What changed in this filing

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Item 9A. Controls and Procedures

2022-03-31 compared with 2021-03-18 · 752 added, 434 removed, 714 unchanged (62% of the section changed)

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Other Information

Disclosure Regarding Foreign Jurisdictions that Prevent Inspections

Not Applicable.

Directors, Executive Officers and Corporate Governance

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Position(s) with the Company

President, Chief Executive Officer and Director

Scott Lewis(1)

Ronald Glibbery

Chief Executive Officer and Director

President and Director

Ian McWalter(1)(2)

Andreas Melder(1)(2)

Member of Audit Committee

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

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 Agreement;

and (ii) terminated the Chapter 15 Proceedings.

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, Inc.

and LSI Logic Corporation.

Glibbery holds a B.E.Sc.

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

We believe that Mr.

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

Daniel Lewis.

Lewis was appointed to our board of directors in September 2017, and has served as our president and chief executive officer since August 2018.

He has served as the managing member and an owner of GMS Manufacturing Solution LLC, which provides engineering services to manufacturing companies, since 2013.

From 2001 to 2013, Mr.

Lewis served as chief executive officer of View Box Group, LLC, which provides management consulting services to small businesses.

Prior to 2001, he served as vice president of worldwide sales at both Xicor, Inc.

and Integrated Device Technology, Inc.

Lewis has also held various sales and technical positions with Accelerant Networks, Inc.

Intel Corporation, Zilog, Inc.

and Digital Equipment Corporation.

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

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

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

Before joining MoSys, Mr.

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

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

Lewis holds a B.S.

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We believe that Mr.

Lewis’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.

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.

Lewis was appointed to our board of directors in October 2018.

He brings more than 40 years of design, sales, and product and corporate marketing experience with technology and semiconductor companies.

He is not related to our chief executive officer.

Since February 2018, Mr.

Lewis has been serving as executive marketing strategist at United Silicon Carbide, Inc., a leader in the silicon carbide power device market.

Previously, he held multiple corporate and product-line marketing leadership positions at Maxim Integrated Products, Inc., Global Foundries, Ltd., Cadence Design Systems, Inc., Intersil Corp., Xilinx, Inc.

and Integrated Device Technology, Inc.

Lewis holds a B.S.

in Electrical Engineering Technology from DeVry Institute of Technology.

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.

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 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.

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.

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

Additionally, Mr.

Melder was a 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.

Lewis’s qualifications to serve on the board of directors include his extensive business experience with over 40 years of design, sales, product and corporate marketing experience in high-technology industries, primarily in management positions at several companies in the semiconductor industry.

He also can provide the board with valuable insight into sales and customer management relevant to our business.

Newell was appointed to our board of directors in October 2018.

He is currently a consultant and advisor to emerging technology and healthcare companies, having held financial management positions with technology and healthcare companies in Silicon Valley for over 25 years.

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

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

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

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

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

From 2003 to 2018, Mr.

Newell was CFO of Dextera Surgical Inc., a developer of advanced stapling devices and automated medical systems.

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

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

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

Newell served on the board of directors of ARI Network Services, Inc., a leading supplier of SaaS and data-as-a-service solutions, from 2012 to 2017.

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 CFO of Omnicell, Inc., a hospital supply and medication management company, and held executive positions with the Beta Group, LLC and Cardiometrics, Inc.

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

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

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

Newell holds a B.A.

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

We believe that Mr.

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

Daniel O’Neil.

O’Neil was appointed to our board of directors in September 2017 and has served as a partner at Acme Strategy, LLC, a provider of strategic consulting and advisory services, which he founded, since 2010.

From 2008 to 2010, he served as an investment banker at Signal Hill Capital Group LLC.

Prior to 2008, Mr.

O’Neil held business development and investment banking positions at Energy Services Group, Deutsche Bank AG and BT Alex.

O’Neil holds an AB from Harvard College and an MBA from the Stanford University Graduate School of Business.

We believe that Mr.

O’Neil’s qualifications to serve on the board of directors include his extensive business experience and expertise in corporate finance and strategy, including experience gained both as an investment banker and corporate executive focused on the semiconductor and electronics industries.

In the past, Mr.

O’Neil has provided financial advisory services to us.

He also brings to our board extensive knowledge of the semiconductor industry, along with deep experience in transactional processes, mergers and acquisitions, and deal financing for a wide range of transactions .

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

President, Chief Executive Officer and Director

Vice President of Finance and Chief Financial Officer

Sullivan became our Vice President of Finance and Chief Financial Officer in January 2008.

Ronald Glibbery

Chief Executive Officer and Director

President and Director

Chief Financial Officer

Bradley Lynch

Chief Operating Officer

Alexander Tomkins

Chief Technology Officer

James Sullivan.

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

From July 2006 until January 2008, Mr.

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From July 2002 until June 2006, Mr.

Sullivan was the Chief Financial Officer at 8x8, Inc., a provider of voice-over-internet-protocol communication services.

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.

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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 & Young Inc.

was appointed as the Monitor of Peraso Tech.

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

Bankruptcy Code, seeking recognition of the CCAA proceeding.

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

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

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

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

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

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

Previously, Mr.

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

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

Alexander Tomkins .

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.

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.

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

in Engineering Physics from Carleton University.

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

Code of Ethics

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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.mosys.com .

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.

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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.mosys.com.

Scott Lewis, Daniel J.

O’Neil, and Robert Y.

Newell are the current 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.

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.

O’Neil 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.

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

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

The Audit Committee has delegated authority to Mr.

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

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

Compensation Committee

Newell and Daniel J.

O’Neil are the current members of the Compensation Committee, and Mr.

Newell serves as the chairman.

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.mosys.com .

Nominations Process

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

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.

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Compensation Committee

Newell and Daniel J.

O’Neil are the current members of the Compensation Committee, with Mr.

Newell serving as the chairman.

Ian McWalter, Andreas Melder and Robert Y.

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

McWalter serving as the chairman.

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

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

Overview of Compensation Program

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

For 2020, the named executive officers included Daniel Lewis, President and Chief Executive Officer, and James Sullivan, Vice President of Finance and Chief Financial Officer.

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

Compensation Philosophy

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

The Compensation Committee reviews these guidelines annually.

The Compensation Committee reviews these guidelines

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

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Base 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 (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 in 2019 vest in increments over three years, while stock options granted to our executives in 2019 vest over 36 months from the date of grant.

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.

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

In 2020, there were no changes to the base salaries paid to our named executive officers.

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

Annual Incentive Compensation

The Compensation Committee did not authorize any incentive compensation for the named executive officers in 2020.

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

Equity Awards

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

Our 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.

Our Amended and Restated Peraso Inc.

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

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

We grant equity awards to achieve retention and motivation:

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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 options to purchase 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 option grants to newly hired executives with reference to option grants held by existing executives, the percentage that such grant represents of our total shares outstanding and hiring negotiations with the individual.

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 options vest with respect to one-fourth of the total number of shares subject to the grant on the first anniversary of the grant date and with respect to 1/48th of the shares monthly thereafter.

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

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

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

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

Name and principal position

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Incentive Plan

Chief Executive Officer & President

Ronald Glibbery

Chief Executive Officer (2)

James Sullivan

Chief Financial Officer

Vice President of Finance

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.

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

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

GRANTS OF PLAN-BASED AWARDS

We did not grant plan-based awards in 2020 to our named executive officers.

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

OUTSTANDING EQUITY AWARDS AT FISCAL YEAR-END

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

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

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

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

The amount is calculated using the Company’s closing price on the Nasdaq of $2.44 per share of common stock on December 31, 2020.

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).

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

OPTION EXERCISES AND STOCK VESTED

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

The information below describes the severance benefits payable to our named executive officers under the Policy as if the Policy had been in effect and a Change‑in‑Control occurred on December 31, 2020, and the employment of each of our named executive officers was terminated without cause immediately following the Change‑in‑Control:

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 payments Mr.

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

Termination Type

Payments and Benefits

Termination for Cause or Voluntary Resignation

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

reimbursement for business expenses.

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

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

reimbursement for business expenses;

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

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

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

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

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

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

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

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

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

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

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

Glibbery under his employment agreement and (ii) Messrs.

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

Base Salary($)(1)

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Stock Award Vesting($)(5)

Ronald Glibbery

James Sullivan

Represents cash severance payments based on the executive’s salary at December 31, 2020, in an amount equal to one year of his base salary.

Represents the average of 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 year, based on the amounts of such premiums at December 31, 2020.

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

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

Lewis and Sullivan.

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

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

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

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

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James Sullivan

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

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

Employment Agreements

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Restricted Stock

Daniel O'Neil

Andreas Melder

Scott Lewis (3)

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

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awards granted to Messrs.

Lewis, Newell and O’Neil on July 29, 2020 to purchase 1,000 shares each.

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

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

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

O’Neil and Mr.

Lewis resigned as board members.

Director Fee Compensation

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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.

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 as chairperson of a committee of our board of directors:

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:

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

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Director Equity Compensation

In August 2019, the Company’s stockholders approved the 2019 Plan.

The 2019 Plan permits the board of directors to establish by resolution the number of shares, up to a maximum of 2,000 each year for each non-employee director, to be covered by annual option grants or other awards for each year of service on our board.

The 2019 Plan further provides that each non-employee director may be granted an award to acquire up to 6,000 shares upon his or her initial appointment or election to our board.

The shares covered by these awards vest over a three year period at the rate of one third of the total number of shares each year, subject to the non-employee director’s continuous service on the board.

The 2019 Plan also permits a disinterested majority of the board of directors, in its discretion, to authorize additional shares to be awarded or granted to committee chairs and other non-employee directors for extraordinary service on the board.

The exercise price per share under each option grant is equal to the fair market value of a share of our common stock on the date of grant on the principal trading market for our common stock at the time of grant, which is the Nasdaq Capital Market, or the Nasdaq.

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 .

In recent years, our basic annual service award to a non-employee director has been a restricted stock unit award for 1,000 shares of common stock.

In 2020, the board of directors once again determined that this was an appropriate award size.

In July 2020, we awarded restricted stock units for 1,000 shares to each of our non-employee directors.

These awards vest and become non-forfeitable on July 29, 2021, or, if earlier, on the date of the 2021 annual meeting of stockholders.

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

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

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

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

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

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

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

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

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

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each of our directors;

each of the named executive officers;

each of our executive officers;

all directors and executive officers as a group.

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

Unless otherwise stated, the business address of each of our directors and named executive officers listed in the table is 2309 Bering Drive, San Jose, California 95131.

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

Amount and Nature of Beneficial

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Securities(2)

Empery Asset Management, LP

1 Rockefeller Plaza, Suite 1205

New York, NY 10020

Entities affiliated with Roadmap Capital General Partner Ltd.

Directors and Officers:

Ronald Glibbery

Andreas Melder

James Sullivan

Bradley Lynch

Alexander Tomkins

All current directors and executive

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

Empery Asset Management, LP (“Empery”) filed a Form 13G/A with the SEC on February 23, 2021 behalf of (i) Empery, (ii) Ryan Lane and (iii) Martin Hoe (together with Empery, the “Empery Persons”).

Martin Hoe and Ryan Lane, in their capacity as investment managers of Empery, may also be deemed to have investment discretion and voting power over the shares held by Empery.

Lane each disclaim any beneficial ownership of these shares.

The beneficial ownership of the Empery Persons includes shares of our common stock issuable upon exercise of warrants issued in July 2017.

