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Item 9A. Controls and Procedures

2024-03-29 compared with 2023-03-29 · 1587 added, 1486 removed, 966 unchanged (76% of the section changed)

1 unchanged sentence

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.

Under the supervision and

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

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

under the Exchange Act.

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

1 unchanged sentence

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,

Our management is responsible

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

under the Exchange Act.

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

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

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

5 unchanged sentences

Changes in 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.

There were no changes in our

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

to materially affect, our internal control over financial reporting.

Other Information.

None of the Company’s

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

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

Disclosure Regarding Foreign Jurisdictions that Prevent

1 unchanged sentence

Directors, Executive Officers and Corporate Governance.

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

The names of our directors and certain information

about each of them are set forth below.

Position(s) with the Company

Executive Officer and Director

Ronald Glibbery

Chief Executive Officer and Director

Ian McWalter(1)(2)

Andreas Melder(1)(2)

Member of Audit Committee

Member of Compensation Committee

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.

(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

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;

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

Ronald Glibbery.

Glibbery was appointed

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

He founded Peraso Technologies Inc.

(Peraso Tech) in 2008

and served as its chief executive officer.

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

Arrangement Act (the CCAA), providing certain relief.

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

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

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

and (ii) terminated the Chapter 15 Proceedings.

over 25 years of experience in the semiconductor industry.

Glibbery has 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,

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

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

for powerline communications.

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

and LSI Logic Corporation.

Glibbery holds a B.E.Sc.

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

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.

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

2022 until his retirement in December 2022.

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

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

Before joining MoSys, Mr.

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

providing engineering services to manufacturing companies.

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

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

Lewis served as the

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

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

Intel Corporation, Zilog and Digital Equipment Corporation.

Lewis holds a B.S.

in Electrical Engineering from the University of Michigan.

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.

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

He currently serves as a member of the board

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

and new-media industries.

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

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

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

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

Ian McWalter.

McWalter was appointed

to our board of directors in December 2021.

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

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

McWalter served

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

Prior to this role, Dr.

McWalter was chief executive officer of Toumaz Technology.

McWalter was chief executive

officer of Toumaz Technology.

Before joining Toumaz, Dr.

McWalter spent 15 years

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

Previously, he held management

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

Semiconductors.

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.

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.

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.

physics and a Ph.D.

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

We believe that

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

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

boards of directors.

Andreas Melder.

Melder was appointed

to our board of directors in December 2021.

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

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

where he continued to serve in executive marketing roles.

Prior to Broadcom, Mr.

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.

Melder served as senior vice president of sales, marketing

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

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

Previously, he was founder and vice president of marketing and

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

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

Additionally, Mr.

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

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

Melder earned a B.S.

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

in Electrical Engineering 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 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

in Electrical Engineering/Business

from Carnegie-Mellon University and a M.S.

in Electrical Engineering and Operations Research from Southern Methodist University.

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

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

Additionally, he brings additional

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

Newell has served

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

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

From 2003 to 2018, Mr.

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.

was chief financial officer of Dextera Surgical, Inc.

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

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

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

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

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

Newell holds a B.A.

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.

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

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

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

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:

Position(s) with the Company

Executive Officer and Director

Financial Officer

Operating Officer

Technology Officer

Revenue Officer

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

Ronald Glibbery

Chief Executive Officer and Director

James Sullivan

Chief Financial Officer

Bradley Lynch

Chief Operating Officer

Mark Lunsford

Chief Revenue Officer

Alexander Tomkins

Chief Technology Officer

James Sullivan.

Sullivan has served

as our chief financial officer since January 2008.

From July 2006 until January 2008, Mr.

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

advertising, search and commerce.

Sullivan served as Vice President of Finance

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

From July 2002 until June 2006, Mr.

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

SAAS provider of VoIP and unified communication solutions.

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

unified communication solutions.

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

and PricewaterhouseCoopers LLP.

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.

and PricewaterhouseCoopers

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

Bradley Lynch .

Lynch has served as chief

operating officer since December 2021.

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

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

certain relief.

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

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.

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

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

Bankruptcy Code, seeking recognition of the CCAA proceeding.

In October 2020,

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

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

(i) recognized

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

and (ii) terminated

the Chapter 15 Proceedings.

Prior to founding Peraso Tech, Mr.

Lynch worked as

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

Before Kleer, he was director of software

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

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

focused on wireless audio technology.

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

in the development of semiconductor devices used for powerline communications.

Previously, Mr.

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

Lynch holds a B.A.Sc in Computer Engineering

from the University of Waterloo.

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.

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.

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.

Mark Lunsford.

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.

From 1999 to 2001, Mr.

Lunsford was the vice president of

worldwide sales and director of business development at Pivotal Technologies.

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

president of worldwide sales at Micrel Semiconductor.

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

and marketing for the Americas.

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

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

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

of high-technology businesses.

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

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

Lunsford holds a degree in Mechanical Engineering from the

University of California at Davis.

Alexander Tomkins .

Tomkins has served

as our chief technology officer since December 2021.

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

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

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

was appointed

as the Monitor of Peraso Tech.

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

United States under Chapter 15 of the U.S.

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;

(ii) terminated the Chapter 15 Proceedings.

In October 2020, the Court granted

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

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

(i) recognized and gave full force

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

and (ii) terminated the Chapter 15 Proceedings.

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

1 unchanged sentence

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

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

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.

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.

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.perasoinc.com.

Ian McWalter, Andreas Melder

and Robert Y.

Newell 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 chair 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

Compensation Committee

Ian 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.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;

McWalter serves as the chair.

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.

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:

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.

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.

Board of Directors Leadership Structure

Our bylaws provide the board

of directors with flexibility to combine or separate the positions of chair of the board of directors and chief executive officer in accordance

with its determination that utilizing one or the other structure is in the best interests of our company.

Currently, the board of directors

has not appointed a chair or lead independent director.

From time to time, each of the independent directors works with our chief executive

officer to perform a variety of functions related to our corporate governance, including coordinating activities of the board of directors,

setting the agenda for meetings (in consultation with our chief executive officer, as necessary or appropriate) and ensuring adequate

communication between the board of directors and management.

Our Audit Committee oversees critical matters such as our relationship with

our auditors, our financial reporting practices, system of disclosure controls and procedures and internal controls over financial reporting.

Our Compensation Committee oversees our executive compensation program.

Each of these committees consists entirely of independent directors.

Risk Oversight

The board of directors is

actively involved in the oversight of risks — including strategic, credit, liquidity, operational and other risks — which

could affect our business.

The board of directors does not have a standing risk management committee and administers this oversight function

directly through the board of directors as a whole and through its committees, which oversee risks relevant to their respective functions.

For example, in addition to the oversight matters described in the preceding paragraph, the Audit Committee also assists the board of

directors in its risk oversight function by reviewing and discussing with management our compliance with accounting principles and the

treasury function, including management of our cash and investments.

The Compensation Committee assists the board of directors in its

risk oversight function by considering risks relating to the design of our executive compensation programs and arrangements and employee

benefit plans.

The full board of directors considers strategic risks and opportunities and receives reports from the committees regarding

risk oversight in their areas of responsibility as necessary.

The board of directors and each committee administers its respective risk

oversight function by evaluating management’s monitoring, assessment and management of risks, including steps taken to limit our

exposure to known risks, through regular interaction with our senior management and in board and committee deliberations that are closed

to members of management.

The interaction with management occurs not only at formal board and committee meetings but also periodically

through other written and oral communications.

Compensation Committee Interlocks and Insider

Participation

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

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

of directors or Compensation Committee.

McWalter and Messrs.

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

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

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.

Employee, Officer, and Director Hedging

Our policy against insider

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

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

Executive Compensation.

McWalter, Andreas Melder and Robert Y.

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

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:

Overview of Compensation Program

The Compensation Committee

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

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 is set forth in the Summary Compensation Table, below.

For 2023, our named executive officers included

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

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:

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;

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

Role of Executive Officers in Compensation

The chief executive officer

(the “CEO”) makes recommendations for equity and non-equity compensation for executives to be approved by the Compensation

The Compensation Committee reviews these guidelines annually.

6 unchanged sentences

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.

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.

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.

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:

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.

In each fiscal year, the Compensation

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

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

Our widespread use of long-term compensation, consisting of

stock options and restricted stock units (the “RSUs”), focuses recipients on the achievement of our longer-term goals and

conserves cash for other operating expenses.

