What changed in this filing

/stocks — the workspaceLOADING

Item 1A. Risk Factors

2023-03-29 compared with 2022-03-31 · 729 added, 317 removed, 23 unchanged (98% of the section changed)

The following risks could materially and adversely affect our business, financial condition, cash flows, and results of operations, and the trading price of our common stock could decline.

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

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

Due to risks and uncertainties, known and unknown, our past financial results may not be a reliable indicator of future performance, and historical trends should not be used to anticipate results or trends in future periods.

Refer also to the other information set forth in this Annual Report on Form 10-K, including in Part II, Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations” as well as our Consolidated Financial Statements and the related notes in Part II, Item 15.

We may not realize all of the anticipated benefits of the recent business combination.

In December 2021, we completed the Arrangement.

The success of the Arrangement will depend on, among other things, our ability to integrate the businesses of Peraso Tech and MoSys in a timely fashion.

Additionally, we may not be able to successfully achieve the level of cost savings, revenue enhancements and synergies that we expect.

If we are not able to successfully achieve these objectives, the anticipated benefits of the Arrangement may not be realized fully or at all or may take longer to realize than expected.

In addition, failure to successfully integrate the businesses in the expected timeframe may adversely affect our business, financial condition, results of operations or cash flows.

In addition, the combined operation of two businesses may be a complex, costly and time-consuming process.

The difficulties of combining the operations of the companies include, inter ali a :

• the ability of officers and directors to, as required, effectively transfer operational knowledge of

MoSys, especially the production of the MoSys products, to the new management team;

• the diversion of management attention to integration matters;

• difficulties in integrating functions, personnel, and systems;

• difficulties in assimilating employees and in attracting and retaining key personnel;

difficulties in achieving anticipated cost savings, synergies, business opportunities, and growth prospects from the combination;

challenges of managing a larger company following the Arrangement, including challenges of conforming standards, controls, procedures, and accounting and other policies and compensation structures;

• declines in our results of operations, financial condition or cash flows;

• a decline in the market price of our common stock;

• contingent liabilities that are larger than expected;

disruption of existing relationships, with existing customers, business partners, and other constituencies;

• the disruption of, or the loss of momentum in, ongoing research and development, .

Many of these factors are outside our control, and any one of them could result in increased costs, decreased expected revenues and diversion of management time and energy, which could materially impact our business, financial condition, results of operations and cash flows.

These factors could cause our operating results to suffer , decrease or delay the expected benefits of the Arrangement and negatively impact the price of our common stock.

As a result, it cannot be assured that we will realize the full benefits anticipated from the Arrangement within the anticipated time frames, or at all.

Even if the businesses are integrated, there can be no assurance that the Arrangement will result in the realization of the full benefit of the anticipated synergies and cost savings or that these benefits will be realized within the expected time frames or at all.

Difficulties in integrating the businesses could harm our reputation.

In addition, by engaging in the Arrangement, MoSys and Peraso may forego or delay pursuit of other opportunities that may have proven to have greater commercial potential.

We have a history of losses and we may need to raise additional capital in the future.

We recorded a net loss of approximately $10.9 million for the year ended December 31, 2021, and ended the period with an accumulated deficit of approximately $117.1 million.

We recorded a net loss of approximately $15.3 million for the year ended December 31, 2020, and ended the period with an accumulated deficit of approximately $106.3 million.

The following risks could materially and adversely

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

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

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

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

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

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

or trends in future periods.

Refer also to the other information set forth in this Annual Report on Form 10-K, including in Part II, Item

7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations” as well as our Consolidated

Financial Statements and the related notes in Part II, Item 15.

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

Our consolidated financial

statements as of December 31, 2022 have been prepared under the assumption that we will continue as a going concern for the next twelve

As of December 31, 2022, we had cash, cash equivalents and investments of $2.9 million and an accumulated deficit of $149.6 million.

We do not believe that our cash, cash equivalents and investments are sufficient to fund our operations for the next 12 months.

need to increase revenues substantially beyond levels that we have attained in the past in order to generate sustainable operating profit

and sufficient cash flows to continue doing business without raising additional capital from time to time.

As a result of our

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

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

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

If we cannot continue

as a viable entity, our stockholders would likely lose most or all of their investment in us.

If we are unable to generate sustainable operating

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

We are seeking additional financing

and evaluating financing alternatives in order to meet our cash requirements for the next 12 months.

We cannot be certain that raising

additional capital, whether through selling additional debt or equity securities or obtaining a line of credit or other loan, will be

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

If we issue additional securities to raise funds, these securities

may have rights, preferences, or privileges senior to those of our common stock, and our current stockholders may experience dilution.

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

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

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

We recorded net losses of approximately $32.4

million and $10.9 million for the years ended December 31, 2022 and December 31, 2021, and we ended the period with an accumulated deficit

of approximately $149.6 million.

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

To remain competitive and expand our product offerings to customers, we will need to increase revenues substantially beyond levels that we have attained in the past in order to generate sustainable operating profit and sufficient cash flows to continue doing business without raising additional capital from time to time.

Given our history of fluctuating revenues and operating losses, and the challenges we face in securing customers for our products, we cannot be certain that we will be able to achieve and maintain profitability on either a quarterly or annual basis in the future.

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

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

The global outbreak of the coronavirus disease 2019, or COVID-19, was declared a pandemic by the World Health Organization and a national emergency by the U.S.

government in March 2020.

This has negatively affected the world economy, disrupted global supply chains, significantly restricted travel and transportation, resulted in mandated closures and orders to “shelter-in-place” and created significant disruption of the financial markets.

The extent of the impact on our operational and financial performance will depend on future developments, including the duration and spread of the pandemic and related actions U.S.

and foreign government agencies continue to take to prevent disease spread, all of which are uncertain, out of our control and cannot be predicted.

In accordance with applicable U.S.

governmental ordinances generally exempting essential businesses and/or critical infrastructure workforces from mandated closures and orders to “shelter-in-place,” we are operating in support of essential products and services, subject to limitations and requirements in applicable state and county orders.

We have been complying with county and state orders and have implemented a teleworking policy for our employees and contractors and significantly minimized the number of employees who visit our office.

Since the outbreak of COVID-19, while we have experienced increased lead times for wafers, substrates and assembly services, we have experienced minimal impact on our production operations and have been able to satisfy all customer purchase orders timely.

However, a facility closure, work slowdowns or temporary stoppage at one of our manufacturing suppliers could occur, which could have a longer-term impact and could delay our production and ability to conduct business and negatively impact our business, financial condition, operating results and cash flows.

If our workforce is unable to work effectively, including because of illness, quarantines, absenteeism, government actions, facility closures, travel restrictions or other restrictions in connection with the COVID-19 pandemic, our operations will be negatively impacted.

We may be unable to produce and sell our IC products, and our costs may increase as a result of the COVID-19 outbreak.

The impacts could worsen if there is an extended duration of any COVID-19 outbreak or a resurgence of COVID-19 infection in affected regions after they have begun to experience improvement.

The continued spread of COVID-19 has also led to disruption and volatility in the global capital markets.

We may be unable to access the capital markets, and additional capital may only be available to us on terms that could be significantly detrimental to our existing stockholders and to our business.

We are working with our stakeholders, including customers, suppliers and employees, to address the impact of this global pandemic.

We continue to monitor the situation, to assess further possible implications to our business, supply chain and customers, and to take actions in an effort to mitigate adverse consequences.

Should such disruption continue for an extended period of time, or if and when the pandemic ends, the resumption of normal business operations may be delayed or constrained by lingering effects of the pandemic (including limitations imposed by governmental authorities on our ability to return to normal operating practices).

These effects, alone or taken together, could have a material adverse impact on our business, results of operations or financial condition .