The Empery Persons cannot exercise the warrants to the extent the Empery Persons would beneficially own, after any such exercise, more than 4.99% of the outstanding shares of our common stock.

Based on information reported by Roadmap Capital General Partner Ltd.

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

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

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 .

Securities Authorized for Issuance under Equity Compensation Plans

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

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

that was completed in December 2021.

Certain Relationships and Related Transactions and Director Independence

1 unchanged sentence

Director Independence

Our board of directors has determined that each of the current directors, with the exception of Daniel Lewis, 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 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.

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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 Acco untant Fees and Services

Principal Accountant Fees and Services

Weinberg & Co., P.A.

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

Pursuant to the Audit Committee's determination, on May 12, 2020, BPM LLP ("BPM"), the independent registered public accounting firm previously engaged to audit our financial statements, was dismissed.

The engagement of Weinberg as our independent registered public accounting firm was approved by our Audit Committee on May 12, 2020.

The following table shows the fees billed (in thousands of dollars) to us by Weinberg and BPM, for the financial statement audits and other services provided for fiscal 2020 and 2019.

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

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

Audit Fees(1)

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

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

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.

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The following documents are filed as part of this Report:

Consolidated Financial Statements and Reports of Independent Registered Public Accounting Firms, all of which are set forth on pages 58 through 81 of this Report.

Reports of Independent Registered Public Accounting Firms

Consolidated Balance Sheets

Consolidated Statements of Operations

Consolidated Statements of Stockholders’ Equity

Consolidated Statements of Cash Flows

Notes to Consolidated Financial Statements

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

(2) Financial Statement Schedules:

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

Restated Certificate of Incorporation of the Registrant

Certificate of Amendment to Restated Certificate of Incorporation of the Registrant

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

Amended and Restated Bylaws of the Registrant

Arrangement Agreement with Peraso Technologies Inc .

First Amending Agreement dated October 21, 2021

Restated Certificate of Incorporation of the Company

Certificate of Amendment to Restated Certificate of Incorporation of the Company

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

Certificate of Amendment to Articles of Incorporation (Name Change)

Certificate of Designation of Series A Special Voting Preferred Stock

Amended and Restated Bylaws of the Company

Specimen Common Stock Certificate

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Form of Securities Purchase Agreement

Rights Agreement, dated November 10, 2010, by and between Registrant and Wells Fargo Bank, N.A., as Rights Agent

Form of Right Certificate

Summary of Rights to Purchase Preferred Shares

Amendment No.

1 to Rights Agreement, dated July 22, 2011, by and between Registrant and Wells Fargo Bank, N.A., as Rights Agent

Amendment No.

2 to Rights Agreement, dated May 18, 2012, by and between Registrant and Wells Fargo Bank, N.A., as Rights Agent

Form of Common Stock Purchase Warrant

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2010 Amended and Restated Equity Incentive Plan

Amended and Restated Peraso Inc.

2019 Stock Incentive Plan

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

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

Amended and Restated 2010 Equity Incentive Plan

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

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

2019 Stock Incentive Plan

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

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

Amended and Restated 2010 Equity Incentive Plan

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

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

2019 Stock Incentive Plan

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

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

Amended Peraso Technologies Inc.

2009 Share Option Plan

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

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 MoSys, Inc.

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

2010 Amended and Restated Equity Incentive Plan

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dated October 3, 2017

10% Senior Secured Convertible Note Purchase Agreement dated March 14, 2016

Security Agreement dated March 14, 2016

10% Senior Secured Convertible Note due August 15, 2018

Amendment to 10% Senior Secured Convertible Note Purchase Agreement and every 10% Senior Secured Convertible Note due August 15, 2018 Issued Thereunder

Executive Change-in-Control and Severance Policy

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

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

Securities Purchase Agreement

Amendment No.

2 to 10% Senior Secured Convertible Note Purchase Agreement and every 10% Senior Secured Convertible Note due August 15, 2018 Issued Thereunder

Securities Purchase Agreement

Paycheck Protection Program Promissory Note and Agreement dated May 3, 2020

Sublease Addendum #2 to the Lease between Cyren Ltd.

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

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

Form of Lock-Up Agreement

Intercompany Services Agreement

Employment Agreement (Ronald Glibbery)

List of Subsidiaries

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

Consent of Independent Registered Public Accounting Firm—BPM LLP

Power of Attorney (see signature page)

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Section 1350 certification

XBRL Instance Document

XBRL Taxonomy Extension Schema Document

XBRL Taxonomy Extension Calculation Linkbase Document

XBRL Taxonomy Extension Definition Linkbase Document

XBRL Taxonomy Extension Labels Linkbase Document

XBRL Taxonomy Extension Presentation Linkbase Document

Inline XBRL Instance Document

Inline XBRL Taxonomy Extension Schema Document

Inline XBRL Taxonomy Extension Calculation Linkbase Document

Inline XBRL Taxonomy Extension Definition Linkbase Document

Inline XBRL Taxonomy Extension Labels Linkbase Document

Inline XBRL Taxonomy Extension Presentation Linkbase Document

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.

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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 3.4 to Form 8-K filed by the Company on October 29, 2008 (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.

1 unchanged sentence

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 E xhibit 4.4 to Form 8-K filed by the Company on November 12, 2010 (Commission File No.

I ncorporated by reference to Exhibit 4.4.1 to Form 8-K filed by the Company on November 12, 2010 (Commission File No.

Incorporated by reference to Exhibit 4.4.2 to Form 8-K filed by the Company on November 12, 2010 (Commission File No.

Incorporated by reference to Exhibit 4.2.3 to the Current Report on Form 8-K, filed on July 27, 2011 (Commission File No.

Incorporated by reference to Exhibit 4.2.4 to Current Report on Form 8-K filed by the Company on May 24, 2012 (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 4.8 to the Company’s Registration Statement on Form S-8, filed February 15, 2019 (Commission File No.

Incorporated by reference to Appendix A to the Company’s proxy statement on Schedule 14A filed with the Securities and Exchange Commission on July 3, 2019 (Commission File No.

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

I ncorporated by reference to Exhibit 4.10 to the Company ’s Registration Statement on Form S-8, filed November 13 , 2019 (Commission File No.

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

Incorporated by reference to Exhibit 4.13 to the Company ’s Registration Statement on Form S-8, filed November 13, 2019 (Commission File No.

333 -234675).

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

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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 10.1 to Form 8-K filed by the Company on March 15, 2016 (Commission File No.

Incorporated by reference to Exhibit 10.2 to Form 8-K filed by the Company on March 15, 2016 (Commission File No.

Incorporated by reference to Exhibit 10.3 to Form 8-K filed by the Company on March 15, 2016 (Commission File No.

Incorporated by reference to Exhibit 10.4 to Form 8-K filed by the Company on February 27, 2018 (Commission File No.

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

005-78033), as amended

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

333-225193), as amended

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 10.30 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 10.1 to the Current Report on Form 8-K filed with the SEC on May 13, 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.

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

Form 10-K Summary

Not applicable.

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this Report to be signed on its behalf by the undersigned, thereunto duly authorized, on the 18 t h day of March 2021.

/s/ Daniel Lewis

President and Chief Executive Officer

/s/ Ronald Glibbery

Ronald Glibbery

Chief Executive Officer and Director

POWER OF ATTORNEY

KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears below constitutes and appoints Daniel Lewis and James W.

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.

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/ DANIEL LEWIS

President, Chief Executive Officer, and Director

/s/ Ronald Glibbery

Chief Executive Officer and Director

March 31, 2022

Ronald Glibbery

(principal executive officer)

Vice President of Finance and Chief Financial

Officer (Principal Financial Officer and Principal

/s/ James Sullivan

Chief Financial Officer

James Sullivan

(principal financial and accounting officer)

March 31, 2022

Accounting Officer)

/s/ SCOTT LEWIS

/s/ Daniel Lewis

March 31, 2022

/s/ ROBERT Y.

/s/ Ian McWalter

March 31, 2022

/s/ Daniel O’NeIl

/s/ Andreas Melder

March 31, 2022

Daniel O’Neil

Andreas Melder

/s/ Robert Y.

March 31, 2022

INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

Report of Independent Registered Public Accounting Firm—Weinberg & Company

Report of Independent Registered Public Accounting Firm—BPM LLP

Report of Independent Registered Public Accounting Firm (PCAOB ID 572 )

Consolidated Balance Sheets

Consolidated Statements of Operations

Consolidated Statements of Stockholders’ Equity

Consolidated Statements of Stockholders’ Equity (Deficit)

Consolidated Statements of Cash Flows

1 unchanged sentence

Report of Independent Registered Public Accounting Firm

To the Stockholders and Board of Directors of

Board of Directors and Stockholders

San Jose, California

Opinion on the Consolidated Financial Statements

We have audited the accompanying consolidated balance sheets of MoSys, Inc.

and its subsidiaries (the “Company”) as of December 31, 2020, the related consolidated statements of operations, stockholders’ equity, and cash flows for the year ended December 31, 2020, and the related notes (collectively referred to as the “consolidated financial statements”).

In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2020, and the results of its operations and its cash flows for the year ended December 31, 2020, in conformity with accounting principles generally accepted in the United States of America.

We have audited the accompanying consolidated balance sheets of Peraso Inc.

(the “Company”) and subsidiaries as of December 31, 2021 and 2020, the related consolidated statements of operations, stockholders’ equity (deficit), and cash flows for the years ended December 31, 2021 and 2020, and the related notes (collectively referred to as the “consolidated financial statements”).

In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company and its subsidiaries as of December 31, 2021 and 2020, and the results of their operations and their cash flows for the years then ended , in conformity with accounting principles generally accepted in the United States of America.

Basis for Opinion

These consolidated financial statements are the responsibility of the Company’s management.

Our responsibility is to express an opinion on the Company’s consolidated financial statements based on our audit.

Our responsibility is to express an opinion on the Company’s consolidated financial statements based on our audits.

We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (“PCAOB”) and are required to be independent with respect to the Company in accordance with the U.S.

federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audit in accordance with the standards of the PCAOB.

Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud.

We conducted our audits in accordance with the standards of the PCAOB.

Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud.

The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting.

3 unchanged sentences

Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements.

Our audit also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements.

We believe that our audit provides a reasonable basis for our opinion.

Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements.

We believe that our audits provide a reasonable basis for our opinion.

Critical Audit Matter

1 unchanged sentence

The communication of critical audit matters does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matters below, providing separate opinions on the critical audit matters or on the accounts or disclosures to which they relate.

Adjustment of warrant exercise price

As discussed in Note 6 to the consolidated financial statements, in April 2020, the Company completed a registered direct offering of securities and sold 1,218,000 shares of common stock at a price of $1.56 per share to institutional investors.

As a result of the offering, the exercise price of the 1,845,540 outstanding common stock purchase warrants that were issued in October 2018 was reduced from $6.00 per share to $2.40 per share.

The Company accounted for the warrant exercise price adjustment in accordance with ASC Topic 260 and determined that the change in the exercise price resulted in a deemed dividend of $392,000 that increased the net loss attributable to common stockholders for the year ended December 31, 2020.

We identified the accounting for the adjustment of the warrant exercise price as a critical audit matter because of the significance of the account balance and due to the complexity of the transaction and the significant judgements used by management in determining the fair value of the adjustment to the warrant price.

