What changed in this filing

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Item 9A. Controls and Procedures

2025-03-28 compared with 2024-03-29 · 1608 added, 1776 removed, 777 unchanged (81% of the section changed)

Controls and Procedures.

Evaluation of Disclosure Controls and Procedures

Under the supervision and

with the participation of our management, including our chief executive officer and chief financial officer, we conducted an evaluation

of the effectiveness of the design and operation of our disclosure controls and procedures, as defined in Rules 13a-15(e) and 15d-15(e)

under the Exchange Act.

Based on this evaluation, our management concluded that as of December 31, 2023, our disclosure controls and procedures

were effective.

Management’s Annual Report on Internal Control over Financial

Our management is responsible

for establishing and maintaining adequate internal control over financial reporting, as such term is defined in Rules 13a-15(f) and 15d-15(f)

under the Exchange Act.

In designing and evaluating the disclosure controls and procedures, management recognizes that any controls and

procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives,

and management necessarily is required to apply its judgment in evaluating the cost-benefit relationship of possible controls.

supervision and with the participation of our management, including our chief executive officer and chief financial officer, we conducted

an evaluation of the effectiveness of our internal control over financial reporting based on the framework in Internal Control-Integrated

Framework (2013 Framework) issued by the Committee of Sponsoring Organizations of the Treadway Commission.

Based on the evaluation,

our management concluded that our internal control over financial reporting was effective as of December 31, 2023.

Changes in Internal Control over Financial Reporting

There were no changes in our

internal control over financial reporting during the fourth fiscal quarter of 2023 that have materially affected, or are reasonably likely

to materially affect, our internal control over financial reporting.

of Disclosure Controls and Procedures

the supervision and with the participation of our management, including our chief executive officer and chief financial officer, we conducted

an evaluation of the effectiveness of the design and operation of our disclosure controls and procedures, as defined in Rules 13a-15(e)

and 15d-15(e) under the Exchange Act.

Based on this evaluation, our management concluded that as of December 31, 2024, our disclosure

controls and procedures were effective.

Annual Report on Internal Control over Financial Reporting

management is responsible for establishing and maintaining adequate internal control over financial reporting, as such term is defined

in Rules 13a-15(f) and 15d-15(f) under the Exchange Act.

In designing and evaluating the disclosure controls and procedures, management

recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving

the desired control objectives, and management necessarily is required to apply its judgment in evaluating the cost-benefit relationship

of possible controls.

Under the supervision and with the participation of our management, including our chief executive officer and chief

financial officer, we conducted an evaluation of the effectiveness of our internal control over financial reporting based on the framework

in Internal Control-Integrated Framework (2013 Framework) issued by the Committee of Sponsoring Organizations of the Treadway

Based on the evaluation, our management concluded that our internal control over financial reporting was effective as of

December 31, 2024.

in Internal Control over Financial Reporting

were no changes in our internal control over financial reporting during the fourth fiscal quarter of 2024 that have materially affected,

or are reasonably likely to materially affect, our internal control over financial reporting.

Other Information.

None of the Company’s

directors or officers adopted , modified or terminated a Rule 10b5-1 trading arrangement or a non-Rule 10b5-1 trading arrangement during

the Company’s fiscal quarter ended December 31, 2023, as such terms are defined under Item 408(a) of Regulation S-K.

Disclosure Regarding Foreign Jurisdictions that Prevent

Not Applicable.

of the Company’s directors or officers adopted , modified or terminated a Rule 10b5-1 trading arrangement or a non-Rule 10b5-1 trading

arrangement during the Company’s fiscal quarter ended December 31, 2024, as such terms are defined under Item 408(a) of Regulation

Disclosure Regarding Foreign Jurisdictions that Prevent Inspections.

Directors, Executive Officers and Corporate Governance.

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Member of Compensation Committee

The principal occupations and positions for at

least the past five years of our directors are described below.

There are no family relationships among any of our directors or executive

The principal occupations

and positions for at least the past five years of our directors are described below.

There are no family relationships among any of our

directors or executive officers.

Ronald Glibbery.

Glibbery was appointed

as our chief executive officer and to our board of directors in December 2021.

Glibbery was appointed as our chief executive officer and to our board of directors in December 2021.

He founded Peraso Technologies Inc.

(Peraso Tech) in 2008

and served as its chief executive officer.

In June 2020, Peraso Tech applied for and obtained an order under the Companies’ Creditors

Arrangement Act (the CCAA), providing certain relief.

Pursuant to the Initial Order issued by the Ontario Superior Court of Justice (Commercial

List) (the Court), Ernst & Young Inc.

(Peraso Tech) in 2008 and served as its chief executive officer.

In June 2020, Peraso Tech applied for and obtained an order under the

Companies’ Creditors Arrangement Act (the CCAA), providing certain relief.

Pursuant to the Initial Order issued by the Ontario Superior

Court of Justice (Commercial List) (the Court), Ernst & Young Inc.

was appointed as the Monitor of Peraso Tech.

In addition, the Monitor, in its capacity as Foreign

Representative, filed a voluntary petition in the United States under Chapter 15 of the U.S.

Bankruptcy Code, seeking recognition of the

CCAA proceeding.

In October 2020, the Court granted an order authorizing the termination of Peraso Tech’s CCAA proceedings upon

the completion of certain defined steps.

In December 2020, the United States Bankruptcy Court for the Southern District of New York issued

an Order that:

(i) recognized and gave full force and effect in the United States to the Court’s order approving the Settlement

In addition, the Monitor,

in its capacity as Foreign Representative, filed a voluntary petition in the United States under Chapter 15 of the U.S.

Bankruptcy Code,

seeking recognition of the CCAA proceeding.

In October 2020, the Court granted an order authorizing the termination of Peraso Tech’s

CCAA proceedings upon the completion of certain defined steps.

In December 2020, the United States Bankruptcy Court for the Southern District

of New York issued an Order that:

(i) recognized and gave full force and effect in the United States to the Court’s order approving

the Settlement Agreement;

and (ii) terminated the Chapter 15 Proceedings.

Glibbery has over 25 years of experience in the semiconductor industry.

Glibbery has over 25 years of experience in the semiconductor

Prior to co-founding Peraso Tech, Mr.

Glibbery held executive positions at Kleer Semiconductor, a fabless semiconductor company focused

on wireless audio technology and Intellon Corporation (Intellon), a pioneer and leader in the development of semiconductor devices used

for powerline communications.

Glibbery held executive positions at Kleer Semiconductor, a fabless semiconductor company

focused on wireless audio technology and Intellon Corporation (Intellon), a pioneer and leader in the development of semiconductor devices

used for powerline communications.

He has held other executive roles at Cogency Semiconductor, LSI Logic Canada, Inc.

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We believe that Mr.

Glibbery’s qualifications

to serve on the board of directors include his service as an officer of ours and his extensive general management and technical expertise

in the semiconductor industry, as well as his experience as a chief executive officer.

qualifications to serve on the board of directors include his service as an officer of ours and his extensive general management and technical

expertise in the semiconductor industry, as well as his experience as a chief executive officer.

Daniel Lewis.

Lewis has served as a

member of the board of directors since September 2017.

He served as our Vice President, General Manager of Memory Products from April

2022 until his retirement in December 2022.

Lewis previously served as our President from August 2018 until April 2022 and chief executive

officer from August 2018 until the business combination with Peraso Tech in December 2021.

Before joining MoSys, Mr.

Lewis served as the

managing member and an owner of GMS Manufacturing Solution LLC, a firm focused on providing engineering services to manufacturing companies.

He previously held various executive and leadership roles at View Box Group, Xicor, Integrated Device Technology, Accelerant Networks,

Intel Corporation, Zilog and Digital Equipment Corporation.

who is currently retired, has served as a member of the board of directors since September 2017.

He served as our Vice President, General

Manager of Memory Products from April 2022 until his retirement in December 2022.

Lewis previously served as our President from August

2018 until April 2022 and chief executive officer from August 2018 until the business combination with Peraso Tech in December 2021.

joining MoSys, Mr.

Lewis served as the managing member and an owner of GMS Manufacturing Solution LLC, a firm focused on providing engineering

services to manufacturing companies.

He previously held various executive and leadership roles at View Box Group, Xicor, Integrated Device

Technology, Accelerant Networks, Intel Corporation, Zilog and Digital Equipment Corporation.

Lewis holds a B.S.

in Electrical Engineering from the University of Michigan.

in Electrical Engineering

from the University of Michigan.

We believe that Mr.

Lewis’s qualifications to serve on the board of directors include his service as an officer of ours and his

extensive business experience, having held senior management positions at several companies in the semiconductor, computer and networking

industries, which brings strategic and operational insight to the board of directors.

Lewis’s qualifications to serve on the board of directors include his service

as an officer of ours and his extensive business experience, having held senior management positions at several companies in the semiconductor,

computer and networking industries, which brings strategic and operational insight to the board of directors.

Ian McWalter.

McWalter was appointed

to our board of directors in December 2021.

He currently serves as a member of the board of directors for Evertz Technologies, a publicly

traded manufacturer of video and audio infrastructure solutions for television, telecom and new-media industries.

McWalter served

as the president and chief executive officer of CMC Microsystems from 2007 until 2018.

McWalter, who is currently retired, was appointed to our board

of directors in December 2021.

From 2006 to 2024, h e served as a member of the board of directors

for Evertz Technologies Limited, a TSX-listed manufacturer of video and audio infrastructure solutions for television, telecom and new-media

From 2010 to 2023, Dr.

McWalter served as chairman of the board of directors of GaN Systems, a developer of power semiconductors,

which was acquired by Infineon Technologies AG in 2023.

McWalter served as the president and chief executive officer of CMC Microsystems

from 2007 until 2018.

Prior to this role, Dr.

McWalter was chief executive

officer of Toumaz Technology.

McWalter was chief executive officer of Toumaz Technology.

Before joining Toumaz, Dr.

McWalter spent 15 years at Gennum Corporation, including five years as president

and chief executive officer from 2000 to 2005.

Previously, he held management and technical positions at Bell Northern Research Ltd.,

the research and development arm of Northern Telecom and Bell Canada, and Plessey Semiconductors.

spent 15 years at Gennum Corporation, including five years as president and chief executive officer from 2000 to 2005.

Previously, he

held management and technical positions at Bell Northern Research Ltd., the research and development arm of Northern Telecom and Bell

Canada, and Plessey Semiconductors.

McWalter was awarded a B.Sc.

physics and a Ph.D.

in Electrical Engineering from the Imperial College of Science and Technology in London, England.

We believe that

McWalter’s qualifications to serve on the board of directors include his extensive general management and technical expertise

in the semiconductor industry, as well as his experience as a chief executive officer and his experience serving as a director on public-company

boards of directors.

in physics and a Ph.D.

in Electrical Engineering from the Imperial

College of Science and Technology in London, England.

We believe that Dr.

McWalter’s qualifications to serve on the board of directors

include his extensive general management and technical expertise in the semiconductor industry, as well as his experience as a chief executive

officer and his experience serving as a director on public-company boards of directors.

Andreas Melder.

Melder was appointed

to our board of directors in December 2021.

He is a veteran technology executive in the semiconductor, communications and consumer electronics

industries and previously served as vice president of business development at Gigle Networks, which was acquired in 2011 by Broadcom,

where he continued to serve in executive marketing roles.

Melder was appointed to our board of directors in December 2021.

He is a veteran technology executive in the semiconductor, communications and consumer electronics industries.

In January 2022, Mr.

co-founded Cercle.ai, an AI technology company focused on advancing healthcare for women,and currently serves on its board of directors.

Previously, he served as vice president of business development at Gigle Networks, which was acquired in 2011 by Broadcom, where he continued

to serve in executive marketing roles.

Prior to Broadcom, Mr.

Melder served as senior vice president of sales, marketing

and business development for Intellon, which was acquired by Atheros Communications, Inc., which was subsequently acquired by Qualcomm

(Qualcomm), and held similar positions with Atheros and Qualcomm.

Previously, he was founder and vice president of marketing and

business development for Microtune, a designer of RF integrated circuits and subsystem modules, which was acquired by Zoran Semiconductor,

and vice president of sales and marketing for Tripath, an audio controller company acquired by Etelos.

Melder served as senior vice president of sales, marketing and business

development for Intellon, which was acquired by Atheros Communications, Inc., which was subsequently acquired by Qualcomm Inc.

and held similar positions with Atheros and Qualcomm.

Previously, he was founder and vice president of marketing and business development

for Microtune, a designer of RF integrated circuits and subsystem modules, which was acquired by Zoran Semiconductor, and vice president

of sales and marketing for Tripath, an audio controller company acquired by Etelos.

Additionally, Mr.

senior executive for companies that were acquired by Broadcom, Cirrus Logic and RFMD.

Melder was a senior executive for

companies that were acquired by Broadcom, Cirrus Logic and RFMD.

Melder earned a B.S.

in Electrical Engineering/Business

from Carnegie-Mellon University and a M.S.

in Electrical Engineering/Business from Carnegie-Mellon

University and a M.S.

in Electrical Engineering and Operations Research from Southern Methodist University.

Melder’s qualifications to serve on the board of directors include his extensive business experience, having held senior

management positions at several companies in the semiconductor, computer and networking industries.

Additionally, he brings additional

operational, and fund-raising expertise, and business development, mergers and acquisitions and public markets experience.

Newell has served

as a member of our board of directors since October 2018 and is currently a consultant and advisor to emerging technology and healthcare

We believe that Mr.

qualifications to serve on the board of directors include his extensive business experience, having held senior management positions at

several companies in the semiconductor, computer and networking industries.

Additionally, he brings additional operational, and fund-raising

expertise, and business development, mergers and acquisitions and public markets experience.

Newell has served as a member of our board of directors since October 2018 and is currently a consultant and advisor to emerging technology

and healthcare companies.

He has held financial management positions for companies in Silicon Valley for over 25 years.

From 2003 to 2018, Mr.

was chief financial officer of Dextera Surgical, Inc.

From 2003 to 2018,

Newell was chief financial officer of Dextera Surgical, Inc.

(Dextera) a developer of advanced surgical stapling and medical devices.

2017, after entering into an agreement to sell substantially all of its assets, Dextera filed a voluntary petition for reorganization

In December 2017, after entering into an agreement to sell substantially all of its assets, Dextera filed a voluntary petition for reorganization

under Chapter 11 of Title 11 of the United States Code in the United States Bankruptcy Court for the District of Delaware.

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serving as a director on public-company boards of directors.

The names of our executive officers and certain

information about them are set forth either above or below, as the case may be:

The names of our executive

officers and certain information about them are set forth either above or below, as the case may be:

Position(s) with the Company

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James Sullivan.

Sullivan has served

as our chief financial officer since January 2008.

Sullivan has served as our chief financial officer since January 2008.

From July 2006 until January 2008, Mr.

Sullivan served as Vice President of Finance

and Chief Financial Officer at Apptera, Inc., a venture-backed company providing software for mobile advertising, search and commerce.

Sullivan served as Vice

President of Finance and Chief Financial Officer at Apptera, Inc., a venture-backed company providing software for mobile advertising,

search and commerce.

From July 2002 until June 2006, Mr.

Sullivan was the chief financial officer at 8x8, Inc., a publicly-traded SAAS provider of VoIP and

unified communication solutions.

Sullivan was the chief financial officer at 8x8, Inc., a publicly-traded SAAS

provider of VoIP and unified communication solutions.

Sullivan’s prior experience includes various positions at 8x8, Inc.

and PricewaterhouseCoopers

He received a Bachelor of Science degree in Accounting from New York University and is a certified public accountant.

PricewaterhouseCoopers LLP.

He received a Bachelor of Science degree in Accounting from New York University and is a certified public

Bradley Lynch .

Lynch has served as chief

operating officer since December 2021.

He co-founded Peraso Tech in 2009 and served as executive vice president of engineering and operations.

In June 2020, Peraso Tech applied for and obtained an order under the Companies’ Creditors Arrangement Act (the CCAA), providing

certain relief.

Pursuant to the Initial Order issued by the Ontario Superior Court of Justice (Commercial List) (the Court), Ernst &

Lynch has served as chief operating officer since December 2021.

He co-founded Peraso Tech in 2009 and served as executive vice president

of engineering and operations.

In June 2020, Peraso Tech applied for and obtained an order under the Companies’ Creditors Arrangement

Act (the CCAA), providing certain relief.

Pursuant to the Initial Order issued by the Ontario Superior Court of Justice (Commercial List)

(the Court), Ernst & Young Inc.

was appointed as the Monitor of Peraso Tech.

In addition, the Monitor, in its capacity as Foreign Representative, filed a voluntary

petition in the United States under Chapter 15 of the U.S.

Bankruptcy Code, seeking recognition of the CCAA proceeding.

In October 2020,

the Court granted an order authorizing the termination of Peraso Tech’s CCAA proceedings upon the completion of certain defined

In December 2020, the United States Bankruptcy Court for the Southern District of New York issued an Order that:

(i) recognized

and gave full force and effect in the United States to the Court’s order approving the Settlement Agreement;

and (ii) terminated

the Chapter 15 Proceedings.

In addition, the Monitor, in its capacity as Foreign

Representative, filed a voluntary petition in the United States under Chapter 15 of the U.S.

Bankruptcy Code, seeking recognition of the

CCAA proceeding.

In October 2020, the Court granted an order authorizing the termination of Peraso Tech’s CCAA proceedings upon

the completion of certain defined steps.

In December 2020, the United States Bankruptcy Court for the Southern District of New York issued

an Order that:

(i) recognized and gave full force and effect in the United States to the Court’s order approving the Settlement

and (ii) terminated the Chapter 15 Proceedings.

Prior to founding Peraso Tech, Mr.

Lynch worked as a system architect at Kleer Semiconductor, a fabless company

focused on wireless audio technology.

Before Kleer, he was director of software engineering at Intellon Corporation, a pioneer and leader

in the development of semiconductor devices used for powerline communications.

Lynch worked as a system architect at Kleer

Semiconductor, a fabless company focused on wireless audio technology.

Before Kleer, he was director of software engineering at Intellon

Corporation, a pioneer and leader in the development of semiconductor devices used for powerline communications.

Previously, Mr.

Lynch held various technical roles at Cogency

Semiconductor and Power Trunk.

Lynch holds a B.A.Sc in Computer Engineering from the University of Waterloo.

held various technical roles at Cogency Semiconductor and Power Trunk.

Lynch holds a B.A.Sc in Computer Engineering from the University

Mark Lunsford.

Lunsford was appointed

as our chief revenue officer in October 2022.

Lunsford was appointed as our chief revenue officer in October 2022.

Prior to joining Peraso, Mr.

Lunsford held numerous positions of responsibility with companies

in the semiconductor industry.

From 1988 to 1999, he worked for Asia Pacific at Monolithic Memories, where he served in multiple roles,

including vice president of sales for the Americas and director of marketing.

Lunsford held numerous positions of

responsibility with companies in the semiconductor industry.

From 1988 to 1999, he worked for Asia Pacific at Monolithic Memories, where

he served in multiple roles, including vice president of sales for the Americas and director of marketing.

From 1999 to 2001, Mr.

Lunsford was the vice president of

worldwide sales and director of business development at Pivotal Technologies.

In 2001, and for a period of eight years, he served as vice

president of worldwide sales at Micrel Semiconductor.

From 2009 to 2013, he worked at NXP, where he served as vice president of sales

and marketing for the Americas.

In 2013, and for a period of six years, he served as the executive vice president of worldwide sales at

SiTime Inc., a provider of MEMS-based timing devices.

From January 2019 until April 2020, he provided consulting services for a range

of high-technology businesses.

Finally, he served as the vice president of global sales at Chasm Advanced Materials, a provider of carbon

nano tube based product solutions, from November 2020 until April 2022.

Lunsford holds a degree in Mechanical Engineering from the

University of California at Davis.

was the vice president of worldwide sales and director of business development at Pivotal Technologies.

In 2001, and for a period of eight

years, he served as vice president of worldwide sales at Micrel Semiconductor.

From 2009 to 2013, he worked at NXP, where he served as

vice president of sales and marketing for the Americas.

In 2013, and for a period of six years, he served as the executive vice president

of worldwide sales at SiTime Inc., a provider of MEMS-based timing devices.

From January 2019 until April 2020, he provided consulting

services for a range of high-technology businesses.

Finally, he served as the vice president of global sales at Chasm Advanced Materials,

a provider of carbon nano tube based product solutions, from November 2020 until April 2022.

Lunsford holds a degree in Mechanical

Engineering from the University of California at Davis.

Alexander Tomkins .

Tomkins has served

as our chief technology officer since December 2021.

He co-founded Peraso Tech in 2009 and served as its chief technology officer.

June 2020, Peraso Tech applied for and obtained an order under the Companies’ Creditors Arrangement Act (the CCAA), providing certain

Pursuant to the Initial Order issued by the Ontario Superior Court of Justice (Commercial List), Ernst & Young Inc.

was appointed

as the Monitor of Peraso Tech.

In addition, the Monitor, in its capacity as Foreign Representative, filed a voluntary petition in the

United States under Chapter 15 of the U.S.

Tomkins has served as our chief technology officer since December 2021.

He co-founded Peraso Tech in 2009 and served as its chief

technology officer.

In June 2020, Peraso Tech applied for and obtained an order under the Companies’ Creditors Arrangement Act (the

CCAA), providing certain relief.

Pursuant to the Initial Order issued by the Ontario Superior Court of Justice (Commercial List), Ernst

was appointed as the Monitor of Peraso Tech.

In addition, the Monitor, in its capacity as Foreign Representative, filed

a voluntary petition in the United States under Chapter 15 of the U.S.

Bankruptcy Code, seeking recognition of the CCAA proceeding.

In October 2020, the Court granted

an order authorizing the termination of Peraso Tech’s CCAA proceedings upon the completion of certain defined steps.

2020, the United States Bankruptcy Court for the Southern District of New York issued an Order that:

(i) recognized and gave full force

and effect in the United States to the Court’s order approving the Settlement Agreement;

and (ii) terminated the Chapter 15 Proceedings.

October 2020, the Court granted an order authorizing the termination of Peraso Tech’s CCAA proceedings upon the completion of certain

defined steps.

In December 2020, the United States Bankruptcy Court for the Southern District of New York issued an Order that:

(i) recognized

and gave full force and effect in the United States to the Court’s order approving the Settlement Agreement;

and (ii) terminated

the Chapter 15 Proceedings.

Tomkins holds a Masters of Applied Science from the University of Toronto and a B.S.

in Engineering Physics from Carleton University.

in Engineering Physics

from Carleton University.

He also attended the University of Toronto as a doctoral candidate in Applied Science.

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Our Compensation Committee also has the principal responsibility for the administration of our equity

incentive and stock purchase plans.

The responsibilities of our Compensation Committee are described in the Compensation Committee Charter

adopted by our board of directors, a current copy of which can be found on the investors section of our website, www.perasoinc.com.

The responsibilities of our Compensation Committee are described in the Compensation Committee Charter adopted by our board of

directors, a current copy of which can be found on the investors section of our website, www.perasoinc.com.

Nominations Process

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committee, as we are a small company and currently only have five directors.

Instead of having such a committee, our board of directors

historically has appointed all of the independent directors on our board to search for and evaluate qualified individuals to become nominees

Instead of having such a committee, historically, our board

of directors has appointed all of the independent directors on our board to search for and evaluate qualified individuals to become nominees

for director and board committee members.

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in our bylaws for stockholder nominees to be considered at an annual meeting, including the following:

stockholder’s name and address and the beneficial owner, if any, on whose behalf the nomination is proposed;

stockholder’s reason for making the nomination at the annual meeting, and the signed consent of the nominee to serve if elected;

number of shares owned by, and any material interest of, the record owner and the beneficial owner, if any, on whose behalf the record

owner is proposing the nominee;

description of any arrangements or understandings between the stockholder, the nominee and any other person regarding the nomination;

● Information

regarding the nominee that would be required to be included in our proxy statement by the rules of the SEC, including the nominee’s

age, business experience for the past five years and any other directorships held by the nominee.

The stockholder’s name and address and the beneficial owner, if any, on whose behalf the nomination is proposed;

The stockholder’s reason for making the nomination at the annual meeting, and the signed consent of the nominee to serve if elected;

The number of shares owned by, and any material interest of, the record owner and the beneficial owner, if any, on whose behalf the record owner is proposing the nominee;

A description of any arrangements or understandings between the stockholder, the nominee and any other person regarding the nomination;

Information regarding the nominee that would be required to be included in our proxy statement by the rules of the SEC, including the nominee’s age, business experience for the past five years and any other directorships held by the nominee.

The information listed above

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Participation

During 2023, none of our executive officers served as a member of the

board of directors or Compensation Committee of any entity that had one or more of its executive officers serving as a member of our board

of directors or Compensation Committee.

During 2024, none of our executive

officers served as a member of the board of directors or Compensation Committee of any entity that had one or more of its executive officers

serving as a member of our board of directors or Compensation Committee.

McWalter and Messrs.

Melder and Newell, the members of the Compensation Committee, were

not officers or employees of ours during 2023 or at any other time.

Melder and Newell, the members

of the Compensation Committee, were not officers or employees of ours during 2024 or at any other time.

Delinquent Section 16(a) Reports

Section 16(a) of the Exchange

Act requires our directors, executive officers and persons who own more than 10% of a registered class of our equity securities to file

with the SEC initial reports of ownership and reports of changes in ownership of common stock and other equity securities of ours.

executive officers and greater than 10% holders are required by SEC regulation to furnish us with copies of all Section 16(a) reports

Based solely on our review of Forms 3 and 4 filed during 2024 (and any written representations to us by such persons), we believe

that all directors, executive officers and 10% stockholders complied with all applicable Section 16(a) filing requirements during 2024,

except that Alexander Tomkins failed to timely file a Form 4 in June 2024 to report an open-market purchase of our common stock.

Code of Ethics

We have adopted a code of

ethics that applies to all of our employees.

The code of ethics is designed to deter wrongdoing and to promote, among other things, honest

and ethical conduct, full, fair, accurate, timely, and understandable disclosures in reports and documents submitted to the SEC and other

public communications, compliance with applicable governmental laws, rules and regulations, the prompt internal reporting of violations

of the code to an appropriate person or persons identified in the code and accountability for adherence to such code.

ethics that applies to all of our employees and directors.

