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Item 9A. Controls and Procedures

2023-03-29 compared with 2022-03-31 · 1973 added, 987 removed, 479 unchanged (86% of the section changed)

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Evaluation of Disclosure Controls and Procedures

Under the supervision and with the participation of our management, including our chief executive officer and chief financial officer, we conducted an evaluation of the effectiveness of the design and operation of our disclosure controls and procedures, as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934.

Based on this evaluation, our management concluded that as of December 31, 2021, our disclosure controls and procedures were effective.

Management’s Annual Report on Internal Control over Financial Reporting

Our management is responsible for establishing and maintaining adequate internal control over financial reporting, as such term is defined in Rules 13a-15(f) and 15d-15(f) under the Securities Exchange Act of 1934.

In designing and evaluating the disclosure controls and procedures, management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives, and management necessarily is required to apply its judgment in evaluating the cost-benefit relationship of possible controls.

Under the supervision and with the participation of our management, including our chief executive officer and chief financial officer, we conducted an evaluation of the effectiveness of our internal control over financial reporting based on the framework in Internal Control—Integrated Framework (2013 Framework) issued by the Committee of Sponsoring Organizations of the Treadway Commission.

Based on the evaluation, our management concluded that our internal control over financial reporting was effective as of December 31, 2021.

Under the supervision and with the participation

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

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

Exchange Act of 1934.

Based on this evaluation, our management concluded that as of December 31, 2022, our disclosure controls and procedures

were effective.

Management’s Annual Report on Internal Control over Financial

Our management is responsible for establishing

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

Securities Exchange Act of 1934.

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

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

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

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

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

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

Based on the evaluation,

our management concluded that our internal control over financial reporting was effective as of December 31, 2022.

Changes in Internal Control over Financial Reporting

There were no changes in our internal controls over financial reporting during the fourth fiscal quarter of 2021 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

There were no changes in our internal controls

over financial reporting during the fourth fiscal quarter of 2022 that have materially affected, or are reasonably likely to materially

affect, our internal control over financial reporting.

Other Information

Disclosure Regarding Foreign Jurisdictions that Prevent Inspections

Disclosure Regarding Foreign Jurisdictions that Prevent

Not Applicable.

Directors, Executive Officers and Corporate Governance

The names of our directors and certain information about each of them are set forth below.

names of our directors and certain information about each of them are set forth below.

Position(s) with the Company

Ronald Glibbery

Chief Executive Officer and Director

President and Director

Executive Officer and Director

Ian McWalter(1)(2)

Andreas Melder(1)(2)

Member of Audit Committee

Member of Compensation Committee

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

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

Ronald Glibbery.

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

There are no family relationships

among any of our directors or executive officers.

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

He founded Peraso Technologies Inc.

He founded Peraso

Technologies Inc.

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

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

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

was appointed as the Monitor of Peraso Tech.

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

In June 2020, Peraso Tech applied for and obtained

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

Pursuant to the Initial Order issued

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

was appointed as the Monitor of Peraso

In addition, the Monitor, in its capacity as Foreign Representative, filed a voluntary petition in the United States under Chapter

15 of the U.S.

Bankruptcy Code, seeking recognition of the CCAA proceeding.

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

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

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

In October 2020, the Court granted an order authorizing the

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

In December 2020, the United States

Bankruptcy Court for the Southern District of New York issued an Order that:

(i) recognized and gave full force and effect in the United

States to the Court’s order approving the Settlement Agreement;

and (ii) terminated the Chapter 15 Proceedings.

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

over 25 years of experience in the semiconductor industry.

Prior to co-founding Peraso Tech, Mr.

Glibbery held executive positions at Kleer Semiconductor, a fabless semiconductor company focused on wireless audio technology and Intellon, a pioneer and leader in the development of semiconductor devices used for powerline communications.

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

Glibbery held executive positions at

Kleer Semiconductor, a fabless semiconductor company focused on wireless audio technology and Intellon, a pioneer and leader in the development

of semiconductor devices used for powerline communications.

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

and LSI Logic Corporation.

Glibbery holds a B.E.Sc.

in Electrical and Electronics Engineering from the University of Western Ontario.

We believe that Mr.

Glibbery’s qualifications to serve on the board of directors include his service as an officer of ours and his extensive general management and technical expertise in the semiconductor industry, as well as his experience as a chief executive officer.

Daniel Lewis.

Lewis has served as a member of the board of directors since September 2017 and currently serves as our president.

He has served as our president since August 2018 and previously served as chief executive officer of MoSys, Inc.

(MoSys) from August 2018 until the business combination with Peraso Tech.

in Electrical and Electronics Engineering from the University of Western

believe that Mr.

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

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

Lewis has served as a member of the board of directors since September 2017.

He served as our Vice President, General

Manager of Memory Products from April 2022 until his retirement effective December 16, 2022.

Lewis previously served as our President

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

Before joining MoSys, Mr.

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

He previously held various executive and leadership roles at View Box Group, Xicor, Integrated Device Technology, Accelerant Networks, Intel Corporation, Zilog and Digital Equipment Corporation.

Lewis holds a B.S.

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

providing engineering services to manufacturing companies.

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

Xicor, Integrated Device Technology, Accelerant Networks, Intel Corporation, Zilog and Digital Equipment Corporation.

in Electrical Engineering from the University of Michigan.

We believe that Mr.

Lewis’s qualifications to serve on the board of directors include his service as an officer of ours and his extensive business experience, having held senior management positions at several companies in the semiconductor, computer and networking industries.

He brings strategic and operational insight to the board of directors.

Ian McWalter .

Lewis’s qualifications to serve on the board

of directors include his service as an officer of ours and his extensive business experience, having held senior management positions

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

He brings strategic and operational insight to the board

of directors.

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

He currently serves as a member of the board of directors for Evertz Technologies, a publicly traded manufacturer of video and audio infrastructure solutions for television, telecom and new-media industries.

He currently serves as a member of the board

of directors for Evertz Technologies, a publicly traded manufacturer of video and audio infrastructure solutions for television, telecom

and new-media industries.

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

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Before joining Toumaz, Dr.

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

Previously, he held management and technical positions at Bell Northern Research Ltd., the research and development arm of Northern Telecom and Bell Canada, and Plessey Semiconductors.

McWalter spent 15 years

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

Previously, he held management

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

Semiconductors.

McWalter was awarded a B.Sc.

in physics and a Ph.D.

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

in Electrical Engineering from the Imperial College of Science

and Technology in London, England.

We believe that Dr.

McWalter’s qualifications to serve on the board of directors include his extensive general management and technical expertise in the semiconductor industry, as well as his experience as a chief executive officer and his experience serving as a director on public-company boards of directors.

Andreas Melder.

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

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

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

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

He is a veteran technology executive in the semiconductor, communications and consumer electronics industries and previously served as vice president of business development at Gigle Networks, which was acquired in 2011 by Broadcom, where he continued to serve in executive marketing roles.

He is a veteran technology executive in the semiconductor,

communications and consumer electronics industries and previously served as vice president of business development at Gigle Networks,

which was acquired in 2011 by Broadcom, where he continued to serve in executive marketing roles.

Prior to Broadcom, Mr.

Melder served as senior vice president of sales, marketing and business development for Intellon, which was acquired by Atheros/Qualcom.

Previously, he was founder and vice president of marketing and business development for Microtune, a designer of RF integrated circuits and subsystem modules, which was acquired by Zoran Semiconductor, and vice president of sales & marketing for Tripath, an audio controller company acquired by Etelos.

Melder served

as senior vice president of sales, marketing and business development for Intellon, which was acquired by Atheros/Qualcom.

he was founder and vice president of marketing and business development for Microtune, a designer of RF integrated circuits and subsystem

modules, which was acquired by Zoran Semiconductor, and vice president of sales & marketing for Tripath, an audio controller company

acquired by Etelos.

Additionally, Mr.

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in Electrical Engineering/Business from Carnegie-Mellon University and a M.S.

in Electrical Engineering and Operations Research from Southern Methodist University.

in Electrical Engineering and

Operations Research from Southern Methodist University.

We believe that Mr.

Melder’s qualifications to serve on the board of directors include his extensive business experience, having held senior management positions at several companies in the semiconductor, computer and networking industries.

Additionally, he brings additional operational, and fund-raising expertise, and business development and mergers and acquisitions experience.

public markets, participated in investor roadshows and positioned additional companies for M&A exits through proper strategic industry positioning.

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

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

Melder’s qualifications to serve on the board of directors

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

and networking industries.

Additionally, he brings additional operational, and fund-raising expertise, and business development and mergers

and acquisitions experience.

public markets, participated in investor roadshows and positioned additional companies for M&A exits

through proper strategic industry positioning.

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

to emerging technology and healthcare companies.

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

From 2003 to 2018, Mr.

Newell was chief financial officer of Dextera Surgical, a developer of advanced surgical stapling and medical devices.

In December 2017, after entering into an agreement to sell substantially all of its assets, Dextera Surgical, Inc.

filed a voluntary petition for reorganization under Chapter 11 of Title 11 of the United States Code in the United States Bankruptcy Court for the District of Delaware.

He served on the board of directors of ARI Network Services, a leading publicly traded supplier of SaaS and data as a service solutions.

Newell was chief financial officer of Dextera Surgical, Inc.

(Dextera) a developer of advanced surgical

stapling and medical devices.

In December 2017, after entering into an agreement to sell substantially all of its assets, Dextera filed

a voluntary petition for reorganization under Chapter 11 of Title 11 of the United States Code in the United States Bankruptcy Court

for the District of Delaware.

He served on the board of directors of ARI Network Services, a leading publicly traded supplier of SaaS

and data as a service solutions.

Previously, Mr.

Newell served as chief financial officer of Omnicell, an automated medication and hospital supply management company, and prior to 2000, he held executive positions with the Beta Group and Cardiometrics.

Prior to his business career, he was a pilot in the United States Air Force.

Newell served as chief financial officer of Omnicell, an automated medication and hospital

supply management company, and prior to 2000, he held executive positions with the Beta Group and Cardiometrics.

Prior to his business

career, he was a pilot in the United States Air Force.

Newell holds a B.A.

in mathematics from the College of William & Mary and an MBA from Harvard Business School.

in mathematics from the College of William & Mary

and an MBA from Harvard Business School.

We believe that Mr.

Newell’s qualifications to serve on the board of directors include his substantial financial and public-company experience, as he has served as chief financial officer at multiple medical device and other technology companies.

Newell’s qualifications to serve on the board of directors include

his substantial financial and public-company experience, as he has served as chief financial officer at multiple medical device and other

technology companies.

He also has previous experience serving as a director on public-company boards of directors.

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

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

Position(s) with the Company

Ronald Glibbery

Chief Executive Officer and Director

President and Director

Chief Financial Officer

Bradley Lynch

Chief Operating Officer

Alexander Tomkins

Chief Technology Officer

James Sullivan.

Executive Officer and Director

Financial Officer

Operating Officer

Technology Officer

Revenue Officer

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

From July 2006 until January 2008, Mr.

Sullivan served as Vice President of Finance and Chief Financial Officer at Apptera, Inc., a venture-backed company providing software for mobile advertising, search and commerce.

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

advertising, search and commerce.

From July 2002 until June 2006, Mr.

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

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

SAAS provider of VoIP and unified communication solutions.

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

and PricewaterhouseCoopers LLP.

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

Bradley Lynch .

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

Lynch has served as chief operating officer since December 2021.

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

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

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

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

vice president of engineering and operations.

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

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

Pursuant to the Initial Order issued by the Ontario Superior Court of

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

was appointed as the Monitor of Peraso Tech.

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

Bankruptcy Code, seeking recognition of the CCAA proceeding.

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

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

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

and (ii) terminated the Chapter 15 Proceedings.Prior to founding Peraso Tech, Mr.

Lynch worked as a system architect at Kleer Semiconductor, a fabless company focused on wireless audio technology.

Before Kleer, he was director of software engineering at Intellon Corporation, a pioneer and leader in the development of semiconductor devices used for powerline communications.

In addition, the Monitor,

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

Bankruptcy Code,

seeking recognition of the CCAA proceeding.

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

CCAA proceedings upon the completion of certain defined steps.

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

District of New York issued an Order that:

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

approving the Settlement Agreement;

and (ii) terminated the Chapter 15 Proceedings.

Prior to founding Peraso Tech, Mr.

Lynch worked as

a system architect at Kleer Semiconductor, a fabless company focused on wireless audio technology.

Before Kleer, he was director of software

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

Previously, Mr.

Lynch held various technical roles at Cogency Semiconductor and Power Trunk.

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

Alexander Tomkins .

Lynch holds a B.A.Sc in Computer Engineering

from the University of Waterloo.

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

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

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

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

He co-founded Peraso Tech in 2009 and served

as its chief technology officer.

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

Act (the CCAA), providing certain relief.

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

Ernst & Young Inc.

was appointed as the Monitor of Peraso Tech.

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

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

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

Bankruptcy Code, seeking recognition of the CCAA proceeding.

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

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

certain defined steps.

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

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

and (ii) terminated the Chapter 15 Proceedings.

(ii) terminated the Chapter 15 Proceedings.

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

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

Code of Ethics

We have adopted a code of ethics that applies to all of our employees.

The code of ethics is designed to deter wrongdoing and to promote, among other things, honest and ethical conduct, full, fair, accurate, timely, and understandable disclosures in reports and documents submitted to the SEC and other public communications, compliance with applicable governmental laws, rules and regulations, the prompt internal reporting of violations of the code to an appropriate person or persons identified in the code and accountability for adherence to such code.

The code of ethics is available on our website, www.perasoinc.com .

If we make any substantive amendments to the code of ethics or grant any waiver, including any implicit waiver, from a provision of the code to our chief executive officer or chief financial officer, or persons performing similar functions, where such amendment or waiver is required to be disclosed under applicable SEC rules, we intend to disclose the nature of such amendment or waiver on our website.

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

Prior to joining Peraso, Mr.

Lunsford held numerous

positions of responsibility with companies in the semiconductor industry.

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

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

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

and for a period of eight years, he served as vice president of worldwide sales at Micrel Semiconductor.

From 2009 to 2013, he worked

at NXP, where he served as vice president of sales and marketing for the Americas.

In 2013, and for a period of six years, he served

as the executive vice president of worldwide sales at SiTime Inc., a provider of MEMS-based timing devices.

From January 2019 until April

2020, he provided consulting services for a range of high-technology businesses.

Finally, he served as the vice president of global sales

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

holds a degree in Mechanical Engineering from the University of California at Davis.

have adopted a code of ethics that applies to all of our employees.

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

among other things, honest and ethical conduct, full, fair, accurate, timely, and understandable disclosures in reports and documents

submitted to the SEC and other public communications, compliance with applicable governmental laws, rules and regulations, the prompt

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

to such code.

code of ethics is available on our website, www.perasoinc.com .

If we make any substantive amendments to the code of ethics or

grant any waiver, including any implicit waiver, from a provision of the code to our chief executive officer or chief financial officer,

or persons performing similar functions, where such amendment or waiver is required to be disclosed under applicable SEC rules, we intend

to disclose the nature of such amendment or waiver on our website.

board of directors established the Audit Committee for the purpose of overseeing the accounting and financial reporting processes and

audits of our financial statements.

The Audit Committee also is charged with reviewing reports regarding violations of our code of ethics

and complaints with respect thereto, and internal control violations under our whistleblower policy are directed to the members of the

Audit Committee.

Our board of directors established the Audit Committee for the purpose of overseeing the accounting and financial reporting processes and audits of our financial statements.

The Audit Committee also is charged with reviewing reports regarding violations of our code of ethics and complaints with respect thereto, and internal control violations under our whistleblower policy are directed to the members of the Audit Committee.

The responsibilities

of our Audit Committee are described in the Audit Committee Charter adopted by our board of directors, a current copy of which can be found on the investors section of our website, www.

The responsibilities of our Audit Committee are described in the Audit Committee Charter adopted by our board of directors,

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

Newell, Ian McWalter and Andreas Melder are the current members of the Audit Committee.

All are independent, as determined in accordance with Rule 5605(a)(2) of the Nasdaq listing rules and Rule 10A‑3 of the Exchange Act.

Newell serves as the chairman and has been designated by the board of directors as the “audit committee financial expert,” as defined by Item 407(d)(5) of Regulation S‑K under the Securities Act and the Exchange Act.

That status does not impose duties, liabilities or obligations that are greater than the duties, liabilities or obligations otherwise imposed on him as a member of the Audit Committee and the board of directors, however.

The Audit Committee has delegated authority to Mr.

Newell for review and pre-approval of services proposed to be provided by our independent registered public accounting firm.

Compensation Committee

Ian McWalter, Andreas Melder and Robert Y.

All are independent, as determined in accordance

with Rule 5605(a)(2) of the Nasdaq listing rules and Rule 10A-3 of the Exchange Act.

Newell serves as the chairman and has been designated

by the board of directors as the “audit committee financial expert,” as defined by Item 407(d)(5) of Regulation S-K under

the Securities Act and the Exchange Act.

That status does not impose duties, liabilities or obligations that are greater than the duties,

liabilities or obligations otherwise imposed on him as a member of the Audit Committee and the board of directors, however.

Committee has delegated authority to Mr.

Newell for review and pre-approval of services proposed to be provided by our independent registered

public accounting firm.

McWalter, Andreas Melder and Robert Y.

Newell are the current members of the Compensation Committee, and Dr.

McWalter serves as the chairman.

The Compensation Committee is responsible for reviewing, recommending and approving our compensation policies and benefits, including the compensation of all of our executive officers and directors.

Our Compensation Committee also has the principal responsibility for the administration of our equity incentive and stock purchase plans.

The responsibilities of our Compensation Committee are described in the Compensation Committee Charter adopted by our board of directors, a current copy of which can be found on the investors section of our website, www.peraso.com .

Nominations Process

We do not have a nominating committee, as we are a small company and currently only have five directors.

Instead of having such a committee, our board of directors historically has appointed all of the independent directors on our board to search for and evaluate qualified individuals to become nominees for director and board committee members.

The independent directors recommend candidates for nomination for election or reelection at each annual meeting of stockholders and, as necessary, to fill vacancies and newly created directorships, and evaluate candidates for appointment to and removal from committees.

The independent directors operate in this capacity under authority granted by resolution of the board of directors, rather than by charter.

When new candidates for our board of directors are sought, the independent directors evaluate each candidate for nomination as a director within the context of the needs and the composition of the board of directors as a whole.

The independent directors conduct any appropriate and necessary inquiries into the backgrounds and qualifications of candidates.

When evaluating director nominees, our board of directors generally seeks to identify individuals with diverse, yet complementary business backgrounds.

Although we have no formal policy regarding diversity, our directors consider both the personal characteristics and experience of director nominees, including each nominee’s independence, diversity, age, skills, expertise, time availability and industry background in the context of the needs of the board of directors and the Company.

The board of directors believes that director nominees should exhibit proven leadership capabilities and experience at a high level of responsibility within their chosen fields, and must have the experience and ability to analyze the complex business issues facing us, and specifically, the issues inherent in the semiconductor industry.

In addition to business expertise, the board of directors requires that director nominees have the highest personal and professional ethics, integrity and values and, above all, are committed to representing the long-term interests of our stockholders and other stakeholders.

To date, we have not paid any fee to a third party to assist in the process of identifying or evaluating director candidates.

Our independent directors will consider candidates for nomination as director who are recommended by a stockholder and will not evaluate any candidate for nomination for director differently because the candidate was recommended by a stockholder.

To date, we have not received or rejected any suggestions for a director candidate recommended by any stockholder or group of stockholders owning more than 5% of our common stock.

The recommendation must include the information specified in our bylaws for stockholder nominees to be considered at an annual meeting, including the following:

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

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

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

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

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

The information listed above is not a complete list of the information required by our bylaws.

The secretary will forward any timely recommendations containing the required information to our independent directors for consideration.

The Compensation Committee is responsible for reviewing, recommending and approving our compensation policies and benefits, including

the compensation of all of our executive officers and directors.

Our Compensation Committee also has the principal responsibility for

the administration of our equity incentive and stock purchase plans.

The responsibilities of our Compensation Committee are described

in the Compensation Committee Charter adopted by our board of directors, a current copy of which can be found on the investors section

of our website, www.perasoinc.com.

do not have a nominating committee, as we are a small company and currently only have five directors.

Instead of having such a committee,

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

individuals to become nominees for director and board committee members.

The independent directors recommend candidates for nomination

for election or reelection at each annual meeting of stockholders and, as necessary, to fill vacancies and newly created directorships,

and evaluate candidates for appointment to and removal from committees.

The independent directors operate in this capacity under authority

granted by resolution of the board of directors, rather than by charter.

new candidates for our board of directors are sought, the independent directors evaluate each candidate for nomination as a director

within the context of the needs and the composition of the board of directors as a whole.

The independent directors conduct any appropriate

and necessary inquiries into the backgrounds and qualifications of candidates.

When evaluating director nominees, our board of directors

generally seeks to identify individuals with diverse, yet complementary business backgrounds.

Although we have no formal policy regarding

diversity, our directors consider both the personal characteristics and experience of director nominees, including each nominee’s

independence, diversity, age, skills, expertise, time availability and industry background in the context of the needs of the board of

directors and the Company.

The board of directors believes that director nominees should exhibit proven leadership capabilities and experience

at a high level of responsibility within their chosen fields and must have the experience and ability to analyze the complex business

issues facing us, and specifically, the issues inherent in the semiconductor industry.

In addition to business expertise, the board of

directors requires that director nominees have the highest personal and professional ethics, integrity and values and, above all, are

committed to representing the long-term interests of our stockholders and other stakeholders.

To date, we have not paid any fee to a

third party to assist in the process of identifying or evaluating director candidates.

Our independent directors will consider candidates

for nomination as director who are recommended by a stockholder and will not evaluate any candidate for nomination for director differently

because the candidate was recommended by a stockholder.

To date, we have not received or rejected any suggestions for a director candidate

recommended by any stockholder or group of stockholders owning more than 5% of our common stock.

The recommendation must include the

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

stockholder’s name and address and the beneficial owner, if any, on whose behalf the

nomination is proposed;

stockholder’s reason for making the nomination at the annual meeting, and the signed

consent of the nominee to serve if elected;

number of shares owned by, and any material interest of, the record owner and the beneficial

owner, if any, on whose behalf the record owner is proposing the nominee;

description of any arrangements or understandings between the stockholder, the nominee and

any other person regarding the nomination;

● Information

regarding the nominee that would be required to be included in our proxy statement by the

rules of the SEC, including the nominee’s age, business experience for the past five

years and any other directorships held by the nominee.

information listed above is not a complete list of the information required by our bylaws.

The secretary will forward any timely recommendations

containing the required information to our independent directors for consideration.

Executive Compensation

Compensation Committee

Ian McWalter, Andreas Melder and Robert Y.

McWalter, Andreas Melder and Robert Y.

Newell are the current members of our Compensation Committee, with Dr.

McWalter serving as the chairman.

The Compensation Committee is responsible for reviewing, recommending and approving our compensation policies and benefits, including the compensation of all of our executive officers and directors.

Our Compensation Committee also has the principal responsibility for the administration of our equity incentive and stock purchase plans and the approval of equity awards to the named executive officers.

Overview of Compensation Program

The Compensation Committee of the board of directors has responsibility for establishing, implementing and monitoring adherence to our compensation philosophy.

The board of directors has delegated to the Compensation Committee the responsibility for determining our compensation policies and procedures for senior management, including the named executive officers, periodically reviewing these policies and procedures, and making recommendations concerning executive compensation to be considered by the full board of directors, when such approval is required under any of our plans or policies or by applicable laws.

The compensation received by our named executive officers in fiscal year 2021 is set forth in the Summary Compensation Table, below.

For 2021, the named executive officers included Ronald Glibbery, chief executive officer, Daniel Lewis, our president and former chief executive officer, and James Sullivan, chief financial officer.

Compensation Philosophy

In general, our executive compensation policies are designed to recruit, retain and motivate qualified executives by providing them with a competitive total compensation package based in large part on the executive’s contribution to our financial and operational success, the executive’s personal performance and increases in stockholder value, as measured by the price of our common stock.

We believe that the total compensation paid to our executives should be fair, reasonable and competitive.

We seek to have a balanced approach to executive compensation with each primary element of compensation (base salary, variable compensation and equity incentives) designed to play a specific role.

Overall, we design our compensation programs to allow for the recruitment, retention and motivation of the key executives and high‑level talent required in order for us to:

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

achieve or exceed our annual financial plan and be profitable;

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

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

Role of Executive Officers in Compensation Decisions

The chief executive officer (CEO) makes recommendations for equity and non‑equity compensation for executives to be approved by the Compensation Committee.