Auditing the accounting for the adjustment of the exercise price of the warrants involved increased extent of effort and a high degree of auditor judgment.

The primary audit procedures we performed to address this critical audit matter included the following, among others:

We inspected the warrant agreements and relevant documentation.

We evaluated the Company’s conclusions regarding the application of relevant accounting guidance to the accounting for the adjustment of the warrant price, including conclusions reached with respect to treatment as a deemed dividend.

We tested the accuracy and completeness of data used by the Company to calculate the fair value of warrant price adjustment, including expected life, expected volatility, the risk free interest rate, and the dividend rate, and tested the mathematical accuracy of calculations.

We developed independent estimates for the fair value of the deemed dividend based on the assumptions and data used by the Company.

Reverse Acquisition

As described further in Note 2 to the consolidated financial statements, o n December 17, 2021 the Company completed the transaction pursuant to the terms of the Arrangement Agreement between the Company and Peraso Technologies Inc.

(“Peraso Tech”), a private company domiciled in Canada.

Immediately following the E f fective T ime, there were 21,569,158 shares of Common Stock outstanding and 23,272,641 shares of Common Stock outstanding on a fully-diluted basis, with t h e former stockholders of Peraso Tech owning approximately 61% of the economic and voting interest of the Company and the Company ’ s stockholders immediate l y prior to the E f fective T ime holding the remaining 39% economic and voting interest.

The Company has accounted for the above described transaction as a reverse acquisition using the acquisition method of accounting in accordance with Accounting Standards Codification (ASC) Topic 805, Business Combinations, with the Company as the accounting acquiree and Peraso Tech as the accounting acquiror.

The acquisition method of accounting requires the assets acquired and liabilities assumed to be recorded at fair value as of the transaction date and for which the Company utilized a valuation report from a third-party valuation firm.

As of December 31, 2021, the fair value estimates for intangible assets and goodwill are provisional as the valuation report has not been finalized yet.

We identified the estimation of the fair value of the assets acquired and liabilities assumed in the reverse acquisition as a critical audit matter.

The principal considerations for our determination that the estimation of the fair value of the assets acquired and liabilities assumed in the reverse acquisition was a critical audit matter are that there was a high estimation uncertainty due to significant management and specialist judgements with respect to the selection of the valuation methodologies applied by the third party valuation firm, including the assumptions used to estimate the future revenues and cash flows, revenue growth rates, forecasted costs, technology migration curves, discount rates and future market conditions in the determination of the fair value of the intangible assets acquired.

This in turn required the exercise of a high degree of auditor judgment, including the evaluation of the reasonableness of the valuation models and significant assumptions.

Professionals with specialized skill and knowledge were used to assist in the evaluation of the Company’s discounted cash flow models and the and discount rates assumptions.

Our audit procedures responsive to the estimation of the fair value of the assets acquired and liabilities assumed in the reverse acquisition included the following procedures, among others:

We evaluated management’s and the valuation specialist’s identification of assets acquired and liabilities assumed.

We assessed the reasonableness of the fair value measurements prepared by management and their third-party valuation specialists, including the discount rates, revenue growth rates, technology migration curves and projected profit margins used in valuing the intangible assets.

We evaluated the reasonableness of the methodologies used to value the assets acquired and liabilities assumed and whether such approaches were appropriate given the nature of the item being valued.

We evaluated the qualifications of the third-party firm engaged by the Company based on their credentials and experience.

We evaluated the accuracy and completeness of the financial statement presentation and disclosure of the acquisition.

We have served as the Company’s auditor since 2020.

2 unchanged sentences

March 31, 2022

Report of Independent Registered Public Accounting Firm

To the Stockholders and Board of Directors of

Opinion on the Consolidated Financial Statements

We have audited the accompanying consolidated balance sheet of MoSys, Inc.

and its subsidiaries (the “Company”) as of December 31, 2019, the related consolidated statements of operations, stockholders’ equity, and cash flows for the year ended December 31, 2019, 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 as of December 31, 2019, and the results of its operations and its cash flows for the year ended December 31, 2019, in conformity with accounting principles generally accepted in the United States of America.

Change in Accounting Principle

As discussed in Note 9 to the consolidated financial statements, the Company changed its method of accounting for leases in 2019 due to the adoption of the new lease standard.

Basis for Opinion

These consolidated financial statements are the responsibility of the Company’s management.

Our responsibility is to express an opinion on the Company’s consolidated financial statements based on our audits.

federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB.

The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting.

As part of our audit, we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting.

Accordingly, we express no such opinion.

Our audit included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks.

Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements.

We believe that our audits provide a reasonable basis for our opinion.

We served as the Company’s auditor from 2007 to 2020.

San Jose, California

March 17, 2020

CONSOLIDATED BALANCE SHEETS

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Accounts receivable, net

Tax credits and receivables

Prepaid expenses and other

Total current assets

Long-term investments

Property and equipment, net

Right-of-use lease asset

LIABILITIES AND STOCKHOLDERS’ EQUITY

Right-of-use lease assets

Intangible assets, net

LIABILITIES AND STOCKHOLDERS’ EQUITY (DEFICIT)

Current liabilities

Accounts payable

Deferred revenue

Short-term lease liability

PPP note payable, current

Accrued expenses and other

Deferred revenue

Short-term lease liabilities

Total current liabilities

Long-term lease liability

PPP note payable

Convertible notes payable

Long-term lease liabilities

Warrant liability

Convertible debentures

Total liabilities

Commitments and contingencies (Note 10)

Stockholders’ equity

Stockholders’ equity (deficit)

Preferred stock, $ 0.01 par value;

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Accumulated deficit

Total stockholders’ equity

Total stockholders’ equity (deficit)

Total liabilities and stockholders’ equity

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(In thousands, except per share data)

Royalty and other

License and other

Total net revenue

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Selling, general and administrative

Impairment of goodwill

Total operating expenses

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Interest expense

Other income, net

Deemed dividend for warrant exercise price adjustment

Change in fair value of warrant liability

Other income (expense), net

Deemed dividend on inducement of conversion of Class C Preferred Shares

Accretion of preferred shares presented as dividends

Effect of foreign exchange on preferred shares

Net loss attributable to common stockholders

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The accompanying notes are an integral part of these consolidated financial statements.

CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY (DEFICIT)

(In thousands)

Balance as of January 1, 2019

Balance as of December 31, 2019

Issuance of common stock under stock plans, net

Conversion of Convertible Class A Preferred Shares

Conversion of Convertible Class B Preferred Shares

Conversion of Convertible Class C Preferred Shares

Dividends on preferred shares

Effect of foreign exchange on preferred shares

Stock-based compensation

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Issuance of common stock under stock plans, net

Exercise of pre-funded warrants

Sale of common stock, net of financing

Deemed dividend for warrant exercise price adjustment

Settlement of warrants to common stock

Conversion of convertible debentures to common stock

Effect of business combination

Stock-based compensation

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Cash flows from operating activities:

Adjustments to reconcile net loss to net cash provided by

(used in) operating activities:

Provision for doubtful accounts

Adjustments to reconcile net loss to net cash used in operating activities:

Depreciation and amortization

Stock-based compensation

Impairment of goodwill

Change in fair value of warrant liability

Finance costs related to warrants

Accrued interest

Loss on disposal of assets

Amortization of lease right-of-use asset

Change in operating lease liability

Amortization of lease right-of-use assets

Change in operating lease liabilities

Amortization of debt discount

Changes in assets and liabilities

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Prepaid expenses and other assets

Tax credits and receivables

Accounts payable

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Purchases of property and equipment

Purchases of intangible assets

Proceeds from maturities of marketable securities and investments

Purchases of marketable securities and investments

Cash acquired in business combination

Net cash provided by (used in) investing activities

Cash flows from financing activities:

Proceeds from PPP note

Proceeds from sale of common stock and warrants, net of issuance costs

Net proceeds from exercise of pre-funded warrants

Taxes paid to net share settle equity awards

Net cash provided by (used in) financing activities

Net decrease in cash and cash equivalents

Repayment of loans

Proceeds from exercise of stock options

Net proceeds from loan facility

Net proceeds from convertible debentures

Net proceeds from debtor-in-possession loans

Net cash provided by financing activities

Net increase (decrease) in cash and cash equivalents

Cash and cash equivalents at beginning of year

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Supplemental disclosure:

Cash paid for income taxes

Noncash investing and financing activities:

Issuance of convertible notes in settlement of accrued interest

Fair value of warrant exercise price adjustment considered as deemed dividend

Reclassification of prepaids to fixed assets

Settlement of accounts receivable through debtor-in-possession loans

Conversion of debtor-in-possession loan into convertible debentures

Fair value of new warrant liability issued recognized as debt discount

Conversion of preferred shares to common stock

Deemed dividend on inducement of conversion of Class C preferred shares

Dividends and foreign exchange effect on preferred shares

Settlement of loan facility against tax receivables

Effect of business combination

Settlement of warrants to common stock

Conversion of convertible debentures into common stock

The accompanying notes are an integral part of these consolidated financial statements.

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The Company and Summary of Significant Accounting Policies

Peraso Inc., formerly known as MoSys, Inc.

(the Company), was incorporated in California in 1991 and reincorporated in 2000 in Delaware.

The Company provides both integrated circuits (ICs) and intellectual property (IP) solutions that enable fast, intelligent data access and decision making for a wide range of markets.

The Company’s primary product line is marketed under the Accelerator Engine name and includes the Bandwidth Engine IC products, which integrate the Company’s proprietary, 1T-SRAM high-density embedded memory and a highly-efficient serial interface protocol resulting in a monolithic memory IC solution optimized for memory bandwidth and transaction access performance.

In 2020, the Company began offering for license the first of its Virtual Accelerator Engine products which consist of software, firmware and related IP.

This new product line will include multiple function accelerator platform products, which target specific application functions and will use a common software interface to allow performance scalability over multiple hardware environments.

The Company is a fabless semiconductor company specializing in the development of mmWave technology, including 60GHz and 5G products and derives revenue from sellingsemiconductor devices and licensing of intellectual property (IP) and performance of non-recurring engineering services (NRE) for customers and prospective customers.

The Company also manufactures and sells memory semiconductor devices that enable fast, intelligent data access and decision making for a wide range of markets.

On September 14, 2021, the Company and its subsidiaries, 2864552 Ontario Inc.

(Callco) and 2864555 Ontario Inc.

(Canco), entered into an Arrangement Agreement (the Arrangement Agreement) with Peraso Technologies Inc.

(Peraso Tech), a corporation existing under the laws of the province of Ontario, to acquire all of the issued and outstanding common shares of Peraso Tech (the Peraso Shares), including those Peraso Shares to be issued in connection with the conversion or exchange of secured convertible debentures and common share purchase warrants of Peraso Tech, as applicable, by way of a statutory plan of arrangement (the Arrangement) under the Business Corporations Act (Ontario).

On December 17, 2021, following the satisfaction of the closing conditions set forth in the Arrangement Agreement, the Arrangement was completed and , the Company changed its name to “Peraso Inc.” and began trading on the Nasdaq Stock Market (the Nasdaq) under the symbol “PRSO.”

For accounting purposes, the legal subsidiary, Peraso Tech, has been treated as the accounting acquirer and the Company, the legal parent, has been treated as the accounting acquiree.

The transaction has been accounted for as a reverse acquisition in accordance with Accounting Standards Codification (ASC) No.

