMC has informed us that

it will be discontinuing the foundry process used to produce the wafers necessary to produce our memory ICs.

We are not in a position

to transition wafer production to a new foundry and continue to manufacture these products.

As a result, we have informed our customers

that we have initiated an end-of-life, or EOL, of our memory IC products.

We expect to fulfill product EOL orders through at least December

Our memory IC products represented over 50% of our revenues for the year ended December 31, 2022 and over 60% of our revenues

for the year ended December 31, 2023.

The discontinuation of the production and sale of our memory IC products will negatively impact

our future revenues, results of operations and cash flows.

Our gross profit may fluctuate due to a

variety of factors, which could negatively impact our results of operations and our financial condition.

Our gross profit may fluctuate

due to a number of factors, including customer and product mix, market acceptance of our new products, yield, wafer pricing, packaging

and testing costs, competitive pricing dynamics, charges for inventory write-downs and geographic and market pricing strategies.

extent we may offer or be contractually obligated to offer certain customers favorable prices, it would decrease our average selling prices

and likely impact our gross profit.

In the possible event our customers, including our larger customers, exert more pressure with respect

to pricing and other terms, it could put downward pressure on our profit.

Because we do not operate

our own wafer fabrication, assembly, or testing facilities, we may not be able to reduce our costs as rapidly as companies that operate

their own facilities, and in fact, our costs may even increase, which could further reduce our gross profit.

We seek yield improvements

and volume-based cost reductions to enable cost reductions.

To the extent that such cost reductions do not occur at a sufficient level

and in a timely manner, our business, financial condition, and results of operations could be adversely affected and may vary from our

In addition, we maintain an

inventory of our products at various stages of production, as well as an inventory of finished goods.

As we are generally a sole-source

supplier, we hold these inventories in anticipation of customer orders.

If those customer purchase orders do not materialize in a timely

manner or customers do not honor those purchase orders, we can have excess or obsolete inventory which we would have to write-down, and

our gross profit and results of operations would be adversely affected.

During the years ended December 31, 2023 and 2022, we recorded

inventory write-downs of approximately $3.5 million and $0.4 million, respectively.

We have a history of losses, and we will

need to raise additional capital.

We incurred net losses of approximately

$16.8 million and $32.4 million for the years ended December 31, 2023 and 2022, respectively, and we had an accumulated deficit of approximately

$166.4 million as of December 31, 2023.

These and prior-year losses have resulted in significant negative cash flows.

To remain competitive

and expand our product offerings to customers, we 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.

Given our history of fluctuating revenues and operating losses, and the challenges we face in securing customers

for our products, we cannot be certain that we will be able to achieve and maintain profitability on either a quarterly or annual basis

in the future.

As a result, we may need to raise additional capital in the future, which may or may not be available to us at all or only

on unfavorable terms.

Our failure to generate the significant

capital necessary or raise additional capital to expand our operations and invest in new products could reduce our ability to compete

and could harm our business.

We intend to continue spending

to grow our business.

If we do not achieve and maintain profitability, we will need additional financing to pursue our business strategy,

develop new products, respond to competition and market opportunities and acquire complementary businesses or technologies.

be no assurance that such additional capital, whether in the form of debt or equity financing, will be sufficient or available and, if

available, that such capital will be offered on terms and conditions acceptable to us.

If we were to raise additional

capital through sales of our equity securities, our stockholders would suffer dilution of their equity 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 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:

develop or enhance our products;

continue to expand our product development and sales and marketing organizations;

acquire complementary technologies, products or businesses;

expand operations, in the United States or internationally;

hire, train and retain employees;

respond to competitive pressures or unanticipated working capital requirements.

We may fail to achieve the intended cost

savings and related benefits from our reduction in workforce and temporary lay-offs.

In February 2023, we implemented

a reduction in our workforce and eliminated five positions to help us achieve a more cost-efficient organization.

In November 2023, we

further reduced our workforce by eliminating three full-time equivalent positions, which included one employee and two consultants, and

we initiated a temporary lay-off in Canada of 16 positions, all intended to preserve cash while keeping capital expenditures to minimum

levels in order to reduce operating costs and our short-term cash needs.

We may fail to effectively

execute on, or achieve the intended goals of, the reductions in operating costs.

Our plans may also change as we continue to refocus on

reducing operating costs and streamlining operations, while at the same time conserving cash by delaying or deferring certain expenditures

These actions may take more time than we currently estimate and we may not be able to achieve the cost-efficiencies sought.

addition, if we do not recall the impacted Canadian employees, we estimate that the total non-recurring charges would approximate $0.5

million to $1.0 million, primarily consisting of severance payments, notice pay, and employee benefit payments.

We expect that the majority

of the charges would be incurred by June 30, 2024.

The charges that we expect to incur are subject to a number of assumptions, including

legal requirements in various jurisdictions, and actual expenses may differ materially from the estimates disclosed above.

Moreover, the reduction in

workforce may negatively impact employee morale for those who are not directly impacted, which may increase employee attrition and hurt

future recruiting efforts, hindering our ability to achieve our key priorities.

Any failure to achieve the expected benefits from the

reduction in workforce and any charges we incur if we do not recall the impacted Canadian employees could adversely affect our stock price,

financial condition and ability to achieve our goals.

Failure to comply with laws relating to

employment could subject us to penalties and other adverse consequences.

We are subject to various

employment-related laws in the jurisdictions in which our employees are based.

We face risks if we fail to comply with applicable U.S.

We discontinued the production of our memory products.

We have a history of losses,

and we will need to raise additional capital.

Our failure to generate

the significant capital necessary or raise additional capital to expand our operations and invest in new products could reduce our

ability to compete and could harm our business.

Our reduction in force

undertaken to significantly reduce our ongoing operating expenses may not result in our intended outcomes and may yield unintended

consequences and additional costs.

Our failure to successfully

market our products could seriously harm our ability to execute our business strategy and may force us to curtail our research and

development plans or existing operations.

Future revenue growth depends

on our winning designs with existing and new customers, retaining current customers, and having those customers design our solutions

into their product offerings and successfully selling and marketing such products.

If we do not continue to win designs in the short

term, our product revenue in the following years will not grow.

To date, we have not achieved

the anticipated benefits of a fabless semiconductor company.

Our main objective is the

development and sale of our technologies to OEMS, service providers and other equipment manufacturers and their subsystem and component

vendors and, if demand for these products does not grow, we may not achieve revenue growth and our strategic objectives.

Our failure to continue

to develop new products and enhance our products on a timely basis could diminish our ability to attract and retain customers.

Our products have a lengthy

sales cycle, which makes it difficult to predict success in this market and the timing of future revenue.

The semiconductor industry

is cyclical in nature and subject to periodic downturns, which can negatively affect our revenue.

Our revenue has been highly

concentrated among a small number of customers, and our results of operations could be harmed if we lose a key revenue source and

fail to replace it.

Our revenue concentration

may also pose credit risks which could negatively affect our cash flow and financial condition.

Our products must meet

exact specifications and defects and failures may occur, which may cause customers to return or stop buying our products.

Because we sell our products

on a purchase order basis and rely on estimated forecasts of our customers’ needs, inaccurate forecasts could adversely affect

our business.

We rely on independent

foundries and contractors for the manufacture, assembly, testing and packaging of our integrated circuits and modules, and the failure

of any of these third parties to deliver products or otherwise perform as requested could damage our relationships with our customers

and harm our sales and financial results.

Disruptions in our supply

chain due to shortages in the global semiconductor supply chain could cause delays for customers and impact revenue.

Any claim that our products

or technology infringe third party IP rights could increase our costs of operation and distract management and could result in expensive

settlement costs or the discontinuance of our technology licensing or product offerings.

In addition, we may incur substantial litigation

expense which would adversely affect our profitability.

The discovery of defects

in our technology and products could expose us to liability for damages.

We might not be able to

protect and enforce our IP rights, which could impair our ability to compete and reduce the value of our technology.

We currently maintain and may expand operations outside of the United

States, which exposes us to significant risks.

International trade policies,

including protectionist trade policies, such as tariffs and sanctions, could adversely affect our business, results of operations

and financial condition.

Third parties might attempt

to gain unauthorized access to our network or seek to compromise our products and services.

Related to Our Securities

There may be future sales

of our common stock, which could adversely affect the market price of our common stock and dilute a stockholder’s ownership

of common stock.

Provisions of our certificate

of incorporation and bylaws or Delaware law might delay or prevent a change-of-control transaction and depress the market price of

If we are unable to satisfy

the continued listing requirements of the Nasdaq, our common stock could be delisted and the price and liquidity of our common stock

may be adversely affected.

Related to Our Business, Operations and Industry

might not be able to continue as a going concern.

consolidated financial statements as of December 31, 2024 have been prepared under the assumption that we will continue as a going concern

for the next twelve months.

As of December 31, 2024, we had cash and cash equivalents of $3.3 million and an accumulated deficit of $177.1

We believe that our existing cash and cash equivalents will enable us to meet our capital needs through at least the second

quarter of 2025.

ability to continue as a going concern is dependent upon our ability to raise additional capital and to achieve sustainable revenues

and profitable operations.

We 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

As a result of our expected operating losses and cash burn for the foreseeable future and recurring losses from operations,

if we are unable to raise sufficient capital through additional debt or equity arrangements, there will be uncertainty regarding our

ability to maintain liquidity sufficient to operate our business effectively, which raises substantial doubt as to our ability to continue

as a going concern.

If we cannot continue as a viable entity, our stockholders would likely lose most or all of their investment in us.

we are unable to generate sustainable operating profit and sufficient cash flows, then our future success will depend on our ability

to raise capital.

We cannot be certain that raising additional capital, whether through selling additional debt or equity securities

or obtaining a line of credit or other loan, will be available to us or, if available, will be on terms acceptable to us.

additional securities to raise funds, these securities may have rights, preferences, or privileges senior to those of our common stock,

and our current stockholders may experience dilution.

If we are unable to obtain funds when needed or on acceptable terms, we may be

required to curtail our current product development programs, cut operating costs, forego future development and other opportunities

or even terminate our operations.

forecast of the period of time through which our financial resources will be adequate to support our operating requirements is a forward-looking

statement and involves risks and uncertainties, and actual results could vary as a result of a number of factors, including the factors

discussed elsewhere in this “ Risk Factors ” section.

We have based this estimate on a number of assumptions that may

prove to be wrong and changing circumstances beyond our control may cause us to consume capital more rapidly than we currently anticipate.

Our inability to obtain additional funding when we need it could seriously harm our business.

discontinued the production of our memory products.

Semiconductor Manufacturing Corporation, or TSMC, is the sole foundry that manufactures the wafers used to produce our memory IC products.

TSMC informed us that it would be discontinuing the foundry process used to produce the wafers necessary to produce our memory ICs.

we were not in a position to transition wafer production to a new foundry and continue to manufacture these products, we initiated an

end-of-life, or EOL, of our memory IC products in 2023, and ceased production of these products in 2024.

As of December 31, 2024, we

had remaining EOL purchase orders from customers totaling approximately $2.3 million, and we expect to ship all of these orders by March

We do not expect any further shipments or to generate any meaningful revenue from shipments of our memory IC products after

For the years ended December 31, 2024 and 2023, our memory IC products represented over 85% and 60% of our revenues, respectively.

The discontinuation of the production and sale of our memory IC products will negatively impact our future revenues, results of operations

and cash flows.

gross profit may fluctuate due to a variety of factors, which could negatively impact our results of operations and our financial condition.

gross profit may fluctuate due to a number of factors, including customer and product mix, market acceptance of our new products, yield,

wafer pricing, packaging and testing costs, competitive pricing dynamics, charges for inventory write-downs and geographic and market

pricing strategies.

To the extent we may offer or be contractually obligated to offer certain customers favorable prices, it would decrease

our average selling prices and likely impact our gross profit.

In the possible event our customers, including our larger customers, exert

more pressure with respect to pricing and other terms, it could put downward pressure on our profit.

we do not operate our own wafer fabrication, assembly, or testing facilities, we may not be able to reduce our costs as rapidly as companies

that operate their own facilities, and in fact, our costs may even increase, which could further reduce our gross profit.

We seek yield

improvements and volume-based cost reductions to enable cost reductions.

To the extent that such cost reductions do not occur at a sufficient

level and in a timely manner, our business, financial condition, and results of operations could be adversely affected and may vary from

our estimates.

addition, we maintain an inventory of our products at various stages of production, as well as an inventory of finished goods.

are generally a sole-source supplier, we hold these inventories in anticipation of customer orders.

If those customer purchase orders

do not materialize in a timely manner or customers do not honor those purchase orders, we can have excess or obsolete inventory which

we would have to write-down, and our gross profit and results of operations would be adversely affected.