The Compensation Committee reviews these guidelines

The CEO annually reviews the performance of our executives (other than himself) and presents his recommendations for proposed salary adjustments, bonuses and equity awards to the Compensation Committee once a year.

McWalter serving as the

The Compensation Committee is responsible for reviewing, recommending and approving our compensation policies and benefits,

including the compensation of all of our executive officers and directors.

Our Compensation Committee also has the principal responsibility

for the administration of our equity incentive and stock purchase plans and the approval of equity awards to the named executive officers.

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

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

of Compensation Program

Compensation Committee of the board of directors has responsibility for establishing, implementing and monitoring adherence to our compensation

The board of directors has delegated to the Compensation Committee the responsibility for determining our compensation policies

and procedures for senior management, including the named executive officers, periodically reviewing these policies and procedures, and

making recommendations concerning executive compensation to be considered by the full board of directors, when such approval is required

under any of our plans or policies or by applicable laws.

compensation received by our named executive officers in fiscal year 2022 is set forth in the Summary Compensation Table, below.

2022, the named executive officers included Ronald Glibbery, our chief executive officer, Daniel Lewis, our former vice president and

president, and James Sullivan, our chief financial officer.

general, our executive compensation policies are designed to recruit, retain and motivate qualified executives by providing them with

a competitive total compensation package based in large part on the executive’s contribution to our financial and operational success,

the executive’s personal performance and increases in stockholder value, as measured by the price of our common stock.

that the total compensation paid to our executives should be fair, reasonable and competitive.

seek to have a balanced approach to executive compensation with each primary element of compensation (base salary, variable compensation

and equity incentives) designed to play a specific role.

Overall, we design our compensation programs to allow for the recruitment, retention

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

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

or exceed our annual financial plan and be profitable;

continuous progression towards achieving our long-term strategic objectives to be a high-growth

company with growing profitability;

our share price to provide greater value to our stockholders.

of Executive Officers in Compensation Decisions

chief executive officer (CEO) makes recommendations for equity and non-equity compensation for executives to be approved by the Compensation

The Compensation Committee reviews these guidelines annually.

The CEO annually reviews the performance of our executives (other

than himself) and presents his recommendations for proposed salary adjustments, bonuses and equity awards to the Compensation Committee

In its discretion, the Compensation Committee may accept, modify or reject the CEO’s recommendations.

The Compensation Committee evaluates the compensation of the CEO on its own without the participation or involvement of the CEO.

Only the Compensation Committee and the board of directors are authorized to approve the compensation for any named executive officer.

Compensation of new executives is based on hiring negotiations between the individuals and our CEO and/or Compensation Committee .

Elements of Compensation

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

annual incentive compensation;

equity awards.

In each fiscal year, the Compensation Committee determines the amount and relative weighting of each component for all executives, including the named executive officers.

The Compensation

Committee evaluates the compensation of the CEO on its own without the participation or involvement of the CEO.

Only the Compensation

Committee and the board of directors are authorized to approve the compensation for any named executive officer.

Compensation of new

executives is based on hiring negotiations between the individuals and our CEO and/or Compensation Committee.

of Compensation

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

incentive compensation;

each fiscal year, the Compensation Committee determines the amount and relative weighting of each component for all executives, including

the named executive officers.

Base salaries are paid in fixed amounts and thus do not encourage risk taking.

Our widespread use of long‑term compensation consisting of restricted stock units (RSUs) focuses recipients on the achievement of our longer‑term goals and conserves cash for other operating expenses.

Our widespread use of long-term

compensation consisting of restricted stock units (RSUs) focuses recipients on the achievement of our longer-term goals and conserves

cash for other operating expenses.

Historically, the RSUs granted to our executives have vested in increments over three years.

The Compensation Committee does not believe that these awards encourage unnecessary or excessive risk taking because the ultimate value of the awards is tied to our stock price, and the use of multi‑year vesting schedules helps to align our employees’ interests even more closely with those of our long‑term investors.

Because our compensation philosophy stresses performance-based awards, base salary is intended to be a smaller portion of total executive compensation relative to long-term equity.

The Compensation Committee takes into account the executive’s scope of responsibility and significance to the execution of our long-term strategy, past accomplishments, experience and personal performance and compares each executive’s base salary with those of the other members of senior management.

The Compensation Committee may give different weighting to each of these factors for each executive, as it deems appropriate.

The Compensation Committee did not retain a compensation consultant or determine a compensation peer group for 2021.

In May 2021, there were changes to the base salaries paid to our named executive officers.

Annual Incentive Compensation

The Compensation Committee authorized incentive compensation for the named executive officers in 2021.

Equity Awards

Although we do not have a mandated policy regarding the ownership of shares of common stock by officers and directors, we believe that granting equity awards to executives and other key employees on an ongoing basis gives them a strong incentive to maximize stockholder value and aligns their interests with those of our other stockholders on a long-term basis.

The Compensation

Committee does not believe that these awards encourage unnecessary or excessive risk taking because the ultimate value of the awards

is tied to our stock price, and the use of multi-year vesting schedules helps to align our employees’ interests even more closely

with those of our long-term investors.

our compensation philosophy stresses performance-based awards, base salary is intended to be a smaller portion of total executive compensation

relative to long-term equity.

The Compensation Committee takes into account the executive’s scope of responsibility and significance

to the execution of our long-term strategy, past accomplishments, experience and personal performance and compares each executive’s

base salary with those of the other members of senior management.

The Compensation Committee may give different weighting to each of

these factors for each executive, as it deems appropriate.

The Compensation Committee did not retain a compensation consultant or determine

a compensation peer group for 2022.

In February 2022, the Compensation Committee approved increases to

the annual base salaries of certain of our executive officers, effective retroactively as of December 17, 2021.

The annual base salary

for our chief financial officer, James Sullivan, was increased from $260,000 to $305,000.

The annual base salary for our chief operating

officer, Brad Lynch, was increased from CAD$200,000 to $275,000.

The annual base salary for our chief technology officer, Alex Tomkins,

was increased from CAD$252,000 to $250,000.

April 2022, the Compensation Committee approved an increase to the annual base salary for our then president, Daniel Lewis, from $250,000

to $275,000, effective retroactively as of December 17, 2021.

Incentive Compensation

February 2022, the Compensation Committee authorized incentive compensation targets for the named executive officers.

Sullivan, under

the terms of his 2022 annual performance-based bonus, will be eligible to receive a target amount of up to 60% of his base salary, payable

in the form of cash, the Company’s stock or a combination of both.

Similarly, Mr.

Lynch, under the terms of his 2022 annual performance-based

bonus, will be eligible to receive a target amount of up to 50% of his base salary, also payable in the form of cash, the Company’s

stock or a combination of both.

April 2022, the Compensation Committee authorized incentive compensation targets for Mr.

Lewis, under the terms of his 2022 annual performance-based bonus, will be eligible to receive (i) a target amount of up to 50%

of his base salary based upon the achievement of certain goals and performance criteria determined by our CEO and the Compensation Committee

and (ii) a cash bonus equal to 3% of (a) the cash proceeds received by the Company (the “VAE Bonus”) in the event the Company

sells all or any part of the Company’s Virtual Accelerator Engine intellectual property (the “VAE Sale”) or (b) the

royalties paid to the Company during the 24 month period following the VAE Sale (the “VAE Royalty Payments” and, together

with the VAE Bonus, the “VAE Incentive Payments”);

provided, however, that in no event will the aggregate VAE Incentive Payments

exceed $300,000.

In January 2023, upon receipt of the final proceeds from the VAE Sale, we paid Mr.

Lewis $105,000 for the VAE Bonus.

we do not have a mandated policy regarding the ownership of shares of common stock by officers and directors, we believe that granting

equity awards to executives and other key employees on an ongoing basis gives them a strong incentive to maximize stockholder value and

aligns their interests with those of our other stockholders on a long-term basis.

Our Amended and Restated Peraso Inc.

2019 Stock Incentive Plan (the “Peraso Stock Incentive Plan”), which was approved by our stockholders and became effective in August 2019, enables us to grant equity awards, as well as other types of stock-based compensation, to our executive officers and other employees.

The Compensation Committee reviews and approves all equity awards granted under the Peraso Stock Incentive Plan to the named executive officers.

We grant equity awards to achieve retention and motivation:

2019 Stock Incentive

Plan (the “Peraso Stock Incentive Plan”), which was approved by our stockholders and became effective in August 2019, enables

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

The Compensation

Committee reviews and approves all equity awards granted under the Peraso Stock Incentive Plan to the named executive officers.

equity awards to achieve retention and motivation:

upon the hiring of key executives and other personnel;

annually, when we review progress against corporate and personal goals;

when we believe that competitive forces or economic conditions threaten to cause our key executives to lose their motivation and/or where retention of these key executives is in jeopardy.

With the Compensation Committee’s approval, we grant equity awards to acquire shares of common stock when we initially hire executives and other employees, as a long-term performance incentive.

The Compensation Committee has determined the size of the initial equity awards to newly hired executives with reference to equity awards held by existing executives, the percentage that such award represents of our total shares outstanding and hiring negotiations with the individual.

In addition, the Compensation Committee would consider other relevant information regarding the size and type of compensation package considered necessary to enable us to recruit, retain and motivate the executive .

Typically, when we hire an executive, the equity awards vest on over a three-year period.

The options granted to executives in connection with annual performance reviews typically vest monthly over a three-to-four year period, and RSUs granted typically vest annually over a period of from one-to-three years, as the Compensation Committee may decide.

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

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

Historically, no employee has been eligible for an annual performance grant until the employee has been employed for at least six months.

Annual performance reviews are generally conducted in the first half of each fiscal year.

Our CEO conducts the performance review of all other executives, and makes his recommendations to the Compensation Committee.

The Compensation Committee also reviews the CEO’s annual performance and determines whether he should receive additional equity awards.

Aside from equity award grants in connection with annual performance reviews, we do not have a policy of granting additional awards to executives during the year.

The board of directors and Compensation Committee have not adopted a policy with respect to setting the dates of award grants relative to the timing of the release of material non-public information.

Our policy with respect to prohibiting insider trading restricts sales of shares during specified black-out periods, including at all times that our insiders are considered to possess material non-public information.

In determining the size of equity awards in connection with the annual performance reviews of our executives, the Compensation Committee takes into account the executive’s current position with and responsibilities to us, and current and past equity awards to the executive.

Going forward, we intend to continue to evaluate and consider equity grants to our executives on an annual basis.

We expect to consider potential equity awards for executives at the same time as we annually review our employees’ performance and determine whether to award grants for all employees.

Accounting and Tax Considerations

Our Compensation Committee has reviewed the impact of tax and accounting treatment on the various components of our executive compensation program.

Section 162(m) of the Internal Revenue Code, as amended (the “Code”), generally disallows a tax deduction to publicly-held companies for compensation paid to “covered” executive officers, to the extent that compensation paid to such an officer exceeds $1 million during the taxable year.

The Tax Cuts and Jobs Act repealed the performance-based exception to the deduction limit for remuneration that is deductible in tax years commencing after December 31, 2017.

However, certain remuneration is specifically exempt from the deduction limit under a transition rule to the extent that it is "performance-based," as defined in Section 162(m) of the Code, and subject to a "written binding contract" in effect as of November 2, 2017 that is not later modified in any material respect.

We endeavor to award compensation that will be deductible for income tax purposes, though other factors will also be considered.

None of the compensation paid to our covered executive officers for the year ended December 31, 2021 that would be taken into account for purposes of Section 162(m) exceeded the $1 million limitation for 2020.

Because of ambiguities and uncertainties as to the application and interpretation of Section 162(m) of the Code and the regulations issued thereunder, including the uncertain scope of the transition relief under the Tax Cuts and Jobs Act, no assurance can be given that compensation intended to satisfy the requirements for exemption from Section 162(m) of the Code in fact will satisfy such requirements.

Our Compensation Committee may authorize compensation payments that do not comply with the exemptions to Section 162(m) when we believe that such payments are appropriate to attract and retain executive talent.

In 2020, we gave our stockholders an opportunity to provide feedback on our executive compensation through an advisory vote at our annual stockholder meeting.

annually, when we review progress against corporate

and personal goals;

when we believe that competitive forces or economic

conditions threaten to cause our key executives to lose their motivation and/or where retention of these key executives is in jeopardy.

the Compensation Committee’s approval, we grant equity awards to acquire shares of common stock when we initially hire executives

and other employees, as a long-term performance incentive.

The Compensation Committee has determined the size of the initial equity awards

to newly hired executives with reference to equity awards held by existing executives, the percentage that such award represents of our

total shares outstanding and hiring negotiations with the individual.

In addition, the Compensation Committee would consider other relevant

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

when we hire an executive, the equity awards vest on over a three-year period.

The options granted to executives in connection with annual

performance reviews typically vest monthly over a three-to-four year period, and RSUs granted typically vest annually over a period of

from one-to-three years, as the Compensation Committee may decide.

As matters of policy and practice, we grant stock options with an

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

In determining fair market

value, we use the closing price of the common stock on the Nasdaq on the grant date.

Historically,

no employee has been eligible for an annual performance grant until the employee has been employed for at least six months.

Annual performance

reviews are generally conducted in the first half of each fiscal year.

Our CEO conducts the performance review of all other executives

and makes his recommendations to the Compensation Committee.

The Compensation Committee also reviews the CEO’s annual performance

and determines whether he should receive additional equity awards.

Aside from equity award grants in connection with annual performance

reviews, we do not have a policy of granting additional awards to executives during the year.

The board of directors and Compensation

Committee have not adopted a policy with respect to setting the dates of award grants relative to the timing of the release of material

non-public information.

Our policy with respect to prohibiting insider trading restricts sales of shares during specified black-out periods,

including at all times that our insiders are considered to possess material non-public information.

determining the size of equity awards in connection with the annual performance reviews of our executives, the Compensation Committee

takes into account the executive’s current position with and responsibilities to us, and current and past equity awards to the

April 2022, our Compensation Committee authorized the following awards of restricted stock units to the named executive officers:

Glibbery – 200,000;

Lewis – 75,000;

Sullivan – 100,000.

awards vest over semiannually over the 36-month period commencing December 17, 2021.

forward, we intend to continue to evaluate and consider equity grants to our executives on an annual basis.

We expect to consider potential

equity awards for executives at the same time as we annually review our employees’ performance and determine whether to award grants

for all employees.

and Tax Considerations

Compensation Committee has reviewed the impact of tax and accounting treatment on the various components of our executive compensation

Section 162(m) of the Internal Revenue Code, as amended (the “Code”), generally disallows a tax deduction to publicly-held

companies for compensation paid to “covered” executive officers, to the extent that compensation paid to such an officer

exceeds $1 million during the taxable year.

The Tax Cuts and Jobs Act repealed the performance-based exception to the deduction limit

for remuneration that is deductible in tax years commencing after December 31, 2017.

However, certain remuneration is specifically exempt

from the deduction limit under a transition rule to the extent that it is “performance-based,” as defined in Section 162(m)

of the Code, and subject to a “written binding contract” in effect as of November 2, 2017 that is not later modified in any

material respect.

We endeavor to award compensation that will be deductible for income tax purposes, though other factors will also be

None of the compensation paid to our covered executive officers for the year ended December 31, 2022 that would be taken

into account for purposes of Section 162(m) exceeded the $1 million limitation for 2021.

Because of ambiguities and uncertainties as

to the application and interpretation of Section 162(m) of the Code and the regulations issued thereunder, including the uncertain scope

of the transition relief under the Tax Cuts and Jobs Act, no assurance can be given that compensation intended to satisfy the requirements

for exemption from Section 162(m) of the Code in fact will satisfy such requirements.

Our Compensation Committee may authorize compensation

payments that do not comply with the exemptions to Section 162(m) when we believe that such payments are appropriate to attract and retain

executive talent.

2020, we gave our stockholders an opportunity to provide feedback on our executive compensation through an advisory vote at our annual

stockholder meeting.

Stockholders were asked to approve, on an advisory basis, the compensation paid to our named executive officers.

A majority of stockholders indicated approval of the compensation of the named executive officers, with approximately 90% of the shares that voted on such matter voting in favor of the proposal.

Additionally, in 2017, stockholders were asked to approve, on an advisory basis, in favor of having a stockholder vote to approve the compensation of our named executive officers every three years.

A majority of stockholders indicated approval of having a stockholder vote to approve the compensation of our named executive officers every three years, with approximately 60% of the shares that voted on such matter voting in favor of the proposal.

Based on these results and consistent with the previous recommendation and determination of its board of directors, we will hold non-binding advisory votes on executive compensation every three years until the next vote on the frequency of the stockholder advisory vote on executive compensation.

In light of the results of the advisory vote, the Compensation Committee continued to apply principles that were substantially similar to those applied historically in determining compensation policies and decisions and did not make any significant changes to executive compensation decisions and policies with respect to 2021 executive compensation.

SUMMARY COMPENSATION TABLE

The following table sets forth compensation information for fiscal years 2021 and 2020 for each of our named executive officers.

Compensation paid by Peraso Tech prior to the closing of the Arrangement is not reflected in the Summary Compensation Table.

Name and principal position

A majority of stockholders indicated approval of the compensation of the named executive officers, with approximately 90% of the shares

that voted on such matter voting in favor of the proposal.

Additionally, in 2017, stockholders were asked to approve, on an advisory

basis, in favor of having a stockholder vote to approve the compensation of our named executive officers every three years.

of stockholders indicated approval of having a stockholder vote to approve the compensation of our named executive officers every three

years, with approximately 60% of the shares that voted on such matter voting in favor of the proposal.

Based on these results and consistent

with the previous recommendation and determination of its board of directors, we will hold non-binding advisory votes on executive compensation

every three years until the next vote on the frequency of the stockholder advisory vote on executive compensation.

light of the results of the advisory vote, the Compensation Committee continued to apply principles that were substantially similar to

those applied historically in determining compensation policies and decisions and did not make any significant changes to executive compensation

decisions and policies with respect to 2022 executive compensation.

COMPENSATION TABLE

following table sets forth compensation information for fiscal years 2022 and 2021 for each of our named executive officers.

paid by Peraso Tech prior to the closing of the Arrangement is not reflected in the Summary Compensation Table.

and principal position

Restricted Stock

1 unchanged sentence

Ronald Glibbery

Chief Executive Officer (2)

Ronald Glibbery

Executive Officer (2)

President, General Manager of Memory Products and Director (3)

James Sullivan

Chief Financial Officer

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

The assumptions used to calculate the aggregate grant date fair value of option and stock awards are set forth in the notes to the consolidated financial statements included in item 15 of this Report.

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

Ronald Glibbery was appointed as our CEO at the effective time of the Arrangement on December 17, 2021.

GRANTS OF PLAN-BASED AWARDS

In February 2021, we granted 10,000 RSUs to Daniel Lewis.

OUTSTANDING EQUITY AWARDS AT FISCAL YEAR-END

The following table sets forth information regarding the outstanding equity awards held by our named executive officers as of December 31, 2021.

Option Awards

Financial Officer

amounts reflect the aggregate grant date fair value with respect to awards granted during

the years indicated, as determined pursuant to FASB ASC Topic 718.

The assumptions used

to calculate the aggregate grant date fair value of option and stock awards are set forth

in the notes to the consolidated financial statements included in item 15 of this Report.

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

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

OF PLAN-BASED AWARDS

Stock Awards:

Number of Shares of Stock or

Ronald Glibbery

James Sullivan

(1) Represents

restricted stock units granted pursuant to the Equity Plan.

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

EQUITY AWARDS AT FISCAL YEAR-END

following table sets forth information regarding the outstanding equity awards held by our named executive officers as of December 31,

Unexercisable

James Sullivan

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

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

The stock option was granted on October 19, 2017 for service as a non-employee director, and the shares subject to this option vest annually over three years beginning September 26, 2017 subject to continued employment (or service as a director or consultant).

The stock option was granted on January 4, 2018 for service as a non-employee director, and the shares subject to this option vest annually over three years beginning September 26, 2017 subject to continued service as an employee, director or consultant.

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

The standard option term is

generally ten years, but all of the options expire automatically unless exercised within 90 days after the cessation of service as

an employee, director or consultant.

The stock options were acquired

on December 17, 2021 as consideration for the person’s securities of Peraso Technologies Inc., which we acquired by way of

reverse takeover pursuant to the Arrangement.

The stock option was granted

on October 19, 2017 for service as a non-employee director, and the shares subject to this option vest annually over three years

beginning September 26, 2017 subject to continued employment (or service as a director or consultant).

The stock option was granted

on January 4, 2018 for service as a non-employee director, and the shares subject to this option vest annually over three years beginning

September 26, 2017 subject to continued service as an employee, director or consultant.

The stock option was granted

on February 6, 2019, and the shares subject to this option vest monthly over three years subject to continued service as an employee,

director or consultant.

The shares were fully vested on December 17, 2021 per the Arrangement Agreement.

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

The stock option was granted

on November 20, 2019, and the shares subject to this option vested monthly over three years subject to continued service as an employee,

director or consultant.

The shares were fully vested on December 17, 2021 per the Arrangement Agreement.

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

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

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

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

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

The shares subject to each restricted stock unit grant vest on each semi-annual anniversary over a three-year period commencing on February 6, 2019 subject to continued employment (or service as a director or consultant).

The amount is calculated using the Company’s closing price on the Nasdaq of $4.20 per share of common stock on December 31, 2021.

OPTION EXERCISES AND STOCK VESTED

The following table sets forth the number of shares acquired and aggregate dollar amount realized pursuant to the vesting of stock awards by our named executive officers during 2021.

Option Awards

The stock option was granted

on March 30, 2015, and the shares subject to this option vested monthly over 48 months subject to continued employment (or service

as a director or consultant).

In August 2016, officers tendered

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

stock option was granted on August 23, 2016, and the shares subject to this option vested monthly over 48 months subject to continued

employment (or service as a director or consultant).

The stock option was granted

on February 6, 2019, and the shares subject to this option vest monthly over three years subject to continued service as an employee,

director or consultant).

The stock option was granted

on November 20, 2019, and the shares subject to this option vested monthly over three years subject to continued service as an employee,

director or consultant.

The shares subject to each

restricted stock unit grant vest on each semi-annual anniversary over a three-year period commencing on December 17, 2021 subject

to continued employment (or service as a director or consultant).

The amount is calculated using

the Company’s closing price on the Nasdaq of $0.73 per share of common stock on December 30, 2022.

EXERCISES AND STOCK VESTED

following table sets forth the number of shares acquired and aggregate dollar amount realized pursuant to the vesting of stock awards

by our named executive officers during 2022.

Vesting($)(1)

Ronald Glibbery

James Sullivan

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

Employment and Change-in-Control Arrangements and Agreements

Our Executive Change-in-Control and Severance Policy (the “Policy”) provides benefits that are intended to encourage the continued dedication of our executive officers and to mitigate potential disincentives to the consideration of a transaction that would result in a change in control, particularly where the services of our named executive officers may not be required by a potential acquirer.

The Policy provides for benefits for our named executive officers in the event of a “Change-in-Control,” which is generally defined as:

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

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

Under the Policy, the following compensation and benefits are to be provided to our chief executive officer upon the occurrence of a Change-in-Control, and in the case of our other named executive officers, upon a Change-in-Control combined with a termination of the named executive officer’s employment without cause, or due to disability or resignation for good reason (as defined in the Policy) in connection with the Change-in-Control or within 24 months after it:

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

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

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

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

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

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

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

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

Under the Policy, “cause” means the executive’s:

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

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

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

misconduct resulting in material harm to our business or reputation, including fraud, embezzlement, misappropriation of funds or a material violation of the executive’s Employment, Confidential Information, Invention Assignment and Arbitration Agreement ;

Under the Policy, “good reason” means the occurrence of any of the following conditions without the executive’s consent, but only if such condition is reported by the executive within 90 days of the executive’s knowledge of such condition and remains uncured 30 days after written notice from the executive to the board of directors of said condition:

The aggregate dollar value

realized upon vesting represents the closing price of a share of common stock on the Nasdaq at the date of vesting, multiplied by

the total number of shares vested.

and Change-in-Control Arrangements and Agreements

Executive Change-in-Control and Severance Policy (the “Policy”) provides benefits that are intended to encourage the continued

dedication of our executive officers and to mitigate potential disincentives to the consideration of a transaction that would result

in a change in control, particularly where the services of our named executive officers may not be required by a potential acquirer.

