What changed in this filing

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Item 1A. Risk Factors

2024-11-13 compared with 2024-08-13 · 177 added, 129 removed, 19 unchanged (94% of the section changed)

We face many significant risks in our business, some of which are unknown

to us and not presently foreseen.

These risks could have a material adverse impact on our business, financial condition and results of

operations in the future.

Other than as set forth below, t here have been no material changes with

respect to the risk factors disclosed under Item 1A of our annual report on Form 10-K for the year ended December 31, 2023,

which we filed with the SEC on March 29, 2024.

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

Our consolidated financial

statements as of June 30, 2024 have been prepared under the assumption that we will continue as a going concern for the next twelve months.

As of June 30, 2024, we had cash and cash equivalents of $1.9 million and an accumulated deficit of $173 million.

In February 2024, we

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

believe that our existing cash and cash equivalents as of June 30, 2024, plus expected receipts associated with forecasted product sales,

will enable us to meet our capital needs until the fourth quarter of 2024.

Our ability to continue as

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

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

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

As a result of our expected

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

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

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

If we cannot continue as a

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

If we are unable to generate

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

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

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

If we issue additional securities to raise

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

may experience dilution.

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

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

Our forecast of the period

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

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

in this “ Risk Factors ” section and in Item 1A of our annual report on Form 10-K for the year ended December 31, 2023.

We have based this estimate on a number of assumptions that may prove to be wrong and changing circumstances beyond our control may cause

us to consume capital more rapidly than we currently anticipate.

Our inability to obtain additional funding when we need it could seriously

harm our business.

We intend to discontinue the production

of our memory products.

Taiwan Semiconductor Manufacturing Corporation, or TSMC, is the sole

foundry that manufactures the wafers used to produce our memory IC products.

TSMC has informed us that it is discontinuing the foundry

process used to produce the wafers necessary to produce our memory ICs.

We are not in a position to transition wafer production to a new

foundry and continue to manufacture these products.

As a result, in May 2023, we initiated

an end-of-life, or EOL, o f our memory IC products.

We expect to fulfill EOL product purchase orders

by March 31, 2025.

However, the timing of EOL shipments will be dependent on the potential receipt of additional purchase orders from

customers, deliveries from our suppliers, and the delivery schedules requested by our customers.

Our memory IC products represented

over 60% of our revenues for the year ended December 31, 2023 and over 80% of our revenues for the six months ended June 30, 2024.

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

of operations and cash flows.

Our recent reduction in force undertaken

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

additional costs.

On November 7, 2023, we implemented an employee lay-off and terminated

certain consulting positions (the “Reductions”) to reduce operating expenses and cash burn, as we prioritized business activities

and projects that we believe will have a higher return on investment.

As part of the Reductions, we implemented a temporary lay-off that

impacted 16 employees (the “Employees”) of Peraso Tech.

The employment of one Employee was terminated during the three months

ended March 31, 2024.

During the three months ended June 30, 2024, we determined that we would not recall any of the 10 Employees that

remained on our payroll and commenced notifying the remaining Employees that their employment would be terminated.

As a result, we recorded

severance charges of approximately $424,000 and $446,000 for the three and six months ended June 30, 2024, respectively, and a liability

for severance costs of $419,000 as of June 30, 2024.

The severance costs are expected to be paid over the next 13 months.

As a result of the decision to not recall the Employees, we determined

that it was probable that a number of our non-cancelable licenses for computer-aided design software would not be utilized during the

remaining license terms.

During the three months ended June 30, 2024, we expensed the value of the remaining contractual liabilities and

recorded liabilities of approximately $1,533,000.

We expect to pay these license fees through September 30, 2025.

In addition to the costs

associated with the non-cancelable license commitments for computer-aided design software, the Reductions may result in other unintended

consequences and costs, such as the loss of institutional knowledge and expertise, attrition beyond the intended number of employees,

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

while positions have been eliminated, certain functions performed by those positions and necessary to our operations remain, and we may

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

face many significant risks in our business, some of which are unknown to us and not presently foreseen.