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

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

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

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

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 2023.

There were no changes to the

annual base salaries of our executive officers in 2023.

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

of our executive officers based in Canada, namely Messrs.

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

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

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

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

Annual Incentive Compensation

There were no changes to the

incentive compensation targets for our named executive officers in 2023.

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.

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.

equity awards to achieve retention and motivation:

2019 Stock Incentive Plan (the “2019

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

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

The Compensation Committee reviews and approves

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

We grant equity awards to achieve retention and motivation:

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.

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.

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

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 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 he

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

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.

In 2023, we did not grant

equity awards to any of our named executive officers.

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.

of the compensation paid to our covered executive officers for the year ended December 31, 2023 that would be taken into account for purposes

of Section 162(m) exceeded the $1 million limitation.

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.

Say-on-Pay and Say-on-Frequency

We gave our stockholders an

opportunity to provide feedback on our executive compensation through an advisory vote at our 2023 annual stockholder meeting (the “2023

Meeting”), which was held on December 15, 2023.

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 81% of the shares that voted on such matter voting in favor of the proposal.

Additionally, at the 2023 Meeting, 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 71% of the shares that voted on such matter voting in favor of the

Based on these results and consistent with the previous recommendation and determination of our 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 intends to continue to apply principles that were substantially similar to those applied

historically in determining compensation policies and decisions with respect to 2024 executive compensation.

SUMMARY COMPENSATION TABLE

The following table sets forth compensation information

for fiscal years 2023 and 2022 for each of our named executive officers.

Name and principal position

Restricted Stock

1 unchanged sentence

Ronald Glibbery

Executive Officer (2)

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

James Sullivan

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

Chief Executive Officer

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,

Chief Financial Officer

Bradley Lynch

Chief Operating Officer

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

Pursuant to the employment agreements for Messrs.

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

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

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

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

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

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

GRANTS OF PLAN-BASED AWARDS

We did not grant plan-based awards in 2023

to any of our named executive officers.

OUTSTANDING EQUITY AWARDS AT FISCAL YEAR-END

The following table and accompanying footnotes set forth information

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

Option Awards

Unexercisable

James Sullivan

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 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.

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.

Bradley Lynch

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

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

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

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

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

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

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

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

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

OPTION EXERCISES AND STOCK VESTED

The following table sets forth the number of shares

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

during the year ended December 31, 2023.

Option Awards

Vesting($)(1)

1 unchanged sentence

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.

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

Bradley Lynch

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:

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

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;

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

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

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

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

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

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

a failure to nominate the executive for election as a Board 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,

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

The table below summarizes the payments Mr.

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

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

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

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

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

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

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

case of all other named executive officers).

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

termination of employment for all other named executive officers;

● reimbursement

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

● reimbursement

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

● outstanding

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

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

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

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

Under the Policy, “cause”

means the executive’s:

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

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

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

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

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

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

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

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:

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

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

executive management;

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

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

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

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

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

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

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

than our chief executive officer;

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

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

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

between the prior office and the executive’s home;

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

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

is a member of the board of directors.

Notwithstanding the above, in lieu of the payments

and benefits payable under the Policy to Mr.

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

Glibbery will receive change-in

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

The table below summarizes the

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

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:

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:

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

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:

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.

Lynch and Sullivan

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

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

Incentive Plans

Continuation of

Benefits($)(3)

Vesting($)(4)

Vesting($)(5)

Ronald Glibbery

James 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.

Bradley Lynch

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

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

Sullivan and Lynch.

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

Sullivan, 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.

Sullivan and Lynch, the amounts represent the average of each executive’s 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, 2023.

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

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

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

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 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 $11.20 on December 29, 2023.

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:

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

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

December 31, 2023:

Accelerated Option

and Award Shares

Ronald Glibbery

James Sullivan

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:

Bradley Lynch

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

Director Compensation

The following table summarizes the compensation

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

Restricted Stock

Compensation ($)

Andreas Melder

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 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:

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

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

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

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

Represents a cash bonus paid to Mr.

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

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

Director Fee Compensation

As a small company, it can be challenging for us

to attract new non-employee directors.

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

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

In December 2021, we amended our director compensation

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

Under the Director Plan, we pay the following

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

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

for service on the board of directors;

for service as chairperson of the Audit Committee;

for service as a member of the Audit Committee;

for service as chairperson of the Compensation Committee;

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.

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

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

for service as a member 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, provided, however, that such annual equity award for each non-employee

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

The restricted stock unit award will vest in full on the

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

All equity awards granted under

the Director Plan will be made from the 2019 Plan.

Security Ownership of Certain Beneficial Owners and Management

and Related Stockholder Matters.

The table below sets forth certain information

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

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.

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.

Beneficial ownership is determined in accordance

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

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

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

These shares are taken into account in the calculation

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

calculating percentage ownership of the particular holder.

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

stockholders and on information contained in filings with the SEC.

Except as otherwise indicated, and subject to community property laws

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

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

The percentage of beneficial ownership

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

Unless otherwise stated, the business address of

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

Amount and Nature of Beneficial

Name and Principal Position

Number of Shares

Beneficially Owned

(Excluding Outstanding

Number of Shares

Issuable on Exercise

of Outstanding Options

or Convertible

Entities affiliated with Roadmap Capital General Partner Ltd.

Armistice Capital, LLC

Securities(2)

Iroquois Capital Management, LLC

Ionic Ventures, LLC

Brio Capital, LLC

Directors and Officers:

4 unchanged sentences

Alexander Tomkins

All current directors and executive officers as a group

Mark Lunsford

All current directors and executive officers as a group (9 persons)

Represents holdings of less than one percent.

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.

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.

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.

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, 2024.

Represents the number of shares subject to outstanding options, restricted stock units, convertible securities or other rights to acquire common stock that are exercisable within 60 days of March 1, 2024.

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

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

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

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

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

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

The table above excludes 2,143,950 shares of common stock issuable upon exercise of the Warrants because the warrants are subject to a 9.99% beneficial ownership blocker.

Abbe shares authority and responsibility for the investments made on behalf of Iroquois Master Fund with Ms.

Kimberly Page, each of whom is a director of the Iroquois Master Fund.

Page may each be deemed to be the beneficial owner of all shares of common stock held by and underlying the Warrants held by, Iroquois Master Fund.

Iroquois Capital is the investment advisor for Iroquois Master Fund and Mr.

Abbe is the President of Iroquois Capital.

Abbe has the sole authority and responsibility for the investments made on behalf of ICIG.

Abbe may be deemed to be the beneficial owner of all shares of Common Stock held by and underlying the Warrants held by, Iroquois Master Fund and ICIG.

Iroquois Capital, Mr.

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

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

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

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

Each of the managers of Ionic Management, Mr.

O’Neil and Mr.

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

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

and Brio Capital Management LLC.

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

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

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

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

Securities Authorized for Issuance under Equity Compensation

The following table provides information as of

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

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

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

Plan Category

Number of Securities

Upon Exercise of

13 unchanged sentences

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.

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

Consists of 1,031 shares of common stock subject to outstanding equity awards under the 2010 Plan, 18,694 shares of common stock subject to outstanding equity awards under the 2019 Plan and 31,235 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

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.

Certain Relationships and Related Transactions and Director

Independence.

Related Party Transactions

Below we describe any transactions

to which we have been a participant, in which the amount involved in the transaction exceeds or will exceed the lesser of $120,000 or

one percent of the average of our total assets at year end for each of the last two completed fiscal years and in which any of our directors,

director nominees, executive officers, or holders of more than 5% of our capital stock, or any immediate family member of, or person sharing

the household with, any of these individuals, had or will have a direct or indirect material interest since January 1, 2022.

A family member of one of our executive officers

is employed by us.

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

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

awarded in April 2022.

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

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

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.

Principal Accountant Fees and Services.

(“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.

Weinberg & Co., P.A.

was our independent registered public accounting firm for the years ended December 31, 2023 and 2022.

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 2023 and

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.

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;

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;

(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.

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.

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

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

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

of the auditors.

(a) (1) Consolidated Financial

The following documents are filed as part of this

Consolidated Financial Statements and Report of

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

(2) Financial Statement Schedules:

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.