The Policy provides for benefits for our named executive officers in the event of a “Change-in-Control,” which is generally

an acquisition of 45% or more of our common stock or

voting securities by any “person” as defined under the Exchange Act;

consummation of a complete liquidation or dissolution

of the Company or a merger, consolidation, reorganization or sale of all or substantially all of our assets (collectively, a “Business

Combination”) other than a Business Combination in which (A) our stockholders receive 50% or more of the stock of the corporation

resulting from the Business Combination and (B) at least a majority of the board of directors of such resulting corporation were

our incumbent directors immediately prior to the consummation of the Business Combination, and (C) after which no individual, entity

or group (excluding any corporation or other entity resulting from the Business Combination or any employee benefit plan of such

corporation or of ours) who did not own 45% or more of the stock of the resulting corporation or other entity immediately before

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

the Policy, the following compensation and benefits are to be provided to our chief executive officer upon the occurrence of a Change-in-Control,

and in the case of our other named executive officers, upon a Change-in-Control combined with a termination of the named executive officer’s

employment without cause, or due to disability or resignation for good reason (as defined in the Policy) in connection with the Change-in-Control

or within 24 months after it:

any base salary earned but not yet paid through the

date of termination;

any annual or discretionary

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

any compensation under

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

a single lump sum payment

equal to the sum of (a) one year of his or her then-current base salary plus (b) the average of his or her annual bonus payments

in the preceding three years or such shorter time as he or she has been employed by us (with prorated weighting assigned to any bonus

earned for a partial year of employment), which payment will be made within 60 days following the Change-in-Control (in the case

of the chief executive officer), or 60 days following the date of employment termination (in the case of all other named executive

vesting in 100% of all

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

of employment for all other named executive officers;

reimbursement of any business

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

reimbursement of the cost

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

outstanding equity awards that are structured as stock

options, stock appreciation rights or similar awards shall be amended effective as of the date of termination to provide that such

awards will remain outstanding and exercisable until the earlier of (a) 12 months following the date of the Change-in-Control for

the chief executive officer, or the termination of employment for the other named executive officers, and (b) the expiration of the

award’s initial term.

the Policy, “cause” means the executive’s:

willful failure to attend to the executive’s

duties that is not cured by the executive within 30 days of receiving written notice from the CEO (or, in the case of the CEO, from

the board of directors) specifying such failure;

material breach of the executive’s then-current

employment agreement (if any) that is not cured by the executive within 30 days of receiving written notice from the CEO (or, in

the case of the CEO, from the board of directors) specifying such breach;

conviction of (or plea of guilty or nolo contendere

to) any felony or any misdemeanor involving theft or embezzlement;

misconduct resulting in material harm to our business

or reputation, including fraud, embezzlement, misappropriation of funds or a material violation of the executive’s Employment,

Confidential Information, Invention Assignment and Arbitration Agreement;

the Policy, “good reason” means the occurrence of any of the following conditions without the executive’s consent,

but only if such condition is reported by the executive within 90 days of the executive’s knowledge of such condition and remains

uncured 30 days after written notice from the executive to the board of directors of said condition:

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

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

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

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

Notwithstanding

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

Glibbery as the Company’s chief executive officer,

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

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

Termination Type

Payments and Benefits

Termination for Cause or Voluntary Resignation

accrued and unpaid base salary and any other payments required by law, including those in connection with accrued vacation;

reimbursement for business expenses.

Termination Without Cause, for Good Reason, upon Change of Control, Death or Disability

accrued and unpaid base salary and any other payments required by law including those in connection with accrued vacation;

reimbursement for business expenses;

the payment of the greater of (A) the sum of:

for Cause or Voluntary Resignation

accrued and unpaid base

salary and any other payments required by law, including those in connection with accrued vacation;

reimbursement for business

Without Cause, for Good Reason, upon Change of Control, Death or Disability

accrued and unpaid base

salary and any other payments required by law including those in connection with accrued vacation;

reimbursement for business

the payment of the greater

of (A) the sum of:

(x) pay in lieu of notice of termination, in the amount required pursuant to the ESA (as defined in Mr.

Glibbery’s employment agreement), and (y) statutory severance pay (if applicable) in the amount required to be provided pursuant to the ESA;

or (B) twenty-four (24) months of base salary in lieu of notice, calculated solely by reference to the base salary except and only to the extent as otherwise minimally required by the ESA, to be paid in the form of a lump sum;

any bonus awarded but not yet paid in respect of the fiscal year preceding the termination date;

bonus for the year in which the employment terminates, prorated pursuant to the employment agreement;

all benefits (as existed on the date notice of termination is provided) for the duration of the Severance Period (as defined in the employment agreement);

any unvested equity and equity-related compensation that has been issued pursuant to the Plan will be immediately accelerated and vested as of the termination date;

any vested equity and equity-related compensation that has been issued under the Plan will remain exercisable until 24 months following such termination;

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

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

Glibbery under his employment agreement and (ii) Messrs.

Lewis and Sullivan under the Policy, as if such arrangements had been in effect and a Change‑in‑Control occurred on December 31, 2021, and the employment of each of our named executive officers was terminated without cause immediately following the Change‑in‑Control:

Base Salary($)(1)

employment agreement), and (y) statutory severance pay (if applicable) in the amount required to be provided pursuant to the ESA;

or (B) twenty-four (24) months of base salary in lieu of notice, calculated solely by reference to the base salary except and only

to the extent as otherwise minimally required by the ESA, to be paid in the form of a lump sum;

any bonus awarded but

not yet paid in respect of the fiscal year preceding the termination date;

bonus for the year in

which the employment terminates, prorated pursuant to the employment agreement;

all benefits (as existed

on the date notice of termination is provided) for the duration of the Severance Period (as defined in the employment agreement);

any unvested equity

and equity-related compensation that has been issued pursuant to the Plan will be immediately accelerated and vested as of the termination

any vested equity and

equity-related compensation that has been issued under the Plan will remain exercisable until 24 months following such termination;

any other benefits and/or

perquisites shall continue until the end of the ESA Notice Period (as defined in the employment agreement).

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

Glibbery under his employment agreement and (ii) Mr.

Sullivan under

the Policy, as if such arrangements had been in effect and a Change-in-Control occurred on December 31, 2022, and the employment of each

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

Incentive Plans

Continuation of Benefits($)(3)

Stock Option Vesting($)(4)

Stock Award Vesting($)(5)

Ronald Glibbery

James Sullivan

Represents cash severance payments based on the executive’s salary at December 31, 2021, in an amount equal to two years of base salary for Mr.

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

Lewis and Sullivan.

Represents cash severance

payments based on the executive’s salary at December 31, 2022, in an amount equal to two years of base salary for Mr.

and one year of base salary for Mr.

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

Sullivan, the amounts represents the average of his annual performance incentive payments in the preceding three years.

Represents the aggregate amount of all premiums payable for the continuation of the executive’s health benefits for one or two years, as applicable, based on the amounts of such premiums at December 31, 2021.

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

The intrinsic value per share would be calculated as the excess of the closing price of the common stock on the Nasdaq of $4.20 on December 31, 2021 over the exercise price of the option.

Sullivan, the amount represents the average of

his annual performance incentive payments in the preceding three years.

the aggregate amount of all premiums payable for the continuation of the executive’s health benefits for one or two years, as applicable,

based on the amounts of such premiums at December 31, 2022.

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

The intrinsic value per share would be calculated as the excess of the closing price of the common stock on the Nasdaq of $0.73 on December

30, 2022 over the exercise price of the option.

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

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

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

The intrinsic value per share is considered as the closing price of our common stock on the Nasdaq of $0.73 on December 30, 2022.

If a Change‑in‑Control occurred on December 31, 2021, under the Policy, the following numbers of option and award shares would have vested immediately as a result of acceleration on December 31, 2021:

Number of Accelerated Option and Award Shares

a Change-in-Control occurred on December 31, 2022, under the Policy, the following numbers of option and award shares would have vested

immediately as a result of acceleration on December 31, 2022:

Ronald Glibbery

James Sullivan

As a result of the business combination that was effective December 17, 2021, Dan Lewis received a $275,000 payment in December 2021 and, in addition, all of his unvested equity awards vested in full.

The payment and accelerated vesting were in accordance with the terms and conditions of the Policy.

Employment Agreements

In addition to the agreements containing the Change‑in‑Control provisions summarized above, we have entered into our standard form of employment, confidential information, invention assignment and arbitration agreement with each of the named executive officers.

We also have entered into agreements to indemnify our current and former directors and certain executive officers, in addition to the indemnification provided for in our certificate of incorporation and bylaws.

These agreements, among other things, provide for indemnification of our directors and certain executive officers for many expenses, including attorneys’ fees, judgments, fines and settlement amounts incurred by any such person in any action or proceeding, including any action by or in the right of the Company, arising out of such person’s services as a director or executive officer of the Company, any subsidiary of the Company or any other company or enterprise to which the person provided services at our request.

Director Compensation

The following table summarizes the compensation we paid to our non-employee directors in 2021:

addition to the agreements containing the Change-in-Control provisions summarized above, we have entered into our standard form of employment,

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

also have entered into agreements to indemnify our current and former directors and certain executive officers, in addition to the indemnification

provided for in our certificate of incorporation and bylaws.

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

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

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

person’s services as a director or executive officer of the Company, any subsidiary of the Company or any other company or enterprise

to which the person provided services at our request.

following table summarizes the compensation we paid to our non-employee directors in 2022:

Restricted Stock

Andreas Melder

Scott Lewis (3)

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

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

Restricted stock award amounts consist of:

of December 31, 2022, restricted stock unit awards held on December 31, 2022 consist of:

awards granted to Messrs.

Newell, McWalter and Melder on December 22, 2021 to purchase 9,862 shares each.

As of December 31, 2021, our non-employee directors each held outstanding options to purchase 19,724 of shares of our common stock.

As of December 17, 2021, effective with the Arrangement, Mr.

O’Neil and Mr.

Lewis resigned as board members.

Director Fee Compensation

The challenges our business has faced have made it challenging for us to attract new non-employee directors.

Nasdaq and SEC regulations require that a majority of the directors on our board of directors and its committees be independent, non-employee directors, as defined by each entity.

In December 2021, we amended our director compensation structure and adopted our Outside Director Compensation Plan (the Director Plan).

Under the Director Plan, we pay the following annual cash retainer fees, payable in quarterly installments, to our non-employee directors for their service on our board of directors and, as applicable, for service on committees of our board of directors:

Newell, McWalter and

Melder on December 22, 2021 for 20,000 shares each.

of December 31, 2022, Messrs.

McWalter and Melder each held 19,724 outstanding options to purchase of shares of our common stock.

Newell held 24,724 outstanding options to purchase of shares of our common stock.

Fee Compensation

challenges our business has faced have made it challenging for us to attract new non-employee directors.

Nasdaq and SEC regulations require

that a majority of the directors on our board of directors and its committees be independent, non-employee directors, as defined by each

In December 2021, we amended our director compensation structure and adopted our Outside Director Compensation Plan (the Director

Under the Director Plan, we pay the following annual cash retainer fees, payable in quarterly installments, to our non-employee

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

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

1 unchanged sentence

$6,000 for service as chairperson of the Compensation Committee.

Director Equity Compensation

Under the Director Plan, upon initial appointment to our board of directors, each non-employee director will receive a stock option with a value of $100,000, calculated by dividing the $100,000 by the closing trading price of our common stock on the date of grant.

The initial stock option will have an exercise price equal to the closing price

of our common stock on the date of grant and will vest as to one-third of the shares on the first annual anniversary of the grant and the remaining shares quarterly over the subsequent two years, provided the non-employee director continues to serve on the board of directors.

In the event of a merger, sale of substantially all of our assets or similar transaction, vesting of all director options would accelerate as to 100% of the unvested shares subject to the award .

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

The restricted stock unit award will be made upon initial appointment to our board of directors and then subsequently at the first scheduled meeting of the board of directors following our annual meeting of stockholders.

The number of restricted stock units will be calculated by dividing $50,000 by the closing trading price of our common stock on the date of the award.

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

Equity Compensation

the Director Plan, upon initial appointment to our board of directors, each non-employee director will receive a stock option with

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

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

of the shares on the first annual anniversary of the grant and the remaining shares quarterly over the subsequent two years, provided

the non-employee director continues to serve on the board of directors.

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

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

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

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

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

The number of restricted stock units

will be calculated by dividing $50,000 by the closing trading price of our common stock on the date of the award.

The restricted stock

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

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

Prior to the adoption of the Director Plan, our basic annual service award to a non-employee director had been a restricted stock unit award for 1,000 to 2,000 shares of our common stock.

In December 2021, we awarded restricted stock units for 2,000 shares to each of our non-employee directors.

As a result of the business combination that was effective December 17, 2021, these awards vested and become non-forfeitable on December 17, 2021.

Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters

The following table sets forth certain information as of March 1, 2022 concerning the ownership of our common stock by:

following table sets forth certain information as of March 1, 2023 concerning the ownership of our common stock by:

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

2 unchanged sentences

all directors and executive officers as a group.

Beneficial ownership is determined in accordance with Rule 13d-3 of the Exchange Act, and includes all shares over which the beneficial owner exercises voting or investment power.

Shares that are issuable upon the exercise of options, warrants and other rights to acquire common stock that are presently exercisable or exercisable within 60 days of March 1, 2022 are reflected in a separate column in the table below.

These shares are taken into account in the calculation of the total number of shares beneficially owned by a particular holder and the total number of shares outstanding for the purpose of calculating percentage ownership of the particular holder.

We have relied on information supplied by our officers, directors and certain stockholders and on information contained in filings with the SEC.

Except as otherwise indicated, and subject to community property laws where applicable, we believe, based on information provided by these persons, that the persons named in the table have sole voting and investment power with respect to all shares of common stock shown as beneficially owned by them.

The percentage of beneficial ownership is based on 21,578,908 shares of common stock outstanding as of March 1, 2022.

Unless otherwise stated, the business address of each of our directors and executive officers listed in the table is 2309 Bering Drive , San Jose , California 95 131 .

ownership is determined in accordance with Rule 13d-3 of the Exchange Act and includes all shares over which the beneficial owner exercises

voting or investment power.

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

that are presently exercisable or exercisable within 60 days of March 1,2023 are reflected in a separate column in the table below.

shares are taken into account in the calculation of the total number of shares beneficially owned by a particular holder and the total

number of shares outstanding for the purpose of calculating percentage ownership of the particular holder.

We have relied on information

supplied by our officers, directors and certain stockholders and on information contained in filings with the SEC.

Except as otherwise

indicated, and subject to community property laws where applicable, we believe, based on information provided by these persons, that

the persons named in the table have sole voting and investment power with respect to all shares of common stock shown as beneficially

owned by them.

The percentage of beneficial ownership is based on 23,376,466 shares of our common stock and exchangeable shares outstanding

as of March 1, 2023.

otherwise stated, the business address of each of our directors and executive officers listed in the table is 2309 Bering Drive, San

Jose, California 95131.

Amount and Nature of Beneficial

Name and Principal Position

Number of Shares

Beneficially Owned

(Excluding Outstanding

Number of Shares

Issuable on Exercise

of Outstanding Options

or Convertible

Securities(2)

Entities affiliated with Roadmap Capital General Partner Ltd.

Armistice Capital, LLC

Directors and Officers:

4 unchanged sentences

Alexander Tomkins

All current directors and executive

officers as a group (8 persons)

All current directors and executive officers as a group

Represents holdings of less than one percent.

Excludes shares subject to outstanding options, warrants, convertible securities or other rights to acquire common stock that are exercisable within 60 days of March 1, 2022.

Represents the number of shares subject to outstanding options, warrants, convertible securities or other rights to acquire common stock that are exercisable within 60 days of March 1, 2022.

Based on information reported by Roadmap Capital General Partner Ltd.

(“Roadmap GP”) on Schedule 13D filed with the SEC on December 27, 2021, Roadmap GP reported that it has shared dispositive power with respect to 8,562,520 shares, and shared voting power with respect to 8,562,520 shares.

Roadmap GP is the general partner of Roadmap Innovation I, Roadmap Innovation II, Roadmap Peraso, Roadmap Peraso (U.S.

shares subject to outstanding options, warrants, convertible securities or other rights to acquire common stock that are exercisable

within 60 days of March 1, 2023.

the number of shares subject to outstanding options, restricted stock units, convertible securities or other rights to acquire common

stock that are exercisable within 60 days of March 1, 2023.

on information reported by Roadmap Capital General Partner Ltd.

(“Roadmap GP”) on Schedule 13D filed with the SEC on December

27, 2021, Roadmap GP reported that it has shared dispositive power with respect to 8,562,520 shares, and shared voting power with respect

to 8,562,520 shares.

Roadmap GP is the general partner of Roadmap Innovation I, Roadmap Innovation II, Roadmap Peraso, Roadmap Peraso

and Offshore), Roadmap Peraso II, Roadmap Peraso II (U.S.

and Offshore), Roadmap Peraso III and Roadmap Peraso III (U.S.

and Offshore) (collectively, the “Roadmap Funds”), which own these shares.

and Offshore)

(collectively, the “Roadmap Funds”), which own these shares.

Roadmap Capital Inc.

is the sole shareholder of Roadmap GP.

Because of the relationship between Roadmap GP and each of the Roadmap Funds, Roadmap GP may be deemed to beneficially own securities beneficially owned by each of the Roadmap Funds.

Because of the relationship between Roadmap Capital and Roadmap GP, Roadmap Capital may be deemed to beneficially own the securities beneficially owned by Roadmap GP.

Roadmap GP listed its address as 130 Bloor Street West, Suite 603, Toronto, Ontario, Canada M5S 1N5 .

Securities Authorized for Issuance under Equity Compensation Plans

The following table provides information as of December 31, 2021 regarding equity compensation plans approved by our security holders.

As of December 31, 2021, we had no awards outstanding under equity compensation plans that have not been approved by our security holders.

Because of the relationship between Roadmap GP and each of the Roadmap Funds, Roadmap GP may be deemed to beneficially own securities

beneficially owned by each of the Roadmap Funds.

Because of the relationship between Roadmap Capital and Roadmap GP, Roadmap Capital

may be deemed to beneficially own the securities beneficially owned by Roadmap GP.

Roadmap GP listed its address as 130 Bloor Street

West, Suite 603, Toronto, Ontario, Canada M5S 1N5.

on information reported by Armistice Capital, LLC on Schedule 13G filed with the SEC on February 14, 2023.

Authorized for Issuance under Equity Compensation Plans

following table provides information as of December 31, 2022 regarding equity compensation plans approved by our security holders.

of December 31, 2022, we had no awards outstanding under equity compensation plans that have not been approved by our security holders.

Plan Category

Number of Securities

Upon Exercise of

12 unchanged sentences

in Column (a))(1)

Equity compensation plans

approved by security holders

Consists of shares of common stock available for future issuance under the 2019 Plan.

Consists of 305,532 shares of common stock subject to outstanding equity awards under the 2019 Plan and 1,341,017 shares of common stock subject to outstanding options assumed by us in connection with the business combination with Peraso Technologies Inc.

Equity compensation plans approved by security holders

2,556,063 (2)

Consists of shares of common stock available for future

issuance under the 2019 Plan.

of 61,787 shares of common stock subject to outstanding equity awards under the 2010 Plan, 1,195,954 shares of common stock subject to

outstanding equity awards under the 2019 Plan and 1,298,322 of common stock subject to outstanding options assumed by us in connection

with the business combination with Peraso Technologies Inc.

that was completed in December 2021.

Certain Relationships and Related Transactions and Director Independence

Related Party Transactions

Director Independence

Our board of directors has determined that each of the current directors, with the exception of Daniel Lewis and Ronald Glibbery, is “independent,” as defined by the listing rules of the NASDAQ Stock Market, or Nasdaq, and the rules and regulations of the SEC.

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

No director qualifies as independent unless the board of directors affirmatively determines that he has no direct or indirect relationship with us that would impair his independence.

We independently review the relationship of the Company to any entity employing a director or on whose board of directors he is serving currently .

Party Transactions

family member of one of our executive officers serves as a consultant to us.

During the year ended December 31, 2022 and 2021, we paid

approximately $162,000 and $208,000, respectively, to the consultant.

Additionally, a family member of one of our executive officers

is an employee of the Company.

During the year ended December 31, 2022, we paid approximately $101,000 to the employed family member,

which includes the aggregate grant date fair value, as determined pursuant to FASB ASC Topic 718, of an RSU awarded in April 2022.

the year ended December 31, 2021, we paid approximately $94,000 to the employed family member.

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

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

Our board of directors

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

listing rules.

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

relationship with us that would impair his independence.

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

a director or on whose board of directors he is serving currently.

Principal Accountant Fees and Services

Weinberg & Co., P.A.

(“Weinberg”) was our independent registered public accounting firm for the years ended December 31, 2021 and 2020.

The following table shows the fees billed (in thousands of dollars) to us by Weinberg for the financial statement audits and other services provided for fiscal 2021 and 2020.

(“Weinberg”) was our independent registered public accounting firm for the years ended December 31, 2022

following table shows the fees billed (in thousands of dollars) to us by Weinberg for the financial statement audits and other services

provided for fiscal 2022 and 2021.

Audit Fees(1)

Audit-Related Fees(2)

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

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

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

The Audit Committee meets with our independent registered public accounting firm at least four times a year.

At such times, the Audit Committee reviews both audit and non‑audit services performed by the independent registered public accounting firm, as well as the fees charged for such services.

The Audit Committee is responsible for pre‑approving all auditing services and non‑auditing services (other than non‑audit services falling within the de minimis exception set forth in Section 10A(i)(1)(B) of the Exchange Act and non‑audit services that independent auditors are prohibited from providing to us) in accordance with the following guidelines:

(1) pre‑approval policies and procedures must be detailed as to the particular services provided;

Audit fees consisted of fees for professional

services rendered for the audit of our annual consolidated financial statements, review of our quarterly financial statements and

services normally provided in connection with statutory and regulatory filings.

Audit-related fees consisted of fees related to the

issuance of SEC registration statements.

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

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

At such times, the Audit Committee

reviews both audit and non-audit services performed by the independent registered public accounting firm, as well as the fees charged

for such services.

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

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

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

(1) pre-approval policies

and procedures must be detailed as to the particular services provided;

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

and (3) the Audit Committee may delegate pre‑approval authority to one or more of its members, who shall report to the full committee, but shall not delegate its pre‑approval authority to management.

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

(a) (1) Consolidated Financial Statements:

The following documents are filed as part of this Report:

Consolidated Financial Statements and Report of Independent Registered Public Accounting Firm, all of which are set forth on pages 60 through 89 of this Report.

and (3) the Audit Committee may delegate pre-approval authority to one or more of its members, who shall report to the full committee,

but shall not delegate its pre-approval authority to management.

Among other things, the Audit Committee examines the effect that performance

of non-audit services may have upon the independence of the auditors.

Consolidated Financial Statements:

following documents are filed as part of this Report:

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

through F-34 of this Report.

Financial Statement Schedules:

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

(3) Exhibits:

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

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

financial statements or notes thereto.

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

Arrangement Agreement with Peraso Technologies Inc.

2 unchanged sentences

Certificate of Amendment to Restated Certificate of Incorporation of the Company

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

Certificate of Amendment to the Amended and Restated Certificate of Incorporation of Peraso Inc.,

filed with the Secretary of State of the State of Delaware on August 27, 2019

Certificate of Amendment to Articles of Incorporation (Name Change)

5 unchanged sentences

Form of Common Stock Purchase Warrant

Description of Securities

Description of the Registrant’s Securities

2010 Amended and Restated Equity Incentive Plan

2 unchanged sentences

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

Amended and Restated 2010 Equity Incentive Plan

Amended and Restated 2010

Equity Incentive Plan

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

2019 Stock Incentive Plan

Incentive Plan

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

Amended and Restated 2010 Equity Incentive Plan

and Restated 2010 Equity Incentive Plan

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

2 unchanged sentences

2009 Share Option Plan

Form of Pre-Funded Common Stock Purchase Warrant

Form of Common Stock Purchase Warrant

Employment offer letter agreement between the Company and James Sullivan dated December 21, 2007

2 unchanged sentences

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

2010 Amended and Restated Equity Incentive Plan

and Restated Equity Incentive Plan

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

11 unchanged sentences

Employment Agreement (Ronald Glibbery)

Employment offer letter agreement between the Company and Mark Lunsford dated October 7, 2023

Employment Agreement (Brad Lynch)

Employment Agreement (Alexander Tomkins)

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

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

Amendment to employment agreement between Peraso Technologies Inc.

and Brad Lynch dated April 15, 2022

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

Form of Securities Purchase Agreement

Form of Registration Rights Agreement

List of Subsidiaries

30 unchanged sentences

Incorporated by reference to Exhibit 4.5 to the registration statement on Form S-8 filed by the Company on January 7, 2022 (Commission File No.

Incorporated by reference to Exhibit 4.1 to Form 8-K filed by the Company on November 30, 2022 (Commission File No.

Incorporated by reference to Exhibit 4.2 to Form 8-K filed by the Company on November 30, 2022 (Commission File No.