During the years ended December

31, 2024 and 2023, we recorded inventory write-downs of approximately $0.4 million and $3.5 million, respectively.

have a history of losses, and we will need to raise additional capital.

incurred net losses of approximately $10.7 million and $16.8 million for the years ended December 31, 2024 and 2023, respectively,

and we had an accumulated deficit of approximately $177.1 million as of December 31, 2024.

These and prior-year losses have

resulted in significant negative cash flows.

To remain competitive and expand our product offerings to customers, we 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.

Given our history of fluctuating revenues

and operating losses, and the challenges we face in securing customers for our products, we cannot be certain that we will be able to

achieve and maintain profitability on either a quarterly or annual basis in the future.

As a result, we may need to raise additional

capital in the future, which may or may not be available to us at all or only on unfavorable terms.

failure to generate the significant capital necessary or raise additional capital to expand our operations and invest in new products

could reduce our ability to compete and could harm our business.

intend to continue spending to grow our business.

If we do not achieve and maintain profitability, we will need additional financing

to pursue our business strategy, develop new products, respond to competition and market opportunities and acquire complementary businesses

or technologies.

There can be no assurance that such additional capital, whether in the form of debt or equity financing, will be sufficient

or available and, if available, that such capital will be offered on terms and conditions acceptable to us.

we were to raise additional capital through sales of our equity securities, our stockholders would suffer dilution of their equity 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 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:

develop or enhance our

continue to expand our

product development and sales and marketing organizations;

acquire complementary technologies,

products or businesses;

expand operations, in the

United States or internationally;

hire, train and retain

respond to competitive

pressures or unanticipated working capital requirements.

reduction in force undertaken to significantly reduce our ongoing operating expenses may not result in our intended outcomes and may

yield unintended consequences and additional costs.

November 2023, we implemented an employee lay-off and terminated certain consulting positions (the “Reductions”) to reduce

operating expenses and cash burn, as we prioritized business activities and projects that we believe will have a higher return on investment.

As part of the Reductions, we implemented a temporary lay-off that impacted 16 employees (the “Employees”) of Peraso Tech.

In 2024, we determined that we would not recall any of the 11 Employees that remained on our payroll and commenced notifying the remaining

Employees that their employment would be terminated.

As a result, we recorded severance charges of approximately $0.4 million during

the year ended December 31, 2024, and, as of December 31, 2024, we had a remaining liability for severance costs of approximately $0.1

The accrued severance costs are expected to be paid through October 2025.

a result of the decision to not recall the Employees, we determined that it was probable that a number of our non-cancelable licenses

for computer-aided design software would not be utilized during the remaining license terms.

During the three months ended June 30, 2024,

we expensed the value of the remaining contractual liabilities and recorded liabilities of approximately $1.6 million.

As of December

31, 2024, we had a remaining liability of approximately $1.1 million, and we expect to pay these license fees through September 30, 2025.

addition to the costs associated with the non-cancelable license commitments for computer-aided design software, the Reductions may result

in other unintended consequences and costs, such as the loss of institutional knowledge and expertise, attrition beyond the intended

number of employees, decreased morale among our remaining employees, and the risk that we may not achieve the anticipated benefits of

the Reductions.

In addition, while positions have been eliminated, certain functions necessary to our operations remain, and we may be

unsuccessful in distributing the duties and obligations of departed employees among our remaining employees.

We may also be unsuccessful

in negotiating any desired strategic alternative or partnership relating to such functions on a timely basis, on acceptable terms, or

The Reductions could also make it difficult for us to pursue, or prevent us from pursuing, new opportunities and initiatives

due to insufficient personnel, or require us to incur additional and unanticipated costs to hire new personnel to pursue such opportunities

or initiatives.

Further, inflationary pressure may increase our costs, including employee compensation costs, or result in employee attrition

to the extent our compensation does not keep up with inflation, particularly if our competitors’ compensation does.

If we are unable

to realize the anticipated benefits from the Reductions, if we experience significant adverse consequences from the reduction in force,

or if we are otherwise unable to retain our employees, our business, financial condition, and results of operations may be materially

adversely affected.

to comply with laws relating to employment could subject us to penalties and other adverse consequences.

are subject to various employment-related laws in the jurisdictions in which our employees are based.

We face risks if we fail to comply

with applicable U.S.

federal or state employment and wage laws, or employment wage laws applicable to our employees located in Canada.

In November 2023, we

initiated a temporary lay-off in Canada of 16 positions.

The temporary lay-offs create an additional risk of claims being made on behalf

of affected employees.

Recently, the Company has received and, may in the future receive, claims made on behalf of employees, whom were

part of the temporary lay-off, regarding statutory and common law severance payments.

If such claims are successful and not mitigated

by employment practices insurance coverage, our required payments may be higher than we have initially estimated.

In addition, any violations

of applicable wage laws or other labor- or employment-related laws could result in complaints by current or former employees, adverse

media coverage, investigations, and damages or penalties which could have a materially adverse effect on our reputation, business, operating

results, and prospects.

In addition, responding to any such proceeding may result in a significant diversion of management’s attention

and resources, significant defense costs, and other professional fees.

Our failure to successfully market our products

could seriously harm our ability to execute our business strategy and may force us to curtail our research and development plans or existing

Our success depends upon the

acceptance by our target markets of our products and technologies.

Our prospective customers, which include original equipment manufacturers,

or OEMs, and service providers, may be unwilling to adopt and design-in our products due to the uncertainties and risks surrounding designing

a new IC or module and/or incorporating new IP into their systems and relying on a small, sole-sourced supplier.

Thus, currently, we do

not know whether we will be able to generate adequate profit from making and selling our products and licensing our technologies to sustain

our operations.

An important part of our strategy

to gain market acceptance is to penetrate new markets by targeting market leaders to accept our technology solutions.

This strategy is

designed to encourage other participants in those markets to follow these leaders in adopting our solutions.

If a high-profile industry

participant adopts our products for one or more of its products but fails to achieve success with those products, or is unable to successfully

implement our products, other industry participants’ perception of our solutions could be harmed.

Any such event could reduce the

amount of future sales of our products.

Future revenue growth depends on our winning

designs with existing and new customers, retaining current customers, and having those customers design our solutions into their product

offerings and successfully selling and marketing such products.

If we do not continue to win designs in the short term, our product revenue

in the following years will not grow.

We sell our ICs to customers

that include our ICs and modules in their products.

Our technology is generally incorporated into products at the design stage, which

we refer to as a design win, and which we define as the point at which a customer has made a commitment to build a board against a fixed

schematic for its system, and this board will utilize our products.

As a result, our future revenue depends on our OEM customers designing

our products into their products, and on those products being produced in volume and successfully commercialized.

If we fail to retain

our current customers or convince our current or prospective customers to include our products in their products and fail to achieve a

consistent number of design wins, our results of operations and business will be harmed.

In addition, if a current or prospective customer

designs a competitor’s offering into its product, it becomes significantly more difficult for us to sell our products to that customer

because changing suppliers involves significant cost, time, effort and risk for the OEM.

Even if a customer designs one of our ICs or

modules into its product, we cannot be assured that the OEM’s product will be commercially successful over time, or at all, or that

we will receive or continue to receive any revenue from that customer.

Furthermore, the customer product for which we obtain a design

win may be canceled before the product enters production or before or after it is introduced into the market.

Because of our extended

sales cycle, our revenue in future years is highly dependent on design wins we are awarded today.

Our lack of capital and uncertainty

about our future technology roadmap also may limit our success in achieving additional design wins, as discussed under “ We may

experience difficulties in transitioning to new wafer fabrication process technologies or in achieving higher levels of design integration,

which may result in reduced manufacturing yields, delays in product deliveries and increased costs .”

The design win process for our products

is generally lengthy, expensive and competitive, with no guarantee of revenue, and, if we fail to generate sufficient revenue to offset

our expenses, our business and operating results would suffer.

Achieving a design win for

one of our products is typically a lengthy, expensive and competitive process because our customers generally take a considerable amount

of time to evaluate our products.

In the markets we serve, the time from initial customer engagement to design win to production volume

shipments can range from one to three years, though it may take longer for new customers or markets we intend to address.

win designs, we are required to both incur design and development costs and dedicate substantial engineering resources in pursuit of a

single customer opportunity.

Even though we incur these costs we may not prevail in the competitive selection process, and, even if we

do achieve a design win, we may never generate sufficient, or any, revenue to offset our development expenditures.

Our customers have

the option to decide whether or not to put our solutions into production after initially designing our products in the specification.

The customer can make changes to its product after a design win has been awarded to us, which can have the effect of canceling a previous

The delays inherent in our protracted sales cycle increase the risk that a customer will decide to cancel, curtail, reduce

or delay its product plans, causing us to lose anticipated revenue.

The Reductions create an additional risk of claims being made on behalf of affected employees.

Recently, the Company has received and,

may in the future receive, claims made on behalf of employees, whom were part of the Reductions, regarding statutory and common law severance

If such claims are successful and not mitigated by employment practices insurance coverage, our required payments may be higher

than we have initially estimated.

In addition, any violations of applicable wage laws or other labor- or employment-related laws could

result in complaints by current or former employees, adverse media coverage, investigations, and damages or penalties, which could have

a materially adverse effect on our reputation, business, operating results, and prospects.

In addition, responding to any such proceeding

may result in a significant diversion of management’s attention and resources, significant defense costs, and other professional

failure to successfully market our products could seriously harm our ability to execute our business strategy and may force us to curtail

our research and development plans or existing operations.

success depends upon the acceptance by our target markets of our products and technologies.

Our prospective customers, which include

original equipment manufacturers, or OEMs, and service providers, may be unwilling to adopt and design-in our products due to the uncertainties

and risks surrounding designing a new IC or module and/or incorporating new IP into their systems and relying on a small, sole-sourced

Thus, currently, we do not know whether we will be able to generate adequate profit from making and selling our products and

licensing our technologies to sustain our operations.

important part of our strategy to gain market acceptance is to penetrate new markets by targeting market leaders to accept our technology

This strategy is designed to encourage other participants in those markets to follow these leaders in adopting our solutions.

If a high-profile industry participant adopts our products for one or more of its products but fails to achieve success with those products,

or is unable to successfully implement our products, other industry participants’ perception of our solutions could be harmed.

Any such event could reduce the amount of future sales of our products.

revenue growth depends on our winning designs with existing and new customers, retaining current customers, and having those customers

design our solutions into their product offerings and successfully selling and marketing such products.

If we do not continue to win

designs in the short term, our product revenue in the following years will not grow.

sell our ICs and modules to customers that include our products in their products.

Our technology is generally incorporated into products

at the design stage, which we refer to as a design win, and which we define as the point at which a customer has made a commitment to

build a board against a fixed schematic for its system, and this board will utilize our products.

As a result, our future revenue depends

on our OEM customers designing our products into their products, and on those products being produced in volume and successfully commercialized.

If we fail to retain our current customers or convince our current or prospective customers to include our products in their products

and fail to achieve a consistent number of design wins, our results of operations and business will be harmed.

In addition, if a current

or prospective customer designs a competitor’s offering into its product, it becomes significantly more difficult for us to sell

our products to that customer because changing suppliers involves significant cost, time, effort and risk for the OEM.

Even if a customer

designs one of our ICs or modules into its product, we cannot be assured that the OEM’s product will be commercially successful

over time, or at all, or that we will receive or continue to receive any revenue from that customer.

Furthermore, the customer product

for which we obtain a design win may be canceled before the product enters production or before or after it is introduced into the market.

Because of our extended sales cycle, our revenue in future years is highly dependent on design wins we are awarded today.

capital and uncertainty about our future technology roadmap also may limit our success in achieving additional design wins, as discussed

under “ We may experience difficulties in transitioning to new wafer fabrication process technologies or in achieving higher

levels of design integration, which may result in reduced manufacturing yields, delays in product deliveries and increased costs .”

design-win process for our products is generally lengthy, expensive and competitive, with no guarantee of revenue, and, if we fail to

generate sufficient revenue to offset our expenses, our business and operating results would suffer.

a design win for one of our products is typically a lengthy, expensive and competitive process because our customers generally take a

considerable amount of time to evaluate our products.

In the markets we serve, the time from initial customer engagement to design win

to production volume shipments can range from one to three years, though it may take longer for new customers or markets we intend to

In order to win designs, we are required to both incur design and development costs and dedicate substantial engineering resources

in pursuit of a single customer opportunity.

Even though we incur these costs we may not prevail in the competitive selection process,

and, even if we do achieve a design win, we may never generate sufficient, or any, revenue to offset our development expenditures.

customers have the option to decide whether or not to put our solutions into production after initially designing our products in the

specification.