Financial statement schedules are omitted because

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

(3) Exhibits:

Required exhibits are incorporated by reference

or are filed with this Report.

Exhibit Description

Filed or Furnished

Arrangement Agreement with Peraso Technologies Inc.

September 15, 2021

First Amending Agreement dated October 21, 2021

October 22, 2021

Restated Certificate of Incorporation of the Company

November 12, 2010

Certificate of Amendment to Restated Certificate of Incorporation of the Company

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

February 14, 2017

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

August 27, 2019

Certificate of Amendment to Articles of Incorporation (Name Change)

December 20, 2021

Certificate of Designation of Series A Special Voting Preferred Stock

December 20, 2021

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

December 19, 2023

Amended and Restated Bylaws of the Company

November 23, 2021

Specimen Common Stock Certificate

September 14, 2000

Form of Common Stock Purchase Warrant

June 30, 2017

Form of Securities Purchase Agreement

June 30, 2017

Form of Common Stock Purchase Warrant

October 3, 2018

Description of the Registrant's Securities

2010 Amended and Restated Equity Incentive Plan

March 29, 2023

Amended and Restated Peraso Inc.

2010 Equity Incentive Plan

February 15, 2019

Amended and Restated Peraso Inc.

2019 Stock Incentive Plan

January 7, 2022

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

July 28, 2010

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

Incentive Plan

2019 Stock Incentive Plan

November 13, 2019

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

and Restated 2010 Equity Incentive Plan

Amended and Restated 2010 Equity Incentive Plan

August 8, 2013

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

2019 Stock Incentive Plan

November 13, 2019

Amended Peraso Technologies Inc.

2009 Share Option Plan

January 7, 2022

Form of Pre-Funded Common Stock Purchase Warrant

November 30, 2022

Form of Common Stock Purchase Warrant

November 30, 2022

Form of Pre-Funded Warrant

Form of Purchase Warrant

Form of Placement Agent Warrant

Form of Series A Warrant

February 5, 2024

Form of Series B Warrant

February 5, 2024

Form of Pre-Funded Warrant

January 23, 2024

Form of Representative Warrant

January 23, 2024

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

March 17, 2008

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

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

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

and Restated Equity Incentive Plan

March 17, 2008

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

July 28, 2010

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

2010 Equity Incentive Plan

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

March 15, 2012

Form of Indemnification Agreement used from June 2012 to present

Sublease Agreement with Cyren, Inc.

dated October 3, 2017

August 9, 2012

Executive Change-in-Control and Severance Policy

July 26, 2016

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

September 17, 2018

Securities Purchase Agreement

October 3, 2018

Securities Purchase Agreement

Sublease Addendum #2 to the Lease between Cyren Ltd.

and Peraso Inc., dated September 30, 2020, by and between Peraso Inc., and Cyren Ltd.

April 17, 2020

Form of Lock-Up Agreement

December 20, 2021

Intercompany Services Agreement

December 20, 2021

Employment Agreement (Ronald Glibbery)

December 20, 2021

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

March 29, 2023

Employment Agreement (Brad Lynch)

March 29, 2023

Employment Agreement (Alexander Tomkins)

March 29, 2023

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

August 15, 2022

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

August 15, 2022

Amendment to employment agreement between Peraso Technologies Inc.

and Brad Lynch dated April 15, 2022

August 15, 2022

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

June 16, 2023

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

June 16, 2023

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

June 16, 2023

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

November 14, 2022

Form of Securities Purchase Agreement

November 30, 2022

Form of Registration Rights Agreement

November 30, 2022

Form of Securities Purchase Agreement

Form of Registration Rights Agreement

First Amendment to Executive Change-in-Control and Severance Policy

Amendment No.

1 to Peraso Inc.

Common Stock Purchase Warrant

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

February 9, 2024

Form of Lock-Up Agreement

January 23, 2024

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

February 9, 2024

List of Subsidiaries

March 29, 2023

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

3 unchanged sentences

Section 1350 Certification

Company Clawback Policy

Inline XBRL Instance Document

5 unchanged sentences

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

Incorporated by reference to the same-numbered exhibit to Form 8-K, filed by the Company on September 15, 2021 (Commission File No.

Incorporated by reference to Exhibit 2.1 to Form 8-K, filed by the Company on October 22, 2021 (Commission File No.

Incorporated by reference to Exhibit 3.6 to Form 8-K filed by the Company on November 12, 2010 (Commission File No.

Incorporated by reference to Exhibit 3.1 to Form 8-K filed by the Company on February 14, 2017 (Commission File No.

Incorporated by reference to Exhibit 3.1 to Form 8-K filed by the Company on August 27, 2019 (Commission File No.

Incorporated by reference to Exhibit 3.1 to Form 8-K filed by the Company on December 20, 2021 (Commission File No.

Incorporated by reference to Exhibit 3.2 to Form 8-K filed by the Company on December 20, 2021 (Commission File No.

Incorporated by reference to Exhibit 3.1 to Form 8-K filed by the Company on November 23, 2021 (Commission File No.

Incorporated by reference to Exhibit 4.1 to the Company’s Registration Statement on Form S-1, as amended, originally filed August 4, 2000, declared effective June 27, 2001 (Commission File No.

Incorporated by reference to Exhibit 4.1 to Form 8-K filed by the Company on June 30, 2017 (Commission File No.

Incorporated by reference to Exhibit 10.1 to Form 8-K filed by the Company on June 30, 2017 (Commission File No.

Incorporated by reference to Exhibit 4.6 to Form 8-K filed by the Company on October 3, 2018 (Commission File No.

Incorporated by reference to Exhibit 3.1 to Form 8-K filed by the Company on August 27, 2019 (Commission File No.

Incorporated by reference to Exhibit 4.2 to Form S-8 filed by the Company on January 7, 2022 (Commission File No.

Incorporated by reference to Exhibit 4.10 to the Company’s Registration Statement on Form S-8, filed July 28, 2010 (Commission File No.

Incorporated by reference to Exhibit 4.10 to the Company’s Current Report on Form S-8, filed on November 13, 2019 (Commission File No.

Incorporated by reference to Exhibit 10.23 to the Company’s Form 10-Q filed on August 8, 2013 (Commission File No.

Incorporated by reference to Exhibit 4.10 to the Company’s Current Report on Form S-8, filed November 13, 2019 (Commission File No.

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.

Incorporated by reference to Exhibit 10.27 to Form 10-K filed by the Company on March 17, 2008 (Commission File No.

Incorporated by reference to Exhibit 4.10 to Form S-8 filed by the Company on July 28, 2010 (Commission File No.

Incorporated by reference to Exhibit 4.8 to Form S-8 filed by the Company on June 5, 2009 (Commission File No.

Incorporated by reference to Exhibit 10.19 to Form 10-K filed by the Company on March 15, 2012 (Commission File No.

Incorporated by reference to Exhibit 10.22 to Form 10-Q filed by the Company on August 9, 2012 (Commission File No.

Incorporated by reference to Exhibit 99.2 to Form 10-Q filed by the Company on November 14, 2017 (Commission File No.

Incorporated by reference to Exhibit 99 to Schedule TO filed by the Company on July 26, 2016 (Commission File No.

Incorporated by reference to Exhibit 10.28 to Form S-1/A filed by the Company on September 17, 2018 (Commission File No.

Incorporated by reference to Exhibit 10.26 to Form 8-K filed by the Company on October 3, 2018 (Commission File No.

Incorporated by reference to Exhibit 10.1 to Form 8-K filed by the Company on April 17, 2020 (Commission File No.

Incorporated by reference to Exhibit 10.21 to Form 10-K filed by the Company on March 18, 2021 (Commission File No.

Incorporated by reference to Exhibit 10.1 to Form 8-K filed by the Company on December 20, 2021 (Commission File No.

Incorporated by reference to Exhibit 10.2 to Form 8-K filed by the Company on December 20, 2021 (Commission File No.

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

4 unchanged sentences

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.

POWER OF ATTORNEY

KNOW ALL MEN BY THESE PRESENTS, that each person

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

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

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

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

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

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

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

Pursuant to the requirements of the Securities

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

on the dates indicated.

/s/ Ronald Glibbery

Chief Executive

Officer and Director

Chief Executive Officer and Director

March 29, 2024

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/s/ James Sullivan

Chief Financial

Chief Financial Officer

James Sullivan

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March 29, 2024

/s/ Andreas Melder

March 29, 2024

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

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

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

In our opinion, the consolidated financial statements

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

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

generally accepted in the United States of America.