Incorporated by reference to Exhibit 10.26 to Form 10-K filed by the Company on March 17, 2008 (Commission File No.

13 unchanged sentences

Incorporated by reference to Exhibit 10.3 to Form 8-K filed by the Company on December 20, 2021 (Commission File No.

Incorporated by reference to Exhibit 10.1 to Form 10-Q filed by the Company on August 15, 2022 (Commission File No.

Incorporated by reference to Exhibit 10.2 to Form 10-Q filed by the Company on August 15, 2022 (Commission File No.

Incorporated by reference to Exhibit 10.3 to Form 10-Q filed by the Company on August 15, 2022 (Commission File No.

Incorporated by reference to Exhibit 10.1 to Form 10-Q filed by the Company on November 14, 2022 (Commission File No.

Incorporated by reference to Exhibit 10.1 to Form 8-K filed by the Company on November 30, 2022 (Commission File No.

Filed herewith.

Management contract, compensatory plan or arrangement.

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

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

Certain schedules, exhibits and similar attachments

have been omitted pursuant to Item 601(a)(5) of Regulation S-K.

The Company hereby undertakes to furnish copies of such omitted materials

supplementally upon request by the SEC.

Form 10-K Summary

Not applicable.

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this Report to be signed on its behalf by the undersigned, thereunto duly authorized, on the 31st day of March 2022.

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

Exchange Act of 1934, the Registrant has duly caused this Report to be signed on its behalf by the undersigned, thereunto duly authorized,

on the 29th, day of March, 2023.

/s/ Ronald Glibbery

Ronald Glibbery

Chief Executive Officer and Director

POWER OF ATTORNEY

KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears below constitutes and appoints Ronald Glibbery and James Sullivan as his true and lawful attorneys-in-fact and agents, with full power of substitution and resubstitution, for him and in his name, place and stead, in any and all capacities, to sign any and all amendments to this Report on Form 10-K, and to file the same, with all exhibits thereto, and other documents in connection therewith, with the Securities and Exchange Commission, granting unto said attorney-in-fact and agents full power and authority to do and perform each and every act and thing requisite and necessary to be done in connection therewith, as fully to all intents and purposes as he might or could do in person, hereby ratifying and confirming all that said attorney-in- fact and agents, or his substitute or substitutes, may lawfully do or cause to be done by virtue hereof.

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.

Chief Executive Officer

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

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

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

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

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

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

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

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

registrant and in the capacities and on the dates indicated.

/s/ Ronald Glibbery

Chief Executive Officer and Director

Chief Executive

Officer and Director

March 29, 2023

2 unchanged sentences

/s/ James Sullivan

Chief Financial Officer

Chief Financial

James Sullivan

5 unchanged sentences

March 29, 2023

/s/ Andreas Melder

March 29, 2023

3 unchanged sentences

INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

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

Consolidated Balance Sheets

Consolidated Statements of Operations

Consolidated Statements of Stockholders’ Equity (Deficit)

Consolidated Statements of Cash Flows

Notes to Consolidated Financial Statements

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

Consolidated Balance Sheets F-4

Consolidated Statements of Operations and Comprehensive Loss F-5

Consolidated Statements of Stockholders’ Equity F-6

Consolidated Statements of Cash Flows F-7

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

Report of Independent Registered Public Accounting Firm

2 unchanged sentences

Opinion on the Consolidated Financial Statements

We have audited the accompanying consolidated balance sheets of Peraso Inc.

(the “Company”) and subsidiaries as of December 31, 2021 and 2020, the related consolidated statements of operations, stockholders’ equity (deficit), and cash flows for the years ended December 31, 2021 and 2020, and the related notes (collectively referred to as the “consolidated financial statements”).

In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company and its subsidiaries as of December 31, 2021 and 2020, and the results of their operations and their cash flows for the years then ended , in conformity with accounting principles generally accepted in the United States of America.

We have audited the accompanying consolidated

balance sheets of Peraso Inc.

(the “Company”) and subsidiaries as of December 31, 2022 and 2021, the related consolidated

statements of operations, stockholders’ equity (deficit), and cash flows for the years ended December 31, 2022 and 2021, and the

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

In our opinion, the consolidated financial

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

and 2021, and the results of their operations and their cash flows for the years then ended , in conformity with accounting

principles generally accepted in the United States of America.

Going Concern

The accompanying financial

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

As discussed in Note 1 to the financial statements,

during the year ended December 31, 2022, the Company incurred a net loss and utilized cash in operations.

These conditions raise substantial

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

Management’s plans to alleviate these conditions are also

described in Note 1.

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

Basis for Opinion

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

Our responsibility is to express an opinion on the Company’s consolidated financial statements based on our audits.

We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (“PCAOB”) and are required to be independent with respect to the Company in accordance with the U.S.

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

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

Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud.

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

As part of our audit we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting.

These consolidated financial statements are the

responsibility of the Company’s management.

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

statements based on our audits.

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

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

federal securities

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

We conducted our audits in accordance with the

standards of the PCAOB.

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

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

The Company is not required to have, nor were we

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

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

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

internal control over financial reporting.

Accordingly, we express no such opinion.

Our audits included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks.

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

Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements.

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

Critical Audit Matter

The critical audit matter communicated below is a matter arising from the current period audit of the financial statements that were communicated or required to be communicated to the audit committee and that (1) relate to accounts or disclosures that are material to the financial statements and (2) involved especially challenging, subjective, or complex judgments.

The communication of critical audit matters does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matters below, providing separate opinions on the critical audit matters or on the accounts or disclosures to which they relate.

Reverse Acquisition

As described further in Note 2 to the consolidated financial statements, o n December 17, 2021 the Company completed the transaction pursuant to the terms of the Arrangement Agreement between the Company and Peraso Technologies Inc.

(“Peraso Tech”), a private company domiciled in Canada.

Immediately following the E f fective T ime, there were 21,569,158 shares of Common Stock outstanding and 23,272,641 shares of Common Stock outstanding on a fully-diluted basis, with t h e former stockholders of Peraso Tech owning approximately 61% of the economic and voting interest of the Company and the Company ’ s stockholders immediate l y prior to the E f fective T ime holding the remaining 39% economic and voting interest.

The Company has accounted for the above described transaction as a reverse acquisition using the acquisition method of accounting in accordance with Accounting Standards Codification (ASC) Topic 805, Business Combinations, with the Company as the accounting acquiree and Peraso Tech as the accounting acquiror.

The acquisition method of accounting requires the assets acquired and liabilities assumed to be recorded at fair value as of the transaction date and for which the Company utilized a valuation report from a third-party valuation firm.

As of December 31, 2021, the fair value estimates for intangible assets and goodwill are provisional as the valuation report has not been finalized yet.

We identified the estimation of the fair value of the assets acquired and liabilities assumed in the reverse acquisition as a critical audit matter.

The principal considerations for our determination that the estimation of the fair value of the assets acquired and liabilities assumed in the reverse acquisition was a critical audit matter are that there was a high estimation uncertainty due to significant management and specialist judgements with respect to the selection of the valuation methodologies applied by the third party valuation firm, including the assumptions used to estimate the future revenues and cash flows, revenue growth rates, forecasted costs, technology migration curves, discount rates and future market conditions in the determination of the fair value of the intangible assets acquired.

This in turn required the exercise of a high degree of auditor judgment, including the evaluation of the reasonableness of the valuation models and significant assumptions.

Professionals with specialized skill and knowledge were used to assist in the evaluation of the Company’s discounted cash flow models and the and discount rates assumptions.

Our audit procedures responsive to the estimation of the fair value of the assets acquired and liabilities assumed in the reverse acquisition included the following procedures, among others:

We evaluated management’s and the valuation specialist’s identification of assets acquired and liabilities assumed.

We assessed the reasonableness of the fair value measurements prepared by management and their third-party valuation specialists, including the discount rates, revenue growth rates, technology migration curves and projected profit margins used in valuing the intangible assets.

We evaluated the reasonableness of the methodologies used to value the assets acquired and liabilities assumed and whether such approaches were appropriate given the nature of the item being valued.

We evaluated the qualifications of the third-party firm engaged by the Company based on their credentials and experience.

We evaluated the accuracy and completeness of the financial statement presentation and disclosure of the acquisition.

We have served as the Company’s auditor since 2020.

Our audits included performing procedures to assess

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

that respond to those risks.

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

consolidated financial statements.

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

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

We believe that our audits provide

a reasonable basis for our opinion.

Critical Audit Matters

The critical audit matters communicated below

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

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

challenging, subjective, or complex judgments.

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

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

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

Amortizable intangible assets impairment assessment

As described in Notes 1 and 2 to the consolidated

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

relationships had a carrying value of $6.3 million as of December 31, 2022.

Management conducts an impairment assessment annually on December

31, or more frequently if impairment indicators exist.

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

acquired technology and customer relationships exceeds its fair value.

The Company’s evaluation of the recoverability of acquired

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

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

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

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

Based on the results of the impairment assessment, management

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

We identified the evaluation of acquired technology

and customer relationships intangible assets for potential impairment as a critical audit matter because of the significant estimates

and assumptions management makes related to future cash flows expected to be generated over the intangible assets’ lives.

the impairment evaluation required a high degree of auditor judgment and an increased extent of effort when performing audit procedures

to evaluate the reasonableness of management’s future cash flows over the remaining useful life of the long-lived asset group.

The primary procedures we performed to address

this critical audit matter included:

(i) obtained an understanding of management’s processes related to its impairment assessment

of intangibles, (ii) evaluated the reasonableness of management’s forecasts of undiscounted future cash flows by comparing management’s

projections to the Company’s historical results and evaluating the appropriateness of projected revenue growth, margin and cost

rates (iii) tested the completeness and accuracy of underlying data used in the projections, and (iv) evaluated whether the estimated

future cash flows over the remaining useful life were consistent with evidence obtained in other areas of the audit.

Goodwill Impairment Assessment

As described in

Notes 1 and 2 to the consolidated financial statements, on December 17, 2021 the Company completed a reverse acquisition of Peraso

The Company has accounted for the reverse acquisition using the acquisition method of accounting in

accordance with Accounting Standards Codification (ASC)Topic 805, Business Combinations, with the Company as the accounting acquiree and

Peraso Tech as the accounting acquiror.

The acquisition method of accounting requires the assets acquired and liabilities assumed

to be recorded at fair value as of the transaction date.

The excess of the fair value of the purchase consideration over the estimated

fair values of the net assets acquired was determined to be $9.6 million and was recorded as goodwill.

Management tests its goodwill for impairment on

December 31 or more frequently if circumstances indicate that the carrying value of a reporting unit may exceed its fair value.

carrying amount of the Company, as a sole reporting unit, including goodwill, exceeds its fair value, an impairment loss is recognized

in an amount equal to that excess up to the amount of the recorded goodwill.

During the fourth quarter of 2021, the Company experienced

a sustained decrease in its share price, and as of December 31, 2022, the Company’s market capitalization was below the carrying

value of the Company’s net assets.

Pursuant to current accounting guidance, management concluded that this was an impairment triggering

event, and first evaluated its amortizable intangible assets, and then performed an impairment assessment of its goodwill.

results of the impairment assessment, management determined that its goodwill was impaired and recognized an impairment charge of $9.6

related to goodwill during the year ended December 31, 2021.

Following the impairment, the Company had no remaining goodwill as of December

We identified the evaluation of goodwill impairment

as a critical audit matter because of the significant judgment by management when determining the fair value of the reporting unit.

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

The primary procedures we performed to address

this critical audit matter included:

(i) obtained an understanding of management’s process for determining the fair value of the

reporting unit, (ii) we evaluated the allocation of the Company’s estimated fair value to its reporting units and the comparison

of the Company’s estimated fair value to its market capitalization, and (iii) we recalculated the impairment recorded for goodwill

of $9.6 million based on the excess of the carrying values of goodwill over its estimated fair value as of December 31, 2022.

We have served as the Company’s

auditor since 2020.

/s/ Weinberg & Company

1 unchanged sentence

March 29, 2023

PART I—FINANCIAL INFORMATION

Financial Statements

CONSOLIDATED BALANCE SHEETS

(In thousands, except par value data)

(In thousands, except par value)

Current assets

3 unchanged sentences

Tax credits and receivables

Deferred cost of net revenue

Prepaid expenses and other

4 unchanged sentences

Intangible assets, net

LIABILITIES AND STOCKHOLDERS’ EQUITY (DEFICIT)

LIABILITIES AND STOCKHOLDERS’ EQUITY

Current liabilities

6 unchanged sentences

Warrant liability

Convertible debentures

Total liabilities

Commitments and contingencies (Note 5)

Stockholders’ equity (deficit)

Stockholders’ equity

Preferred stock, $ 0.01 par value;

20,000 shares authorized;

and outstanding

none issued and outstanding

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

one share authorized;

and one share issued and outstanding at December 31, 2022 and 2021

Common stock, $ 0.001 par value;

120,000 shares authorized;

shares and 5,241 shares issued and outstanding at December 31,

2021 and December 31, 2020, respectively

14,270 shares and 12,284 shares issued and outstanding at December 31, 2022 and December 31, 2021, respectively

Exchangeable shares, no par value;

unlimited shares authorized;

9,107 shares and 9,295 shares outstanding at December 31, 2022 and December 31, 2021, respectively

Additional paid-in capital

Accumulated other comprehensive loss

Accumulated deficit

Total stockholders’ equity (deficit)

Total stockholders’ equity

Total liabilities and stockholders’ equity

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

CONSOLIDATED STATEMENTS OF OPERATIONS

The accompanying notes are an integral part of

these consolidated financial statements.

CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE

(In thousands, except per share data)

License and other

Royalty and other

Total net revenue

3 unchanged sentences

Selling, general and administrative

Gain on license and asset sale

Impairment of goodwill

Total operating expenses

2 unchanged sentences

Change in fair value of warrant liability

Financing cost - warrant issuance

Other income (expense), net

Deemed dividend on inducement of conversion of Class C Preferred Shares

Accretion of preferred shares presented as dividends

Effect of foreign exchange on preferred shares

Net loss attributable to common stockholders

Net loss per share attributable to common stockholders

Other comprehensive loss, net of tax:

Net unrealized loss on available-for-sale-securities

Comprehensive loss

Net loss per share

Basic and diluted

1 unchanged sentence

Basic and diluted

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

CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY (DEFICIT)

The accompanying notes are an integral part of

these consolidated financial statements.

CONSOLIDATED STATEMENTS OF STOCKHOLDERS’

EQUITY (DEFICIT)

( In thousands )

Preferred Stock

Comprehensive

Balance as of December 31, 2020

Issuance of common stock under stock plans, net

Conversion of Convertible Class A Preferred Shares

Conversion of Convertible Class B Preferred Shares

Conversion of Convertible Class C Preferred Shares

Dividends on preferred shares

Effect of foreign exchange on preferred shares

Exchangeable shares

Issuance of common stock

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

Settlement of warrants to

Conversion of convertible

debentures to common stock

Effect of business combination

Stock-based compensation

Balance as of December 31, 2021

Issuance of common stock under stock plans, net

Settlement of warrants to common stock

Conversion of convertible debentures to common stock

Effect of business combination

Exchange of exchangeable shares

Issuance of common stock

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

Sale of common stock and

Initial recognition of fair

value of warrant liability

Unrealized loss on available-for-sale

Stock-based compensation

Balance as of December

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

$ ( 149,597 )

The accompanying notes are an integral part of

these consolidated financial statements.

CONSOLIDATED STATEMENTS OF CASH FLOWS

5 unchanged sentences

Change in fair value of warrant liability

Finance costs related to warrants

Accrued interest

Amortization of lease right-of-use assets

Change in operating lease liabilities

Financing costs - warrant issuances

Impairment of goodwill

Accrued interest on debt obligation

Interest portion of financing lease repayment

Amortization of debt discount

4 unchanged sentences

Accounts payable

Right-of-use assets

Lease liabilities - operating

Deferred revenue and other liabilities

3 unchanged sentences

Purchases of intangible assets

Proceeds from maturities of marketable securities and investments

Proceeds from maturities of marketable securities

Purchases of marketable securities

Cash acquired in business combination

Net cash provided by (used in) investing activities

Net cash provided by investing activities

Cash flows from financing activities:

Proceeds from sale of common stock, net

Repayment of financing lease

Repayment of loans

2 unchanged sentences

Net proceeds from convertible debentures

Net proceeds from debtor-in-possession loans

Taxes paid to net share settle equity awards

Net cash provided by financing activities

4 unchanged sentences

Noncash investing and financing activities:

Reclassification of prepaids to fixed assets

Settlement of accounts receivable through debtor-in-possession loans

Conversion of debtor-in-possession loan into convertible debentures

Initial recognition of warrant liability

Recognition of right-of-use assets and lease liabilities

Unrealized loss on available-for-sale securities

Fair value of new warrant liability issued recognized as debt discount

Conversion of preferred shares to common stock

Deemed dividend on inducement of conversion of Class C preferred shares

Dividends and foreign exchange effect on preferred shares

Settlement of loan facility against tax receivables

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Conversion of convertible debentures into common stock

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

The accompanying notes are an integral part of

these consolidated financial statements.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

The Company and Summary of Significant Accounting Policies

Peraso Inc., formerly known as MoSys, Inc.

formerly known as MoSys, Inc.

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

The Company is a fabless semiconductor company specializing in the development of mmWave technology, including 60GHz and 5G products and derives revenue from sellingsemiconductor devices and licensing of intellectual property (IP) and performance of non-recurring engineering services (NRE) for customers and prospective customers.

The Company also manufactures and sells memory semiconductor devices that enable fast, intelligent data access and decision making for a wide range of markets.

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

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

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

The Company derives revenue from selling its semiconductor

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

The Company also manufactures and sells high-performance memory

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

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

(Callco) and 2864555 Ontario Inc.

(Canco), entered into an Arrangement Agreement (the Arrangement Agreement) with Peraso Technologies Inc.

(Peraso Tech), a corporation existing under the laws of the province of Ontario, to acquire all of the issued and outstanding common shares of Peraso Tech (the Peraso Shares), including those Peraso Shares to be issued in connection with the conversion or exchange of secured convertible debentures and common share purchase warrants of Peraso Tech, as applicable, by way of a statutory plan of arrangement (the Arrangement) under the Business Corporations Act (Ontario).

On December 17, 2021, following the satisfaction of the closing conditions set forth in the Arrangement Agreement, the Arrangement was completed and , the Company changed its name to “Peraso Inc.” and began trading on the Nasdaq Stock Market (the Nasdaq) under the symbol “PRSO.”

For accounting purposes, the legal subsidiary, Peraso Tech, has been treated as the accounting acquirer and the Company, the legal parent, has been treated as the accounting acquiree.

The transaction has been accounted for as a reverse acquisition in accordance with Accounting Standards Codification (ASC) No.

805, Business Combinations (ASC 805).

Accordingly, these consolidated financial statements are a continuation of Peraso Tech’s consolidated financial statements prior to December 17, 2021 and exclude the balance sheets, statements of operations and comprehensive loss, statement of changes in stockholders’ equity and statements of cash flows of the Company prior to December 17, 2021.

(Canco), entered into an Arrangement

Agreement (the Arrangement Agreement) with Peraso Technologies Inc.

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

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

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

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

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

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

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

For accounting

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

the accounting acquiree.

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

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

Accordingly, these consolidated financial

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

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

See Note 2 for additional disclosure .

Liquidity and Going Concern

The Company incurred net losses of approximately

$ 32.4 million and $ 10.9 million for the years ended December 31, 2022 and December 31, 2021, respectively, and had an accumulated deficit

of approximately $ 149.6 million as of December 31, 2022.

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

and have required the Company to raise substantial amounts of additional capital.

To date, the Company has primarily financed its operations

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

The Company expects to continue to incur operating

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

The Company will need to increase revenues substantially beyond levels that it has attained in the past in order to generate sustainable

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

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

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

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

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

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

There can be no assurance

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

such capital will be offered on terms and conditions acceptable to the Company.

The Company’s primary focus is producing and selling

its products.

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

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

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

business activities.

Basis of Presentation

The consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries.

All significant intercompany transactions and balances have been eliminated in consolidation.

The consolidated financial statements include

the accounts of the Company and its wholly-owned subsidiaries.

All significant intercompany transactions and balances have been eliminated

in consolidation.

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

Going Concern

The accompanying financial statements have been prepared on a going concern basis, which contemplates the realization of assets and satisfaction of liabilities in the normal course of business.

The realization of assets and the satisfaction of liabilities in the normal course of business are dependent on, among other things, the Company’s ability to operate profitably, to generate cash flows from operations, and to pursue financing arrangements to support its working capital requirements.

At issuance of the Company’s financial statements for the year ended December 31, 2020, management had determined that there was significant doubt as to the ability of the Company to meet its obligations and continue as a going concern.

As a result of the Arrangement, which was completed in December 2021, and resulting improved financial position, the Company believes it has sufficient liquidity to meet its obligations as they come due and conduct its business for a period of at least 12 months from the date of issuance of these financial statements.

Risk and Uncertainties

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

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

Certain prior year amounts have been reclassified

for consistency with the current period presentation.

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

Risks and Uncertainties

The Company is subject to risks from, among other

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

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

The global outbreak of the coronavirus disease

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

government in March 2020.

This has negatively affected the U.S.

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

The full extent of the COVID-19 impact on the Company’s operational and financial performance will depend on future developments, including the duration and spread of the pandemic and related actions taken by U.S.

and foreign government agencies to prevent disease spread, all of which are uncertain, out of the Company’s control, and cannot be predicted.

has negatively affected the U.S.

and global economy, disrupted global supply chains, significantly restricted travel and transportation,

resulted in mandated closures and orders to “shelter-in-place” and created significant disruption of the financial markets.

The full extent of the COVID-19 impact on the Company’s operational and financial performance will depend on future developments,

including the duration and spread of the pandemic and related actions taken by U.S.

and foreign government agencies to prevent disease

spread, all of which are uncertain, out of the Company’s control, and cannot be predicted.

Use of Estimates

The preparation of financial statements in accordance with accounting principles generally accepted in the United States requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses recognized during the reported period.

Material estimates may include assumptions made in determining reserves for uncollectible receivables, inventory write-downs, impairment of long-term assets, purchase price allocations, valuation allowance on deferred tax assets, accruals for potential liabilities and assumptions made in valuing equity instruments.

The preparation of financial statements in accordance

with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure

of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses recognized

during the reported period.

Material estimates may include assumptions made in determining reserves for uncollectible receivables, inventory

write-downs, impairment of long-term assets, purchase price allocations, valuation allowance on deferred tax assets, accruals for potential

liabilities and assumptions made in valuing equity instruments.

Actual results could differ from those estimates.

Cash Equivalents and Investments

The Company has invested its excess cash in money market accounts, certificates of deposit, corporate debt, government-sponsored enterprise bonds and municipal bonds and considers all highly liquid debt instruments purchased with an original maturity of three months or less to be cash equivalents.

Investments with original maturities greater than three months and remaining maturities less than one year are classified as short-term investments.

Investments with remaining maturities greater than one year are classified as long-term investments.

Management generally determines the appropriate classification of securities at the time of purchase.

The Company has invested its excess cash in money

market accounts, certificates of deposit, corporate debt, government-sponsored enterprise bonds and municipal bonds and considers all

highly liquid debt instruments purchased with an original maturity of three months or less to be cash equivalents.

Investments with original

maturities greater than three months and remaining maturities less than one year are classified as short-term investments.

with remaining maturities greater than one year are classified as long-term investments.

Management generally determines the appropriate

classification of securities at the time of purchase.

All securities are classified as available-for-sale.

The Company’s available-for-sale short-term and long-term investments are carried at fair value, with the unrealized holding gains and losses reported in accumulated other comprehensive income (loss).

Realized gains and losses and declines in the value judged to be other-than-temporary are included in the other income, net line item in the consolidated statements of operations.

The cost of securities sold is based on the specific identification method.

The Company’s available-for-sale

short-term and long-term investments are carried at fair value, with the unrealized holding gains and losses reported in accumulated other

comprehensive income (loss).

Realized gains and losses and declines in the value judged to be other-than-temporary are included in the

other income, net line item in the consolidated statements of operations.

The cost of securities sold is based on the specific identification

Fair Value Measurements

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

The Company measures the fair value of financial

instruments using a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value into three broad

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

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The determination of fair value for Level 3 investments and other financial instruments involves the most management judgment and subjectivity.

The carrying amounts of financial assets and liabilities, such as cash and cash equivalents, accounts receivable, accounts payable, notes payable and other payables, approximate their fair values because of the

short maturity of these instruments.

The carrying values of lease obligations and long-term financing obligations approximate their fair values because interest rates on these obligations are based on prevailing market interest rates.

