What changed in this filing

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Item 1A. Risk Factors

2025-05-13 compared with 2024-11-13 · 177 added, 191 removed, 5 unchanged (99% of the section changed)

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.

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.

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.

have been no material changes with respect to the risk factors disclosed under Part I, Item 1A of our Annual Report on Form 10-K

for the year ended December 31, 2024, which we filed with the SEC on March 28, 2025.

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

Our consolidated financial

statements as of March 31, 2025 have been prepared under the assumption that we will continue as a going concern for the next twelve months.

As of March 31, 2025, we had cash and cash equivalents of $2.8 million and an accumulated deficit of $177.6 million.

We believe that our

existing cash and cash equivalents as of March 31, 2025 and expected receipts associated with forecasted product sales, will enable us

to meet our capital needs into the third quarter of 2025.

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.

In addition, our independent

registered public accounting firm, in its report on our consolidated financial statements for the year ended December 31, 2024, expressed

substantial doubt about 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 Part I, Item 1A of our Annual Report on Form 10-K for the year ended December

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.

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

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

1 unchanged sentence

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.

On April 4, 2025, we received

a letter from the Listing Qualifications Staff of The Nasdaq Stock Market LLC (“Nasdaq”) indicating that, based upon the closing

bid price of our common stock for the 30 consecutive business days ending on April 3, 2025, we no longer met the requirement to maintain

a minimum bid price of $1 per share, as set forth in Nasdaq Listing Rule 5550(a)(2).

In accordance with Nasdaq

Listing Rule 5810(c)(3)(A), we have been provided a period of 180 calendar days, or until October 1, 2025, in which to regain compliance.

In order to regain compliance with the minimum bid price requirement, the closing bid price of our common stock must be at least $1 per

share for a minimum of ten consecutive business days during this 180-day period.

In the event we do not regain compliance within this

180-day period, we may be eligible to seek an additional compliance period of 180 calendar days provided we meet the continued listing

requirement for market value of publicly held shares and all other initial listing standards for the Nasdaq Capital Market, with the exception

of the bid price requirement, and if we provide written notice to Nasdaq of our intent to cure the deficiency during this second compliance

period by effecting a reverse stock split, if necessary.

However, if it appears to the Nasdaq staff that we will not be able to cure the

deficiency, or if we are otherwise not eligible, Nasdaq will provide notice to us that our common stock will be subject to delisting.

The above mentioned letter

does not result in the immediate delisting of our common stock from the Nasdaq Capital Market.

We are monitoring the closing bid price

of our common stock and considering our available options in the event the closing bid price of our common stock remains below $1 per

There can be no assurance

that we will be able to regain compliance with the minimum bid price requirement, maintain compliance with the other continued listing

requirements of Nasdaq, 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

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

in negotiating any desired strategic alternative or partnership relating to such functions on a timely basis, on acceptable terms, or

The Reductions could also make it difficult for us to pursue, or prevent us from pursuing, new opportunities and initiatives

due to insufficient personnel, or require us to incur additional and unanticipated costs to hire new personnel to pursue such opportunities

or initiatives.

Further, inflationary pressure may increase our costs, including employee compensation costs, or result in employee attrition

to the extent our compensation does not keep up with inflation, particularly if our competitors’ compensation does.

If we are unable

to realize the anticipated benefits from the Reductions, if we experience significant adverse consequences from the reduction in force,

or if we are otherwise unable to retain our employees, our business, financial condition, and results of operations may be materially

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.

success of our business depends, in large part, on our ability to operate successfully from geographically disparate locations and to

further expand our international operations and sales.

Operating in international markets requires significant resources and management

attention and subjects us to regulatory, economic, and political risks that are different from those we face in the United States.

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.

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:

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.

● 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.

We discontinued the production of our memory

Taiwan Semiconductor Manufacturing

Corporation, or TSMC, the sole foundry that manufactured the wafers used to produce our memory IC products, discontinued

the foundry process used to produce such wafers.

As a result, we commenced an end-of-life (EOL) of our memory products in 2023.