The customer can make changes to its product after a design win has been awarded to us, which can have the effect of canceling

a previous design win.

The delays inherent in our protracted sales cycle increase the risk that a customer will decide to cancel, curtail,

reduce or delay its product plans, causing us to lose anticipated revenue.

In addition, any change, delay or cancellation of a customer’s

plans could harm our financial results, as we may have incurred significant expense while generating no revenue.

If our foundries do not achieve satisfactory

yields or quality, our cost of net revenue will increase, our operating margins will decline and our reputation and customer relationships

could be harmed.

We depend not only on sufficient

foundry manufacturing capacity and wafer prices, but also on good production yields (the number of good die per wafer) and timely wafer

delivery to meet customer demand and maintain profit margins.

The fabrication of our products is a complex and technically demanding process.

Minor deviations in the manufacturing process can cause substantial decreases in yields and, in some cases, cause production to be suspended.

From time to time, our foundries experience manufacturing defects and reduced manufacturing yields.

Changes in manufacturing processes

or the inadvertent use of defective or contaminated materials by our foundries could result in lower than anticipated manufacturing yields,

which would harm our revenue or increase our costs.

For example, in the past, one of our foundries produced ICs and met its process specification

range but did not meet our customer’s specifications causing us to write off a portion of our production lot.

Many of these problems

are difficult to detect at an early stage of the manufacturing process and may be time consuming and expensive to correct.

from our foundry, or defects, integration issues or other performance problems in our ICs, could cause us significant customer relations

and business reputation problems, harm our operating results and give rise to financial or other damages to our customers.

Our customers

might consequently seek damages from us for their losses.

A product liability claim brought against us, even if unsuccessful, would likely

be time consuming and costly to defend.

We may experience difficulties in transitioning

to new wafer fabrication process technologies or in achieving higher levels of design integration, which may result in reduced manufacturing

yields, delays in product deliveries and increased costs.

We aim to use the most advanced

manufacturing process technology appropriate for our solutions that is available from our foundries.

As a result, we periodically evaluate

the benefits of migrating our solutions to other technologies in order to improve performance and reduce costs.

These ongoing efforts

require us from time to time to modify the manufacturing processes for our products and to redesign some products, which in turn may result

in delays in product deliveries.

We are dependent on our foundries to support the production of wafers for future versions of our IC.

our foundries do not achieve satisfactory yields or quality, our cost of net revenue will increase, our operating margins will decline

and our reputation and customer relationships could be harmed.

depend not only on sufficient foundry manufacturing capacity and wafer prices, but also on good production yields (the number of good

die per wafer) and timely wafer delivery to meet customer demand and maintain profit margins.

The fabrication of our products is a complex

and technically demanding process.

Minor deviations in the manufacturing process can cause substantial decreases in yields and, in some

cases, cause production to be suspended.

From time to time, our foundries experience manufacturing defects and reduced manufacturing

Changes in manufacturing processes or the inadvertent use of defective or contaminated materials by our foundries could result

in lower than anticipated manufacturing yields, which would harm our revenue or increase our costs.

For example, in the past, one of

our foundries produced ICs and met its process specification range but did not meet our customer’s specifications causing us to

write off a portion of our production lot.

Many of these problems are difficult to detect at an early stage of the manufacturing process

and may be time consuming and expensive to correct.

Poor yields from our foundry, or defects, integration issues or other performance

problems in our ICs, could cause us significant customer relations and business reputation problems, harm our operating results and give

rise to financial or other damages to our customers.

Our customers might consequently seek damages from us for their losses.

liability claim brought against us, even if unsuccessful, would likely be time consuming and costly to defend.

may experience difficulties in transitioning to new wafer fabrication process technologies or in achieving higher levels of design integration,

which may result in reduced manufacturing yields, delays in product deliveries and increased costs.

aim to use the most advanced manufacturing process technology appropriate for our solutions that is available from our foundries.

a result, we periodically evaluate the benefits of migrating our solutions to other technologies in order to improve performance and

reduce costs.

These ongoing efforts require us from time to time to modify the manufacturing processes for our products and to redesign

some products, which in turn may result in delays in product deliveries.

We are dependent on our foundries to support the production

of wafers for future versions of our IC.

Such production may require changes to the foundry’s existing process technology.

If the foundry elects to not alter their process

technology to support future versions of our ICs, we would need to identify a new foundry.

As discussed under “ We

intend to discontinue the production of our memory products ,” TSMC, which is the sole foundry that manufactures the wafers used

to produce our memory IC products, has informed us that it will be discontinuing the foundry process used to produce the wafers necessary

to produce our memory ICs.

We are not in a position to transition wafer production to a new foundry and continue to manufacture these

foundry elects to not alter their process technology to support future versions of our ICs, we would need to identify a new foundry.

discussed under “ We discontinued the production of our memory products ,” TSMC, which is the sole foundry that manufactures

the wafers used to produce our memory IC products, informed us that it will be discontinuing the foundry process used to produce the

wafers necessary to produce our memory ICs.

We are not in a position to transition wafer production to a new foundry and continue to

manufacture these products.

As a result, we initiated an EOL of our memory IC products.

The discontinuation of the production and sale of our memory IC

products will negatively impact our future revenues, results of operations and cash flows.

To date, we have not achieved the anticipated

benefits of a fabless semiconductor company.

Our primary goal has been

to increase our total available market by creating high-performance ICs and modules for mmWave applications using our proprietary technology

and design expertise.

Historically, this development effort required that we add headcount and design resources, such as expensive software

tools, which increased our losses from, and cash used in, operations.

Our efforts to increase our revenue and expand our markets have

been subject to various risks and uncertainties, including, but not limited to:

The discontinuation of the production and sale

of our memory IC products will negatively impact our future revenues, results of operations and cash flows.

date, we have not achieved the anticipated benefits of a fabless semiconductor company.

primary goal has been to increase our total available market by creating high-performance ICs and modules for mmWave applications using

our proprietary technology and design expertise.

Historically, this development effort required that we add headcount and design resources,

such as expensive software tools, which increased our losses from, and cash used in, operations.

Our efforts to increase our revenue

and expand our markets have been subject to various risks and uncertainties, including, but not limited to:

a lack of working capital;

customer acceptance;

difficulties and delays in our product development, manufacturing, testing and marketing activities;

timeliness of new product introductions;

the anticipated costs and technological risks of developing and bringing our products to market;

the willingness of our manufacturing partners to assist successfully with fabrication;

our ability to qualify our products for mass production and achieve wafer yield levels and the final test results necessary to be price competitive;

the availability of quantities of our products supplied by our manufacturing partners at a competitive cost;

our ability to generate the desired gross margin percentages and return on our product development investment;

competition from established competitors;

the adequacy of our IP protection for our proprietary IC designs and technologies;

customer concerns over our financial condition and viability to be a long-term profitable supplier;

the vigor and growth of markets served by our current and prospective customers.

If we experience significant

delays in bringing our products to market, if customer adoption of our products is delayed or if our customers’ products that include

our products are not successful, this could have a material adverse effect on our anticipated revenues in upcoming years due to the potential

loss of design wins and future revenues.

Our main objective is the development and

sale of our technologies to service providers, cloud networking, security, test and video system providers and their subsystem and component

vendors and, if demand for these products does not grow, we may not achieve revenue growth and our strategic objectives.

We market and sell our products

and technology to mmWave, cloud networking, communications, data center and other equipment providers and their subsystem and component

We believe our future business and financial success depends on market acceptance and increasing sales of these products.

meet our growth and strategic objectives, networking infrastructure OEMs must incorporate our products into their systems and the demand

for their systems must grow as well.

We cannot provide assurance that sales of our products to these OEMs will increase substantially

in the future or that the demand for our customers’ systems will increase.

Our future revenues from these products may not increase

in accordance with our growth and strategic objectives if, instead, our OEM customers modify their product designs, select products sold

by our competitors or develop their own proprietary technologies.

Moreover, demand for their products that incorporate our technologies

may not grow or result in significant sales of such products due to factors affecting the customers and their business such as industry

downturns, declines in capital spending in the enterprise and carrier markets or unfavorable macroeconomic conditions.

Thus, the future

success of our business depends in large part on factors outside our control, and sales of our products may not meet our revenue growth

and strategic objectives.

Our failure to continue to develop new products

and enhance our products on a timely basis could diminish our ability to attract and retain customers.

The existing and potential

markets for our products are characterized by ever-increasing performance requirements, evolving industry standards, rapid technological

change and product obsolescence.

These characteristics lead to periodic changes in customer requirements, shorter product life cycles

and changes in industry demands and mandate new product introductions and enhancements to maintain customer engagements and design wins.

In order to attain and maintain a significant position in the market, we will need to continue to enhance and evolve our products and

the underlying proprietary technologies in anticipation of these market trends although we do not have a large engineering staff.

Our future performance depends

on a number of factors, including our ability to:

identify target markets and relevant emerging technological trends;

develop and maintain competitive technology by improving performance and adding innovative features that differentiate our products from alternative technologies;

enable the incorporation of our products into customers’ products on a timely basis and at competitive prices;

respond effectively to new technological developments or new product introductions by others.

Our failure to enhance our

existing products and develop future products that achieve broad market acceptance will harm our competitive position and impede our future

Our products have a lengthy sales cycle,

which makes it difficult to predict success in this market and the timing of future revenue.

Our products have a lengthy

sales cycle, ranging from six to 24 months from the date of our initial proposal to a prospective customer until the date on which the

customer confirms that it has designed our product into its system.

An even lengthier period could ensue before we would know the volume

of products that such customer will, or is likely to, order.

A number of factors can contribute to the length of the sales cycle including

technical evaluations of our products by the customers, the design process required to integrate our products into the customers’

products and the timing of the customers’ new product announcements.

In anticipation of product orders, we may incur substantial

costs before the sales cycle is complete and before we receive any customer payments.

As a result, in the event that a sale is not completed

or is cancelled or delayed, we may have incurred substantial expenses, making it more difficult for us to become profitable or otherwise

negatively impacting our financial results.

Furthermore, because of this lengthy sales cycle, the recording of revenues from our selling

efforts may be substantially delayed, our ability to forecast our future revenue may be more limited and our revenue may fluctuate significantly

from quarter to quarter.

We cannot provide any assurances that our efforts to build a strong and profitable business based on the sale

of ICs will succeed.

If these efforts are not successful, in light of the substantial resources that we have invested, our future operating

results and cash flows could be materially and adversely affected.

The semiconductor industry is cyclical in

nature and subject to periodic downturns, which can negatively affect our revenue.

The semiconductor industry

is cyclical and has experienced pronounced downturns for sustained periods of up to several years.

To respond to any downturn, many semiconductor

manufacturers and their customers will slow their research and development activities, cancel or delay new product developments, reduce

their workforces and inventories and take a cautious approach to acquiring new equipment and technologies.

As a result, our business has

been in the past and could be adversely affected in the future by an industry downturn which could negatively impact our future revenue

and profitability.

Also, the cyclical nature of the semiconductor industry may cause our operating results to fluctuate significantly

from year-to-year.

Our revenue has been highly concentrated

among a small number of customers, and our results of operations could be harmed if we lose a key revenue source and fail to replace it.

Our overall revenue has been

highly concentrated, with a few customers accounting for a significant percentage of our total revenue.

For the years ended December 31,

2023 and 2022, our three largest customers represented approximately 75% and 63% of total revenue, respectively.

We expect that a relatively

small number of customers will continue to account for a substantial portion of our revenue for the foreseeable future.

As a result of this revenue

concentration, our results of operations could be adversely affected by the decision of a single key customer to cease using our technology

or products or by a decline in the number of products that incorporate our technology that are sold by a single licensee or customer or

by a small group of licensees or customers.

Our revenue concentration may also pose

credit risks which could negatively affect our cash flow and financial condition.

We might also face credit

risks associated with the concentration of our revenue among a small number of licensees and customers.

At December 31, 2023 and 2022,

four customers represented approximately 83% and 79% of total trade receivables, respectively.

Our failure to collect receivables from

any customer that represents a large percentage of receivables on a timely basis, or at all, could adversely affect our cash flow or results

of operations.

Our products must meet exact specifications

and defects and failures may occur, which may cause customers to return or stop buying our products.

Our customers generally establish

demanding specifications for quality, performance and reliability that our products must meet.

However, our products are highly complex

and may contain defects and failures when they are first introduced or as new versions are released.

If defects and failures occur in

our products during the design phase or after, we could experience lost revenues, increased costs, including warranty and customer support

expenses and penalties for non-performance stipulated in customer purchase agreements, delays in or cancellations or rescheduling of orders

or shipments, product returns or discounts, diversion of management resources or damage to our reputation and brand equity, and in some

cases consequential damages, any of which would harm our operating results.

