10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549

FORM 10-Q

(Mark one)

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 2022

OR

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from                to              

Commission file number 000-32929

PERASO INC.

(Exact name of registrant as specified in its charter)

Delaware	77-0291941
(State or other jurisdiction	(I.R.S. Employer
of Incorporation or organization)	Identification Number)

2309 Bering Drive

San Jose, California 95131

(Address of principal executive office and zip code)

(408) 418-7500

(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:

Title of each class	Trading symbol(s)	Name of each exchange on which registered
Common Stock, par value $0.001 per share	PRSO	The Nasdaq Stock Market, LLC

Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to filing requirements for the past 90 days.  Yes ☒  NO ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).  Yes ☒  NO ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act:

Large accelerated filer	☐	Accelerated filer	☐
Non-accelerated filer	☒	Smaller reporting company	☒
Emerging growth company	☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).  Yes ☐  No ☒

The number of outstanding shares of the registrant’s common stock, par value $0.001 per share, was 21,832,903 as of August 12, 2022.

PERASO INC.

FORM 10-Q

June 30, 2022

PART I —	FINANCIAL INFORMATION	3
Item 1.	Financial Statements (Unaudited):	3
	Condensed Consolidated Balance Sheets as of June 30, 2022 and December 31, 2021	3
	Condensed Consolidated Statements of Operations and Comprehensive Loss for the three and six months ended June 30, 2022 and 2021	4
	Condensed Consolidated Statements of Stockholders’ Equity (Deficit) for the three and six months ended June 30, 2022 and 2021	5
	Condensed Consolidated Statements of Cash Flows for the six months ended June 30, 2022 and 2021	6
	Notes to Condensed Consolidated Financial Statements	7
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	26
Item 4.	Controls and Procedures	33
PART II —	OTHER INFORMATION	34
Item 1.	Legal Proceedings	34
Item 1A.	Risk Factors	34
Item 6.	Exhibits	36
	Signatures	37

PART I—FINANCIAL INFORMATION

Item 1. Financial Statements

PERASO INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(In thousands, except par value)

	June 30,			December 31,
	2022			2021
	(unaudited)
ASSETS
Current assets
Cash and cash equivalents	$	2,820		$	5,893
Short-term investments		2,094			9,267
Accounts receivable, net		3,227			2,436
Inventories		4,385			3,824
Tax credits and receivables		1,070			1,099
Prepaid expenses and other		1,446			1,159
Total current assets		15,042			23,678
Long-term investments		1,082			2,928
Property and equipment, net		2,047			2,349
Intangible assets, net		7,327			8,355
Goodwill		9,946			9,946
Right-of-use lease asset, net		1,356			617
Other		152			78
Total assets	$	36,952		$	47,951
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities
Accounts payable	$	2,385		$	1,937
Accrued expenses and other		1,778			2,903
Deferred revenue		314			375
Short-term lease liability		672			379
Total current liabilities		5,149			5,594
Long-term lease liability		722			288
Total liabilities		5,871			5,882
Commitments and contingencies (Note 5)
Stockholders’ equity
Preferred stock, $0.01 par value; 20,000 shares authorized; one share of Series A Special Voting Preferred Stock issued and outstanding (Note 2)		—			—
Common stock, $0.001 par value; 120,000 shares authorized; 21,832 shares and 21,579 shares issued and outstanding at June 30, 2022 and December 31, 2021, respectively		22			22
Additional paid-in capital		162,096			159,246
Accumulated other comprehensive loss		(41	)		—
Accumulated deficit		(130,996	)		(117,199	)
Total stockholders’ equity		31,081			42,069
Total liabilities and stockholders’ equity	$	36,952		$	47,951

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

3

PERASO INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS

(Unaudited)

(In thousands, except per share data)