Our failure to generate the significant capital necessary or raise additional capital to expand our operations and invest in new products could reduce our ability to compe te and could harm our business.

To remain competitive and

expand our product offerings to customers, we will need to increase revenues substantially beyond levels that we have attained in the

past in order to generate sustainable operating profit and sufficient cash flows to continue doing business without raising additional

capital from time to time.

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

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

in the future.

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

on unfavorable terms.

Our failure to generate the significant capital necessary or

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

We intend to continue spending to grow our business.

If we do not achieve and maintain profitability, we will need additional financing to pursue our business strategy, develop new products, respond to competition and market opportunities and acquire complementary businesses or technologies.

There can be no assurance that such additional capital, whether in the form of debt or equity financing, will be sufficient or available and, if available, that such capital will be offered on terms and conditions acceptable to us.

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

If we engage in debt financing, we may be required to accept terms that restrict our ability to incur additional indebtedness, prohibit us from paying dividends, repurchasing our stock or making investments, and force us to maintain specified liquidity or other ratios, any of which could harm our business, operating results and financial condition.

If we need additional capital and cannot raise it on acceptable terms, we may not be able to, among other things:

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

respond to competition and market opportunities and acquire complementary businesses or technologies.

There can be no assurance that such

additional capital, whether in the form of debt or equity financing, will be sufficient or available and, if available, that such capital

will be offered on terms and conditions acceptable to us.

If we were to raise additional capital through

sales of our equity securities, our stockholders would suffer dilution of their equity ownership.

If we engage in debt financing, we may

be required to accept terms that restrict our ability to incur additional indebtedness, prohibit us from paying dividends, repurchasing

our stock or making investments, and force us to maintain specified liquidity or other ratios, any of which could harm our business, operating

results and financial condition.

If we need additional capital and cannot raise it on acceptable terms, we may not be able to, among other

● develop or enhance our products;

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

● continue to expand our product development and sales and marketing

organizations;

● acquire complementary technologies, products or businesses;

1 unchanged sentence

● hire, train and retain employees;

Respond to competitive pressures or unanticipated working capital requirements.

Our failure to successfully market our products could seriously harm our ability to execute our business strategy and may force us to curtail our research and development plans or existing operations.

Our success depends upon the acceptance by our target markets of our products and technologies by original equipment manufacturers or OEMs.

Our prospective customers may be unwilling to adopt and design-in our products due to the uncertainties and risks surrounding designing a new IC or module and/or incorporating new IP into their systems and relying on a small, sole-sourced supplier.

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

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

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

If a high-profile industry participant adopts our products for one or more of its products but fails to achieve success with those products, or is unable to successfully implement our products, other industry participants’ perception of our solutions could be harmed.

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

Future revenue growth depends on our winning designs with existing and new customers, retaining current customers, and having those customers design our solutions into their product offerings and successfully selling and marketing such products.

If we do not continue to win designs in the short term, our product revenue in the following years will not grow.

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

Our technology is generally incorporated into products at the design stage, which we refer to as a design win, and which we define as the point at which a customer has made a commitment to build a board against a fixed schematic for its system, and this board will utilize our products.

As a result, our future revenue depends on our OEM customers designing our products into their products, and on those products being produced in volume and successfully commercialized.

If we fail to retain our current customers or convince our current or prospective customers to include our products in their products and fail to achieve a consistent number of design wins, our results of operations and business will be harmed.

In addition, if a current or prospective customer designs a competitor’s offering into its product, it becomes significantly more difficult for us to sell our products to that customer because changing suppliers involves significant cost, time, effort and risk for the OEM.

Even if a customer designs one of our ICs or modules into its product, we cannot be assured that the OEM’s product will be commercially successful over time, or at all, or that we will receive or continue to receive any revenue from that customer.

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

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

Our lack of capital and uncertainty about our future technology roadmap also may limit our

success in achieving additional design wins, as discussed under “We may experience difficulties in transitioning to new wafer fabrication process technologies or in achieving higher levels of design integration, which may result in reduced manufacturing yields, delays in product deliveries and increased costs.”

The design win process for our products is generally lengthy, expensive and competitive, with no guarantee of revenue, and, if we fail to generate sufficient revenue to offset our expenses, our business and operating results would suffer.

Achieving a design win for one of our products is typically a lengthy, expensive and competitive process because our customers generally take a considerable amount of time to evaluate our products.

In the markets we serve, the time from initial customer engagement to design win to production volume shipments can range from one to three years, though it may take longer for new customers or markets we intend to address.

In order to win designs, we are required to both incur design and development costs and dedicate substantial engineering resources in pursuit of a single customer opportunity.

Even though we incur these costs we may not prevail in the competitive selection process, and, even if we do achieve a design win, we may never generate sufficient, or any, revenue to offset our development expenditures.

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

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

This occurred in 2018 when a large customer decided to phase out its use of our memory products.

The delays inherent in our protracted sales cycle increase the risk that a customer will decide to cancel, curtail, reduce or delay its product plans, causing us to lose anticipated revenue.

In addition, any change, delay or cancellation of a customer’s plans could harm our financial results, as we may have incurred significant expense while generating no revenue.

If our foundries do not achieve satisfactory yields or quality, our cost of net revenue will increase, our operating margins will decline and our reputation and customer relationships could be harmed.

We depend not only on sufficient foundry manufacturing capacity and wafer prices, but also on good production yields (the number of good die per wafer) and timely wafer delivery to meet customer demand and maintain profit margins.

● respond to competitive pressures or unanticipated working

capital requirements.

Our failure to successfully market our products could seriously

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

Our success depends upon the acceptance by our

target markets of our products and technologies by original equipment manufacturers or OEMs and service providers.

Our prospective customers

may be unwilling to adopt and design-in our products due to the uncertainties and risks surrounding designing a new IC or module and/or

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

Thus, currently, we do not know whether we will

be able to generate adequate profit from making and selling our products and licensing our technologies.

An important part of our strategy to gain market

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

This strategy is designed to encourage

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

If a high-profile industry participant adopts our

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

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

Any such event could reduce the amount of future

sales of our products.

Future revenue growth depends on our winning designs with existing

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

selling and marketing such products.

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

will not grow.

We sell our ICs to customers that include our

ICs and modules in their products.

Our technology is generally incorporated into products at the design stage, which we refer to as a

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

its system, and this board will utilize our products.

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

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

If we fail to retain our current

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

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

In addition, if a current or prospective customer designs

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

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

Even if a customer designs one of our ICs or modules

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

receive or continue to receive any revenue from that customer.

Furthermore, the customer product for which we obtain a design win may

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

Because of our extended sales cycle,

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

Our lack of capital and uncertainty about our future

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

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

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

The design win process for our products is generally lengthy,

expensive and competitive, with no guarantee of revenue, and, if we fail to generate sufficient revenue to offset our expenses, our business

and operating results would suffer.

Achieving a design win for one of our products

is typically a lengthy, expensive and competitive process because our customers generally take a considerable amount of time to evaluate

our products.

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

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

In order to win designs, we are

required to both incur design and development costs and dedicate substantial engineering resources in pursuit of a single customer opportunity.

Even though we incur these costs we may not prevail in the competitive selection process, and, even if we do achieve a design win, we

may never generate sufficient, or any, revenue to offset our development expenditures.

Our customers have the option to decide whether

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

The customer can make changes

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

The delays inherent

in our protracted sales cycle increase the risk that a customer will decide to cancel, curtail, reduce or delay its product plans, causing

us to lose anticipated revenue.

In addition, any change, delay or cancellation of a customer’s plans could harm our financial results,

as we may have incurred significant expense while generating no revenue.

If our foundries do not achieve satisfactory yields or quality,

our cost of net revenue will increase, our operating margins will decline and our reputation and customer relationships could be harmed.