Going Concern

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

Amortizable intangible assets impairment assessment

Amortizable intangible assets impairment

As described in Notes 1 and 2 to the consolidated

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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.

We identifie d

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

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

intangible assets’ lives.

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

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

useful life of the long-lived asset group.

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

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

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

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

appropriateness of projected revenue growth, margin and cost rates;

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

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

evidence obtained in other areas of the audit.

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

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

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

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

market conditions, and other factors.

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

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

the net realizable value.

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

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

management’s product demand forecast for reasonableness considering historical sales

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

in other areas of the audit, and;

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

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

financial statements.

of warrant liability

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

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

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

date including December 31, 2023.

We identified auditing

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

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

This required

a high degree of auditor judgment and increased auditor effort

in auditing the determination and valuation of the warrant liabilities.

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

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

of its presentation as a liability in the financial statements.

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

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

the warrant liability.

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

expectation to the Company calculated value.

have served as the Company’s auditor since 2020.

/s/ Weinberg & Company

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Accounts receivable, net

Inventories, net

Tax credits and receivables

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Total current assets

Long-term investments

Property and equipment, net

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Long-term lease liabilities

Warrant liability

Warrant liabilities

Total liabilities

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120,000 shares authorized;

14,270 shares and 12,284 shares issued and outstanding at December 31, 2022 and December 31, 2021, respectively

673 shares and 357 shares issued and outstanding at December 31, 2023 and 2022, 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

95 shares and 228 shares outstanding at December 31, 2023 and 2022, respectively

Additional paid-in capital

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Total liabilities and stockholders’ equity

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

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

2024, as discussed in Note 1.

The accompanying notes are an integral part of

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Interest expense

Change in fair value of warrant liability

Change in fair value of warrant liabilities

Financing cost - warrant issuance

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Basic and diluted

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

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

The accompanying notes are an integral part of

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CONSOLIDATED STATEMENTS OF STOCKHOLDERS’

EQUITY (DEFICIT)

( In thousands )

Series A Special Voting

Accumulated Other

Preferred Stock

Exchangeable Shares

Comprehensive

Stockholders’

Balance as of December 31, 2021

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

$ ( 117,199 )

Exchange of exchangeable shares

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

Sale of common stock and warrants

Initial recognition of fair value of warrant liability

Unrealized loss on available-for-sale securities

Stock-based compensation

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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

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

Sale of common stock and warrants

Issuance of common stock upon exercise of warrants

Initial recognition of fair value of warrant liability

Unrealized gain on available-for-sale securities

Stock-based compensation

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$ ( 166,392 )

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

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

in January 2024, as discussed in Note 1.

The accompanying notes are an integral part of

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Stock-based compensation

Change in fair value of warrant liability

Change in fair value of warrant liabilities

Inventory write-down

Financing costs - warrant issuances

Impairment of goodwill

Allowance for bad debt

Accrued interest on debt obligation

Interest portion of financing lease repayment

Amortization of debt discount

Impairment of intangible assets and property and equipment

Changes in assets and liabilities

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Purchases of marketable securities

Cash acquired in business combination

Net cash provided by investing activities

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Repayment of financing lease

Repayment of loans

Proceeds from exercise of stock options

Net proceeds from loan facility

Net proceeds from convertible debentures

Taxes paid to net share settle equity awards

Net cash provided by financing activities

Net increase (decrease) in cash and cash equivalents

Net decrease in cash and cash equivalents

Cash and cash equivalents at beginning of year

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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

Settlement of loan facility against tax receivables

Effect of business combination

Settlement of warrants to common stock

Conversion of convertible debentures into common stock

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

The accompanying notes are an integral part of

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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.

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

$ 166.4 million as of December 31, 2023.

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

the Company to raise substantial amounts of additional capital.

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

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

As disclosed in Note 13, in February

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

The Company expects to continue to incur operating

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Basis of Presentation

The consolidated financial statements include

the accounts of the Company and its wholly-owned subsidiaries.

The consolidated financial statements include the

accounts of the Company and its wholly-owned subsidiaries.

All significant intercompany transactions and balances have been eliminated

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

Reverse Stock Split

On December 15, 2023, the

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

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

Further, on January 2, 2024, Canco

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

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

Such amendments and ratio were previously approved by

the Company’s stockholders and board of directors.

As a result of the reverse stock split, which was

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

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

Proportionate voting rights and other rights of holders

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

Any fractional shares of common stock and exchangeable

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

All stock options and restricted stock units

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

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

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

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

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

Risks and Uncertainties

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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.

COVID-19 and World Unrest

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

government in March 2020.

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.

This negatively affected the U.S.

and global economy, disrupted global supply chains,

significantly restricted travel and transportation, resulted in mandated closures and orders to “shelter-in-place” and created

significant disruption of the financial markets.

While the U.S.

national emergency expired in May 2023 and substantially all closures

and “shelter-in-place” orders have ended, there can be no assurance that COVID-19 will not impact the Company’s operational

and financial performance in the future, as actions taken by U.S.

and foreign government agencies to prevent disease spread are uncertain,

out of the Company’s control, and cannot be predicted.

due to wars and terrorist attacks have led to further economic disruptions.

Mounting inflationary cost pressures and recessionary fears

have negatively impacted the global economy.

Since mid-2022, at times, the U.S.

Federal Reserve has addressed elevated inflation by increasing

interest rates.

Given current market conditions, the Company may be unable to access the capital markets, and additional capital may only

be available to the Company on terms that could be significantly detrimental to the Company’s current stockholders and to the Company’s

Use of Estimates

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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.

liabilities and assumptions made in valuing equity instruments and warrant liabilities.

Actual results could differ from those estimates.

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instruments using a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value into three broad

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

Level 2 —Pricing is provided by third party sources of market information obtained through the Company’s investment advisors, rather than models.

The Company does not adjust for, or apply, any additional assumptions or estimates to the pricing information it receives from advisors.

The Company’s Level 2 securities include cash equivalents and available-for-sale securities, which consisted primarily of certificates of deposit, corporate debt, and government agency and municipal debt securities from issuers with high-quality credit ratings.

The Company’s investment advisors obtain pricing data from independent sources, such as Standard & Poor’s, Bloomberg and Interactive Data Corporation, and rely on comparable pricing of other securities because the Level 2 securities are not actively traded and have fewer observable transactions.

Level 1 —Inputs used to measure fair value are

unadjusted quoted prices that are available in active markets for the identical assets or liabilities as of the reporting date.

Level 2 —Pricing is provided by third party sources

of market information obtained through the Company’s investment advisors, rather than models.

The Company does not adjust for, or

apply, any additional assumptions or estimates to the pricing information it receives from advisors.

The Company’s Level 2

securities include cash equivalents and available-for-sale securities, which consisted primarily of certificates of deposit, corporate

debt, and government agency and municipal debt securities from issuers with high-quality credit ratings.

The Company’s investment

advisors obtain pricing data from independent sources, such as Standard & Poor’s, Bloomberg and Interactive Data Corporation,

and rely on comparable pricing of other securities because the Level 2 securities are not actively traded and have fewer observable

transactions.

The Company considers this the most reliable information available for the valuation of the securities.

Level 3 —Unobservable inputs that are supported by little or no market activity and reflect the use of significant management judgment are used to measure fair value.

These values are generally determined using pricing models for which the assumptions utilize management’s estimates of market participant assumptions.

The determination of fair value for Level 3 investments and other financial instruments involves the most management judgment and subjectivity.

Level 3 —Unobservable inputs that are supported

by little or no market activity and reflect the use of significant management judgment are used to measure fair value.

These values are

generally determined using pricing models for which the assumptions utilize management’s estimates of market participant assumptions.

The determination of fair value for Level 3 investments and other financial instruments involves the most management judgment and

subjectivity.

The carrying amounts of financial assets and liabilities,

such as cash and cash equivalents, accounts receivable, accounts payable, notes payable and other payables, approximate their fair values

because of the short maturity of these instruments.

The carrying values of lease obligations and long-term financing obligations approximate

their fair values because interest rates on these obligations are based on prevailing market interest rates.