In addition, delays in our ability to fill product orders

as a result of quality control issues may negatively impact our relationship with our customers.

We cannot assure you that we will have

sufficient resources to satisfy any asserted claims.

Furthermore, any such defects, failures or delays may be particularly damaging to

us as we attempt to establish our reputation as a reliable provider of IC and module products.

Because we sell our products on a purchase

order basis and rely on estimated forecasts of our customers’ needs, inaccurate forecasts could adversely affect our business.

We sell our products pursuant

to individual purchase orders rather than long-term purchase commitments.

Therefore, we will rely on estimated demand forecasts, based

upon input from our customers, to determine how much product to manufacture.

Because our sales are based primarily on purchase orders,

our customers may cancel, delay or otherwise modify their purchase commitments with little or no notice to us.

For these reasons, we will

generally have limited visibility regarding our customers’ product needs.

In addition, the product design cycle for our customers

can be lengthy and it may be difficult for us to accurately anticipate when they will commence commercial shipments of products that include

our ICs or modules.

Furthermore, if we experience

substantial warranty claims, our customers may cancel existing orders or cease to place future orders.

Any cancellation, delay or other

modification in our customers’ orders could significantly reduce our revenue, cause our operating results to fluctuate from period

to period and make it more difficult for us to predict our revenue.

In the event of a cancellation or reduction of an order, we may not

have enough time to reduce operating expenses to mitigate the effect of the lost revenue on our business.

If we overestimate customer

demand for our products, we may purchase products from our manufacturers that we cannot sell.

Conversely, if we underestimate customer

demand or if sufficient manufacturing and testing capacity are unavailable, we would forego revenue opportunities and could lose market

share in the markets served by our products and could incur penalty payments under our customer purchase agreements.

In addition, our

inability to meet customer requirements for our products could lead to delays in product shipments, force customers to identify alternative

sources and otherwise adversely affect our ongoing relationships with our customers.

We depend on contract manufacturers for

a significant portion of our revenue from the sale of our products.

Many of our current and prospective

OEM customers use third party contract manufacturers to manufacture their systems and these contract manufacturers purchase our products

directly from us on behalf of the OEMs.

Although we expect to work with our OEM customers in the design and development phases of their

systems, these OEMs often give contract manufacturers some authority in product purchasing decisions.

If we cannot compete effectively

for the business of these contract manufacturers, or if any of the contract manufacturers that work with our OEM customers experience

financial or other difficulties in their businesses, our revenue and our business could be adversely affected.

For example, if a contract

manufacturer becomes subject to bankruptcy proceedings, we may not be able to obtain our products held by the contract manufacturer or

recover payments owed to us by the contract manufacturer for products already delivered to the contract manufacturer.

If we are unable

to persuade contract manufacturers to purchase our products, or if the contract manufacturers are unable to deliver systems with our products

to OEMs on a timely basis, our business would be adversely affected.

We rely on independent foundries and contractors

for the manufacture, assembly, testing and packaging of our integrated circuits and modules, and the failure of any of these third parties

to deliver products or otherwise perform as requested could damage our relationships with our customers and harm our sales and financial

As a fabless semiconductor

company, we rely on third parties for substantially all of our manufacturing operations.

We depend on these parties to supply us with

material in a timely manner that meets our standards for yield, cost and quality.

We do not have long-term supply contracts with any of

our suppliers or manufacturing service providers, and therefore they are not obligated to manufacture products for us for any specific

period, in any specific quantity or at any specified price except as may be provided in a particular purchase order.

Any problems with

our manufacturing supply chain could adversely impact our ability to ship our products to our customers on time and in the quantity required

which in turn could damage our customer relationships and impede market acceptance of our IC products.

Our third-party wafer foundry and testing

and assembly vendors are located in regions at high risk for earthquakes and other natural disasters and adverse consequences related

to the outbreak of contagious diseases, such as COVID-19.

Any disruption to the operations of these foundries and vendors resulting from

earthquakes or other natural disasters could cause significant delays in the development, production, shipment and sales of our IC products.

Certain vendors that we utilize

to manufacture our products are located in Asia, as are other foundries we may use in the future.

Our vendors that provide substrates

and wafer sorting and handle the testing of our products are headquartered in either Asia or the San Francisco Bay Area of California.

The risk of an earthquake in the Pacific Rim region is significant due to the proximity of major earthquake fault lines.

The occurrence

of earthquakes or other natural disasters could result in the disruption of the wafer foundry or assembly and test capacity of the third

parties that supply these services to us and may impede our research and development efforts as well as our ability to market and sell

our products.

We may not be able to obtain alternate capacity on favorable terms, if at all.

Global pandemics, such as

the COVID-19 pandemic, which was declared a pandemic by the World Health Organization and a national emergency by the U.S.

in March 2020, along with outbreaks of new contagious diseases or the resurgence of existing diseases that significantly affect the Asia-Pacific

region could disrupt the operations of our key suppliers and manufacturing partners.

Disruptions in our supply chain due to shortages

in the global semiconductor supply chain could cause delays for customers and impact revenue.

We have and may continue to

experience disruptions in our global semiconductor supply chain, with suppliers increasing lead times or placing products on allocation,

including procuring necessary components, wafers, substrates and assembly services in a timely fashion.

As a result of these supply chain

disruptions, we have had to increase customer order lead times, and we may be required to purchase some products on allocation.

be unable to satisfy all of the demand for our products, which may adversely affect customer relationships and impact revenue.

Price increases from our supply chain can

adversely impact revenue or reduce margins.

Our suppliers can increase

the price of products and services provided to us.

Finding and qualifying alternate or additional suppliers in response to increased pricing

from suppliers can be a lengthy process and can lead to production delays or additional costs, and such alternatives are sometimes not

If we are unable to increase the price of our products to our customers in response to increased costs, we would face reduced

Any claim that our products or technology

infringe third party IP rights could increase our costs of operation and distract management and could result in expensive settlement

costs or the discontinuance of our technology licensing or product offerings.

In addition, we may incur substantial litigation expense

which would adversely affect our profitability.

The semiconductor industry

is characterized by vigorous protection and pursuit of IP rights or positions which has resulted in often protracted and expensive litigation.

difficulties and delays

in our product development, manufacturing, testing and marketing activities;

timeliness of new product

introductions;

the anticipated costs and

technological risks of developing and bringing our products to market;

the willingness of our

manufacturing partners to assist successfully with fabrication;

our ability to qualify

our products for mass production and achieve wafer yield levels and the final test results necessary to be price competitive;

the availability of quantities

of our products supplied by our manufacturing partners at a competitive cost;

our ability to generate

the desired gross margin percentages and return on our product development investment;

competition from established

the adequacy of our IP

protection for our proprietary IC designs and technologies;

customer concerns over

our financial condition and viability to be a long-term profitable supplier;

the vigor and growth of

markets served by our current and prospective customers.

we experience significant delays in bringing our products to market, if customer adoption of our products is delayed or if our customers’

products that include our products are not successful, this could have a material adverse effect on our anticipated revenues in upcoming

years due to the potential loss of design wins and future revenues.

main objective is the development and sale of our technologies to OEMs, service providers and other equipment manufacturers and their

subsystem and component vendors and, if demand for these products does not grow, we may not achieve revenue growth and our strategic

market and sell our mmWave products and technology to OEMs, service providers and other equipment manufacturers in the defense and aerospace

and consumer product markets and their subsystem and component vendors.

We believe our future business and financial success depends

on market acceptance and increasing sales of these products.

To meet our growth and strategic objectives, OEMs, service providers and

other equipment manufacturers must incorporate our products into their systems and the demand for their systems must grow as well.

cannot provide assurance that sales of our products to these customers will increase substantially in the future or that the demand for

our customers’ or their customers’ systems will increase.

Our future revenues from these products may not increase in accordance

with our growth and strategic objectives, if, instead, our customers modify their product designs, select products sold by our competitors

or develop their own proprietary technologies.

Moreover, demand for their products that incorporate our technologies may not grow or

result in significant sales of such products due to factors affecting the customers and their business such as industry downturns, declines

in capital spending in the enterprise and carrier markets or unfavorable macroeconomic conditions.

Thus, the future success of our business

depends in large part on factors outside our control, and sales of our products may not meet our revenue growth and strategic objectives.

failure to continue to develop new products and enhance our products on a timely basis could diminish our ability to attract and retain

existing and potential markets for our products are characterized by ever-increasing performance requirements, evolving industry standards,

rapid technological change and product obsolescence.

These characteristics lead to periodic changes in customer requirements, shorter

product life cycles and changes in industry demands and mandate new product introductions and enhancements to maintain customer engagements

and design wins.

In order to attain and maintain a significant position in the market, we will need to continue to enhance and evolve

our products and the underlying proprietary technologies in anticipation of these market trends although we do not have a large engineering

future performance depends on a number of factors, including our ability to:

identify target markets

and relevant emerging technological trends;

develop and maintain competitive

technology by improving performance and adding innovative features that differentiate our products from alternative technologies;

enable the incorporation

of our products into customers’ products on a timely basis and at competitive prices;

respond effectively to

new technological developments or new product introductions by others.

failure to enhance our existing products and develop future products that achieve broad market acceptance will harm our competitive position

and impede our future growth.

products have a lengthy sales cycle, which makes it difficult to predict success in this market and the timing of future revenue.

products have a lengthy sales cycle, ranging from six to 24 months from the date of our initial proposal to a prospective customer until

the date on which the customer confirms that it has designed our product into its system.

An even lengthier period could ensue before

we would know the volume of products that such customer will, or is likely to, order.

A number of factors can contribute to the length

of the sales cycle including technical evaluations of our products by the customers, the design process required to integrate our products

into the customers’ products and the timing of the customers’ new product announcements.

In anticipation of product orders,

we may incur substantial costs before the sales cycle is complete and before we receive any customer payments.

As a result, in the event

that a sale is not completed or is cancelled or delayed, we may have incurred substantial expenses, making it more difficult for us to

become profitable or otherwise negatively impacting our financial results.

Furthermore, because of this lengthy sales cycle, the recording

of revenues from our selling efforts may be substantially delayed, our ability to forecast our future revenue may be more limited and

our revenue may fluctuate significantly from quarter to quarter.

We cannot provide any assurances that our efforts to build a strong

and profitable business based on the sale of ICs will succeed.

If these efforts are not successful, in light of the substantial resources

that we have invested, our future operating results and cash flows could be materially and adversely affected.

semiconductor industry is cyclical in nature and subject to periodic downturns, which can negatively affect our revenue.

semiconductor industry is cyclical and has experienced pronounced downturns for sustained periods of up to several years.

to any downturn, many semiconductor manufacturers and their customers will slow their research and development activities, cancel or

delay new product developments, reduce their workforces and inventories and take a cautious approach to acquiring new equipment and technologies.

As a result, our business has been in the past and could be adversely affected in the future by an industry downturn which could negatively

impact our future revenue and profitability.

Also, the cyclical nature of the semiconductor industry may cause our operating results

to fluctuate significantly from year-to-year.

revenue has been highly concentrated among a small number of customers, and our results of operations could be harmed if we lose a key

revenue source and fail to replace it.

overall revenue has been highly concentrated, with a few customers accounting for a significant percentage of our total revenue.

the years ended December 31, 2024 and 2023, our three largest customers represented approximately 86% and 75% of our total revenue, respectively.

We expect that a relatively small number of customers will continue to account for a substantial portion of our revenue for the foreseeable

a result of this revenue concentration, our results of operations could be adversely affected by the decision of a single key customer

to cease using our technology or products or by a decline in the number of products that incorporate our technology that are sold by

a single licensee or customer or by a small group of licensees or customers.

revenue concentration may also pose credit risks which could negatively affect our cash flow and financial condition.

We might also face credit risks associated with the concentration of

our revenue among a small number of licensees and customers.

At December 31, 2024, three customers represented approximately 91% of total

trade receivables and at December 31, 2023, three customers represented approximately 83% of total trade receivables.

Our failure to collect

receivables from any customer, which represents a large percentage of receivables, on a timely basis, or at all, could adversely affect

our cash flow or results of operations.

products must meet exact specifications and defects and failures may occur, which may cause customers to return or stop buying our products.

customers generally establish demanding specifications for quality, performance and reliability that our products must meet.

our products are highly complex and may contain defects and failures when they are first introduced or as new versions are released.

If defects and failures occur in our products during the design phase or after, we could experience lost revenues, increased costs, including

warranty and customer support expenses and penalties for non-performance stipulated in customer purchase agreements, delays in or cancellations

or rescheduling of orders or shipments, product returns or discounts, diversion of management resources or damage to our reputation and

brand equity, and in some cases consequential damages, any of which would harm our operating results.