805, Business Combinations (ASC 805).

Accordingly, these consolidated financial statements are a continuation of Peraso Tech’s consolidated financial statements prior to December 17, 2021 and exclude the balance sheets, statements of operations and comprehensive loss, statement of changes in stockholders’ equity and statements of cash flows of the Company prior to December 17, 2021.

See Note 2 for additional disclosure.

Basis of Presentation

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The Company’s fiscal year ends on December 31 of each calendar year.

Going Concern

The accompanying financial statements have been prepared on a going concern basis, which contemplates the realization of assets and satisfaction of liabilities in the normal course of business.

The realization of assets and the satisfaction of liabilities in the normal course of business are dependent on, among other things, the Company’s ability to operate profitably, to generate cash flows from operations, and to pursue financing arrangements to support its working capital requirements.

At issuance of the Company’s financial statements for the year ended December 31, 2020, management had determined that there was significant doubt as to the ability of the Company to meet its obligations and continue as a going concern.

As a result of the Arrangement, which was completed in December 2021, and resulting improved financial position, the Company believes it has sufficient liquidity to meet its obligations as they come due and conduct its business for a period of at least 12 months from the date of issuance of these financial statements.

Risk and Uncertainties

The Company is subject to risks from, among other things, competition associated with the industry in general, other risks associated with financing, liquidity requirements, rapidly changing customer requirements, limited operating history and the volatility of public markets.

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

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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 the 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.

In March 2020, Santa Clara County in California, where the Company is based, issued a ”shelter-in-place” order (the Order) that was initially effective through April 7, 2020 and has now been extended.

The Company has been complying with the Order and have minimized business activities at the San Jose headquarters facility (the only facility).

The Company has implemented a teleworking policy for employees and contractors to reduce on-site activity at the facility.

The Order impacted the Company’s ability to produce and ship IC products in the second half of March 2020, as certain vendors in the San Francisco Bay Area closed in accordance with the Order.

In April 2020, the Company resumed shipments of IC products, as they are supporting shipment of components for critical infrastructure, as defined by the federal government;

however, employees are generally restricted from visiting customer and vendor sites in compliance with the Order, and, in some cases, have limited ability to conduct certain product testing and development activities.

The Company remain s diligent in continuing to identify and manage risks to our business given the changing uncertainties related to COVID-19.

The ultimate impact of the Covid-19 pandemic on the business and results of operations is uncertain and difficult to predict, and the Company is closely monitoring impacts, especially to customer programs and our supply chain.

The Company expect s that the impacts of the COVID-19 pandemic will have a negative impact on its revenues for 2021, although the Company is not in a position to quantify such impacts.

In addition, the Company has and continue s to experience longer lead times for certain components used to manufacture its IC products.

While the Company believe s that operations personnel are currently in a position to meet expected customer demand levels in the coming quarters, they recognize that unpredictable events could create difficulties in the months ahead.

The Company may not be able to address these difficulties in a timely manner, which could negatively impact its business, results of operations, financial condition and cash flows.

Use of Estimates

The preparation of financial statements in accordance with accounting principles generally accepted in the United States requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses recognized during the reported period.

Material estimates may include assumptions made in determining reserves for uncollectible receivables, inventory write-downs, impairment of long-term assets, valuation allowance on deferred tax assets, accruals for potential liabilities and assumptions made in valuing equity instruments.

Material estimates may include assumptions made in determining reserves for uncollectible receivables, inventory write-downs, impairment of long-term assets, purchase price allocations, valuation allowance on deferred tax assets, accruals for potential liabilities and assumptions made in valuing equity instruments.

Actual results could differ from those estimates.

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

The carrying amounts of financial assets and liabilities, such as cash and cash equivalents, accounts receivable, accounts payable, notes payable and other payables, approximate their fair values because of the short maturity of these instruments.

The carrying values of lease obligations and long-term financing

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

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.

Allowance for Doubtful Accounts

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The Company grants credit only to customers deemed creditworthy in the judgment of management.

The allowance for doubtful accounts receivable was $41,000 and zero as of December 31, 2020 and 2019, respectively.

The allowance for doubtful accounts receivable was approximately $ 61,000 and $ 85,000 as of December 31, 2021 and 2020, respectively.

The Company values its inventories at the lower of cost, which approximates actual cost on a first-in, first-out basis, or net realizable value.

Costs of inventories primarily consisted of material and third party assembly costs.

The Company records inventory reserves for estimated obsolescence or unmarketable inventories based upon assumptions about future demand and market conditions.

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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 inventory write-downs of $0.1 million for each of the years ended December 31, 2020 and 2019.

The Company recorded no inventory write-downs for each of the years ended December 31, 2021 and 2020.

Tax credits and receivables

The Company is registered for the Canadian federal and provincial goods and services taxes.

As such, the Company is obligated to collect from third parties, and is entitled to claim sales taxes paid on its expenses and capital expenditures incurred in Canada.

In addition, the Company is also a part of the Scientific Research and Experimental Development (SR&ED) Program, which uses tax incentives to encourage Canadian businesses of all sizes and in all sectors to conduct research and development (R&D) in Canada.

As a part of the program, the Company may be entitled to a receivable in the form of tax credit or incentive.

The Company records refundable tax credits as a reduction of expense and receivable when the Company can reasonably estimate the amounts and it is more likely than not, they will be received.

A government refund or subsidy that is compensation for expenses or losses already incurred, or for which there are no future related costs, is recognized in the statement of operations in the period in which it becomes receivable.

Property and Equipment

Property and equipment are originally recorded at cost.

Depreciation is computed using the straight-line method over the estimated useful lives of the assets, generally three to five years.

Depreciation is computed using the straight-line method over the estimated useful lives of the assets, generally three to six years .

Depreciation is recorded in cost of sales and operating expenses in the consolidated statements of operations and comprehensive loss.

Leasehold improvements and assets acquired through capital leases are amortized over the shorter of their estimated useful life or the lease term, and amortization is recorded in operating expenses in the consolidated statements of operations.

Valuation of Long-lived Assets

The Company evaluates the recoverability of long-lived assets with finite lives whenever events or changes in circumstances occur that indicate that the carrying value of the asset or asset group may not be recoverable.

Finite-lived intangible assets are being amortized on a straight-line basis over their estimated useful lives of three to seven years.

An impairment charge is recognized as the difference between the net book value of such assets and the fair value of such assets at the date of measurement.

The measurement of impairment requires management to estimate future cash flows and the fair value of long-lived assets.

Leasehold improvements and assets acquired through capital leases are amortized over the shorter of their estimated useful life or the lease term, and related amortization is recorded in operating expenses in the consolidated statements of operations.

Intangible and Long-lived Assets

Intangible assets are recorded at cost and amortized on a straight-line method over their estimated useful lives of three to ten years .

The Company regularly reviews the carrying value and estimated lives of its long-lived assets and finite-lived intangible asset to determine whether indicators of impairment may exist which warrant adjustments to carrying values or estimated useful lives.

The determinants used for this evaluation include management’s estimate of the asset’s ability to generate positive income from operations and positive cash flow in future periods as well as the strategic significance of the assets to the Company’s business objective.

Should an impairment exist, the impairment loss would be measured based on the excess of the carrying amount of the long-lived asset group over the asset’s fair value.

Business combinations

The Company allocates the fair value of purchase consideration to the tangible assets acquired, liabilities assumed and intangible assets acquired based on their estimated fair values.

The excess of the fair value of purchase consideration over the fair values of these identifiable assets and liabilities is recorded as goodwill to reporting units based on the expected benefit from the business combination.

Allocation of purchase consideration to identifiable assets and liabilities affects the amortization expense, as acquired finite-lived intangible assets are amortized over the useful life, whereas any indefinite-lived intangible assets, including goodwill, are not amortized.

During the measurement period, which is not to exceed one year from the acquisition date, the Company records adjustments to the assets acquired and liabilities assumed, with the corresponding offset to goodwill.

Upon the conclusion of the measurement period, any subsequent adjustments are recorded to earnings.

Acquisition-related expenses are recognized separately from business combinations and are expensed as incurred.

The Company determines the amount of a potential goodwill impairment by comparing the fair value of the reporting unit with its carrying amount.

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The Company has determined that it has a single reporting unit for purposes of performing its goodwill impairment test.

As the Company uses the market approach to determine the step one fair value, the price of its common stock is an important component of the fair value calculation.

If the Company’s stock price continues to experience significant price and volume fluctuations, this will impact the fair value of the reporting unit, which can lead to potential impairment in future periods.

As the Company uses the market approach to determine the step one fair value of the reporting unit, the price of its common stock is an important component of the fair value calculation.

If the Company’s stock price experiences significant price and volume fluctuations, this will impact the fair value of the reporting unit, which can lead to potential impairment in future periods.

The Company reviews goodwill for impairment on an annual basis or whenever events or changes in circumstances indicate the carrying value of an asset may not be recoverable.

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The fair value of the reporting unit is determined using the market approach.

If the fair value of the reporting unit exceeds the carrying value of net assets of the reporting unit, goodwill is not

If the fair value of the reporting unit exceeds the carrying value of net assets of the reporting unit, goodwill is not impaired.

If the carrying value of the reporting unit’s goodwill exceeds its fair value, then the Company must record an impairment charge equal to the difference.

The Company performed its annual test for goodwill impairment as of September 1, 2019, and, due to a 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.

Further, 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 as of September 30, 2019 and performed an additional test for impairment of its goodwill asset resulting in further indication that the goodwill carrying value was still greater than its implied fair value.

As a result of both of these tests, the Company recorded non-cash impairment charges totaling $0.4 million.

As a result of these charges, the Company’s goodwill balance was reduced to zero at September 30, 2019.

Acquired intangibles

Acquired intangible assets consist of developed technology and customer relationships that are measured at fair value at date of acquisition.

In valuing acquired intangible assets, the Company makes assumptions and estimates based in part on projected financial information, which makes assumptions and estimates inherently uncertain, particularly for early-stage technology companies.

The significant estimates and assumptions used by the Company in the determination of the fair value of acquired intangible technology assets include the revenue growth rate, the royalty rate and the discount rate.

The significant estimates and assumptions used by the Company in the determination of the fair value of acquired customer contract intangible assets include the revenue growth rate and the discount rate.

As a result of the judgments that need to be made, the Company obtains the assistance of independent valuation firms.

The Company completes these assessments as soon as practical after the closing dates.

Any excess of the purchase price over the estimated fair values of the identifiable net assets acquired is recorded as goodwill.

Warrant liability

The Company issued detachable warrants with its preferred shares and convertible debentures.

The warrants have exercise prices that are denominated in foreign currency (Canadian dollars or CND) that differs from the Company’s functional currency (United States dollars or USD) and accordingly are accounted for as liability in accordance with ASC No.

815, Derivatives and Hedging .

These warrants are initially recorded at fair value and then re-valued at each reporting date, with changes in the fair value reported in the statements of operations.

The classification of these instruments, including whether such instruments should be recorded as liability or as equity, is evaluated at the end of each reporting period.

Effective January 1, 2019 , the Company adopted ASC No.

842, Leases (ASC 842).

ASC 842 requires an entity to recognize a right-of-use asset and a lease liability for all leases with terms longer than 12 months.

The Company adopted ASC 842 utilizing the modified retrospective transition method.