We depend not only on sufficient foundry manufacturing

capacity and wafer prices, but also on good production yields (the number of good die per wafer) and timely wafer delivery to meet customer

demand and maintain profit margins.

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

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

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

Changes in manufacturing processes or the inadvertent use of defective or contaminated materials by our foundries could result in lower than anticipated manufacturing yields, which would harm our revenue or increase our costs.

For example, in the past, one of our foundries produced ICs and met its process specification range but did not meet our customer’s specifications causing us to write off a portion of our production lot.

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

Poor yields from our foundry, or defects, integration issues or other performance problems in our ICs, could cause us significant customer relations and business reputation problems, harm our operating results and give rise to financial or other damages to our customers.

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

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

We may experience difficulties in transitioning to new wafer fabrication process technologies or in achieving higher levels of design integration, which may result in reduced manufacturing yields, delays in product deliveries and increased costs.

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

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

These ongoing efforts require us from time to time to modify the manufacturing processes for our products and to redesign some products, which in turn may result in delays in product deliveries.

Minor deviations in

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

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

Changes in manufacturing processes or the inadvertent

use of defective or contaminated materials by our foundries could result in lower than anticipated manufacturing yields, which would harm

our revenue or increase our costs.

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

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

Many of these problems are

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

Poor yields from

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

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

Our customers might

consequently seek damages from us for their losses.

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

time consuming and costly to defend.

We may experience difficulties in transitioning to new wafer

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

delays in product deliveries and increased costs.

We aim to use the most advanced manufacturing

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

As a result, we periodically evaluate the benefits

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

These ongoing efforts require us from

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

in product deliveries.

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

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

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

For example , our 1T-SRAM technology used in our Accelerator Engine products is not available at process nodes below 40 nanometers.

To date, we have not developed any memory products below the 40-nanometer process node and have no plans to continue the product roadmap for our Accelerator Engine products .

We do not consider this to adversely affect our current product offerings, but our inability to continue our product roadmap can adversely affect, and has in the past affected , our efforts to win new customers for these products , secure additional design wins and grow our future revenues .

If Taiwan Semiconductor Manufacturing, or TSMC, which is the sole foundry for producing our memory ICs were to discontinue the foundry process used to produce our Accelerator Engine products, we would not be in a position to transition production of these products to a new foundry and continue to manufacture our products and this would require us to discontinue production of these products and would negatively impact our future revenues results of operations and cash flows.

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

Our goal has been to increase our total available market by creating high-performance ICs for mmWave, 5G, networking communications, data center systems and other markets using our proprietary technology and design expertise.

Historically, this development effort required that we add headcount and design resources, such as expensive software tools, which increased our losses from, and cash used in, operations.

Due to our limited financial resources, we were unable to sustain our memory IC development efforts and curtailed them in 2017.

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

Such production

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

If the foundry elects to not alter their process technology to

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

For example, our 1T-SRAM technology used in our

Accelerator Engine products is not available at process nodes below 40 nanometers.

To date, we have not developed any memory products

below the 40-nanometer process node and have no plans to continue the product roadmap for our Accelerator Engine products.

We do not consider

this to adversely affect our current product offerings, but our inability to continue our product roadmap can adversely affect, and has

in the past affected, our efforts to win new customers for these products, secure additional design wins and grow our future revenues.

If Taiwan Semiconductor Manufacturing, or TSMC,

which is the sole foundry for producing our memory ICs were to discontinue the foundry process used to produce our Accelerator Engine

products, we would not be in a position to transition production of these products to a new foundry and continue to manufacture our products.

This would require us to discontinue production of these products and would negatively impact our future revenues, results of operations

and cash flows.

To date, we have not achieved the anticipated benefits of a fabless

semiconductor company.

Our primary goal has been to increase our total

available market by creating high-performance ICs and modules for mmWave applications using our proprietary technology and design expertise.

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

our losses from, and cash used in, operations.

Our efforts to increase our revenue and expand our markets have been subject to various

risks and uncertainties, including, but not limited to:

● a lack of working capital;

● customer acceptance;

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

● difficulties and delays in our product development, manufacturing,

testing and marketing activities;

● timeliness of new product introductions;

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

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

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

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

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

competition from established IC suppliers;

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

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

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

If we experience significant delays in bringing our IC products to market, if customer adoption of our products is delayed or if our customers’ products that include our IC products are not successful, this could have a material adverse effect on our anticipated revenues in upcoming years due to the potential loss of design wins and future revenues.

Our main objective is the development and sale of our technologies to cloud networking, security, test and video system providers and their subsystem and component vendors and, if demand for these products does not grow, we may not achieve revenue growth and our strategic objectives.

We market and sell our ICs and IP to mmWave, 5G,cloud networking, communications, data center and other equipment providers and their subsystem and component vendors.

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

To meet our growth and strategic objectives, networking infrastructure OEMs must incorporate our products into their systems and the demand for their systems must grow as well.

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

Our future revenues from these products may not increase in accordance with our growth and strategic objectives if, instead, our OEM customers modify their product designs, select products sold by our competitors or develop their own proprietary technologies.

Moreover, demand for their products that incorporate our technologies may not grow or result in significant sales of such products due to factors affecting the customers and their business such as industry downturns, declines in capital spending in the enterprise and carrier markets or unfavorable macroeconomic conditions.

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

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

The existing and potential markets for our products are characterized by ever-increasing performance requirements, evolving industry standards, rapid technological change and product obsolescence.

These characteristics lead to periodic changes in customer requirements, shorter product life cycles and changes in industry demands and mandate new product introductions and enhancements to maintain customer engagements and design wins.

In order to attain and maintain a significant position in the market, we will need to continue to enhance and evolve our products and the underlying proprietary technologies in anticipation of these market trends although we do not have a large engineering staff.

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

identify target markets and relevant emerging technological trends;

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

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

develop and establish a market for our VAE products;

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

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

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

Our ICs have a lengthy sales cycle, ranging from six to 24 months from the date of our initial proposal to a prospective customer until the date on which the customer confirms that it has designed our product into its system.

An even lengthier period could ensue before we would know the volume of products that such customer will, or is likely to, order.

A number of factors can contribute to the length of the sales cycle including technical evaluations of our products by the customers, the design process required to integrate our products into the customers’ products and the timing of the customers’ new product announcements.

In anticipation of product orders, we may incur substantial costs before the sales cycle is complete and before we receive any customer payments.

As a result, in the event that a sale is not completed or is cancelled or delayed, we may have incurred substantial expenses, making it more difficult for us to become profitable or otherwise negatively impacting our financial results.

Furthermore, because of this lengthy sales cycle, the recording of revenues from our selling efforts may be substantially delayed, our ability to forecast our future revenue may be more limited and our revenue may fluctuate significantly from quarter to quarter.

● the anticipated costs and technological risks of developing

and bringing our products to market;

● the willingness of our manufacturing partners to assist successfully

with fabrication;

● our ability to qualify our products for mass production and

achieve wafer yield levels and the final test results necessary to be price competitive;

● the availability of quantities of our products supplied by

our manufacturing partners at a competitive cost;

● our ability to generate the desired gross margin percentages

and return on our product development investment;

● competition from established competitors;

● the adequacy of our IP protection for our proprietary IC designs

and technologies;

● customer concerns over our financial condition and viability

to be a long-term profitable supplier;

● the vigor and growth of markets served by our current and

prospective customers.

If we experience significant delays in bringing

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

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

of design wins and future revenues.

Our main objective is the development and sale of our technologies

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

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

We market and sell our products and technology

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

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

To meet our growth and

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

must grow as well.

We cannot provide assurance that sales of our products to these OEMs will increase substantially in the future or that

the demand for our customers’ systems will increase.

Our future revenues from these products may not increase in accordance with

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

or develop their own proprietary technologies.

