What changed in this filing

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Item 2. Management’s Discussion and Analysis

2025-08-13 compared with 2025-05-13 · 174 added, 93 removed, 203 unchanged (57% of the section changed)

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With our module, we can guarantee the performance of the amplifier/antenna interface and simplify customers’

radio frequency (“RF”) engineering, facilitating more opportunities for customer prospects that have not provided RF-type

systems, as well as shortening the time to market for new products.

radio frequency, or RF, engineering, facilitating more opportunities for customer prospects that have not provided RF-type systems, as

well as shortening the time to market for new products.

We also had a memory product

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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.

$2.3 million for the six months ended June 30, 2025 and $10.7 million for the year ended December 31, 2024, and we had an accumulated

deficit of approximately $179.4 million as of June 30, 2025.

These and prior year losses have resulted in significant negative

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Recent Developments

Compliance with Nasdaq Continued Listing Requirements

Compliance with Nasdaq Minimum Bid Price Requirement

On April 4, 2025, we received

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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

On June 18, 2025, we received a notification letter

from Nasdaq notifying us that we had regained compliance with the minimum bid price requirement.

Unsolicited, Non-binding Proposal from Mobix

Update on Strategic Review Process and Capital Strategy

On June 27, 2025, we confirmed

in a public press release the receipt of an unsolicited, non-binding proposal from Mobix Labs, Inc.

(“Mobix”) to acquire all

of the Company’s issued and outstanding equity securities in exchange for newly issued shares of Mobix common stock, with a fixed

exchange ratio based on the average daily closing price of the Company’s common stock over the 30 calendar days ending on June 11,

2025, plus a 20% premium, or approximately $1.20 per share (the “Mobix Proposal”).

On July 11, 2025, we announced

that our board of directors (the “Board”) has authorized the exploration of strategic alternatives, including a merger, sale

of assets or other similar transaction, all intended to maximize stockholder value and further our business operations.

We retained Craig-Hallum

Capital Group LLC as our financial advisor to assist with the exploration process.

As part of this process, the Board is evaluating the

Mobix Proposal.

In addition, management is

pursuing a wide variety of potential funding arrangements to address our short-term cash needs and provide the capital necessary to support

our operations, while at the same time conserving cash by delaying or deferring certain expenditures.

There can be no assurance that the

exploration process will result in any strategic alternative, or as to its outcome or timing.

Additionally, there can be no assurance

that we will secure any financing arrangement or complete any capital transaction, that we will enter into negotiations with Mobix or

any third party, that the Mobix Proposal or any strategic alternative will result in a formal offer, or that any such offer or alternative

will ultimately lead to a completed transaction.

Risks and Uncertainties

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Percentage of total net revenue

The following table details

revenue by product category for the three months ended March 31, 2025 and 2024:

Product - six months ended

Percentage of total net revenue

following table details revenue by product category for the three and six months ended June 30, 2025 and 2024:

(amounts in thousands)

For the Three Months Ended March 31,

For the Three Months Ended June 30,

Product category

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mmWave other products

Product revenue increased

for the three months ended March 31, 2025 compared with the same period of 2024 primarily due to the increase in shipments of our mmWave

ICs and antenna modules.

The decrease in memory IC product shipments during 2025 was primarily attributable to the completion of final

EOL shipments.

We expect revenues to decrease

in 2025 as compared with 2024, as we do not expect further sales of our memory IC products after March 31, 2025;

however, we expect sales

of our mmWave products to increase from a volume and revenue perspective during 2025, based on our current order backlog and the expected

commencement of production shipments to new customers.

(amounts in thousands)

Six Months Ended June 30,

Product category

mmWave modules

mmWave other products

Product revenue decreased

for the three and six months ended June 30, 2025 compared with the same periods of 2024 primarily due to the decrease in our memory IC

product shipments attributable to the completion of final EOL shipments in March 2025.

The decrease was partially offset by an increase

in shipments of our mmWave ICs and antenna modules.

We expect sales of our mmWave

products to increase from a volume and revenue perspective during 2025, based on our current order backlog and the expected commencement

of production shipments to new customers.

(dollar amounts in thousands)

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Percentage of total net revenue

Royalty and other - six months ended

Percentage of total net revenue

Royalty and other revenue

includes royalty, non-recurring engineering services and license revenues.