The Company elected the practical expedient afforded in ASC 842 in which the Company did not reassess whether any contracts that existed prior to adoption have or contain leases or the classification of its existing leases.

Revenue Recognition

The Company recognizes revenue in accordance with Financial Accounting Standards Board ( FASB) Accounting Standards Codification (ASC) Topic 606, Revenue from Contracts with Customers, and its amendments (ASC 606).

The Company recognizes revenue in accordance with Financial Accounting Standards Board ( FASB) ASC Topic 606, Revenue from Contracts with Customers, and its amendments (ASC 606).

As described below, the analysis of contracts under ASC 606 supports the recognition of revenue at a point in time, resulting in revenue recognition timing that is materially consistent with the Company’s historical practice of recognizing product revenue when title and risk of loss pass to the customer.

The Company generates revenue primarily from sales of IC products and licensing of its intellectual property.

The Company generates revenue primarily from sales of integrated circuits and module products, performance of engineering services and licensing of its intellectual property.

Revenues are recognized when control is transferred to customers in amounts that reflect the consideration the Company expects to be entitled to receive in exchange for those goods.

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and (v) recognition of revenue when or as a performance obligation is satisfied.

Product revenue

Revenue is recognized when performance obligations under the terms of a contract with a customer are satisfied.

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The Company may record an estimated allowance, at the time of shipment, for future returns and other charges against revenue consistent with the terms of sale.

Royalty and other

License and other

The Company’s licensing contracts typically provide for royalties based on the licensee’s use of the Company’s memory technology in its currently shipping commercial products.

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Payments are received in the subsequent quarter.

The Company also generates revenue from licensing its technology.

The Company recognizes License fee as revenue at the point of time when the control of the license has been transferred and the Company has no continuing performance obligations to the customer.

Engineering services revenue

Engineering and development contracts with customers generally contain a single performance obligation that is delivered over time.

Revenue is recognized using an output method that is consistent with the satisfaction of the performance obligation as a measure of progress.

Contract liabilities – deferred revenue

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As of December 31, 2021, contract liabilities were in a current position and included in deferred revenue.

During the year ended December 31, 2020, the Company recognized revenue of $0.2 million that had been included in deferred revenue as of December 31, 2019.

During the year ended December 31, 2019, the Company recognized revenue of $0.3 million that had been included in deferred revenue as of December 31, 2018.

During the year ended December 31, 2021, the Company had no recognized revenue that had been included in deferred revenue at December 31, 2020 During the year ended December 31, 2020, the Company had no revenue that had been included in deferred revenue at December 31, 2019.

See Note 8 for disaggregation of revenue by geography.

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Cost of Net Revenue

Cost of net revenue consists primarily of direct and indirect costs of IC product sales and engineering personnel costs directly related to maintenance and support services specified in licensing agreements.

Maintenance and support typically include engineering support to assist in the commencement of production of a licensee’s products.

Cost of net revenue consists primarily of direct and indirect costs of product sales.

Advertising Costs

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Advertising costs were not significant for the years ended December 31, 2021 and 2020.

Government Subsidies

A grant or subsidy that is compensation for expenses or losses already incurred, or for which there are no future related costs, is recognized in the statement of operations in the period in which it becomes receivable.

Starting in 2020, certain Canadian businesses, which experienced a drop in revenue during the COVID-19 pandemic, became eligible for a rent and wage subsidy from the government.

The Company’s subsidiary, Peraso Tech, began receiving this subsidy on a monthly basis beginning in the fourth quarter of 2020.

During the year ended December 31, 2021, the Company recognized payroll subsidies of $ 1,120,475 as a reduction in the associated wage costs and rent subsidies of $ 199,235 as a reduction of operating expenses in the consolidated statement of operations.

During the year ended December 31, 2020, the Company recognized payroll subsidies of $ 1,085,066 as a reduction in the associated wage costs and rent subsidies of $ 89,992 as a reduction of operating expenses in the consolidated statement of operations.

In addition, as a Canadian Controlled Private Corporation (CCPA), Peraso Tech was eligible for the Canadian government’s Scientific Research and Experimental Development (SR&ED) refund program, which refunds 35 % of eligible costs for Canadian businesses of all sizes and in all sectors to conduct research and development in Canada.

The Company records refundable SR&ED credits as a receivable when the Company can reasonably estimate the amounts and it is more likely than not, such amounts will be received.

As of December 17, 2021, Peraso Tech ceased to be a CCPA and is no longer eligible for the expenditure refund program.

However, it is eligible for a tax credit of 15 % on qualified SR&ED expenditures.

Unused tax credits can be carried back three years or forward for 20 years.

The Company is registered for the Canadian federal and provincial goods and services taxes.

As such, the Company is obligated to collect from third parties, and is entitled to claim sales taxes paid on its expenses and capital expenditures incurred in Canada

Research and Development

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The Company periodically issues stock options and restricted stock awards to employees and non-employees.

The Company accounts for such grants based on ASC 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 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.

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The assumptions used in the Black-Scholes model could materially affect compensation expense recorded in future periods.

Foreign Currency Transactions

The functional currency of the Company is the U.S dollar.

All foreign currency transactions are initially measured and recorded in an entity’s functional currency using the exchange rate on the date of the transaction.

All monetary assets and liabilities are remeasured at the end of each reporting period using the exchange rate at that date.

All non-monetary assets and related expense, depreciation or amortization are not subsequently remeasured and are measured using the historical exchange rate.

An average exchange rate may be used to recognize income and expense items earned or incurred evenly over a period.

Foreign exchange gains and losses resulting from the settlement of such transactions are recognized in the statement of operations, except for the gains and losses arising from the conversion of the carrying amount of the foreign currency denominated convertible preferred shares into the functional currency that are presented as adjustment to the net loss to arrive at net loss attributable to common stockholders.

Per-Share Amounts

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The following table sets forth securities outstanding which were excluded from the computation of diluted net loss per share as their inclusion would be anti-dilutive (in thousands):

Escrow Shares

Options to purchase common stock

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For the years ended December 31, 2021 and 2020, the Company’s comprehensive loss was the same as its net loss.

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.

Under the new guidance, an entity recognizes an allowance for its estimate of expected credit losses and applies to most debt instruments, trade receivables, lease receivables, financial guarantee contracts, and other loan commitments.

The CECL model does not have a minimum threshold for recognition of impairment losses and entities will need to measure expected credit losses on assets that have a low risk of loss.

This update is effective for fiscal years beginning after December 15, 2022, including interim periods within those fiscal years for smaller reporting companies.

The Company is still evaluating the impact of this accounting guidance on its results of operations and financial position.

In August 2020, the FASB issued ASU No.

2020-06 (ASU 2020-06), Debt—Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging—Contracts in Entity’s Own Equity (Subtopic 815-40):

Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity.

The ASU will simplify the accounting for convertible instruments by reducing the number of accounting models for convertible debt instruments and convertible preferred stock.

Limiting the accounting models will result in fewer embedded conversion features being separately recognized from the host contract as compared with current GAAP.

Convertible instruments that continue to be subject to separation models are (1) those with embedded conversion features that are not clearly and closely related to the host contract, that meet the definition of a derivative, and that do not qualify for a scope exception from derivative accounting and (2) convertible debt instruments issued with substantial premiums for which the premiums are recorded as paid-in capital.

The ASU also amends the guidance for the derivatives scope exception for contracts in an entity’s own equity to reduce form-over-substance-based accounting conclusions.

ASU 2020-06 will be effective for the Company January 1, 2024, and early adoption is permitted, but no earlier than January 1, 2021, including interim periods within that year.

The Company is currently evaluating what effect(s) the adoption of ASU 2020-06 may have on its financial statements, but the Company does not believe the impact of the ASU will be material to its financial position, results of operations and cash flows.

The effect will largely depend on the composition and terms of the Company’s financial instruments at the time of adoption.

Business Combination

As discussed in Note 1, on September 14, 2021, the Company and its newly formed subsidiaries Callco and Canco entered into the Arrangement Agreement with Peraso Tech..

On December 17, 2021, following the satisfaction of the closing conditions set forth in the Arrangement Agreement, including approvals from the stockholders of the Company and Peraso Tech, the Arrangement was completed.

The Company ’s c ommon s tock, previously traded on the Nasdaq under the ticker symbol “MOSY,” commenced trading on the Nasdaq under the ticker symbol “PRSO.”

Securities Conversion

Pursuant to the completion of the Arrangement, each Peraso Share that was issued and outstanding immediately prior to December 17, 2021 was converted into the right to receive 0.045239122387267 (the Exchange Ratio) newly issued shares of common stock of the Company or shares of Canco, which are exchangeable for shares of the Company’s common stock (Exchangeable Shares) at the election of each former Peraso Tech stockholder.

In addition, all of Peraso Tech’s outstanding stock options and other securities exercisable or exchangeable for, or convertible into, and any other rights to acquire Peraso Shares were exchanged for securities exercisable or exchangeable for, or convertible into, or other rights to acquire the Company’s common stock.

Immediately following the completion of the Arrangement, the former security holders of Peraso Tech owned approximately 61 %, on a fully-diluted basis, of the Company’s common stock, and the former shareholders of Peraso Tech, as a group, obtained control of the Company.

While the Company was the legal acquirer of Peraso Tech, Peraso Tech was deemed to be the acquirer for accounting purposes.

In addition, pursuant to the terms of the Arrangement Agreement, (i) certain warrants to purchase Peraso Shares outstanding immediately prior to the closing of the Arrangement were exercised in consideration for the issuance of Peraso Shares;

(ii) each convertible debenture of Peraso Tech outstanding immediately prior to the closing of the Arrangement and all principal and accrued but unpaid interest thereon was converted into Peraso Shares at a conversion price equal to the conversion price set out in each such debenture;

and (iii) each outstanding option to purchase Peraso Shares (each, a Peraso Option) was exchanged for a replacement option to purchase such number of shares of common stock that was equal to the product of (a) the number of Peraso Shares subject to the Peraso Options immediately before the closing of the Arrangement and (b) the Exchange Ratio, rounded down to the nearest whole number of shares of common stock.

Upon the closing of the Arrangement, an aggregate of 9,295,097 Exchangeable Shares and 3,558,151 shares of common stock were issued to the holders of Peraso Shares.

Of such shares, pursuant to the terms of the Agreement, the Company held in escrow an aggregate of 1,312,878 Exchangeable Shares and 502,567 shares of common stock (collectively, the Escrow Shares).

The Escrow Shares are escrowed pursuant to the terms of an escrow agreement on a pro rata basis from the aggregate consideration received by the holders of Peraso Shares, subject to the offset by the Company for any losses in accordance with the Agreement.

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

(a) any date following the first anniversary of December 17, 2021 and prior to December 17, 2024 where the volume weighted average price of the common stock for any 20 trading days within a period of 30 consecutive trading days is at least $ 8.57 per share, subject to adjustment for stock splits or other similar transactions;

(b) the date of any sale of all or substantially all of the assets or shares of the Company;

or (c) the date of any bankruptcy, insolvency, restructuring, receivership, administration, wind-up, liquidation, dissolution, or similar event involving the Company.

All and any voting rights and other stockholder rights, other than with respect to dividends and distributions, with respect to the Escrow Shares are suspended until the Escrow Shares are released from escrow.

In connection with the Arrangement, on December 15, 2021, the Company filed the Certificate of Designation of Series A Special Voting Preferred Stock with the Secretary of State of the State of Delaware to designate Series A Special Voting Preferred Stock (the Special Voting Share) in accordance with the terms of the Arrangement Agreement in order to enable the holders of Exchangeable Shares to exercise their voting rights.