	Three Months Ended						Six Months Ended
	June 30,						June 30,
	2022			2021			2022			2021
Net revenue
Product	$	4,120		$	576		$	7,324		$	1,627
Royalty and other		164			121			363			171
Total net revenue		4,284			697			7,687			1,798
Cost of net revenue		2,799			435			4,747			1,054
Gross profit		1,485			262			2,940			744
Operating expenses
Research and development		5,643			2,892			11,127			5,679
Selling, general and administrative		2,878			1,799			5,585			3,106
Total operating expenses		8,521			4,691			16,712			8,785
Loss from operations		(7,036	)		(4,429	)		(13,772	)		(8,041	)
Interest expense		(6	)		(786	)		(6	)		(1,300	)
Other expense, net		(1	)		(215	)		(19	)		(245	)
Net loss	$	(7,043	)	$	(5,430	)	$	(13,797	)	$	(9,586	)
Other comprehensive loss, net of tax:
Net unrealized loss on available-for-sale securities		(4	)		—			(41	)		—
Comprehensive loss	$	(7,047	)	$	(5,430	)	$	(13,838	)	$	(9,586	)
Net loss per share
Basic and diluted	$	(0.33	)	$	(1.03	)	$	(0.64	)	$	(1.83	)
Shares used in computing net loss per share
Basic and diluted		21,636			5,251			21,610			5,241

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

4

PERASO INC.

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY (DEFICIT)

(Unaudited)

(In thousands)

								Accumulated
					Additional			Other
	Common Stock				Paid-In			Comprehensive			Accumulated
	Shares		Amount		Capital			Loss			Deficit			Total
Balance as of December 31, 2021		21,579	$	22	$	159,246		$	—		$	(117,199	)	$	42,069
Issuance of common stock under stock plan, net		9		—		(9	)		—			—			(9	)
Stock-based compensation		—		—		1,171			—			—			1,171
Unrealized loss on available-for-sale securities		—		—		—			(37	)		—			(37	)
Net loss		—		—		—			—			(6,754	)		(6,754	)
Balance as of March 31, 2022		21,588		22		160,408			(37	)		(123,953	)		36,440
Issuance of common stock under stock plan, net		244		—		(50	)		—			—			(50	)
Stock-based compensation		—		—		1,738			—			—			1,738
Unrealized loss on available-for-sale securities		—		—		—			(4	)		—			(4	)
Net loss		—		—		—			—			(7,043	)		(7,043	)
Balance as of June 30, 2022		21,832	$	22	$	162,096		$	(41	)	$	(130,996	)	$	31,081
								Accumulated
					Additional			Other
	Common Stock				Paid-In			Comprehensive			Accumulated
	Shares		Amount		Capital			Loss			Deficit			Total
Balance as of December 31, 2020		5,241	$	5	$	102,361		$	—		$	(106,287	)	$	(3,921	)
Stock-based compensation		—		—		1,177			—			—			1,177
Net loss		—		—		—			—			(4,157	)		(4,157	)
Balance as of March 31, 2021		5,241	$	5	$	103,538		$	—		$	(110,444	)	$	(6,901	)
Issuance of common stock under stock plan, net		16		—	$	30			—			—			30
Stock-based compensation		—		—		1,137			—			—			1,137
Net loss		—		—		—			—			(5,430	)		(5,430	)
Balance as of June 30, 2021		5,257	$	5	$	104,705		$	—		$	(115,874	)	$	(11,164	)

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

5

PERASO INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

(In thousands)