2025, we fulfilled all outstanding EOL orders for our memory IC products.

We do not expect any further shipments or to generate

any meaningful revenue from shipments of our memory IC products after March 2025.

For the three months ended March 31, 2025 and 2024,

our memory IC products represented over 58% and 84% of our revenues, respectively.

The discontinuation of the production and sale of our

memory IC products will negatively impact our future revenues, results of operations and cash flows.

We have a history of losses, and we will

need to raise additional capital.

We incurred net losses of approximately

$0.5 million for the three months ended March 31, 2025 and $10.7 million for the year ended December 31, 2024, and we had an accumulated

deficit of approximately $177.6 million as of March 31, 2025.

These and prior-year losses have resulted in significant negative

To remain competitive and expand our product offerings to customers, we will need to increase revenues substantially beyond

levels that we have attained in the past in order to generate sustainable operating profit and sufficient cash flows to continue doing

business without raising additional capital from time to time.

Given our history of fluctuating revenues and operating losses, and the

challenges we face in securing customers for our products, we cannot be certain that we will be able to achieve and maintain profitability

on either a quarterly or annual basis in the future.

As a result, we may need to raise additional capital in the future, which may or

may not be available to us at all or only on unfavorable terms.

Our 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.

In 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.

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

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 $1.6 million.

As of March 31, 2025, we had a remaining

liability of approximately $0.6 million, and 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.

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 in negotiating any desired strategic alternative or partnership

relating to such functions on a timely basis, on acceptable terms, or at all.

The Reductions could also make it difficult for us to pursue,

or prevent us from pursuing, new opportunities and initiatives due to insufficient personnel, or require us to incur additional and unanticipated

costs to hire new personnel to pursue such opportunities or initiatives.

Further, inflationary pressure may increase our costs, including

employee compensation costs, or result in employee attrition to the extent our compensation does not keep up with inflation, particularly

if our competitors’ compensation does.

If we are unable to realize the anticipated benefits from the Reductions, if we experience

significant adverse consequences from the reduction in force, or if we are otherwise unable to retain our employees, our business, financial

condition, and results of operations may be materially adversely affected.

International trade policies, including

protectionist trade policies, such as tariffs and sanctions, could adversely affect our business, results of operations and financial

Due to the interconnectedness

of the global economy, policy changes in one area of the world can have an immediate and material adverse impact on markets around the

Changes in international trade policies, including:

(i) changes to existing trade agreements;

(ii) greater restrictions on free

trade generally;

and (iii) significant increases in customs duties and tariffs on goods imported into the United States and reciprocal

actions by other countries, could adversely affect our business, results of operations and financial condition.

Current or future tariffs

or other restrictive trade measures may raise the costs of raw materials, components or finished goods, which may adversely impact both

our product offerings and our operational expenses.

Such cost increases may reduce our margins and require us to increase prices, which

could harm our competitive position, reduce customer demand and damage customer relationships.

Trade disputes, trade restrictions,

tariffs and other political tensions between the U.S.

and other countries may also exacerbate unfavorable macroeconomic conditions including

inflationary pressures, foreign exchange volatility, financial market instability, and economic recessions or downturns, which may also

negatively impact customer demand for our products or services, delay purchases or renewals, limit expansion opportunities with customers,

limit our access to capital, or otherwise negatively impact our business and operations.

Ongoing tariff, trade restrictions and macroeconomic

uncertainty has and may continue to contribute to volatility in the price of our common stock.

Ongoing uncertainty regarding

trade policies may also complicate our short- and long-term strategic planning, and that of our partners and customers, including decisions

regarding hiring, product strategy, capital investment, supply chain design and geographic expansion.

While we continue to monitor

trade developments, the ultimate impact of these risks remains uncertain and any prolonged economic downturn, escalation in trade tensions,

or deterioration in international perception of U.S.-based companies could materially and adversely affect our supply chain, as well as

our business, results of operations and financial condition.

In addition, tariffs and other trade developments have and may continue to

heighten the risks related to the other risk factors described in our Annual Report on Form 10-K for the year ended December 31, 2024.

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