In addition, delays in our ability

to fill product orders as a result of quality control issues may negatively impact our relationship with our customers.

We cannot assure

you that we will have sufficient resources to satisfy any asserted claims.

Furthermore, any such defects, failures or delays may be particularly

damaging to us as we attempt to establish our reputation as a reliable provider of IC and module products.

we sell our products on a purchase order basis and rely on estimated forecasts of our customers’ needs, inaccurate forecasts could

adversely affect our business.

sell our products pursuant to individual purchase orders rather than long-term purchase commitments.

Therefore, we will rely on estimated

demand forecasts, based upon input from our customers, to determine how much product to manufacture.

Because our sales are based primarily

on purchase orders, our customers may cancel, delay or otherwise modify their purchase commitments with little or no notice to us.

these reasons, we will generally have limited visibility regarding our customers’ product needs.

In addition, the product design

cycle for our customers can be lengthy and it may be difficult for us to accurately anticipate when our customers will commence commercial

shipments of products that include our products.

if we experience substantial warranty claims, our customers may cancel existing orders or cease to place future orders.

Any cancellation,

delay or other modification in our customers’ orders could significantly reduce our revenue, cause our operating results to fluctuate

from period to period and make it more difficult for us to predict our revenue.

In the event of a cancellation or reduction of an order,

we may not have enough time to reduce operating expenses to mitigate the effect of the lost revenue on our business.

we overestimate customer demand for our products, we may purchase products from our manufacturers that we cannot sell.

Conversely, if

we underestimate customer demand or if sufficient manufacturing and testing capacity are unavailable, we would forego revenue opportunities

and could lose market share in the markets served by our products and could incur penalties under our customer purchase agreements.

addition, our inability to meet customer requirements for our products could lead to delays in product shipments, force customers to

identify alternative sources, result in certain of our customers obtaining manufacturing rights to our products and otherwise adversely

affect our ongoing relationships with our customers.

rely on independent foundries and contractors for the manufacture, assembly, testing and packaging of our integrated circuits and modules,

and the failure of any of these third parties to deliver products or otherwise perform as requested could damage our relationships with

our customers and harm our sales and financial results.

a fabless semiconductor company, we rely on third parties for substantially all of our manufacturing operations.

We depend on these parties

to supply us with material in a timely manner that meets our standards for yield, cost and quality.

We do not have long-term supply contracts

with any of our suppliers or manufacturing service providers, and therefore they are not obligated to manufacture products for us for

any specific period, in any specific quantity or at any specified price except as may be provided in a particular purchase order.

problems with our manufacturing supply chain could adversely impact our ability to ship our products to our customers on time and in

the quantity required which in turn could damage our customer relationships and impede market acceptance of our IC products.

third-party wafer foundry and testing and assembly vendors are located in regions at high risk for earthquakes and other natural

disasters and adverse consequences related to the outbreak of contagious diseases, such as COVID-19.

Any disruption to the operations

of these foundries and vendors resulting from earthquakes or other natural disasters could cause significant delays in the development,

production, shipment and sales of our IC products.

vendors that we utilize to manufacture our products are located in Asia, as are other foundries we may use in the future.

vendors that provide substrates and wafer sorting and handle the testing of our products are headquartered in Asia.

The risk of an earthquake

in the Pacific Rim region is significant due to the proximity of major earthquake fault lines.

The occurrence of earthquakes or other

natural disasters could result in the disruption of the wafer foundry or assembly and test capacity of the third parties that supply

these services to us and may impede our research and development efforts as well as our ability to market and sell our products.

not be able to obtain alternate capacity on favorable terms, if at all.

pandemics along with outbreaks of new contagious diseases or the resurgence of existing diseases could disrupt the operations of our

key suppliers and manufacturing partners worldwide.

in our supply chain due to shortages in the global semiconductor supply chain could cause delays for customers and impact revenue.

have and may continue to experience disruptions in our global semiconductor supply chain, with suppliers increasing lead times or placing

products on allocation, including procuring necessary components, wafers, substrates and assembly services in a timely fashion.

result of these supply chain disruptions, we have had to increase customer order lead times, and we may be required to purchase some

products on allocation.

We may be unable to satisfy all of the demand for our products, which may adversely affect customer relationships

and impact revenue.

increases from our supply chain can adversely impact revenue or reduce margins.

suppliers can increase the price of products and services provided to us.

Finding and qualifying alternate or additional suppliers in

response to increased pricing from suppliers can be a lengthy process and can lead to production delays or additional costs, and such

alternatives are sometimes not available.

We may be unable to successfully pass on these costs through price increases.

In some cases,

our customer agreements only allow us to adjust pricing on an annual basis.

If we are unable to increase the price of our products to

our customers in response to increased costs, we would face reduced margins.

claim that our products or technology infringe third party IP rights could increase our costs of operation and distract management and

could result in expensive settlement costs or the discontinuance of our technology licensing or product offerings.

In addition, we may

incur substantial litigation expense which would adversely affect our profitability.

semiconductor industry is characterized by vigorous protection and pursuit of IP rights or positions which has resulted in often protracted

and expensive litigation.

We are not aware of any third party IP that our products or technology would infringe.

However, like many companies of our size with limited

resources, we have not searched for all potentially applicable IP in the public databases.

It is possible that a third party now has,

or may in the future obtain, patents or other intellectual property rights that our products or technology may now, or in the future,

Our licensees and IC customers, or we, might, from time to time, receive notice of claims that we have infringed patents or

other IP rights of others.

Litigation against us can result in significant expense and divert the efforts of our technical and management

personnel whether or not the litigation has merit or results in a determination adverse to us.

The discovery of defects in our technology

and products could expose us to liability for damages.

The discovery of a defect

in our technologies and products could lead our customers to seek damages from us.

Many of our agreements with customers include provisions

waiving implied warranties regarding our technology and products and limiting our liability to our customers.

We cannot be certain, however,

that the waivers or limitations of liability contained in our agreements with customers will be enforceable.

We might not be able to protect and enforce

our IP rights which could impair our ability to compete and reduce the value of our technology.

Our technology is complex

and is intended for use in complex systems.

For example, our licensees’ products utilize our embedded memory and/or interface technology

and a large number of companies manufacture and market these products.

Because of these factors, policing the unauthorized use of our

IP is difficult and expensive.

We cannot be certain that we will be able to detect unauthorized use of our technology or prevent other

parties from designing and marketing unauthorized products based on our technology.

In the event we identify any past or present infringement

of our patents, copyrights or trademarks, or any violation of our trade secrets, confidentiality procedures or licensing agreements, we

cannot assure you that the steps taken by us to protect our proprietary information will be adequate to prevent misappropriation of our

Our inability to adequately protect our IP would reduce significantly the barriers of entry for directly competing technologies

and could reduce the value of our technology.

Furthermore, we might initiate claims or litigation against third parties for infringement

of our proprietary rights or to establish the validity of our proprietary rights.

Litigation by us could result in significant expense

and divert the efforts of our technical and management personnel whether or not such litigation results in a determination favorable to

Our existing patents might not provide us

with sufficient protection of our IP, and our patent applications might not result in the issuance of patents, either of which could reduce

the value of our core technology and harm our business.

We rely on a combination of

patents, trademarks, trade secret laws and confidentiality procedures to protect our IP rights.

We cannot be sure that any patents will

be issued from any of our pending applications or that any claims allowed from pending applications will be of sufficient scope or strength,

or issued in all countries where our products can be sold, to provide meaningful protection or any commercial advantage to us.

of our patents or patent applications to provide meaningful protection might allow others to utilize our technology without any compensation

If our intangible assets become impaired,

we would be required to record a charge to earnings.

We review our intangible assets

for impairment when events or changes in circumstances, such as a decline in our stock price and/or market capitalization, indicate the

carrying value may not be recoverable.

If our intangible assets are deemed to be impaired, an impairment loss equal to the amount by which

the carrying amount exceeds the fair value of the assets would be recognized.

We would be required to record an impairment charge in our

financial statements during the period in which any impairment of our intangible assets is determined, which would negatively affect our

results of operations.

If we fail to retain key personnel, our

business and growth could be negatively affected.

Our business has been dependent

to a significant degree upon the services of a small number of executive officers and technical employees.

The loss of key personnel could

negatively impact our technology development efforts, our ability to deliver products under our existing agreements, maintain strategic

relationships with our partners and obtain new customers.

We generally have not entered into employment or non-competition agreements

with any of our employees and do not maintain key-man life insurance on the lives of any of our key personnel.

Our ability to utilize our net operating

loss carryforwards is limited as a result of an “ownership change,” as defined in Section 382 of the Internal Revenue Code

of 1986, as amended.

As of December 31, 2023, we

had approximately $212.7 million of net operating loss, or NOL, carryforwards for U.S.

However, like many companies

of our size with limited resources, we have not searched for all potentially applicable IP in the public databases.

It is possible that

a third party now has, or may in the future obtain, patents or other intellectual property rights that our products or technology may

now, or in the future, infringe.

Our licensees and IC customers, or we, might, from time to time, receive notice of claims that we have

infringed patents or other IP rights of others.

Litigation against us can result in significant expense and divert the efforts of our

technical and management personnel whether or not the litigation has merit or results in a determination adverse to us.

discovery of defects in our technology and products could expose us to liability for damages.

discovery of a defect in our technologies and products could lead our customers to seek damages from us.

Many of our agreements with

customers include provisions waiving implied warranties regarding our technology and products and limiting our liability to our customers.

We cannot be certain, however, that the waivers or limitations of liability contained in our agreements with customers will be enforceable.

might not be able to protect and enforce our IP rights, which could impair our ability to compete and reduce the value of our technology.

technology is complex and is intended for use in complex systems.

For example, our licensees’ products utilize our embedded memory

and/or interface technology and a large number of companies manufacture and market these products.

Because of these factors, policing

the unauthorized use of our IP is difficult and expensive.

We cannot be certain that we will be able to detect unauthorized use of our

technology or prevent other parties from designing and marketing unauthorized products based on our technology.

In the event we identify

any past or present infringement of our patents, copyrights or trademarks, or any violation of our trade secrets, confidentiality procedures

or licensing agreements, we cannot assure you that the steps taken by us to protect our proprietary information will be adequate to prevent

misappropriation of our technology.

Our inability to adequately protect our IP would reduce significantly the barriers of entry for directly

competing technologies and could reduce the value of our technology.

Furthermore, we might initiate claims or litigation against third

parties for infringement of our proprietary rights or to establish the validity of our proprietary rights.

Litigation by us could result

in significant expense and divert the efforts of our technical and management personnel whether or not such litigation results in a determination

favorable to us.

existing patents might not provide us with sufficient protection of our IP, and our patent applications might not result in the issuance

of patents, either of which could reduce the value of our core technology and harm our business.

rely on a combination of patents, trademarks, trade secret laws and confidentiality procedures to protect our IP rights.

sure that any patents will be issued from any of our pending applications or that any claims allowed from pending applications will be

of sufficient scope or strength, or issued in all countries where our products can be sold, to provide meaningful protection or any commercial

advantage to us.

Failure of our patents or patent applications to provide meaningful protection might allow others to utilize our technology

without any compensation to us.

we fail to retain key personnel, our business and growth could be negatively affected.

business has been dependent to a significant degree upon the services of a small number of executive officers and technical employees.

The loss of key personnel could negatively impact our technology development efforts, our ability to deliver products under our existing

agreements, maintain strategic relationships with our partners and obtain new customers.

We generally have not entered into employment

or non-competition agreements with any of our employees and do not maintain key-man life insurance on the lives of any of our key personnel.

currently maintain and may expand operations outside of the United States, which exposes us to significant risks.

success of our business depends, in large part, on our ability to operate successfully from geographically disparate locations and to

further expand our international operations and sales.

Operating in international markets requires significant resources and management

attention and subjects us to regulatory, economic, and political risks that are different from those we face in the United States.

cannot be sure that further international expansion will be successful.

In addition, we face risks in doing business internationally

that could expose us to reduced demand for our products, lower prices for our products or other adverse effects on our operating results.