The code of ethics is designed to deter wrongdoing and to promote, among other

things, honest and ethical conduct, full, fair, accurate, timely, and understandable disclosures in reports and documents submitted to

the SEC and other public communications, compliance with applicable governmental laws, rules and regulations, the prompt internal reporting

of violations of the code to an appropriate person or persons identified in the code and accountability for adherence to such code.

The code of ethics is available

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or waiver on our website.

Employee, Officer, and Director Hedging

Our policy against insider

trading prohibits all directors, officers or other employees from engaging in any short sales of our securities, transactions in puts,

calls or other derivative securities on an exchange or in any other organized market and hedging transactions.

Insider Trading Policy, Employee, Officer,

and Director Hedging

We have adopted an insider

trading policy that governs the purchase, sale, and other dispositions of our securities by directors, officers, employees and other covered

persons, which policy is reasonably designed to promote compliance with insider trading laws, rules and regulations, and the Nasdaq listing

standards applicable to us.

As part of this policy, we prohibit all directors, officers or other employees from engaging in any short

sales of our securities, transactions in puts, calls or other derivative securities on an exchange or in any other organized market and

hedging transactions.

A copy of our insider trading policy is filed as Exhibit 19.1 to this Annual Report.

Executive Compensation.

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or policies or by applicable laws.

The compensation received

by our named executive officers is set forth in the Summary Compensation Table, below.

For 2023, our named executive officers included

Ronald Glibbery, our chief executive officer, James Sullivan, our chief financial officer, and Bradley Lynch, our chief operating officer.

The compensation received by our named executive officers is set forth

in the Summary Compensation Table, below.

For 2024, our named executive officers included Ronald Glibbery, our chief executive officer,

James Sullivan, our chief financial officer and secretary, Bradley Lynch, our chief operating officer, and Mark Lunsford, our chief revenue

Compensation Philosophy

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of the key executives and high-level talent required in order for us to:

high-value and high-quality integrated circuit solutions to our customer base;

or exceed our annual financial plan and be profitable;

continuous progression towards achieving our long-term strategic objectives to be a high-growth company with growing profitability;

our share price to provide greater value to our stockholders.

supply high-value and high-quality integrated circuit solutions to our current and prospective customer base;

achieve or exceed our annual financial plan and be profitable;

make continuous progression towards achieving our long-term strategic objectives to be a high-growth company with growing profitability;

increase our share price to provide greater value to our stockholders.

Role of Executive Officers in Compensation

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philosophy and objectives, we offer executive compensation packages consisting of the following three components:

incentive compensation;

annual incentive compensation;

equity awards.

In each fiscal year, the Compensation

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conserves cash for other operating expenses.

For example, the RSUs granted to our executives generally vest in increments over three years,

For example, the RSUs granted to our executives generally vest in increments over 36 months,

while stock options granted to our executives generally vest over 36 months from the date of grant.

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annual base salaries of our executive officers in 2024.

In April 2023, we entered into amendments to our employment agreements with each

of our executive officers based in Canada, namely Messrs.

Glibbery, Lynch and Tomkins, which provide that for purposes of calculating

any cash compensation amounts payable by us under their employment agreements, each payment shall be converted into Canadian dollars at

the exchange rate reported by the Bank of Canada (or such other equivalent exchange rate source, as determined by the Company) as of 5:00

Pacific Time on the first business day of each calendar quarter during which the payment is made.

Annual Incentive Compensation

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Our Amended and Restated Peraso Inc.

2019 Stock Incentive Plan (the “2019

Plan”), which was approved by our stockholders and became effective in August 2019, enables us to grant equity awards, as well as

other types of stock-based compensation, to our executive officers and other employees.

The Compensation Committee reviews and approves

all equity awards granted under the 2019 Plan to the named executive officers.

We grant equity awards to achieve retention and motivation:

2019 Stock Incentive Plan, as amended

(the “2019 Plan”), which was approved by our stockholders and became effective in August 2019, enables us to grant equity

awards, as well as other types of stock-based compensation, to our executive officers and other employees.

The Compensation Committee

reviews and approves all equity awards granted under the 2019 Plan to the named executive officers.

We grant equity awards to achieve

retention and motivation:

upon the hiring of key executives and other personnel;

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size and type of compensation package considered necessary to enable us to recruit, retain and motivate the executive.

Typically, when we hire an

executive, the equity awards vest over a three-year period.

The options granted to executives in connection with annual performance reviews

typically vest monthly over a three-to four-year period, and RSUs granted typically vest annually over a period of from one- to three-years,

as the Compensation Committee may decide.

As matters of policy and practice, we grant stock options with an exercise price equal to fair

market value, although the 2019 Plan allows us to use a different exercise price.

In determining fair market value, we use the closing

price of the common stock on the Nasdaq on the grant date.

Historically, no employee

Typically, when we hire an executive, the equity awards vest over a

three-year period.

The options granted to executives in connection with annual performance reviews typically vest monthly over a three-year

period, and RSUs granted typically vest over a period of three years, as the Compensation Committee may decide.

As matters of policy and

practice, we grant stock options with an exercise price equal to fair market value, although the 2019 Plan allows us to use a different

exercise price.

In determining fair market value, we use the closing price of the common stock on the Nasdaq on the grant date.

Historically, no executive

has been eligible for an annual performance grant until the employee has been employed for at least six months.

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current position with and responsibilities to us, and current and past equity awards to the executive.

In 2023, we did not grant

During 2024, we did not grant

equity awards to any of our named executive officers.

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Name and principal position

Restricted Stock

Incentive Plan

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Chief Operating Officer

The dollar amounts in this column represent base salary earned during the indicated fiscal year.

Pursuant to the employment agreements for Messrs.

Sullivan and Lynch, each as amended in April 2022, such named executive officers received a base salary increase that was retroactive to December 17, 2021.

Accordingly, the amounts in this column for fiscal year 2022 for Messrs.

Sullivan and Lynch reflect retroactive salary increases for the time period from December 17, 2021 through December 31, 2021 in the aggregate amounts of $1,719 and $4,992, respectively, plus fiscal year 2022 base salary.

Award amounts reflect the aggregate grant date fair value with respect to awards granted during the years indicated, as determined pursuant to FASB ASC Topic 718.

The assumptions used to calculate the aggregate grant date fair value of option and stock awards are set forth in the notes to the consolidated financial statements included elsewhere in this Report.

These amounts do not reflect actual compensation earned or to be earned by our named executive officers.

Mark Lunsford

Chief Revenue Officer

GRANTS OF PLAN-BASED AWARDS

We did not grant plan-based awards in 2023

to any of our named executive officers.

We did not grant plan-based awards in 2024 to any

of our named executive officers.

OUTSTANDING EQUITY AWARDS AT FISCAL YEAR-END

The following table and accompanying footnotes set forth information

regarding the outstanding equity awards held by our named executive officers as of December 31, 2023.

The following table and accompanying

footnotes set forth information regarding the outstanding equity awards held by our named executive officers as of December 31, 2024.

Option Awards

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Bradley Lynch

Mark Lunsford

The standard option term is generally ten years, but all of the options expire automatically unless exercised within 90 days after the cessation of service as an employee, director or consultant.

The stock options were acquired on December 17, 2021 as consideration for the person’s securities of Peraso Technologies Inc., which we acquired by way of a reverse takeover.

The stock option was granted on March 30, 2015, and the shares subject to this option vested monthly over 48 months subject to continued employment (or service as a director or consultant).

In August 2016, officers tendered their eligible options and received new options at a rate of 1 replacement option share for each 1.75 option shares tendered.

The stock option was granted on August 23, 2016, and the shares subject to this option vested monthly over 48 months subject to continued employment (or service as a director or consultant).

The stock option was granted on February 6, 2019, and the shares subject to this option vest monthly over three years subject to continued service as an employee, director or consultant).

The stock option was granted on March 30, 2015, and the shares subject to this option vested monthly over 48 months subject to continued service as an employee, director or consultant.

The stock option was granted on August 23, 2016, and the shares subject to this option vested monthly over 48 months subject to continued service as an employee, director or consultant.

The stock option was granted on February 6, 2019, and the shares subject to this option vested monthly over three years subject to continued service as an employee, director or consultant.

The stock option was granted on November 20, 2019, and the shares subject to this option vested monthly over three years subject to continued service as an employee, director or consultant.

The shares subject to each restricted stock unit grant vest on each semi-annual anniversary over a three-year period commencing on December 17, 2021 subject to continued employment (or service as a director or consultant).

The amount is calculated using the Company’s closing price on the Nasdaq of $11.20 per share of common stock on December 29, 2023.

(7) The restricted stock unit

award was granted on October 24, 2022, and the shares subject to this award vested one-third of the shares on October 15, 2023 and

the remaining two-thirds vest on each semi-annual anniversary over a two-year period from the one-year anniversary of October 15,

2023, subject to continued employment.

(8) The amount is calculated

using the Company’s closing price on the Nasdaq of $1.16 per share of common stock on December 31, 2024.

OPTION EXERCISES AND STOCK VESTED

The following table sets forth the number of shares

acquired and aggregate dollar amount realized pursuant to the exercise of options and vesting of stock awards by our named executive officers

during the year ended December 31, 2023.

Option Awards

The following table sets forth

the number of shares acquired and aggregate dollar amount realized pursuant to the exercise of options and vesting of stock awards by

our named executive officers during the year ended December 31, 2024.

Vesting($)(1)

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Bradley Lynch

Mark Lunsford

The aggregate dollar value realized upon vesting represents the closing price of a share of common stock on the Nasdaq at the date of vesting, multiplied by the total number of shares vested.

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named executive officers in the event of a “Change-in-Control,” which is generally defined as:

acquisition of 45% or more of our common stock or voting securities by any “person,” as defined under the Exchange Act;

● consummation

of a complete liquidation or dissolution of the Company or a merger, consolidation, reorganization or sale of all or substantially all

of our assets (collectively, a “Business Combination”) other than a Business Combination in which (A) our stockholders

receive 50% or more of the stock of the corporation resulting from the Business Combination and (B) at least a majority of the board

of directors of such resulting corporation were our incumbent directors immediately prior to the consummation of the Business Combination,

and (C) after which no individual, entity or group (excluding any corporation or other entity resulting from the Business Combination

or any employee benefit plan of such corporation or of ours) who did not own 45% or more of the stock of the resulting corporation or

other entity immediately before the Business Combination owns 45% or more of the stock of such resulting corporation or other entity.

an acquisition of 45% or more of our common stock or voting securities by any “person,” as defined under the Exchange Act;

consummation of a complete liquidation or dissolution of the Company or a merger, consolidation, reorganization or sale of all or substantially all of our assets (collectively, a “Business Combination”) other than a Business Combination in which (A) our stockholders receive 50% or more of the stock of the corporation resulting from the Business Combination and (B) at least a majority of the board of directors of such resulting corporation were our incumbent directors immediately prior to the consummation of the Business Combination, and (C) after which no individual, entity or group (excluding any corporation or other entity resulting from the Business Combination or any employee benefit plan of such corporation or of ours) who did not own 45% or more of the stock of the resulting corporation or other entity immediately before the Business Combination owns 45% or more of the stock of such resulting corporation or other entity.

Under the Policy, the following

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or within 24 months after it:

base salary earned but not yet paid through the date of termination;

annual or discretionary bonus earned but not yet paid to him for any calendar year prior to the year in which his termination occurs;

compensation under any deferred compensation plan of ours or deferred compensation agreement with us then in effect;

single lump sum payment equal to the sum of (a) one year of his or her then-current base salary plus (b) the average of his

or her annual bonus payments in the preceding three years or such shorter time as he or she has been employed by us (with prorated

weighting assigned to any bonus earned for a partial year of employment), which payment will be made within 60 days following the

Change-in-Control (in the case of the chief executive officer), or 60 days following the date of employment termination (in the

case of all other named executive officers).

in 100% of all outstanding equity awards as of the date of the Change-in-Control for the chief executive officer, or as of the date of

termination of employment for all other named executive officers;

● reimbursement

of any business expenses incurred by him through the date of termination but not yet paid;

● reimbursement

of the cost of continuation of medical benefits for a period of 12 months;

● outstanding

equity awards that are structured as stock options, stock appreciation rights or similar awards shall be amended effective as of the

date of termination to provide that such awards will remain outstanding and exercisable until the earlier of (a) 12 months

following the date of the Change-in-Control for the chief executive officer, or the termination of employment for the other named executive

officers, and (b) the expiration of the award’s initial term.

any base salary earned but not yet paid through the date of termination;

any annual or discretionary bonus earned but not yet paid to him for any calendar year prior to the year in which his termination occurs;

any compensation under any deferred compensation plan of ours or deferred compensation agreement with us then in effect;

a single lump sum payment equal to the sum of (a) one year of his or her then-current base salary plus (b) the average of his or her annual bonus payments in the preceding three years or such shorter time as he or she has been employed by us (with prorated weighting assigned to any bonus earned for a partial year of employment), which payment will be made within 60 days following the Change-in-Control (in the case of the chief executive officer), or 60 days following the date of employment termination (in the case of all other named executive officers).

vesting in 100% of all outstanding equity awards as of the date of the Change-in-Control for the chief executive officer, or as of the date of termination of employment for all other named executive officers;

reimbursement of any business expenses incurred by him through the date of termination but not yet paid;

reimbursement of the cost of continuation of medical benefits for a period of 12 months;

outstanding equity awards that are structured as stock options, stock appreciation rights or similar awards shall be amended effective as of the date of termination to provide that such awards will remain outstanding and exercisable until the earlier of (a) 12 months following the date of the Change-in-Control for the chief executive officer, or the termination of employment for the other named executive officers, and (b) the expiration of the award’s initial term.

Under the Policy, “cause”

means the executive’s:

failure to attend to the executive’s duties that is not cured by the executive within 30 days of receiving written notice

from the CEO (or, in the case of the CEO, from the board of directors) specifying such failure;

breach of the executive’s then-current employment agreement (if any) that is not cured by the executive within 30 days of

receiving written notice from the CEO (or, in the case of the CEO, from the board of directors) specifying such breach;

of (or plea of guilty or nolo contendere to) any felony or any misdemeanor involving theft or embezzlement;

resulting in material harm to our business or reputation, including fraud, embezzlement, misappropriation of funds or a material violation

of the executive’s employment, confidential information, non-disclosure, invention assignment and arbitration agreement.

willful failure to attend to the executive’s duties that is not cured by the executive within 30 days of receiving written notice from the CEO (or, in the case of the CEO, from the board of directors) specifying such failure;

material breach of the executive’s then-current employment agreement (if any) that is not cured by the executive within 30 days of receiving written notice from the CEO (or, in the case of the CEO, from the board of directors) specifying such breach;

conviction of (or plea of guilty or nolo contendere to) any felony or any misdemeanor involving theft or embezzlement;

misconduct resulting in material harm to our business or reputation, including fraud, embezzlement, misappropriation of funds or a material violation of the executive’s employment, confidential information, non-disclosure, invention assignment and arbitration agreement.

Under the Policy, “good

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after written notice from the executive to the board of directors of said condition:

material reduction in the executive’s then-current base salary or annual target bonus (expressed as a percentage of Executive’s

then-current base salary), except for a reduction proportionate to reductions concurrently imposed on all other members of the Company’s

executive management;

material reduction in the executive’s then-current employee benefits package, taken as a whole, except for a reduction proportionate

to reductions concurrently imposed on all other members of executive management;

material reduction in the executive’s responsibilities with respect to our overall operations, such that continuity of responsibilities

with respect to business operations existing prior to a corporate transaction will serve as a material reduction in responsibilities

if such business operations represent only a subsidiary or business unit of the larger enterprise after the corporate transaction;

material reduction in the responsibilities of the executive’s direct reports, including a requirement for the chief executive officer

to report to another officer as opposed to our board of directors or a requirement for any other executive to report to any officer other

than our chief executive officer;

material breach by us of any material provision of the executive’s then-current employment agreement (if any);

requirement that the executive relocate to a location more than 35 miles from the executive’s then-current office location, unless

such office relocation results in the distance between the new office and Executive’s home being closer or equal to the distance

between the prior office and the executive’s home;

failure of a successor or transferee to assume our obligations under this Policy;

failure to nominate the executive for election as a board of directors director, if, at the proper time for nomination, the executive

is a member of the board of directors.

Notwithstanding the above, in lieu of the payments

and benefits payable under the Policy to Mr.

a material reduction in the executive’s then-current base salary or annual target bonus (expressed as a percentage of Executive’s then-current base salary), except for a reduction proportionate to reductions concurrently imposed on all other members of the Company’s executive management;

a material reduction in the executive’s then-current employee benefits package, taken as a whole, except for a reduction proportionate to reductions concurrently imposed on all other members of executive management;

a material reduction in the executive’s responsibilities with respect to our overall operations, such that continuity of responsibilities with respect to business operations existing prior to a corporate transaction will serve as a material reduction in responsibilities if such business operations represent only a subsidiary or business unit of the larger enterprise after the corporate transaction;

a material reduction in the responsibilities of the executive’s direct reports, including a requirement for the chief executive officer to report to another officer as opposed to our board of directors or a requirement for any other executive to report to any officer other than our chief executive officer;

a material breach by us of any material provision of the executive’s then-current employment agreement (if any);

a requirement that the executive relocate to a location more than 35 miles from the executive’s then-current office location, unless such office relocation results in the distance between the new office and Executive’s home being closer or equal to the distance between the prior office and the executive’s home;

a failure of a successor or transferee to assume our obligations under this Policy;

a failure to nominate the executive for election as a board of directors director, if, at the proper time for nomination, the executive is a member of the board of directors.

Notwithstanding the above,

in lieu of the payments and benefits payable under the Policy to Mr.

Glibbery as the Company’s chief executive officer, Mr.

Glibbery will receive change-in

control payments and benefits in accordance with the terms and conditions of his employment agreement.

The table below summarizes the

will receive change-in control payments and benefits in accordance with the terms and conditions of his employment agreement.

below summarizes the payments Mr.

Glibbery would be entitled to depending on the respective type of termination of his employment.

Termination Type

Payments and Benefits

Termination for Cause or Voluntary Resignation

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any other benefits and/or perquisites shall continue until the end of the ESA Notice Period (as defined in the employment agreement).

The information below describes

the severance benefits payable to (i) Mr.

Glibbery under his employment agreement and (ii) Messrs.

Lynch and Sullivan

under the Policy, as if such arrangements had been in effect and a Change-in-Control occurred on December 31, 2023, and the employment

of each of our named executive officers was terminated without cause immediately following the Change-in-Control.

The information below describes the severance benefits payable to (i) Mr.

under his employment agreement and (ii) Messrs.

Sullivan, Lynch and Lunsford under the Policy, as if such arrangements had been

in effect and a Change-in-Control occurred on December 31, 2024, and the employment of each of our named executive officers was terminated

without cause immediately following the Change-in-Control.

Base Salary($)(1)

Incentive Plans($)(2)

Continuation of

Benefits($)(3)

Vesting($)(4)

Vesting($)(5)

Continuation of Benefits($)(3)

Stock Option Vesting($)(4)

Stock Award Vesting($)(5)

Ronald Glibbery

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Bradley Lynch

Represents cash severance payments based on the executive’s salary at December 31, 2023, in an amount equal to two years of base salary for Mr.

Mark Lunsford

Represents cash severance payments based on the executive’s salary

at December 31, 2024, in an amount equal to two years of base salary for Mr.

Glibbery and one year of base salary for each of Messrs.

Sullivan and Lynch.

Glibbery, the amount represents payment of his annual target bonus amount.

Sullivan and Lynch, the amounts represent the average of each executive’s annual performance incentive payments in the preceding three years.

Sullivan, Lynch and Lunsford.

Glibbery, the amount represents payment of his annual target

bonus amount.

Sullivan and Lynch, the amounts represent each executive’s salary times 60% and 50%, respectively.

Lunsford, the amount represents the average of his annual performance incentive payments in the preceding three years.

Represents the aggregate amount of all premiums payable for the continuation of the executive’s health benefits for one or two years, as applicable, based on the amounts of such premiums at December 31, 2024.

The value is calculated as the intrinsic value per share, multiplied by the number of shares that would become fully vested upon the Change-in-Control.

The intrinsic value per share would be calculated as the excess of the closing price of the common stock on the Nasdaq of $11.20 on December 29, 2023 over the exercise price of the option.

The intrinsic value per share would be calculated as the excess of the closing price of our common stock on the Nasdaq of $1.16 on December 31, 2024 over the exercise price of the option.

If the value is less than zero, it is deemed to be zero for the purposes of these calculations.

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The intrinsic value per share is considered as the closing price of our common stock on the Nasdaq of $1.16 on December 31, 2024.

If a Change-in-Control occurred on December 31,

2023, under the Policy, the following numbers of option and award shares would have vested immediately as a result of acceleration on

December 31, 2023:

Accelerated Option

and Award Shares

If a Change-in-Control occurred

on December 31, 2024, under the Policy, the following numbers of option and award shares would have vested immediately as a result of

acceleration on December 31, 2024:

Number of Accelerated Option and Award Shares

Ronald Glibbery

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Bradley Lynch

Mark Lunsford

Employment Agreements

In addition to the agreements containing the Change-in-Control

provisions summarized above, we have entered into our standard form of employment, confidential information, invention assignment and

arbitration agreement with each of the named executive officers.

We also have entered into agreements to indemnify

our current and former directors and certain executive officers, in addition to the indemnification provided for in our certificate of

incorporation and bylaws.

These agreements, among other things, provide for indemnification of our directors and certain executive officers

for many expenses, including attorneys’ fees, judgments, fines and settlement amounts incurred by any such person in any action

or proceeding, including any action by or in the right of the Company, arising out of such person’s services as a director or executive

officer of the Company, any subsidiary of the Company or any other company or enterprise to which the person provided services at our

In addition to the agreements

containing the Change-in-Control provisions summarized above, we have entered into our standard form of employment, confidential information,

invention assignment and arbitration agreement with each of the named executive officers.

We also have entered into

agreements to indemnify our current and former directors and certain executive officers, in addition to the indemnification provided for

in our certificate of incorporation and bylaws.

These agreements, among other things, provide for indemnification of our directors and

certain executive officers for many expenses, including attorneys’ fees, judgments, fines and settlement amounts incurred by any

such person in any action or proceeding, including any action by or in the right of the Company, arising out of such person’s services

as a director or executive officer of the Company, any subsidiary of the Company or any other company or enterprise to which the person

provided services at our request.

Director Compensation

The following table summarizes the compensation

we paid to our non-employee directors in the year ended December 31, 2023:

The following table summarizes

the compensation earned by our non-employee directors in the year ended December 31, 2024:

Restricted Stock

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Andreas Melder

Consists of (i) $45,000 of fees earned in 2023, of which $22,500 was not paid in 2023, and (ii) $11,250 of fees earned in 2022 and paid in 2023.

Consists of (i) $44,000 of fees earned in 2023, of which $22,000 was not paid in 2023, and (ii) $11,000 of fees earned in 2022 and paid in 2023.

Consists of (i) $40,000 of fees earned in 2023, of which $20,000 was not paid in 2023, and (ii) $10,000 of fees earned in 2022 and paid in 2023

Includes $17,500 of fees earned but not paid in 2023.

Represents a cash bonus paid to Mr.

Lewis in January 2023 equal to 3% of the gross proceeds we received from the sale of our Virtual Accelerator Engine intellectual property, pursuant to the terms of his offer of employment, dated August 8, 2018, as amended on April 15, 2022.

Lewis resigned as our Vice President, General Manager of Memory Products in December 2022.

Newell, McWalter, Melder and Lewis were

each granted 500 restricted stock units on February 27, 2024.

Award amounts reflect the aggregate grant date fair value as determined

pursuant to FASB ASC Topic 718.

For these restricted stock unit awards, the fair value is equal to the underlying value of the stock and

is calculated using the closing price of our common stock on the award date.

The actual value realized by a non-employee director related

to restricted stock unit awards will depend on the market value of our common stock on the date the underlying stock is sold following

vesting of the awards.

Director Fee Compensation

As a small company, it can be challenging for us

to attract new non-employee directors.

Nasdaq and SEC regulations require that a majority of the directors on our board of directors and

its committees be independent, non-employee directors, as defined by each entity.

In December 2021, we amended our director compensation

structure and adopted our Outside Director Compensation Plan (the “Director Plan”).

Under the Director Plan, we pay the following

annual cash retainer fees, payable in quarterly installments, to our non-employee directors for their service on our board of directors

and, as applicable, for service on committees of our board of directors:

As a small company, it can

be challenging for us to attract new non-employee directors.

Nasdaq and SEC regulations require that a majority of the directors on our

board of directors and its committees be independent, non-employee directors, as defined by each entity.

In December 2021, we amended

our director compensation structure and adopted our Outside Director Compensation Plan (the “Director Plan”).

Under the Director

Plan, we pay the following annual cash retainer fees, payable in quarterly installments, to our non-employee directors for their service

on our board of directors and, as applicable, for service on committees of our board of directors:

$35,000 for service on the board of directors;

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Director Equity Compensation

Under the Director Plan, upon initial appointment

to our board of directors, each non-employee director will receive a stock option with a value of $100,000, calculated by dividing the

$100,000 by the closing trading price of our common stock on the date of grant.

The initial stock option will have an exercise price equal

to the closing price of our common stock on the date of grant and will vest as to one-third of the shares on the first annual anniversary

of the grant and the remaining shares quarterly over the subsequent two years, provided the non-employee director continues to serve on

the board of directors.

In the event of a merger, sale of substantially all of our assets or similar transaction, vesting of all director

options would accelerate as to 100% of the unvested shares subject to the award.

Non-employee directors will also receive an annual

equity award of restricted stock units of common stock equal to $50,000 of value per non-employee director.

The restricted stock unit

award will be made upon initial appointment to our board of directors and then subsequently at the first scheduled meeting of the board

of directors following our annual meeting of stockholders.

The number of restricted stock units will be calculated by dividing $50,000

by the closing trading price of our common stock on the date of the award, provided, however, that such annual equity award for each non-employee

director cannot exceed 500 shares per year in accordance with the 2019 Plan.

The restricted stock unit award will vest in full on the

earlier to occur of the next annual meeting of stockholders or the one-year anniversary of the award.

All equity awards granted under

the Director Plan will be made from the 2019 Plan.

Under the Director Plan, upon

initial appointment to our board of directors, each non-employee director will receive a stock option with a value of $100,000, calculated

by dividing the $100,000 by the closing trading price of our common stock on the date of grant.