The Company measures the

fair value of its warrant liabilities using Level 3 inputs.

such as cash and cash equivalents, accounts receivable, accounts payable and other payables, approximate their fair values because of

the short maturity of these instruments.

The carrying values of lease obligations and long-term financing obligations approximate their

fair values because interest rates on these obligations are based on prevailing market interest rates.

The Company measures the fair value

of its warrant liabilities using Level 3 inputs.

and Liability-Classified Instruments

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The allowance for doubtful accounts receivable was approximately $ 30,000 and $ 183,000

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.

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.

as of December 31, 2023 and 2022, respectively.

The Company values its inventories at the lower

of cost, which approximates actual cost on a first-in, first-out basis, or net realizable value.

Costs of inventories primarily consisted

of material and third party assembly costs.

The Company records write-downs for estimated obsolescence or unmarketable inventories based

upon assumptions about future demand and market conditions.

If actual market conditions are less favorable than those expected by management,

additional adjustments to inventory valuation may be required.

Charges for obsolete and slow-moving inventories are recorded based upon

an analysis of specific identification of obsolete inventory items and quantification of slow moving inventory items.

The Company recorded

write-downs of inventory of approximately $ 3,558,000 and $ 420,000 during the years ended December 31, 2023 and 2022, respectively.

Property and Equipment

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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):

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, 2023

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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.

Amortization related to developed

technology of $ 2.0 million and $ 1.4 million for the years ended December 31, 2023 and 2022, respectively, was included in cost of net

revenue in the consolidated statements of operations and comprehensive loss.

Customer relationships relate to the Company’s

ability to sell existing and future versions of 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.

ability to sell existing and future versions of its products to MoSys’ customers existing at the time of the arrangement.

value of the customer relationships was determined by discounting estimated net future cash flows from the customer relationships.

related to customer relationships of $ 0.9 million and $ 0.6 million for the years ended December 31, 2023 and 2022, respectively, was included

in selling, general and administrative expense in the consolidated statements of operations and comprehensive loss.

During 2023, the Company revised the remaining

estimated life for its developed technology and customer relationship intangible assets to 18 months as a result of the end-of-life of

its memory products (see Note 12).

Other amortization expense was approximately $ 28,000

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As of December 31, 2023, estimated future amortization

expense related to intangible assets was (in thousands):

expense related to intangible assets is expected to be (in thousands):

Year ending December 31,

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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.

During the three months ended December 31, 2022,

the Company concluded a triggering event had occurred due to the sustained decrease in the price per share of its common stock and related

reduced market capitalization.

The Company performed a test for goodwill impairment, and, due to the decrease in the price per share of

its common stock, the test results indicated the goodwill carrying value was greater than its implied fair value.

As a result of the impairment

test, the Company recorded a non-cash impairment charge totaling $ 9.9 million, and the Company’s goodwill balance was reduced to

zero as of December 31, 2022.

ASC 842, Leases (ASC 842), requires an entity

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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.

Accordingly, the cost

of net revenue of approximately $ 0.6 million associated with these shipments was deferred and presented as deferred cost of net revenue

in the consolidated balance sheets as of December 31, 2022.

During the three months ended March 31, 2023, the Company recognized the associated

revenue and cost of net revenue.

Contract liabilities – deferred revenue

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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.

As of December 31, 2023 and 2022, contract liabilities

were in a current position and included in deferred revenue.

During the year ended December 31, 2023, the Company

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costs were not significant for the years ended December 31, 2023 and 2022.

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 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

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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.

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.

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Foreign Currency Transactions

The functional currency of the Company is the

The functional currency of the Company is the U.S

All foreign currency transactions are initially measured and recorded in an entity’s functional currency using the exchange

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Recently Issued Accounting Pronouncements

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.

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.

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.

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 shares of the common stock that were outstanding immediately following the consummation of the Arrangement:

Number of shares

MoSys common stock outstanding prior to business combination

Common stock issued to Peraso Tech stockholders

Exchangeable Shares issued to Peraso Tech stockholders

Escrow Shares - common stock

Escrow Shares - Exchangeable Shares

Total shares issued and outstanding

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;

(ii) Peraso Tech appointed a majority of the Company’s board of directors;

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 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)

Cash, cash equivalents and investments

Other current assets

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 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

November 2023, the FASB issued ASU No.

2023-07, Segment Reporting (Topic 280):

Improvements to Reportable Segment Disclosures ,

which requires disclosure of incremental segment information on an annual and interim basis.

2023-07 is effective for fiscal years

beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024, and it requires retrospective

application to all prior periods presented in the financial statements.

The Company is currently evaluating the impact that this ASU will

have on the presentation of its consolidated financial statements.

December 2023, the FASB issued ASU No.

2023-09, Income Taxes (Topic 740):

Improvements to Income Tax Disclosures , which expands

disclosures in an entity’s income tax rate reconciliation table and disclosures regarding cash taxes paid both in the U.S.

jurisdictions.

The update will be effective for annual periods beginning after December 15, 2024.

The Company is currently evaluating

the impact that this ASU will have on the presentation of its consolidated financial statements.

Other recent authoritative guidance issued by

the FASB (including technical corrections to the ASC), the American Institute of Certified Public Accountants, and the Securities and

Exchange Commission (the SEC) did not, or is not expected to, have a material impact on the Company’s consolidated financial statements

and related disclosures.

Fair Value of Financial Instruments

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Money market funds (1)

Corporate notes and commercial paper

Warrant liability

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Corporate notes and commercial paper

(1) Included in cash and cash equivalents

Warrant liability

in cash and cash equivalents

The following table represents the Company’s

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Cash and cash equivalents

Short-term investments

December 31, 2022

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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

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During the year ended December 31, 2023, 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.

wrote off assets with a book value of approximately $ 243,000 to depreciation expense as a loss on disposal.

The net book value of assets

written off was allocated between cost of net revenue of $ 116,000 and the remaining book value of $ 127,000 was charged to operating expenses.

During the year ended December 31, 2022, the Company

wrote-off fully depreciated assets, or assets that were no longer in service, with a historical cost of approximately $ 6,380,000 with

corresponding accumulated depreciation of approximately $ 6,227,000 .

Depreciation expense of approximately $ 535,000 and approximately $ 384,000

was charged to cost of net revenue and operating expenses, respectively, for the year ended December 31, 2023.

The Company wrote off the

remaining book value of approximately $ 153,000 to depreciation expense as a loss on disposal during the year ended December 31, 2022.

(in thousands)

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Professional fees, legal and consulting

Accrued taxes

Accrued inventory

Financing liability

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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.

In November 2023, the Company renewed the San Jose facility lease for a one-year term commencing January

15, 2024 (the Renewal Term), and effective with the commencement of the Renewal term the Company ceased accounting for the lease under

In December 2023, the Company renewed the Toronto office lease for a one-year term commencing January 1, 2024.

In May 2022, the

Company entered into a lease for the facility in Markham with a 60-month term, which commenced June 21, 2022.

The Markham landlord also

provided a lease incentive of approximately $ 286,200 (the Incentive).

In 2023, the Company received payment of $ 143,100 from the Markham

landlord of the first installment of the Incentive.

The remaining balance of the Incentive is paid to the Company in the form of an adjustment

to rent during the last three months of each year during the remaining lease term.

During 2023, a credit of $ 35,775 was made against the

rent during the three months ended December 31, 2023.

As of December 31, 2023, the pending Lease Incentive to be received was $ 107,325 .

Upon the renewal of the Toronto lease in 2023,

the Company recognized a right-of-use asset of approximately $ 137,700 .

The discount rate used to measure the lease assets and liabilities

for the renewal was 8 %.

The initial right-of-use asset and corresponding

liability of approximately $ 1.0 million for the Markham facility lease was measured at the present value of the future minimum lease payments.

The discount rate used to measure the lease assets and liabilities was 8 %.

Lease expense is recognized on a straight-line basis over the

On March 1, 2022, the Company entered into a 36-month

finance lease agreement for the lease of equipment resulting in the recognition of a right-of-use asset and lease liability of approximately

On November 1, 2022, the Company entered into

a 36-month finance lease agreement for the lease of equipment resulting in the recognition of a right-of-use asset of approximately $ 124,000

On November 1, 2022, the Company entered into a

36-month finance lease agreement for the lease of equipment resulting in the recognition of a right-of-use asset of approximately $ 124,000

and lease liability of approximately $ 117,000 .