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

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

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

Thus, the future success of our business

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

Our failure to continue to develop new products and enhance our

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

The existing and potential markets for our products

are characterized by ever-increasing performance requirements, evolving industry standards, rapid technological change and product obsolescence.

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

mandate new product introductions and enhancements to maintain customer engagements and design wins.

In order to attain and maintain a

significant position in the market, we will need to continue to enhance and evolve our products and the underlying proprietary technologies

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

Our future performance depends on a number of

factors, including our ability to:

● identify target markets and relevant emerging technological

● develop and maintain competitive technology by improving performance

and adding innovative features that differentiate our products from alternative technologies;

● enable the incorporation of our products into customers’

products on a timely basis and at competitive prices;

● respond effectively to new technological developments or new

product introductions by others.

Our failure to enhance our existing products and

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

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

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

Our products have a lengthy sales cycle, ranging

from six to 24 months from the date of our initial proposal to a prospective customer until the date on which the customer confirms that

it has designed our product into its system.

An even lengthier period could ensue before we would know the volume of products that such

customer will, or is likely to, order.

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

of our products by the customers, the design process required to integrate our products into the customers’ products and the timing

of the customers’ new product announcements.

In anticipation of product orders, we may incur substantial costs before the sales

cycle is complete and before we receive any customer payments.

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

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

our financial results.

Furthermore, because of this lengthy sales cycle, the recording of revenues from our selling efforts may be substantially

delayed, our ability to forecast our future revenue may be more limited and our revenue may fluctuate significantly from quarter to quarter.

We cannot provide any assurances that our efforts to build a strong and profitable business based on the sale of ICs will succeed.

If these efforts are not successful, in light of the substantial resources that we have invested, our future operating results and cash flows could be materially and adversely affected.

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

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

To respond to any downturn, many semiconductor manufacturers and their customers will slow their research and development activities, cancel or delay new product developments, reduce their workforces and inventories and take a cautious approach to acquiring new equipment and technologies.

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

these efforts are not successful, in light of the substantial resources that we have invested, our future operating results and cash flows

could be materially and adversely affected.

The semiconductor industry is cyclical in nature and subject

to periodic downturns, which can negatively affect our revenue.

The semiconductor industry is cyclical and has

experienced pronounced downturns for sustained periods of up to several years.

To respond to any downturn, many semiconductor manufacturers

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

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

As a result, our business has been in the past

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

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

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

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

For the year ended December 31, 2021, our three largest customers represented approximately 81% of total revenue.

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

As a result of this revenue concentration, our results of operations could be adversely affected by the decision of a single key customer to cease using our technology or products or by a decline in the number of products that incorporate our technology that are sold by a single licensee or customer or by a small group of licensees or customers.

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

We might also face credit risks associated with the concentration of our revenue among a small number of licensees and customers.

At December 31, 2021, four customers represented approximately 92% of total trade receivables.

Our failure to collect receivables from any customer that represents a large percentage of receivables on a timely basis, or at all, could adversely affect our cash flow or results of operations.

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

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

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

If defects and failures occur in our products during the design phase or after, we could experience lost revenues, increased costs, including warranty and customer support expenses and penalties for non-performance stipulated in customer purchase agreements, delays in or cancellations or rescheduling of orders or shipments, product returns or discounts, diversion of management resources or damage to

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

In addition, delays in our ability to fill product orders as a result of quality control issues may negatively impact our relationship with our customers.

We cannot assure you that we will have sufficient resources to satisfy any asserted claims.

Furthermore, any such defects, failures or delays may be particularly damaging to us as we attempt to establish our reputation as a reliable provider of IC and module products.

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

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

Therefore, we will rely on estimated demand forecasts, based upon input from our customers, to determine how much product to manufacture.

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

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

In addition, the product design cycle for networking OEMs is lengthy and it may be difficult for us to accurately anticipate when they will commence commercial shipments of products that include our ICs or modules.

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

Any cancellation, delay or other modification in our customers’ orders could significantly reduce our revenue, cause our operating results to fluctuate from period to period and make it more difficult for us to predict our revenue.

In the event of a cancellation or reduction of an order, we may not have enough time to reduce operating expenses to mitigate the effect of the lost revenue on our business.

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

Conversely, if we underestimate customer demand or if sufficient manufacturing and testing capacity are unavailable, we would forego revenue opportunities and could lose market share in the markets served by our products and could incur penalty payments under our customer purchase agreements.

In addition, our inability to meet customer requirements for our products could lead to delays in product shipments, force customers to identify alternative sources and otherwise adversely affect our ongoing relationships with our customers.

We depend on contract manufacturers for a significant portion of our revenue from the sale of our products.

Many of our current and prospective OEM customers use third party contract manufacturers to manufacture their systems and these contract manufacturers purchase our products directly from us on behalf of the OEMs.

Although we expect to work with our OEM customers in the design and development phases of their systems, these OEMs often give contract manufacturers some authority in product purchasing decisions.

If we cannot compete effectively for the business of these contract manufacturers, or if any of the contract manufacturers that work with our OEM customers experience financial or other difficulties in their businesses, our revenue and our business could be adversely affected.

For example, if a contract manufacturer becomes subject to bankruptcy proceedings, we may not be able to obtain our products held by the contract manufacturer or recover payments owed to us by the contract manufacturer for products already delivered to the contract manufacturer.

If we are unable to persuade contract manufacturers to purchase our products, or if the contract manufacturers are unable to deliver systems with our products to OEMs on a timely basis, our business would be adversely affected.

We rely on independent foundries and contractors for the manufacture, assembly, testing and packaging of our integrated circuits and modules, and the failure of any of these third parties to deliver products or otherwise perform as requested could damage our relationships with our customers and harm our sales and financial results.

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

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

We do not have long-term supply contracts with any of our suppliers or manufacturing service providers, and therefore they are not obligated to manufacture products for us for any specific period, in any specific quantity or at any specified price except as may be provided in a particular purchase order.

Any problems with our manufacturing supply chain, including disruptions due to the COVID-19 global pandemic, could adversely impact our ability to ship our products to our customers on time and in the quantity required which in turn could damage our customer relationships and impede market acceptance of our IC solutions.

Our third-party wafer foundr y and testing and assembly vendors are located in regions at high risk for earthquakes and other natural disasters and adverse consequences related to the outbreak of contagious diseases such as COVID-19 .

Any disruption to the operations of these foundries and vendors resulting from earthquakes or other natural disasters could cause significant delays in the development, production, shipment and sales of our IC products.

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

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

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

The occurrence of earthquakes or other natural disasters could result in the disruption of the wafer foundry or assembly and test capacity of the third parties that supply these services to us and may impede our research and development efforts as well as our ability to market and sell our products.

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

The COVID-19 global pandemic, along with outbreaks of new contagious diseases or the resurgence of existing diseases that significantly affect the Asia-Pacific region could disrupt the operations of our key suppliers and manufacturing partners.

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

We may experience disruptions in our global semiconductor supply chain, with suppliers increasing lead times or placing products on allocation, including procuring necessary components, wafers, substrates and assembly services in a timely fashion.

As a result of these potential supply chain disruptions, we may be required to increase customer order lead times and placed some products on allocation.

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

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

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

Finding and qualifying alternate or additional suppliers in response to increased pricing from suppliers can be a lengthy process and can lead to production delays or additional costs, and such alternatives are sometimes not available.

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

Any claim that our products or technology infringe third party IP rights could increase our costs of operation and distract management and could result in expensive settlement costs or the discontinuance of our technology licensing or product offerings.

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

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

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

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

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

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

Litigation against us can result in significant expense and divert the efforts of our technical and management personnel whether or not the litigation has merit or results in a determination adverse to us.