Each Exchangeable Share is exchangeable for one share of common stock of the Company and while outstanding, the Special Voting Share enables holders of Exchangeable Shares to cast votes on matters for which holders of the common stock are entitled to vote, and by virtue of the share terms relating to the Exchangeable Shares, to receive dividends that are economically equivalent to any dividends declared with respect to the shares of common stock.

The Exchangeable Shares, which can be converted into common stock at the option of the holder and have the same voting rights as common stock, are similar in substance to shares of common stock and, therefore, have been included in the determination of outstanding common stock.

Outstanding Shares of Common Stock

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

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 was determined to be $ 37.6 million.

The following table summarizes the preliminary provisional allocation of the purchase price to the net assets acquired based on the respective fair value of the acquired assets and assumed liabilities of the accounting acquiree, which is the Company.

The Company believes that information gathered to date provides a reasonable basis for estimating the fair value of assets acquired and liabilities assumed.

However, the provisional measurements of fair value set forth below are subject to change.

The Company expects to complete the purchase price allocation as soon as practical but no later than one year from the acquisition date.

(in thousands)

Cash, cash equivalents and investments

Other current assets

Developed technology (provisional)

Customer relationships (provisional)

Current liabilities

Presentation of Consolidated Financial Statements Post Reverse Acquisition

The consolidated financial statements reflect all of the following:

the assets and liabilities of the legal subsidiary (Peraso Tech, as the accounting acquirer) recognized and measured at their pre-combination carrying amounts;

the assets and liabilities of the legal parent (the Company, as the accounting acquiree) recognized and measured in accordance with ASC 805;

the retained earnings and other equity balances of the legal subsidiary (Peraso Tech, as the accounting acquirer) before the business combination;

the amount recognized as issued equity interests in the consolidated financial statements determined by adding the issued equity interest of Peraso Tech outstanding immediately before the business combination to the fair value of the Company.

However, the equity structure (that is, the number and type of equity interests issued) reflects the equity structure of the Company.

All references to common stock, stock options and warrants as well as per share amounts have been retroactively restated to reflect the number of shares of the Company issued in the reverse acquisition.

Unaudited proforma results of operations for the years ended December 31, 2021 and 2020 are included below as if the business combination occurred on January 1, 2020.

This summary of the unaudited pro forma results of operations is not necessarily indicative of what the Company’s results of operations would have been had Peraso Tech been acquired at the beginning of 2020, nor does it purport to represent results of operations for any future periods.

Year ended December 31,

acquisition costs

Adjusted net loss

The goodwill recognized from the reverse acquisition is attributed to the operational synergies from the combined operations of the Company and Peraso Tech.

Revenue and earnings of the Company from acquisition date to December 31, 2021 that were included in the consolidated financial statements as of December 31, 2021 amounted to $ 263,000 and $ 74,000 , respectively.

Consolidated Balance Sheet Detail

(in thousands)

Raw materials

Work-in-process

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Prepaid software

Refundable tax

Prepaid legal

Property and equipment, net:

Equipment, furniture and fixtures and leasehold

Acquired software

Accumulated depreciation and amortization

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Professional fees, legal and consulting

IC development and wafer purchases

Accrued taxes

Accrued inventory

Warranty accrual

Interest payable

Corporate taxes

Fair Value of Financial Instruments

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Cash and cash equivalents

December 31, 2019

Cash and cash equivalents

Short-term investments

The unrealized losses from available-for-sale securities as of December 31, 2020 and 2019 were not material.

The following table represents the Company’s fair value hierarchy for its financial assets (cash equivalents and investments) as of December 31, 2020 and 2019 (in thousands):

Long-term investments

December 31, 2020

Money market funds

The unrealized losses from available-for-sale securities as of December 31, 2021 and 2020 were not material.

The following table represents the Company’s fair value hierarchy for its financial assets (cash equivalents and investments) as of December 31, 2021 (in thousands):

December 31, 2021

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Corporate notes and commercial paper

Included in cash and cash equivalents.

There were no cash equivalents and investments as of December 31, 2020.

During the year ended December 31, 2021, $ 0.4 million of corporate notes and commercial paper matured and were transferred to Level 1.

There were no transfers in or out of Level 1 and Level 2 securities during the year ended December 31, 2020.

The income tax provision (benefit) consisted of the following (in thousands):

Current portion:

Deferred portion:

Deferred income taxes reflect the net tax effects of temporary differences between the carrying amount of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes.

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Deferred tax assets:

Federal and state loss carryforwards

Net operating loss carryforwards

Reserves, accruals and other

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Research and development credit carryforwards

Foreign tax and other credits

Total deferred tax assets

Valuation allowance

Net deferred tax assets

Net deferred tax assets, net

The $ 2.0 million increase in the valuation allowance during 2021 was primarily the result of an increase to the net operating loss carryforwards for the current year.

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In the event of an ownership change, utilization of the NOLs would be subject to an annual limitation under Section 382 determined by multiplying the value of the Company’s stock at the time of the ownership change by the applicable long-term tax-exempt rate.

While a formal study has not been performed, the Company believes that a Section 382 ownership change occurred as a result of a financing effected in October 2018.

The Company believes this Section 382 limitation will result in approximately 97% of the federal and state NOLs expiring before they can be utilized, and approximately 96% of the federal tax credit carryforwards expiring before they can be utilized.

While a formal study has not been performed, the Company believes that Section 382 ownership changes occurred as a result of financing transactions and the Arrangement..

The Company believes the Section 382 limitations will result in approximately 89 % of the federal and state NOLs expiring before they can be utilized, and approximately 88 % of the federal tax credit carryforwards expiring before they can be utilized.

As of December 31, 2021, the Company had NOLs of approximately $ 214.1 million for federal income tax purposes and approximately $ 134.1 million for state income tax purposes.

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Amortization of intangible assets

Goodwill impairment

Valuation allowance changes affecting tax provision

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The Amended 2010 Plan was terminated in August 2019 and remains in effect as to outstanding equity awards granted prior to the date of expiration.

As of December 31, 2019, no new awards may be made under the Amended 2010 Plan, and equity awards for approximately 172,000 shares were outstanding.

No new awards may be made under the Amended 2010 Plan.

In August 2019, the Company’s stockholders approved the 2019 Stock Incentive Plan (the 2019 Plan), and it replaced the Amended 2010 Plan.

The 2019 Plan authorizes the board of directors or the compensation committee of the board of directors to grant a broad range of awards including stock options, stock appreciation rights, restricted stock, performance-based awards, and restricted stock units.

Under the 2019 Plan, 182,500 shares have been reserved for issuance.

The 2019 Plan provides for annual option grants or other awards to the Company’s non-employee directors to acquire up to 2,000 shares and for a one-time grant of an option or other award to a non-employee director to acquire up to 6,000 shares upon his or her initial appointment or election to the board of directors.

Under the 2019 Plan, 182,500 shares were initially reserved for issuance.

In November 2021, in connection with the approval of the Arrangement, the Company’s stockholders approved an amendment increasing the number of shares reserved for issuance under the 2019 Plan by 3,106,937 shares.

Under the 2019 Plan, the term of all incentive stock options granted to a person who, at the time of grant, owns stock representing more than 10 % of the voting power of all classes of the Company’s stock may not exceed five years .

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In addition, the 2019 Plan provides for automatic acceleration of vesting for options granted to non-employee directors upon a change of control of the Company.

The Amended 2010 Plan and the 2019 Plan are referred to collectively as the “Plans.”

The Company may also award shares to new employees outside the Plans, as material inducements to the acceptance of employment with the Company, as permitted under the Listing Rules of the Nasdaq Stock Market.

These awards must be approved by the compensation committee of the board of directors, a majority of the independent directors or, below a specified share level, by an authorized executive officer.

At December 31, 2020 and 2019, no such awards were outstanding.

In connection with the Arrangement, the Company assumed the Peraso Technologies Inc.

2009 Share Option Plan (the 2009 Plan) and all outstanding options granted pursuant to the terms of the 2009 Plan .

Each outstanding, unexercised and unexpired option under the 2009 Plan, whether vested or unvested, was assumed by the Company and converted into options to purchase shares of the Company’s common stock and became exercisable by the holder of such option in accordance with its terms, with (i) the number of shares of common stock subject to each option multiplied by the Exchange Ratio and (ii) the per share exercise price upon the exercise of each option divided by the Exchange Ratio.

In connection with the Arrangement, no further awards will be made under the 2009 Plan

The 2009 Plan, the Amended 2010 Plan and the 2019 Plan are referred to collectively as the “Plans.”

Stock-Based Compensation Expense

The unamortized compensation cost, at December 31, 2020, was $0.2 million related to stock options and is expected to be recognized as expense over a weighted average period of approximately 1.4 years.

The unamortized

compensation cost, at December 31, 2020 , was $ 0.

3 million related to restricted stock units and is expected to be recognized as expense over a weighted average period of approximately 0 .

For the year s ended December 31, 20 20 and 2019 , the fair value of options and awards vested was approximately $ 0.

2 million and $ 0.3 million, respectively .

At December 31, 2021, the unamortized compensation cost was approximately $ 12.2 million related to stock options and is expected to be recognized as expense over a weighted average period of approximately 3.5 years.

The unamortized compensation cost, at December 31, 2021, was $ 0.1 million related to restricted stock units and is expected to be recognized as expense over a weighted average period of approximately 1.8 years.

For the years ended December 31, 2021 and 2020, the fair value of options and awards vested was approximately $ 1.0 million and $ 0.3 million, respectively.

Valuation Assumptions and Expense Information for Stock-based Compensation

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A dividend yield of zero is applied because the Company has never paid dividends and has no intention to pay dividends in the near future.

Prior to January 1, 2019, the stock-based compensation expense recorded was adjusted based on estimated forfeiture rates.

An annualized forfeiture rate was used as a best estimate of future forfeitures based on the Company’s historical forfeiture experience.

The stock-based compensation expense was adjusted in later periods if the actual forfeiture rate is different from the estimate.

Upon the adoption of ASU No.

2016-09 on January 1, 2019, the Company elected to change its accounting policy to account for forfeitures as they occur.

Historically, estimated forfeitures were immaterial to the consolidated financial statements.

In accordance with ASU No.

2016-09, the Company accounts for forfeitures as they occur.

Common Stock Options and Restricted Stock

A summary of stock option and restricted stock unit (RSU) award activity under the Plans is presented below (in thousands, except exercise price):

A summary of stock option activity under the Plans is presented below (in thousands, except exercise price):

Options outstanding

Balance as of January 1, 2020

Additional shares authorized under the Plan

RSUs cancelled and returned to the Plan

Options granted

Options cancelled and returned to the Plan

Plan termination

Options cancelled and returned to the Plans

Options exercised

Balance as of December 31, 2020

RSUs cancelled and returned to the Plan

Options cancelled

Options granted

Options exercised

Options cancelled and returned to the Plans

Effect of business combination

Balance as of December 31, 2021

As of December 31, 2021, the Company had approximately 3.0 million shares available for grant.

A summary of RSU activity under the Plans is presented below (in thousands, except fair value):

Non-vested shares as of January 1, 2019

Non-vested shares as of December 31, 2020

Effect of business combination

Non-vested shares as of December 31, 2021

The total intrinsic value of outstanding RSUs was $0.2 million for each of the years ended December 31, 2020 and 2019.