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assets and lease liabilities as of December 31, 2023 (in thousands):

December 31, 2022

Right-of-use assets:

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Rent expense was approximately $ 0.6 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.

$ 0.7 million for the years ended December 31, 2023 and 2022, respectively.

In addition to the minimum lease payments, the Company is responsible

for property taxes, insurance and certain other operating costs related to the leased facilities and equipment.

Indemnification

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not meritorious, could result in the expenditure of significant financial resources and diversion of management efforts.

Purchase Obligations

The Company’s primary

purchase obligations include non-cancelable purchase orders for inventory and computer-aided-design (CAD) software.

At December 31, 2023,

the Company had outstanding non-cancelable purchase orders for inventory, primarily wafers and substrates, and related expenditures of

approximately $ 2.3 million and non-cancelable purchase orders for CAD software of $ 3.1 million over 24 months.

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.

Effective January 1997, the Company adopted the

Peraso 401(k) Plan (the Savings Plan), which qualifies as a thrift plan under Section 401(k) of the Internal Revenue Code.

Full-time and

part-time employees who are at least 21 years of age are eligible to participate in the Savings Plan at the time of hire.

may contribute up to 15 % of their earnings to the Savings Plan.

No matching contributions were made by the Company during the years ended

December 31, 2023 and 2022.

Business Segments, Concentration of Credit Risk and

Significant Customers

The Company determined its reporting units in

accordance with ASC No.

The Company determines its reporting units in accordance

280, Segment Reporting (ASC 280).

Management evaluates a reporting unit by first identifying its operating

segments under ASC 280.

The Company then evaluates each operating segment to determine if it includes one or more components that constitute

Management evaluates a reporting unit by first identifying its operating segments

under ASC 280.

The Company then evaluates each operating segment to determine if it includes one or more components that constitute a

If there are components within an operating segment that meet the definition of a business, the Company evaluates those components

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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):

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

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by category (in thousands):

(amounts in thousands)

Product category

3 unchanged sentences

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.

less than 10 %

As of December 31, 2023, three customers accounted

for 83 % of accounts receivable, and the Company had a provision for doubtful accounts of $ 30,000 against one of the customer’s receivables.

Four customers accounted for 79 % of accounts receivable as of December 31, 2022.

Income Tax Provision

2 unchanged sentences

income tax purposes.

Significant components of the Company’s

deferred tax assets and liabilities were (in thousands):

Significant components of the Company’s deferred

tax assets and liabilities were (in thousands):

Deferred tax assets:

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Net deferred tax assets, net

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.

The $ 3.9 million decrease in the valuation allowance

during 2023 was primarily the result of a decrease to the net operating loss carryforwards for the current year.

The valuation allowance

increased by $ 4.4 million during the year ended December 31, 2022.

Utilization of the Company’s net operating

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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.

As of December 31, 2023, the Company had NOLs of

approximately $ 212.7 million for federal income tax purposes and approximately $ 131.2 million for state income tax purposes.

Only approximately

$ 18.7 million of the federal NOLs and $ 13.3 million of the state NOLs are expected to be available before expiration due to the Section

382 limitation.

These NOLs are available to reduce future taxable income and will expire at various times from 2025 through 2037, except

federal NOLs from 2018 to 2023 which have no expiration date.

As of December 31, 2023, the Company also had federal research and development

tax credit carryforwards of approximately $ 8.1 million that will expire at various times through 2042, and California research and development

credits of approximately $ 8.5 million, which do not have an expiration date.

A reconciliation of income taxes provided at the

6 unchanged sentences

Goodwill impairment

Change in fair value of warrant liabilities

Valuation allowance changes affecting tax provision

37 unchanged sentences

Stock-Based Compensation Expense

The Company reflected compensation costs of $ 4.3

The Company recorded compensation costs of $ 4.2

million and $ 4.3 million related to the vesting of stock options during the years ended December 31, 2023 and 2022, respectively.

1 unchanged sentence

expense over a weighted average period of approximately two years .

The Company reflected compensation costs of $ 1.4 million and $ 0.1 million

The Company recorded compensation costs of $ 1.0 million and $ 1.4 million

related to the vesting of restricted stock options during the years ended December 31, 2023 and 2022, respectively.

12 unchanged sentences

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):

The following table summarizes the activity in

the shares available for grant under the Plans during the years ended December 31, 2023 and 2022 and options outstanding as of December

31, 2023 and 2022.

(in thousands, except exercise price):

Options Outstanding

Balance as of January 1, 2021

Additional shares authorized under the Plans

Options granted

Options exercised

Options cancelled and returned to the Plans

Effect of business combination

Balance as of December 31, 2021

2 unchanged sentences

Balance as of December 31, 2022

RSUs cancelled and returned to the 2019 Plan

Options cancelled

Balance as of December 31, 2023

The following table summarizes significant ranges

8 unchanged sentences

$ 62.80 - $ 36,960.00

$ 1.57 - $ 924.00

A summary of RSU activity under the Plans is presented

5 unchanged sentences

Stockholders’ Equity

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.

Exchangeable Shares and Preferred Stock

As discussed in Note 1, on December 17, 2021,

following the satisfaction of the closing conditions set forth in the Arrangement Agreement, the Arrangement was completed.

the completion of the Arrangement, each Peraso Share that was issued and outstanding immediately prior to December 17, 2021 was converted

into either newly issued shares of common stock of the Company or shares of Canco, which are exchangeable for shares of the Company’s

common stock (Exchangeable Shares), at the election of each former Peraso Tech stockholder.

Of the shares issued to the holders of Peraso

Tech Shares, pursuant to the terms of the Agreement, the Company held in escrow an aggregate of 1,312,878 Exchangeable Shares and 502,567

shares of common stock (collectively, the Escrow Shares).

The Escrow Shares are escrowed pursuant to the terms of an escrow agreement

on a pro rata basis from the aggregate consideration received by the holders of Peraso Shares, subject to the offset by the Company for

any losses in accordance with the Agreement.

Such Escrow Shares shall be released, subject to any offset claim, upon the satisfaction

of the earlier of:

(a) any date following the first anniversary of December 17, 2021 and prior to December 17, 2024 where the volume weighted

average price of the common stock for any 20 trading days within a period of 30 consecutive trading days is at least $ 342.80 per share,

subject to further adjustment for stock splits or other similar transactions;

(b) the date of any sale of all or substantially all of

the assets or shares of the Company;

or (c) the date of any bankruptcy, insolvency, restructuring, receivership, administration, wind-up,

liquidation, dissolution, or similar event involving the Company.

All and any voting rights and other stockholder rights, other than with

respect to dividends and distributions, with respect to the Escrow Shares are suspended until the Escrow Shares are released from escrow.

The Exchangeable Share structure is commonly used

for cross-border transactions of this nature so as to provide non-tax-exempt Canadian shareholders with the same economic rights and benefits

as holders of the Company’s shares into which the Exchangeable Shares are exchangeable, while allowing those Canadian shareholders

to benefit from the tax-rollover available on the issuance of the Exchangeable Shares.

In general terms, by choosing to acquire Exchangeable

Shares from Canco, such a former Peraso Tech shareholder was able to rely on a rollover rule in the Income Tax Act (Canada) in order to

defer any capital gain that he/she/it would have otherwise realized.

Callco was incorporated to exercise the call rights,

while Canco was incorporated to acquire the shares of Peraso Tech from Canadian shareholders that wished to receive Exchangeable Shares

as consideration, so it was a tax deferred transaction for such Canadian shareholders.

The use of a separate entity, Callco, helps maximize

cross border paid-up capital, which represents the amount that can generally be distributed free of Canadian withholding tax.

rights also allow Callco to “purchase” the Exchangeable Shares rather than having them redeemed by Canco on a redemption or

retraction or in connection with a liquidity event, thus avoiding the adverse deemed dividend tax consequences to shareholders that may

arise from a redemption or retraction of Exchangeable Shares.

Holders of Exchangeable Shares have the right

at any time (the Retraction Right) to retract or redeem any or all of the Exchangeable Shares owned by them for an amount per share equal

to the market price of a share of the Company’s common stock plus the full amount of all declared and unpaid dividends on such Exchangeable

Share (the Exchangeable Share Purchase Price).