The initial stock option will have an

exercise price equal to the closing price of our common stock on the date of grant and will vest as to one-third of the shares on the

first annual anniversary of the grant and the remaining shares quarterly over the subsequent two years, provided the non-employee director

continues to serve on the board of directors.

In the event of a merger, sale of substantially all of our assets or similar transaction,

vesting of all director options would accelerate as to 100% of the unvested shares subject to the award.

Non-employee directors will

also receive an annual equity award of restricted stock units of common stock equal to $50,000 of value per non-employee director.

restricted stock unit award will be made upon initial appointment to our board of directors and then subsequently at the first scheduled

meeting of the board of directors following our annual meeting of stockholders.

The number of restricted stock units will be calculated

by dividing $50,000 by the closing trading price of our common stock on the date of the award, provided, however, that such annual equity

award for each non-employee director cannot exceed 500 shares per year in accordance with the 2019 Plan.

The restricted stock unit award

will vest in full on the earlier to occur of the next annual meeting of stockholders or the one-year anniversary of the award.

awards granted under the Director Plan will be made from the 2019 Plan.

Security Ownership of Certain Beneficial Owners and Management

and Related Stockholder Matters.

The table below sets forth certain information

as of March 1, 2024 concerning the ownership of our common stock by:

The table below sets forth

certain information as of March 1, 2025 concerning the ownership of our common stock by:

each stockholder known by us to be the beneficial owner of more than 5% of the outstanding shares of our common stock (currently our only class of voting securities);

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all directors and executive officers as a group.

Beneficial ownership is determined in accordance

with Rule 13d-3 of the Exchange Act and includes all shares over which the beneficial owner exercises voting or investment power.

that are issuable upon the exercise of options, warrants and other rights to acquire common stock that are presently exercisable or exercisable

within 60 days of March 1, 2024 are reflected in a separate column in the table below.

These shares are taken into account in the calculation

of the total number of shares beneficially owned by a particular holder and the total number of shares outstanding for the purpose of

calculating percentage ownership of the particular holder.

We have relied on information supplied by our officers, directors and certain

stockholders and on information contained in filings with the SEC.

Except as otherwise indicated, and subject to community property laws

where applicable, we believe, based on information provided by these persons, that the persons named in the table have sole voting and

investment power with respect to all shares of common stock shown as beneficially owned by them.

The percentage of beneficial ownership

is based on 2,256,253 shares of our common stock and exchangeable shares outstanding as of March 1, 2024.

Unless otherwise stated, the business address of

each of our directors and executive officers listed in the table is 2309 Bering Drive, San Jose, California 95131.

Amount and Nature of Beneficial

Beneficial ownership is determined

in accordance with Rule 13d-3 of the Exchange Act and includes all shares over which the beneficial owner exercises voting or investment

Shares that are issuable upon the exercise of options, warrants and other rights to acquire common stock that are presently exercisable

or exercisable within 60 days of March 1, 2025 are reflected in a separate column in the table below.

These shares are taken into account

in the calculation of the total number of shares beneficially owned by a particular holder and the total number of shares outstanding

for the purpose of calculating percentage ownership of the particular holder.

We have relied on information supplied by our officers,

directors and certain stockholders and on information contained in filings with the SEC.

Except as otherwise indicated, and subject to

community property laws where applicable, we believe, based on information provided by these persons, that the persons named in the table

have sole voting and investment power with respect to all shares of common stock shown as beneficially owned by them.

The percentage of

beneficial ownership is based on 4,902,103 shares of our common stock and exchangeable shares outstanding as of March 1, 2025.

Unless otherwise stated, the

business address of each of our directors and executive officers listed in the table is 2033 Gateway Place, Suite 500, San Jose, California

Amount and Nature of Beneficial Ownership

Name and Principal Position

Number of Shares

Beneficially Owned

(Excluding Outstanding

Number of Shares

Issuable on Exercise

of Outstanding Options

or Convertible

Securities(2)

Number of Shares Beneficially Owned (Excluding Outstanding Options)(1)

Number of Shares Issuable on Exercise of Outstanding Options or Convertible Securities(2)

Percent of Class

Iroquois Capital Management, LLC

Ionic Ventures, LLC

Brio Capital, LLC

Directors and Officers:

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Represents the number of shares subject to outstanding options, restricted stock units, convertible securities or other rights to acquire common stock that are exercisable within 60 days of March 1, 2025.

Based on information reported on a Schedule 13G filed with the SEC on February 15, 2024 by Iroquois Capital Management L.L.C.

(“Iroquois Capital”), Richard Abbe and Kimberly Page.

Based on information reported on a Schedule 13G/A filed with the SEC on February 14, 2025 by Iroquois Capital Management LLC (“Iroquois Capital”), Richard Abbe and Kimberly Page.

The filing reflects that (i) Iroquois Capital, Mr.

Page share voting and dispositive power over 31,200 shares of common stock and 587,840 shares of common stock issuable upon exercise of pre-funded warrants, Series A warrants and Series B warrants (collectively, the “Warrants”), which securities are directly held by Iroquois Master Fund Ltd.

Page share voting and dispositive power over 619,041 shares of common stock issuable upon exercise of warrants that are directly held by Iroquois Master Fund Ltd.

(“Iroquois Master Fund”), and (ii) Mr.

Abbe has sole voting and dispositive power over 88,800 shares of common stock and 1,673,110 shares of common stock issuable upon exercise of the Warrants, which securities are directly held by Iroquois Capital Investment Group LLC (“ICIG”).

Abbe has sole voting and dispositive power over 1,761,910 shares of common stock issuable upon exercise of warrants directly held by Iroquois Capital Investment Group LLC (“ICIG”).

The table above excludes 1,836,879 shares of common stock issuable upon exercise of the warrants because the warrants are subject to a 9.99% beneficial ownership blocker.

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Abbe may be deemed to be the beneficial owner of all shares of common stock held by and underlying the warrants held by, Iroquois Master Fund and ICIG.

Iroquois Capital, Mr.

Page each disclaims any beneficial ownership of any such shares of common stock except to the extent of their pecuniary interest therein.

Based on information reported on a Schedule 13G filed with the SEC on February 12, 2024 by Ionic Ventures, LLC (“Ionic”), Ionic Management, LLC (“Ionic Management”), Brendan O’Neil and Keith Coulston, which each report shared voting and dispositive power with respect to the shares.

The table above excludes 2,143,950 shares of common stock issuable upon exercise of the Series A warrants, Series B warrants and pre-funded warrants because the warrants are subject to a 9.99% beneficial ownership blocker.

The principal business address for Iroquois Capital, Mr.

Page is 2 Overhill Road, Scarsdale, NY 10583.

Based on information available to the Company and information reported on a Schedule 13G/A filed with the SEC on November 14, 2024 by Ionic Ventures, LLC (“Ionic”), Ionic Management, LLC (“Ionic Management”), Brendan O’Neil and Keith Coulston, which each report shared voting and dispositive power with respect to the shares.

The table above excludes 408,308 shares of common stock issuable upon exercise of Series A warrants because the warrants are subject to a 9.99% beneficial ownership blocker.

Ionic has the power to dispose of and the power to vote the shares beneficially owned by it, which power may be exercised by its manager, Ionic Management.

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Coulston, has shared power to vote and/or dispose of the shares beneficially owned by Ionic and Ionic Management.

Based on information reported on a Schedule 13G filed with the SEC on February 7, 2024 by Brio Capital Master Fund Ltd.

and Brio Capital Management LLC.

Brio Capital Management LLC, is the investment manager of Brio Capital Master Fund Ltd.

and has the voting and investment discretion over securities held by Brio Capital Master Fund Ltd.

Shaye Hirsch, in his capacity as Managing Member of Brio Capital Management LLC, makes voting and investment decisions on behalf of Brio Capital Management LLC in its capacity as the investment manager of Brio Capital Master Fund Ltd.

The amount of shares in the table above excludes 2,260,950 shares of common stock issuable upon exercise of pre-funded warrants, Series A warrants and Series B warrants which are subject to a 4.99% ownership blocker.

Securities Authorized for Issuance under Equity Compensation

The following table provides information as of

December 31, 2023 regarding equity compensation plans approved by our security holders.

As of December 31, 2023, we had no awards outstanding

under equity compensation plans that have not been approved by our security holders.

The principal business address of Ionic, Ionic Management, Mr.

O’Neil and Mr.

Coulston is 3053 Fillmore St, Suite 256, San Francisco, CA 94123.

Securities Authorized for Issuance under Equity Compensation Plans

The following table provides

information as of December 31, 2024 regarding equity compensation plans approved by our security holders.

As of December 31, 2024, we

had no awards outstanding under equity compensation plans that have not been approved by our security holders.

Plan Category

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the household with, any of these individuals, had or will have a direct or indirect material interest since January 1, 2023.

A family member of one of our executive officers

is employed by us.

During the years ended December 31, 2023 and 2022, we paid approximately $111,400 and $101,000, respectively, to the

The amount paid in 2022 includes the aggregate grant date fair value, as determined pursuant to FASB ASC Topic 718, of an RSU

awarded in April 2022.

Additionally, a family member of one of our executive officers previously served as a consultant to the Company.

During the year ended December 31, 2022, we paid approximately $162,000 to the consultant family member.

A family member of one of

our executive officers is employed by us.

During the years ended December 31, 2024 and 2023, we paid approximately $113,800 and $111,400,

respectively, to the employee.

Policies and Procedures for Review and Approval

of Related Party Transactions

Pursuant to its charter,

our Audit Committee has the responsibility to review and approve any transactions with a related party.

In considering whether to approve

any such transaction, the Audit Committee considers such factors as it deems appropriate, and generally focuses on whether the terms of

the transaction are at least as favorable to us as terms we would receive on an arm’s-length basis from an unaffiliated third party

and whether any such transaction might impair the independence of a director or present a conflict of interest for a director or executive

Each of the transactions described above that was required to be reviewed and approved by the Audit Committee in accordance with

its charter was so reviewed and approved.

Director Independence

Our board of directors has determined that each

of the current directors, with the exception of Daniel Lewis and Ronald Glibbery, is “independent,” as defined by the listing

rules of the NASDAQ Stock Market, or Nasdaq, and the rules and regulations of the SEC.

Our board of directors has standing Audit and Compensation

Committees, each of which is comprised solely of independent directors in accordance with the Nasdaq listing rules.

No director qualifies

as independent unless the board of directors affirmatively determines that he has no direct or indirect relationship with us that would

impair his independence.

We independently review the relationship of the Company to any entity employing a director or on whose board

of directors he is serving currently.

Our board of directors has

determined that each of the current directors, with the exception of Daniel Lewis and Ronald Glibbery, is “independent,” as

defined by the listing rules of the NASDAQ Stock Market, or Nasdaq, and the rules and regulations of the SEC.

Our board of directors has

standing Audit and Compensation Committees, each of which is comprised solely of independent directors in accordance with the Nasdaq listing

No director qualifies as independent unless the board of directors affirmatively determines that he has no direct or indirect relationship

with us that would impair his independence.

We independently review the relationship of the Company to any entity employing a director

or on whose board of directors he is serving currently.

Principal Accountant Fees and Services.

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Audit fees consisted of fees for professional services rendered for the audit of our annual consolidated financial statements, review of our quarterly financial statements and services normally provided in connection with statutory and regulatory filings.

Audit-related fees consisted of fees related to the issuance of SEC registration statements.

Audit-related fees consisted of fees related to

the issuance of SEC registration statements and sales of our

securities under registration statements.

Weinberg did not provide any non-audit or other services other than those reported under “Audit Fees” and “Audit-Related Fees.”

The Audit Committee meets with our independent

registered public accounting firm at least four times a year.

At such times, the Audit Committee reviews both audit and non-audit services

performed by the independent registered public accounting firm, as well as the fees charged for such services.

The Audit Committee is

responsible for pre-approving all auditing services and non-auditing services (other than non-audit services falling within the de

minimis exception set forth in Section 10A(i)(1)(B) of the Exchange Act and non-audit services that independent auditors are prohibited

from providing to us) in accordance with the following guidelines:

(1) pre-approval policies and procedures must be detailed as to the

particular services provided;

The Audit Committee meets

with our independent registered public accounting firm at least four times a year.

At such times, the Audit Committee reviews both audit

and non-audit services performed by the independent registered public accounting firm, as well as the fees charged for such services.

The Audit Committee is responsible for pre-approving all auditing services and non-auditing services (other than non-audit services falling

within the de minimis exception set forth in Section 10A(i)(1)(B) of the Exchange Act and non-audit services that independent auditors

are prohibited from providing to us) in accordance with the following guidelines:

(1) pre-approval policies and procedures must be detailed

as to the particular services provided;

(2) the Audit Committee must be informed about each service;

and (3) the Audit Committee may delegate pre-approval

authority to one or more of its members, who shall report to the full committee, but shall not delegate its pre-approval authority to

Among other things, the Audit Committee examines the effect that performance of non-audit services may have upon the independence

of the auditors.

(a) (1) Consolidated Financial

The following documents are filed as part of this

Consolidated Financial Statements and Report of

Independent Registered Public Accounting Firm, all of which are set forth on pages F-1 through F-32 of this Report.

and (3) the Audit Committee may delegate

pre-approval authority to one or more of its members, who shall report to the full committee, but shall not delegate its pre-approval

authority to management.

Among other things, the Audit Committee examines the effect that performance of non-audit services may have upon

the independence of the auditors.

Consolidated Financial Statements:

following documents are filed as part of this Report:

Financial Statements and Report of Independent Registered Public Accounting Firm, all of which are set forth on pages F-1 through F-34

of this Report.

Financial Statement Schedules:

Financial statement schedules are omitted because

they are not required, not applicable or because the required information is shown in the consolidated financial statements or notes thereto.

(3) Exhibits:

Required exhibits are incorporated by reference

or are filed with this Report.

Exhibit Description

Filed or Furnished

statement schedules are omitted because they are not required, not applicable or because the required information is shown in the consolidated

financial statements or notes thereto.

exhibits are incorporated by reference or are filed with this Report.

Arrangement Agreement with Peraso Technologies Inc.

September 15, 2021

First Amending Agreement dated October 21, 2021

October 22, 2021

Restated Certificate of Incorporation of the Company

November 12, 2010

Certificate of Amendment to Restated Certificate of Incorporation of the Company

February 14, 2017

Certificate of Amendment to the Amended and Restated Certificate of Incorporation of the Company, filed with the Secretary of State of the State of Delaware on August 27, 2019

August 27, 2019

Certificate of Amendment to Articles of Incorporation (Name Change)

December 20, 2021

Certificate of Designation of Series A Special Voting Preferred Stock

December 20, 2021

Certificate of Amendment to Amended and Restated Certificate of Incorporation of the Company, filed with the Secretary of State of the State of Delaware on December 15, 2023

December 19, 2023

Amended and Restated Bylaws of the Company

November 23, 2021

Specimen Common Stock Certificate

September 14, 2000

Form of Common Stock Purchase Warrant

June 30, 2017

Form of Securities Purchase Agreement

June 30, 2017

Form of Common Stock Purchase Warrant

October 3, 2018

Description of the Registrant’s Securities

March 29, 2023

Amended and Restated Peraso Inc.

2010 Equity Incentive Plan

February 15, 2019

Amended and Restated Peraso Inc.

2019 Stock Incentive Plan

January 7, 2022

Amended and Restated 2019 Stock Incentive Plan, as amended

Form of Agreement for Stock Option Grant pursuant to the Peraso Inc.

Amended and Restated 2010 Equity Incentive Plan

July 28, 2010

Form of Notice of Grant of Stock Option Award and Agreement pursuant to the Peraso Inc.

2019 Stock Incentive Plan

November 13, 2019

Form of Notice of Grant of Restricted Stock Unit Award and Agreement under the Peraso Inc.

Amended and Restated 2010 Equity Incentive Plan

August 8, 2013

Form of Notice of Grant of Restricted Stock Unit Award and Agreement under the Peraso Inc.

2019 Stock Incentive Plan

November 13, 2019

Amended Peraso Technologies Inc.

2009 Share Option Plan

January 7, 2022

Form of Pre-Funded Common Stock Purchase Warrant

November 30, 2022

Form of Common Stock Purchase Warrant

November 30, 2022

Form of Pre-Funded Warrant

Form of Purchase Warrant

1 unchanged sentence

Form of Series A Warrant

February 5, 2024

Form of Series B Warrant

February 5, 2024

Form of Pre-Funded Warrant

January 23, 2024

Form of Representative Warrant

January 23, 2024

Form of Series C Warrant

Form of Series D Warrant

Form of Placement Agent Warrant

Employment Offer Letter Agreement between the Company and James Sullivan dated December 21, 2007

March 17, 2008

Change-in-control Agreement between the Company and James Sullivan dated January 18, 2008

March 17, 2008

Form of Option Agreement for Stock Option Grant pursuant to Amended and Restated 2010 Equity Incentive Plan

July 28, 2010

Form of Notice of Restricted Stock Unit Award and Agreement under the Amended and Restated Peraso Inc.

2010 Equity Incentive Plan

Form of New Employee Inducement Grant Stock Option Agreement (revised February 2012)

March 15, 2012

Form of Indemnification Agreement used from June 2012 to present

August 9, 2012

Executive Change-in-Control and Severance Policy

July 26, 2016

Employment offer letter agreement between the Company and Daniel Lewis dated August 8, 2018

September 17, 2018

Securities Purchase Agreement

October 3, 2018

Securities Purchase Agreement

April 17, 2020

Form of Lock-Up Agreement

December 20, 2021

Intercompany Services Agreement

December 20, 2021

Employment Agreement (Ronald Glibbery)

December 20, 2021

Employment offer letter agreement between the Company and Mark Lunsford dated October 4, 2022

March 29, 2023

Employment Agreement (Brad Lynch)

March 29, 2023

Employment Agreement (Alexander Tomkins)

March 29, 2023

Amendment to offer of employment between the Company and Daniel Lewis dated April 15, 2022

August 15, 2022

Amendment to offer of employment between the Company and James Sullivan dated April 15, 2022

August 15, 2022

Amendment to employment agreement between Peraso Technologies Inc.

and Brad Lynch dated April 15, 2022

August 15, 2022

Amendment to offer of employment between the Company and Alex Tomkins dated April 19, 2023

June 16, 2023

Amendment to offer of employment between the Company and Ronald Glibbery dated April 19, 2023

June 16, 2023

Second Amendment to offer of employment between the Company and Brad Lynch dated April 19, 2023

June 16, 2023

Technology License and Patent Assignment Agreement By and Between Intel Corporation and the Company dated August 5, 2022

November 14, 2022

Form of Securities Purchase Agreement

November 30, 2022

Form of Registration Rights Agreement

November 30, 2022

Form of Securities Purchase Agreement

5 unchanged sentences

Underwriting Agreement, dated February 6, 2024, by and between the Company and Ladenburg Thalmann & Co.

February 9, 2024

Form of Lock-Up Agreement

January 23, 2024

Warrant Agency Agreement, dated February 8, 2024, by and between the Company and Equiniti Trust Company, LLC

February 9, 2024

Stock Purchase Agreement dated as of June 11, 2024

Amendment to the Warrant Agency Agreement dated February 8, 2024 by and between Peraso Inc.

and Equiniti Trust Company, LLC, as Warrant Agent, dated August 6, 2024

At The Market Offering Agreement, dated August 30, 2024, by and between Peraso Inc.

and Ladenburg Thalmann & Co.

Amendment #2 to the Warrant Agency Agreement dated February 8, 2024 by and between Peraso Inc.

and Equiniti Trust Company, LLC, as Warrant Agent, dated October 3, 2024

Form of Inducement Letter

Insider Trading Policy

List of Subsidiaries

March 29, 2023

Consent of Independent Registered Public Accounting Firm-Weinberg & Co., P.A.

4 unchanged sentences

Company Clawback Policy

Inline XBRL Instance Document

Inline XBRL Taxonomy Extension Schema Document

Inline XBRL Taxonomy Extension Calculation Linkbase Document

Inline XBRL Taxonomy Extension Definition Linkbase Document

Inline XBRL Taxonomy Extension Labels Linkbase Document

Inline XBRL Taxonomy Extension Presentation Linkbase Document

Cover Page Interactive Data File (embedded within the Inline XBRL document)

Management contract, compensatory plan or arrangement.

Certain schedules, exhibits and similar attachments have been omitted pursuant to Item 601(a)(5) of Regulation S-K.

The Company hereby undertakes to furnish copies of such omitted materials supplementally upon request by the SEC.

Inline XBRL Instance

Inline XBRL Taxonomy

Extension Schema Document

Inline XBRL Taxonomy

Extension Calculation Linkbase Document

Inline XBRL Taxonomy

Extension Definition Linkbase Document

Inline XBRL Taxonomy

Extension Labels Linkbase Document

Inline XBRL Taxonomy

Extension Presentation Linkbase Document

Cover Page Interactive

Data File (embedded within the Inline XBRL document)

contract, compensatory plan or arrangement.

schedules, exhibits and similar attachments have been omitted pursuant to Item 601(a)(5) of Regulation S-K.

The Company hereby undertakes

to furnish copies of such omitted materials supplementally upon request by the SEC.

Form 10-K Summary

Not applicable.

Pursuant to the requirements of Section 13 or 15(d) of the Securities

1 unchanged sentence

on the 28th day of March 2025.

/s/ Ronald Glibbery

Ronald Glibbery

Chief Executive Officer

POWER OF ATTORNEY

KNOW ALL MEN BY THESE PRESENTS, that each person

whose signature appears below constitutes and appoints Ronald Glibbery and James Sullivan as his true and lawful attorneys-in-fact and

agents, with full power of substitution and resubstitution, for him and in his name, place and stead, in any and all capacities, to sign

any and all amendments to this Report on Form 10-K, and to file the same, with all exhibits thereto, and other documents in connection

therewith, with the Securities and Exchange Commission, granting unto said attorney-in-fact and agents full power and authority to do

and perform each and every act and thing requisite and necessary to be done in connection therewith, as fully to all intents and purposes

as he might or could do in person, hereby ratifying and confirming all that said attorney-in- fact and agents, or his substitute or substitutes,

may lawfully do or cause to be done by virtue hereof.

Pursuant to the requirements of the Securities

Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and

on the dates indicated.

/s/ Ronald Glibbery

Chief Executive Officer and Director

March 29, 2024

Executive Officer

ALL MEN BY THESE PRESENTS, that each person whose signature appears below constitutes and appoints Ronald Glibbery and James Sullivan

as his true and lawful attorneys-in-fact and agents, with full power of substitution and resubstitution, for him and in his name, place

and stead, in any and all capacities, to sign any and all amendments to this Report on Form 10-K, and to file the same, with all exhibits

thereto, and other documents in connection therewith, with the Securities and Exchange Commission, granting unto said attorney-in-fact

and agents full power and authority to do and perform each and every act and thing requisite and necessary to be done in connection therewith,

as fully to all intents and purposes as he might or could do in person, hereby ratifying and confirming all that said attorney-in- fact

and agents, or his substitute or substitutes, may lawfully do or cause to be done by virtue hereof.

to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the

registrant and in the capacities and on the dates indicated.

Ronald Glibbery

(principal executive officer)

/s/ James Sullivan

Chief Financial Officer

Executive Officer and Director

executive officer)

James Sullivan

(principal financial and accounting officer)

March 29, 2024

/s/ Daniel Lewis

March 29, 2024

/s/ Ian McWalter

March 29, 2024

/s/ Andreas Melder

Financial Officer

financial and accounting officer)

March 28, 2025

Andreas Melder

/s/ Robert Y.

March 29, 2024

INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

TO CONSOLIDATED FINANCIAL STATEMENTS

Report of Independent Registered Public Accounting Firm (PCAOB ID 572 ) F-2

Consolidated Balance Sheets F-4

Consolidated Statements of Operations and Comprehensive Loss F-6

Consolidated Statements of Operations F-5

Consolidated Statements of Stockholders’ Equity F-6

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Notes to Consolidated Financial Statements F-8 - F-34

Report of Independent Registered Public Accounting Firm

Board of Directors and Stockholders

San Jose, California

Opinion on the Consolidated Financial Statements

We have audited the accompanying consolidated

balance sheets of Peraso Inc.

(the “Company”) and subsidiaries as of December 31, 2023 and 2022, the related consolidated

statements of operations, stockholders’ equity, and cash flows for the years ended December 31, 2023 and 2022, and the related notes

(collectively referred to as the “consolidated financial statements”).

In our opinion, the consolidated financial statements

present fairly, in all material respects, the financial position of the Company and its subsidiaries as of December 31, 2023 and 2022,

and the results of their operations and their cash flows for the years then ended , in conformity with accounting principles

generally accepted in the United States of America.

Going Concern

The accompanying financial

statements have been prepared assuming that the Company will continue as a going concern.

As discussed in Note 1 to the financial statements,

during the year ended December 31, 2023, the Company incurred a net loss and utilized cash in operations.

These conditions raise substantial

doubt about the Company’s ability to continue as a going concern.

Management’s plans to alleviate these conditions are also

described in Note 1.

The financial statements do not include any adjustments that might result from the outcome of this uncertainty.

Basis for Opinion

These consolidated financial statements are the

responsibility of the Company’s management.

Our responsibility is to express an opinion on the Company’s consolidated financial

statements based on our audits.

We are a public accounting firm registered with the Public Company Accounting Oversight Board (United

States) (“PCAOB”) and are required to be independent with respect to the Company in accordance with the U.S.

federal securities

laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the

standards of the PCAOB.

Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the consolidated

financial statements are free of material misstatement, whether due to error or fraud.

The Company is not required to have, nor were we

engaged to perform, an audit of its internal control over financial reporting.

As part of our audit we are required to obtain an understanding

of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company’s

internal control over financial reporting.

of Independent Registered Public Accounting Firm

of Directors and Stockholders

Jose, California

on the Consolidated Financial Statements

have audited the accompanying consolidated balance sheets of Peraso Inc.

(the “Company”) and subsidiaries as of December

31, 2024 and 2023, the related consolidated statements of operations, stockholders’ equity, and cash flows for the years ended

December 31, 2024 and 2023, and the related notes (collectively referred to as the “consolidated financial statements”).

In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company

and its subsidiaries as of December 31, 2024 and 2023, and the results of their operations and their cash flows for the years then ended , in

conformity with accounting principles generally accepted in the United States of America.

accompanying financial statements have been prepared assuming that the Company will continue as a going concern.