The carrying amounts of financial assets and liabilities,

such as cash and cash equivalents, accounts receivable, accounts payable, notes payable and other payables, approximate their fair values

because of the short maturity of these instruments.

The carrying values of lease obligations and long-term financing obligations approximate

their fair values because interest rates on these obligations are based on prevailing market interest rates.

The Company measures the

fair value of its warrant liabilities using Level 3 inputs.

and Liability-Classified Instruments

accounts for common stock warrants as either equity-classified or liability-classified instruments based on an assessment of the specific

terms of the warrants and the guidance provided by the Financial Accounting Standards Board (FASB) in ASC 480 , Distinguishing Liabilities

from Equity (ASC 480) and ASC 815, Derivatives and Hedging (ASC 815) .

The assessment considers whether the warrants are freestanding

financial instruments pursuant to ASC 480, meet the definition of a liability pursuant to ASC 480, and meet all of the requirements for

equity classification under ASC 815, including whether the warrants are indexed to the Company’s own stock and whether the holders

of the warrants could potentially require net cash settlement in a circumstance outside of the Company’s control, among other conditions

for equity classification.

This assessment, which requires the use of professional judgment, is conducted at the time of warrant issuance

and as of each subsequent quarterly period end date while the warrants are outstanding.

Allowance for Doubtful Accounts

The Company establishes an allowance for doubtful accounts to ensure that its trade receivables balances are not overstated due to uncollectibility.

The Company performs ongoing customer credit evaluations within the context of the industry in which it operates and generally does not require collateral from its customers.

The Company establishes an allowance for doubtful

accounts to ensure that its trade receivables balances are not overstated due to uncollectibility.

The Company performs ongoing customer

credit evaluations within the context of the industry in which it operates and generally does not require collateral from its customers.

A specific allowance of up to 100 % of the invoice value is provided for any problematic customer balances.

Delinquent account balances are written off after management has determined that the likelihood of collection is remote.

The Company grants credit only to customers deemed creditworthy in the judgment of management.

The allowance for doubtful accounts receivable was approximately $ 61,000 and $ 85,000 as of December 31, 2021 and 2020, respectively.

The Company values its inventories at the lower of cost, which approximates actual cost on a first-in, first-out basis, or net realizable value.

Costs of inventories primarily consisted of material and third party assembly costs.

The Company records inventory reserves for estimated obsolescence or unmarketable inventories based upon assumptions about future demand and market conditions.

Once a reserve is established, it is maintained until the product to which it relates is sold or otherwise disposed of.

If actual market conditions are less favorable than those expected by management, additional adjustment to inventory valuation may be required.

Charges for obsolete and slow-moving inventories are recorded based upon an analysis of specific identification of obsolete inventory items and quantification of slow-moving inventory items.

The Company recorded no inventory write-downs for each of the years ended December 31, 2021 and 2020.

Delinquent account balances

are written off after management has determined that the likelihood of collection is remote.

The Company grants credit only to customers

deemed creditworthy in the judgment of management.

The allowance for doubtful accounts receivable was approximately $ 183,000 and $ 61,000

as of December 31, 2022 and December 31, 2021, respectively.

The Company values its inventories at the lower of cost, which approximates

actual cost on a first-in, first-out basis, or net realizable value.

Costs of inventories primarily consisted of material and third party

assembly costs.

The Company records inventory reserves for estimated obsolescence or unmarketable inventories based upon assumptions about

future demand and market conditions.

Once a reserve is established, it is maintained until the product to which it relates is sold or

otherwise disposed of.

If actual market conditions are less favorable than those expected by management, additional adjustment to inventory

valuation may be required.

Charges for obsolete and slow-moving inventories are recorded based upon an analysis of specific identification

of obsolete inventory items and quantification of slow moving inventory items.

The Company recorded write-downs of inventory of approximately

$ 420,000 during the year ended December 31, 2022.

The Company recorded no inventory write-downs for the year ended December 31, 2021.

Tax Credits and Receivables

The Company is registered for the Canadian federal and provincial goods and services taxes.

As such, the Company is obligated to collect from third parties, and is entitled to claim sales taxes paid on its expenses and capital expenditures incurred in Canada.

In addition, the Company is also a part of the Scientific Research and Experimental Development (SR&ED) Program, which uses tax incentives to encourage Canadian businesses of all sizes and in all sectors to conduct research and development (R&D) in Canada.

As a part of the program, the Company may be entitled to a receivable in the form of tax credit or incentive.

The Company records refundable tax credits as a reduction of expense and receivable when the Company can reasonably estimate the amounts and it is more likely than not, they will be received.

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

The Company is registered for the Canadian federal

and provincial goods and services taxes.

As such, the Company is obligated to collect from third parties and is entitled to claim sales

taxes paid on its expenses and capital expenditures incurred in Canada.

The Company participates in the Canadian government’s

Scientific Research and Experimental Development (SRED) Program, which uses tax incentives to encourage Canadian businesses to conduct

research and development (R&D) in Canada.

As a part of the program, the Company may be entitled to a receivable in the form of tax

credits or incentives.

The Company records refundable tax credits as a reduction of expense and receivable when the Company can reasonably

estimate the amounts and it is more likely than not, the credit will be received.

A government refund or subsidy that is compensation

for expenses or losses already incurred, or for which there are no future related costs, is recognized in the statement of operations

in the period in which it becomes receivable.

On December 17, 2021, Peraso Tech ceased to be

a Canadian Controlled Private Corporation, as defined by the government of Canada, and the Company was no longer eligible for the expenditure

refund program.

However, it is eligible for a tax credit of 15 % on qualified SRED expenditures.

Unused SRED tax credits can be carried

back three years or forward for 20 years.

Property and Equipment

Property and equipment are originally recorded at cost.

Depreciation is computed using the straight-line method over the estimated useful lives of the assets, generally three to six years .

Depreciation is recorded in cost of sales and operating expenses in the consolidated statements of operations and comprehensive loss.

Leasehold improvements and assets acquired through capital leases are amortized over the shorter of their estimated useful life or the lease term, and related amortization is recorded in operating expenses in the consolidated statements of operations.

Property and equipment are originally recorded

Depreciation is computed using the straight-line method over the estimated useful lives of the assets, generally three to six

Depreciation is recorded in cost of sales and operating expenses in the consolidated statements of operations and comprehensive

Leasehold improvements and assets acquired through capital leases are amortized over the shorter of their estimated useful life

or the lease term, and related amortization is recorded in operating expenses in the consolidated statements of operations.

Intangible and Long-lived Assets

Intangible assets are recorded at cost and amortized on a straight-line method over their estimated useful lives of three to ten years .

The Company regularly reviews the carrying value and estimated lives of its long-lived assets and finite-lived intangible asset to determine whether indicators of impairment may exist which warrant adjustments to carrying values or estimated useful lives.

The determinants used for this evaluation include management’s estimate of the asset’s ability to generate positive income from operations and positive cash flow in future periods as well as the strategic significance of the assets to the Company’s business objective.

Should an impairment exist, the impairment loss would be measured based on the excess of the carrying amount of the long-lived asset group over the asset’s fair value.

Intangible assets are recorded at cost and amortized

on a straight-line method over their estimated useful lives of three to ten years .

Amortization of developed technology and other intangibles

directly related to the Company’s products is included in cost of net revenue, while amortization of customer relationships and

other intangibles not associated with the Company’s products is included in selling, general and administrative expenses in the

consolidated statements of operations and comprehensive loss.

The Company regularly reviews the carrying value

and estimated lives of its long-lived assets and finite-lived intangible assets to determine whether indicators of impairment may exist

which warrant adjustments to carrying values or estimated useful lives.

The determinants used for this evaluation include management’s

estimate of the asset’s ability to generate positive income from operations and positive cash flow in future periods as well as

the strategic significance of the assets to the Company’s business objective.

Should an impairment exist, the impairment loss would

be measured based on the excess of the carrying amount of the long-lived asset group over the asset’s fair value.

Purchased Intangible Assets

Intangible assets acquired in business combinations

are accounted for based on the fair value of assets purchased and are amortized over the period in which economic benefit is estimated

to be received.

Intangible assets subject to amortization, including those acquired in business combinations were as follows (amounts

in thousands):

December 31, 2022

Developed technology

Customer relationships

December 31, 2021

Developed technology

Customer relationships

Developed technology primarily consisted of MoSys’

products that have reached technological feasibility and primarily relate to its memory semiconductor products and technology.

of the developed technology was determined by discounting estimated net future cash flows of these products.

The Company is amortizing

the developed technology on a straight-line basis over four years .

Amortization related to developed technology of approximately $ 1,431,000

and $ 60,000 for the years ended December 31, 2022 and 2021, respectively, has been included in cost of net revenue in the consolidated

statements of operations and comprehensive loss.

Customer relationships relate to the Company’s

ability to sell existing and future versions of products to MoSys’ customers existing at the time of the arrangement.

The fair value

of the customer relationships was determined by discounting estimated net future cash flows from the customer relationships.

is amortizing customer relationships on a straight-line basis over an estimated life of four years .

Amortization related to customer relationships

of approximately $ 639,000 and $ 27,000 for the years ended December 31, 2022 and 2021, respectively, has been included in selling, general

and administrative expenses in the consolidated statements of operations and comprehensive loss.

Other amortization expense was approximately $ 28,000

and $ 5,000 for the years ended December 31, 2022 and 2021, respectively.

As of December 31, 2022, estimated future amortization

expense related to intangible assets was (in thousands):

Year ending December 31,

Business Combinations

The Company allocates the fair value of purchase consideration to the tangible assets acquired, liabilities assumed and intangible assets acquired based on their estimated fair values.

The excess of the fair value of purchase consideration over the fair values of these identifiable assets and liabilities is recorded as goodwill to reporting units based on the expected benefit from the business combination.

Allocation of purchase consideration to identifiable assets and liabilities affects the amortization expense, as acquired finite-lived intangible assets are amortized over the useful life, whereas any indefinite-lived intangible assets, including goodwill, are not amortized.

During the measurement period, which is not to exceed one year from the acquisition date, the Company records adjustments to the assets acquired and liabilities assumed, with the corresponding offset to goodwill.

The Company allocates the fair value of purchase

consideration to the tangible assets acquired, liabilities assumed and intangible assets acquired based on their estimated fair values.

The excess of the fair value of purchase consideration over the fair values of these identifiable assets and liabilities is recorded as

goodwill to reporting units based on the expected benefit from the business combination.

Allocation of purchase consideration to identifiable

assets and liabilities affects the amortization expense, as acquired finite-lived intangible assets are amortized over the useful life,

whereas any indefinite-lived intangible assets, including goodwill, are not amortized.

During the measurement period, which is not to

exceed one year from the acquisition date, the Company records adjustments to the assets acquired and liabilities assumed, with the corresponding

offset to goodwill.

Upon the conclusion of the measurement period, any subsequent adjustments are recorded to earnings.

Acquisition-related expenses are recognized separately from business combinations and are expensed as incurred.

The Company determines the amount of a potential goodwill impairment by comparing the fair value of the reporting unit with its carrying amount.

To the extent the carrying value of a reporting unit exceeds its fair value, a goodwill impairment charge is recognized.

The Company has determined that it has a single reporting unit for purposes of performing its goodwill impairment test.

As the Company uses the market approach to determine the step one fair value of the reporting unit, the price of its common stock is an important component of the fair value calculation.

If the Company’s stock price experiences significant price and volume fluctuations, this will impact the fair value of the reporting unit, which can lead to potential impairment in future periods.

The Company reviews goodwill for impairment on an annual basis or whenever events or changes in circumstances indicate the carrying value of an asset may not be recoverable.

The Company first assesses qualitative factors to determine whether it is more-likely-than-not that the fair value of the reporting unit is less than the carrying amount as a basis for determining whether it is necessary to perform an impairment test.

If the qualitative assessment warrants further analysis, the Company compares the fair value of the reporting unit to its carrying value.

Acquisition-related

expenses are recognized separately from business combinations and are expensed as incurred.

The Company determines the amount of a potential

goodwill impairment by comparing the fair value of the reporting unit with its carrying amount.

To the extent the carrying value of a

reporting unit exceeds its fair value, a goodwill impairment charge is recognized.

The Company has determined that it has a single

reporting unit for purposes of performing its goodwill impairment test.

As the Company uses the market approach to determine the step

one fair value of the reporting unit, the price of its common stock is an important component of the fair value calculation.

If the Company’s

stock price experiences significant price and volume fluctuations, this will impact the fair value of the reporting unit, which can lead

to potential impairment in future periods.

The Company reviews goodwill for impairment on an annual basis or whenever events or changes

in circumstances indicate the carrying value of an asset may not be recoverable.

The Company first assesses qualitative factors to determine

whether it is more-likely-than-not that the fair value of the reporting unit is less than the carrying amount as a basis for determining

whether it is necessary to perform an impairment test.

If the qualitative assessment warrants further analysis, the Company compares the

fair value of the reporting unit to its carrying value.

The fair value of the reporting unit is determined using the market approach.

If the fair value of the reporting unit exceeds the carrying value of net assets of the reporting unit, goodwill is not impaired.

If the carrying value of the reporting unit’s goodwill exceeds its fair value, then the Company must record an impairment charge equal to the difference.

Acquired intangibles

Acquired intangible assets consist of developed technology and customer relationships that are measured at fair value at date of acquisition.

In valuing acquired intangible assets, the Company makes assumptions and estimates based in part on projected financial information, which makes assumptions and estimates inherently uncertain, particularly for early-stage technology companies.

The significant estimates and assumptions used by the Company in the determination of the fair value of acquired intangible technology assets include the revenue growth rate, the royalty rate and the discount rate.

The significant estimates and assumptions used by the Company in the determination of the fair value of acquired customer contract intangible assets include the revenue growth rate and the discount rate.

As a result of the judgments that need to be made, the Company obtains the assistance of independent valuation firms.

The Company completes these assessments as soon as practical after the closing dates.

Any excess of the purchase price over the estimated fair values of the identifiable net assets acquired is recorded as goodwill.

Warrant liability

The Company issued detachable warrants with its preferred shares and convertible debentures.

The warrants have exercise prices that are denominated in foreign currency (Canadian dollars or CND) that differs from the Company’s functional currency (United States dollars or USD) and accordingly are accounted for as liability in accordance with ASC No.

815, Derivatives and Hedging .

These warrants are initially recorded at fair value and then re-valued at each reporting date, with changes in the fair value reported in the statements of operations.

The classification of these instruments, including whether such instruments should be recorded as liability or as equity, is evaluated at the end of each reporting period.

Effective January 1, 2019 , the Company adopted ASC No.

842, Leases (ASC 842).

ASC 842 requires an entity to recognize a right-of-use asset and a lease liability for all leases with terms longer than 12 months.

The Company adopted ASC 842 utilizing the modified retrospective transition method.

The Company elected the practical expedient afforded in ASC 842 in which the Company did not reassess whether any contracts that existed prior to adoption have or contain leases or the classification of its existing leases.

carrying value of the reporting unit’s goodwill exceeds its fair value, then the Company must record an impairment charge equal

to the difference.

the three months ended December 31, 2022, the Company concluded a triggering event had occurred due to the sustained decrease in the price

per share of its common stock and related reduced market capitalization.

The Company performed a test for goodwill impairment, and, due

to the decrease in the price per share of its common stock, the test results indicated the goodwill carrying value was greater than its

implied fair value.

As a result of the impairment test, the Company recorded a non-cash impairment charge totaling $ 9.9 million, and the

Company’s goodwill balance was reduced to zero as of December 31, 2022.

ASC 842, Leases (ASC 842), requires an entity

to recognize a right-of-use asset and a lease liability for all leases with terms longer than 12 months.

The Company adopted

ASC 842 utilizing the modified retrospective transition method.

The Company elected the practical expedient afforded in ASC 842 in which

the Company did not reassess whether any contracts that existed prior to adoption have or contain leases or the classification of its

existing leases.

Revenue Recognition

The Company recognizes revenue in accordance with Financial Accounting Standards Board ( FASB) ASC Topic 606, Revenue from Contracts with Customers, and its amendments (ASC 606).

As described below, the analysis of contracts under ASC 606 supports the recognition of revenue at a point in time, resulting in revenue recognition timing that is materially consistent with the Company’s historical practice of recognizing product revenue when title and risk of loss pass to the customer.

The Company generates revenue primarily from sales of integrated circuits and module products, performance of engineering services and licensing of its intellectual property.

Revenues are recognized when control is transferred to customers in amounts that reflect the consideration the Company expects to be entitled to receive in exchange for those goods.

The Company recognizes revenue in accordance with

ASC Topic 606, Revenue from Contracts with Customers, and its amendments (ASC 606).

As described below, the analysis of contracts

under ASC 606 supports the recognition of revenue at a point in time, resulting in revenue recognition timing that is materially consistent

with the Company’s historical practice of recognizing product revenue when title and risk of loss pass to the customer.

The Company generates revenue primarily from sales

of integrated circuits and module products, performance of engineering services and licensing of its intellectual property.

recognized when control is transferred to customers in amounts that reflect the consideration the Company expects to be entitled to receive

in exchange for those goods.

Revenue recognition is evaluated through the following five steps:

(i) identification of the contract, or contracts, with a customer;

(i) identification of the contract, or

contracts, with a customer;

(ii) identification of the performance obligations in the contract;

(iii) determination of the transaction price;

(iii) determination of the transaction

(iv) allocation of the transaction price to the performance obligations in the contract;

and (v) recognition of revenue when or as a performance obligation is satisfied.

and (v) recognition of revenue when or

as a performance obligation is satisfied.

Product revenue

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

The majority of the Company's contracts have a single performance obligation to transfer products.

Accordingly, the Company recognizes revenue when title and risk of loss have been transferred to the customer, generally at the time of shipment of products.

Revenue is measured as the amount of consideration the Company expects to receive in exchange for transferring products and is generally based upon a negotiated, formula, list or fixed price.

- The Company sells its products both directly to customers and through distributors generally under agreements with payment terms typically 60 days or less.

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

License and other

The Company’s licensing contracts typically provide for royalties based on the licensee’s use of the Company’s memory technology in its currently shipping commercial products.

Revenue is recognized when performance obligations

under the terms of a contract with a customer are satisfied.

The majority of the Company’s contracts have a single performance obligation

to transfer products.

Accordingly, the Company recognizes revenue when title and risk of loss have been transferred to the customer, generally

at the time of shipment of products.

Revenue is measured as the amount of consideration the Company expects to receive in exchange for

transferring products and is generally based upon a negotiated, formula, list or fixed price.

The Company sells its products both directly

to customers and through distributors generally under agreements with payment terms typically 60 days or less.

The Company may record an estimated allowance,

at the time of shipment, for future returns and other charges against revenue consistent with the terms of sale.

Royalty and other

The Company’s licensing contracts typically

provide for royalties based on the licensee’s use of the Company’s memory technology in its currently shipping commercial

The Company estimates its royalty revenue in the calendar quarter in which the licensee uses the licensed technology.

Payments are received in the subsequent quarter.

are received in the subsequent quarter.

The Company also generates revenue from licensing its technology.

The Company recognizes License fee as revenue at the point of time when the control of the license has been transferred and the Company has no continuing performance obligations to the customer.

The Company recognizes license

fees as revenue at the point of time when the control of the license has been transferred and the Company has no continuing performance

obligations to the customer.

Engineering services revenue

Engineering and development contracts with customers generally contain a single performance obligation that is delivered over time.

Revenue is recognized using an output method that is consistent with the satisfaction of the performance obligation as a measure of progress.

Engineering and development contracts with customers

generally contain a single performance obligation that is delivered over time.

Revenue is recognized using an output method that is consistent

with the satisfaction of the performance obligation as a measure of progress.

Deferred cost of net revenue

During the year ended December 31, 2022, the Company

had $ 1.1 million of product shipments for which the revenue recognition criteria under ASC 606 had not been met.

Accordingly, the Company

deferred the cost of net revenue associated with these shipments, and the amount deferred has been presented as deferred cost of net revenue

in the consolidated balance sheets.

Contract liabilities – deferred revenue

The Company’s contract liabilities consist of advance customer payments and deferred revenue.

The Company classifies advance customer payments and deferred revenue as current or non-current based on the timing of when the Company expects to recognize revenue.

As of December 31, 2021, contract liabilities were in a current position and included in deferred revenue.

During the year ended December 31, 2021, the Company had no recognized revenue that had been included in deferred revenue at December 31, 2020 During the year ended December 31, 2020, the Company had no revenue that had been included in deferred revenue at December 31, 2019.

The Company’s contract liabilities consist

of advance customer payments and deferred revenue.

The Company classifies advance customer payments and deferred revenue as current or

non-current based on the timing of when the Company expects to recognize revenue.

As of December 31, 2022 and December 31, 2021, contract

liabilities were in a current position and included in deferred revenue.

During the year ended December 31, 2022, the Company

recognized approximately $ 243,000 of revenue that had been included in deferred revenue as of December 31, 2021.

See Note 7 for disaggregation of revenue by geography.

The Company does not have significant financing components, as payments from customers are typically due within 60 days of invoicing, and the Company has elected the practical expedient to net value financing components that are less than one year.

Shipping and handling costs are generally incurred by the customer, and, therefore, are not recorded as revenue.

The Company does not have significant financing

components, as payments from customers are typically due within 60 days of invoicing, and the Company has elected the practical expedient

to not value financing components that are less than one year.

Shipping and handling costs are generally incurred by the customer, and,

therefore, are not recorded as revenue.

Cost of Net Revenue

Cost of net revenue consists primarily of direct and indirect costs of product sales.

Cost of net revenue consists primarily of direct

and indirect costs of product sales, including amortization of intangible assets and depreciation of production-related fixed assets.

Advertising Costs

Advertising costs are expensed as incurred.

Advertising costs were not significant for the years ended December 31, 2021 and 2020.

costs were not significant for the years ended December 31, 2022 and 2021.

Government Subsidies

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

Starting in 2020, certain Canadian businesses, which experienced a drop in revenue during the COVID-19 pandemic, became eligible for a rent and wage subsidy from the government.

The Company’s subsidiary, Peraso Tech, began receiving this subsidy on a monthly basis beginning in the fourth quarter of 2020.

During the year ended December 31, 2021, the Company recognized payroll subsidies of $ 1,120,475 as a reduction in the associated wage costs and rent subsidies of $ 199,235 as a reduction of operating expenses in the consolidated statement of operations.

During the year ended December 31, 2020, the Company recognized payroll subsidies of $ 1,085,066 as a reduction in the associated wage costs and rent subsidies of $ 89,992 as a reduction of operating expenses in the consolidated statement of operations.

In addition, as a Canadian Controlled Private Corporation (CCPA), Peraso Tech was eligible for the Canadian government’s Scientific Research and Experimental Development (SR&ED) refund program, which refunds 35 % of eligible costs for Canadian businesses of all sizes and in all sectors to conduct research and development in Canada.

The Company records refundable SR&ED credits as a receivable when the Company can reasonably estimate the amounts and it is more likely than not, such amounts will be received.

As of December 17, 2021, Peraso Tech ceased to be a CCPA and is no longer eligible for the expenditure refund program.

However, it is eligible for a tax credit of 15 % on qualified SR&ED expenditures.

Unused tax credits can be carried back three years or forward for 20 years.

The Company is registered for the Canadian federal and provincial goods and services taxes.

As such, the Company is obligated to collect from third parties, and is entitled to claim sales taxes paid on its expenses and capital expenditures incurred in Canada

A grant or subsidy that is compensation for expenses

or losses already incurred, or for which there are no future related costs, is recognized in the statement of operations in the period

in which it becomes receivable.

Starting in 2020, certain Canadian businesses,

which experienced a drop in revenue during the COVID-19 pandemic, became eligible for rent and wage subsidies from the Canadian government.

The Company’s subsidiary, Peraso Tech, was eligible for and received the Covid-program subsidies on a monthly basis beginning in

the fourth quarter of 2020 and ending in the fourth quarter of 2021.

During the year ended December 31, 2021, the Company

recognized payroll subsidies of $ 1,120,475 as a reduction in the associated wage costs and rent subsidies of $ 199,235 as a reduction of

operating expenses in the consolidated statement of operations.

Research and Development

Engineering costs are recorded as research and development expense in the period incurred.

Engineering costs are recorded as research and

development expense in the period incurred.

Stock-Based Compensation

The Company periodically issues stock options and restricted stock awards to employees and non-employees.

The Company periodically issues stock options

and restricted stock awards to employees and non-employees.

The Company accounts for such grants based on ASC No.

718, whereby the value of the award is measured on the date of grant and recognized as compensation expense on a straight-line basis over the vesting period.