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

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

Many of our agreements with customers include provisions waiving implied warranties regarding our technology and products and limiting our liability to our customers.

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

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

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

Our licensees’ products utilize our embedded memory and/or interface technology and a large number of companies manufacture and market these products.

Because of these factors, policing the unauthorized use of our IP is difficult and expensive.

We cannot be certain that we will be able to detect unauthorized use of our technology or prevent other parties from designing and marketing unauthorized products based on our technology.

In the event we identify any past or present infringement of our patents, copyrights or trademarks, or any violation of our trade secrets, confidentiality procedures or licensing agreements, we cannot assure you that the steps taken by us to protect our proprietary information will be adequate to prevent misappropriation of our technology.

Our inability to adequately protect our IP would reduce significantly the barriers of entry for directly competing technologies and could reduce the value of our technology.

Furthermore, we might initiate claims or litigation against third parties for infringement of our proprietary rights or to establish the validity of our proprietary rights.

Litigation by us could result in significant expense and divert the efforts of our technical and management personnel whether or not such litigation results in a determination favorable to us.

Our existing patents might not provide us with sufficient protection of our IP, and our patent applications might not result in the issuance of patents, either of which could reduce the value of our core technology and harm our business.

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

We cannot be sure that any patents will be issued from any of our pending applications or that any claims allowed from pending applications will be of sufficient scope or strength, or issued in all countries where our products can be sold, to provide meaningful protection or any commercial advantage to us.

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

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

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

The loss of key personnel could negatively impact our technology development efforts, our ability to deliver products under our existing agreements, maintain strategic relationships with our partners and obtain new customers.

We generally have not entered into employment or non-competition agreements with any of our employees and do not maintain key-man life insurance on the lives of any of our key personnel.

Our ability to utilize our net operating loss carryforwards is limited as a result of an “ownership change,” as defined in Section 382 of the Internal Re venue Code of 1986, as amended.

As of December 31, 2021, we had over $100.0 million of net operating loss, or NOL, carryforwards for U.S.

Our revenue has been highly concentrated among a small number

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

Our overall revenue has been highly concentrated,

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

For the year ended December 31, 2022, our three largest

customers represented approximately 74% of total revenue.

We expect that a relatively small number of customers will continue to account

for a substantial portion of our revenue for the foreseeable future.

As a result of this revenue concentration, our

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

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

of licensees or customers.

Our revenue concentration may also pose credit risks which could

negatively affect our cash flow and financial condition.

We might also face credit risks associated with

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

At December 31, 2022, four customers represented approximately

79% of total trade receivables.

Our failure to collect receivables from any customer that represents a large percentage of receivables

on a timely basis, or at all, could adversely affect our cash flow or results of operations.

Our products must meet exact specifications and defects and failures

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

Our customers generally establish demanding specifications

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

However, our products are highly complex and may contain defects

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

If defects and failures occur in our products during the

design phase or after, we could experience lost revenues, increased costs, including warranty and customer support expenses and penalties

for non-performance stipulated in customer purchase agreements, delays in or cancellations or rescheduling of orders or shipments, product

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

damages, any of which would harm our operating results.

In addition, delays in our ability to fill product orders as a result of quality

control issues may negatively impact our relationship with our customers.

We cannot assure you that we will have sufficient resources

to satisfy any asserted claims.

Furthermore, any such defects, failures or delays may be particularly damaging to us as we attempt to

establish our reputation as a reliable provider of IC and module products.

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

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

We sell our products pursuant to individual purchase

orders rather than long-term purchase commitments.

Therefore, we will rely on estimated demand forecasts, based upon input from our customers,

to determine how much product to manufacture.

Because our sales are based primarily on purchase orders, our customers may cancel, delay

or otherwise modify their purchase commitments with little or no notice to us.

For these reasons, we will generally have limited visibility

regarding our customers’ product needs.

In addition, the product design cycle for our customers can be lengthy and it may be difficult

for us to accurately anticipate when they will commence commercial shipments of products that include our ICs or modules.

Furthermore, if we experience substantial warranty

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

Any cancellation, delay or other modification in our

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

it more difficult for us to predict our revenue.

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

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

If we overestimate customer demand for our products,

we may purchase products from our manufacturers that we cannot sell.

Conversely, if we underestimate customer demand or if sufficient

manufacturing and testing capacity are unavailable, we would forego revenue opportunities and could lose market share in the markets served

by our products and could incur penalty payments under our customer purchase agreements.

In addition, our inability to meet customer requirements

for our products could lead to delays in product shipments, force customers to identify alternative sources and otherwise adversely affect

our ongoing relationships with our customers.

We depend on contract manufacturers for a significant portion

of our revenue from the sale of our products.

Many of our current and prospective OEM customers

use third party contract manufacturers to manufacture their systems and these contract manufacturers purchase our products directly from

us on behalf of the OEMs.

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

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

If we cannot compete effectively for the business

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

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

For example, if a contract manufacturer becomes

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

to us by the contract manufacturer for products already delivered to the contract manufacturer.

If we are unable to persuade contract

manufacturers to purchase our products, or if the contract manufacturers are unable to deliver systems with our products to OEMs on a

timely basis, our business would be adversely affected.

We rely on independent foundries and contractors for the manufacture,

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

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

As a fabless semiconductor company, we rely on

third parties for substantially all of our manufacturing operations.

We depend on these parties to supply us with material in a timely

manner that meets our standards for yield, cost and quality.

We do not have long-term supply contracts with any of our suppliers or manufacturing

service providers, and therefore they are not obligated to manufacture products for us for any specific period, in any specific quantity

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

Any problems with our manufacturing supply chain,

including disruptions due to the COVID-19 global pandemic, could adversely impact our ability to ship our products to our customers on

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

Our third-party wafer foundry and testing and assembly vendors

are located in regions at high risk for earthquakes and other natural disasters and adverse consequences related to the outbreak

of contagious diseases such as COVID-19.

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

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

Certain vendors that we utilize to manufacture

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

Our vendors that provide substrates and wafer sorting

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

The risk of an earthquake

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

The occurrence of earthquakes or other

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

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

be able to obtain alternate capacity on favorable terms, if at all.

The COVID-19 global pandemic, along with outbreaks

of new contagious diseases or the resurgence of existing diseases that significantly affect the Asia-Pacific region could disrupt the

operations of our key suppliers and manufacturing partners.

Disruptions in our supply chain due to shortages in the global

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

We have and may continue to experience disruptions

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

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

As a result of these supply chain disruptions, we

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

We may be unable to satisfy all of

the demand for our products, which may adversely affect customer relationships and impact revenue.

Price increases from our supply chain can adversely impact revenue

or reduce margins.

Our suppliers can increase the price of products

and services provided to us.

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

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

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

Any claim that our products or technology infringe third party

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

of our technology licensing or product offerings.

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

our profitability.

The semiconductor industry is characterized by

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

aware of any third party IP that our products or technology would infringe.

However, like many companies of our size with limited resources,

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

It is possible that a third party now has, or may in the

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

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

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

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

The discovery of defects in our technology and products could

expose us to liability for damages.

The discovery of a defect in our technologies

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

Many of our agreements with customers include provisions waiving implied

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

We cannot be certain, however, that the

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

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

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

Our technology is complex and is intended for

use in complex systems.

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

number of companies manufacture and market these products.

Because of these factors, policing the unauthorized use of our IP is difficult

and expensive.

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

and marketing unauthorized products based on our technology.

In the event we identify any past or present infringement of our patents,

copyrights or trademarks, or any violation of our trade secrets, confidentiality procedures or licensing agreements, we cannot assure

you that the steps taken by us to protect our proprietary information will be adequate to prevent misappropriation of our technology.

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

reduce the value of our technology.