As discussed in Note

1 to the financial statements, during the year ended December 31, 2024, the Company incurred a net loss and utilized cash in operations.

These conditions raise substantial doubt about the Company’s ability to continue as a going concern.

Management’s plans to

alleviate these conditions are also described in Note 1.

The financial statements do not include any adjustments that might result from

the outcome of this uncertainty.

consolidated financial statements are the responsibility of the Company’s management.

Our responsibility is to express an opinion

on the Company’s consolidated financial statements based on our audits.

We are a public accounting firm registered with the Public

Company Accounting Oversight Board (United States) (“PCAOB”) and are required to be independent with respect to the Company

in accordance with the U.S.

federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission

and the PCAOB.

conducted our audits in accordance with the standards of the PCAOB.

Those standards require that we plan and perform the audits to obtain

reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud.

The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting.

of our audit we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing

an opinion on the effectiveness of the Company’s internal control over financial reporting.

Accordingly, we express no such opinion.

Our audits included performing procedures to assess

the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures

that respond to those risks.

Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the

consolidated financial statements.

Our audits also included evaluating the accounting principles used and significant estimates made by

management, as well as evaluating the overall presentation of the consolidated financial statements.

We believe that our audits provide

a reasonable basis for our opinion.

Critical Audit Matters

The critical audit matters communicated below

are matters arising from the current period audit of the financial statements that were communicated or required to be communicated to

the audit committee and that (1) relate to accounts or disclosures that are material to the financial statements and (2) involved especially

challenging, subjective, or complex judgments.

The communication of critical audit matters does not alter in any way our opinion on the

consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matters below, providing separate

opinions on the critical audit matters or on the accounts or disclosures to which they relate.

Amortizable intangible assets impairment

As described in Notes 1 and 2 to the consolidated

financial statements, the Company’s amortizable definite-lived intangible assets consisting of acquired technology and customer

relationships had a carrying value of $3.3 million as of December 31, 2023.

Management conducts an impairment assessment annually on December

31, or more frequently if impairment indicators exist.

An impairment exists when the carrying value of the long-lived group containing

acquired technology and customer relationships exceeds its fair value.

The Company’s evaluation of the recoverability of acquired

technology and customer relationships intangible assets first involves the comparison of undiscounted future cash flows expected to be

generated by the acquired technology and customer lists over the remaining useful life of the assets to their respective carrying amounts.

The Company’s recoverability analysis requires management to make significant estimates and assumptions related to forecasted sales

growth rates and cash flows over the remaining useful life of the assets.

Based on the results of the impairment assessment, management

determined that its amortizable definite-lived intangible assets were not impaired.

We identifie d

the evaluation of acquired technology and customer relationships intangible assets for potential impairment as a critical audit matter

because of the significant estimates and assumptions management makes related to future cash flows expected to be generated over the

intangible assets’ lives.

Auditing the impairment evaluation required a high degree of auditor judgment and an increased extent

of effort when performing audit procedures to evaluate the reasonableness of management’s future cash flows over the remaining

useful life of the long-lived asset group.

primary procedures we performed to address this critical audit matter included:

an understanding of management’s processes related to its impairment assessment of

the reasonableness of management’s forecasts of undiscounted future cash flows by comparing

management’s projections to the Company’s historical results and evaluating the

appropriateness of projected revenue growth, margin and cost rates;

the completeness and accuracy of underlying data used in the projections, and;

whether the estimated future cash flows over the remaining useful life were consistent with

evidence obtained in other areas of the audit.

discussed in Note 1 to the financial statements, the Company’s inventories are stated at the lower of cost or net realizable value,

with cost determined on first-in, first-out (“FIFO”) basis.

As of December 31, 2023, the Company held inventories of $2.6

In determining net realizable value, management considers historical usage, forecasted demand in relation to inventory on hand,

market conditions, and other factors.

identified the evaluation of management’s estimate of the net realizable value of certain inventory as a critical audit matter,

because of the significant judgments made by management in estimating future demand and market conditions which are used to arrive at

the net realizable value.

This required a high degree of auditor judgment and increased auditor effort in auditing such assumptions.

primary procedures we performed to address this critical audit matter included:

management’s product demand forecast for reasonableness considering historical sales

by product, and whether they were consistent with the historical data and evidence obtained

in other areas of the audit, and;

developed an independent expectation of the net realizable value of inventory using historic

inventory activity and compared our independent expectation to the amount recorded in the

financial statements.

of warrant liability

described in Note 5 to the financial statements, during the year ended December 31, 2023, the Company issued certain warrants to acquire

its common stock and such warrants contained provisions and terms that resulted in the warrants requiring recognition as fair value liabilities.

The warrant liabilities are required to be measured at fair value initially at issuance, and subseque ntly thereafter at each reporting

date including December 31, 2023.

We identified auditing

the valuation of the warrant liabilities as a critical audit matter due to the complexity of the accounting for the

transaction and the significant judgements used by the Company in determining the fair value of the warrant liabilities.

This required

a high degree of auditor judgment and increased auditor effort

in auditing the determination and valuation of the warrant liabilities.

audits included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether

due to error or fraud, and performing procedures that respond to those risks.

Such procedures included examining, on a test basis, evidence

regarding the amounts and disclosures in the consolidated financial statements.

Our audits also included evaluating the accounting principles

used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements.

We believe that our audits provide a reasonable basis for our opinion.

Audit Matters

critical audit matters communicated below are matters arising from the current period audit of the financial statements that were communicated

or required to be communicated to the audit committee and that (1) relate to accounts or disclosures that are material to the financial

statements and (2) involved especially challenging, subjective, or complex judgments.

The communication of critical audit matters does

not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical

audit matters below, providing separate opinions on the critical audit matters or on the accounts or disclosures to which they relate.

of warrants during the period

described in Note 9 to the consolidated financial statements, during the year ended December 31, 2024, the Company issued certain pre-funded

warrants and common stock warrants in various financing transactions.

The warrants were evaluated under both ASC 815, Derivatives and

Hedging (“ASC 815”) and ASC 480, Distinguishing Liabilities from Equity (“ASC 480”), to determine whether such

instruments should be classified within equity or as liabilities.

identified the accounting for the issuance of the Pre-Funded Warrants and Common Stock Warrants as a critical audit matter because of

the complexity in applying the accounting framework and the significant judgements made by management in the determination of the classification

of these instruments.

This required especially challenging and complex auditor’s judgment due to the nature and extent of the effort

required to address these matters, including the extent of specialized skills and knowledge needed.

primary procedures we performed to address this critical audit matter included:

obtained and examined the warrant liability agreement, including assessing the reasonableness

of its presentation as a liability in the financial statements.

evaluated the appropriateness of the model used to value the warrant liability and tested

the reasonableness of the assumptions used by the Company in determined the fair value of

the warrant liability.

developed an independent expectation of the warrant liability and compared our independent

expectation to the Company calculated value.

the agreements related to the Pre-Funded and Common Stock Warrants to identify relevant terms

and conditions that affect whether the warrants required liability accounting treatment.

and assessing the Company’s technical accounting analysis to evaluate whether the Company

had considered those key terms and conditions and whether management’s conclusions

related to the accounting treatment of these warrants were reasonable.

personnel with specialized knowledge and skill in the relevant technical accounting guidance

to evaluate the appropriateness of the Company’s application of the relevant technical

accounting guidance in determining whether the Pre-Funded and Common Stock Warrants require

liability accounting treatment.

have served as the Company’s auditor since 2020.

/s/ Weinberg & Company

Los Angeles, California

Weinberg & Company

Angeles, California

March 28, 2025

PART I—FINANCIAL INFORMATION

PART I—FINANCIAL

Financial Statements

CONSOLIDATED BALANCE SHEETS

(In thousands, except par value)

BALANCE SHEETS

thousands, except par value)

and cash equivalents

receivable, net

expenses and other

current assets

Cash and cash equivalents

Short-term investments

Accounts receivable, net

Inventories, net

Tax credits and receivables

Deferred cost of net revenue

Prepaid expenses and other

Total current assets

Property and equipment, net

Right-of-use lease assets

Intangible assets, net

LIABILITIES AND STOCKHOLDERS’ EQUITY

and equipment, net

AND STOCKHOLDERS’ EQUITY

expenses and other

lease liabilities

current liabilities

Accounts payable

Accrued expenses and other

Deferred revenue

Short-term lease liabilities

Total current liabilities

Long-term lease liabilities

Warrant liabilities

Total liabilities

Commitments and contingencies (Note 4)

Stockholders’ equity

lease liabilities

and contingencies (Note 5)

Stockholders’

Preferred stock, $ 0.01 par value;

2 unchanged sentences

Series A, special voting preferred stock, $ 0.01 par value;

one share authorized;

and one share issued and outstanding at December 31, 2023 and 2022

one share authorized, issued and outstanding at December 31, 2024 and 2023

Common stock, $ 0.001 par value;

4 unchanged sentences

60 shares and 95 shares outstanding at December 31, 2024 and 2023, respectively

Additional paid-in capital

Accumulated other comprehensive loss

Accumulated deficit

Total stockholders’ equity

Total liabilities and stockholders’ equity

Share amounts as of December 31, 2023 and 2022 have been adjusted

to reflect the impact of a 1-for-40 reverse stock split of the Company’s common stock and exchangeable shares effected in January

2024, as discussed in Note 1.

The accompanying notes are an integral part of

these consolidated financial statements.

CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE

(In thousands, except per share data)

Royalty and other

Total net revenue

Cost of net revenue

Issuable shares, 917 shares at December 31, 2024

paid-in capital

stockholders’ equity

liabilities and stockholders’ equity

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

STATEMENTS OF OPERATIONS

thousands, except per share data)

of net revenue

and development

general and administrative

and software license obligations

on license and asset sale

operating expenses

Research and development

Selling, general and administrative

Gain on license and asset sale

Impairment of goodwill

Total operating expenses

Loss from operations

Interest expense

Change in fair value of warrant liabilities

Financing cost - warrant issuance

Other income (expense), net

Other comprehensive loss, net of tax:

Net unrealized loss on available-for-sale-securities

Comprehensive loss

Net loss per share

Basic and diluted

Shares used in computing net loss per share

Basic and diluted

Share and per share amounts for the years ended December 31,

2023 and 2022 have been adjusted to reflect the impact of a 1-for-40 reverse stock split effected in January 2024, as discussed in Note

The accompanying notes are an integral part of

these consolidated financial statements.

CONSOLIDATED STATEMENTS OF STOCKHOLDERS’

( In thousands )

Series A Special Voting

Accumulated Other

from operations

in fair value of warrant liabilities

loss per share

used in computing net loss per share

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

STATEMENTS OF STOCKHOLDERS’ EQUITY

Preferred Stock

Exchangeable Shares

Comprehensive

Stockholders’

Balance as of December 31, 2021

as of December 31, 2022

$ ( 149,597 )

Exchange of exchangeable shares

Issuance of common stock under stock plans, net of taxes paid related to net share settlements of restricted stock units

Sale of common stock and warrants

Initial recognition of fair value of warrant liability

Unrealized loss on available-for-sale securities

Stock-based compensation

Balance as of December 31, 2022

Exchange of exchangeable shares

Issuance of common stock under stock plans, net of taxes paid related to net share settlements of restricted stock units

Sale of common stock and warrants

Issuance of common stock upon exercise of warrants

Initial recognition of fair value of warrant liability

Unrealized gain on available-for-sale securities

Stock-based compensation

Balance as of December 31, 2023

of exchangeable shares

of common stock under stock plans, net of taxes paid related to net share settlements of restricted stock units

of common stock and warrants

of common stock upon exercise of warrants

recognition of fair value of warrant liability

gain on available-for-sale securities

as of December 31, 2023

issued for reverse stock split

of exchangeable shares

of common stock under stock plans, net of taxes paid related to net share settlements of restricted stock units

of common stock and warrants, net

of common stock and warrants from warrant inducement offering, net

of common stock

of common stock upon exercise of pre-funded warrants

market sales of stock, net

issued for services

as of December 31, 2024

$ ( 177,120 )

Share amounts for the year ended December 31, 2023 and 2022 have

been adjusted to reflect the impact of a 1-for-40 reverse stock split of the Company’s common stock and exchangeable shares effected

in January 2024, as discussed in Note 1.

The accompanying notes are an integral part of

these consolidated financial statements.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)

Cash flows from operating activities:

Adjustments to reconcile net loss to net cash used in operating activities:

Depreciation and amortization

Stock-based compensation

Change in fair value of warrant liabilities

Inventory write-down

Financing costs - warrant issuances

Impairment of goodwill

Allowance for bad debt

Accrued interest on debt obligation

Interest portion of financing lease repayment

Impairment of intangible assets and property and equipment

Changes in assets and liabilities

Accounts receivable

Prepaid expenses and other assets

Tax credits and receivables

Accounts payable

Right-of-use assets

Lease liabilities - operating

Deferred revenue and other liabilities

Net cash used in operating activities

Cash flows from investing activities:

Purchases of property and equipment

Purchases of intangible assets

Proceeds from maturities of marketable securities

Purchases of marketable securities

Net cash provided by investing activities

Cash flows from financing activities:

Proceeds from sale of common stock, net

Repayment of financing lease

Taxes paid to net share settle equity awards

Net cash provided by financing activities

Net decrease in cash and cash equivalents

Cash and cash equivalents at beginning of year

Cash and cash equivalents at end of year

Supplemental disclosure:

Noncash investing and financing activities:

Initial recognition of warrant liability

Recognition of right-of-use assets and lease liabilities

Unrealized gain (loss) on available-for-sale securities

The accompanying notes are an integral part of

these consolidated financial statements.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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

STATEMENTS OF CASH FLOWS

flows from operating activities:

to reconcile net loss to net cash used in operating activities:

and amortization

in fair value of warrant liabilities

issued for services

interest on debt obligation

of intangible assets and property and equipment

in assets and liabilities

expenses and other assets

liabilities - operating

expenses and other

cash used in operating activities

flows from investing activities:

of property and equipment

from maturities of marketable securities

cash provided by investing activities

flows from financing activities:

from at-the-market sales of stock, net

from warrant inducement, net

from sale of common stock and warrants, net

of financing lease

paid to net share settle equity awards

cash provided by financing activities

decrease in cash and cash equivalents

and cash equivalents at beginning of year

and cash equivalents at end of year

investing and financing activities:

recognition of warrant liability

of right-of-use assets and lease liabilities

loss on available-for-sale securities

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

TO CONSOLIDATED FINANCIAL STATEMENTS

The Company and Summary of Significant Accounting Policies

formerly known as MoSys, Inc.

(the Company), was incorporated in California in 1991 and reincorporated in 2000 in Delaware.

Company is a fabless semiconductor company specializing in the development of millimeter wave (mmWave), which is generally described as

the frequency band from 24 Gigahertz (GHz) to 300GHz, wireless technology.

The Company derives revenue from selling its semiconductor

devices and modules and performance of non-recurring engineering services.

The Company also manufactures and sells high-performance memory

semiconductor devices for a wide range of markets and receives royalties from licensees of its memory technology.

14, 2021, the Company and its subsidiaries, 2864552 Ontario Inc.

Inc., formerly known as MoSys, Inc.

(the Company), was incorporated in

California in 1991 and reincorporated in 2000 in Delaware.

The Company is a fabless semiconductor company specializing in the development

of millimeter wave (mmWave), which is generally described as the frequency band from 24 Gigahertz (GHz) to 300GHz, wireless technology.

The Company derives revenue from selling its semiconductor devices and modules and performance of non-recurring engineering services.

The Company also manufactures and sells high-performance memory semiconductor devices for a wide range of markets and receives royalties

from licensees of its memory technology.

September 14, 2021, the Company and its subsidiaries, 2864552 Ontario Inc.

(Callco) and 2864555 Ontario Inc.

(Canco), entered into an Arrangement

Agreement (the Arrangement Agreement) with Peraso Technologies Inc.

(Peraso Tech), a corporation existing under the laws of the province

of Ontario, to acquire all of the issued and outstanding common shares of Peraso Tech (the Peraso Shares), including those Peraso Shares

to be issued in connection with the conversion or exchange of secured convertible debentures and common share purchase warrants of Peraso

Tech, as applicable, by way of a statutory plan of arrangement (the Arrangement) under the Business Corporations Act (Ontario).

On December 17, 2021, following the satisfaction of the closing conditions set forth in the Arrangement Agreement, the Arrangement was

completed and , the Company changed its name to “Peraso Inc.” and began trading

on the Nasdaq Stock Market (the Nasdaq) under the symbol “PRSO.”

For accounting

purposes, Peraso Tech, the legal subsidiary, was treated as the accounting acquirer and the Company, the legal parent, was treated as

the accounting acquiree.

The transaction was accounted for as a reverse acquisition in accordance with Financial Accounting Standards

Board (FASB) Accounting Standards Codification (ASC) 805, Business Combinations (ASC 805) .

Accordingly, these consolidated financial

statements are a continuation of Peraso Tech’s consolidated financial statements prior to December 17, 2021 and exclude the statements

of operations and comprehensive loss, statement of stockholders’ equity and statements of cash flows of the Company prior to December

See Note 2 for additional disclosure .

Liquidity and Going Concern

The Company incurred net losses of approximately

$ 16.8 million and $ 32.4 million for the years ended December 31, 2023 and 2022, respectively, and 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 and have required

the Company to raise substantial amounts of additional capital.

To date, the Company has primarily financed its operations through multiple

offerings of common stock and issuance of convertible notes and loans to investors and affiliates.

As disclosed in Note 13, in February

2024, the Company completed a public offering of its common stock and warrants for net proceeds of $ 3.3 million.

The Company expects to continue to incur operating

losses for the foreseeable future as it secures additional customers and continues to invest in the commercialization of its products.

The Company will need to increase revenues substantially beyond levels that it has 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.

of the Company’s expected operating losses and cash burn for the foreseeable future, as well as recurring losses from operations,

if the Company is unable to raise sufficient capital through additional debt or equity arrangements, there will be uncertainty regarding

the Company’s ability to maintain liquidity sufficient to operate its business effectively, which raises substantial doubt as to

the Company’s ability to continue as a going concern within one year from the date of issuance of these consolidated financial statements.

These consolidated financial statements do not include any adjustments that might result from this uncertainty.

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 the Company.

The Company’s primary focus is producing and selling

its products.

If the Company is unsuccessful in these efforts, it will need to implement additional cost reduction strategies, which could

further affect its near- and long-term business plan.

These efforts may include, but are not limited to, reducing headcount and curtailing

business activities.

Basis of Presentation

The consolidated financial statements include the

accounts of the Company and its wholly-owned subsidiaries.

All significant intercompany transactions and balances have been eliminated

in consolidation.

The Company’s fiscal year ends on December 31 of each calendar year.

Certain prior year amounts have been reclassified

for consistency with the current period presentation.

These reclassifications had no effect on the reported results of operations or cash

Reverse Stock Split

On December 15, 2023, the

Company filed a certificate of amendment to its amended and restated certificate of incorporation with the Secretary of State of the State

of Delaware to effect a 1-for-40 reverse stock split of the Company’s shares of common stock.

Further, on January 2, 2024, Canco

filed a certificate of amendment to its amended and restated certificate of incorporation under the Ontario Business Corporations Act

to effect a 1-for-40 reverse stock split of the outstanding exchangeable shares.

Such amendments and ratio were previously approved by

the Company’s stockholders and board of directors.

As a result of the reverse stock split, which was

effective for trading purposes on January 3, 2024, every 40 shares of the Company’s pre-reverse split outstanding common stock and

exchangeable shares were combined and reclassified into one share of common stock.

Proportionate voting rights and other rights of holders

of common stock and exchangeable shares were not affected by the reverse stock split.

Any fractional shares of common stock and exchangeable

shares resulting from the reverse stock split were rounded up to the nearest whole share.

All stock options and restricted stock units

outstanding and common stock reserved for issuance under the Company’s equity incentive plans and warrants outstanding immediately

prior to the reverse stock split were adjusted by dividing the number of affected shares of common stock by 40 and, as applicable, multiplying

the exercise price by 40, as a result of the reverse stock split.

All share and per-share amounts in these consolidated financial statements

have been restated to reflect the reverse stock split as if it had occurred at the beginning of the earliest period presented .

Risks and Uncertainties

The Company is subject to risks from, among other

things, competition associated with the industry in general, other risks associated with financing, liquidity requirements, rapidly changing

customer requirements, limited operating history and the volatility of public markets.

COVID-19 and World Unrest

outbreak of the coronavirus disease 2019 (COVID-19) was declared a pandemic by the World Health Organization and a national emergency

government in March 2020.

This negatively affected the U.S.

and global economy, disrupted global supply chains,

significantly restricted travel and transportation, resulted in mandated closures and orders to “shelter-in-place” and created

significant disruption of the financial markets.

While the U.S.

national emergency expired in May 2023 and substantially all closures

and “shelter-in-place” orders have ended, there can be no assurance that COVID-19 will not impact the Company’s operational

and financial performance in the future, as actions taken by U.S.

and foreign government agencies to prevent disease spread are uncertain,

out of the Company’s control, and cannot be predicted.

due to wars and terrorist attacks have led to further economic disruptions.

Mounting inflationary cost pressures and recessionary fears

have negatively impacted the global economy.

Since mid-2022, at times, the U.S.

Federal Reserve has addressed elevated inflation by increasing

interest rates.

Given current market conditions, the Company may be unable to access the capital markets, and additional capital may only

be available to the Company on terms that could be significantly detrimental to the Company’s current stockholders and to the Company’s

Use of Estimates

The preparation of financial statements in accordance

with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure

of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses recognized

during the reported period.

Material estimates may include assumptions made in determining reserves for uncollectible receivables, inventory

write-downs, impairment of long-term assets, purchase price allocations, valuation allowance on deferred tax assets, accruals for potential

liabilities and assumptions made in valuing equity instruments and warrant liabilities.

(Canco), entered into an

Arrangement Agreement (the Arrangement Agreement) with Peraso Technologies Inc.

(Peraso Tech), a corporation existing under the laws

of the province of Ontario, to acquire all of the issued and outstanding common shares of Peraso Tech (the Peraso Shares), including

those Peraso Shares to be issued in connection with the conversion or exchange of secured convertible debentures and common share purchase

warrants of Peraso Tech, as applicable, by way of a statutory plan of arrangement (the Arrangement) under the Business Corporations Act

On December 17, 2021, following the satisfaction of the closing

conditions set forth in the Arrangement Agreement, the Arrangement was completed and , the

Company changed its name to “Peraso Inc.” and began trading on the Nasdaq Stock Market (the Nasdaq) under the symbol “PRSO.”

and Going Concern

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

and 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 and have required the Company to raise substantial amounts of additional capital.

To date, the Company

has primarily financed its operations through multiple offerings of common stock and issuance of convertible notes and loans to investors

and affiliates.

As disclosed in Note 9, in February 2024, the Company completed a public offering of its common stock and warrants for

net proceeds of $ 3.4 million, and, in November 2024, the Company entered into a warrant inducement offering for net proceeds of approximately

$ 2.6 million.

Company expects to continue to incur operating losses for the foreseeable future as it secures additional customers and continues to

invest in the commercialization of its products.

The Company will need to increase revenues substantially beyond levels that it has 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 the Company’s expected operating losses and cash burn for the foreseeable future, as

well as recurring losses from operations, if the Company is unable to raise sufficient capital through additional debt or equity arrangements,

there will be uncertainty regarding the Company’s ability to maintain liquidity sufficient to operate its business effectively,

which raises substantial doubt as to the Company’s ability to continue as a going concern within one year from the date of issuance

of these consolidated financial statements.

These consolidated financial statements do not include any adjustments that might result

from this uncertainty.

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 the Company.

Company’s primary focus is producing and selling its products.

If the Company is unsuccessful in these efforts, it will need to

implement additional cost reduction strategies, which could further affect its near- and long-term business plan.

These efforts may include,

but are not limited to, reducing headcount and curtailing business activities.

of Presentation

consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries.

All significant intercompany

transactions and balances have been eliminated in consolidation.

The Company’s fiscal year ends on December 31 of each calendar

Certain prior year amounts have been reclassified for consistency with the current-period presentation.

These reclassifications

had no effect on the reported results of operations or cash flows.

December 15, 2023, the Company filed a certificate of amendment to its amended and restated certificate of incorporation with the Secretary

of State of the State of Delaware to effect a 1-for-40 reverse stock split of the Company’s shares of common stock.

January 2, 2024, Canco filed a certificate of amendment to its amended and restated certificate of incorporation under the Ontario Business

Corporations Act to effect a 1-for-40 reverse stock split of the outstanding exchangeable shares.

Such amendments and ratio were previously

approved by the Company’s stockholders and board of directors.

a result of the reverse stock split, which was effective for trading purposes on January 3, 2024, every 40 shares of the Company’s

pre-reverse split outstanding common stock and exchangeable shares were combined and reclassified into one share of common stock.

Proportionate

voting rights and other rights of holders of common stock and exchangeable shares were not affected by the reverse stock split.

Any fractional

shares of common stock and exchangeable shares resulting from the reverse stock split were rounded up to the nearest whole share.

stock options and restricted stock units outstanding and common stock reserved for issuance under the Company’s equity incentive

plans and warrants outstanding immediately prior to the reverse stock split were adjusted by dividing the number of affected shares of

common stock by 40 and, as applicable, multiplying the exercise price by 40, as a result of the reverse stock split.

All share and per-share

amounts in these consolidated financial statements have been restated to reflect the reverse stock split as if it had occurred at the

beginning of the earliest period presented.

and Uncertainties

Company is subject to risks from, among other things, competition associated with the industry in general, other risks associated with

financing, liquidity requirements, rapidly changing customer requirements, limited operating history and the volatility of public markets.

preparation of financial statements in accordance with GAAP requires management to make estimates and assumptions that affect the reported

amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the financial statements and the

reported amounts of revenues and expenses recognized during the reported period.

Material estimates may include assumptions made in determining

reserves for uncollectible receivables, inventory write-downs, impairment of long-term assets, purchase price allocations, valuation

allowance on deferred tax assets, accruals for potential liabilities and assumptions made in valuing equity instruments and warrant liabilities.

Actual results could differ from those estimates.

Cash Equivalents and Investments

The Company has invested its excess cash in money

market accounts, certificates of deposit, corporate debt, government-sponsored enterprise bonds and municipal bonds and considers all

highly liquid debt instruments purchased with an original maturity of three months or less to be cash equivalents.