The fair value of the Company’s stock options is estimated using the Black-Scholes-Merton Option Pricing (Black Scholes) model, which uses certain assumptions related to risk-free interest rates, expected volatility, expected life of the options, and future dividends.

718, whereby the value

of the award is measured on the date of grant and recognized as compensation expense on a straight-line basis over the vesting period.

The fair value of the Company’s stock options is estimated using the Black-Scholes-Merton Option Pricing (Black Scholes) model,

which uses certain assumptions related to risk-free interest rates, expected volatility, expected life of the options, and future dividends.

Compensation expense is recorded based upon the value derived from the Black Scholes model.

The assumptions used in the Black-Scholes model could materially affect compensation expense recorded in future periods.

The assumptions used in the Black Scholes

model could materially affect compensation expense recorded in future periods.

Foreign Currency Transactions

The functional currency of the Company is the U.S dollar.

All foreign currency transactions are initially measured and recorded in an entity’s functional currency using the exchange rate on the date of the transaction.

All monetary assets and liabilities are remeasured at the end of each reporting period using the exchange rate at that date.

All non-monetary assets and related expense, depreciation or amortization are not subsequently remeasured and are measured using the historical exchange rate.

An average exchange rate may be used to recognize income and expense items earned or incurred evenly over a period.

Foreign exchange gains and losses resulting from the settlement of such transactions are recognized in the statement of operations, except for the gains and losses arising from the conversion of the carrying amount of the foreign currency denominated convertible preferred shares into the functional currency that are presented as adjustment to the net loss to arrive at net loss attributable to common stockholders.

The functional currency of the Company is the

All foreign currency transactions are initially measured and recorded in an entity’s functional currency using the exchange

rate on the date of the transaction.

All monetary assets and liabilities are remeasured at the end of each reporting period using the

exchange rate at that date.

All non-monetary assets and related expense, depreciation or amortization are not subsequently remeasured

and are measured using the historical exchange rate.

An average exchange rate may be used to recognize income and expense items earned

or incurred evenly over a period.

Foreign exchange gains and losses resulting from the settlement of such transactions are recognized

in the statement of operations, except for the gains and losses arising from the conversion of the carrying amount of the foreign currency

denominated convertible preferred shares into the functional currency that are presented as adjustment to the net loss to arrive at net

loss attributable to common stockholders.

Per-Share Amounts

Basic net loss per share is computed by dividing net loss for the period by the weighted-average number of shares of common stock outstanding during the period.

Diluted net loss per share gives effect to all potentially dilutive common shares outstanding during the period.

Potentially dilutive common shares consist of incremental shares of common stock issuable upon the exercise of stock options, vesting of stock awards and purchases under the employee stock purchase plan, conversion of convertible debt and exercise of warrants.

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

Escrow Shares

Basic net loss per share is computed by dividing

net loss for the period by the weighted-average number of exchangeable shares and shares of common stock outstanding during the period.

Diluted net loss per share gives effect to all potentially dilutive exchangeable and common shares outstanding during the period.

dilutive common shares consist of incremental exchangeable shares and shares of common stock issuable upon the achievement of escrow terms,

exercise of stock options, vesting of stock awards and exercise of warrants.

The following table sets forth securities outstanding

that were excluded from the computation of diluted net loss per share as their inclusion would be anti-dilutive (in thousands):

Escrow Shares - exchangeable shares

Escrow Shares - common stock

Options to purchase common stock

Unvested restricted common stock units

Convertible debt

The Company determines deferred tax assets and liabilities based upon the differences between the financial statement and tax bases of the Company’s assets and liabilities using tax rates in effect for the year in which the Company expects the differences to affect taxable income.

A valuation allowance is established for any deferred tax assets for which it is more likely than not that all or a portion of the deferred tax assets will not be realized.

Common stock warrants

The Company determines deferred tax assets and

liabilities based upon the differences between the financial statement and tax bases of the Company’s assets and liabilities using

tax rates in effect for the year in which the Company expects the differences to affect taxable income.

A valuation allowance is established

for any deferred tax assets for which it is more likely than not that all or a portion of the deferred tax assets will not be realized.

The Company files U.S.

federal and state and foreign income tax returns in jurisdictions with varying statutes of limitations.

The 2014 through 2018 tax years generally remain subject to examination by U.S.

federal and state tax authorities, and the 2010 through 2019 tax years generally remain subject to examination by foreign tax authorities .

At December 31, 2021, the Company did not have any material unrecognized tax benefits nor expect its unrecognized tax benefits to change significantly over the next 12 months.

The Company recognizes interest related to unrecognized tax benefits as income tax expense and penalties related to unrecognized tax benefits as other income and expense.

During the years ended December 31, 2021 and 2020, the Company did not recognize any interest or penalties related to unrecognized tax benefits.

Comprehensive Loss

Comprehensive loss represents the changes in equity of an enterprise, other than those resulting from stockholder transactions.

Accordingly, comprehensive loss may include certain changes in equity that are excluded from net loss.

For the years ended December 31, 2021 and 2020, the Company’s comprehensive loss was the same as its net loss.

federal and state and foreign

income tax returns in jurisdictions with varying statutes of limitations.

The 2015 through 2020 tax years generally remain subject to

examination by U.S.

federal and state tax authorities, and the 2011 through 2020 tax years generally remain subject to examination by

foreign tax authorities.

At December 31, 2022, the Company did not have

any material unrecognized tax benefits nor expect its unrecognized tax benefits to change significantly over the next 12 months.

recognizes interest related to unrecognized tax benefits as income tax expense and penalties related to unrecognized tax benefits as other

income and expense.

During the years ended December 31, 2022 and 2021, the Company did not recognize any interest or penalties related

to unrecognized tax benefits.

Recently Issued Accounting Pronouncements

In June 2016, the FASB issued Accounting Standards Update (ASU) No.

In June 2016, the FASB

issued Accounting Standards Update (ASU) No.

2016-13, Financial Instruments—Credit Losses .

This ASU added a new impairment model (known as the current expected credit loss (CECL) model) that is based on expected losses rather than incurred losses.

Under the new guidance, an entity recognizes an allowance for its estimate of expected credit losses and applies to most debt instruments, trade receivables, lease receivables, financial guarantee contracts, and other loan commitments.

The CECL model does not have a minimum threshold for recognition of impairment losses and entities will need to measure expected credit losses on assets that have a low risk of loss.

This update is effective for fiscal years beginning after December 15, 2022, including interim periods within those fiscal years for smaller reporting companies.

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

In August 2020, the FASB issued ASU No.

2020-06 (ASU 2020-06), Debt—Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging—Contracts in Entity’s Own Equity (Subtopic 815-40):

Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity.

The ASU will simplify the accounting for convertible instruments by reducing the number of accounting models for convertible debt instruments and convertible preferred stock.

Limiting the accounting models will result in fewer embedded conversion features being separately recognized from the host contract as compared with current GAAP.

Convertible instruments that continue to be subject to separation models are (1) those with embedded conversion features that are not clearly and closely related to the host contract, that meet the definition of a derivative, and that do not qualify for a scope exception from derivative accounting and (2) convertible debt instruments issued with substantial premiums for which the premiums are recorded as paid-in capital.

The ASU also amends the guidance for the derivatives scope exception for contracts in an entity’s own equity to reduce form-over-substance-based accounting conclusions.

ASU 2020-06 will be effective for the Company January 1, 2024, and early adoption is permitted, but no earlier than January 1, 2021, including interim periods within that year.

The Company is currently evaluating what effect(s) the adoption of ASU 2020-06 may have on its financial statements, but the Company does not believe the impact of the ASU will be material to its financial position, results of operations and cash flows.

The effect will largely depend on the composition and terms of the Company’s financial instruments at the time of adoption.

This ASU added a new impairment

model (known as the current expected credit loss (CECL) model) that is based on expected losses rather than incurred losses.

new guidance, an entity recognizes an allowance for its estimate of expected credit losses and applies to most debt instruments, trade

receivables, lease receivables, financial guarantee contracts, and other loan commitments.

The CECL model does not have a minimum threshold

for recognition of impairment losses and entities will need to measure expected credit losses on assets that have a low risk of loss.

This update is effective for fiscal years beginning after December 15, 2022, including interim periods within those fiscal years for smaller

reporting companies.

The Company does not expect that the adoption of ASU No.

2016-13 will have

a significant impact on the Company’s consolidated financial statements .

In May 2021, the FASB

issued ASU No.

2021-04 , Earnings Per Share (Topic 260), Debt — Modifications and Extinguishments (Subtopic 470-50), Compensation

— Stock Compensation (Topic 718), and Derivatives and Hedging — Contracts in Entity’s Own Equity (Subtopic 815-40):

Issuer’s Accounting for Certain Modifications or Exchanges of Freestanding Equity-Classified Written Call Options (ASU 2021-04) .

ASU 2021-04 provides guidance as to how an issuer should account for a modification of the terms or conditions or an exchange of a freestanding

equity-classified written call option (i.e., a warrant) that remains classified after modification or exchange as an exchange of the original

instrument for a new instrument.

An issuer should measure the effect of a modification or exchange as the difference between the fair

value of the modified or exchanged warrant and the fair value of that warrant immediately before modification or exchange and then apply

a recognition model that comprises four categories of transactions and the corresponding accounting treatment for each category (equity

issuance, debt origination, debt modification, and modifications unrelated to equity issuance and debt origination or modification).

2021-04 is effective for all entities for fiscal years beginning after December 15, 2021, including interim periods within those fiscal

An entity should apply the guidance provided in ASU 2021-04 prospectively to modifications or exchanges occurring on or after the

effective date.

The Company adopted ASU 2021-04 effective January 1, 2022.

The adoption of ASU 2021-04 did not have any impact on the

Company’s consolidated financial statement presentation or disclosures.

Management does not believe

that any other recently issued, but not yet effective, authoritative guidance, if currently adopted, would have a material impact on the

Company’s financial statement presentation or disclosures.

Business Combination

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

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

The Company ’s c ommon s tock, previously traded on the Nasdaq under the ticker symbol “MOSY,” commenced trading on the Nasdaq under the ticker symbol “PRSO.”

As discussed in Note 1, on September

14, 2021, the Company and its newly formed subsidiaries, Callco and Canco, entered into the Arrangement Agreement with Peraso Tech.

to the Arrangement, as a fabless semiconductor company, the Company’s primary focus was the manufacture and sale of high-performance

memory semiconductor devices for a wide range of markets.

Peraso Tech was also a fabless semiconductor company specializing in the development

of mmWave technology, including 60GHz and 5G products, and deriving revenue from selling semiconductor devices, proprietary modules based

on its semiconductor devices and performance of non-recurring engineering services.

The primary reason for the business combination was

to produce a larger fabless semiconductor company with greater size and scale with access to the public capital markets for the benefit

of the stockholders of both companies.

On December 17, 2021, following

the satisfaction of the closing conditions set forth in the Arrangement Agreement, including approvals from the stockholders of the Company

and Peraso Tech, the Arrangement was completed.

Securities Conversion

Pursuant to the completion of the Arrangement, each Peraso Share that was issued and outstanding immediately prior to December 17, 2021 was converted into the right to receive 0.045239122387267 (the Exchange Ratio) newly issued shares of common stock of the Company or shares of Canco, which are exchangeable for shares of the Company’s common stock (Exchangeable Shares) at the election of each former Peraso Tech stockholder.

In addition, all of Peraso Tech’s outstanding stock options and other securities exercisable or exchangeable for, or convertible into, and any other rights to acquire Peraso Shares were exchanged for securities exercisable or exchangeable for, or convertible into, or other rights to acquire the Company’s common stock.

Immediately following the completion of the Arrangement, the former security holders of Peraso Tech owned approximately 61 %, on a fully-diluted basis, of the Company’s common stock, and the former shareholders of Peraso Tech, as a group, obtained control of the Company.

While the Company was the legal acquirer of Peraso Tech, Peraso Tech was deemed to be the acquirer for accounting purposes.

In addition, pursuant to the terms of the Arrangement Agreement, (i) certain warrants to purchase Peraso Shares outstanding immediately prior to the closing of the Arrangement were exercised in consideration for the issuance of Peraso Shares;

(ii) each convertible debenture of Peraso Tech outstanding immediately prior to the closing of the Arrangement and all principal and accrued but unpaid interest thereon was converted into Peraso Shares at a conversion price equal to the conversion price set out in each such debenture;

and (iii) each outstanding option to purchase Peraso Shares (each, a Peraso Option) was exchanged for a replacement option to purchase such number of shares of common stock that was equal to the product of (a) the number of Peraso Shares subject to the Peraso Options immediately before the closing of the Arrangement and (b) the Exchange Ratio, rounded down to the nearest whole number of shares of common stock.

Upon the closing of the Arrangement, an aggregate of 9,295,097 Exchangeable Shares and 3,558,151 shares of common stock were issued to the holders of Peraso Shares.

Of such shares, pursuant to the terms of the Agreement, the Company held in escrow an aggregate of 1,312,878 Exchangeable Shares and 502,567 shares of common stock (collectively, the Escrow Shares).

The Escrow Shares are escrowed pursuant to the terms of an escrow agreement on a pro rata basis from the aggregate consideration received by the holders of Peraso Shares, subject to the offset by the Company for any losses in accordance with the Agreement.

Such Escrow Shares shall be released, subject to any offset claim, upon the satisfaction of the earlier of:

(a) any date following the first anniversary of December 17, 2021 and prior to December 17, 2024 where the volume weighted average price of the common stock for any 20 trading days within a period of 30 consecutive trading days is at least $ 8.57 per share, subject to adjustment for stock splits or other similar transactions;

(b) the date of any sale of all or substantially all of the assets or shares of the Company;

or (c) the date of any bankruptcy, insolvency, restructuring, receivership, administration, wind-up, liquidation, dissolution, or similar event involving the Company.

All and any voting rights and other stockholder rights, other than with respect to dividends and distributions, with respect to the Escrow Shares are suspended until the Escrow Shares are released from escrow.

In connection with the Arrangement, on December 15, 2021, the Company filed the Certificate of Designation of Series A Special Voting Preferred Stock with the Secretary of State of the State of Delaware to designate Series A Special Voting Preferred Stock (the Special Voting Share) in accordance with the terms of the Arrangement Agreement in order to enable the holders of Exchangeable Shares to exercise their voting rights.

Each Exchangeable Share is exchangeable for one share of common stock of the Company and while outstanding, the Special Voting Share enables holders of Exchangeable Shares to cast votes on matters for which holders of the common stock are entitled to vote, and by virtue of the share terms relating to the Exchangeable Shares, to receive dividends that are economically equivalent to any dividends declared with respect to the shares of common stock.

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

Pursuant to the completion of

the Arrangement, each Peraso Share that was issued and outstanding immediately prior to December 17, 2021 was converted into the right

to receive 0.045239122387267 (the Exchange Ratio) newly issued shares of common stock of the Company or shares of Canco, which are exchangeable

for shares of the Company’s common stock (Exchangeable Shares), at the election of each former Peraso Tech stockholder.

all of Peraso Tech’s outstanding stock options and other securities exercisable or exchangeable for, or convertible into, and any

other rights to acquire Peraso Shares were exchanged for securities exercisable or exchangeable for, or convertible into, or other rights

to acquire the Company’s common stock.

Immediately following the completion of the Arrangement, the former security holders of Peraso

Tech owned approximately 61 %, on a fully-diluted basis, of the Company’s common stock, and the former shareholders of Peraso Tech,

as a group, obtained control of the Company.

While the Company was the legal acquirer of Peraso Tech, Peraso Tech was deemed to be the

acquirer for accounting purposes.

In addition, pursuant to the

terms of the Arrangement Agreement, (i) certain warrants to purchase Peraso Shares outstanding immediately prior to the closing of the

Arrangement were exercised in consideration for the issuance of Peraso Shares;

(ii) each convertible debenture of Peraso Tech outstanding

immediately prior to the closing of the Arrangement and all principal and accrued but unpaid interest thereon was converted into Peraso

Shares at a conversion price equal to the conversion price set out in each such debenture;

and (iii) each outstanding option to purchase

Peraso Shares (each, a Peraso Option) was exchanged for a replacement option to purchase such number of shares of common stock that was

equal to the product of (a) the number of Peraso Shares subject to the Peraso Options immediately before the closing of the Arrangement

and (b) the Exchange Ratio, rounded down to the nearest whole number of shares of common stock.

Upon the closing of the Arrangement,

an aggregate of 9,295,097 Exchangeable Shares and 3,558,151 shares of common stock were issued to the holders of Peraso Shares.

shares, pursuant to the terms of the Agreement, the Company held in escrow an aggregate of 1,312,878 Exchangeable Shares and 502,567 shares

of common stock (collectively, the Escrow Shares).

The Escrow Shares are escrowed pursuant to the terms of an escrow agreement on a pro

rata basis from the aggregate consideration received by the holders of Peraso Shares, subject to the offset by the Company for any losses

in accordance with the Agreement.

Such Escrow Shares shall be released, subject to any offset claim, upon the satisfaction of the earlier

(a) any date following the first anniversary of December 17, 2021 and prior to December 17, 2024 where the volume weighted average

price of the common stock for any 20 trading days within a period of 30 consecutive trading days is at least $ 8.57 per share, subject

to adjustment for stock splits or other similar transactions;

(b) the date of any sale of all or substantially all of the assets or shares

of the Company;

or (c) the date of any bankruptcy, insolvency, restructuring, receivership, administration, wind-up, liquidation, dissolution,

or similar event involving the Company.

All and any voting rights and other stockholder rights, other than with respect to dividends and

distributions, with respect to the Escrow Shares are suspended until the Escrow Shares are released from escrow.

The Exchangeable Share structure

is commonly used for cross-border transactions of this nature so as to provide non-tax-exempt Canadian shareholders with the same economic

rights and benefits as holders of the Company’s shares into which the Exchangeable Shares are exchangeable, while allowing those

Canadian shareholders to benefit from the tax-rollover available on the issuance of the Exchangeable Shares.

In general terms, by choosing

to acquire Exchangeable Shares from Canco, such a former Peraso Tech shareholder was able to rely on a rollover rule in the Income Tax

Act (Canada) in order to defer any capital gain that he/she/it would have otherwise realized.

Callco was incorporated to

exercise the call rights, while Canco was incorporated to acquire the shares of Peraso Tech from Canadian shareholders that wished to

receive Exchangeable Shares as consideration, so it was a tax deferred transaction for such Canadian shareholders.

The use of a separate

entity, Callco, helps maximize cross border paid-up capital, which represents the amount that can generally be distributed free of Canadian

withholding tax.

The call rights also allow Callco to “purchase” the Exchangeable Shares rather than having them redeemed

by Canco on a redemption or retraction or in connection with a liquidity event, thus avoiding the adverse deemed dividend tax consequences

to shareholders that may arise from a redemption or retraction of Exchangeable Shares.

Holders of Exchangeable Shares

have the right at any time (the Retraction Right) to retract or redeem any or all of the Exchangeable Shares owned by them for an amount

per share equal to the market price of a share of the Company’s common stock plus the full amount of all declared and unpaid dividends

on such Exchangeable Share (the Exchangeable Share Purchase Price).

The Exchangeable Share Purchase Price is payable only by the Company

delivering or causing to be delivered to the relevant holder one share of the Company’s common stock for each Exchangeable Share

purchased plus a cash amount equal to the amount of any accrued and unpaid dividends on such Exchangeable Share.

The Company and Callco

each have an overriding right, in the event that a holder of Exchangeable Shares exercises its Retraction Right, to redeem from such holder

all, but not less than all, of the Exchangeable Shares tendered for redemption.

The Exchangeable Shares are

subject to redemption by the Company, Callco and Canco at the Exchangeable Share Purchase Price, on the “Redemption Date,”

which date shall be no earlier than the seventh anniversary of the date on which Exchangeable Shares are first issued, unless:

than 10 % of the aggregate number of Exchangeable Shares issued remain outstanding;

(b) there is a change in control of the Company (defined

generally as (i) any merger, amalgamation, arrangement, takeover bid or tender offer, material sale of shares or rights or interests that

results in the holders of outstanding voting securities of the Company directly or indirectly owning, or exercising control or direction

over, voting securities representing less than 50 % of the total voting power of all of the voting securities of the surviving entity;

or (ii) any sale or disposition of all or substantially of the Company’s assets), and (c) upon the occurrence of certain other events.

The Exchangeable Share Purchase Price is payable only by the Company delivering or causing to be delivered to the relevant holder one

share of the Company’s common stock for each Exchangeable Share purchased plus a cash amount equal to the amount of any accrued

and unpaid dividends on such Exchangeable Share.

In the event of the liquidation,

dissolution or winding-up of Canco, holders of Exchangeable Shares have the right to receive in respect of each Exchangeable Share held

by such holder, an amount per share equal to the Exchangeable Share Purchase Price, which shall be satisfied in full by Canco by delivering

to such holder one Company Share, plus an amount equal to the Dividend Amount.

The Company and Callco each have an overriding right to

purchase from all holders all but not less than all of the Exchangeable Shares upon the occurrence of such events.

In addition, the Company

and Callco have the right to purchase all outstanding Exchangeable Shares at the Exchangeable Share Purchase Price if there is a change

of law that permits holders of Exchangeable Shares to exchange their Exchangeable Shares for shares of common stock on a basis that will

not require holders to recognize any gain or loss or any actual or deemed dividend for Canadian tax purposes.

The holders of Exchangeable

Shares have an “automatic exchange right” in the event of any insolvency, liquidation, dissolution or winding-up or in general,

related proceedings, of the Company for an amount per share equal to the Exchangeable Share Purchase Price.

It is expected that Callco

will exercise its call rights, as that is more beneficial to the holders of the Exchangeable Shares.

Once Callco acquires the Exchangeable

Shares from a holder, it (Callco and the Company) is obligated to deliver the Company shares to the holder.

Callco discharges this obligation

by arranging for the Company to issue and deliver those shares to the holders on behalf of Callco.

As consideration for satisfying the

delivery obligation, Callco would issue its own shares to the Company.

There are no cash redemption

features, as all redemption and exchange scenarios are payable in a share of the Company’s common stock.

Neither Canco, Callco,

or the Company assume any tax liabilities of a former Peraso Tech shareholder who acquired Exchangeable Shares under the plan of arrangement.

The purchase price computed upon the exercise of rights pertaining to retraction, redemption, or liquidation, or otherwise giving rise

to a purchase or cancellation of an Exchangeable Share, will, in all cases, consist of a 1:1 exchange involving the Company’s common

stock, regardless of the market price of a share of the Company’s common stock.

In connection with the Arrangement,

on December 15, 2021, the Company filed the Certificate of Designation of Series A Special Voting Preferred Stock (the Certificate) with

the Secretary of State of the State of Delaware to designate Series A Special Voting Preferred Stock (the Special Voting Share) in accordance

with the terms of the Arrangement Agreement in order to enable the holders of Exchangeable Shares to exercise their voting rights.

Special Voting Share was issued to a third-party administrative agent (the Agent) solely to facilitate the exercise of rights by holders

of Exchangeable Shares.

The rights of the Agent, as holder of the Special Voting Share, are limited to effecting the rights of the holders

of the Exchangeable Shares;

the Special Voting Share does not confer any independent rights to the Agent.

Under the Certificate, when

all of the Exchangeable shares have been converted into shares of the Company’s common stock, the Special Voting Share shall be

automatically cancelled and shall not be reissued.

Each Exchangeable Share is exchangeable for one share of common stock of the Company

and while outstanding, the Special Voting Share enables holders of Exchangeable Shares to cast votes on matters for which holders of the

common stock are entitled to vote, and by virtue of the share terms relating to the Exchangeable Shares, enable the Exchangeable Shares

to receive dividends that are economically equivalent to any dividends declared with respect to the shares of common stock.

As the Special

Voting Share does not participate in dividends (only the Exchangeable Shares participate in dividends) and is not entitled to participate

in the residual interest of the Company, it is not classified as an equity instrument in the Company’s financial statements.

The Exchangeable Shares, which can be converted

into common stock at the option of the holder and have the same voting and dividend rights as common stock, are similar in substance to

shares of common stock.

Further, Canco and Callco are non-substantive entities, which are looked through with the Exchangeable Shares

being, in substance, common stock of the Company.

Therefore, the Exchangeable Shares have been included in the determination of outstanding

common stock.

The Special Voting Share was issued to a third-party administrative agent (the Agent) solely to facilitate the exercise

of rights by holders of Exchangeable Shares, The rights of the Agent, as holder of the Special Voting Share, are limited to effecting

the rights of the holders of the Exchangeable Shares;

the Special Voting Share does not confer any independent rights to the Agent.

the Certificate, when all of the Exchangeable shares have been converted into shares of the Company’s common stock, the Special

Voting Share shall be automatically cancelled and shall not be reissued.