The decrease in royalty and other revenue for the three months

ended March 31, 2025 compared with the same period of 2024 was primarily due to a decrease in royalty revenues from licensees of our memory

technology due to reduced shipments by these licensees, which we attribute to the discontinuation of the foundry process by TSMC, and

decreases in non-recurring engineering services revenue related to our mmWave technology.

The decrease in royalty and other revenue for the three and

six months ended June 30, 2025 compared with the same periods of 2024 was primarily due to a decrease in royalty revenues from licensees

of our memory technology due to reduced shipments by these licensees, which we attribute to the discontinuation of the foundry process

by TSMC, and decreases in non-recurring engineering services revenue related to our mmWave technology.

Cost of Net Revenue and Gross Profit

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Percentage of total net revenue

Cost of net revenue -six months ended

Percentage of total net revenue

Cost of net revenue is primarily

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Cost of net revenue decreased

for the three months ended March 31, 2025 when compared with the same period in 2024, primarily related to the decrease of amortization

for the three months ended June 30, 2025 when compared with the same period in 2024, primarily related to the decrease of amortization

of developed technology intangible assets of approximately $0.6 million, as these assets were fully amortized as of December 31, 2024.

The decrease was partially offset by an increase in cost of sales of our mmWave IC and module products attributable to increased shipments

during the three months ended March 31, 2025 as compared with the prior year period.

during the three months ended June 30, 2025 as compared with the prior year period.

Cost of net revenue decreased for the six months ended

June 30, 2025 when compared with the same period in 2024, primarily related to the decrease of amortization of developed technology intangible

assets of approximately $1.1 million, as these assets were fully amortized as of December 31, 2024.

The decrease was partially offset

by an increase in cost of sales of our mmWave IC and module products attributable to increased shipments during the six months ended June

30, 2025 as compared with the prior year period.

(dollar amounts in thousands)

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Percentage of total net revenue

Gross profit increased

for the three months ended March 31, 2025 compared with the same period of 2024 primarily due to an increase in sales of our mmWave

IC and module products, partially offset by a decrease in royalty and other revenue and a decrease in sales of our memory IC

During the three months ended March 31, 2025, we sold mmWave inventory with a value of approximately $94,000 that had been

written down in prior periods.

Gross profit -six months ended

Percentage of total net revenue

Gross profit decreased for

the three months ended June 30, 2025 compared with the same period of 2024 primarily due to decreases in product and royalty revenues,

and product revenue mix, as we had no sales of our memory IC products during the three months ended June 30, 2025, which historically

had higher profit margins than our mmWave IC and module products.

During the three months ended June 30, 2025, we sold mmWave inventory

with a cost of approximately $0.2 million that had been written down in prior periods.

Gross profit increased for

the six months ended June 30, 2025 compared with the same period of 2024 primarily due to an increase in sales of our mmWave IC and module

products, partially offset by a decrease in sales of our memory IC products and a decrease in royalty revenue.

During the six months ended

June 30, 2025, we sold mmWave inventory with a cost of approximately $0.3 million that had been written down in prior periods.

Research and Development

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Percentage of total net revenue

Research and development -six months ended

Percentage of total net revenue

Our research and development,

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The decrease for the three

months ended March 31, 2025 compared with the same period of 2024 was primarily due to:

i) reduced salary and consulting costs, as we

implemented reductions in force in February and November 2023 and terminated consultant contracts, ii) reduced rent expense for our San

Jose office as we significantly reduced the space we rent effective January 2025, and iii) reduced software license expense, as during

the three months ended June 30, 2024, we accrued the value of certain of our software license obligations (see Note 4 to the condensed

consolidated financial statements in Part I, Item 1 of this Quarterly Report on Form 10-Q).

and six months ended June 30, 2025 compared with the same periods of 2024 was primarily due to:

i) reduced salary and consulting costs,

as we implemented reductions in force in February and November 2023 and terminated consultant contracts, ii) reduced rent expense for

our San Jose office as we significantly reduced the space we rent effective January 2025, and iii) reduced software license expense, as

during the three and six months ended June 30, 2024, we accrued the value of certain of our software license obligations (see Note 4 to

the condensed consolidated financial statements in Part I, Item 1 of this Quarterly Report on Form 10-Q).

expect that total R&D expenses will decrease during 2025 compared with 2024, as a result of our cost reduction initiatives .