Investments with original

maturities greater than three months and remaining maturities less than one year are classified as short-term investments.

with remaining maturities greater than one year are classified as long-term investments.

Management generally determines the appropriate

classification of securities at the time of purchase.

All securities are classified as available-for-sale.

The Company’s available-for-sale

short-term and long-term investments are carried at fair value, with the unrealized holding gains and losses reported in accumulated other

comprehensive income (loss).

Realized gains and losses and declines in the value judged to be other-than-temporary are included in the

other income, net line item in the consolidated statements of operations.

The cost of securities sold is based on the specific identification

Fair Value Measurements

The Company measures the fair value of financial

instruments using a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value into three broad

Level 1 —Inputs used to measure fair value are

unadjusted quoted prices that are available in active markets for the identical assets or liabilities as of the reporting date.

Level 2 —Pricing is provided by third party sources

of market information obtained through the Company’s investment advisors, rather than models.

The Company does not adjust for, or

apply, any additional assumptions or estimates to the pricing information it receives from advisors.

The Company’s Level 2

securities include cash equivalents and available-for-sale securities, which consisted primarily of certificates of deposit, corporate

debt, and government agency and municipal debt securities from issuers with high-quality credit ratings.

The Company’s investment

advisors obtain pricing data from independent sources, such as Standard & Poor’s, Bloomberg and Interactive Data Corporation,

and rely on comparable pricing of other securities because the Level 2 securities are not actively traded and have fewer observable

transactions.

The Company considers this the most reliable information available for the valuation of the securities.

Level 3 —Unobservable inputs that are supported

by little or no market activity and reflect the use of significant management judgment are used to measure fair value.

These values are

generally determined using pricing models for which the assumptions utilize management’s estimates of market participant assumptions.

The determination of fair value for Level 3 investments and other financial instruments involves the most management judgment and

subjectivity.

The carrying amounts of financial assets and liabilities,

such as cash and cash equivalents, accounts receivable, accounts payable and other payables, approximate their fair values because of

the short maturity of these instruments.

The carrying values of lease obligations and long-term financing obligations approximate their

fair values because interest rates on these obligations are based on prevailing market interest rates.

The Company measures the fair value

of its warrant liabilities using Level 3 inputs.

Equivalents and Investments

Company has invested its excess cash in money market accounts, certificates of deposit, corporate debt, government-sponsored enterprise

bonds and municipal bonds and considers all highly liquid debt instruments purchased with an original maturity of three months or less

to be cash equivalents.

Investments with original maturities greater than three months and remaining maturities less than one year are

classified as short-term investments.

Investments with remaining maturities greater than one year are classified as long-term investments.

Management generally determines the appropriate classification of securities at the time of purchase.

All securities are classified as

available-for-sale.

The Company’s available-for-sale short-term and long-term investments are carried at fair value, with the unrealized

holding gains and losses reported in accumulated other comprehensive income (loss).

Realized gains and losses and declines in the value

judged to be other-than-temporary are included in the other income, net line item in the consolidated statements of operations.

of securities sold is based on the specific identification method.

Value Measurements

Company measures the fair value of financial instruments using a fair value hierarchy that prioritizes the inputs to valuation techniques

used to measure fair value into three broad levels:

—Inputs used to measure fair value are unadjusted quoted prices that are available in active markets for the identical assets or

liabilities as of the reporting date.

—Pricing is provided by third party sources of market information obtained through the Company’s investment advisors, rather

The Company does not adjust for, or apply, any additional assumptions or estimates to the pricing information it receives

from advisors.

The Company’s Level 2 securities include cash equivalents and available-for-sale securities, which consisted

primarily of certificates of deposit, corporate debt, and government agency and municipal debt securities from issuers with high-quality

credit ratings.

The Company’s investment advisors obtain pricing data from independent sources, such as Standard & Poor’s,

Bloomberg and Interactive Data Corporation, and rely on comparable pricing of other securities because the Level 2 securities are

not actively traded and have fewer observable transactions.

The Company considers this the most reliable information available for the

valuation of the securities.

—Unobservable inputs that are supported by little or no market activity and reflect the use of significant management judgment

are used to measure fair value.

These values are generally determined using pricing models for which the assumptions utilize management’s

estimates of market participant assumptions.

The determination of fair value for Level 3 investments and other financial instruments

involves the most management judgment and subjectivity.

carrying amounts of financial assets and liabilities, such as cash and cash equivalents, accounts receivable, accounts payable and other

payables, approximate their fair values because of the short maturity of these instruments.

The carrying values of lease obligations

and long-term financing obligations approximate their fair values because interest rates on these obligations are based on prevailing

market interest rates.

The Company measures the fair value of its warrant liabilities using Level 3 inputs.

and Liability-Classified Instruments

accounts for common stock warrants as either equity-classified or liability-classified instruments based on an assessment of the specific

terms of the warrants and the guidance provided by the Financial Accounting Standards Board (FASB) in ASC 480 , Distinguishing Liabilities

from Equity (ASC 480) and ASC 815, Derivatives and Hedging (ASC 815) .

The assessment considers whether the warrants are freestanding

financial instruments pursuant to ASC 480, meet the definition of a liability pursuant to ASC 480, and meet all of the requirements for

equity classification under ASC 815, including whether the warrants are indexed to the Company’s own stock and whether the holders

of the warrants could potentially require net cash settlement in a circumstance outside of the Company’s control, among other conditions

for equity classification.

This assessment, which requires the use of professional judgment, is conducted at the time of warrant issuance

and as of each subsequent quarterly period end date while the warrants are outstanding.

Allowance for Doubtful Accounts

The Company establishes an allowance for doubtful

accounts to ensure that its trade receivables balances are not overstated due to uncollectibility.

The Company performs ongoing customer

credit evaluations within the context of the industry in which it operates and generally does not require collateral from its customers.

A specific allowance of up to 100 % of the invoice value is provided for any problematic customer balances.

Delinquent account balances

are written off after management has determined that the likelihood of collection is remote.

The Company grants credit only to customers

deemed creditworthy in the judgment of management.

The allowance for doubtful accounts receivable was approximately $ 30,000 and $ 183,000

as of December 31, 2023 and 2022, respectively.

The Company values its inventories at the lower

of cost, which approximates actual cost on a first-in, first-out basis, or net realizable value.

Costs of inventories primarily consisted

of material and third party assembly costs.

The Company records write-downs for estimated obsolescence or unmarketable inventories based

upon assumptions about future demand and market conditions.

If actual market conditions are less favorable than those expected by management,

additional adjustments to inventory valuation may be required.

Charges for obsolete and slow-moving inventories are recorded based upon

an analysis of specific identification of obsolete inventory items and quantification of slow moving inventory items.

The Company recorded

write-downs of inventory of approximately $ 3,558,000 and $ 420,000 during the years ended December 31, 2023 and 2022, respectively.

Property and Equipment

Property and equipment are originally recorded

Depreciation is computed using the straight-line method over the estimated useful lives of the assets, generally three to six

Depreciation is recorded in cost of sales and operating expenses in the consolidated statements of operations and comprehensive

Leasehold improvements and assets acquired through capital leases are amortized over the shorter of their estimated useful life

or the lease term, and related amortization is recorded in operating expenses in the consolidated statements of operations.

Intangible and Long-lived Assets

Intangible assets are recorded at cost and amortized

on a straight-line method over their estimated useful lives of three to ten years .

Amortization of developed technology and other intangibles

directly related to the Company’s products is included in cost of net revenue, while amortization of customer relationships and

other intangibles not associated with the Company’s products is included in selling, general and administrative expenses in the

consolidated statements of operations and comprehensive loss.

The Company regularly reviews the carrying value

and estimated lives of its long-lived assets and finite-lived intangible assets to determine whether indicators of impairment may exist

which warrant adjustments to carrying values or estimated useful lives.

The determinants used for this evaluation include management’s

estimate of the asset’s ability to generate positive income from operations and positive cash flow in future periods as well as

the strategic significance of the assets to the Company’s business objective.

Should an impairment exist, the impairment loss would

be measured based on the excess of the carrying amount of the long-lived asset group over the asset’s fair value.

Company accounts for common stock warrants as either equity-classified or liability-classified instruments based on an assessment of

the specific terms of the warrants and the guidance provided by the Financial Accounting Standards Board (FASB) in ASC 480 , Distinguishing

Liabilities from Equity (ASC 480) and ASC 815, Derivatives and Hedging (ASC 815) .

The assessment considers whether the warrants

are freestanding financial instruments pursuant to ASC 480, meet the definition of a liability pursuant to ASC 480, and meet all of the

requirements for equity classification under ASC 815, including whether the warrants are indexed to the Company’s own stock and

whether the holders of the warrants could potentially require net cash settlement in a circumstance outside of the Company’s control,

among other conditions for equity classification.

This assessment, which requires the use of professional judgment, is conducted at the

time of warrant issuance and as of each subsequent quarterly period end date while the warrants are outstanding.

for Doubtful Accounts

Company establishes an allowance for doubtful accounts to ensure that its trade receivables balances are not overstated due to uncollectibility.

The Company performs ongoing customer credit evaluations within the context of the industry in which it operates and generally does not

require collateral from its customers.

A specific allowance of up to 100% of the invoice value is provided for any problematic customer

Delinquent account balances are written off after management has determined that the likelihood of collection is remote.

Company grants credit only to customers deemed creditworthy in the judgment of management.

Company values its inventories at the lower of cost, which approximates actual cost on a first-in, first-out basis, or net realizable

Costs of inventories primarily consisted of material and third party assembly costs.

The Company records write-downs for estimated

obsolescence or unmarketable inventories based upon assumptions about future demand and market conditions.

If actual market conditions

are less favorable than those expected by management, additional adjustments to inventory valuation may be required.

Charges for obsolete

and slow-moving inventories are recorded based upon an analysis of specific identification of obsolete inventory items and quantification

of slow moving inventory items.

The Company recorded write-downs of inventory of approximately $ 359,000 and $ 3,558,000 during the years

ended December 31, 2024 and 2023, respectively.

and Equipment

and equipment are originally recorded at cost.

Depreciation is computed using the straight-line method over the estimated useful lives

of the assets, generally three to six years .

Depreciation is recorded in cost of sales and operating expenses in the consolidated statements

of operations.

Leasehold improvements and assets acquired through capital leases are amortized over the shorter of their estimated useful

life or the lease term, and related amortization is recorded in operating expenses in the consolidated statements of operations.

and Long-lived Assets

assets are recorded at cost and amortized on a straight-line method over their estimated useful lives of three to ten years .

of developed technology and other intangibles directly related to the Company’s products is included in cost of net revenue, while

amortization of customer relationships and other intangibles not associated with the Company’s products is included in selling,

general and administrative expenses in the consolidated statements of operations.

Company regularly reviews the carrying value and estimated lives of its long-lived assets and finite-lived intangible assets to determine

whether indicators of impairment may exist which warrant adjustments to carrying values or estimated useful lives.

The determinants used

for this evaluation include management’s estimate of the asset’s ability to generate positive income from operations and

positive cash flow in future periods as well as the strategic significance of the assets to the Company’s business objective.

an impairment exist, the impairment loss would be measured based on the excess of the carrying amount of the long-lived asset group over

the asset’s fair value.

Purchased Intangible Assets

10 unchanged sentences

Customer relationships

Developed technology primarily consisted of MoSys’

products that have reached technological feasibility and primarily relate to its memory semiconductor products and technology.

of the developed technology was determined by discounting estimated net future cash flows of these products.

Amortization related to developed

technology of $ 2.0 million and $ 1.4 million for the years ended December 31, 2023 and 2022, respectively, was included in cost of net

revenue in the consolidated statements of operations and comprehensive loss.

Customer relationships relate to the Company’s

ability to sell existing and future versions of its products to MoSys’ customers existing at the time of the arrangement.

value of the customer relationships was determined by discounting estimated net future cash flows from the customer relationships.

related to customer relationships of $ 0.9 million and $ 0.6 million for the years ended December 31, 2023 and 2022, respectively, was included

in selling, general and administrative expense in the consolidated statements of operations and comprehensive loss.

During 2023, the Company revised the remaining

estimated life for its developed technology and customer relationship intangible assets to 18 months as a result of the end-of-life of

its memory products (see Note 12).

Other amortization expense was approximately $ 28,000

and $ 27,000 for the years ended December 31, 2023 and 2022, respectively.

As of December 31, 2023, estimated future amortization

expense related to intangible assets is expected to be (in thousands):

Developed technology primarily

consisted of MoSys’ products that had reached technological feasibility and primarily related to its memory semiconductor products

and technology.

The value of the developed technology was determined by discounting estimated net future cash flows of these products.

Amortization related to developed technology of $ 2.3 million and $ 2.0 million for the years ended December 31, 2024 and 2023, respectively,

was included in cost of net revenue in the consolidated statements of operations.

Customer relationships relate

to the Company’s ability to sell existing and future versions of its products to MoSys’ customers existing at the time of

the arrangement.

The fair value of the customer relationships was determined by discounting estimated net future cash flows from the customer

relationships.

Amortization related to customer relationships of $ 1.0 million and $ 0.9 million for the years ended December 31, 2024 and

2023, respectively, was included in selling, general and administrative expense in the consolidated statements of operations.

During 2023, the Company revised

the remaining estimated life for its developed technology and customer relationship intangible assets to 18 months as a result of the

end-of-life of its memory products (see Note 14).

Other amortization expense

was approximately $ 6,000 and $ 28,000 for the years ended December 31, 2024 and 2023, respectively.

As of December 31, 2024, estimated

future amortization expense related to intangible assets is expected to be (in thousands):

Year ending December 31,

Business Combinations

The Company allocates the fair value of purchase

consideration to the tangible assets acquired, liabilities assumed and intangible assets acquired based on their estimated fair values.

The excess of the fair value of purchase consideration over the fair values of these identifiable assets and liabilities is recorded as

goodwill to reporting units based on the expected benefit from the business combination.

Allocation of purchase consideration to identifiable

assets and liabilities affects the amortization expense, as acquired finite-lived intangible assets are amortized over the useful life,

whereas any indefinite-lived intangible assets, including goodwill, are not amortized.

During the measurement period, which is not to

exceed one year from the acquisition date, the Company records adjustments to the assets acquired and liabilities assumed, with the corresponding

offset to goodwill.

Upon the conclusion of the measurement period, any subsequent adjustments are recorded to earnings.

Acquisition-related

expenses are recognized separately from business combinations and are expensed as incurred.

The Company determines the amount of a potential

goodwill impairment by comparing the fair value of the reporting unit with its carrying amount.

To the extent the carrying value of a

reporting unit exceeds its fair value, a goodwill impairment charge is recognized.

The Company has determined that it has a single

reporting unit for purposes of performing its goodwill impairment test.

As the Company uses the market approach to determine the step

one fair value of the reporting unit, the price of its common stock is an important component of the fair value calculation.

If the Company’s

stock price experiences significant price and volume fluctuations, this will impact the fair value of the reporting unit, which can lead

to potential impairment in future periods.

The Company reviews goodwill for impairment on an annual basis or whenever events or changes

in circumstances indicate the carrying value of an asset may not be recoverable.

The Company first assesses qualitative factors to determine

whether it is more-likely-than-not that the fair value of the reporting unit is less than the carrying amount as a basis for determining

whether it is necessary to perform an impairment test.

If the qualitative assessment warrants further analysis, the Company compares the

fair value of the reporting unit to its carrying value.

The fair value of the reporting unit is determined using the market approach.

If the fair value of the reporting unit exceeds the carrying value of net assets of the reporting unit, goodwill is not impaired.

carrying value of the reporting unit’s goodwill exceeds its fair value, then the Company must record an impairment charge equal

to the difference.

During the three months ended December 31, 2022,

the Company concluded a triggering event had occurred due to the sustained decrease in the price per share of its common stock and related

reduced market capitalization.

The Company performed a test for goodwill impairment, and, due to the decrease in the price per share of

its common stock, the test results indicated the goodwill carrying value was greater than its implied fair value.

As a result of the impairment

test, the Company recorded a non-cash impairment charge totaling $ 9.9 million, and the Company’s goodwill balance was reduced to

zero as of December 31, 2022.

ASC 842, Leases (ASC 842), requires an entity

to recognize a right-of-use asset and a lease liability for all leases with terms longer than 12 months.

The Company adopted

ASC 842 utilizing the modified retrospective transition method.

The Company elected the practical expedient afforded in ASC 842 in which

the Company did not reassess whether any contracts that existed prior to adoption have or contain leases or the classification of its

existing leases.

ASC 842, Leases (ASC

842), requires an entity to recognize a right-of-use asset and a lease liability for all leases with terms longer than 12 months.

The Company adopted ASC 842 utilizing the modified retrospective transition method.

The Company elected the practical expedient afforded

in ASC 842 in which the Company did not reassess whether any contracts that existed prior to adoption have or contain leases or the classification

of its existing leases.

Revenue Recognition

The Company recognizes revenue in accordance with

ASC Topic 606, Revenue from Contracts with Customers, and its amendments (ASC 606).

As described below, the analysis of contracts

under ASC 606 supports the recognition of revenue at a point in time, resulting in revenue recognition timing that is materially consistent

with the Company’s historical practice of recognizing product revenue when title and risk of loss pass to the customer.

The Company generates revenue primarily from sales

of integrated circuits and module products, performance of engineering services and licensing of its intellectual property.

recognized when control is transferred to customers in amounts that reflect the consideration the Company expects to be entitled to receive

in exchange for those goods.

The Company recognizes revenue

in accordance with ASC Topic 606, Revenue from Contracts with Customers, and its amendments (ASC 606).

As described below, the

analysis of contracts under ASC 606 supports the recognition of revenue at a point in time, resulting in revenue recognition timing that

is materially consistent with the Company’s historical practice of recognizing product revenue when title and risk of loss pass

to the customer.

The Company generates revenue

primarily from sales of integrated circuits and module products, performance of engineering services and licensing of its intellectual

Revenues are recognized when control is transferred to customers in amounts that reflect the consideration the Company expects

to be entitled to receive in exchange for those goods.

Revenue recognition is evaluated through the following five steps:

(i) identification of the contract, or

contracts, with a customer;

(i) identification

of the contract, or contracts, with a customer;

(ii) identification of the performance obligations in the contract;

(iii) determination of the transaction

(iii) determination

of the transaction price;

(iv) allocation of the transaction price to the performance obligations in the contract;

and (v) recognition of revenue when or

as a performance obligation is satisfied.

and (v) recognition

of revenue when or as a performance obligation is satisfied.

Product revenue

Revenue is recognized when performance obligations

under the terms of a contract with a customer are satisfied.

The majority of the Company’s contracts have a single performance obligation

to transfer products.

Accordingly, the Company recognizes revenue when title and risk of loss have been transferred to the customer, generally

at the time of shipment of products.

Revenue is measured as the amount of consideration the Company expects to receive in exchange for

transferring products and is generally based upon a negotiated, formula, list or fixed price.

The Company sells its products both directly

to customers and through distributors generally under agreements with payment terms typically 60 days or less.

The Company may record an estimated allowance,

at the time of shipment, for future returns and other charges against revenue consistent with the terms of sale.

Revenue is recognized when

performance obligations under the terms of a contract with a customer are satisfied.

The majority of the Company’s contracts have

a single performance obligation to transfer products.

Accordingly, the Company recognizes revenue when title and risk of loss have been

transferred to the customer, generally at the time of shipment of products.

Revenue is measured as the amount of consideration the Company

expects to receive in exchange for transferring products and is generally based upon a negotiated, formula, list or fixed price.

sells its products both directly to customers and through distributors generally under agreements with payment terms typically 60 days

The Company may record an

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

Royalty and other

The Company’s licensing contracts typically

provide for royalties based on the licensee’s use of the Company’s memory technology in its currently shipping commercial

The Company estimates its royalty revenue in the calendar quarter in which the licensee uses the licensed technology.

are received in the subsequent quarter.

The Company’s licensing

contracts typically provide for royalties based on the licensee’s use of the Company’s memory technology in its currently

shipping commercial products.

The Company estimates its royalty revenue in the calendar quarter in which the licensee uses the licensed

Payments are received in the subsequent quarter.

The Company also generates revenue from licensing its technology.

The Company recognizes license

fees as revenue at the point of time when the control of the license has been transferred and the Company has no continuing performance

obligations to the customer.

recognizes license fees as revenue at the point of time when the control of the license has been transferred and the Company has no continuing

performance obligations to the customer.

Engineering services revenue

Engineering and development contracts with customers

generally contain a single performance obligation that is delivered over time.

Revenue is recognized using an output method that is consistent

with the satisfaction of the performance obligation as a measure of progress.

Engineering and development

contracts with customers generally contain a single performance obligation that is delivered over time.

Revenue is recognized using an

output method that is consistent with the satisfaction of the performance obligation as a measure of progress.

Deferred cost of net revenue

During the year ended December 31, 2022, the Company

had $ 1.1 million of product shipments for which the revenue recognition criteria under ASC 606 had not been met.

Accordingly, the cost

of net revenue of approximately $ 0.6 million associated with these shipments was deferred and presented as deferred cost of net revenue

in the consolidated balance sheets as of December 31, 2022.

During the three months ended March 31, 2023, the Company recognized the associated

revenue and cost of net revenue.

Contract liabilities – deferred revenue

The Company’s contract liabilities consist

of advance customer payments and deferred revenue.

The Company classifies advance customer payments and deferred revenue as current or

non-current based on the timing of when the Company expects to recognize revenue.

As of December 31, 2023 and 2022, contract liabilities

were in a current position and included in deferred revenue.

During the year ended December 31, 2023, the Company

recognized approximately $ 332,000 of revenue that had been included in deferred revenue as of December 31, 2022.

See Note 7 for disaggregation of revenue by geography.

The Company does not have significant financing

components, as payments from customers are typically due within 60 days of invoicing, and the Company has elected the practical expedient

to not value financing components that are less than one year.

Shipping and handling costs are generally incurred by the customer, and,

therefore, are not recorded as revenue.

During the year ended December

31, 2022, the Company had $ 1.1 million of product shipments for which the revenue recognition criteria under ASC 606 had not been met.

Accordingly, the cost of net revenue of approximately $ 0.6 million associated with these shipments was deferred and presented as deferred

cost of net revenue in the consolidated balance sheets as of December 31, 2022.

During the three months ended March 31, 2023, the Company

recognized the associated revenue and cost of net revenue.

Contract liabilities – deferred

The Company’s contract

liabilities consist of advance customer payments and deferred revenue.

The Company classifies advance customer payments and deferred revenue

as current or non-current based on the timing of when the Company expects to recognize revenue.

As of December 31, 2024 and 2023, contract

liabilities were in a current position and included in deferred revenue.

During the year ended December

31, 2024, the Company recognized approximately $ 1,040,000 of revenue that had been included in deferred revenue as of December 31, 2023.

See Note 7 for disaggregation

of revenue by geography.

The Company does not have

significant financing components, as payments from customers are typically due within 60 days of invoicing, and the Company has elected

the practical expedient to not value financing components that are less than one year.

Shipping and handling costs are generally incurred

by the customer, and, therefore, are not recorded as revenue.

Cost of Net Revenue

Cost of net revenue consists primarily of direct

and indirect costs of product sales, including amortization of intangible assets and depreciation of production-related fixed assets.

Cost of net revenue consists

primarily of direct and indirect costs of product sales, including amortization of intangible assets and depreciation of production-related

fixed assets.

Advertising Costs

Advertising costs are expensed as incurred.

costs were not significant for the years ended December 31, 2023 and 2022.

Advertising costs are expensed

Advertising costs were not significant for the years ended December 31, 2024 and 2023.

Research and Development

Engineering costs are recorded as research and

development expense in the period incurred.

Engineering costs are recorded

as research and development expense in the period incurred.

Stock-Based Compensation

The Company periodically issues stock options and

restricted stock awards to employees and non-employees.

The Company periodically issues

stock options and restricted stock awards to employees and non-employees.

The Company accounts for such grants based on ASC No.

718, whereby the value of

the award is measured on the date of grant and recognized as compensation expense on a straight-line basis over the vesting period.

fair value of the Company’s stock options is estimated using the Black-Scholes-Merton Option Pricing (Black Scholes) model, which

uses certain assumptions related to risk-free interest rates, expected volatility, expected life of the options, and future dividends.

the value of the award is measured on the date of grant and recognized as compensation expense on a straight-line basis over the vesting

The fair value of the Company’s stock options is estimated using the Black-Scholes-Merton Option Pricing (Black Scholes)

model, which uses certain assumptions related to risk-free interest rates, expected volatility, expected life of the options, and future

Compensation expense is recorded based upon the value derived from the Black Scholes model.

The assumptions used in the Black Scholes

model could materially affect compensation expense recorded in future periods.

The assumptions used in the Black

Scholes model could materially affect compensation expense recorded in future periods.

The fair value of restricted stock awards, restricted

stock units, and performance-based restricted stock units is based on the closing price of the Company’s common stock on the date

Foreign Currency Transactions

The functional currency of the Company is the U.S

All foreign currency transactions are initially measured and recorded in an entity’s functional currency using the exchange

rate on the date of the transaction.

All monetary assets and liabilities are remeasured at the end of each reporting period using the

exchange rate at that date.

All non-monetary assets and related expense, depreciation or amortization are not subsequently remeasured

and are measured using the historical exchange rate.

An average exchange rate may be used to recognize income and expense items earned

or incurred evenly over a period.

Foreign exchange gains and losses resulting from the settlement of such transactions are recognized

in the statement of operations, except for the gains and losses arising from the conversion of the carrying amount of the foreign currency

denominated convertible preferred shares into the functional currency that are presented as adjustment to the net loss to arrive at net

loss attributable to common stockholders.

The functional currency of

the Company is the U.S.

All foreign currency transactions are initially measured and recorded in an entity’s functional

currency using the exchange rate on the date of the transaction.

All monetary assets and liabilities are remeasured at the end of each

reporting period using the exchange rate at that date.

All non-monetary assets and related expense, depreciation or amortization are not

subsequently remeasured and are measured using the historical exchange rate.

An average exchange rate may be used to recognize income

and expense items earned or incurred evenly over a period.

Foreign exchange gains and losses resulting from the settlement of such transactions

are recognized in the statement of operations, except for the gains and losses arising from the conversion of the carrying amount of the

foreign currency denominated convertible preferred shares into the functional currency that are presented as adjustment to the net loss

to arrive at net loss attributable to common stockholders.