These risks could have a material

adverse impact on our business, financial condition and results of operations in the future.

Other than as set forth below, t here

have been no material changes with respect to the risk factors disclosed under Item 1A of our annual report on Form 10-K for

the year ended December 31, 2023, which we filed with the SEC on March 29, 2024.

If we are unable to satisfy the continued listing

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

Our common stock may lose value

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

While our common stock is currently listed

on Nasdaq, we can give no assurance that we will be able to satisfy the continued listing requirements of Nasdaq in the future, including,

but not limited to, the corporate governance requirements and the minimum closing bid price requirement or the minimum equity requirement.

Specifically, as of September

30, 2024, our stockholders’ equity was below Nasdaq’s $2.5 million minimum stockholders’ equity continued listing requirement.

However, we believe that, as a result of our receipt of net proceeds of approximately $2.6 million from the warrant inducement offering

in November 2024, our current stockholders’ equity is now above such requirement.

If we are unable to demonstrate to Nasdaq’s

satisfaction that we subsequently regained compliance with this requirement, Nasdaq will notify us of such non-compliance.

If we receive

such notice from Nasdaq, in accordance with Nasdaq rules, we will have 45 calendar days from the date of the notification to submit a

plan to regain compliance with Nasdaq Listing Rule 5550(b)(1).

If our compliance plan is accepted, we may be granted up to 180 calendar

days from the date of the initial notification to evidence compliance.

There can be no assurance that

we will be able to maintain compliance with the continued listing requirements for Nasdaq.

If we fail to maintain compliance with any

such continued listing requirement, there can also be no assurance that we will be able to regain compliance with any such continued listing

requirement in the future or that our common stock will not be delisted in the future.

If we were to be delisted, we

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

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

● a limited availability

of market quotations for our common stock;

● a decreased ability to

issue additional securities or obtain additional financing in the future;

● reduced liquidity for

our stockholders;

● potential loss of confidence

by customers, collaboration partners and employees;

● loss of institutional

investor interest.

In the event of a delisting, we

can provide no assurance that any action taken by us to restore compliance with listing requirements would allow our common stock to become

listed again, stabilize the market price or improve the liquidity of our common stock, prevent our common stock from dropping below the

Nasdaq minimum bid price requirement, or prevent future non-compliance with Nasdaq’s listing requirements.

might not be able to continue as a going concern.

consolidated financial statements as of September 30, 2024 have been prepared under the assumption that we will continue as a going concern

for the next twelve months.

As of September 30, 2024, we had cash and cash equivalents of $1.3 million and an accumulated deficit of

$175.6 million.

In November 2024, we completed a warrant inducement offering for estimated net proceeds of approximately $2.6 million.

We believe that our existing cash and cash equivalents as of September 30, 2024, plus the proceeds from the warrant inducement offering

completed in November 2024 and expected receipts associated with forecasted product sales, will enable us to meet our capital needs until

the second quarter of 2025.

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

and profitable operations.

We will need to increase revenues substantially beyond levels that we have attained in the past in order to

generate sustainable operating profit and sufficient cash flows to continue doing business without raising additional capital from time

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

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

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

as a going concern.

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

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

to raise capital.

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

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

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

and our current stockholders may experience dilution.

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

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

or even terminate our operations.

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

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

discussed elsewhere in this “ Risk Factors ” section and in Item 1A of our annual report on Form 10-K for the year ended

December 31, 2023.

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

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

Our inability to obtain additional funding when

we need it could seriously harm our business.

intend to discontinue the production of our memory products.

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

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

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

a result, in May 2023, we initiated an end-of-life, or EOL, o f our memory IC products.

expect to fulfill EOL product purchase orders by March 31, 2025.

However, the timing of EOL shipments will be dependent on the potential

receipt of additional purchase orders from customers, deliveries from our suppliers, and the delivery schedules requested by our customers.