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Percentage of total net revenue

SG&A months ended

Percentage of total net revenue

Selling, general and administrative,

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The decrease for the three

months ended March 31, 2025 compared with the same period of 2024 was primarily attributable to decreased consulting and professional

services costs and decreased amortization of purchased intangible assets for customer relationships, which were fully amortized as of

December 31, 2024.

We expect that total SG&A expense will remain flat or slightly decrease for

2025 compared with 2024, as we continue to manage our SG&A costs.

months ended June 30, 2025 compared with the same period of 2024 was primarily attributable to reductions in expenses for facilities,

stock based compensation and amortization of purchased intangible assets for customer relationships of approximately $0.3 million, which

were fully amortized as of December 31, 2024.

The decrease for the six months ended June 30, 2025 compared with the same period of 2024

was primarily attributable to reductions in expenses for facilities, stock based compensation and amortization of purchased intangible

assets for customer relationships of approximately $0.5 million, which were fully amortized as of December 31, 2024.

These decreases were

partially offset by increases in consulting and professional services costs.

We expect that total

SG&A expense will remain flat or slightly decrease for the remainder of 2025 compared with 2024, as we continue to manage our SG&A

Severance and Software License Obligations

(dollar amounts in thousands)

Severance and software license obligations -three months ended

Percentage of total net revenue

Severance and software license obligations -six months ended

Percentage of total net revenue

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.

As a result, we recorded severance charges of approximately $0.4 million

for each of the three and six months ended June 30, 2024.

The remaining severance liabilities of approximately $10,000 as of June 30,

2025 were paid in 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.

During the three months ended June 30,

2025, a licensor terminated one of the license agreements and initiated a refund of approximately $56,300 for amounts previously paid

As a result, we reversed approximately $222,600 of expense and approximately $166,300 of the related contractual liabilities for

this licensor during the three months ended June 30, 2025.

As of June 30, 2025, the remaining contractual liabilities of approximately

$0.2 million and $0.2 million were included in accrued expenses and other (see Note 3 to the condensed consolidated financial statements)

and accounts payable, respectively, which are expected to be paid by September 30, 2025.

Liquidity and Capital Resources;

Changes in Financial Condition

As of March 31, 2025, we had

As of June 30, 2025, we had

cash and cash equivalents of $1.8 million and working capital of $2.4 million.

Net cash used in operating

activities was $1.0 million for the first three months of 2025, which primarily resulted from our net loss of $0.5 million, as adjusted

activities was $3.0 million for the first six months of 2025, which primarily resulted from our net loss of $2.3 million, as adjusted

for $1.1 million in net changes in assets and liabilities, as partially offset by non-cash charges of $0.1 million of depreciation and

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Net cash used in operating

activities was $2.6 million for the first three months of 2024, which primarily resulted from our net loss of $2.0 million, as adjusted

for a $1.6 million non-cash gain on the change in fair value of warrant liability, $1.0 million in net changes in assets and liabilities

and $0.2 million in other non-cash changes, as partially offset by non-cash charges of $1.0 million of depreciation and amortization and

$1.2 million of stock based compensation.

The changes in assets and liabilities primarily related to the timing of accounts receivable

collections, purchases of inventory and other vendor payables and prepayments.

For the three months ended

March 31, 2025 and 2024, no cash was provided by or used in investing activities.

activities was $3.2 million for the first six months of 2024, which primarily resulted from our net loss of $6.5 million, as adjusted

for a $1.6 million non-cash gain on the change in fair value of warrant liability, as partially offset by non-cash charges of $2.0 million

of depreciation and amortization, $2.4 million of stock based compensation and $0.5 million in net changes in assets and liabilities.

The changes in assets and liabilities primarily related to the timing of accounts receivable collections, accruals for software license

obligations, accrued severance benefits and other vendor payables and prepayments.

Net cash used in investing

activities was approximately $45,000 for the first six months of 2025, which was attributable to the purchase of fixed assets.

For the six months ended June

30, 2024, no cash was provided by or used in investing activities.

Net cash provided by financing

activities for the three months ended March 31, 2025 comprised $0.4 million of net proceeds from sales under our at-the market offering

program, partially offset by repayment of financing lease liabilities.

activities for the six months ended June 30, 2025 comprised $1.5 million of net proceeds from sales under our at-the market offering program,

partially offset by repayment of financing lease liabilities.