Per-Share Amounts

Basic net loss per share is computed by dividing

net loss for the period by the weighted-average number of exchangeable shares and shares of common stock outstanding during the period.

Diluted net loss per share gives effect to all potentially dilutive exchangeable and common shares outstanding during the period.

dilutive common shares consist of incremental exchangeable shares and shares of common stock issuable upon the achievement of escrow terms,

exercise of stock options, vesting of stock awards and exercise of warrants.

The following table sets forth securities outstanding

that were excluded from the computation of diluted net loss per share as their inclusion would be anti-dilutive (in thousands):

Basic net loss per share is

computed by dividing net loss for the period by the weighted-average number of exchangeable shares and shares of common stock outstanding

during the period.

Diluted net loss per share gives effect to all potentially dilutive exchangeable and common shares outstanding during

Potentially dilutive common shares consist of incremental exchangeable shares and shares of common stock issuable upon the

achievement of escrow terms, exercise of stock options, vesting of stock awards and exercise of warrants.

The following table sets forth

securities outstanding that were excluded from the computation of diluted net loss per share as their inclusion would be anti-dilutive

(in thousands):

Escrow shares - exchangeable shares

2 unchanged sentences

Unvested restricted common stock units

Common stock warrants

The Company determines deferred tax assets and

liabilities based upon the differences between the financial statement and tax bases of the Company’s assets and liabilities using

tax rates in effect for the year in which the Company expects the differences to affect taxable income.

A valuation allowance is established

for any deferred tax assets for which it is more likely than not that all or a portion of the deferred tax assets will not be realized.

Warrants classified as equity

Warrants classified as liabilities

The Company determines deferred

tax assets and liabilities based upon the differences between the financial statement and tax bases of the Company’s assets and

liabilities using tax rates in effect for the year in which the Company expects the differences to affect taxable income.

allowance is established for any deferred tax assets for which it is more likely than not that all or a portion of the deferred tax assets

will not be realized.

The Company files U.S.

federal and state and foreign

income tax returns in jurisdictions with varying statutes of limitations.

The 2015 through 2020 tax years generally remain subject to

examination by U.S.

federal and state tax authorities, and the 2011 through 2020 tax years generally remain subject to examination by

foreign tax authorities.

At December 31, 2023, the Company did not have

any material unrecognized tax benefits nor expect its unrecognized tax benefits to change significantly over the next 12 months.

recognizes interest related to unrecognized tax benefits as income tax expense and penalties related to unrecognized tax benefits as other

income and expense.

During the years ended December 31, 2023 and 2022, the Company did not recognize any interest or penalties related

to unrecognized tax benefits.

and state and foreign income tax returns in jurisdictions with varying statutes of limitations.

The 2018 through 2023 tax years generally

remain subject to examination by U.S.

federal and state tax authorities, and the 2020 through 2023 tax years generally remain subject

to examination by foreign tax authorities.

At December 31, 2024, the

Company did not have any material unrecognized tax benefits nor expect its unrecognized tax benefits to change significantly over the

next 12 months.

The Company recognizes interest related to unrecognized tax benefits as income tax expense and penalties related to unrecognized

tax benefits as other income and expense.

During the years ended December 31, 2024 and 2023, the Company did not recognize any interest

or penalties related to unrecognized tax benefits.

Comprehensive loss

Comprehensive loss represents

the changes in equity of an enterprise, other than those resulting from stockholder transactions.

Accordingly, comprehensive loss may

include certain changes in equity that are excluded from net loss.

For the years ended December 31, 2024 and 2023, the Company’s

comprehensive loss was the same as its net loss.

Recently Issued Accounting Pronouncements

November 2023, the FASB issued ASU No.

2023, the FASB issued Accounting Standards Update (ASU) No.

2023-07, Segment Reporting (Topic 280):

Improvements to Reportable Segment Disclosures ,

which requires disclosure of incremental segment information on an annual and interim basis.

2023-07 is effective for fiscal years

beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024, and it requires retrospective

application to all prior periods presented in the financial statements.

The Company is currently evaluating the impact that this ASU will

have on the presentation of its consolidated financial statements.

December 2023, the FASB issued ASU No.

Improvements to Reportable Segment

Disclosures , which requires disclosure of incremental segment information on an annual and interim basis.

2023-07 is effective

for fiscal years beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024, and it

requires retrospective application to all prior periods presented in the financial statements.

The Company adopted ASU 2023-07 as of December

The adoption of this standard did not have a material impact on the Company’s consolidated financial statements, but it

has resulted in additional disclosures within the footnotes to the consolidated financial statements (see Note 7).

2023, the FASB issued ASU No.

2023-09, Income Taxes (Topic 740):

Improvements to Income Tax Disclosures , which expands

disclosures in an entity’s income tax rate reconciliation table and disclosures regarding cash taxes paid both in the U.S.

jurisdictions.

Improvements to Income Tax Disclosures , which expands disclosures

in an entity’s income tax rate reconciliation table and disclosures regarding cash taxes paid both in the U.S.

and foreign jurisdictions.

The update will be effective for annual periods beginning after December 15, 2024.

The Company is currently evaluating

the impact that this ASU will have on the presentation of its consolidated financial statements.

Other recent authoritative guidance issued by

the FASB (including technical corrections to the ASC), the American Institute of Certified Public Accountants, and the Securities and

Exchange Commission (the SEC) did not, or is not expected to, have a material impact on the Company’s consolidated financial statements

and related disclosures.

The Company does not expect the adoption of ASU No.

2023-09 to have a material impact on its consolidated financial statements.

2024, the FASB issued ASU No.

2024-03, Income Statement – Reporting Comprehensive Income – Expense Disaggregation Disclosures

(Subtopic 220-40):

Disaggregation of Income Statement Expenses .

The new standard requires disclosures about specific types of expenses

included in the expense captions presented on the face of the income statement as well as disclosures about selling expenses.

is effective for the Company for annual periods beginning January 1, 2027 and interim periods beginning January 1, 2028, with early adoption

The standard may be applied either prospectively to financial statements issued for reporting periods after the effective date

or retrospectively to any or all prior periods presented in the financial statements.

The Company is evaluating the impact that this ASU

will have on the presentation of its consolidated financial statements.

authoritative guidance issued by the FASB (including technical corrections to the ASCs), the American Institute of Certified Public Accountants,

and the Securities and Exchange Commission (the SEC) did not, or is not expected to, have a material impact on the Company’s consolidated

financial statements and related disclosures.

Fair Value of Financial Instruments

The following table represents the Company’s

assets and liabilities measured at fair value on a recurring basis as of December 31, 2023 and 2022 and the basis for that measurement

(in thousands):

The following table represents

the Company’s assets and liabilities measured at fair value on a recurring basis as of December 31, 2024 and 2023 and

the basis for that measurement (in thousands):

December 31, 2024

3 unchanged sentences

Money market funds (1)

Corporate notes and commercial paper

Warrant liability

6 unchanged sentences

Cash and cash equivalents

Short-term investments

Balance Sheet Detail

14 unchanged sentences

Accumulated depreciation and amortization

During the year ended December 31, 2023, the Company

wrote off assets with a book value of approximately $ 243,000 to depreciation expense as a loss on disposal.

The net book value of assets

written off was allocated between cost of net revenue of $ 116,000 and the remaining book value of $ 127,000 was charged to operating expenses.

During the year ended December 31, 2022, the Company

wrote-off fully depreciated assets, or assets that were no longer in service, with a historical cost of approximately $ 6,380,000 with

corresponding accumulated depreciation of approximately $ 6,227,000 .

Depreciation expense of approximately $ 535,000 and approximately $ 384,000

was charged to cost of net revenue and operating expenses, respectively, for the year ended December 31, 2023.

The Company wrote off the

remaining book value of approximately $ 153,000 to depreciation expense as a loss on disposal during the year ended December 31, 2022.

During the year ended December

31, 2023, the Company wrote off assets with a book value of approximately $ 243,000 to depreciation expense as a loss on disposal.

net book value of assets written off was allocated between cost of net revenue of $ 116,000 and the remaining book value of $ 127,000 was

charged to operating expenses.

(in thousands)

2 unchanged sentences

Professional fees, legal and consulting

Financing liability

Software license obligations

Severance benefits

Warranty accrual

Severance and Software License Obligations

In November 2023, the Company

implemented an employee lay-off and terminated certain consulting positions (the Reductions) to reduce operating expenses and cash burn,

as the Company prioritized business activities and projects that it believes will have a higher return on investment.

As part of the Reductions,

the Company implemented a temporary lay-off that impacted 16 employees (the Employees) of Peraso Tech.

During the six months ended June

30, 2024, the Company determined that it would not recall any of the 11 Employees that remained on the Company’s payroll and commenced

notifying the remaining Employees that their employment would be terminated.

As a result of the termination of the Employees’ employment,

the Company recorded severance charges of approximately $ 446,000 during the six months ended June 30, 2024.

As of December 31, 2024, there

were remaining severance liabilities of approximately $ 118,000 , which are expected to be paid through October 2025.

As a result of the decision

to not recall the Employees, the Company determined that it was probable that a number of its 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, the Company accrued

the value of the remaining contractual liabilities of approximately $ 1,617,000 , which are expected to be paid through September 30, 2025.

As of December 31, 2024, the remaining contractual liabilities of approximately $ 0.8 million and $ 0.2 million are included in accrued

expenses and other and accounts payable, respectively.

Commitments and Contingencies

The Company has facility leases that it accounts

for under ASC 842, including the operating leases for its corporate headquarters facility in San Jose, California, and facilities in Toronto

and Markham Ontario, Canada.

In November 2023, the Company renewed the San Jose facility lease for a one-year term commencing January

15, 2024 (the Renewal Term), and effective with the commencement of the Renewal term the Company ceased accounting for the lease under

In December 2023, the Company renewed the Toronto office lease for a one-year term commencing January 1, 2024.

In May 2022, the

Company entered into a lease for the facility in Markham with a 60-month term, which commenced June 21, 2022.

The Markham landlord also

provided a lease incentive of approximately $ 286,200 (the Incentive).

In 2023, the Company received payment of $ 143,100 from the Markham

landlord of the first installment of the Incentive.

The remaining balance of the Incentive is paid to the Company in the form of an adjustment

to rent during the last three months of each year during the remaining lease term.

During 2023, a credit of $ 35,775 was made against the

rent during the three months ended December 31, 2023.

As of December 31, 2023, the pending Lease Incentive to be received was $ 107,325 .

Upon the renewal of the Toronto lease in 2023,

the Company recognized a right-of-use asset of approximately $ 137,700 .

The discount rate used to measure the lease assets and liabilities

for the renewal was 8 %.

The initial right-of-use asset and corresponding

liability of approximately $ 1.0 million for the Markham facility lease was measured at the present value of the future minimum lease payments.

The Company has operating leases for its corporate

headquarters facility in San Jose, California and facilities in Toronto and Markham, Ontario, Canada and recognizes lease expense on a

straight-line basis over the respective lease terms.

In November 2023, the Company renewed the San

Jose facility lease for a one-year term, which commenced January 15, 2024 (the Renewal Term), and, effective with the commencement of

the Renewal Term, the Company ceased accounting for the lease under ASC 842.

The Company did not renew the lease upon the expiration of

the Renewal Term.

In December 2023, the Company renewed the Toronto

office lease for a reduced amount of square footage for a one-year term, which commenced January 1, 2024.

Upon the renewal of the Toronto

lease in December 2023, the Company recognized a right-of-use asset of approximately $ 137,700 .

The discount rate used to measure the lease

assets and liabilities for the renewal was 8 %.

In December 2024, the Company renewed the Toronto office lease for a one-year term, which

commenced January 1, 2025, and the Company ceased accounting for the lease under ASC 842.

In May 2022, the Company entered into a lease

for the facility in Markham with a 60-month term, which commenced June 21, 2022.

The initial right-of-use asset and corresponding liability

of approximately CAD$ 1.0 million for the Markham facility lease were measured at the present value of the future minimum lease payments.

The discount rate used to measure the lease assets and liabilities was 8 %.

Lease expense is recognized on a straight-line basis over the

The Markham landlord also provided a lease incentive of approximately

CAD$ 286,200 (the Incentive).

In 2023, the Company received payment of CAD$ 143,100 from the Markham landlord of the first installment of

the Incentive.

The remaining balance of the Incentive is paid to the Company in the form of an adjustment to rent during the last three

months of each year during the remaining lease term.

During 2023, a credit of CAD$ 35,775 was made against the rent during the three months

ended December 31, 2023.

As of December 31, 2024, the pending Incentive to be received was CAD$ 71,510 .

On March 1, 2022, the Company entered into a 36-month

finance lease agreement for the lease of equipment resulting in the recognition of a right-of-use asset and lease liability of approximately

On November 1, 2022, the Company entered into a

36-month finance lease agreement for the lease of equipment resulting in the recognition of a right-of-use asset of approximately $ 124,000

On November 1, 2022, the Company entered into

a 36-month finance lease agreement for the lease of equipment resulting in the recognition of a right-of-use asset of approximately $ 124,000

and lease liability of approximately $ 117,000 .

The following table provides the details of right-of-use

assets and lease liabilities as of December 31, 2023 (in thousands):

The following table provides

the details of right-of-use assets and lease liabilities as of December 31, 2024 (in thousands):

Year Ended December 31,

Right-of-use assets:

Operating leases $ 213 $ 422

Finance lease

Finance leases 54 193

Total right-of-use assets $ 267 $ 615

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Operating leases $ 266 $ 525

Finance lease

Finance leases 55 194

Total lease liabilities $ 321 $ 719

Future minimum payments under the leases at December

31, 2023 are listed in the table below (in thousands):

Future minimum payments under

the leases at December 31, 2024 are listed in the table below (in thousands):

Year ending December 31,

7 unchanged sentences

Operating cash flows for leases $ 487 $ 674

Rent expense was approximately $ 0.6 million and

$ 0.7 million for the years ended December 31, 2023 and 2022, respectively.

In addition to the minimum lease payments, the Company is responsible

for property taxes, insurance and certain other operating costs related to the leased facilities and equipment.

Rent expense was approximately

$ 0.7 million and $ 0.6 million for the years ended December 31, 2024 and 2023, respectively.

In addition to the minimum lease payments,

the Company is responsible for property taxes, insurance and certain other operating costs related to the leased facilities and equipment.

Indemnification

In the ordinary course of business, the Company

enters into contractual arrangements under which it may agree to indemnify the counterparties from any losses incurred relating to breach

of representations and warranties, failure to perform certain covenants, or claims and losses arising from certain events as outlined

within the particular contract, which may include, for example, losses arising from litigation or claims relating to past performance.

In the ordinary course of

business, the Company enters into contractual arrangements under which it may agree to indemnify the counterparties from any losses incurred

relating to breach of representations and warranties, failure to perform certain covenants, or claims and losses arising from certain

events as outlined within the particular contract, which may include, for example, losses arising from litigation or claims relating to

past performance.

Such indemnification clauses may not be subject to maximum loss clauses.

The Company has also entered into indemnification agreements

with its officers and directors.

No material amounts were reflected in the Company’s consolidated financial statements for the years

ended December 31, 2023 and 2022 related to these indemnifications.

The Company has not estimated the maximum potential

amount of indemnification liability under these agreements due to the limited history of prior claims and the unique facts and circumstances

applicable to each particular agreement.

To date, the Company has not made any payments related to these indemnification agreements.

The Company has also entered into indemnification

agreements with its officers and directors.

No material amounts were reflected in the Company’s consolidated financial statements

for the years ended December 31, 2024 and 2023 related to these indemnifications.

The Company has not estimated

the maximum potential amount of indemnification liability under these agreements due to the limited history of prior claims and the unique

facts and circumstances applicable to each particular agreement.

To date, the Company has not made any payments related to these indemnification

Product Warranties

The Company warrants certain of its products to

be free of defects generally for a period of three years.

The Company estimates its warranty costs based on historical warranty claim

experience and includes such costs in cost of net revenues.

Warranty costs were not material for the years ended December 31, 2023 and

The Company warrants certain

of its products to be free of defects generally for a period of three years.

The Company estimates its warranty costs based on historical

warranty claim experience and includes such costs in cost of net revenues.

Warranty costs were not material for the years ended December

31, 2024 and 2023.

Legal Matters

The Company is not a party to any legal proceeding

that the Company believes is likely to have a material adverse effect on its consolidated financial position or results of operations.

The Company is not a party

to any legal proceeding that the Company believes is likely to have a material adverse effect on its consolidated financial position or

results of operations.

From time to time the Company may be subject to legal proceedings and claims in the ordinary course of business.

These claims, even if

not meritorious, could result in the expenditure of significant financial resources and diversion of management efforts.

These claims, even if not meritorious, could result in the expenditure of significant financial resources and diversion of management

Purchase Obligations

The Company’s primary

purchase obligations include non-cancelable purchase orders for inventory and computer-aided-design (CAD) software.

At December 31, 2023,

the Company had outstanding non-cancelable purchase orders for inventory, primarily wafers and substrates, and related expenditures of

approximately $ 2.3 million and non-cancelable purchase orders for CAD software of $ 3.1 million over 24 months.

purchase obligations include non-cancelable purchase orders for inventory.

At December 31, 2024, the Company had outstanding non-cancelable

purchase orders for inventory, primarily wafers and substrates, and related expenditures of approximately $ 3.1 million.

Retirement Savings

Effective January 1997, the Company adopted the

Peraso 401(k) Plan (the Savings Plan), which qualifies as a thrift plan under Section 401(k) of the Internal Revenue Code.

Full-time and

part-time employees who are at least 21 years of age are eligible to participate in the Savings Plan at the time of hire.

may contribute up to 15 % of their earnings to the Savings Plan.

No matching contributions were made by the Company during the years ended

December 31, 2023 and 2022.

Business Segments, Concentration of Credit Risk and

Significant Customers

The Company determines its reporting units in accordance

280, Segment Reporting (ASC 280).

Management evaluates a reporting unit by first identifying its operating segments

under ASC 280.

The Company then evaluates each operating segment to determine if it includes one or more components that constitute a

If there are components within an operating segment that meet the definition of a business, the Company evaluates those components

to determine if they must be aggregated into one or more reporting units.

If applicable, when determining if it is appropriate to aggregate

different operating segments, the Company determines if the segments are economically similar and, if so, the operating segments are aggregated.

Management has determined that the Company has

one consolidated operating segment.

The Company’s reporting segment reflects the manner in which its chief operating decision maker

reviews results and allocates resources.

The Company’s reporting segment meets the definition of an operating segment and does not

include the aggregation of multiple operating segments.

The Company recognized revenue from shipments of

product, licensing of its technologies and performance of services to customers by geographical location as follows (in thousands):

United States

Effective January 1997, the

Company adopted the Peraso 401(k) Plan (the Savings Plan), which qualifies as a thrift plan under Section 401(k) of the Internal Revenue

Full-time and part-time employees who are at least 21 years of age are eligible to participate in the Savings Plan at the time of

Participants may contribute up to 15 % of their earnings to the Savings Plan.

No matching contributions were made by the Company

during the years ended December 31, 2024 and 2023.

Business Segments, Concentration

of Credit Risk and Significant Customers

Segment Information

The Company determines its

reporting units in accordance with ASC No.

280, Segment Reporting (ASC 280), as amended by ASU No.

Management evaluates

a reporting unit by first identifying its operating segments under ASC 280.

The Company then evaluates each operating segment to determine

if it includes one or more components that constitute a business.

If there are components within an operating segment that meet the definition

of a business, the Company evaluates those components to determine if they must be aggregated into one or more reporting units.

If applicable,

when determining if it is appropriate to aggregate different operating segments, the Company determines if the segments are economically

similar and, if so, the operating segments are aggregated.

The Company’s chief

executive officer is the chief operating decision maker (CODM) and evaluates performance and makes operating decisions about allocating

resources based on financial data presented on a consolidated basis.

Because the CODM evaluates financial performance on a consolidated

basis, the Company has determined that it operates as a single reportable segment composed of the consolidated financial results of the

Company (see Note 7).

The Company’s reporting

segment meets the definition of an operating segment and does not include the aggregation of multiple operating segments.

The Company operates and manages

its business as one reportable and operating segment as a fabless semiconductor company focused on the development and sale of millimeter

wavelength wireless technology, or mmWave, semiconductor devices and antenna modules and performance of non-recurring engineering, or

NRE, services and licensing of intellectual property, or IP.

The measure of segment assets is reported on the balance sheet as total consolidated

In addition, the Company manages the business activities on a consolidated basis.

The Company’s CODM reviews

financial information presented on a consolidated basis and decides how to allocate resources based on net income (loss).

net income (loss) is used for evaluating financial performance.

Significant segment expenses

include research and development expenditures, salaries and benefits, stock-based compensation, software license obligations.

expenses include all remaining costs necessary to operate the Company’s business, which primarily include facilities, external professional

services and other administrative expenses.

The following table presents the significant segment expenses and other segment items regularly

reviewed by our CODM:

Year Ended December 31,

Total net revenue

Cost of net revenue

Research and development

Stock-based compensation

Severance and software license obligations

Other operating expenses

Concentrations

The Company recognized revenue

from shipments of product, licensing of its technologies and performance of services to customers by geographical location as follows

(in thousands):

Year Ended December 31,

North America

Rest of world

2 unchanged sentences

by category (in thousands):

(amounts in thousands)

Years Ended December 31,

Year-Over-Year

Product category

1 unchanged sentence

mmWave other products

Customers who accounted for at least 10 % of total

net revenue were:

The following table lists significant customers

that represented more than 10% of the Company’s total revenue during each respective period:

Ended December 31,

The following table lists

significant customers that represented more than 10% of the Company’s net accounts receivable balance at each respective balance

Accounts Receivable

As of December 31,

The following table lists

significant vendors that represented more than 10% of the Company’s total accounts payable balance at each respective balance sheet

Accounts Payable

As of December 31,

less than 10%

As of December 31, 2023, three customers accounted

for 83 % of accounts receivable, and the Company had a provision for doubtful accounts of $ 30,000 against one of the customer’s receivables.

Four customers accounted for 79 % of accounts receivable as of December 31, 2022.

Income Tax Provision

Deferred income taxes reflect the net tax effects

of temporary differences between the carrying amount of assets and liabilities for financial reporting purposes and the amounts used for

income tax purposes.

Significant components of the Company’s deferred

tax assets and liabilities were (in thousands):

The income tax provision consisted

of the following (in thousands):

Ended December 31,

Current portion:

Federal and state

Deferred portion:

Change in valuation allowance

Provision for income taxes

Deferred income taxes reflect

the net tax effects of temporary differences between the carrying amount of assets and liabilities for financial reporting purposes and

the amounts used for income tax purposes.

Significant components of

the Company’s deferred tax assets and liabilities were (in thousands):

Ended December 31,

Deferred tax assets:

8 unchanged sentences

Net deferred tax assets, net

The $ 3.9 million decrease in the valuation allowance

during 2023 was primarily the result of a decrease to the net operating loss carryforwards for the current year.

The valuation allowance

increased by $ 4.4 million during the year ended December 31, 2022.

Utilization of the Company’s net operating

losses (NOLs) and tax credit carryforwards is subject to a substantial annual limitation due to the ownership change limitations provided

by the Internal Revenue Code (IRC) and similar state provisions.

Section 382 of the IRC (Section 382) imposes limitations on a corporation’s

ability to utilize its NOL and tax credit carryforwards, if it experiences an “ownership change.” In general terms, an ownership

change may result from transactions increasing the ownership percentage of certain stockholders in the stock of the corporation by more

than 50 % over a three-year period.

In the event of an ownership change, utilization of the NOLs would be subject to an annual limitation

under Section 382 determined by multiplying the value of the Company’s stock at the time of the ownership change by the applicable

long-term tax-exempt rate.

While a formal study has not been performed, the Company believes that Section 382 ownership changes occurred

as a result of financing transaction in 2018 and the Arrangement.

The Company believes the Section 382 limitations will result in approximately

91 % of the federal and state NOLs expiring before they can be utilized, and approximately 98 % of the federal tax credit carryforwards

expiring before they can be utilized.

As of December 31, 2023, the Company had NOLs of

approximately $ 212.7 million for federal income tax purposes and approximately $ 131.2 million for state income tax purposes.

Only approximately

$ 18.7 million of the federal NOLs and $ 13.3 million of the state NOLs are expected to be available before expiration due to the Section

382 limitation.

These NOLs are available to reduce future taxable income and will expire at various times from 2025 through 2037, except

federal NOLs from 2018 to 2023 which have no expiration date.

As of December 31, 2023, the Company also had federal research and development

tax credit carryforwards of approximately $ 8.1 million that will expire at various times through 2042, and California research and development

credits of approximately $ 8.5 million, which do not have an expiration date.

Utilization of the Company’s

net operating losses (NOLs) and tax credit carryforwards is subject to a substantial annual limitation due to the ownership change limitations

provided by the Internal Revenue Code (IRC) and similar state provisions.

Section 382 of the IRC (Section 382) imposes limitations

on a corporation’s ability to utilize its NOL and tax credit carryforwards, if it experiences an “ownership change.”

In general terms, an ownership change may result from transactions increasing the ownership percentage of certain stockholders in the

stock of the corporation by more than 50 % over a three-year period.

In the event of an ownership change, utilization of the NOLs would

be subject to an annual limitation under Section 382 determined by multiplying the value of the Company’s stock at the time of the

ownership change by the applicable long-term tax-exempt rate.

While a formal study has not been performed, the Company believes that

Section 382 ownership changes occurred as a result of financing transaction in 2018 and the Arrangement.

The Company believes the Section

382 limitations will result in approximately 91 % of the federal and state NOLs expiring before they can be utilized, and approximately

94 % of the federal tax credit carryforwards expiring before they can be utilized.

As of December 31, 2024, the

Company had NOLs of approximately $ 212.1 million for federal income tax purposes and approximately $ 131.1 million for state income tax

Only approximately $ 18.1 million of the federal NOLs and $ 13.3 million of the state NOLs are expected to be available before

expiration due to the Section 382 limitation.

These NOLs are available to reduce future taxable income and will expire at various times

from 2025 through 2044, except federal NOLs from 2018 and later which have no expiration date.

As of December 31, 2024, the Company also

had federal research and development tax credit carryforwards of approximately $ 8.2 million that will expire at various times through

2044, and California research and development credits of approximately $ 8.5 million, which do not have an expiration date.