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

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

Litigation by us could result in significant expense and divert

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

Our existing patents might not provide us with sufficient protection

of our IP, and our patent applications might not result in the issuance of patents, either of which could reduce the value of our core

technology and harm our business.

We rely on a combination of patents, trademarks,

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

We cannot be sure that any patents will be issued from any

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

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

Failure of our patents

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

If our intangible assets become impaired,

we would be required to record a charge to earnings.

We review our intangible

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

the carrying value may not be recoverable.

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

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

We would be required to record an impairment charge

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

our results of operations.

If we fail to retain key personnel, our business and growth could

be negatively affected.

Our business has been dependent to a significant

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

The loss of key personnel could negatively impact

our technology development efforts, our ability to deliver products under our existing agreements, maintain strategic relationships with

our partners and obtain new customers.

We generally have not entered into employment or non-competition agreements with any of our employees

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

Our ability to utilize our net operating loss carryforwards is

limited as a result of an “ownership change,” as defined in Section 382 of the Internal Revenue Code of 1986, as amended.

As of December 31, 2022, we had over $238 million

of net operating loss, or NOL, carryforwards for U.S.

federal tax purposes.

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

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

Our California NOL carryforwards (and certain related tax credits) generally may be used to offset future state taxable income for 20 years from the year in which the losses are generated, depending on the state, after which time they will expire.

The rate at which we can utilize our NOL carryforwards is limited (which could result in NOL carryforwards expiring prior to their use) each time we experience an “ownership change,” as determined under Section 382 of the Internal Revenue Code.

A Section 382 ownership change generally occurs if a shareholder or a group of shareholders who are deemed to own at least 5% of our common stock increase their ownership by more than 50 percentage points over their lowest ownership percentage within a rolling three-year period.

If an ownership change occurs, Section 382 generally would impose an annual limit on the amount of post-ownership change taxable income that may be offset with pre-ownership change NOL carryforwards equal to the product of the total value of our outstanding equity immediately prior to the ownership change (reduced by certain items specified in Section 382) and the U.S.

federal income tax law, we generally can use our

NOL carryforwards (and certain related tax credits) to offset ordinary taxable income, thereby reducing our U.S.

federal income tax liability,

for up to 20 years from the year in which the losses were generated, after which time they will expire.

Our California NOL carryforwards

(and certain related tax credits) generally may be used to offset future state taxable income for 20 years from the year in which the

losses are generated, depending on the state, after which time they will expire.

The rate at which we can utilize our NOL carryforwards

is limited (which could result in NOL carryforwards expiring prior to their use) each time we experience an “ownership change,”

as determined under Section 382 of the Internal Revenue Code.

A Section 382 ownership change generally occurs if a shareholder or a group

of shareholders who are deemed to own at least 5% of our common stock increase their ownership by more than 50 percentage points over

their lowest ownership percentage within a rolling three-year period.

If an ownership change occurs, Section 382 generally would impose

an annual limit on the amount of post-ownership change taxable income that may be offset with pre-ownership change NOL carryforwards equal

to the product of the total value of our outstanding equity immediately prior to the ownership change (reduced by certain items specified

in Section 382) and the U.S.

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

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

While the complexity of Section 382 makes it difficult to determine whether and when an ownership change has occurred, and a formal study has not been performed, we believe that a Section 382 ownership change occurred as a result of a financing effected in October 2018.

The Company believes this Section 382 limitation will result in substantially all of our federal and state NOLs federal tax credit carryforwards incurred prior to October 2018 expiring before they can be utilized.

An additional ownership change may occur upon the consummation of this offering.

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

Existing and future Section 382 limitations and our inability to generate enough taxable income in the future could result in a substantial portion of our NOL carryforwards expiring before they are used.

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

Acquisitions or other business combinations that we pursue in the future, whether or not consummated, could result in other operating and financial difficulties.

In the future we may seek to acquire additional product lines, technologies or businesses in an effort to increase our growth, enhance our ability to compete, complement our product offerings, enter new and adjacent markets, obtain access to additional technical resources, enhance our IP rights or pursue other competitive opportunities.

If we seek acquisitions or other business combinations, we may not be able to identify suitable candidates at prices we consider appropriate.

We cannot readily predict the timing or size of our future acquisitions or combinations, or the success of any such transactions.

To the extent that we consummate acquisitions, combinations or investments, we may face financial risks as a result, including increased costs associated with merged or acquired operations, increased indebtedness, economic dilution to gross and operating profit and earnings per share, or unanticipated costs and liabilities.

A number of special

and complex rules apply in calculating this Section 382 limitation.

While the complexity of Section 382 makes it difficult to determine

whether and when an ownership change has occurred, and a formal study has not been performed, we believe that a Section 382 ownership

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

The Company believes this Section 382 limitation

will result in substantially all of our federal and state NOLs federal tax credit carryforwards incurred prior to December 2021 expiring

before they can be utilized.

In addition, our ability to use our NOL carryforwards will be limited to the extent we fail to generate enough

taxable income in the future before they expire.

Existing and future Section 382 limitations and our inability to generate enough taxable

income in the future could result in a substantial portion of our NOL carryforwards expiring before they are used.

We have recorded a

full valuation allowance for our deferred tax assets.

Acquisitions or other business combinations that we pursue in

the future, whether or not consummated, could result in other operating and financial difficulties.

In the future we may seek to acquire additional

product lines, technologies or businesses in an effort to increase our growth, enhance our ability to compete, complement our product

offerings, enter new and adjacent markets, obtain access to additional technical resources, enhance our IP rights or pursue other competitive

opportunities.

If we seek acquisitions or other business combinations, we may not be able to identify suitable candidates at prices we

consider appropriate.

We cannot readily predict the timing or size of our future acquisitions or combinations, or the success of any such

transactions.

To the extent that we consummate acquisitions,

combinations or investments, we may face financial risks as a result, including increased costs associated with merged or acquired operations,

increased indebtedness, economic dilution to gross and operating profit and earnings per share, or unanticipated costs and liabilities.

Acquisitions may involve additional risks, including:

the acquired product lines, technologies or businesses may not improve our financial and strategic position as planned;

we may determine we have overpaid for the product lines, technologies or businesses, or that the economic conditions underlying our acquisition have changed;

we may have difficulty integrating the operations and personnel of the acquired company;

we may have difficulty retaining the employees with the technical skills needed to enhance and provide services with respect to the acquired product lines or technologies;

the acquisition may be viewed negatively by customers, employees, suppliers, financial markets or investors;

we may have difficulty incorporating the acquired product lines or technologies with our existing technologies;

we may encounter a competitive response, including price competition or IP litigation;

we may become a party to product liability or IP infringement claims as a result of our sale of the acquired company’s products;

we may incur one-time charges, such as for acquired in-process research and development costs, and restructuring charges;

we may acquire goodwill and other intangible assets that are subject to impairment tests, which could result in future impairment charges;

our ongoing business and management’s attention may be disrupted or diverted by transition or integration issues and the complexity of managing geographically or culturally diverse enterprises;

our due diligence process may fail to identify significant existing issues with the target business.

From time to time, we may enter into negotiations for acquisitions or investments that are not ultimately consummated.

These negotiations could result in significant diversion of management time, as well as substantial out-of-pocket costs, any of which could have a material adverse effect on our business, operating results and financial condition.

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

Various provisions of our certificate of incorporation and bylaws might have the effect of making it more difficult for a third party to acquire, or discouraging a third party from attempting to acquire, control of our company.

These provisions could limit the price that certain investors might be willing to pay in the future for shares of our common stock.

Certain of these provisions eliminate cumulative voting in the election of directors, limit the right of stockholders to call special meetings and establish specific procedures for director nominations by stockholders and the submission of other proposals for consideration at stockholder meetings.