The Exchangeable Share Purchase Price is payable only by the Company delivering or causing

to be delivered to the relevant holder one share of the Company’s common stock for each Exchangeable Share purchased plus a cash

amount equal to the amount of any accrued and unpaid dividends on such Exchangeable Share.

The Company and Callco each have an overriding

right, in the event that a holder of Exchangeable Shares exercises its Retraction Right, to redeem from such holder all, but not less

than all, of the Exchangeable Shares tendered for redemption.

The Exchangeable Shares are subject to redemption

by the Company, Callco and Canco at the Exchangeable Share Purchase Price, on the “Redemption Date,” which date shall be no

earlier than the seventh anniversary of the date on which Exchangeable Shares are first issued, unless:

(a) less than 10 % of the aggregate

number of Exchangeable Shares issued remain outstanding;

(b) there is a change in control of the Company (defined generally as (i) any

merger, amalgamation, arrangement, takeover bid or tender offer, material sale of shares or rights or interests that results in the holders

of outstanding voting securities of the Company directly or indirectly owning, or exercising control or direction over, voting securities

representing less than 50 % of the total voting power of all of the voting securities of the surviving entity;

or (ii) any sale or disposition

of all or substantially of the Company’s assets), and (c) upon the occurrence of certain other events.

The Exchangeable Share Purchase

Price is payable only by the Company delivering or causing to be delivered to the relevant holder one share of the Company’s common

stock for each Exchangeable Share purchased plus a cash amount equal to the amount of any accrued and unpaid dividends on such Exchangeable

In the event of the liquidation, dissolution or

winding-up of Canco, holders of Exchangeable Shares have the right to receive in respect of each Exchangeable Share held by such holder,

an amount per share equal to the Exchangeable Share Purchase Price, which shall be satisfied in full by Canco by delivering to such holder

one Company Share, plus an amount equal to the Dividend Amount.

The Company and Callco each have an overriding right to purchase from

all holders all but not less than all of the Exchangeable Shares upon the occurrence of such events.

In addition, the Company and Callco have the right

to purchase all outstanding Exchangeable Shares at the Exchangeable Share Purchase Price if there is a change of law that permits holders

of Exchangeable Shares to exchange their Exchangeable Shares for shares of common stock on a basis that will not require holders to recognize

any gain or loss or any actual or deemed dividend for Canadian tax purposes.

The holders of Exchangeable Shares have an “automatic

exchange right” in the event of any insolvency, liquidation, dissolution or winding-up or in general, related proceedings, of the

Company for an amount per share equal to the Exchangeable Share Purchase Price.

It is expected that Callco will exercise its call

rights, as that is more beneficial to the holders of the Exchangeable Shares.

Once Callco acquires the Exchangeable Shares from a holder,

it (Callco and the Company) is obligated to deliver the Company shares to the holder.

Callco discharges this obligation by arranging for

the Company to issue and deliver those shares to the holders on behalf of Callco.

As consideration for satisfying the delivery obligation,

Callco would issue its own shares to the Company.

There are no cash redemption features, as all

redemption and exchange scenarios are payable in a share of the Company’s common stock.

Neither Canco, Callco, or the Company assume

any tax liabilities of a former Peraso Tech shareholder who acquired Exchangeable Shares under the plan of arrangement.

The purchase price

computed upon the exercise of rights pertaining to retraction, redemption, or liquidation, or otherwise giving rise to a purchase or cancellation

of an Exchangeable Share, will, in all cases, consist of a 1:1 exchange involving the Company’s common stock, regardless of the

market price of a share of the Company’s common stock.

In connection with the Arrangement, on December

15, 2021, the Company filed the Certificate of Designation of Series A Special Voting Preferred Stock (the Certificate) with the Secretary

of State of the State of Delaware to designate Series A Special Voting Preferred Stock (the Special Voting Share) in accordance with the

terms of the Arrangement Agreement in order to enable the holders of Exchangeable Shares to exercise their voting rights.

Voting Share was issued to a third-party administrative agent (the Agent) solely to facilitate the exercise of rights by holders of Exchangeable

The rights of the Agent, as holder of the Special Voting Share, are limited to effecting the rights of the holders of the Exchangeable

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.

During the years ended December 31, 2023 and 2022,

133 and 5 exchangeable shares were exchanged into an equivalent number of shares of common stock.

June 2023 Registered Direct Offering

On May 31, 2023, the Company entered into a securities

purchase agreement (the SPA) with an institutional investor (the Investor), pursuant to which the Company sold to the Investor, in a registered

direct offering that closed on June 2, 2023, an aggregate of 56,250 shares of common stock at a purchase price of $ 28.00 per share.

proceeds to the Company from the registered direct offering, after offering costs, were approximately $ 3.4 million.

The Company also offered

and sold to the Investor pre-funded warrants to purchase up to 86,608 shares of common stock (the 2023 PF Warrants).

Each pre-funded warrant

is exercisable for one share of common stock.

The purchase price of each pre-funded warrant was $ 27.60 , and the exercise price of each

pre-funded warrant is $ 0.40 per share.

The 2023 PF Warrants were immediately exercisable and may be exercised at any time until all of

such pre-funded warrants are exercised in full.

In June 2023, the Investor exercised 24,183 of the 2023 PF Warrants, and in September

2023, the remaining 62,425 of the 2023 PF Warrants were exercised by the Investor .

In connection

with the execution of the SPA, the Company and the Investor entered into an amendment (the Amendment) to the 2022 Purchase Warrant.

to the terms of the Amendment, the 2022 Purchase Warrant (as defined below) was amended to reduce the exercise price per share from $ 54.40

to $ 40.00 , effective as of June 2, 2023.

In a concurrent private placement that closed

on June 2, 2023, the Company also sold to the Investor a warrant to purchase up to 142,858 shares of common stock (the 2023 Purchase Warrant).

The 2023 Purchase Warrant was immediately exercisable at an exercise price of $ 28.00 per share with a five-year term.

As discussed below,

the 2023 Purchase Warrant is accounted for as a liability.

The fair value of the warrant at the date of issuance of approximately $ 3,162,000

was accounted for as a cost of the offering.

November 2022 Registered Direct Offering

28, 2022, the Company entered into a securities purchase agreement with the Investor, pursuant to which the Company sold to the Investor,

in a registered direct offering that closed on November 30, 2022, an aggregate of 32,500 shares of common stock at a negotiated

purchase price of $ 40.00 per share.

The Company also offered and sold to the investor pre-funded warrants to purchase up to 28,750 shares

of common stock.

Each pre-funded warrant was exercisable for one share of common stock.

The purchase price of each pre-funded warrant

was $ 39.60 , and the exercise price of each pre-funded warrant was $ 0.40 per share.

The pre-funded warrants were exercised in full

by the Investor in April 2023.

Net proceeds to the Company from the registered direct offering, after offering costs, were approximately

$ 2.1 million.

In a concurrent

private placement, the Company also sold to the Investor a warrant to purchase up to 91,875 shares of common stock (the 2022

Purchase Warrant).

The 2022 Purchase Warrant became exercisable on May 29, 2023 at an initial exercise price of $ 54.40 per share,

which was subsequently reduced to $ 40.00 per share per the Amendment, and expires on May 29, 2028.

As discussed below, the 2022

Purchase Warrant is accounted for as a liability.

Warrants Classified as Liability

Purchase Warrants

The securities purchase agreements governing the

2023 Purchase Warrant and the 2022 Purchase Warrant (collectively, the “Purchase Warrants”) provide for a value calculation

for such warrants using the Black Scholes model in the event of certain fundamental transactions.

The fair 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 Warrants 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 Warrants as liabilities

in its consolidated balance sheet.

The classification of the Purchase Warrants, including whether the Purchase Warrants should be recorded

as liabilities or as equity, is evaluated at the end of each reporting period with changes in the fair value reported in other income

(expense) in the consolidated statements of operations and comprehensive loss.

The 2022 Purchase Warrant was initially recorded at a fair

value at $ 3,673,368 at the grant date and is re-valued at each reporting date.

As of December 31, 2022, the fair value of the warrant

liability was reduced to $ 2,079,138 .

Upon the closing of the registered direct offering, the fair value of the Purchase Warrant liability,

up to the net amounts of the funds received of approximately $ 2,099,000 , was recorded as a financing cost, and the excess of $ 1,576,000

was recorded as a financing cost in the statement of operations.