	Six Months Ended
	June 30,
	2022			2021
Cash flows from operating activities:
Net loss	$	(13,797	)	$	(9,586	)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization		1,540			533
Stock-based compensation		2,909			2,314
Change in fair value of warrant liability		—			211
Amortization of debt discount		—			910
Accrued interest expense		13			416
Amortization of lease right-of-use assets		256			120
Change in operating lease liabilities		(242	)		(117	)
Other		154			41
Changes in assets and liabilities:
Accounts receivable		(791	)		518
Inventories		(561	)		21
Tax credits and receivables		29			(554	)
Prepaid expenses and other assets		(360	)		(100	)
Accounts payable		474			(403	)
Deferred revenue and other liabilities		(1,186	)		25
Net cash used in operating activities		(11,562	)		(5,651	)
Cash flows from investing activities:
Purchases of property and equipment		(342	)		(52	)
Purchases of intangible assets		(21	)		(95	)
Proceeds from maturities of marketable securities		9,434			—
Purchases of marketable securities		(497	)		—
Net cash provided by (used in) investing activities		8,574			(147	)
Cash flows from financing activities:
Taxes paid to net share settle equity awards		(59	)		—
Payment of lease obligation		(26	)		—
Proceeds from exercise of stock options		—			30
Net proceeds from loan facility		—			552
Net proceeds from convertible debenture		—			5,545
Net cash provided by (used in) financing activities		(85	)		6,127
Net increase (decrease) in cash and cash equivalents		(3,073	)		329
Cash and cash equivalents at beginning of period		5,893			1,711
Cash and cash equivalents at end of period	$	2,820		$	2,040
Supplemental disclosure:
Recognition of right-of-use assets and lease liabilities	$	995		$	—
Unrealized loss on available-for-sale securities	$	41		$	—
Fair value of new warrants issued recognized as debt discount	$	—		$	2,604

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

6

PERASO INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

Note 1. 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 is a fabless semiconductor company specializing in the development of millimeter wave (mmWave), which is generally described as the frequency band from 24 Gigahertz (GHz) to 300GHz, wireless technology. The Company derives revenue from selling its 60GHz and 5G semiconductor devices and modules, licensing of intellectual property and performance of non-recurring engineering services. The Company also manufactures and sells high-performance memory semiconductor devices for a wide range of markets and receives royalties from licensees of its memory technology.

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 was accounted for as a reverse acquisition in accordance with Financial Accounting Standards Board Accounting Standards Codification (ASC) No. 805, Business Combinations (ASC 805). Accordingly, these condensed consolidated financial statements are a continuation of Peraso Tech’s consolidated financial statements prior to December 17, 2021 and exclude the statements of operations and comprehensive loss, statement of stockholders’ equity and statements of cash flows of the Company prior to December 17, 2021. See Note 2 for additional disclosure.

The accompanying condensed consolidated financial statements of the Company have been prepared without audit.  

The condensed consolidated balance sheet as of December 31, 2021 has been derived from the audited consolidated financial statements at that date. Certain information and disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States (GAAP) have been condensed or omitted in accordance with the rules and regulations of the Securities and Exchange Commission (SEC). The information in this report should be read in conjunction with the Company’s consolidated financial statements and notes thereto included in its most recent annual report on Form 10-K filed with the SEC.

In the opinion of management, the accompanying unaudited condensed consolidated financial statements reflect all adjustments (consisting only of normal recurring adjustments) necessary to summarize fairly the Company’s financial position, results of operations and cash flows for the interim periods presented. The operating results for the three and six months ended June 30, 2022 are not necessarily indicative of the results that may be expected for the year ending December 31, 2022 or for any other future period.

7

Liquidity

The Company incurred net losses of approximately $13.8 million for the six months ended June 30, 2022 and $10.8 million for the year ended December 31, 2021 and had an accumulated deficit of approximately $131.0 million as of June 30, 2022.  These and prior year losses have resulted in significant negative cash flows and have required us to raise substantial amounts of additional capital. To date, the Company has primarily financed its operations through multiple offerings of common stock to investors and affiliates.

The Company expects to continue to incur operating losses for the foreseeable future as it secures customers and continues to invest in the commercialization of its products. The Company will need to increase revenues substantially beyond levels that it has attained in the past in order to generate sustainable operating profit and sufficient cash flows to continue doing business without raising additional capital from time to time.  As a result of the Company’s expected operating losses and cash burn for the foreseeable future, as well as recurring losses from operations, if the Company is unable to raise sufficient capital through additional debt or equity arrangements, there will be uncertainty regarding the Company’s ability to maintain liquidity sufficient to operate its business effectively, which raises substantial doubt as to the Company’s ability to continue as a going concern within one year from the date of issuance of these condensed consolidated financial statements. These condensed consolidated financial statements do not include any adjustments that might result from this uncertainty. There can be no assurance that such additional capital, whether in the form of debt or equity financing, will be sufficient or available and, if available, that such capital will be offered on terms and conditions acceptable to the Company. The Company’s primary focus is producing and selling its new products.  If the Company is unsuccessful in these efforts, it will need to implement additional cost reduction strategies, which could further affect its near- and long-term business plan. These efforts may include, but are not limited to, further reducing headcount and curtailing business activities.