A reconciliation of income taxes provided at the

federal statutory rate to the actual income tax provision is as follows (in thousands):

Ended December 31,

Income tax benefit computed at U.S.

statutory rate

Research and development credits

Stock-based compensation

Amortization of intangible assets

Goodwill impairment

Change in fair value of warrant liabilities

1 unchanged sentence

Income tax provision

Stock-Based Compensation

Common Stock Equity Plans

In 2010, the Company adopted the 2010 Equity Incentive

Plan and later amended it in 2014, 2017 and 2018 (the Amended 2010 Plan).

The Amended 2010 Plan was terminated in August 2019 and remains

in effect as to outstanding equity awards granted prior to the date of expiration.

No new awards may be made under the Amended 2010 Plan.

In August 2019, the Company’s stockholders

approved the 2019 Stock Incentive Plan (the 2019 Plan) to replace the Amended 2010 Plan.

The 2019 Plan authorizes the board of directors

or the compensation committee of the board of directors to grant a broad range of awards including stock options, stock appreciation rights,

restricted stock, performance-based awards, and restricted stock units.

Under the 2019 Plan, 4,563 shares were initially reserved for

In November 2021, in connection with the approval of the Arrangement, the Company’s stockholders approved an amendment

increasing the number of shares reserved for issuance under the 2019 Plan by 77,674 shares.

Under the 2019 Plan, the term of all incentive

stock options granted to a person who, at the time of grant, owns stock representing more than 10 % of the voting power of all classes

of the Company’s stock may not exceed five years .

The exercise price of stock options granted under the 2019 Plan must be at least

equal to the fair market value of the shares on the date of grant.

Generally, awards under the 2019 Plan will vest over a three to four-year

period, and options will have a term of 10 years from the date of grant.

In addition, the 2019 Plan provides for automatic acceleration

of vesting for options granted to non-employee directors upon a change of control of the Company.

In connection with the Arrangement, the Company

assumed the Peraso Technologies Inc.

2009 Share Option Plan (the 2009 Plan) and all outstanding options granted pursuant to the terms

of the 2009 Plan.

Each outstanding, unexercised and unexpired option under the 2009 Plan, whether vested or unvested, was assumed by the

Company and converted into options to purchase shares of the Company’s common stock and became exercisable by the holder of such

option in accordance with its terms, with (i) the number of shares of common stock subject to each option multiplied by the Exchange Ratio

and (ii) the per share exercise price upon the exercise of each option divided by the Exchange Ratio.

In connection with the Arrangement,

no further awards will be made under the 2009 Plan.

The 2009 Plan, the Amended 2010 Plan and the 2019

Plan are referred to collectively as the “Plans.”

Stock-Based Compensation Expense

The Company recorded compensation costs of $ 4.2

million and $ 4.3 million related to the vesting of stock options during the years ended December 31, 2023 and 2022, respectively.

31, 2023, the unamortized compensation cost was approximately $ 3.3 million related to stock options and is expected to be recognized as

expense over a weighted average period of approximately two years .

The Company recorded compensation costs of $ 1.0 million and $ 1.4 million

related to the vesting of restricted stock options during the years ended December 31, 2023 and 2022, respectively.

The unamortized compensation

cost at December 31, 2023 was $ 1.0 million related to restricted stock units and is expected to be recognized as expense over a weighted

average period of approximately two years .

Common Stock Options and Restricted Stock

The term of all incentive stock options granted

to a person who, at the time of grant, owns stock representing more than 10 % of the voting power of all classes of the Company’s

stock may not exceed five years.

The exercise price of stock options granted under the 2019 Plan must be at least equal to the fair market

value of the shares on the date of grant.

Generally, options granted under the 2019 Plan will vest over a three to four-year period and

have a term of 10 years from the date of grant.

In addition, the 2019 Plan provides for automatic acceleration of vesting for options

granted to non-employee directors upon a change of control (as defined in the 2019 Plan) of the Company.

The following table summarizes the activity in

the shares available for grant under the Plans during the years ended December 31, 2023 and 2022 and options outstanding as of December

31, 2023 and 2022.

(in thousands, except exercise price):

Options Outstanding

Balance as of December 31, 2021

RSUs cancelled and returned to the Plans

Options cancelled

Balance as of December 31, 2022

RSUs cancelled and returned to the 2019 Plan

Options cancelled

Balance as of December 31, 2023

The following table summarizes significant ranges

of outstanding and exercisable options as of December 31, 2023 (in thousands, except contractual life and exercise price):

Options Outstanding

Options Exercisable

Range of Exercise Price

$ 62.80 - $ 599.60

$ 1,024.00 - $ 5,759.60

$ 5,760.00 - $ 16,399.60

$ 16,400.00 - $ 36,960.00

$ 62.80 - $ 36,960.00

A summary of RSU activity under the Plans is presented

below (in thousands, except for fair value):

Non-vested shares as of December 31, 2021

Effect of business combination

Non-vested shares as of December 31, 2022

Non-vested shares as of December 31, 2023

Stockholders’ Equity

Exchangeable Shares and Preferred Stock

As discussed in Note 1, on December 17, 2021,

following the satisfaction of the closing conditions set forth in the Arrangement Agreement, the Arrangement was completed.

the completion of the Arrangement, each Peraso Share that was issued and outstanding immediately prior to December 17, 2021 was converted

into either newly issued shares of common stock of the Company or shares of Canco, which are exchangeable for shares of the Company’s

common stock (Exchangeable Shares), at the election of each former Peraso Tech stockholder.

Of the shares issued to the holders of Peraso

Tech Shares, pursuant to the terms of the Agreement, the Company held in escrow an aggregate of 1,312,878 Exchangeable Shares and 502,567

shares of common stock (collectively, the Escrow Shares).

The Escrow Shares are escrowed pursuant to the terms of an escrow agreement

on a pro rata basis from the aggregate consideration received by the holders of Peraso Shares, subject to the offset by the Company for

any losses in accordance with the Agreement.

Such Escrow Shares shall be released, subject to any offset claim, upon the satisfaction

of the earlier of:

(a) any date following the first anniversary of December 17, 2021 and prior to December 17, 2024 where the volume weighted

average price of the common stock for any 20 trading days within a period of 30 consecutive trading days is at least $ 342.80 per share,

subject to further adjustment for stock splits or other similar transactions;

(b) the date of any sale of all or substantially all of

the assets or shares of the Company;

or (c) the date of any bankruptcy, insolvency, restructuring, receivership, administration, wind-up,

liquidation, dissolution, or similar event involving the Company.

All and any voting rights and other stockholder rights, other than with

respect to dividends and distributions, with respect to the Escrow Shares are suspended until the Escrow Shares are released from escrow.

The Exchangeable Share structure is commonly used

for cross-border transactions of this nature so as to provide non-tax-exempt Canadian shareholders with the same economic rights and benefits

as holders of the Company’s shares into which the Exchangeable Shares are exchangeable, while allowing those Canadian shareholders

to benefit from the tax-rollover available on the issuance of the Exchangeable Shares.

In general terms, by choosing to acquire Exchangeable

Shares from Canco, such a former Peraso Tech shareholder was able to rely on a rollover rule in the Income Tax Act (Canada) in order to

defer any capital gain that he/she/it would have otherwise realized.

Callco was incorporated to exercise the call rights,

while Canco was incorporated to acquire the shares of Peraso Tech from Canadian shareholders that wished to receive Exchangeable Shares

as consideration, so it was a tax deferred transaction for such Canadian shareholders.

The use of a separate entity, Callco, helps maximize

cross border paid-up capital, which represents the amount that can generally be distributed free of Canadian withholding tax.

rights also allow Callco to “purchase” the Exchangeable Shares rather than having them redeemed by Canco on a redemption or

retraction or in connection with a liquidity event, thus avoiding the adverse deemed dividend tax consequences to shareholders that may

arise from a redemption or retraction of Exchangeable Shares.

Holders of Exchangeable Shares have the right

at any time (the Retraction Right) to retract or redeem any or all of the Exchangeable Shares owned by them for an amount per share equal

to the market price of a share of the Company’s common stock plus the full amount of all declared and unpaid dividends on such Exchangeable

Share (the Exchangeable Share Purchase Price).

The Exchangeable Share Purchase Price is payable only by the Company delivering or causing

to be delivered to the relevant holder one share of the Company’s common stock for each Exchangeable Share purchased plus a cash

amount equal to the amount of any accrued and unpaid dividends on such Exchangeable Share.

The Company and Callco each have an overriding

right, in the event that a holder of Exchangeable Shares exercises its Retraction Right, to redeem from such holder all, but not less

than all, of the Exchangeable Shares tendered for redemption.

The Exchangeable Shares are subject to redemption

by the Company, Callco and Canco at the Exchangeable Share Purchase Price, on the “Redemption Date,” which date shall be no

earlier than the seventh anniversary of the date on which Exchangeable Shares are first issued, unless:

(a) less than 10 % of the aggregate

number of Exchangeable Shares issued remain outstanding;

(b) there is a change in control of the Company (defined generally as (i) any

merger, amalgamation, arrangement, takeover bid or tender offer, material sale of shares or rights or interests that results in the holders

of outstanding voting securities of the Company directly or indirectly owning, or exercising control or direction over, voting securities

representing less than 50 % of the total voting power of all of the voting securities of the surviving entity;

or (ii) any sale or disposition

of all or substantially of the Company’s assets), and (c) upon the occurrence of certain other events.

The Exchangeable Share Purchase

Price is payable only by the Company delivering or causing to be delivered to the relevant holder one share of the Company’s common

stock for each Exchangeable Share purchased plus a cash amount equal to the amount of any accrued and unpaid dividends on such Exchangeable

In the event of the liquidation, dissolution or

winding-up of Canco, holders of Exchangeable Shares have the right to receive in respect of each Exchangeable Share held by such holder,

an amount per share equal to the Exchangeable Share Purchase Price, which shall be satisfied in full by Canco by delivering to such holder

one Company Share, plus an amount equal to the Dividend Amount.

The Company and Callco each have an overriding right to purchase from

all holders all but not less than all of the Exchangeable Shares upon the occurrence of such events.

In addition, the Company and Callco have the right

to purchase all outstanding Exchangeable Shares at the Exchangeable Share Purchase Price if there is a change of law that permits holders

of Exchangeable Shares to exchange their Exchangeable Shares for shares of common stock on a basis that will not require holders to recognize

any gain or loss or any actual or deemed dividend for Canadian tax purposes.

The holders of Exchangeable Shares have an “automatic

exchange right” in the event of any insolvency, liquidation, dissolution or winding-up or in general, related proceedings, of the

Company for an amount per share equal to the Exchangeable Share Purchase Price.

It is expected that Callco will exercise its call

rights, as that is more beneficial to the holders of the Exchangeable Shares.

Once Callco acquires the Exchangeable Shares from a holder,

it (Callco and the Company) is obligated to deliver the Company shares to the holder.

Callco discharges this obligation by arranging for

the Company to issue and deliver those shares to the holders on behalf of Callco.

As consideration for satisfying the delivery obligation,

Callco would issue its own shares to the Company.

There are no cash redemption features, as all

redemption and exchange scenarios are payable in a share of the Company’s common stock.

Neither Canco, Callco, or the Company assume

any tax liabilities of a former Peraso Tech shareholder who acquired Exchangeable Shares under the plan of arrangement.

The purchase price

computed upon the exercise of rights pertaining to retraction, redemption, or liquidation, or otherwise giving rise to a purchase or cancellation

of an Exchangeable Share, will, in all cases, consist of a 1:1 exchange involving the Company’s common stock, regardless of the

market price of a share of the Company’s common stock.

In connection with the Arrangement, on December

15, 2021, the Company filed the Certificate of Designation of Series A Special Voting Preferred Stock (the Certificate) with the Secretary

of State of the State of Delaware to designate Series A Special Voting Preferred Stock (the Special Voting Share) in accordance with the

terms of the Arrangement Agreement in order to enable the holders of Exchangeable Shares to exercise their voting rights.

Voting Share was issued to a third-party administrative agent (the Agent) solely to facilitate the exercise of rights by holders of Exchangeable

The rights of the Agent, as holder of the Special Voting Share, are limited to effecting the rights of the holders of the Exchangeable

As discussed in Note 1, on

December 17, 2021, following the satisfaction of the closing conditions set forth in the Arrangement Agreement, the Arrangement was completed.

Pursuant to the completion of the Arrangement, each Peraso Share that was issued and outstanding immediately prior to December 17, 2021

was converted into either newly issued shares of common stock of the Company or shares of Canco, which are exchangeable for shares of

the Company’s common stock (Exchangeable Shares), at the election of each former Peraso Tech stockholder.

Of the shares issued to

the holders of Peraso Tech Shares, pursuant to the terms of the Agreement, the Company held in escrow an aggregate of 32,822 Exchangeable

Shares and 12,564 shares of common stock (collectively, the Escrow Shares).

The Escrow Shares are escrowed pursuant to the terms of an

escrow agreement on a pro rata basis from the aggregate consideration received by the holders of Peraso Shares, subject to the offset

by the Company for any losses in accordance with the Agreement.

Such Escrow Shares shall be released, subject to any offset claim, upon

the satisfaction of the earlier of:

(a) any date following the first anniversary of December 17, 2021 and prior to December 17, 2024 where

the volume weighted average price of the common stock for any 20 trading days within a period of 30 consecutive trading days is at least

$ 342.80 per share, subject to further adjustment for stock splits or other similar transactions;

(b) the date of any sale of all or substantially

all of the assets or shares of the Company;

or (c) the date of any bankruptcy, insolvency, restructuring, receivership, administration,

wind-up, liquidation, dissolution, or similar event involving the Company.

All and any voting rights and other stockholder rights, other

than with respect to dividends and distributions, with respect to the Escrow Shares are suspended until the Escrow Shares are released

The Exchangeable Share structure

is commonly used for cross-border transactions of this nature so as to provide non-tax-exempt Canadian shareholders with the same economic

rights and benefits as holders of the Company’s shares into which the Exchangeable Shares are exchangeable, while allowing those

Canadian shareholders to benefit from the tax-rollover available on the issuance of the Exchangeable Shares.

In general terms, by choosing

to acquire Exchangeable Shares from Canco, such a former Peraso Tech shareholder was able to rely on a rollover rule in the Income Tax

Act (Canada) in order to defer any capital gain that he/she/it would have otherwise realized.

Callco was incorporated to

exercise the call rights, while Canco was incorporated to acquire the shares of Peraso Tech from Canadian shareholders that wished to

receive Exchangeable Shares as consideration, so it was a tax deferred transaction for such Canadian shareholders.

The use of a separate

entity, Callco, helps maximize cross border paid-up capital, which represents the amount that can generally be distributed free of Canadian

withholding tax.

The call rights also allow Callco to “purchase” the Exchangeable Shares rather than having them redeemed

by Canco on a redemption or retraction or in connection with a liquidity event, thus avoiding the adverse deemed dividend tax consequences

to shareholders that may arise from a redemption or retraction of Exchangeable Shares.

Holders of Exchangeable Shares

have the right at any time (the Retraction Right) to retract or redeem any or all of the Exchangeable Shares owned by them for an amount

per share equal to the market price of a share of the Company’s common stock plus the full amount of all declared and unpaid dividends

on such Exchangeable Share (the Exchangeable Share Purchase Price).

The Exchangeable Share Purchase Price is payable only by the Company

delivering or causing to be delivered to the relevant holder one share of the Company’s common stock for each Exchangeable Share

purchased plus a cash amount equal to the amount of any accrued and unpaid dividends on such Exchangeable Share.

The Company and Callco

each have an overriding right, in the event that a holder of Exchangeable Shares exercises its Retraction Right, to redeem from such holder

all, but not less than all, of the Exchangeable Shares tendered for redemption.

The Exchangeable Shares are

subject to redemption by the Company, Callco and Canco at the Exchangeable Share Purchase Price, on the “Redemption Date,”

which date shall be no earlier than the seventh anniversary of the date on which Exchangeable Shares are first issued, unless:

than 10 % of the aggregate number of Exchangeable Shares issued remain outstanding;

(b) there is a change in control of the Company (defined

generally as (i) any merger, amalgamation, arrangement, takeover bid or tender offer, material sale of shares or rights or interests that

results in the holders of outstanding voting securities of the Company directly or indirectly owning, or exercising control or direction

over, voting securities representing less than 50 % of the total voting power of all of the voting securities of the surviving entity;

or (ii) any sale or disposition of all or substantially of the Company’s assets), and (c) upon the occurrence of certain other events.

The Exchangeable Share Purchase Price is payable only by the Company delivering or causing to be delivered to the relevant holder one

share of the Company’s common stock for each Exchangeable Share purchased plus a cash amount equal to the amount of any accrued

and unpaid dividends on such Exchangeable Share.

In the event of the liquidation,

dissolution or winding-up of Canco, holders of Exchangeable Shares have the right to receive in respect of each Exchangeable Share held

by such holder, an amount per share equal to the Exchangeable Share Purchase Price, which shall be satisfied in full by Canco by delivering

to such holder one Company Share, plus an amount equal to the Dividend Amount.

The Company and Callco each have an overriding right to

purchase from all holders all but not less than all of the Exchangeable Shares upon the occurrence of such events.

In addition, the Company and

Callco have the right to purchase all outstanding Exchangeable Shares at the Exchangeable Share Purchase Price if there is a change of

law that permits holders of Exchangeable Shares to exchange their Exchangeable Shares for shares of common stock on a basis that will

not require holders to recognize any gain or loss or any actual or deemed dividend for Canadian tax purposes.

The holders of Exchangeable

Shares have an “automatic exchange right” in the event of any insolvency, liquidation, dissolution or winding-up or in general,

related proceedings, of the Company for an amount per share equal to the Exchangeable Share Purchase Price.

It is expected that Callco

will exercise its call rights, as that is more beneficial to the holders of the Exchangeable Shares.

Once Callco acquires the Exchangeable

Shares from a holder, it (Callco and the Company) is obligated to deliver the Company shares to the holder.

Callco discharges this obligation

by arranging for the Company to issue and deliver those shares to the holders on behalf of Callco.

As consideration for satisfying the

delivery obligation, Callco would issue its own shares to the Company.

There are no cash redemption

features, as all redemption and exchange scenarios are payable in a share of the Company’s common stock.

Neither Canco, Callco,

or the Company assume any tax liabilities of a former Peraso Tech shareholder who acquired Exchangeable Shares under the plan of arrangement.

The purchase price computed upon the exercise of rights pertaining to retraction, redemption, or liquidation, or otherwise giving rise

to a purchase or cancellation of an Exchangeable Share, will, in all cases, consist of a 1:1 exchange involving the Company’s common

stock, regardless of the market price of a share of the Company’s common stock.

In connection with the Arrangement,

on December 15, 2021, the Company filed the Certificate of Designation of Series A Special Voting Preferred Stock (the Certificate) with

the Secretary of State of the State of Delaware to designate Series A Special Voting Preferred Stock (the Special Voting Share) in accordance

with the terms of the Arrangement Agreement in order to enable the holders of Exchangeable Shares to exercise their voting rights.

Special Voting Share was issued to a third-party administrative agent (the Agent) solely to facilitate the exercise of rights by holders

of Exchangeable Shares.

The rights of the Agent, as holder of the Special Voting Share, are limited to effecting the rights of the holders

of the Exchangeable Shares;

the Special Voting Share does not confer any independent rights to the Agent.

Under the Certificate, when all of the Exchangeable

shares have been converted into shares of the Company’s common stock, the Special Voting Share shall be automatically cancelled

and shall not be reissued.

Each Exchangeable Share is exchangeable for one share of common stock of the Company and while outstanding,

the Special Voting Share enables holders of Exchangeable Shares to cast votes on matters for which holders of the common stock are entitled

to vote, and by virtue of the share terms relating to the Exchangeable Shares, enable the Exchangeable Shares to receive dividends that

are economically equivalent to any dividends declared with respect to the shares of common stock.

As the Special Voting Share does not

participate in dividends (only the Exchangeable Shares participate in dividends) and is not entitled to participate in the residual interest

of the Company, it is not classified as an equity instrument in the Company’s financial statements.

The Exchangeable Shares, which can be converted

into common stock at the option of the holder and have the same voting and dividend rights as common stock, are similar in substance to

shares of common stock.

Further, Canco and Callco are non-substantive entities, which are looked through with the Exchangeable Shares

being, in substance, common stock of the Company.

Therefore, the Exchangeable Shares have been included in the determination of outstanding

common stock.

The Special Voting Share was issued to a third-party administrative agent (the Agent) solely to facilitate the exercise

of rights by holders of Exchangeable Shares, The rights of the Agent, as holder of the Special Voting Share, are limited to effecting

Under the Certificate, when

all of the Exchangeable Shares have been converted into shares of the Company’s common stock, the Special Voting Share shall be

automatically cancelled and shall not be reissued.

Each Exchangeable Share is exchangeable for one share of common stock of the Company

and while outstanding, the Special Voting Share enables holders of Exchangeable Shares to cast votes on matters for which holders of the

common stock are entitled to vote, and by virtue of the share terms relating to the Exchangeable Shares, enable the Exchangeable Shares

to receive dividends that are economically equivalent to any dividends declared with respect to the shares of common stock.

As the Special

Voting Share does not participate in dividends (only the Exchangeable Shares participate in dividends) and is not entitled to participate

in the residual interest of the Company, it is not classified as an equity instrument in the Company’s financial statements.

The Exchangeable Shares, which

can be converted into common stock at the option of the holder and have the same voting and dividend rights as common stock, are similar

in substance to shares of common stock.

Further, Canco and Callco are non-substantive entities, which are looked through with the Exchangeable

Shares being, in substance, common stock of the Company.

Therefore, the Exchangeable Shares have been included in the determination of

outstanding common stock.

The Special Voting Share was issued to a third-party administrative agent (the Agent) solely to facilitate the

exercise of rights by holders of Exchangeable Shares.

The rights of the Agent, as holder of the Special Voting Share, are limited to effecting

the rights of the holders of the Exchangeable Shares;

2 unchanged sentences

Voting Share shall be automatically cancelled and shall not be reissued.

During the years ended December 31, 2023 and 2022,

133 and 5 exchangeable shares were exchanged into an equivalent number of shares of common stock.

During the years ended December

31, 2024 and 2023, 35 and 133 exchangeable shares were exchanged into an equivalent number of shares of common stock.

disclosed in Note 1, effective January 2, 2024, the Company effected a 1-for-40 reverse stock split of its outstanding common stock.

2024 Public Offering

On February 6, 2024, the Company

entered into an underwriting agreement (the Underwriting Agreement) with Ladenburg Thalmann & Co.

(Ladenburg), as the sole underwriter,

relating to the issuance and sale in a public offering (the Offering) of:

(i) 480,000 shares of the Company’s common stock, (ii)

pre-funded warrants to purchase up to 1,424,760 shares of common stock, (iii) Series A warrants to purchase up to 3,809,520 shares of

common stock, (iv) Series B warrants (the Series B Warrants) to purchase up to 3,809,520 shares of common stock, and (v) up to 285,714

additional shares of common stock, Series A warrants to purchase up to 571,428 shares of common stock and Series B Warrants to purchase

up to 571,428 shares of common stock that may be purchased pursuant to a 45-day option to purchase additional securities granted to Ladenburg

by the Company.

Ladenburg partially exercised this option on February 7, 2024 for 82,500 shares of common stock, Series A warrants to

purchase up to 165,000 shares of common stock and Series B Warrants to purchase up to 165,000 shares of common stock.

The combined public

offering price of each share of common stock, together with the accompanying Series A warrants and Series B Warrants, was $ 2.10 , less

underwriting discounts and commissions.

The combined public offering price of each pre-funded warrant, together with the accompanying

Series A warrants and Series B Warrants, was $ 2.099 , less underwriting discounts and commissions.

The Offering, including the additional

shares of common stock, Series A warrants and Series B Warrants sold pursuant to the partial exercise of Ladenburg’s option, closed

on February 8, 2024.

net proceeds from the Offering, including the additional shares of common stock, Series A warrants and Series B Warrants sold pursuant

to the partial exercise of Ladenburg’s option, after deducting underwriting discounts and commissions and other estimated Offering

expenses payable by the Company and excluding any net proceeds from the exercise of the Series A warrants, Series B Warrants and pre-funded

warrants, were approximately $ 3.4 million.

Series A warrants have an exercise price of $ 2.25 , were immediately exercisable upon issuance, and expire on February 8, 2029.

B Warrants had an original exercise price of $ 2.25 per share, were immediately exercisable upon issuance, and expired on November 8, 2024.

The Series B warrants had an initial expiration date of August 8, 2024, which was extended to November 8, 2024 pursuant to amendments

to the Warrant Agency Agreement dated as of February 8, 2024 by and between the Company and the warrant agent, Equiniti Trust Company,

LLC (the Warrant Agency Agreement) (see Note 10).

The pre-funded warrants have an exercise price of $ 0.001 per share, were exercisable

immediately and may be exercised at any time until all of the pre-funded warrants are exercised in full.

As of December 31, 2024, the

holders exercised pre-funded warrants for 1,424,760 shares of common stock.

The exercise price and number of shares of common stock issuable

upon exercise of the warrants is subject to appropriate adjustment in the event of stock dividends, stock splits, reorganizations or similar

events affecting the common stock and the exercise price.

Subject to limited exceptions, a holder may not exercise any portion of its

warrants to the extent that the holder would beneficially own more than 9.99% or 4.99% (at the election of the holder) of the Company’s

outstanding common stock after exercise.

On February 8, 2024, pursuant to the Underwriting Agreement, the Company

paid Ladenburg a cash fee of 9 % of the gross proceeds received from the Offering and issued warrants to Ladenburg to purchase up to 139,108

shares of common stock at an exercise price of $ 2.625 , subject to adjustments, which were exercisable immediately and have substantially

similar terms to the Series A warrants.

June 2024 Private Sale

In June 2024, the Company

entered into a Stock Purchase Agreement (the Purchase Agreement) with a member of the Company’s board of directors, pursuant to

which the Company sold and the board member purchased 100,000 shares (the Shares) of common stock resulting in net proceeds of $ 127,000 .

The Shares sold pursuant to the Purchase Agreement were issued as restricted securities, as defined in Rule 144 of the Securities Act

of 1933, as amended.

Shares Issued for Services

In August 2024, the Company

issued 40,000 unregistered shares of common stock with a fair value of approximately $ 54,400 to a service provider.