Outstanding Shares of Common Stock

The following table details the outstanding shares of the common stock that were outstanding immediately following the consummation of the Arrangement:

The following table details

the shares of the common stock that were outstanding immediately following the consummation of the Arrangement:

Number of shares

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Reverse Acquisition Determination

Pursuant to ASC 805, the transaction was accounted for as a reverse acquisition because:

(i) the stockholders of Peraso Tech owned the majority of the outstanding common stock of the Company after the share exchange;

Pursuant to ASC 805, the transaction

was accounted for as a reverse acquisition because:

(i) the stockholders of Peraso Tech owned the majority of the outstanding common stock

of the Company after the share exchange;

(ii) Peraso Tech appointed a majority of the Company’s board of directors;

and (iii) Peraso Tech determined the officers of the Company.

and (iii) Peraso

Tech determined the officers of the Company.

Measuring the Consideration Transferred

In the reverse acquisition, the accounting acquirer did not issue any consideration to the accounting acquiree, rather the accounting acquiree issued its equity shares to the owners of the accounting acquirer in exchange for the accounting acquirer’s shares.

The acquisition date fair value of the consideration transferred by the accounting acquirer for its interest in the accounting acquiree was calculated by Peraso Tech, as the fair value of the consideration effectively transferred.

In accordance with ASC 805, the consideration effectively transferred between the Company (a public company as the accounting acquiree) and Peraso Tech (a private company as the accounting acquirer), was calculated as the fair value of the Company’s equity including the fair value of its common shares outstanding and its warrants, plus the portion of the share-based award fair value allocated to the pre-combination service of the accounting acquiree’s awards.

The fair value of the total consideration effectively transferred was determined to be $ 37.6 million.

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

The Company believes that information gathered to date provides a reasonable basis for estimating the fair value of assets acquired and liabilities assumed.

However, the provisional measurements of fair value set forth below are subject to change.

The Company expects to complete the purchase price allocation as soon as practical but no later than one year from the acquisition date.

In the reverse acquisition,

the accounting acquirer did not issue any consideration to the accounting acquiree, rather the accounting acquiree issued its equity shares

to the owners of the accounting acquirer in exchange for the accounting acquirer’s shares.

The acquisition date fair value of the

consideration transferred by the accounting acquirer for its interest in the accounting acquiree was calculated by Peraso Tech, as the

fair value of the consideration effectively transferred.

In accordance with ASC 805, the consideration effectively transferred between

the Company (a public company as the accounting acquiree) and Peraso Tech (a private company as the accounting acquirer), was calculated

as the fair value of the Company’s equity including the fair value of its common shares outstanding and its warrants, plus the portion

of the share-based award fair value allocated to the pre-combination service of the accounting acquiree’s awards.

The fair value

of the total consideration effectively transferred is summarized in the following table (in thousands, except per-share amount):

Company share price (i)

Company common shares outstanding (ii)

Fair value of the Company’s common shares outstanding

Fair value of the Company’s warrants (iii)

Percent related to precombination service

Fair value of the Company’s precombination service share based awards (iii)

Consideration effectively transferred

(i) Represents the Company's share

price as of December 16, 2021

(ii) Represents the Company's outstanding

shares as of December 16, 2021

(iii) Represents the fair value of

the Company's warrants outstanding and calculated as of December 16, 2021

following table summarizes the final allocation of the purchase price to the net assets acquired based on the respective fair value of

the acquired assets and assumed liabilities of the accounting acquiree, which is the Company .

(in thousands)

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Other current assets

Developed technology (provisional)

Customer relationships (provisional)

Developed technology

Customer relationships

Current liabilities

Presentation of Consolidated Financial Statements Post Reverse Acquisition

The consolidated financial statements reflect all of the following:

the assets and liabilities of the legal subsidiary (Peraso Tech, as the accounting acquirer) recognized and measured at their pre-combination carrying amounts;

the assets and liabilities of the legal parent (the Company, as the accounting acquiree) recognized and measured in accordance with ASC 805;

the retained earnings and other equity balances of the legal subsidiary (Peraso Tech, as the accounting acquirer) before the business combination;

the amount recognized as issued equity interests in the consolidated financial statements determined by adding the issued equity interest of Peraso Tech outstanding immediately before the business combination to the fair value of the Company.

However, the equity structure (that is, the number and type of equity interests issued) reflects the equity structure of the Company.

All references to common stock, stock options and warrants as well as per share amounts have been retroactively restated to reflect the number of shares of the Company issued in the reverse acquisition.

Unaudited proforma results of operations for the years ended December 31, 2021 and 2020 are included below as if the business combination occurred on January 1, 2020.

This summary of the unaudited pro forma results of operations is not necessarily indicative of what the Company’s results of operations would have been had Peraso Tech been acquired at the beginning of 2020, nor does it purport to represent results of operations for any future periods.

Year ended December 31,

Presentation of Consolidated Financial Statements

Post Reverse Acquisition

The consolidated financial statements reflect

all of the following:

● the assets and liabilities of the legal subsidiary

(Peraso Tech, as the accounting acquirer) recognized and measured at their pre-combination carrying amounts;

● the assets and liabilities of the legal parent (the

Company, as the accounting acquiree) recognized and measured in accordance with ASC No.

● the retained earnings and other equity balances

of the legal subsidiary (Peraso Tech, as the accounting acquirer) before the business combination;

● the amount recognized as issued equity interests

in the consolidated financial statements determined by adding the issued equity interest of Peraso Tech outstanding immediately before

the business combination to the fair value of the Company.

However, the equity structure (that is, the number and type of equity interests

issued) reflects the equity structure of the Company.

All references to common stock,

stock options and warrants as well as per share amounts have been retroactively restated to reflect the number of shares of the Company

issued in the reverse acquisition.

Unaudited pro forma results of operations for the year ended December 31, 2021 are included below as

if the business combination occurred on January 1, 2021.

This summary of the unaudited pro forma results of operations is not necessarily

indicative of what the Company’s results of operations would have been had Peraso Tech been acquired at the beginning of 2021, nor

does it purport to represent results of operations for any future periods.

acquisition costs

Adjusted net loss

The goodwill recognized from the reverse acquisition is attributed to the operational synergies from the combined operations of the Company and Peraso Tech.

Revenue and earnings of the Company from acquisition date to December 31, 2021 that were included in the consolidated financial statements as of December 31, 2021 amounted to $ 263,000 and $ 74,000 , respectively.

Consolidated Balance Sheet Detail

Fair Value of Financial Instruments

The following table represents the Company’s

assets and liabilities measured at fair value on a recurring basis as of December 31, 2022 and 2021 and the basis for that measurement

(in thousands):

December 31, 2022

Money market funds (1)

Corporate notes and commercial paper

Warrant liability

December 31, 2021

Money market funds (1)

Corporate notes and commercial paper

(1) Included in cash and cash equivalents

The following table represents the Company’s

determination of fair value for its financial assets (cash equivalents and investments) (in thousands):

December 31, 2022

Cash and cash equivalents

Short-term investments

December 31, 2021

Cash and cash equivalents

Short-term investments

Long-term investments

There were no transfers in or out of Level 1 and

Level 2 securities during the years ended December 31, 2022 or December 31, 2021.

Balance Sheet Detail

(in thousands)

Raw materials

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Prepaid software

Prepaid legal

Property and equipment, net:

Equipment, furniture and fixtures and leasehold

Machinery and equipment

Computer equipment and software

Furniture and fixtures

Leasehold improvements

Total property and equipment

Accumulated depreciation and amortization

Accrued expenses and other:

During the year ended December 31, 2022, the Company

wrote-off fully depreciated assets, or assets that were no longer in service, costing approximately $ 6,380,000 with corresponding accumulated

depreciation of approximately $ 6,227,000 , or a remaining net book value of approximately $ 153,000 .

The Company recorded the remaining

book value of approximately $ 153,000 as a loss during the year ended December 31, 2022.

(in thousands)

Accrued Expenses & Other:

Accrued wages and employee benefits

2 unchanged sentences

Accrued inventory

Financing liability

Warranty accrual

Fair Value of Financial Instruments

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

December 31, 2021

Cash and cash equivalents

Short-term investments

Long-term investments

December 31, 2020

The unrealized losses from available-for-sale securities as of December 31, 2021 and 2020 were not material.

The following table represents the Company’s fair value hierarchy for its financial assets (cash equivalents and investments) as of December 31, 2021 (in thousands):

Commitments and Contingencies

The Company has facility leases that it accounts

for under ASC 842, including the operating leases for its corporate headquarters facility in San Jose, California, and facilities in Toronto

and Markham Ontario, Canada.

The Toronto lease expires in December 2023.

The Company entered into a new, direct lease for the San Jose

facility in April 2022, for an 18-month term, which commenced July 15, 2022.

In May 2022, the Company entered into a new lease for the

facility in Markham with a 60-month term, which commenced June 21, 2022.

The Markham landlord also provided a lease incentive of approximately

$ 220,000 (the Incentive), which will be payable to the Company as follows:

one-half of the Incentive payable subsequent to the completion

of the improvements to the leased space and the second half-ratably on an annual basis commencing with the second year of the lease.

The initial right-of-use assets and corresponding

liabilities of approximately $ 1.0 million for the San Jose and Markham facility leases were measured at the present value of the future

minimum lease payments.

The discount rate used to measure the lease assets and liabilities were 8 %.

Lease expense is recognized on a straight-line

basis over the lease term.

On March 1, 2022, the Company entered into a 36-month

finance lease agreement for the lease of equipment resulting in the recognition of a right-of-use asset and lease liability of approximately

On November 1, 2022, the Company entered into

a 36-month finance lease agreement for the lease of equipment resulting in the recognition of a right-of-use asset of approximately $ 124,000

and lease liability of approximately $ 117,000 .

The following table provides the details of right-of-use

assets and lease liabilities as of December 31, 2022 (in thousands):

December 31, 2022

Money market funds (1)

Corporate notes and commercial paper

Included in cash and cash equivalents.

There were no cash equivalents and investments as of December 31, 2020.

During the year ended December 31, 2021, $ 0.4 million of corporate notes and commercial paper matured and were transferred to Level 1.

There were no transfers in or out of Level 1 and Level 2 securities during the year ended December 31, 2020.

Deferred income taxes reflect the net tax effects of temporary differences between the carrying amount of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes.

Significant components of the Company’s deferred tax assets and liabilities were (in thousands):

Right-of-use assets:

Operating leases

Finance lease

Total right-of-use assets

Lease liabilities:

Operating leases

Finance lease

Total lease liabilities

Future minimum payments under the leases at December

31, 2022 are listed in the table below (in thousands):

Year ending December 31,

Total future lease payments

imputed interest

Present value of lease liabilities

The following table provides the details of supplemental

cash flow information (in thousands):

Year Ended December 31,

Cash paid for amounts included in the measurement of lease liabilities:

Operating cash flows for leases

Rent expense was approximately $ 0.7 million and

$ 0.6 million for the years ended December 31, 2022 and December 31, 2021, respectively.

In addition to the minimum lease payments, the

Company is responsible for property taxes, insurance and certain other operating costs related to the leased facilities and equipment.

Indemnification

In the ordinary course of business, the Company

enters into contractual arrangements under which it may agree to indemnify the counterparties from any losses incurred relating to breach

of representations and warranties, failure to perform certain covenants, or claims and losses arising from certain events as outlined

within the particular contract, which may include, for example, losses arising from litigation or claims relating to past performance.

Such indemnification clauses may not be subject to maximum loss clauses.

The Company has also entered into indemnification agreements

with its officers and directors.

No material amounts were reflected in the Company’s consolidated financial statements for the years

ended December 31, 2022 and 2021 related to these indemnifications.

The Company has not estimated the maximum potential

amount of indemnification liability under these agreements due to the limited history of prior claims and the unique facts and circumstances

applicable to each particular agreement.

To date, the Company has not made any payments related to these indemnification agreements.

Product Warranties

The Company warrants certain of its products to

be free of defects generally for a period of three years .

The Company estimates its warranty costs based on historical warranty claim

experience and includes such costs in cost of net revenues.

Warranty costs were not material for the years ended December 31, 2022 and

Legal Matters

The Company is not a party to any legal proceeding

that the Company believes is likely to have a material adverse effect on its consolidated financial position or results of operations.

From time to time the Company may be subject to legal proceedings and claims in the ordinary course of business.

These claims, even if

not meritorious, could result in the expenditure of significant financial resources and diversion of management efforts.

Retirement Savings

January 1997, the Company adopted the Peraso 401(k) Plan (the Savings Plan), which qualifies as a thrift plan under Section 401(k) of

the Internal Revenue Code.

Full-time and part-time employees who are at least 21 years of age are eligible to participate in the Savings

Plan at the time of hire.

Participants may contribute up to 15 % of their earnings to the Savings Plan.

No matching contributions were

made by the Company during the years ended December 31, 2022 and 2021.

Business Segments, Concentration of Credit Risk and

Significant Customers

The Company determined its reporting units in

accordance with ASC No.

280, Segment Reporting (ASC 280).

Management evaluates a reporting unit by first identifying its operating

segments under ASC 280.

The Company then evaluates each operating segment to determine if it includes one or more components that constitute

If there are components within an operating segment that meet the definition of a business, the Company evaluates those components

to determine if they must be aggregated into one or more reporting units.

If applicable, when determining if it is appropriate to aggregate

different operating segments, the Company determines if the segments are economically similar and, if so, the operating segments are aggregated.

Management has determined that the Company has

one consolidated operating segment.

The Company’s reporting segment reflects the manner in which its chief operating decision maker

reviews results and allocates resources.

The Company’s reporting segment meets the definition of an operating segment and does not

include the aggregation of multiple operating segments.

The Company recognized revenue from shipments

of product, licensing of its technologies and performance of services to customers by geographical location as follows (in thousands):

United States

Rest of world

Total net revenue

The following is a breakdown of product revenue

by category (in thousands):

(amounts in thousands)

Product category

mmWave modules

mmWave other products

Customers who accounted for at least 10 % of total

net revenue were:

* Represents less than 10 %

As of December 31, 2022, four customers accounted

for 79 % of accounts receivable, and the Company had a provision for doubtful accounts of $ 183,000 against one of the customer’s

Three customers accounted for 96 % of accounts receivable as of December 31, 2021.

Income Tax Provision

Deferred income taxes reflect the net tax effects

of temporary differences between the carrying amount of assets and liabilities for financial reporting purposes and the amounts used for

income tax purposes.

Significant components of the Company’s

deferred tax assets and liabilities were (in thousands):

Deferred tax assets:

Net operating loss carryforwards

Federal and state loss carryforwards

Reserves, accruals and other

1 unchanged sentence

Deferred stock-based compensation

Capitalized research and development costs

Research and development credit carryforwards

2 unchanged sentences

Net deferred tax assets, net

The $ 2.0 million increase in the valuation allowance during 2021 was primarily the result of an increase to the net operating loss carryforwards for the current year.

The valuation allowance increased by $ 1.1 million during the year ended December 31, 2020.

Utilization of the Company’s net operating losses (NOLs) and tax credit carryforwards is subject to a substantial annual limitation due to the ownership change limitations provided by the IRC and similar state provisions.

Section 382 of the IRC (Section 382) imposes limitations on a corporation’s ability to utilize its NOL and tax credit carryforwards, if it experiences an “ownership change.” In general terms, an ownership change may result from transactions increasing the ownership percentage of certain stockholders in the stock of the corporation by more than 50% over a three-year period.

In the event of an ownership change, utilization of the NOLs would be subject to an annual limitation under Section 382 determined by multiplying the value of the Company’s stock at the time of the ownership change by the applicable long-term tax-exempt rate.

While a formal study has not been performed, the Company believes that Section 382 ownership changes occurred as a result of financing transactions and the Arrangement..

The Company believes the Section 382 limitations will result in approximately 89 % of the federal and state NOLs expiring before they can be utilized, and approximately 88 % of the federal tax credit carryforwards expiring before they can be utilized.

As of December 31, 2021, the Company had NOLs of approximately $ 214.1 million for federal income tax purposes and approximately $ 134.1 million for state income tax purposes.

Only approximately $ 20.2 million of the federal NOLs and $ 16.7 million of the state NOLs are expected to be available before expiration due to the Section 382 limitation.

These NOLs are available to reduce future taxable income and will expire at various times from 2025 through 2041 , except federal NOLs from 2018 to 2021 which will never expire.

The Company also had federal research and development tax credit carryforwards of approximately $ 8.6 million, which will begin expiring in 2022, and California research and development credits of approximately $ 8.4 million, which do not have an expiration date.

A reconciliation of income taxes provided at the federal statutory rate ( 21 %) to the actual income tax provision is as follows (in thousands):

The $ 4.4 million increase in the valuation allowance during 2022 was

primarily the result of an increase to the net operating loss carryforwards for the current year.

The valuation allowance increased by

$ 2.0 million during the year ended December 31, 2021.

Utilization of the Company’s net operating

losses (NOLs) and tax credit carryforwards is subject to a substantial annual limitation due to the ownership change limitations provided

by the Internal Revenue Code (IRC) and similar state provisions.

Section 382 of the IRC (Section 382) imposes limitations on a corporation’s

ability to utilize its NOL and tax credit carryforwards, if it experiences an “ownership change.” In general terms, an ownership

change may result from transactions increasing the ownership percentage of certain stockholders in the stock of the corporation by more

than 50 % over a three-year period.

In the event of an ownership change, utilization of the NOLs would be subject to an annual limitation

under Section 382 determined by multiplying the value of the Company’s stock at the time of the ownership change by the applicable

long-term tax-exempt rate.

While a formal study has not been performed, the Company believes that Section 382 ownership changes occurred

as a result of financing transaction in 2018 and the Arrangement.

The Company believes the Section 382 limitations will result in approximately

89 % of the federal and state NOLs expiring before they can be utilized, and approximately 88 % of the federal tax credit carryforwards

expiring before they can be utilized.

As of December 31, 2022, the Company had NOLs of approximately $ 228.2

million for federal income tax purposes and approximately $143.6 million for state income tax purposes.

Only approximately $ 34.3 million

of the federal NOLs and $ 25.2 million of the state NOLs are expected to be available before expiration due to the Section 382 limitation.

These NOLs are available to reduce future taxable income and will expire at various times from 2025 through 2042, except federal NOLs

from 2018 to 2022 which have no expiration date.

As of December 31, 2022, the Company also had federal research and development tax credit

carryforwards of approximately $ 8.5 million that will expire at various times through 2042, and California research and development credits

of approximately $ 8.4 million, which do not have an expiration date.

A reconciliation of income taxes provided at the

federal statutory rate ( 21 %) to the actual income tax provision is as follows (in thousands):

Income tax benefit computed at U.S.

1 unchanged sentence

Research and development credits

Stock-based compensation

Amortization of intangible assets

Goodwill impairment

Valuation allowance changes affecting tax provision

Income tax provision

The losses before income tax provision for the years ended December 31, 2021 and 2020 were solely attributable to US operations.

Stock-Based Compensation

Equity Compensation Plans

Common Stock Equity Plans

In 2010, the Company adopted the 2010 Equity Incentive Plan and later amended it in 2014, 2017 and 2018 (the Amended 2010 Plan).

The Amended 2010 Plan was terminated in August 2019 and remains in effect as to outstanding equity awards granted prior to the date of expiration.

In 2010, the Company adopted the 2010 Equity Incentive

Plan and later amended it in 2014, 2017 and 2018 (the Amended 2010 Plan).

The Amended 2010 Plan was terminated in August 2019 and remains

in effect as to outstanding equity awards granted prior to the date of expiration.

No new awards may be made under the Amended 2010 Plan.

In August 2019, the Company’s stockholders approved the 2019 Stock Incentive Plan (the 2019 Plan), and it replaced the Amended 2010 Plan.

The 2019 Plan authorizes the board of directors or the compensation committee of the board of directors to grant a broad range of awards including stock options, stock appreciation rights, restricted stock, performance-based awards, and restricted stock units.

Under the 2019 Plan, 182,500 shares were initially reserved for issuance.

In November 2021, in connection with the approval of the Arrangement, the Company’s stockholders approved an amendment increasing the number of shares reserved for issuance under the 2019 Plan by 3,106,937 shares.

Under the 2019 Plan, the term of all incentive stock options granted to a person who, at the time of grant, owns stock representing more than 10 % of the voting power of all classes of the Company’s stock may not exceed five years .

The exercise price of stock options granted under the 2019 Plan must be at least equal to the fair market value of the shares on the date of grant.

Generally, awards under the 2019 Plan will vest over a three to four-year period, and options will have a term of 10 years from the date of grant.

In addition, the 2019 Plan provides for automatic acceleration of vesting for options granted to non-employee directors upon a change of control of the Company.

In connection with the Arrangement, the Company assumed the Peraso Technologies Inc.

2009 Share Option Plan (the 2009 Plan) and all outstanding options granted pursuant to the terms of the 2009 Plan .

Each outstanding, unexercised and unexpired option under the 2009 Plan, whether vested or unvested, was assumed by the Company and converted into options to purchase shares of the Company’s common stock and became exercisable by the holder of such option in accordance with its terms, with (i) the number of shares of common stock subject to each option multiplied by the Exchange Ratio and (ii) the per share exercise price upon the exercise of each option divided by the Exchange Ratio.

In connection with the Arrangement, no further awards will be made under the 2009 Plan

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

In August 2019, the Company’s stockholders

approved the 2019 Stock Incentive Plan (the 2019 Plan) to replace the Amended 2010 Plan.

The 2019 Plan authorizes the board of directors

or the compensation committee of the board of directors to grant a broad range of awards including stock options, stock appreciation rights,

restricted stock, performance-based awards, and restricted stock units.

Under the 2019 Plan, 182,500 shares were initially reserved for

In November 2021, in connection with the approval of the Arrangement, the Company’s stockholders approved an amendment

increasing the number of shares reserved for issuance under the 2019 Plan by 3,106,937 shares.

Under the 2019 Plan, the term of all incentive

stock options granted to a person who, at the time of grant, owns stock representing more than 10 % of the voting power of all classes

of the Company’s stock may not exceed five years .

The exercise price of stock options granted under the 2019 Plan must be at least

equal to the fair market value of the shares on the date of grant.

Generally, awards under the 2019 Plan will vest over a three to four-year

period, and options will have a term of 10 years from the date of grant.

In addition, the 2019 Plan provides for automatic acceleration

of vesting for options granted to non-employee directors upon a change of control of the Company.

In connection with the Arrangement, the Company

assumed the Peraso Technologies Inc.

2009 Share Option Plan (the 2009 Plan) and all outstanding options granted pursuant to the terms

of the 2009 Plan.

Each outstanding, unexercised and unexpired option under the 2009 Plan, whether vested or unvested, was assumed by the

Company and converted into options to purchase shares of the Company’s common stock and became exercisable by the holder of such

option in accordance with its terms, with (i) the number of shares of common stock subject to each option multiplied by the Exchange Ratio

and (ii) the per share exercise price upon the exercise of each option divided by the Exchange Ratio.

In connection with the Arrangement,

no further awards will be made under the 2009 Plan.

The 2009 Plan, the Amended 2010 Plan and the 2019

Plan are referred to collectively as the “Plans.”

Stock-Based Compensation Expense

At December 31, 2021, the unamortized compensation cost was approximately $ 12.2 million related to stock options and is expected to be recognized as expense over a weighted average period of approximately 3.5 years.

The unamortized compensation cost, at December 31, 2021, was $ 0.1 million related to restricted stock units and is expected to be recognized as expense over a weighted average period of approximately 1.8 years.

For the years ended December 31, 2021 and 2020, the fair value of options and awards vested was approximately $ 1.0 million and $ 0.3 million, respectively.

Valuation Assumptions and Expense Information for Stock-based Compensation

The fair value of the Company’s share-based payment awards for the years ended December 31, 2021 and 2020 was estimated on the grant dates using the Black-Scholes model with the following assumptions:

Risk-free interest rate

1.22% - 1.47%

0.46% - 2.74%

Expected life (years)

Dividend yield

The risk-free interest rate was derived from the Daily Treasury Yield Curve Rates as published by the U.S.

Department of the Treasury as of the grant date for terms equal to the expected terms of the options.

The expected volatility was based on the historical volatility of the Company’s stock price over the expected term of the options.

The expected term of options granted was derived from historical data based on employee exercises and post-vesting employment termination behavior.

A dividend yield of zero is applied because the Company has never paid dividends and has no intention to pay dividends in the near future.

In accordance with ASU No.

2016-09, the Company accounts for forfeitures as they occur.

The Company reflected compensation costs of $ 4.3

million and $ 4.4 million related to the vesting of stock options during the years ended December 31, 2022 and 2021, respectively.