Net cash provided by financing

activities for the three months ended March 31, 2024 comprised $3.4 million in net proceeds from a public offering of our common stock

and common stock purchase warrants completed in February 2024, partially offset by repayment of financing lease liabilities.

activities of $3.5 million for the six months ended June 30, 2024 primarily comprised $3.4 million in net proceeds from a public offering

of our common stock and common stock purchase warrants completed in February 2024 and a $0.1 million sale of unregistered common stock

to a member of our board of directors.

Our future liquidity and capital

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include non-cancelable purchase orders for inventory.

At March 31, 2025, we had outstanding non-cancelable purchase orders for inventory,

At June 30, 2025, we had outstanding non-cancelable purchase orders for inventory,

primarily wafers and substrates, and related expenditures of approximately $3.1 million.

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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 cash flows and have required us to raise substantial amounts of additional capital.

approximately $2.3 million for the six months ended June 30, 2025 and $10.7 million for the year ended December 31, 2024, and we had an

accumulated deficit of approximately $179.4 million as of June 30, 2025.

These and prior year losses have resulted in significant negative

cash flows and have required us to raise substantial amounts of additional capital.

To date, we have primarily financed our operations

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least the next 12 months, as our revenues will not be sufficient to offset our operating expenses.

We believe that our existing cash and

cash equivalents as of March 31, 2025 will enable us to meet our capital needs into the third quarter of 2025.

In addition, we may incur substantial

costs related to the Mobix Proposal and our strategic alternative exploration process, which costs may include the fees of our financial

and legal advisors.

We believe that our existing cash and cash equivalents as of June 30, 2025 will enable us to meet our capital needs

into the fourth quarter of 2025.

We will need to increase revenues

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may include, but are not limited to, reducing headcount and curtailing business activities.

As further discussed in Note

9 to the condensed consolidated financial statements, in November 2024, we entered into a warrant inducement offering for net proceeds

of approximately $2.6 million.

Additionally, as further discussed in Note 8 to the condensed consolidated financial statements, on August

30, 2024, we entered into the Sales Agreement with Ladenburg, pursuant to which we may offer and sell, from time to time at our sole discretion,

shares of our common stock through Ladenburg as agent and/or principal (subject to the limitations of General Instruction I.B.6 of Form

S-3) through an at-the-market program.

During the three months ended March 31, 2025, the Company sold 328,966 shares of common

stock for proceeds of approximately $433,000 (net of commissions of approximately $13,000 paid to Ladenburg) pursuant to the Sales Agreement.

Further, during 2023 and 2024, we implemented reductions in our workforce and eliminated 19 full-time equivalent positions.

reduction actions were intended to preserve cash, as we kept capital expenditures to minimum levels in order to reduce operating costs

and our short-term cash needs.

As further discussed in Note 9 to the condensed consolidated financial

statements, in November 2024, we entered into a warrant inducement offering for net proceeds of approximately $2.6 million.

Additionally,

as further discussed in Note 8 to the condensed consolidated financial statements, on August 30, 2024, we entered into the Sales Agreement

with Ladenburg, pursuant to which we may offer and sell, from time to time at our sole discretion, shares of our common stock through

Ladenburg as agent and/or principal (subject to the limitations of General Instruction I.B.6 of Form S-3) through an at-the-market program.

During the six months ended June 30, 2025, we sold 1,270,158 shares of common stock for proceeds of approximately $1,512,000

(net of commissions of approximately $47,000 paid to Ladenburg) pursuant to the Sales Agreement.

Further, during 2023 and 2024, we implemented

reductions in our workforce and eliminated 19 full-time equivalent positions.

These cost reduction actions were intended to preserve cash,

as we kept capital expenditures to minimum levels in order to reduce operating costs and our short-term cash needs.

If we were to raise additional

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● develop or enhance our products;

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

acquire complementary technologies, products or businesses;

expand operations, in the United States or internationally;

● continue to expand our product

development and sales and marketing organizations;

● acquire complementary technologies,

products or businesses;

● expand operations, in the United

States or internationally;

● hire, train and retain employees;

respond to competitive pressures or unanticipated working capital requirements.

● respond to competitive pressures

or unanticipated working capital requirements.

Our failure to do any of these

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No material amounts related to these indemnifications are reflected in our condensed consolidated financial statements

for the three months ended March 31, 2025.

for the three and six months ended June 30, 2025.

Recent Accounting Pronouncements

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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 2. Management’s Discussion and Analysis