As a result of the change in fair value the Company recognized a gain

for the reduction in the warrant liability for the year ended December 31, 2023

On June 2, 2023, the 2023 Purchase Warrant was

initially recorded at a fair value at $ 3,162,401 , and, as of December 31, 2023, the fair value of the warrant liability was reduced to

$ 1,095,287 .

As a result, the Company recorded a gain for the twelve months ended December 31, 2023 for the change in fair value of the

2023 Purchase Warrant.

The 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 .

The Company also recorded a gain of $ 1,426,050 for the twelve months ended December 31, 2023 for the change in

the fair value of the warrant liability for the 2022 Purchase Warrant.

As of December 31, 2023, the Company had the following

liability-classified warrants outstanding (share amounts in thousands):

liability-classified warrants outstanding (amounts in thousands):

Number of warrants

on common shares Amount

Balance as of December 31, 2021 —

2 unchanged sentences

Balance as of December 31, 2022 92 2,079

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.

Recognition of warrant liabilities 143 3,162

Change in fair value of warrants —

Balance as of December 31, 2023 235 $ 1,748

The initial fair value of

each of the Purchase Warrants was determined using the Black Scholes model with the assumptions in the following table.

The table also

includes the total fair value determined at valuation date based on these assumptions.

2022 Purchase Warrant

2023 Purchase Warrant

Expected term based on contractual term

Interest rate (risk-free rate):

Expected volatility

Expected dividend

Fair value of warrants (in thousands)

The fair value of the Purchase

Warrants at December 31, 2023 was determined using the Black Scholes model with the assumptions in the following table.

The table also

includes the total fair value determined at valuation date based on these assumptions.

2022 Purchase Warrant

2023 Purchase Warrant

Expected term based on contractual term

Interest rate (risk-free rate):

Expected volatility

Expected dividend

Fair value of warrants (in thousands)

Warrants Classified as Equity

1 unchanged sentence

equity-classified warrants outstanding (share amounts in thousands):

Balance as of December 31, 2022

Warrants expired

Pre-funded warrants issued

Pre-funded warrants exercised

Balance as of December 31, 2023

As of December 31, 2022, the Company had the following

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Exercise Price

Loan Facilities

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.

A family member of one of the Company’s executive

officers is an employee of the Company.

During the years ended December 31, 2023 and 2022, the Company paid approximately $ 111,400 and

$ 101,000 , respectively, to the employee.

The employee’s 2022 compensation included the aggregate

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

Additionally, a family member

of one of the Company’s executive officers previously served as a consultant to the Company.

During the year ended December 31,

2022, the Company paid approximately $ 162,000 to the consultant family member .

License and Asset Sale Transaction

On August 5, 2022, the Company entered into a Technology

License and Patent Assignment Agreement (the Intel Agreement) with Intel Corporation (Intel), pursuant to which Intel:

(i) licensed from

the Company, on an exclusive basis, certain software and technology assets related to the Company’s Stellar packet classification

intellectual property, including its graph memory engine technology, and any roadmap variant, in the form existing as of the date of the

Agreement (the Licensed Technology);

(ii) acquired from the Company certain patent applications and patents owned by the Company;

(iii) assumed a professional services agreement, dated March 24, 2020, between Fabulous Inventions AB (Fabulous) and the Company, pursuant

to which, among other things, the Company licensed from Fabulous certain technology incorporated into the Licensed Technology.

As consideration for the Company to enter into

the Agreement, Intel 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 Agreement, Intel paid the Company $ 3,062,500 in August 2022 and $ 437,500 (the Holdback) in January 2023 upon the satisfaction by the

Company of certain release criteria set forth in the Intel Agreement regarding the Licensed Technology.

The Company determined that the license and asset

1 unchanged sentence

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.

the year ended December 31, 2022, the Company recognized a gain of approximately $ 2,600,000 on this transaction, net of transaction

costs, which was recorded as a reduction of operating expenses in the consolidated statements of operations and comprehensive loss.

In January 2023, upon receipt of the Holdback, the Company recognized a gain, net of transaction costs, which was also recorded as a reduction

of operating expenses in the consolidated statements of operations and comprehensive loss.

Memory IC Product End-of-Life

Semiconductor Manufacturing Corporation (TSMC) is the sole foundry that manufactures the wafers used to produce the Company’s

memory IC products.

TSMC informed the Company that TSMC is discontinuing the foundry process used to produce wafers, in turn,

necessary to manufacture the Company’s memory ICs.

As a result, in May 2023, the Company informed its customers that the

Company would be initiating an end-of-life (EOL) of its memory IC products.

Through December 31, 2023, the Company had received

non-cancelable purchase orders from customers totaling approximately $ 14,000,000 .

During the period from July 1, 2023 to December

31, 2023 the Company commenced initial shipments of EOL orders and fulfilled approximately $ 3,700,000 of these initial purchase

Based on customer purchase orders in the Company’s backlog, the Company expects to ship additional EOL orders of

approximately $ 10,300,000 over the 12 to 15 month period commencing January 1, 2024.

Subsequent Events

in Note 1, effective January 2, 2024, the Company effected a 1-for-40 reverse stock split of its outstanding common stock.

6, 2024, the Company entered into an underwriting agreement (the “Underwriting Agreement”) with Ladenburg Thalmann & Co.

Inc., as the sole underwriter (the “Underwriter”), relating to the issuance and sale in a public offering (the “Offering”)

(i) 480,000 shares of the Company’s common stock, (ii) pre-funded warrants to purchase up to 1,424,760 shares of common stock,

(iii) Series A warrants to purchase up to 3,809,520 shares of common stock, (iv) Series B warrants to purchase up to 3,809,520 shares

of common stock, and (v) up to 285,714 additional shares of common stock, Series A warrants to purchase up to 571,428 shares of common

stock and Series B warrants to purchase up to 571,428 shares of common stock that may be purchased pursuant to a 45-day option to purchase

additional securities granted to the Underwriter by the Company.

The Underwriter partially exercised this option on February 7, 2024 for

82,500 shares of common stock, Series A warrants to purchase up to 165,000 shares of common stock and Series B warrants to purchase up

to 165,000 shares of common stock.

The combined public offering price of each share of common stock, together with the accompanying Series

A warrants and Series B warrants, was $ 2.10 , less underwriting discounts and commissions.

The combined public offering price of each pre-funded

warrant, together with the accompanying Series A warrants and Series B warrants, was $ 2.099 , less underwriting discounts and commissions.

The Offering,

including the additional shares of common stock, Series A warrants and Series B warrants sold pursuant to the partial exercise of the

Underwriter’s option, closed on February 8, 2024.

The net proceeds

from the Offering, including the additional shares of common stock, Series A warrants and Series B warrants sold pursuant to the partial

exercise of the Underwriter’s option, after deducting underwriting discounts and commissions and other estimated Offering expenses

payable by the Company and excluding any net proceeds from the exercise of the Series A warrants, Series B warrants and pre-funded warrants,

were approximately $ 3.3 million.

A warrants and Series B warrants each have an exercise price of $ 2.25 per share and are immediately exercisable upon issuance.

A warrants expire on the five-year anniversary of the date of issuance and the Series B warrants expire on the six-month anniversary of

the date of issuance.

The pre-funded warrants have an exercise price of $ 0.001 per share, are exercisable immediately and may be exercised

at any time until all of the pre-funded warrants are exercised in full.

Subsequent to the closing of the Offering, as of March 18, 2024,

the holders exercised pre-funded warrants for 1,001,110 shares of common stock.

The exercise price and number of shares of common stock

issuable upon exercise of the warrants is subject to appropriate adjustment in the event of stock dividends, stock splits, reorganizations

or similar events affecting the common stock and the exercise price.

Subject to limited exceptions, a holder may not exercise any portion

of its warrants to the extent that the holder would beneficially own more than 9.99 % or 4.99 % (at the election of the holder) of the Company’s

outstanding common stock after exercise.

On February 8, 2024, pursuant

to the Underwriting Agreement, the Company issued warrants to the Underwriter to purchase up to 139,108 shares of common stock at an exercise

price of $ 2.625 , subject to adjustments, which are exercisable at any time and from time to time, in whole or in part, until February

8, 2029, and have substantially similar terms to the Series A warrants.

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