The success and profitability, as well as the expansion, of our international operations are subject to numerous risks and uncertainties,

many of which are outside of our control, such as the following:

health issues, such as pandemics and epidemics, which can result in varying impacts to our business, employees, partners, customers,

distributors or suppliers internationally;

difficulties,

inefficiencies and costs associated with staffing and managing foreign operations;

and more difficult customer qualification and credit checks;

difficulty collecting accounts receivable and longer payment cycles;

need for various local approvals to operate in some countries;

in entering some foreign markets without larger-scale local operations;

in import/export laws, trade restrictions, regulations and customs and duties and tariffs (foreign and domestic);

with local laws and regulations;

changes in regulatory requirements;

protection for intellectual property rights in some countries;

tax consequences, including potential additional tax exposure if we are deemed to have established a permanent establishment outside

of the United States;

effectiveness of our policies and procedures designed to ensure compliance with the Foreign Corrupt Practices Act of 1977 and similar

in currency exchange rates, which could increase the prices of our products to customers outside of the United States, increase the

expenses of our international operations by reducing the purchasing power of the U.S.

dollar and expose us to foreign currency exchange

rate risk if, in the future, we denominate our international sales in currencies other than the U.S.

and different sources of competition;

economic, and social instability;

and acts of war, which could have a negative impact on the operations of our business or the businesses of our customers and vendors;

Department of Commerce regulations or restrictions on exports of certain semiconductor products and technologies.

failure to manage any of these risks successfully could harm our operations and reduce our revenue.

International

trade policies, including protectionist trade policies, such as tariffs and sanctions, could adversely affect our business, results of

operations and financial condition.

to the interconnectedness of the global economy, policy changes in one area of the world can have an immediate and material adverse impact

on markets around the world.

Changes in international trade policies, including:

(i) changes to existing trade agreements;

restrictions on free trade generally;

and (iii) significant increases in customs duties and tariffs on goods imported into the United

States and reciprocal actions by other countries, could adversely affect our business, results of operations and financial condition.

March 3, 2025, the President of the United States announced the imposition of new tariffs on imports from Mexico and Canada, to take

effect on March 4, 2025.

Effective at 12.01 a.m.

ET on March 4, 2025, all goods arriving at U.S.

ports and originating from Canada or

Mexico are subject to 25 percent tariffs, with some exceptions.

Effective February 4, 2025, all goods presented for entry at U.S.

and originating from China, including Hong Kong, are subject to a 10 percent tariff on Chinese imports.

The impact of these potential

tariffs on our business and financial condition, if any, is subject to a number of factors that are not yet known, including any countermeasures

that the target countries may take in response to such tariffs.

In light of these uncertainties, we can provide no assurance that any

mitigating actions that may become available to us, such as our ability to pass along some or all of the costs of any tariffs to some

or all of our customers, will be successful.

addition to potential increases in customs duties and tariffs in the United States and other countries, the United States-Mexico-Canada

Agreement, or USMCA, is subject to renewal in 2026.

There can be no assurance that any newly negotiated terms in the USMCA will not adversely

affect our business and the business of our customers.

It remains unclear what specific actions the current U.S.

administration may take

to resolve trade-related issues with China and other countries.

of the above factors could impact our supply chain, as well as our operations and business, and adversely affect our results of operations

and financial condition.

ability to utilize our net operating loss carryforwards is limited as a result of an “ownership change,” as defined in Section

382 of the Internal Revenue Code of 1986, as amended.

of December 31, 2024, we had approximately $212.1 million of net operating loss, or NOL, carryforwards for U.S.

federal tax purposes.

federal income

tax law, we generally can use our NOL carryforwards (and certain related tax credits) to offset ordinary taxable income, thereby reducing

federal income tax liability, for up to 20 years from the year in which the losses were generated, after which time they will

Our California NOL carryforwards (and certain related tax credits) generally may be used to offset future state taxable income

for 20 years from the year in which the losses are generated, depending on the state, after which time they will expire.

The rate at which

we can utilize our NOL carryforwards is limited (which could result in NOL carryforwards expiring prior to their use) each time we experience

an “ownership change,” as determined under Section 382 of the Internal Revenue Code.

A Section 382 ownership change generally

occurs if a shareholder or a group of shareholders who are deemed to own at least 5% of our common stock increase their ownership by more

than 50 percentage points over their lowest ownership percentage within a rolling three-year period.

If an ownership change occurs, Section

382 generally would impose an annual limit on the amount of post-ownership change taxable income that may be offset with pre-ownership

change NOL carryforwards equal to the product of the total value of our outstanding equity immediately prior to the ownership change (reduced

by certain items specified in Section 382) and the U.S.

federal long-term tax-exempt interest rate in effect at the time of the ownership

A number of special and complex rules apply in calculating this Section 382 limitation.

While the complexity of Section 382 makes

it difficult to determine whether and when an ownership change has occurred, and a formal study has not been performed, we believe that

a Section 382 ownership change occurred as a result of our business combination with Peraso Technologies Inc.

We believe this

Section 382 limitation will result in substantially all of our federal and state NOLs and federal tax credit carryforwards incurred prior

to December 2021 expiring before they can be utilized.

In addition, our ability to use our NOL carryforwards will be limited to the extent

we fail to generate enough taxable income in the future before they expire.

Existing and future Section 382 limitations and our inability

to generate enough taxable income in the future could result in a substantial portion of our NOL carryforwards expiring before they are

federal income tax law, we generally can use our NOL carryforwards (and certain related tax credits) to offset ordinary taxable

income, thereby reducing our U.S.

federal income tax liability, for up to 20 years from the year in which the losses were generated,

after which time they will expire.

Our California NOL carryforwards (and certain related tax credits) generally may be used to offset

future state taxable income for 20 years from the year in which the losses are generated, depending on the state, after which time they

The rate at which we can utilize our NOL carryforwards is limited (which could result in NOL carryforwards expiring prior

to their use) each time we experience an “ownership change,” as determined under Section 382 of the Internal Revenue Code.

A Section 382 ownership change generally occurs if a shareholder or a group of shareholders who are deemed to own at least 5% of our

common stock increase their ownership by more than 50 percentage points over their lowest ownership percentage within a rolling three-year

If an ownership change occurs, Section 382 generally would impose an annual limit on the amount of post-ownership change taxable

income that may be offset with pre-ownership change NOL carryforwards equal to the product of the total value of our outstanding equity

immediately prior to the ownership change (reduced by certain items specified in Section 382) and the U.S.

federal long-term tax-exempt

interest rate in effect at the time of the ownership change.

A number of special and complex rules apply in calculating this Section

382 limitation.

While the complexity of Section 382 makes it difficult to determine whether and when an ownership change has occurred,

and a formal study has not been performed, we believe that a Section 382 ownership change occurred as a result of our business combination

with Peraso Technologies Inc.

We believe this Section 382 limitation will result in substantially all of our federal and state

NOLs and federal tax credit carryforwards incurred prior to December 2021 expiring before they can be utilized.

In addition, our ability

to use our NOL carryforwards will be limited to the extent we fail to generate enough taxable income in the future before they expire.

Existing and future Section 382 limitations and our inability to generate enough taxable income in the future could result in a substantial

portion of our NOL carryforwards expiring before they are used.

We have recorded a full valuation allowance for our deferred tax assets.

Third parties might

attempt to gain unauthorized access to our network or seek to compromise our products and services.

Our business is dependent

on the security and efficacy of our networks and computer and data management systems, and we rely on our internal computer networks for

many of the systems we use to operate our business generally.

From time to time, we may face attempts by others to gain unauthorized access

through the Internet or otherwise or to introduce malicious software to our IT systems.

We or our products may be a target of computer

hackers, organizations or malicious attackers who attempt to:

parties might attempt to gain unauthorized access to our network or seek to compromise our products and services.

business is dependent on the security and efficacy of our networks and computer and data management systems, and we rely on our internal

computer networks for many of the systems we use to operate our business generally.

From time to time, we may face attempts by others

to gain unauthorized access through the Internet or otherwise or to introduce malicious software to our IT systems.

We or our products

may be a target of computer hackers, organizations or malicious attackers who attempt to:

gain access to our network;

● steal proprietary information related to our business, products,

employees and customers;

steal proprietary information

related to our business, products, employees and customers;

interrupt our systems.

From time to time, we may

encounter attempts at gaining unauthorized access to our network, and we periodically run security checks.

While we seek to detect and

investigate unauthorized attempts and attacks against our network and products of which we become aware, and to prevent their recurrence

where practicable through changes to our internal processes and tools and/or changes to our products, we remain potentially vulnerable

to additional known or unknown threats.

In addition to intentional security breaches, the integrity and confidentiality of company and

customer data and our intellectual property may be compromised as a result of human error, product defects, or technological failures.

time to time, we may encounter attempts at gaining unauthorized access to our network, and we periodically run security checks.

we seek to detect and investigate unauthorized attempts and attacks against our network and products of which we become aware, and to

prevent their recurrence where practicable through changes to our internal processes and tools and/or changes to our products, we remain

potentially vulnerable to additional known or unknown threats.

In addition to intentional security breaches, the integrity and confidentiality

of company and customer data and our intellectual property may be compromised as a result of human error, product defects, or technological

Different geographic markets may have different regulations regarding data protection, raising potential compliance risks.

Further, retaliatory

acts by foreign governments or terrorist organizations in response to policies of the United States government could include cyber attacks

that could disrupt the economy more generally or that could also impact our operations directly or indirectly.

Any failure or perceived failure

by us or our service providers to prevent information security breaches or other incidents or system disruptions, or any compromise of

security that results in or is perceived or reported to result in unauthorized access to, or loss, theft, alteration, release or transfer

of, our information, or any personal information, confidential information, or other data could result in loss or theft of proprietary

or sensitive data and intellectual property, could harm our reputation and competitive position and could expose us to legal claims, regulatory

investigations and proceedings, and fines, penalties, and other liability.

Any such actual or perceived security breach, incident or system

disruption could also divert the efforts of our personnel, and could require us to incur significant costs and operational consequences

in connection with investigating, remediating, eliminating and putting in place additional tools, devices, policies, and other measures

designed to prevent actual or perceived security breaches and other incidents and system disruptions, and in, for example, rebuilding

internal systems, reduced inventory value, providing modifications to our products and services, defending against claims and litigation,

responding to regulatory inquiries or actions, paying damages, or taking other remedial steps with respect to third parties.

we could be required or otherwise find it appropriate to expend significant capital and other resources to respond to, notify third parties

of, and otherwise address the incident or breach and its root cause, and to notify individuals, regulatory authorities and others of security

breaches involving certain types of data.

Further, we cannot assure

that any limitations of liability provisions in our current or future contracts that may be applicable would be enforceable or adequate

or would otherwise protect us from any liabilities or damages with respect to any particular claim relating to a security breach or other

security-related matter.

We also cannot be sure that our existing insurance coverage will continue to be available on acceptable terms

or will be available in sufficient amounts to cover claims related to a security breach or incident, or that the insurer will not deny

coverage as to any future claim.

The successful assertion of claims against us that exceed available insurance coverage, or the occurrence

of changes in our insurance policies, including premium increases or the imposition of large deductible or co-insurance requirements,

could have a material adverse effect on our business, including our financial condition, operating results, and reputation.

Acquisitions or other business combinations

that we pursue in the future, whether or not consummated, could result in other operating and financial difficulties.

In the future we may seek

to acquire additional product lines, technologies or businesses in an effort to increase our growth, enhance our ability to compete, complement

our product offerings, enter new and adjacent markets, obtain access to additional technical resources, enhance our IP rights or pursue

other competitive opportunities.

If we seek acquisitions or other business combinations, we may not be able to identify suitable candidates

at prices we consider appropriate.

We cannot readily predict the timing or size of our future acquisitions or combinations, or the success

of any such transactions.

To the extent that we consummate

acquisitions, combinations or investments, we may face financial risks as a result, including increased costs associated with merged or

acquired operations, increased indebtedness, economic dilution to gross and operating profit and earnings per share, or unanticipated

costs and liabilities.

Further, retaliatory acts by foreign governments or terrorist organizations in response to policies of the United States government could

include cyber attacks that could disrupt the economy more generally or that could also impact our operations directly or indirectly.

failure or perceived failure by us or our service providers to prevent information security breaches or other incidents or system disruptions,

or any compromise of security that results in or is perceived or reported to result in unauthorized access to, or loss, theft, alteration,

release or transfer of, our information, or any personal information, confidential information, or other data could result in loss or

theft of proprietary or sensitive data and intellectual property, could harm our reputation and competitive position and could expose

us to legal claims, regulatory investigations and proceedings, and fines, penalties, and other liability.

Any such actual or perceived

security breach, incident or system disruption could also divert the efforts of our personnel, and could require us to incur significant

costs and operational consequences in connection with investigating, remediating, eliminating and putting in place additional tools,

devices, policies, and other measures designed to prevent actual or perceived security breaches and other incidents and system disruptions,

and in, for example, rebuilding internal systems, reduced inventory value, providing modifications to our products and services, defending

against claims and litigation, responding to regulatory inquiries or actions, paying damages, or taking other remedial steps with respect

to third parties.