We are also subject to provisions of Delaware law that could delay or make more difficult a merger, tender offer or proxy contest involving our company.

In particular, Section 203 of the Delaware General Corporation Law prohibits a Delaware corporation from engaging in any business combination with any interested stockholder for a period of three years unless specific conditions are met.

Any of these provisions could have the effect of delaying, deferring or preventing a change in control, including without limitation, discouraging a proxy contest or making more difficult the acquisition of a substantial block of our common stock.

Under our certificate of incorporation, our board of directors may issue up to 20,000,000 shares of preferred stock, potentially without stockholder approval on such terms as the board might determine.

The rights of the holders of common stock will be subject to, and might be adversely affected by, the rights of the holders of any preferred stock that might be issued in the future.

Potential volatility of the price of our common stock could negatively affect your investment.

We cannot assure you that there will continue to be an active trading market for our common stock.

Historically, the stock market, as well as our common stock, has experienced significant price and volume fluctuations.

Market prices of securities of technology companies have been highly volatile and frequently reach levels that bear no relationship to the operating performance of such companies.

These market prices generally are not sustainable and are subject to wide variations.

If our common stock trades to unsustainably high levels, it is likely that the market price of our common stock will thereafter experience a material decline.

In the past, securities class action litigation has often been brought against a company following periods of volatility in the market price of its securities.

We could be the target of similar litigation in the future.

Securities litigation could cause us to incur substantial costs, divert management’s attention and resources, harm our reputation in the industry and the securities markets and negatively impact our operating results.

Holders of exchangeable shares are expected to experience a delay in receiving shares of our common stock from the date they request an exchange, which may affect the value of the shares the holder receives in an exchange.

Holders of exchangeable shares who request to receive shares of our common stock in exchange for their exchangeable shares will not receive shares of our common stock until several business days after the applicable request is received.

During this period, the market price of our common stock may increase or decrease.

Any such increase or decrease would affect the value of the consideration to be received by such holder of exchangeable shares upon a subsequent sale of the common stock received in the exchange

We are a “smaller reporting company” and, as a result of the reduced disclosure and governance requirements applicable to smaller reporting companies, our common stock may be less attractive to investors.

We are a “smaller reporting company,” and are subject to lesser disclosure obligations in our SEC filings compared to other issuers.

Specifically, “smaller reporting companies” are able to provide simplified executive compensation disclosures in their filings, are exempt from the provisions of Section 404(b) of the Sarbanes-Oxley Act requiring that independent registered public accounting firms provide an attestation report on the effectiveness of internal control over financial reporting and have certain other decreased disclosure obligations in their SEC filings, including, among other things, only being required to provide two years of audited financial statements in annual reports.

Decreased disclosures in our SEC filings due to our status as a “smaller reporting company” may make it harder for investors to analyze our operating results and financial prospects.

If we fail to maintain compliance with the continued listing requirements of the Nasdaq Stock Market, our common stock may be delisted and the price of our common stock and our ability to access the capital markets could be negatively impacted.

Our common stock currently trades on the Nasdaq Stock Market, or Nasdaq, under the symbol “PRSO.” This market has continued listing standards that we must comply with in order to maintain the listing of our common stock.

The continued listing standards include, among others, a minimum bid price requirement of $1.00 per share and any of:

(i) a minimum stockholders’ equity of $2.5 million;

(ii) a market value of listed securities of at least $35.0 million;

or (iii) net income from continuing operations of $500,000 in the most recently completed fiscal year or in the two of the last three fiscal years.

Our results of operations and fluctuating stock price directly impact our ability to satisfy these continued listing standards.

In the event we are unable to maintain these continued listing standards, our common stock may be subject to delisting from the Nasdaq.

If we were to be delisted, we would expect our common stock to be traded in the over-the-counter market which could adversely affect the liquidity of our common stock.

Additionally, we could face significant material adverse consequences, including:

● the acquired product lines, technologies or businesses may

not improve our financial and strategic position as planned;

● we may determine we have overpaid for the product lines, technologies

or businesses, or that the economic conditions underlying our acquisition have changed;

● we may have difficulty integrating the operations and personnel

of the acquired company;

● we may have difficulty retaining the employees with the technical

skills needed to enhance and provide services with respect to the acquired product lines or technologies;

● the acquisition may be viewed negatively by customers, employees,

suppliers, financial markets or investors;

● we may have difficulty incorporating the acquired product

lines or technologies with our existing technologies;

● we may encounter a competitive response, including price competition

or IP litigation;

● we may become a party to product liability or IP infringement

claims as a result of our sale of the acquired company’s products;

● we may incur one-time charges, such as for acquired in-process

research and development costs, and restructuring charges;

● we may acquire goodwill and other intangible assets that are

subject to impairment tests, which could result in future impairment charges;

● our ongoing business and management’s attention may

be disrupted or diverted by transition or integration issues and the complexity of managing geographically or culturally diverse enterprises;

● our due diligence process may fail to identify significant

existing issues with the target business.

From time to time, we may enter into negotiations

for acquisitions or investments that are not ultimately consummated.

These negotiations could result in significant diversion of management

time, as well as substantial out-of-pocket costs, any of which could have a material adverse effect on our business, operating results

and financial condition.

Provisions of our certificate of incorporation and bylaws or

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

Various provisions of our certificate of incorporation

and bylaws might have the effect of making it more difficult for a third party to acquire, or discouraging a third party from attempting

to acquire, control of our company.

These provisions could limit the price that certain investors might be willing to pay in the future

for shares of our common stock.

Certain of these provisions eliminate cumulative voting in the election of directors, limit the right

of stockholders to call special meetings and establish specific procedures for director nominations by stockholders and the submission

of other proposals for consideration at stockholder meetings.

We are also subject to provisions of Delaware

law that could delay or make more difficult a merger, tender offer or proxy contest involving our company.

In particular, Section 203

of the Delaware General Corporation Law prohibits a Delaware corporation from engaging in any business combination with any interested

stockholder for a period of three years unless specific conditions are met.

Any of these provisions could have the effect of delaying,

deferring or preventing a change in control, including without limitation, discouraging a proxy contest or making more difficult the acquisition

of a substantial block of our common stock.

Under our certificate of incorporation, our board

of directors may issue up to 20,000,000 shares of preferred stock, potentially without stockholder approval on such terms as the board

might determine.

The rights of the holders of common stock will be subject to, and might be adversely affected by, the rights of the holders

of any preferred stock that might be issued in the future.

Potential volatility of the price of our common stock could negatively

affect your investment.

We cannot assure you that there will continue

to be an active trading market for our common stock.

Historically, the stock market, as well as our common stock, has experienced significant

price and volume fluctuations.

Market prices of securities of technology companies have been highly volatile and frequently reach levels

that bear no relationship to the operating performance of such companies.

These market prices generally are not sustainable and are subject

to wide variations.

If our common stock trades to unsustainably high levels, it is likely that the market price of our common stock will

thereafter experience a material decline.

In the past, securities class action litigation

has often been brought against a company following periods of volatility in the market price of its securities.

We could be the target

of similar litigation in the future.

Securities litigation could cause us to incur substantial costs, divert management’s attention

and resources, harm our reputation in the industry and the securities markets and negatively impact our operating results.

Certain of our

common stock warrants are accounted for as a warrant liability and recorded at fair value with changes in fair value each period reported

in earnings, which may have an adverse effect on the market price of our common stock.

In accordance with generally

accepted accounting principles in the United States (“GAAP”), we are required to evaluate our common stock warrants to determine

whether they should be accounted for as a warrant liability or as equity.

At each reporting period (1) the warrants will be reevaluated

for proper accounting treatment as a liability or equity and (2) the fair value of the liability of the warrants will be re-measured.