The following table summarizes significant ranges of outstanding and exercisable options at December 31, 2021 (in thousands, except contractual life and exercise price):

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$1.57 - $924.00

There were no stock options exercised during the years ended December 31, 2020 or 2019.

The intrinsic value of outstanding options at December 31, 2019 was $0.1 million.

There were approximately 20,000 and 5,000 options exercised during the years ended December 31, 2021 and 2020, respectively.

Stockholders’ Equity

In April 2020, the Company completed a registered direct offering of securities and sold 1,218,000 shares of common stock at a price of $1.56 per share to institutional investors.

Net proceeds of the offering, after placement agent and other fees and expenses paid by the Company, were approximately $1.6 million.

As a result of the offering, the exercise price of the 1,845,540 outstanding common stock purchase warrants that were issued in October 2018 was reduced from $6.00 per share to $2.40 per share.

The fair value of the warrants was computed on the date of the modification using the Black-Scholes model.

The Company assumed a risk-free interest rate of 1.6%, no dividends, expected volatility of 128%, and an expected warrant life of approximately 3.5 years.

Convertible Preferred Shares

The following tables summarize the movement in preferred shares for the year ended December 31, 2020.

(amounts in thousands)

preferred shares

Balance at January 1, 2020

Dividends accrued

Amortization of issuance costs and warrants

Foreign exchange impact

Preferred shares converted into Peraso Shares

Balance at December 31, 2020

In March 2020, the Company issued 124,408 Peraso Shares upon conversion of all outstanding Class A preferred shares amounting to $ 4,229,288 and 1,988,554 Peraso Shares upon conversion of all outstanding Class B preferred shares amounting to $ 52,102,651 .

The Class A and B preferred shares were converted into Peraso Shares based on the original conversion price of CDN$ 1.00 ($ 0.72 USD).

The outstanding accumulated dividends of $ 22,732,543 were reclassified into additional paid-in capital.

In March 2020, the Company also issued 2,958,787 Peraso Shares amounting to $ 55,668,932 upon conversion of all outstanding Class C preferred shares based on the amended conversion price of CDN$ 1.18 ($ 0.85 USD).

As a conversion inducement, the Company amended the ratio for the conversion of the Class C preferred shares into Peraso Shares from 1:

The Company determined that the additional Peraso Shares issuable arising from such modification totaled 591,757 with a fair value of $ 11,133,786 and recognized such amount as a deemed dividend.

These convertible preferred shares were accounted for as mezzanine equity prior to their conversion into Peraso Shares in March 2020.

Warrants classified as equity

At December 31, 2021, the Company had the following warrants outstanding (share amounts in thousands):

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Exercise Price

Warrants classified as liability

Warrants outstanding at December 31, 2020 and their respective exercise price and expiration dates, were as follows:

Number of warrants issued (recast)

Exercise price

December 31, 2025

August 31, 2022

December 31, 2025

December 31, 2022

December 31, 2025

December 31, 2023

Exercise prices in USD were $ 0.79 , $ 1.16 , and $ 0.12 at December 31, 2020.

Warrant activity and the related changes in the estimated fair values during the years ended December 31, 2021 and 2020 were:

Number of shares (recast)

Balance - December 31, 2019

Issued in the year

Change in fair value of warrants

Balance - December 31, 2020

Issued in the year

Effect of business combination

Change in fair value of warrants

Balance - December 31, 2021

The fair value of the warrant liability was estimated using the Black-Scholes option-pricing model.

Peraso Tech was a private company and lacked company-specific historical and implied volatility information.

Therefore, it estimated its expected stock volatility based on the historical volatility of a publicly traded set of peer companies within the semiconductor industry with characteristics similar to the Company.

The risk-free interest rate is determined by reference to the U.S.

Treasury yield curve in effect at the time of grant of the award for time periods approximately equal to the expected term of the award.

Expected dividend yield is zero , based on the fact that the Company had never paid cash dividends and did not expect to pay any cash dividends in the foreseeable future.

The Company granted warrants with exercise price of CDN$ 0.15 ($ 0.12 USD) to purchase 6,628,495 common shares of the Company in 2020 to certain holders of convertible debentures (Note 7).

The total fair values of these warrants at grant date amounted to $ 5.3 million in 2020.

The fair values were determined using Black-Scholes model with the following assumptions:

expected term based on the contractual term of 3.2 - 5 years, risk-free interest rate of 0.37 %- 0.38 % based on a comparable US Treasury Bond, expected volatility of 104.37 %, and expected dividend of zero .

The fair values of the outstanding warrants at December 31, 2020 was calculated based on the following assumptions used in the Black-Scholes model:

expected term based on the remaining contractual term of 1.92-5.25 years , risk-free interest rate of 0.36 % based on a comparable US Treasury Bond, expected volatility of 104.37 %, and expected dividend of zero .

In accordance with the Arrangement Agreement, on December 16, 2021, the warrants were settled in exchange for a defined number of common shares.

Upon settlement, the fair value of the warrants were calculated using the intrinsic fair value of the common shares.

The change in fair value was recognized in other income (expense) in the consolidated statements of operations.

Retirement Savings Plan

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Cash, cash equivalents and investments are deposited with high credit-quality institutions.

The Company recognized revenue from licensing of its technologies and shipment of ICs to customers in the following geographical locations (in thousands):

The Company recognized revenue from licensing of its technologies, performance of engineering services and shipment of products to customers in the following geographical locations (in thousands):

North America

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Three customers accounted for 96 % of net accounts receivable at December 31, 2021.

Four customers accounted for 85% of net accounts receivable at December 31, 2019.

All net long-lived assets (property and equipment) were held in the United States.

Three customers accounted for 95 % of net accounts receivable at December 31, 2020.

All net long-lived assets (property and equipment) were held in the United States and Canada.

Commitments and Contingencies

Effective January 1, 2019, the Company adopted ASU No.

2016-02, as amended, using the alternative transition method, which allowed the Company to initially apply the new lease standard at the adoption date (the “effective date method”).

The Company identified only one lease to be accounted for under ASU No.

2016-02, and this was the operating lease for its corporate facility in San Jose, California, which was entered into in October 2017 and initially expired in October 2020.

The right-to-use asset and corresponding liability for the facility lease were measured at the present value of the future minimum lease payments.

The discount rate used to measure the lease asset and liability represents the interest rate on the Notes (8%).

The Company has three leases that it accounts for under ASC 842, and these include the operating leases for its corporate facility in San Jose, California, and facilities in Toronto and Waterloo, Ontario, Canada.

The San Jose lease expires in July 2022 , and the Waterloo and Toronto leases expire in September 2022 and December 2023 , respectively.

The right-to-use assets and corresponding liabilities for the facility leases were measured at the present value of the future minimum lease payments.

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

Lease expense is recognized on a straight line basis over the lease term.

The Company had an option to extend the lease for an additional 20.5 month period, but, as the renewal was not reasonably certain, it had not included this renewal option in its accounting for the lease.

On September 30, 2020, the Company and the lessor extended the lease for an additional 20.5 month term commencing November 1, 2020.

The Company does not have an option to extend the lease term beyond the current extension.

The extension was accounted for as a lease modification.

The Company assessed the lease classification of the facility lease at the modification date and determined that the facility lease should be accounted for as an operating lease.

The right-of-use asset and corresponding operating lease liability have been remeasured based on the present value of remaining lease payments over the remaining extended lease term.

The fair value of the right of use asset and corresponding lease obligation was determined to be $352,000 at the date of modification using a discount rate of 8%.

Non-lease components are not included in the right-of-use asset and liability and are reflected as expense in the periods incurred.

Future minimum payments under the facility lease at December 31, 2020 are listed in the table below (in thousands).

Future minimum payments under the facility leases at December 31, 2021 are listed in the table below (in thousands).

Year ended December 31,

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Cash paid for amounts included in the measurement of lease liabilities:

Operating cash flows for lease

Non-cash activity:

Recognition of additional right-of-use asset and liability upon lease modification

Rent expense was approximately $212,000 for each of the years ended December 31, 2020 and 2019.

Operating cash flows for leases

Rent expense was approximately $ 0.6 million for each of the years ended December 31, 2021 and 2020.

In addition to the minimum lease payments, the Company is responsible for property taxes, insurance and certain other operating costs.

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Product warranties

The Company warrants its products to be free of defects generally for a period of three years.

The Company warrants certain of its products to be free of defects generally for a period of three years.

The Company estimates its warranty costs based on historical warranty claim experience and includes such costs in cost of net revenues.

Warranty costs were not material for the years ended December 31, 2021 and 2020.

Notes Payable

Convertible Notes

In March 2016, the Company entered into a 10% Senior Secured Convertible Note Purchase Agreement (the “Purchase Agreement”) with the purchasers of $8,000,000 principal amount of 10% Senior Secured Convertible Notes due August 15, 2018 (the “Notes”), at par, in a private placement transaction effected pursuant to an exemption from the registration requirements under the Securities Act of 1933, as amended.

Pursuant to amendments to the Notes and related documents in February and October 2018, the interest rate was reduced to 8%, the maturity date of the Notes was extended to August 15, 2023, and the optional conversion price was reduced from $170.00 of Note principal per share of common stock to $11.434 of Note principal per share of common stock.

The conversion price is subject to adjustment upon certain events, such as stock splits, reverse stock splits, stock dividends and similar kinds of transactions, as set forth in the Purchase Agreement.

Pursuant to a security agreement entered into by the Company, the Notes are secured by a security interest in all of the assets of the Company.

Accrued interest is payable semi-annually in cash or in kind through the issuance of identical new Notes, or with a combination of the two, at the Company’s option.

The Notes are noncallable and nonredeemable by the Company.

The Notes are redeemable at the election of the holders if the Company experiences a fundamental change (as defined in the Notes), which generally would occur in the event (i) any person acquires beneficial ownership of shares of common stock of the Company entitling such person to exercise at least 40% of the total voting power of all of the shares of capital stock of the Company entitled to vote generally in elections of directors, (ii) an acquisition of the Company by another person through a merger or consolidation, or the sale, transfer or lease of all or substantially all of the Company’s assets, or (iii) the Company’s current directors cease to constitute a majority of the board of directors of the Company within a 12-month period, disregarding for this purpose any director who voluntarily resigns as a director or dies while serving as a director.

Effective February 18, 2018, pursuant to one amendment to the Notes, the redemption price was reduced from 120% to 100% of the principal amount of the Note to be repurchased plus accrued and unpaid interest as of the redemption date.

No Note holder shall be entitled to convert such holder’s Notes if effective upon the applicable conversion date (i) the holder would have beneficial ownership of more than 19.9% of the voting capital stock of the Company as determined in accordance with Rule 13d-3 under the Securities Exchange Act of 1934, as amended, (with exceptions specified in the Purchase Agreement), or (ii) if the shares are being acquired or held with a purpose or effect of changing or influencing control of the Company, or in connection with or as a participant in any transaction having that purpose or effect, as determined in the sole discretion of the board of directors of the Company.

no required sinking fund for the Notes.

The Notes have not been registered for resale, and the holder(s) do not have registration rights.