Moreover, we could be required or otherwise find it appropriate to expend significant capital and other resources to

respond to, notify third parties of, and otherwise address the incident or breach and its root cause, and to notify individuals, regulatory

authorities and others of security breaches involving certain types of data.

we cannot assure that any limitations of liability provisions in our current or future contracts that may be applicable would be enforceable

or adequate or would otherwise protect us from any liabilities or damages with respect to any particular claim relating to a security

breach or other security-related matter.

We also cannot be sure that our existing insurance coverage will continue to be available on

acceptable terms or will be available in sufficient amounts to cover claims related to a security breach or incident, or that the insurer

will not deny coverage as to any future claim.

The successful assertion of claims against us that exceed available insurance coverage,

or the occurrence of changes in our insurance policies, including premium increases or the imposition of large deductible or co-insurance

requirements, could have a material adverse effect on our business, including our financial condition, operating results, and reputation.

or other business combinations that we pursue in the future, whether or not consummated, could result in other operating and financial

difficulties.

the future we may seek to acquire additional product lines, technologies or businesses in an effort to increase our growth, enhance our

ability to compete, complement our product offerings, enter new and adjacent markets, obtain access to additional technical resources,

enhance our IP rights or pursue other competitive opportunities.

If we seek acquisitions or other business combinations, we may not be

able to identify suitable candidates at prices we consider appropriate.

We cannot readily predict the timing or size of our future acquisitions

or combinations, or the success of any such transactions.

the extent that we consummate acquisitions, combinations or investments, we may face financial risks as a result, including increased

costs associated with merged or acquired operations, increased indebtedness, economic dilution to gross and operating profit and earnings

per share, or unanticipated costs and liabilities.

Acquisitions may involve additional risks, including:

acquired product lines, technologies or businesses may not improve our financial and strategic position as planned;

may determine we have overpaid for the product lines, technologies or businesses, or that the economic conditions underlying our acquisition

have changed;

may have difficulty integrating the operations and personnel of the acquired company;

may have difficulty retaining the employees with the technical skills needed to enhance and provide services with respect to the acquired

product lines or technologies;

acquisition may be viewed negatively by customers, employees, suppliers, financial markets or investors;

may have difficulty incorporating the acquired product lines or technologies with our existing technologies;

may encounter a competitive response, including price competition or IP litigation;

may become a party to product liability or IP infringement claims as a result of our sale of the acquired company’s products;

may incur one-time charges, such as for acquired in-process research and development costs, and restructuring charges;

we may acquire goodwill and other intangible assets that are subject to impairment tests, which could result in future impairment charges;

ongoing business and management’s attention may be disrupted or diverted by transition or integration issues and the complexity

of managing geographically or culturally diverse enterprises;

due diligence process may fail to identify significant existing issues with the target business.

From time to time, we may

enter into negotiations for acquisitions or investments that are not ultimately consummated.

These negotiations could result in significant

diversion of management time, as well as substantial out-of-pocket costs, any of which could have a material adverse effect on our business,

operating results and financial condition.

Holders of exchangeable shares are expected

to experience a delay in receiving shares of our common stock from the date they request an exchange, which may affect the value of the

shares the holder receives in an exchange.

Holders of exchangeable shares

who request to receive shares of our common stock in exchange for their exchangeable shares will not receive shares of our common stock

until several business days after the applicable request is received.

During this period, the market price of our common stock may increase

Any such increase or decrease would affect the value of the consideration to be received by such holder of exchangeable shares

upon a subsequent sale of the common stock received in the exchange.

We are a “smaller reporting company”

and, as a result of the reduced disclosure and governance requirements applicable to smaller reporting companies, our common stock may

be less attractive to investors.

We are a “smaller reporting

company,” and are subject to lesser disclosure obligations in our SEC filings compared to other issuers.

Specifically, “smaller

reporting companies” are able to provide simplified executive compensation disclosures in their filings, are exempt from the provisions

of Section 404(b) of the Sarbanes-Oxley Act requiring that independent registered public accounting firms provide an attestation report

on the effectiveness of internal control over financial reporting and have certain other decreased disclosure obligations in their SEC

filings, including, among other things, only being required to provide two years of audited financial statements in annual reports.

disclosures in our SEC filings due to our status as a “smaller reporting company” may make it harder for investors to analyze

our operating results and financial prospects.

War, terrorism, other acts of violence,

natural disasters and global pandemics, such as the COVID-19 pandemic and associated macroeconomic pressures in the markets

in could adversely impact our business.

the acquired product lines,

technologies or businesses may not improve our financial and strategic position as planned;

we may determine we have

overpaid for the product lines, technologies or businesses, or that the economic conditions underlying our acquisition have changed;

we may have difficulty

integrating the operations and personnel of the acquired company;

we may have difficulty

retaining the employees with the technical skills needed to enhance and provide services with respect to the acquired product lines

or technologies;

the acquisition may be

viewed negatively by customers, employees, suppliers, financial markets or investors;

we may have difficulty

incorporating the acquired product lines or technologies with our existing technologies;

we may encounter a competitive

response, including price competition or IP litigation;

we may become a party to

product liability or IP infringement claims as a result of our sale of the acquired company’s products;

we may incur one-time charges,

such as for acquired in-process research and development costs, and restructuring charges;

we may acquire goodwill

and other intangible assets that are subject to impairment tests, which could result in future impairment charges;

our ongoing business and

management’s attention may be disrupted or diverted by transition or integration issues and the complexity of managing geographically

or culturally diverse enterprises;

our due diligence process

may fail to identify significant existing issues with the target business.

time to time, we may enter into negotiations for acquisitions or investments that are not ultimately consummated.

These negotiations

could result in significant diversion of management time, as well as substantial out-of-pocket costs, any of which could have a material

adverse effect on our business, operating results and financial condition.

terrorism, other acts of violence, natural disasters and global pandemics, such as the COVID-19 pandemic and associated macroeconomic

pressures in the markets in could adversely impact our business.

issues around the world can impact macroeconomic conditions and could have a material adverse impact on our business.

7 unchanged sentences

detrimental to our existing stockholders and to our business.

Sustained inflation could have a material

adverse effect on our business, financial condition, results of operations and liquidity.

Inflation rates in the markets

in which we operate have increased and may continue to rise.

Inflation over the last several months has led us to experience higher costs,

including, among others, labor, wafer and transportation.

Our suppliers have raised their prices and may continue to raise prices, and,

although we have made minimal price increases thus far, in the competitive markets in which we operate, we may not be able to make corresponding

price increases to preserve our gross margins and profitability.

In addition, inflationary pressures could cause customers to delay or

reduce purchases of our products or delay payments to us.

If inflation rates continue to rise or remain elevated for a sustained period

of time, they could have a material adverse effect on our business, financial condition, results of operations and liquidity.

There may be future sales of our common

stock, which could adversely affect the market price of our common stock and dilute a stockholder’s ownership of common stock.

The sale of our common stock

resulting from exercise of any options or vesting of restricted stock units granted to executive officers and other employees under our

equity compensation plan and of any warrants, and other issuances of our common stock could have an adverse effect on the market price

of the shares of our common stock.

We are generally not restricted from issuing additional shares of common stock, including any securities

that are convertible into or exchangeable for, or that represent the right to receive shares of common stock, provided that we are subject

to the listing rules of the Nasdaq Stock Market (which generally require stockholder approval for any transactions which would result

in the issuance of more than 20% of our then outstanding shares of common stock or voting rights representing over 20% of our then outstanding

shares of stock).

Sales of a substantial number of shares of our common stock in the public market or the perception that such sales might

occur could materially adversely affect the market price of the shares of our common stock.

Because our decision to issue securities in

any future offering will depend on market conditions and other factors beyond our control, we cannot predict or estimate the amount, timing

or nature of our future offerings.

Accordingly, our stockholders bear the risk that our future offerings will reduce the market price

of our common stock and dilute their stock holdings in us.

Potential volatility of the price of our

common stock could negatively affect your investment.

We cannot assure you that

there will continue to be an active trading market for our common stock.

Historically, the stock market, as well as our common stock,

has experienced significant price and volume fluctuations.

Market prices of securities of technology companies can be highly volatile

and frequently reach levels that bear no relationship to the operating performance of such companies.

These market prices generally are

not sustainable and are subject to wide variations.

If our common stock trades to unsustainably high levels, it is likely that the market

price of our common stock will thereafter experience a material decline.

As a result of fluctuations in the price of our common stock,

you may be unable to sell your shares at or above the price you paid for them.

In addition, if we seek additional financing, including

through the sale of equity or convertible securities, such sales could cause our stock price to decline and result in dilution to existing

stockholders.

In addition, the stock markets in general, and the markets for semiconductor

stocks in particular, have experienced significant volatility that has often been unrelated to the financial condition or results of operations

of particular companies.

These broad market fluctuations may adversely affect the trading price of our common stock and, consequently,

adversely affect the price at which you could sell the shares that you have purchased.

In the past, following periods of volatility in

the market or significant price declines, securities class-action litigation has often been instituted against companies.

Such litigation,

if instituted against us, could result in substantial costs and diversion of management’s attention and resources, which could materially

and adversely affect our business, financial condition, results of operations and growth prospects.

The effective increase in the number of

shares of our common stock available for issuance as a result of our reverse stock split could result in further dilution to our existing

stockholders and have antitakeover implications.

The reverse stock split alone

had no effect on our authorized capital stock, and the total number of authorized shares remains the same as before the reverse stock

The reverse stock split of our issued and outstanding shares increased the number of shares of our common stock (or securities

convertible or exchangeable for our common stock) available for issuance by decreasing the number of shares of our common stock issued

and outstanding.

The additional available shares are available for issuance from time to time at the discretion of our board of directors

when opportunities arise, without further stockholder action or the related delays and expenses, except as may be required for a particular

transaction by law, the rules of any exchange on which our securities may then be listed, or other agreements or restrictions.

of additional shares of our common stock would increase the number of outstanding shares of our common stock and (unless such issuance

was pro-rata among existing stockholders) the percentage ownership of existing stockholders would be diluted accordingly.

any such issuance of additional shares of our common stock could have the effect of diluting the earnings per share and book value per

share of outstanding shares of our common stock.

Additionally, the effective

increase in the number of shares available for issuance could, under certain circumstances, have anti-takeover implications.

the additional shares of common stock that have become available for issuance could be used by us to oppose a hostile takeover attempt

or to delay or prevent changes in control or our management.

Although our reverse stock split is prompted by other considerations and

not by the threat of any hostile takeover attempt, stockholders should be aware that our reverse stock split could facilitate future efforts

by us to deter or prevent changes in control, including transactions in which our stockholders might otherwise receive a premium for their

shares over then-current market prices.

Provisions of our certificate of incorporation

and bylaws or Delaware law might delay or prevent a change-of-control transaction and depress the market price of our stock.

Various provisions of our

certificate of incorporation and bylaws might have the effect of making it more difficult for a third party to acquire, or discouraging

a third party from attempting to acquire, control of our company.

These provisions could limit the price that certain investors might

be willing to pay in the future for shares of our common stock.

Certain of these provisions eliminate cumulative voting in the election

of directors, limit the right of stockholders to call special meetings and establish specific procedures for director nominations by stockholders

and the submission of other proposals for consideration at stockholder meetings.

We are also subject to provisions

of Delaware law which could delay or make more difficult a merger, tender offer or proxy contest involving our company.

In particular,

Section 203 of the Delaware General Corporation Law prohibits a Delaware corporation from engaging in any business combination with any

interested stockholder for a period of three years unless specific conditions are met.

Any of these provisions could have the effect of

delaying, deferring or preventing a change in control, including without limitation, discouraging a proxy contest or making more difficult

the acquisition of a substantial block of our common stock.

Under our certificate of incorporation,

our board of directors may issue up to a maximum of 20,000,000 shares of preferred stock without stockholder approval on such terms as

the board might determine.

The rights of the holders of common stock will be subject to, and might be adversely affected by, the rights

of the holders of any preferred stock that might be issued in the future.

Our common stock warrants outstanding at

December 31, 2023 are accounted for as a warrant liability and recorded at fair value with changes in fair value each period reported

in earnings, which may have an adverse effect on the market price of our common stock.

In accordance with generally

accepted accounting principles in the United States, we are required to evaluate our outstanding common stock warrants to determine whether

they should be accounted for as a warrant liability or as equity.

At each reporting period (i) the warrants will be reevaluated for proper

accounting treatment as a liability or equity and (ii) the fair value of the liability of the warrants will be re-measured.

in the fair value of the liability will be recorded as other income (expense) in our consolidated statement of operations and comprehensive

This accounting treatment may adversely affect the market price of our securities, as we may incur additional expense.

changes in the inputs and assumptions for the valuation model we use to determine the fair value of such liability may have a material

impact on the estimated fair value of the warrant liability.