The change in the fair value of the liability will be recorded as other income (expense) in our statement of operations and comprehensive

This accounting treatment may adversely affect the market price of our securities, as we may incur additional expense.

changes in the inputs and assumptions for the valuation model we use to determine the fair value of such liability may have a material

impact on the estimated fair value of the warrant liability.

As a result, our financial statements and results of operations will fluctuate

quarterly, based on various factors, many of which are outside of our control, including the share price of our common stock.

that we will recognize non-cash gains or losses on our warrants or any other similar derivative instruments in each reporting period and

that the amount of such gains or losses could be material.

The impact of changes in fair value on earnings may have an adverse effect

on the market price of our common stock.

If we are unable to satisfy the continued listing requirements

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

Our common stock may lose value and our common

stock could be delisted from Nasdaq due to several factors or a combination of such factors.

While our common stock is currently listed

on Nasdaq, there can be no assurance that we will be able to maintain such listing.

To maintain the listing of our common stock on Nasdaq,

we are required to meet certain listing requirements, including, among others, a requirement to maintain a minimum closing bid price of

$1.00 per share.

If our common stock trades below the $1.00 minimum closing bid price requirement for 30 consecutive business days or

if we do not meet other listing requirements, we may be notified by Nasdaq of non-compliance.

On February 1, 2023, we received a notice

from Nasdaq, indicating that, based upon the closing bid price of our common stock for the previous 30 business days, we no longer meet

the requirement to maintain a minimum bid price of $1 per share, as set forth in Nasdaq Listing Rule 5550(a)(2) (the “Notice”).

In accordance with Nasdaq Listing Rule 5810(c)(3)(A),

we have been provided a period of 180 calendar days, or until July 31, 2023, in which to regain compliance.

In order to regain compliance

with the minimum bid price requirement, the closing bid price of our common Stock must be at least $1 per share for a minimum of ten consecutive

business days during this 180-day period.

In the event that we do not regain compliance within this 180-day period, we may be eligible

to seek an additional compliance period of 180 calendar days if we meet the continued listing requirement for market value of publicly

held shares and all other initial listing standards for the Nasdaq Capital Market, with the exception of the bid price requirement, and

provide written notice to Nasdaq of our intent to cure the deficiency during this second compliance period, by effecting a reverse stock

split, if necessary.

However, if it appears to the Nasdaq Staff that we will not be able to cure the deficiency, or if we are otherwise

not eligible, Nasdaq will provide notice to us that our common stock will be subject to delisting.

The above mentioned notice does not result in the

immediate delisting of our common stock from the Nasdaq Capital Market.

We intend to monitor the closing bid price of our common stock

and consider our available options in the event that the closing bid price of our common stock remains below $1 per share.

no assurance that we will be able to regain compliance with the minimum bid price requirement or maintain compliance with the other listing

requirements.

As of the date of this Report, we have not regained compliance.

There can be no assurance that we would pursue a reverse

stock split or be able to obtain the approvals necessary to effect a reverse stock split.

In addition, there can be no assurance that,

following any reverse stock split, the per share trading price of our common stock would remain above $1.00 per share or that we would

be able to continue to meet other listing requirements.

If we were to be delisted, we would expect our common stock to be traded in the

over-the-counter market which could adversely affect the liquidity of our common stock.

Additionally, we could face significant material

adverse consequences, including:

a limited availability of market quotations for our common stock;

4 unchanged sentences

loss of institutional investor interest.

Holders of exchangeable shares are expected to experience a delay

in receiving shares of our common stock from the date they request an exchange, which may affect the value of the shares the holder receives

in an exchange.

Holders of exchangeable shares who request to

receive shares of our common stock in exchange for their exchangeable shares will not receive shares of our common stock until several

business days after the applicable request is received.

During this period, the market price of our common stock may increase or decrease.

Any such increase or decrease would affect the value of the consideration to be received by such holder of exchangeable shares upon a

subsequent sale of the common stock received in the exchange

We are a “smaller reporting company” and, as a result

of the reduced disclosure and governance requirements applicable to smaller reporting companies, our common stock may be less attractive

to investors.

We are a “smaller reporting company,”

and are subject to lesser disclosure obligations in our SEC filings compared to other issuers.

Specifically, “smaller reporting

companies” are able to provide simplified executive compensation disclosures in their filings, are exempt from the provisions of

Section 404(b) of the Sarbanes-Oxley Act requiring that independent registered public accounting firms provide an attestation report on

the effectiveness of internal control over financial reporting and have certain other decreased disclosure obligations in their SEC filings,

including, among other things, only being required to provide two years of audited financial statements in annual reports.

Decreased disclosures

in our SEC filings due to our status as a “smaller reporting company” may make it harder for investors to analyze our operating

results and financial prospects.

The invasion of Ukraine by Russia could

negatively impact our business.

Russia’s military invasion of Ukraine in

2022 has led to, and may lead to, additional sanctions being levied by the United States, European Union and other countries against Russia.

Russia’s military invasion and the resulting sanctions have had an adverse effect on global markets.

We cannot predict the progress

or outcome of the situation in Ukraine, as the conflict and governmental reactions are rapidly developing and beyond our control.

unrest, intensified military activities, or more extensive sanctions impacting the region could have a material adverse effect on the

global economy, and such effect could in turn have a material adverse effect on the operations, results of operations, financial condition,

liquidity and business outlook of our business.

Sustained inflation could have a material

adverse effect on our business, financial condition, results of operations and liquidity.

Inflation rates in the markets in which we operate

have increased and may continue to rise.

Inflation over the last several months has led us to experience higher costs, including, among

others, labor, wafer and transportation.

Our suppliers have raised their prices and may continue to raise prices, and, although we have

made minimal price increases thus far, in the competitive markets in which we operate, we may not be able to make corresponding price

increases to preserve our gross margins and profitability.

In addition, inflationary pressures could cause customers to delay or reduce

purchases of our products or delay payments to us.

If inflation rates continue to rise or remain elevated for a sustained period of time,

they could have a material adverse effect on our business, financial condition, results of operations and liquidity.

The full effects of COVID-19 and other potential future public

health crises, epidemics, pandemics or similar events are uncertain and could have a material and adverse effect on our business, financial

condition, operating results and cash flows.

The global outbreak of the coronavirus disease

2019, or COVID-19, was declared a pandemic by the World Health Organization and a national emergency by the U.S.

government in March 2020.

This has negatively affected the world economy, disrupted global supply chains, significantly restricted travel and transportation, resulted

in mandated closures and orders to “shelter-in-place” from time to time and created significant disruption of the financial

The extent of the impact on our operational and financial performance will depend on future developments, including the duration

and spread of the pandemic and related actions U.S.

and foreign government agencies continue to take to prevent disease spread, all of

which are uncertain, out of our control and cannot be predicted.

we have complied with state and county orders, and we have implemented a teleworking policy for our employees and contractors when such

orders were in place.

However, a facility closure, work slowdowns or temporary stoppage at one of our suppliers could occur, which could

have a longer-term impact and could delay our prototype production and ability to conduct business.

If our workforce is unable to work effectively,

including because of illness, quarantines, absenteeism, government actions, facility closures, travel restrictions or other restrictions

in connection with the COVID-19 pandemic, our operations will be negatively impacted.

We may be unable to produce and sell our IC products,

and our costs may increase as a result of the COVID-19 outbreak.

The impacts could worsen if there is an extended duration of any COVID-19

outbreak or a resurgence of COVID-19 infection in affected regions after they have begun to experience improvement.

The continued spread of COVID-19 has also led to occasional disruption

and volatility in the global capital markets.

While we were able to access the capital markets in November 2022, we may be unable to access

the capital markets, and additional capital may only be available to us on terms that could be significantly detrimental to our existing

stockholders and to our business.

Unresolved Staff Comments

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 1A. Risk Factors