The Notes restrict the ability of the Company to incur any indebtedness for borrowed money, unless such indebtedness by its terms is expressly subordinated to the Notes in right of payment and to the security interest of the Note holder(s) in respect to the priority and enforcement of any security interest in property of the Company securing such new debt;

provided that the Note holder(s) security interest and cash payment rights under the Notes shall be subordinate to a maximum of $5,000,000 of indebtedness for a secured accounts receivable line of credit facility provided to the Company by a bank or institutional lender;

and, provided further, that in no event may the amount of indebtedness to which the security interest of the Note holder(s) is subordinated exceed the outstanding balance of accounts receivable less than 90 days old for which the Company has not recorded an allowance for doubtful accounts pledged under such credit facility.

The Notes define an event of default generally as any failure by the Company to pay an amount owed under the Notes when due (subject to cure periods), a default with respect to other indebtedness of the Company resulting in acceleration of such indebtedness, the commencement of bankruptcy or insolvency proceedings, or the cessation of business.

If an event of default occurs under the Notes, the holder(s) of a majority-in-interest of the outstanding principal amount of the Notes may declare the outstanding principal amount thereof to be immediately due and payable and pursue all available remedies, including taking possession of the assets of the Company and selling them to pay the amount of debt then due, plus expenses, in accordance with applicable laws and procedures.

The Company incurred debt issuance costs of approximately $0.1 million, which were recorded as a debt discount and were amortized to interest expense over the repayment period for the original loan term using the effective interest rate method.

As of December 31, 2018, the debt discount was fully amortized.

In accordance with the October 2018 amendment to the Notes, the Company used $7.4 million of the proceeds from its public offering of securities effected in October 2018 to repay a portion of the Notes.

Semi-annual interest payments have been made in each of February 2019, August 2019, February 2020 and August 2020, for approximately, $78,000, $109,000, $112,000 and $122,000, respectively, in-kind with the issue of additional notes (Interest Notes) to the Purchasers.

The Interest Notes have terms identical to the Notes.

At December 31, 2020, the Notes and Interest Notes could be converted into a maximum of 271,121 shares of common stock at $11.434 per share, excluding the effects of future payments of interest in-kind.

On May 7, 2020, the Company entered into a Promissory Note with Wells Fargo Bank, N.A.

(the Lender) in an aggregate principal amount of $579,330 (the PPP Note), pursuant to the Paycheck Protection Program (the PPP) under the CARES Act.

The term of the PPP Note is two years.

Interest will accrue on the outstanding principal balance of the PPP Note at a fixed rate of 1.0%, which shall be deferred for the first ten months of the term of the PPP Note.

Monthly payments will be due and payable beginning in October 2021 and continue each month thereafter until maturity of the PPP Note.

The Company may prepay principal of the PPP Note at any time in any amount without penalty.

The Agreement contains customary events of default relating to, among other things, payment defaults, breach of representations and warranties or provisions of the PPP Note.

The occurrence of an event of default may result in the repayment of all amounts outstanding, collection of all amounts owing from the Company, and/or filing suit and obtaining judgment against the Company.

The Company may apply to the Lender for forgiveness of the PPP Note, under the terms of the PPP.

No assurance is provided that the Company will obtain forgiveness of the PPP Note in whole or in part, but the Company believes it has used the proceeds in accordance with the PPP.

If the PPP Note is not forgiven, principal payments will start in 2021.

Subsequent Events

Subsequent to December 31, 2020, the Company received a total of $2,478,461 of proceeds from the exercise of 1,032,692 warrants to purchase shares of common stock at a price of $2.40 per share.

In February 2021, the Company completed a registered direct offering and sold 1,487,601 shares of common stock at a price of $5.00 per share to institutional investors.

Net proceeds of the offering, after placement agent and other fees and expenses payable by the Company, were approximately $6,800,000.

Under an agreement with the holder of the Notes, who was also a holder of warrants, in January and February 2021, the Company used $1,473,098 of the proceeds from the Note holder’s warrant exercises to repay a portion of the principal amount of the Notes.

In March 2021, the Company repaid in full the remaining principal amount of the Notes.

On June 3, 2020, Peraso Tech applied for and obtained an order under the Companies’ Creditors Arrangement Act (the CCAA), providing certain relief.

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

was appointed as the Monitor (the Monitor) of Peraso Tech.

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

Bankruptcy Code, seeking recognition of the CCAA proceeding.

On October 14, 2020, the Court approved a settlement agreement (the Settlement Agreement) as between Ubiquiti Inc.

and Peraso Tech.

On October 22, 2020, following the satisfaction of certain conditions precedent, the Settlement Agreement (including all agreements incorporated as schedules thereto) became fully effective.

The terms of the settlement agreement are subject to confidentiality.

On October 28, 2020, the Court granted an order authorizing the termination of Peraso Tech’s CCAA proceedings upon the completion of certain defined steps.

On November 2, 2020, Peraso Tech provided written notice to the Monitor that these steps had been completed and, as contemplated in the CCAA Termination Order dated October 28, 2020 (the CCAA Termination Order), the Monitor served a Monitor’s Certificate on the service list that had the effect of, inter alia:

terminating the CCAA proceedings and the Stay Period referred to in the Initial Order;

discharging Ernst & Young Inc.

from its duties as the Monitor;

releasing certain claims in favor of the Monitor and its counsel, with certain exceptions;

and terminating the Administration Charge, the Directors’ Charge, the DIP Lenders’ Charge, the Second DIP Lenders’ Charge, and the Third DIP Lenders’ Charge (as such terms are defined in the CCAA Termination Order).

Notwithstanding the discharge of Ernst & Young Inc.

• Ernst & Young Inc.

will remain Monitor and have the authority to carry out, complete, or address any matters in its role as Monitor that are ancillary or incidental to these CCAA proceedings, including any matter in respect of the Chapter 15 Proceedings (as defined in the CCAA Termination Order);

• Ernst & Young Inc.

and its counsel will continue to have the benefit of any of the rights, approvals, releases and protections in favor of the Monitor at law or pursuant to the CCAA, the Initial Order, and all other Orders made in these CCAA proceedings;

On December 1, 2020 the United States Bankruptcy Court for the Southern District of New York issued an Order that:

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

and (ii) terminated the Chapter 15 Proceedings.

Loan facilities

During 2020, the Company entered into a debtor in possession credit agreement (the DIP Loan) to provide it with financing to fund certain cash requirements during the CCAA proceedings.

Proceeds from the DIP Loan totaled $ 6,150,000 .

As of December 31, 2020, the full balance of the DIP Loan was fully paid/settled as follows:

• $ 1 million settled against accounts receivable related to an engineering agreement;

• $ 2.55 million converted into convertible debentures (see below);

• $ 100 thousand repaid in cash;

• $ 2.5 million settled against accounts receivable related to a licensing manufacturing agreement.

On November 30, 2020, the Company entered into a loan agreement (the SRED Financing) to raise funds against the Company’s present and after acquired personal property.

The proceeds from the first draw totaled $ 0.6 million (CDN$ 750,000 ), which was outstanding at December 31, 2020.

On February 5, 2021, March 5, 2021 and September 17, 2021 the Company raised additional funds from the second, third and fourth draws under the SRED financing of $ 274,715 (CDN$ 350,000 ), $ 274,715 (CDN$ 350,000 ) and $ 745,655 (CDN$ 950,000 ) respectively, totaling year to date gross proceeds of $ 1,295,085 (CDN$ 1,650,000 ) net of financing fees of $ 32,770 (CDN$ 41,750 ).

The loan agreement for all tranches carried an interest rate of 1.6 % per month, compounded monthly ( 20.98 %).

The loan was sanctioned against the Company’s tax credit refund.

The first, second and third draws, including interest of $ 136,900 (CDN$ 174,417 ), were repaid through proceeds from the Company’s tax credit refund of $ 1,093,230 (CDN$ 1,392,831 ) and the balance of $ 184,558 (CDN$ 235,132 ) was paid from the fourth draw.

The remaining loan balance, including interest, of $ 816,964 (CDN$ 1,044,177 ) was repaid on December 16, 2021.

Interest expense on the SRED Financing amounted to $ 209,856 and $ 6,193 for the years ended December 31, 2021 and 2020, respectively.

Convertible debentures

At December 31, 2020, convertible debentures consisted of the following:

(amounts in thousands)

6 % Convertible debentures due December 31, 2023

Accrued interest

Total obligation

Debt discount

In December 2019, the Company entered into convertible debenture agreements with a total principal amount of $ 1.7 million due on June 30, 2025 .

In March 2020, the maturity date was amended to December 31, 2023 .

The convertible debentures had an interest rate of 6 % per annum and were secured by the Company’s assets.

Finance fees incurred for the issuance of the convertible debentures amounting to $ 73,608 were recorded as a debt discount.

The Company also granted to a note holder warrants to purchase 53,312 common shares of the Company.

The fair value of these warrants of $ 45,971 was initially recorded as liability and debt discount.

During March 2020, the Company entered into additional convertible debenture agreements with a total principal amount of $ 3.9 million due on December 31, 2023 .

The convertible debentures had an interest rate of 6 % per annum and were secured by the Company’s assets.

Finance fees amounting to $ 0.4 million incurred for the issuance of the convertible debentures were recorded as debt discount.

The Company also granted to the note holders warrants to purchase 2,160,215 common shares of the Company.

The fair value of these warrants of $ 1,707,943 was initially recorded as liability and debt discount.

During October 2020, the Company settled a portion of its DIP Loan amounting to $ 2.6 million through the issuance of convertible debentures with a maturity date of December 31, 2023 .

The convertible debentures had an interest rate of 6 % per annum and were secured by the Company’s assets.

The Company also granted to the noteholders warrants to purchase 4,468,280 common shares of the Company.

The fair value of these warrants of $ 3.6 million was initially recorded as liability and debt discount up to the face value of the convertible debt, and a finance expense of $ 1.0 million was recorded in the statement of operations for the year ended December 31, 2020 for the remaining portion.

During April 2021, the Company entered into convertible debenture agreements with a total principal amount of $ 5.9 million due on December 31, 2023 .

The convertible debentures carried an interest rate of 6 % per annum and were secured by the Company’s assets.

Finance fees incurred for the issuance of the convertible debentures amounting to $ 0.4 million were recorded as a debt discount, resulting in net cash proceeds to the Company of $ 5.5 million.

Per terms of the convertible debenture agreements, upon the closing of an equity financing, all of the outstanding principal and accrued interest shall convert at a price equal to the lower of CDN$ 0.15 (USD$ 0.12 ) and 80 % of the per share price paid by the investors in such financing.

The Company also granted to the note holders warrants to purchase 2,947,058 common shares of the Company.

The fair value of these warrants of $ 2.6 million was initially recorded as a liability and debt discount.

The debt discount on the convertible debentures was amortized over the term of the related convertible debentures.

For the years ended December 31, 2021 and 2020, the amortization of the debt discount amounted to $ 2.1 million and $ 0.6 million, respectively.

On December 16, 2021, per the Arrangement Agreement the principal balance and accrued interest thereon on all the outstanding convertible debentures were converted into Peraso Shares at a price equal CDN$ 0.15 , or USD$ 0.12 .

The recorded debt discount was amortized to interest expense using the effective interest rate method over the terms of the related convertible debentures.

During the years ended December 31, 2021 and 2020, the amortization of the debt discount amounted to $ 2.1 million and $ 0.6 million, respectively.

For the years ended December 31, 2021 and 2020, interest expense on the convertible debentures amounted to $ 0.7 million and $ 0.3 million, respectively.

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