31, 2022, the unamortized compensation cost was approximately $ 7.7 million related to stock options and is expected to be recognized as

expense over a weighted average period of approximately two years .

The Company reflected compensation costs of $ 1.4 million and $ 0.1 million

related to the vesting of restricted stock options during the years ended December 31, 2022 and 2021, respectively.

The unamortized compensation

cost at December 31, 2022 was $ 2.1 million related to restricted stock units and is expected to be recognized as expense over a weighted

average period of approximately two years .

Common Stock Options and Restricted Stock

A summary of stock option activity under the Plans is presented below (in thousands, except exercise price):

The term of all incentive stock options granted

to a person who, at the time of grant, owns stock representing more than 10 % of the voting power of all classes of the Company’s

stock may not exceed five years.

The exercise price of stock options granted under the 2019 Plan must be at least equal to the fair market

value of the shares on the date of grant.

Generally, options granted under the 2019 Plan will vest over a three to four-year period and

have a term of 10 years from the date of grant.

In addition, the 2019 Plan provides for automatic acceleration of vesting for options

granted to non-employee directors upon a change of control (as defined in the 2019 Plan) of the Company.

The following table summarizes the activity in the shares available

for grant under the Plans during the years ended December 31, 2021 and December 31, 2022 (in thousands, except exercise price):

Options outstanding

Balance as of January 1, 2021

Options granted

Options cancelled and returned to the Plans

Options exercised

Balance as of December 31, 2020

Additional shares authorized under the Plans

Options granted

3 unchanged sentences

Balance as of December 31, 2021

As of December 31, 2021, the Company had approximately 3.0 million shares available for grant.

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

Non-vested shares as of December 31, 2020

Effect of business combination

Non-vested shares as of December 31, 2021

The following table summarizes significant ranges of outstanding and exercisable options at December 31, 2021 (in thousands, except contractual life and exercise price):

RSUs cancelled and returned to the Plans

Options cancelled

Balance as of December 31, 2022

The following table summarizes significant ranges

of outstanding and exercisable options as of December 31, 2022 (in thousands, except contractual life and exercise price):

Options Outstanding

7 unchanged sentences

$ 1.57 - $ 924.00

There were approximately 20,000 and 5,000 options exercised during the years ended December 31, 2021 and 2020, respectively.

A summary of RSU activity under the Plans is presented

below (in thousands, except for fair value):

Non-vested shares as of December 31, 2020

Effect of business combination

Non-vested shares as of December 31, 2021

Non-vested shares as of December 31, 2022

Stockholders’ Equity

Convertible Preferred Shares

The following tables summarize the movement in preferred shares for the year ended December 31, 2020.

(amounts in thousands)

preferred shares

Balance at January 1, 2020

Dividends accrued

Amortization of issuance costs and warrants

Foreign exchange impact

Preferred shares converted into Peraso Shares

Balance at December 31, 2020

In March 2020, the Company issued 124,408 Peraso Shares upon conversion of all outstanding Class A preferred shares amounting to $ 4,229,288 and 1,988,554 Peraso Shares upon conversion of all outstanding Class B preferred shares amounting to $ 52,102,651 .

The Class A and B preferred shares were converted into Peraso Shares based on the original conversion price of CDN$ 1.00 ($ 0.72 USD).

The outstanding accumulated dividends of $ 22,732,543 were reclassified into additional paid-in capital.

In March 2020, the Company also issued 2,958,787 Peraso Shares amounting to $ 55,668,932 upon conversion of all outstanding Class C preferred shares based on the amended conversion price of CDN$ 1.18 ($ 0.85 USD).

As a conversion inducement, the Company amended the ratio for the conversion of the Class C preferred shares into Peraso Shares from 1:

The Company determined that the additional Peraso Shares issuable arising from such modification totaled 591,757 with a fair value of $ 11,133,786 and recognized such amount as a deemed dividend.

These convertible preferred shares were accounted for as mezzanine equity prior to their conversion into Peraso Shares in March 2020.

Securities Purchase Agreement

On November 30, 2022, the Company entered into

a securities purchase agreement (the SPA) with an institutional investor, pursuant to which the Company sold to the investor, in a registered

direct offering, an aggregate of 1,300,000 shares of common stock at a negotiated purchase price of $ 1.00 per share.

The Company also

offered and sold to the investor pre-funded warrants to purchase up to 1,150,000 shares of common stock.

Each pre-funded warrant is exercisable

for one share of common stock.

The purchase price of each pre-funded warrant was $ 0.99 , and the exercise price of each pre-funded warrant

is $ 0.01 per share.

The pre-funded warrants were immediately exercisable and may be exercised at any time until all of the pre-funded

warrants are exercised in full.

Net proceeds to the Company, after offering costs, were $ 2.1 million.

In a concurrent private placement, the Company

also sold to the investor a warrant to purchase up to 3,675,000 shares of common stock (the Purchase Warrant).

The Purchase Warrant will

be exercisable beginning six months and one day from the date of the SPA at an exercise price of $ 1.36 per share and will expire on the

five-year anniversary of that date.

Warrants Classified as Liability

Purchase Warrant

The SPA governing the Purchase Warrant provides

for a value calculation for the Purchase Warrant using the Black Scholes model in the event of certain fundamental transactions.

value calculation provides for a floor on the volatility amount utilized in the value calculation at 100 % or greater.

The Company has

determined this provision introduces leverage to the holders of the Purchase Warrant that could result in a value that would be greater

than the settlement amount of a fixed-for-fixed option on the Company’s own equity shares.

Therefore, pursuant to ASC 815, the

Company has classified the Purchase Warrant as a liability in its consolidated balance sheet.

The classification of the Purchase Warrant,

including whether the Purchase Warrant should be recorded as liability or as equity, is evaluated at the end of each reporting period

with changes in the fair value reported in other income (expense) in the consolidated statements of operations and comprehensive loss.

The Purchase Warrant was initially recorded at a fair value at $ 3.7 million at the grant date and is re-valued at each reporting date.

As of December 31, 2022, the fair value of the warrant liability was reduced to $ 2.1 million.

Upon the closing of the registered direct

offering, the fair value of the Purchase Warrant liability, up to the net amounts of the funds received of approximately $ 2,099,000 , was

recorded as a financing cost, and the excess of $ 1,576,000 was recorded as a financing cost in the statement of operations.

of the change in fair value the Company recorded a gain for the year ended December 31, 2022

The fair value of the Purchase Warrant at December

31, 2022 was determined using Black Scholes model with the following assumptions:

expected term based on the contractual term of 5.4 years,

risk-free interest rate of 4.00 %, which was based on a comparable US Treasury 5-year bond, expected volatility of 114 %, and an expected

dividend of zero .

As of December 31, 2022, the Company had the following

liability-classified warrants outstanding (share amounts in thousands):

Balance as of December 31, 2021

Recognition of warrant liabilities

Change in fair value of warrants

Balance as of December 31, 2022

Peraso Tech Warrants

As of January 1, 2021, the Company had warrants

outstanding to purchase 375,000 shares of its common stock.

During the year ended December 31, 2021, the Company issued warrants to purchase

an additional 133,000 shares of its common stock.

In accordance with the Arrangement Agreement, on December 16, 2021, the warrants to

purchase the 508,000 shares of common stock were settled in exchange for a defined number of common shares.

Upon settlement, the fair

value of the warrants was calculated using the intrinsic fair value of the common shares.

The change in fair value of approximately $ 8.1

million was recognized in other income (expense) in the consolidated statements of operations.

Warrants Classified as Equity

At December 31, 2021, the Company had the following warrants outstanding (share amounts in thousands):

As of December 31, 2022, the Company had the following

equity-classified warrants outstanding (share amounts in thousands):

As of December 31, 2021, the Company had the following

equity-classified warrants outstanding (share amounts in thousands):

Number of Shares

Exercise Price

Warrants classified as liability

Warrants outstanding at December 31, 2020 and their respective exercise price and expiration dates, were as follows:

Number of warrants issued (recast)

Exercise price

December 31, 2025

August 31, 2022

December 31, 2025

December 31, 2022

December 31, 2025

December 31, 2023

Exercise prices in USD were $ 0.79 , $ 1.16 , and $ 0.12 at December 31, 2020.

Warrant activity and the related changes in the estimated fair values during the years ended December 31, 2021 and 2020 were:

Number of shares (recast)

Balance - December 31, 2019

Issued in the year

Change in fair value of warrants

Balance - December 31, 2020

Issued in the year

Effect of business combination

Change in fair value of warrants

Balance - December 31, 2021

The fair value of the warrant liability was estimated using the Black-Scholes option-pricing model.

Peraso Tech was a private company and lacked company-specific historical and implied volatility information.

Therefore, it estimated its expected stock volatility based on the historical volatility of a publicly traded set of peer companies within the semiconductor industry with characteristics similar to the Company.

The risk-free interest rate is determined by reference to the U.S.

Treasury yield curve in effect at the time of grant of the award for time periods approximately equal to the expected term of the award.

Expected dividend yield is zero , based on the fact that the Company had never paid cash dividends and did not expect to pay any cash dividends in the foreseeable future.

The Company granted warrants with exercise price of CDN$ 0.15 ($ 0.12 USD) to purchase 6,628,495 common shares of the Company in 2020 to certain holders of convertible debentures (Note 7).

The total fair values of these warrants at grant date amounted to $ 5.3 million in 2020.

The fair values were determined using Black-Scholes model with the following assumptions:

expected term based on the contractual term of 3.2 - 5 years, risk-free interest rate of 0.37 %- 0.38 % based on a comparable US Treasury Bond, expected volatility of 104.37 %, and expected dividend of zero .

The fair values of the outstanding warrants at December 31, 2020 was calculated based on the following assumptions used in the Black-Scholes model:

expected term based on the remaining contractual term of 1.92-5.25 years , risk-free interest rate of 0.36 % based on a comparable US Treasury Bond, expected volatility of 104.37 %, and expected dividend of zero .

In accordance with the Arrangement Agreement, on December 16, 2021, the warrants were settled in exchange for a defined number of common shares.

Upon settlement, the fair value of the warrants were calculated using the intrinsic fair value of the common shares.

The change in fair value was recognized in other income (expense) in the consolidated statements of operations.

Retirement Savings Plan

Effective January 1997, the Company adopted the MoSys 401(k) Plan (the Savings Plan), which qualifies as a thrift plan under Section 401(k) of the Internal Revenue Code.

Full-time and part-time employees who are at least 21 years of age are eligible to participate in the Savings Plan at the time of hire.

Participants may contribute up to 15 % of their earnings to the Savings Plan.

No matching contributions were made by the Company during the years ended December 31, 2021 and 2020.

Business Segment, Concentration of Credit Risk and Significant Customers

The Company operates in one business segment and uses one measurement of profitability for its business.

Revenue attributed to the United States and to all foreign countries is based on the geographical location of the customer.

Financial instruments that potentially subject the Company to significant concentrations of credit risk consist principally of cash, cash equivalents, investments and accounts receivable.

Cash, cash equivalents and investments are deposited with high credit-quality institutions.

The Company recognized revenue from licensing of its technologies, performance of engineering services and shipment of products to customers in the following geographical locations (in thousands):

North America

Rest of world

Total net revenue

Customers who accounted for at least 10% of total net revenues were:

Represents percentage less than 10%.

Three customers accounted for 96 % of net accounts receivable at December 31, 2021.

Three customers accounted for 95 % of net accounts receivable at December 31, 2020.

All net long-lived assets (property and equipment) were held in the United States and Canada.

Commitments and Contingencies

The Company has three leases that it accounts for under ASC 842, and these include the operating leases for its corporate facility in San Jose, California, and facilities in Toronto and Waterloo, Ontario, Canada.

The San Jose lease expires in July 2022 , and the Waterloo and Toronto leases expire in September 2022 and December 2023 , respectively.

The right-to-use assets and corresponding liabilities for the facility leases were measured at the present value of the future minimum lease payments.

The discount rate used to measure the lease assets and liabilities were 8 %.

Lease expense is recognized on a straight line basis over the lease term.

Future minimum payments under the facility leases at December 31, 2021 are listed in the table below (in thousands).

Year ended December 31,

Total future lease payments

imputed interest

Present value of lease liabilities

Year ended December 31,

Cash paid for amounts included in the measurement of lease liabilities:

Operating cash flows for leases

Rent expense was approximately $ 0.6 million for each of the years ended December 31, 2021 and 2020.

In addition to the minimum lease payments, the Company is responsible for property taxes, insurance and certain other operating costs.

Indemnification

In the ordinary course of business, the Company enters into contractual arrangements under which it may agree to indemnify the counterparties from any losses incurred relating to breach of representations and warranties, failure to perform certain covenants, or claims and losses arising from certain events as outlined within the particular contract, which may include, for example, losses arising from litigation or claims relating to past performance.

Such indemnification clauses may not be subject to maximum loss clauses.

The Company has also entered into indemnification agreements with its officers and directors.

No material amounts were reflected in the Company’s consolidated financial statements for the years ended December 31, 2021 and 2020 related to these indemnifications.

The Company has not estimated the maximum potential amount of indemnification liability under these agreements due to the limited history of prior claims and the unique facts and circumstances applicable to each particular agreement.

To date, the Company has not made any payments related to these indemnification agreements.

Product warranties

The Company warrants certain of its products to be free of defects generally for a period of three years.

The Company estimates its warranty costs based on historical warranty claim experience and includes such costs in cost of net revenues.

Warranty costs were not material for the years ended December 31, 2021 and 2020.

On June 3, 2020, Peraso Tech applied for and obtained an order under the Companies’ Creditors Arrangement Act (the CCAA), providing certain relief.

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

was appointed as the Monitor (the Monitor) of Peraso Tech.

In addition, the Monitor, in its capacity as foreign representative, filed a voluntary petition in the United States under Chapter 15 of the U.S.

Bankruptcy Code, seeking recognition of the CCAA proceeding.

On October 14, 2020, the Court approved a settlement agreement (the Settlement Agreement) as between Ubiquiti Inc.

and Peraso Tech.

On October 22, 2020, following the satisfaction of certain conditions precedent, the Settlement Agreement (including all agreements incorporated as schedules thereto) became fully effective.

The terms of the settlement agreement are subject to confidentiality.

On October 28, 2020, the Court granted an order authorizing the termination of Peraso Tech’s CCAA proceedings upon the completion of certain defined steps.

On November 2, 2020, Peraso Tech provided written notice to the Monitor that these steps had been completed and, as contemplated in the CCAA Termination Order dated October 28, 2020 (the CCAA Termination Order), the Monitor served a Monitor’s Certificate on the service list that had the effect of, inter alia:

terminating the CCAA proceedings and the Stay Period referred to in the Initial Order;

discharging Ernst & Young Inc.

from its duties as the Monitor;

releasing certain claims in favor of the Monitor and its counsel, with certain exceptions;

and terminating the Administration Charge, the Directors’ Charge, the DIP Lenders’ Charge, the Second DIP Lenders’ Charge, and the Third DIP Lenders’ Charge (as such terms are defined in the CCAA Termination Order).

Notwithstanding the discharge of Ernst & Young Inc.

• Ernst & Young Inc.

will remain Monitor and have the authority to carry out, complete, or address any matters in its role as Monitor that are ancillary or incidental to these CCAA proceedings, including any matter in respect of the Chapter 15 Proceedings (as defined in the CCAA Termination Order);

• Ernst & Young Inc.

and its counsel will continue to have the benefit of any of the rights, approvals, releases and protections in favor of the Monitor at law or pursuant to the CCAA, the Initial Order, and all other Orders made in these CCAA proceedings;

On December 1, 2020 the United States Bankruptcy Court for the Southern District of New York issued an Order that:

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

and (ii) terminated the Chapter 15 Proceedings.

Loan Facilities

During 2020, the Company entered into a debtor in possession credit agreement (the DIP Loan) to provide it with financing to fund certain cash requirements during the CCAA proceedings.

Proceeds from the DIP Loan totaled $ 6,150,000 .

As of December 31, 2020, the full balance of the DIP Loan was fully paid/settled as follows:

• $ 1 million settled against accounts receivable related to an engineering agreement;

• $ 2.55 million converted into convertible debentures (see below);

• $ 100 thousand repaid in cash;

• $ 2.5 million settled against accounts receivable related to a licensing manufacturing agreement.

On November 30, 2020, the Company entered into a loan agreement (the SRED Financing) to raise funds against the Company’s present and after acquired personal property.

The proceeds from the first draw totaled $ 0.6 million (CDN$ 750,000 ), which was outstanding at December 31, 2020.

On February 5, 2021, March 5, 2021 and September 17, 2021 the Company raised additional funds from the second, third and fourth draws under the SRED financing of $ 274,715 (CDN$ 350,000 ), $ 274,715 (CDN$ 350,000 ) and $ 745,655 (CDN$ 950,000 ) respectively, totaling year to date gross proceeds of $ 1,295,085 (CDN$ 1,650,000 ) net of financing fees of $ 32,770 (CDN$ 41,750 ).

The loan agreement for all tranches carried an interest rate of 1.6 % per month, compounded monthly ( 20.98 %).

The loan was sanctioned against the Company’s tax credit refund.

The first, second and third draws, including interest of $ 136,900 (CDN$ 174,417 ), were repaid through proceeds from the Company’s tax credit refund of $ 1,093,230 (CDN$ 1,392,831 ) and the balance of $ 184,558 (CDN$ 235,132 ) was paid from the fourth draw.

The remaining loan balance, including interest, of $ 816,964 (CDN$ 1,044,177 ) was repaid on December 16, 2021.

Interest expense on the SRED Financing amounted to $ 209,856 and $ 6,193 for the years ended December 31, 2021 and 2020, respectively.

Convertible debentures

At December 31, 2020, convertible debentures consisted of the following:

(amounts in thousands)

6 % Convertible debentures due December 31, 2023

Accrued interest

Total obligation

Debt discount

In December 2019, the Company entered into convertible debenture agreements with a total principal amount of $ 1.7 million due on June 30, 2025 .

In March 2020, the maturity date was amended to December 31, 2023 .

The convertible debentures had an interest rate of 6 % per annum and were secured by the Company’s assets.

Finance fees incurred for the issuance of the convertible debentures amounting to $ 73,608 were recorded as a debt discount.

The Company also granted to a note holder warrants to purchase 53,312 common shares of the Company.

The fair value of these warrants of $ 45,971 was initially recorded as liability and debt discount.

During March 2020, the Company entered into additional convertible debenture agreements with a total principal amount of $ 3.9 million due on December 31, 2023 .

The convertible debentures had an interest rate of 6 % per annum and were secured by the Company’s assets.

Finance fees amounting to $ 0.4 million incurred for the issuance of the convertible debentures were recorded as debt discount.

The Company also granted to the note holders warrants to purchase 2,160,215 common shares of the Company.

The fair value of these warrants of $ 1,707,943 was initially recorded as liability and debt discount.

During October 2020, the Company settled a portion of its DIP Loan amounting to $ 2.6 million through the issuance of convertible debentures with a maturity date of December 31, 2023 .

The convertible debentures had an interest rate of 6 % per annum and were secured by the Company’s assets.

The Company also granted to the noteholders warrants to purchase 4,468,280 common shares of the Company.

The fair value of these warrants of $ 3.6 million was initially recorded as liability and debt discount up to the face value of the convertible debt, and a finance expense of $ 1.0 million was recorded in the statement of operations for the year ended December 31, 2020 for the remaining portion.

During April 2021, the Company entered into convertible debenture agreements with a total principal amount of $ 5.9 million due on December 31, 2023 .

The convertible debentures carried an interest rate of 6 % per annum and were secured by the Company’s assets.

Finance fees incurred for the issuance of the convertible debentures amounting to $ 0.4 million were recorded as a debt discount, resulting in net cash proceeds to the Company of $ 5.5 million.

Per terms of the convertible debenture agreements, upon the closing of an equity financing, all of the outstanding principal and accrued interest shall convert at a price equal to the lower of CDN$ 0.15 (USD$ 0.12 ) and 80 % of the per share price paid by the investors in such financing.

The Company also granted to the note holders warrants to purchase 2,947,058 common shares of the Company.

The fair value of these warrants of $ 2.6 million was initially recorded as a liability and debt discount.

The debt discount on the convertible debentures was amortized over the term of the related convertible debentures.

For the years ended December 31, 2021 and 2020, the amortization of the debt discount amounted to $ 2.1 million and $ 0.6 million, respectively.

On December 16, 2021, per the Arrangement Agreement the principal balance and accrued interest thereon on all the outstanding convertible debentures were converted into Peraso Shares at a price equal CDN$ 0.15 , or USD$ 0.12 .

The recorded debt discount was amortized to interest expense using the effective interest rate method over the terms of the related convertible debentures.

During the years ended December 31, 2021 and 2020, the amortization of the debt discount amounted to $ 2.1 million and $ 0.6 million, respectively.

For the years ended December 31, 2021 and 2020, interest expense on the convertible debentures amounted to $ 0.7 million and $ 0.3 million, respectively.

On November 30, 2020, the Company entered into

a loan agreement (the SRED Financing) to raise funds against the Company’s present and after acquired personal property.

5, 2021, March 5, 2021 and September 17, 2021, the Company raised additional funds from the second, third and fourth draws under the SRED

financing of $ 274,715 (CDN$ 350,000 ), $ 274,715 (CDN$ 350,000 ) and $ 745,655 (CDN$ 950,000 ) respectively, totaling year to date gross proceeds

of $ 1,295,085 (CDN$ 1,650,000 ) net of financing fees of $ 32,770 (CDN$ 41,750 ).

Each borrowing carried an interest rate of 1.6 % per month,

compounded monthly ( 20.98 %).

The SRED financing was sanctioned against the Company’s SRED tax credit refund.

The first, second and third draws, including interest

of $ 136,900 (CDN$ 174,417 ), were repaid through proceeds from the Company’s tax credit refund of $ 1,093,230 (CDN$ 1,392,831 ) received

in August 2021, and the balance of $ 184,558 (CDN$ 235,132 ) was paid from the fourth draw.

The remaining loan balance, including interest,

of $ 816,964 (CDN$ 1,044,177 ) was repaid on December 16, 2021.

Interest expense of approximately $ 3.0 million

for the year ended December 31, 2021 consisted of i) approximately $ 2.1 million of amortization of debt discount, ii) approximately $ 0.7

million of interest expense on convertible debt, which was outstanding and retired in 2021, and iii) approximately $ 0.2 million of interest

expense on the SRED financing.

Related Party Transactions

A family member of one of the Company’s

executive officers serves as a consultant to the Company.

During the years ended December 31, 2022 and 2021, the Company paid approximately

$ 162,000 and $ 208,000 , respectively, to the consultant.

Additionally, a family member of one of the Company’s executive officers

is an employee of the Company.

During the years ended December 31, 2022, the Company paid approximately $ 101,000 to the employed family

member , which includes the aggregate grant date fair value, as determined pursuant to FASB ASC Topic

718, of an RSU awarded in April 2022.

During the years December 31, 2021, the Company paid approximately $ 94,000 to the employed

family member .

License and Asset Sale Transaction and Subsequent Event

On August 5, 2022, the Company entered into a

Technology License and Patent Assignment Agreement (the Intel Agreement) with Intel Corporation (Intel), pursuant to which Intel:

licensed from the Company, on an exclusive basis, certain software and technology assets related to the Company’s Stellar packet

classification intellectual property, including its graph memory engine technology, and any roadmap variant, in the form existing as of

the date of the Agreement (the Licensed Technology);

(ii) acquired from the Company certain patent applications and patents owned by the

and (iii) assumed a professional services agreement, dated March 24, 2020, between Fabulous Inventions AB (Fabulous) and the

Company (the Fabulous Agreement), pursuant to which, among other things, the Company licensed from Fabulous certain technology incorporated

into the Licensed Technology.

As consideration for the Company to enter into

the Agreement, Intel agreed to pay the Company $ 3,062,500 at the closing of the transaction (the Closing) and $ 437,500 (the Holdback)

upon the satisfaction by the Company, as mutually agreed upon by the parties in good faith, of certain release criteria set forth in the

Agreement relating to various due diligence activities of Intel regarding the Licensed Technology (the Release Criteria).

The Company determined that the license and asset

sale did not qualify as a sale of a business, but as a sale of a non-financial asset, with the resultant gain recorded as income from

operations in accordance with ASC 610-20, Other Income - Gains and Losses from the Derecognition of Nonfinancial Assets .

the year ended December 31, 2022, the Company recognized a $ 2.6 million gain on this transaction, net of transaction costs, which

was recorded as a reduction of operating expenses in the consolidated statements of operations and comprehensive loss.

related to the Holdback will be recorded when the Release Criteria have been satisfied.

In January 2023, Intel paid the Holdback.

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

What changed 10-K

Item 9A. Controls and Procedures