Our memory IC products represented over 60% of our revenues for the year ended December 31, 2023 and over 80% of our revenues

for the nine months ended September 30, 2024.

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

impact our future revenues, gross margins, results of operations and cash flows.

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

incurred net losses of approximately $9.2 million for the nine months ended September 30, 2024 and $16.8 million for the year ended

December 31, 2023, and we had an accumulated deficit of approximately $175.6 million as of September 30, 2024.

These and prior-year

losses have resulted in significant negative cash flows.

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

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

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

Given our history of fluctuating

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

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

As a result, we may need to raise additional

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

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

may yield unintended consequences and additional costs.

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

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

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

During the six months ended June 30, 2024, we determined that we would not recall any of the 11 Employees that remained on our payroll

and commenced notifying the remaining Employees that their employment would be terminated.

As a result, we recorded severance charges

of approximately $0.4 million during the nine months ended September 30, 2024, and, as of September 30, 2024, we had a remaining liability

for severance costs of approximately $0.3 million.

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

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

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

During the three months ended June 30, 2024,

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

As of September

30, 2024, we had a remaining liability of approximately $1.0 million, and we expect to pay these license fees through September 30, 2025.

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

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

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

the Reductions.

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

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

We may also be unsuccessful

9 unchanged sentences

adversely affected.

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

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

We face risks if we fail to comply

with applicable U.S.

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

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

Recently, the Company has received and,

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

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

than we have initially estimated.

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

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

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

In addition, responding to any such proceeding

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

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

4 unchanged sentences

cannot be sure that further international expansion will be successful.

In addition, we face risks in doing business internationally that

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

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

In addition, we face risks in doing business internationally

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

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

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

● public health issues,

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

suppliers internationally;

● difficulties, inefficiencies

and costs associated with staffing and managing foreign operations;

● longer and more difficult

customer qualification and credit checks;

● greater difficulty collecting

accounts receivable and longer payment cycles;

● the need for various local

approvals to operate in some countries;

● difficulties in entering

some foreign markets without larger-scale local operations;

● changes in import/export

laws, trade restrictions, regulations and customs and duties and tariffs (foreign and domestic);

● compliance with local

laws and regulations;

● unexpected changes in

regulatory requirements;

● reduced protection for

intellectual property rights in some countries;

● adverse tax consequences,

including potential additional tax exposure if we are deemed to have established a permanent establishment outside of the United States;

● the effectiveness of our policies

and procedures designed to ensure compliance with the US Foreign Corrupt Practices Act of 1977 and similar regulations;

● fluctuations in currency

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

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

dollar and expose us to foreign currency exchange rate risk if,

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

● new and different sources

of competition;

● political, economic, and

social instability;

● terrorism and acts of

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

● US Department of Commerce

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

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

business, employees, partners, customers, distributors or suppliers internationally;

● difficulties,

inefficiencies and costs associated with staffing and managing foreign operations;

and more difficult customer qualification and credit checks;

difficulty collecting accounts receivable and longer payment cycles;

need for various local approvals to operate in some countries;

● difficulties

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

in import/export laws, trade restrictions, regulations and customs and duties and tariffs

(foreign and domestic);

with local laws and regulations;

changes in regulatory requirements;

protection for intellectual property rights in some countries;

tax consequences, including potential additional tax exposure if we are deemed to have established

a permanent establishment outside of the United States;

effectiveness of our policies and procedures designed to ensure compliance with the Foreign

Corrupt Practices Act of 1977 and similar regulations;

● fluctuations

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

outside of the United States, increase the expenses of our international operations by reducing

the purchasing power of the U.S.

dollar and expose us to foreign currency exchange rate risk

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

and different sources of competition;

economic, and social instability;

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

the businesses of our customers and vendors;

Department of Commerce regulations or restrictions on exports of certain semiconductor products

and technologies.

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

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-Q

Item 1A. Risk Factors