On August 30, 2024, the Company entered into an At The Market Offering

Agreement (the Sales Agreement) with Ladenburg with respect to an “at the market”

offering program, under which the Company may, from time to time, in its sole discretion, issue and sell through Ladenburg, acting as

agent or principal, shares of the Company’s common stock initially having an aggregate offering price of up to $ 1,425,000 .

selling $ 169,215 of shares pursuant to the Sales Agreement, on December 10, 2024, the Company increased the maximum aggregate offering

amount of common stock issuable pursuant to the Sales Agreement to $ 2,693,527 .

The Sales Agreement provides that Ladenburg will be entitled

to compensation for its services equal to 3.0 % of the gross proceeds from sales of any shares of common stock pursuant to the Sales

Agreement in addition to the reimbursement of certain expenses.

The Company has no obligation to sell any shares pursuant to the Sales

Agreement and either the Company or Ladenburg may terminate the Sales Agreement in accordance with its terms.

During the year ended December

31, 2024, the Company sold 251,621 shares of common stock for net proceeds of approximately $ 336,000 pursuant to the Sales Agreement.

June 2023 Registered Direct Offering

On May 31, 2023, the Company entered into a securities

purchase agreement (the SPA) with an institutional investor (the Investor), pursuant to which the Company sold to the Investor, in a registered

direct offering that closed on June 2, 2023, an aggregate of 56,250 shares of common stock at a purchase price of $ 28.00 per share.

proceeds to the Company from the registered direct offering, after offering costs, were approximately $ 3.4 million.

The Company also offered

and sold to the Investor pre-funded warrants to purchase up to 86,608 shares of common stock (the 2023 PF Warrants).

Each pre-funded warrant

is exercisable for one share of common stock.

The purchase price of each pre-funded warrant was $ 27.60 , and the exercise price of each

pre-funded warrant is $ 0.40 per share.

The 2023 PF Warrants were immediately exercisable and may be exercised at any time until all of

such pre-funded warrants are exercised in full.

In June 2023, the Investor exercised 24,183 of the 2023 PF Warrants, and in September

2023, the remaining 62,425 of the 2023 PF Warrants were exercised by the Investor .

In connection

with the execution of the SPA, the Company and the Investor entered into an amendment (the Amendment) to the 2022 Purchase Warrant.

to the terms of the Amendment, the 2022 Purchase Warrant (as defined below) was amended to reduce the exercise price per share from $ 54.40

to $ 40.00 , effective as of June 2, 2023.

In a concurrent private placement that closed

on June 2, 2023, the Company also sold to the Investor a warrant to purchase up to 142,858 shares of common stock (the 2023 Purchase Warrant).

On May 31, 2023, the Company

entered into a securities purchase agreement (the SPA) with an institutional investor (the Investor), pursuant to which the Company sold

to the Investor, in a registered direct offering that closed on June 2, 2023, an aggregate of 56,250 shares of common stock at a purchase

price of $ 28.00 per share.

Net proceeds to the Company from the registered direct offering, after offering costs, were approximately $ 3.6

The Company also offered and sold to the Investor pre-funded warrants to purchase up to 86,608 shares of common stock (the 2023

PF Warrants).

Each pre-funded warrant was exercisable for one share of common stock.

The purchase price of each pre-funded warrant was

$ 27.60 , and the exercise price of each pre-funded warrant was $ 0.40 per share.

The 2023 PF Warrants were exercised in full during 2023.

In connection with the execution of the SPA, the Company and the Investor entered into an amendment (the Amendment) to the 2022 Purchase

Pursuant to the terms of the Amendment, the 2022 Purchase Warrant (as defined below) was amended to reduce the exercise price

per share from $ 54.40 to $ 40.00 , effective as of June 2, 2023.

In a concurrent private placement

that closed on June 2, 2023, the Company also sold to the Investor a warrant to purchase up to 142,858 shares of common stock (the 2023

Purchase Warrant).

The 2023 Purchase Warrant was immediately exercisable at an exercise price of $ 28.00 per share with a five-year term.

As discussed below,

the 2023 Purchase Warrant is accounted for as a liability.

The fair value of the warrant at the date of issuance of approximately $ 3,162,000

was accounted for as a cost of the offering.

As discussed below, the 2023 Purchase Warrant is accounted for as a liability.

The fair value of the warrant at the date of issuance of

approximately $ 3,162,000 was accounted for as a cost of the offering.

November 2022 Registered Direct Offering

28, 2022, the Company entered into a securities purchase agreement with the Investor, pursuant to which the Company sold to the Investor,

in a registered direct offering that closed on November 30, 2022, an aggregate of 32,500 shares of common stock at a negotiated

purchase price of $ 40.00 per share.

The Company also offered and sold to the investor pre-funded warrants to purchase up to 28,750 shares

of common stock.

November 28, 2022, the Company entered into a securities purchase agreement with the Investor, pursuant to which the Company sold to the

Investor, in a registered direct offering that closed on November 30, 2022, an aggregate of 32,500 shares of common stock at

a negotiated purchase price of $ 40.00 per share.

The Company also offered and sold to the investor pre-funded warrants to purchase

up to 28,750 shares of common stock.

Each pre-funded warrant was exercisable for one share of common stock.

The purchase price of each pre-funded warrant

was $ 39.60 , and the exercise price of each pre-funded warrant was $ 0.40 per share.

The pre-funded warrants were exercised in full

by the Investor in April 2023.

Net proceeds to the Company from the registered direct offering, after offering costs, were approximately

$ 2.1 million.

In a concurrent

private placement, the Company also sold to the Investor a warrant to purchase up to 91,875 shares of common stock (the 2022

Purchase Warrant).

The 2022 Purchase Warrant became exercisable on May 29, 2023 at an initial exercise price of $ 54.40 per share,

which was subsequently reduced to $ 40.00 per share per the Amendment, and expires on May 29, 2028.

The purchase price

of each pre-funded warrant was $ 39.60 , and the exercise price of each pre-funded warrant was $ 0.40 per share.

The pre-funded warrants

were exercised in full by the Investor in April 2023.

Net proceeds to the Company from the registered direct offering, after offering

costs, were approximately $ 2.1 million.

a concurrent private placement, the Company also sold to the Investor a warrant to purchase up to 91,875 shares of common stock

(the 2022 Purchase Warrant).

The 2022 Purchase Warrant became exercisable on May 29, 2023 at an initial exercise price of $ 54.40 per

share, which was subsequently reduced to $ 40.00 per share per the Amendment, and expires on May 29, 2028.

As discussed below, the

2022 Purchase Warrant is accounted for as a liability.

Warrants Classified as Liability

Purchase Warrants

The securities purchase agreements governing the

2023 Purchase Warrant and the 2022 Purchase Warrant (collectively, the “Purchase Warrants”) provide for a value calculation

Warrant Inducement Offering

On August 6, 2024, the Company

extended the expiration date of the Series B warrants issued in the Offering (the Series B Warrants) to 5:00 p.m.

(New York City time)

on October 7, 2024, by entering into an amendment to the Warrant Agency Agreement dated as of February 8, 2024 by and between the Company

and the warrant agent, Equiniti Trust Company, LLC.

On October 3, 2024, the Company extended the expiration date of the Series B

Warrants to November 8, 2024, by entering into a further amendment to the Warrant Agency Agreement.

The Series B warrants would otherwise

have expired on October 7, 2024.

On November 5, 2024, the Company

entered into inducement offer letter agreements (the Inducement Letters) with certain holders (the Holders) of existing Series B Warrants

(the Existing Warrants) to purchase up to an aggregate of 2,246,030 shares of the Company’s common stock.

Pursuant to the Inducement

Letters, the Holders agreed to exercise for cash their Existing Warrants at a reduced exercise price of $ 1.30 per share (the Reduced Exercised

Price) in consideration for the Company’s agreement to issue in a private placement (i) new Series C common stock purchase warrants

(the Series C Warrants) to purchase an aggregate of 2,246,030 shares of common stock and (ii) new Series D common stock purchase warrants

(the Series D Warrants) to purchase an aggregate of 2,246,030 shares of common stock.

The Series C Warrants have an exercise price of

$ 1.61 per share, were exercisable upon issuance and expire on the six-month anniversary of the date of issuance.

The Series D Warrants

have an exercise price of $ 1.61 per share, were exercisable upon issuance and expire on the five-year anniversary of the date of issuance.

Upon exercise of the Existing

Warrants, the Company issued 1,328,650 shares of its common stock while the remaining 917,380 shares (Issuable Shares) remained under

abeyance, pending issuance instructions from the Holders, pursuant to the terms of the Inducement Letters.

The Company accounted for the

issuance of the:

i) 1,328,650 shares of its common stock, ii) the Series C warrants to purchase 2,246,030 shares of the Company’s

stock, iii) the Series D warrants to purchase 2,246,030 shares of the Company’s stock, and iv) the remaining 917,380 Issuable Shares

as a single equity transaction for gross proceeds of approximately $ 2.92 million at the reduced exercise price of $ 1.30 per share.

of December 31, 2024, the fair value of the unissued 917,380 Issuable Shares of approximately $ 1.2 million has been presented separately

as issuable shares on the consolidated balance sheets and statements of stockholders’ equity.

In relation to the above warrant inducement offering, the Company engaged

Ladenburg as placement agent and paid cash compensation of 9 % of the gross proceeds.

In addition, the Company issued warrants to Ladenburg

to purchase up to 157,223 shares of common stock at an exercise price of $ 1.625 , which were exercisable upon issuance, expire on the five-year

anniversary of the date of issuance, and have substantially similar terms to the Series C Warrants.

Warrants Classified as Liabilities

The securities purchase agreements

governing the 2023 Purchase Warrant and the 2022 Purchase Warrant (collectively, the Purchase Warrants) provide for a value calculation

for such warrants using the Black Scholes model in the event of certain fundamental transactions.

8 unchanged sentences

as liabilities or as equity, is evaluated at the end of each reporting period with changes in the fair value reported in other income

(expense) in the consolidated statements of operations and comprehensive loss.

The 2022 Purchase Warrant was initially recorded at a fair

value at $ 3,673,368 at the grant date and is re-valued at each reporting date.

As of December 31, 2022, the fair value of the warrant

liability was reduced to $ 2,079,138 .

Upon the closing of the registered direct offering, the fair value of the Purchase Warrant liability,

up to the net amounts of the funds received of approximately $ 2,099,000 , was recorded as a financing cost, and the excess of $ 1,576,000

was recorded as a financing cost in the statement of operations.

As a result of the change in fair value the Company recognized a gain

for the reduction in the warrant liability for the year ended December 31, 2023

On June 2, 2023, the 2023 Purchase Warrant was

initially recorded at a fair value at $ 3,162,401 , and, as of December 31, 2023, the fair value of the warrant liability was reduced to

$ 1,095,287 .

As a result, the Company recorded a gain for the twelve months ended December 31, 2023 for the change in fair value of the

2023 Purchase Warrant.

The Company also recorded a gain of $ 1,426,050 for the twelve months ended December 31, 2023 for the change in

the fair value of the warrant liability for the 2022 Purchase Warrant.

As of December 31, 2023, the Company had the following

liability-classified warrants outstanding (amounts in thousands):

Number of warrants

on common shares Amount

(expense) in the consolidated statements of operations.

As of December 31, 2024, the

Company had the following liability-classified warrants outstanding (amounts in thousands):

common shares

Balance as of December 31, 2022

2 unchanged sentences

Balance as of December 31, 2023

Recognition of warrant liabilities 143 3,162

Change in fair value of warrants

Balance as of December 31, 2024

The initial fair value of

each of the Purchase Warrants was determined using the Black Scholes model with the assumptions in the following table.

The outstanding liability-classified warrants had

no intrinsic value at December 31, 2024.

The fair value of the Purchase

Warrants at December 31, 2024 was determined using the Black Scholes model with the assumptions in the following table.

The table also

19 unchanged sentences

Warrants Classified as Equity

As of December 31, 2023, the Company had the following

equity-classified warrants outstanding (share amounts in thousands):

Balance as of December 31, 2022

Warrants expired

As of December 31, 2024, the

Company had the following equity-classified warrants outstanding (share amounts in thousands):

Warrant Type Number of Shares Exercise Price Expiration

Balance as of December 31, 2023 7 $ 28.00 June 2, 2028

Pre-funded warrants issued 1,425 $ 0.001 —

Pre-funded warrants exercised ( 1,425 ) $ 0.001 —

Series A warrants issued 3,975 $ 2.250 February 8, 2029

Series A warrants issued 139 $ 2.625 February 8, 2029

Series B warrants issued 3,974 $ 2.250 November 8, 2024

Series B warrants exercised ( 2,246 ) $ 1.310 —

Series B warrants expired ( 1,728 ) $ 1.310 November 8, 2024

Series C warrants issued 2,246 $ 1.610 May 5, 2025

Series C warrants issued 157 $ 1.625 November 5, 2029

Series D warrants issued 2,246 $ 1.610 November 5, 2029

Balance as of December 31, 2024 8,770

As of December 31, 2022, the Company had the following

equity-classified warrants outstanding (share amounts in thousands):

Number of Shares

Exercise Price

The outstanding equity-classified warrants had

no intrinsic value at December 31, 2024.

Stock-Based Compensation

Common Stock Equity Plans

In 2010, the Company adopted

the 2010 Equity Incentive Plan and later amended it in 2014, 2017 and 2018 (the Amended 2010 Plan).

The Amended 2010 Plan was terminated

in August 2019 and remains in effect as to outstanding equity awards granted prior to the date of expiration.

No new awards may be made

under the Amended 2010 Plan.

In August 2019, the Company’s

stockholders approved the Amended and Restated 2019 Stock Incentive Plan (the 2019 Plan) to replace the Amended 2010 Plan.

The 2019 Plan

authorizes the board of directors or the compensation committee of the board of directors to grant a broad range of awards including stock

options, stock appreciation rights, restricted stock, performance-based awards, and restricted stock units.

Under the 2019 Plan, 4,563

shares were initially reserved for issuance.

In November 2021 and December 2024, the Company’s stockholders approved amendments

increasing the number of shares reserved for issuance under the 2019 Plan by 77,674 and 1,500,000 shares, respectively.

Under the 2019 Plan, the term

of all incentive stock options granted to a person who, at the time of grant, owns stock representing more than 10 % of the voting power

of all classes of the Company’s stock may not exceed five years .

The exercise price of stock options granted under the 2019 Plan

must be at least equal to the fair market value of the shares on the date of grant.

Generally, awards under the 2019 Plan will vest over

a three to four-year period, and options will have a term of 10 years from the date of grant.

In addition, the 2019 Plan provides for

automatic acceleration of vesting for options granted to non-employee directors upon a change of control of the Company.

In connection with the Arrangement,

the Company assumed the Peraso Technologies Inc.

2009 Share Option Plan (the 2009 Plan) and all outstanding options granted pursuant to

the terms of the 2009 Plan.

Each outstanding, unexercised and unexpired option under the 2009 Plan, whether vested or unvested, was assumed

by the Company and converted into options to purchase shares of the Company’s common stock and became exercisable by the holder

of such option in accordance with its terms, with (i) the number of shares of common stock subject to each option multiplied by the Exchange

Ratio and (ii) the per share exercise price upon the exercise of each option divided by the Exchange Ratio.

In connection with the Arrangement,

no further awards will be made under the 2009 Plan.

The 2009 Plan, the Amended

2010 Plan and the 2019 Plan are referred to collectively as the “Plans.”

Stock-Based Compensation Expense

The Company recorded compensation

costs of $ 2.8 million and $ 4.2 million related to the vesting of stock options during the years ended December 31, 2024 and 2023, respectively.

At December 31, 2024, the unamortized compensation cost was approximately $ 0.2 million related to stock options and is expected to be

recognized as expense over a weighted average period of approximately one year .

The Company recorded compensation costs of $ 0.8 million

and $ 1.0 million related to the vesting of restricted stock units during the years ended December 31, 2024 and 2023, respectively.

unamortized compensation cost at December 31, 2024 was $ 0.1 million related to restricted stock units and is expected to be recognized

as expense over a weighted average period of approximately one year .

Common Stock Options and Restricted Stock

The term of all incentive

stock options granted to a person who, at the time of grant, owns stock representing more than 10 % of the voting power of all classes

of the Company’s stock may not exceed five years.

The exercise price of stock options granted under the 2019 Plan must be at least

equal to the fair market value of the shares on the date of grant.

Generally, options granted under the 2019 Plan will vest over a three

to four-year period and have a term of 10 years from the date of grant.

In addition, the 2019 Plan provides for automatic acceleration

of vesting for options granted to non-employee directors upon a change of control (as defined in the 2019 Plan) of the Company.

The following table summarizes

the activity in the shares available for grant under the Plans during the years ended December 31, 2024 and 2023 and options outstanding

as of December 31, 2024 and 2023.

(in thousands, except exercise price):

Options Outstanding

Balance as of December 31, 2022

RSUs cancelled and returned to the 2019 Plan

Options cancelled

Balance as of December 31, 2023

Additional shares authorized under the 2019 Plan

RSUs cancelled and returned to the 2019 Plan

Options cancelled

Balance as of December 31, 2024

The following table summarizes significant ranges

of outstanding and exercisable options as of December 31, 2024 (in thousands, except contractual life and exercise price):

Options Outstanding Options Exercisable

Remaining Weighted Weighted

Contractual Average Average Aggregate

Number Life Exercise Number Exercise Intrinsic

Range of Exercise Price Outstanding (in Years) Price Exercisable Price value

$ 0.00 - $ 62.80 2 4.89 $ 62.80 2 $ 62.80 $ —

$ 62.81 - $ 599.60 28 5.99 $ 110.31 27 $ 110.71 $ —

$ 0.00 - $ 599.60 30 5.90 $ 130.14 29 $ 131.60 $ —

A summary of RSU activity

under the Plans is presented below (in thousands, except for fair value):

Non-vested shares as of December 31, 2022

Effect of business combination

Non-vested shares as of December 31, 2023

Non-vested shares as of December 31, 2024

Related Party Transactions

A family member of one of the Company’s executive

officers is an employee of the Company.

During the years ended December 31, 2023 and 2022, the Company paid approximately $ 111,400 and

$ 101,000 , respectively, to the employee.

The employee’s 2022 compensation included the aggregate

grant date fair value, as determined pursuant to FASB ASC Topic 718, of an RSU awarded in April 2022.

Additionally, a family member

of one of the Company’s executive officers previously served as a consultant to the Company.

During the year ended December 31,

2022, the Company paid approximately $ 162,000 to the consultant family member .

A family member of one of

the Company’s executive officers is an employee of the Company.

During the years ended December 31, 2024 and 2023, the Company paid

approximately $ 113,800 and $ 111,400 , respectively, to the employee.

License and Asset Sale Transaction

On August 5, 2022, the Company entered into a Technology

License and Patent Assignment Agreement (the Intel Agreement) with Intel Corporation (Intel), pursuant to which Intel:

(i) licensed from

the Company, on an exclusive basis, certain software and technology assets related to the Company’s Stellar packet classification

intellectual property, including its graph memory engine technology, and any roadmap variant, in the form existing as of the date of the

Agreement (the Licensed Technology);

(ii) acquired from the Company certain patent applications and patents owned by the Company;

(iii) assumed a professional services agreement, dated March 24, 2020, between Fabulous Inventions AB (Fabulous) and the Company, pursuant

to which, among other things, the Company licensed from Fabulous certain technology incorporated into the Licensed Technology.

As consideration for the Company to enter into

the Agreement, Intel paid the Company $ 3,062,500 in August 2022 and $ 437,500 (the Holdback) in January 2023 upon the satisfaction by the

Company of certain release criteria set forth in the Intel Agreement regarding the Licensed Technology.

The Company determined that the license and asset

sale did not qualify as a sale of a business, but as a sale of a non-financial asset, with the resultant gain recorded as income from

operations in accordance with ASC 610-20, Other Income - Gains and Losses from the Derecognition of Nonfinancial Assets .

the year ended December 31, 2022, the Company recognized a gain of approximately $ 2,600,000 on this transaction, net of transaction

costs, which was recorded as a reduction of operating expenses in the consolidated statements of operations and comprehensive loss.

In January 2023, upon receipt of the Holdback, the Company recognized a gain, net of transaction costs, which was also recorded as a reduction

of operating expenses in the consolidated statements of operations and comprehensive loss.

On August 5, 2022, the Company

entered into a Technology License and Patent Assignment Agreement (the Intel Agreement) with Intel Corporation (Intel), pursuant to which

(i) licensed from the Company, on an exclusive basis, certain software and technology assets related to the Company’s Stellar

packet classification intellectual property, including its graph memory engine technology, and any roadmap variant, in the form existing

as of the date of the Agreement (the Licensed Technology);

(ii) acquired from the Company certain patent applications and patents owned

by the Company;

and (iii) assumed a professional services agreement, dated March 24, 2020, between Fabulous Inventions AB (Fabulous) and

the Company, pursuant to which, among other things, the Company licensed from Fabulous certain technology incorporated into the Licensed

As consideration for the Company

to enter into the Agreement, Intel paid the Company $ 3,062,500 in August 2022 and $ 437,500 (the Holdback) in January 2023 upon the satisfaction

by the Company of certain release criteria set forth in the Intel Agreement regarding the Licensed Technology.

The Company determined that

the license and asset sale did not qualify as a sale of a business, but as a sale of a non-financial asset, with the resultant gain recorded

as income from operations in accordance with ASC 610-20, Other Income - Gains and Losses from the Derecognition of Nonfinancial Assets .

In January 2023, upon receipt of the Holdback, the Company recognized a gain, net of transaction costs, which was recorded as a reduction

of operating expenses in the consolidated statements of operations.

Memory IC Product End-of-Life

Semiconductor Manufacturing Corporation (TSMC) is the sole foundry that manufactures the wafers used to produce the Company’s

memory IC products.

TSMC informed the Company that TSMC is discontinuing the foundry process used to produce wafers, in turn,

necessary to manufacture the Company’s memory ICs.

As a result, in May 2023, the Company informed its customers that the

Company would be initiating an end-of-life (EOL) of its memory IC products.

Through December 31, 2023, the Company had received

non-cancelable purchase orders from customers totaling approximately $ 14,000,000 .

During the period from July 1, 2023 to December

31, 2023 the Company commenced initial shipments of EOL orders and fulfilled approximately $ 3,700,000 of these initial purchase

Based on customer purchase orders in the Company’s backlog, the Company expects to ship additional EOL orders of

approximately $ 10,300,000 over the 12 to 15 month period commencing January 1, 2024.

Semiconductor Manufacturing Corporation (TSMC) is the sole foundry that manufactures the wafers used to produce the Company’s memory

TSMC informed the Company that TSMC is discontinuing the foundry process used to produce wafers, in turn, necessary to manufacture

the Company’s memory ICs.

As a result, in May 2023, the Company initiated an end-of-life (EOL) of its memory IC products.

commenced shipments of EOL orders in 2023.

Based on customer purchase orders in the Company’s backlog at December 31, 2024, the

Company expects to ship final EOL orders of approximately $ 2.3 million during the three months ending March 31, 2025.

Subsequent events

in Note 1, effective January 2, 2024, the Company effected a 1-for-40 reverse stock split of its outstanding common stock.

6, 2024, the Company entered into an underwriting agreement (the “Underwriting Agreement”) with Ladenburg Thalmann & Co.

Inc., as the sole underwriter (the “Underwriter”), relating to the issuance and sale in a public offering (the “Offering”)

(i) 480,000 shares of the Company’s common stock, (ii) pre-funded warrants to purchase up to 1,424,760 shares of common stock,

(iii) Series A warrants to purchase up to 3,809,520 shares of common stock, (iv) Series B warrants to purchase up to 3,809,520 shares

of common stock, and (v) up to 285,714 additional shares of common stock, Series A warrants to purchase up to 571,428 shares of common

stock and Series B warrants to purchase up to 571,428 shares of common stock that may be purchased pursuant to a 45-day option to purchase

additional securities granted to the Underwriter by the Company.

The Underwriter partially exercised this option on February 7, 2024 for

82,500 shares of common stock, Series A warrants to purchase up to 165,000 shares of common stock and Series B warrants to purchase up

to 165,000 shares of common stock.

The combined public offering price of each share of common stock, together with the accompanying Series

A warrants and Series B warrants, was $ 2.10 , less underwriting discounts and commissions.

The combined public offering price of each pre-funded

warrant, together with the accompanying Series A warrants and Series B warrants, was $ 2.099 , less underwriting discounts and commissions.

The Offering,

including the additional shares of common stock, Series A warrants and Series B warrants sold pursuant to the partial exercise of the

Underwriter’s option, closed on February 8, 2024.

The net proceeds

from the Offering, including the additional shares of common stock, Series A warrants and Series B warrants sold pursuant to the partial

exercise of the Underwriter’s option, after deducting underwriting discounts and commissions and other estimated Offering expenses

payable by the Company and excluding any net proceeds from the exercise of the Series A warrants, Series B warrants and pre-funded warrants,

were approximately $ 3.3 million.

A warrants and Series B warrants each have an exercise price of $ 2.25 per share and are immediately exercisable upon issuance.

A warrants expire on the five-year anniversary of the date of issuance and the Series B warrants expire on the six-month anniversary of

the date of issuance.

The pre-funded warrants have an exercise price of $ 0.001 per share, are exercisable immediately and may be exercised

at any time until all of the pre-funded warrants are exercised in full.

Subsequent to the closing of the Offering, as of March 18, 2024,

the holders exercised pre-funded warrants for 1,001,110 shares of common stock.

The exercise price and number of shares of common stock

issuable upon exercise of the warrants is subject to appropriate adjustment in the event of stock dividends, stock splits, reorganizations

or similar events affecting the common stock and the exercise price.

Subject to limited exceptions, a holder may not exercise any portion

of its warrants to the extent that the holder would beneficially own more than 9.99 % or 4.99 % (at the election of the holder) of the Company’s

outstanding common stock after exercise.

On February 8, 2024, pursuant

to the Underwriting Agreement, the Company issued warrants to the Underwriter to purchase up to 139,108 shares of common stock at an exercise

price of $ 2.625 , subject to adjustments, which are exercisable at any time and from time to time, in whole or in part, until February

8, 2029, and have substantially similar terms to the Series A warrants.

of Common Stock under ATM Offering Program

January 2025, the Company sold 327,943 shares of common stock for net proceeds of approximately $ 431,900 pursuant to the Sales Agreement

(see Note 9).

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 9A. Controls and Procedures