As a result, our financial statements and results of operations will fluctuate

quarterly, based on various factors, many of which are outside of our control, including the share price of our common stock.

that we will recognize non-cash gains or losses on our warrants or any other similar derivative instruments in each reporting period and

that the amount of such gains or losses could be material.

The impact of changes in fair value on earnings may have an adverse effect

on the market price of our common stock.

If we are unable to satisfy the continued

listing requirements of the Nasdaq, our common stock could be delisted and the price and liquidity of our common stock may be adversely

Our common stock may lose

value and could be delisted from Nasdaq due to several factors or a combination of such factors.

While our common stock is currently listed

on Nasdaq, we can give no assurance that we will be able to satisfy the continued listing requirements of Nasdaq in the future, including,

but not limited to, the corporate governance requirements and the minimum closing bid price requirement or the minimum equity requirement.

On February 1, 2023, we received

a deficiency letter from the Nasdaq Listing Qualifications Department of Nasdaq notifying us that, for 30 consecutive business days, the

closing bid price of our common stock was below the minimum $1.00 per share required for continued listing pursuant to Nasdaq Listing

Rule 5550(a)(2).

The Nasdaq deficiency letter had no immediate effect on the listing of our common stock, and our common stock continued

to trade on the Nasdaq under the symbol “PRSO.” We were initially given 180 calendar days, or until July 31, 2023, to regain

compliance with Nasdaq Listing Rule 5550(a)(2), which was extended by an additional 180 calendar days, or January 29, 2024.

2, 2024, we effected a reverse stock split of our issued and outstanding shares of common stock at a ratio of one post-split share for

every 40 pre-split shares.

On January 18, 2024, we received written confirmation from Nasdaq notifying us that we had regained compliance

with Nasdaq Listing Rule 5550(a)(2).

There can be no assurance

that we will be able to maintain compliance with the continued listing requirements for Nasdaq.

If we fail to maintain compliance with

any such continued listing requirement, there can also be no assurance that we will be able to regain compliance with any such continued

listing requirement in the future or that our common stock will not be delisted in the future.

If we were to be delisted,

we would expect our common stock to be traded in the over-the-counter market which could adversely affect the liquidity of our common

inflation could have a material adverse effect on our business, financial condition, results of operations and liquidity.

rates in the markets in which we operate have increased and may continue to rise.

Inflation over the last two years has led us to experience

higher costs, including, among others, labor, wafer and transportation.

Our suppliers have raised their prices and may continue to raise

prices, and, although we have made minimal price increases thus far, in the competitive markets in which we operate, we may not be able

to make corresponding price increases to preserve our gross margins and profitability.

In addition, inflationary pressures could cause

customers to delay or reduce purchases of our products or delay payments to us.

If inflation rates continue to rise or remain elevated

for a sustained period of time, they could have a material adverse effect on our business, financial condition, results of operations

and liquidity.

Related to Our Securities

may be future sales of our common stock, which could adversely affect the market price of our common stock and dilute a stockholder’s

ownership of common stock.

sale of our common stock resulting from the exercise of any options or vesting of restricted stock units granted to executive officers

and other employees under our equity compensation plan and the exercise of any warrants, and other issuances of our common stock could

have an adverse effect on the market price of the shares of our common stock.

We are generally not restricted from issuing additional

shares of common stock, including any securities that are convertible into or exchangeable for, or that represent the right to receive

shares of common stock, provided that we are subject to the listing rules of the Nasdaq Stock Market (which generally require stockholder

approval for any transactions which would result in the issuance of more than 20% of our then outstanding shares of common stock or voting

rights representing over 20% of our then outstanding shares of stock).

Sales of a substantial number of shares of our common stock in

the public market or the perception that such sales might occur could materially adversely affect the market price of the shares of our

common stock.

Because our decision to issue securities in any future offering will depend on market conditions and other factors beyond

our control, we cannot predict or estimate the amount, timing or nature of our future offerings.

Accordingly, our stockholders bear the

risk that our future offerings will reduce the market price of our common stock and dilute their stock holdings in us.

volatility of the price of our common stock could negatively affect your investment.

cannot assure you that there will continue to be an active trading market for our common stock.

Historically, the stock market, as well

as our common stock, has experienced significant price and volume fluctuations.

Market prices of securities of technology companies can

be highly volatile and frequently reach levels that bear no relationship to the operating performance of such companies.

prices generally are not sustainable and are subject to wide variations.

If our common stock trades to unsustainably high levels, it

is likely that the market price of our common stock will thereafter experience a material decline.

As a result of fluctuations in the

price of our common stock, you may be unable to sell your shares at or above the price you paid for them.

In addition, if we seek additional

financing, including through the sale of equity or convertible securities, such sales could cause our stock price to decline and result

in dilution to existing stockholders.

addition, the stock markets in general, and the markets for semiconductor stocks in particular, have experienced significant volatility

that has often been unrelated to the financial condition or results of operations of particular companies.

These broad market fluctuations

may adversely affect the trading price of our common stock and, consequently, adversely affect the price at which you could sell the

shares that you have purchased.

In the past, following periods of volatility in the market or significant price declines, securities

class-action litigation has often been instituted against companies.

Such litigation, if instituted against us, could result in substantial

costs and diversion of management’s attention and resources, which could materially and adversely affect our business, financial

condition, results of operations and growth prospects.

effective increase in the number of shares of our common stock available for issuance as a result of our reverse stock split could result

in further dilution to our existing stockholders and have antitakeover implications.

reverse stock split effected in January 2024 alone had no effect on our authorized capital stock, and the total number of authorized

shares remains the same as before the reverse stock split.

The reverse stock split of our issued and outstanding shares increased the

number of shares of our common stock (or securities convertible or exchangeable for our common stock) available for issuance by decreasing

the number of shares of our common stock issued and outstanding.

The additional available shares are available for issuance from time

to time at the discretion of our board of directors when opportunities arise, without further stockholder action or the related delays

and expenses, except as may be required for a particular transaction by law, the rules of any exchange on which our securities may then

be listed, or other agreements or restrictions.

Any issuance of additional shares of our common stock would increase the number of outstanding

shares of our common stock and (unless such issuance was pro-rata among existing stockholders) the percentage ownership of existing stockholders

would be diluted accordingly.

In addition, any such issuance of additional shares of our common stock could have the effect of diluting

the earnings per share and book value per share of outstanding shares of our common stock.

Additionally,

the effective increase in the number of shares available for issuance could, under certain circumstances, have anti-takeover implications.

For example, the additional shares of common stock that have become available for issuance could be used by us to oppose a hostile takeover

attempt or to delay or prevent changes in control or our management.

Although our reverse stock split is prompted by other considerations

and not by the threat of any hostile takeover attempt, stockholders should be aware that our reverse stock split could facilitate future

efforts by us to deter or prevent changes in control, including transactions in which our stockholders might otherwise receive a premium

for their shares over then-current market prices.

of our certificate of incorporation and bylaws or Delaware law might delay or prevent a change-of-control transaction and depress the

market price of our stock.

provisions of our certificate of incorporation and bylaws might have the effect of making it more difficult for a third party to acquire,

or discouraging a third party from attempting to acquire, control of our company.

These provisions could limit the price that certain

investors might be willing to pay in the future for shares of our common stock.

Certain of these provisions eliminate cumulative voting

in the election of directors, limit the right of stockholders to call special meetings and establish specific procedures for director

nominations by stockholders and the submission of other proposals for consideration at stockholder meetings.

are also subject to provisions of Delaware law that could delay or make more difficult a merger, tender offer or proxy contest involving

In particular, Section 203 of the Delaware General Corporation Law prohibits a Delaware corporation from engaging in any

business combination with any interested stockholder for a period of three years unless specific conditions are met.

Any of these provisions

could have the effect of delaying, deferring or preventing a change in control, including without limitation, discouraging a proxy contest

or making more difficult the acquisition of a substantial block of our common stock.

our certificate of incorporation, our board of directors may issue up to a maximum of 20,000,000 shares of preferred stock without stockholder

approval on such terms as the board might determine.

The rights of the holders of common stock will be subject to, and might be adversely

affected by, the rights of the holders of any preferred stock that might be issued in the future.

of our common stock warrants outstanding at December 31, 2024 are accounted for as liabilities and recorded at fair value with changes

in fair value each period reported in earnings, which may have an adverse effect on the market price of our common stock.

accordance with generally accepted accounting principles in the United States, we are required to evaluate our outstanding common stock

warrants to determine whether they should be accounted for as a warrant liability or as equity.

At each reporting period (i) the warrants

are reevaluated for proper accounting treatment as a liability or equity and (ii) the fair value of the liability of the warrants is

The change in the fair value of the liability will be recorded as other income (expense) in our consolidated statement of

operations and comprehensive loss.

This accounting treatment may adversely affect the market price of our securities, as we may incur

additional expense.

In addition, changes in the inputs and assumptions for the valuation model we use to determine the fair value of

such liability may have a material impact on the estimated fair value of the warrant liability.

As a result, our financial statements

and results of operations will fluctuate quarterly, based on various factors, many of which are outside of our control, including the

share price of our common stock.

We expect that we will recognize non-cash gains or losses on our warrants or any other similar derivative

instruments in each reporting period and that the amount of such gains or losses could be material.

The impact of changes in fair value

on earnings may have an adverse effect on the market price of our common stock.

we are unable to satisfy the continued listing requirements of the Nasdaq, our common stock could be delisted and the price and liquidity

of our common stock may be adversely affected.

common stock may lose value and could be delisted from Nasdaq due to several factors or a combination of such factors.

While our common

stock is currently listed on Nasdaq, we can give no assurance that we will be able to maintain compliance with the continued listing

requirements of Nasdaq, including, but not limited to, the corporate governance requirements, the minimum closing bid price requirement

or the minimum equity requirement.

If we fail to maintain compliance with any such continued listing requirement, there can also be no

assurance that we will be able to regain compliance with any such continued listing requirement in the future or that our common stock

will not be delisted in the future.

we were to be delisted, we would expect our common stock to be traded in the over-the-counter market which could adversely affect the

liquidity of our common stock.

Additionally, we could face significant material adverse consequences, including:

limited availability of market quotations for our common stock;

decreased ability to issue additional securities or obtain additional financing in the future;

liquidity for our stockholders;

loss of confidence by customers, collaboration partners and employees;

of institutional investor interest.

In the event of a delisting,

we can provide no assurance that any action taken by us to restore compliance with listing requirements would allow our common stock to

become listed again, stabilize the market price or improve the liquidity of our common stock, prevent our common stock from dropping below

the Nasdaq minimum bid price requirement, or prevent future non-compliance with Nasdaq’s listing requirements.

a limited availability

of market quotations for our common stock;

a decreased ability to

issue additional securities or obtain additional financing in the future;

reduced liquidity for our

stockholders;

potential loss of confidence

by customers, collaboration partners and employees;

loss of institutional investor

the event of a delisting, we can provide no assurance that any action taken by us to restore compliance with listing requirements would

allow our common stock to become listed again, stabilize the market price or improve the liquidity of our common stock, prevent our common

stock from dropping below the Nasdaq minimum bid price requirement, or prevent future non-compliance with Nasdaq’s listing requirements.

are a “smaller reporting company” and, as a result of the reduced disclosure and governance requirements applicable to smaller

reporting companies, our common stock may be less attractive to investors.

are a “smaller reporting company,” and are subject to lesser disclosure obligations in our SEC filings compared to other

Specifically, “smaller reporting companies” are able to provide simplified executive compensation disclosures in

their filings, are exempt from the provisions of Section 404(b) of the Sarbanes-Oxley Act requiring that independent registered public

accounting firms provide an attestation report on the effectiveness of internal control over financial reporting and have certain other

decreased disclosure obligations in their SEC filings, including, among other things, only being required to provide two years of audited

financial statements in annual reports.

Decreased disclosures in our SEC filings due to our status as a “smaller reporting company”

may make it harder for investors to analyze our operating results and financial prospects.

of exchangeable shares are expected to experience a delay in receiving shares of our common stock from the date they request an exchange,

which may affect the value of the shares the holder receives in an exchange.

of exchangeable shares who request to receive shares of our common stock in exchange for their exchangeable shares will not receive shares

of our common stock until several business days after the applicable request is received.

During this period, the market price of our

common stock may increase or decrease.

Any such increase or decrease would affect the value of the consideration to be received by such

holder of exchangeable shares upon a subsequent sale of the common stock received in the exchange.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 1A. Risk Factors