Basis of Presentation

The condensed consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries. All significant intercompany transactions and balances have been eliminated in consolidation. The Company’s fiscal year ends on December 31 of each calendar year. The Company previously classified intangible asset amortization expense related to the developed technology and customer relationships intangibles within research and development expenses (R&D) in its condensed consolidated statements of operations and comprehensive loss. Amortization expense on the developed technology intangible asset is now classified within cost of net revenue, and amortization expense on customer relationships is now classified in selling, general and administrative expenses (SG&A). Prior period amounts have been conformed to the current period presentation. See Note 5 for additional disclosure.

Risks 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.

COVID-19

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. government in March 2020.  This has negatively affected the U.S. and global economy, disrupted global supply chains, significantly restricted travel and transportation, resulted in mandated closures and orders to “shelter-in-place” and created significant disruption of the financial markets. The full extent of the COVID-19 impact on the Company’s operational and financial performance will depend on future developments, including the duration and spread of the pandemic and related actions taken by U.S. and foreign government agencies to prevent disease spread, all of which are uncertain, out of the Company’s control, and cannot be predicted.

8

Use of Estimates

The preparation of financial statements in accordance with GAAP 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, 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.

Cash Equivalents and Investments

The Company has invested its excess cash in money market accounts, certificates of deposit, corporate debt, government-sponsored enterprise bonds and municipal bonds and considers all highly liquid debt instruments purchased with an original maturity of three months or less to be cash equivalents. Investments with original maturities greater than three months and remaining maturities less than one year are classified as short-term investments. Investments with remaining maturities greater than one year are classified as long-term investments. Management generally determines the appropriate classification of securities at the time of purchase. All securities are classified as available-for-sale. The Company’s available-for-sale short-term and long-term investments are carried at fair value, with the unrealized holding gains and losses reported in accumulated other comprehensive income (loss). Realized gains and losses and declines in the value judged to be other-than-temporary are included in the other income, net line item in the condensed consolidated statements of operations. The cost of securities sold is based on the specific identification method.

Fair Value Measurements

The Company measures the fair value of financial instruments using a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value into three broad levels:

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

Level 2—Pricing is provided by third party sources of market information obtained through the Company’s investment advisors, rather than models. The Company does not adjust for, or apply, any additional assumptions or estimates to the pricing information it receives from advisors. The Company’s Level 2 securities include cash equivalents and available-for-sale securities, which consisted primarily of certificates of deposit, corporate debt, and government agency and municipal debt securities from issuers with high-quality credit ratings. The Company’s investment advisors obtain pricing data from independent sources, such as Standard & Poor’s, Bloomberg and Interactive Data Corporation, and rely on comparable pricing of other securities because the Level 2 securities are not actively traded and have fewer observable transactions. The Company considers this the most reliable information available for the valuation of the securities.

Level 3—Unobservable inputs that are supported by little or no market activity and reflect the use of significant management judgment are used to measure fair value. These values are generally determined using pricing models for which the assumptions utilize management’s estimates of market participant assumptions. The determination of fair value for Level 3 investments and other financial instruments involves the most management judgment and subjectivity.

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.

9

Allowance for Doubtful Accounts

The Company establishes an allowance for doubtful accounts to ensure that its trade receivables balances are not overstated due to uncollectibility. The Company performs ongoing customer credit evaluations within the context of the industry in which it operates and generally does not require collateral from its customers. A specific allowance of up to 100% of the invoice value is provided for any problematic customer balances. Delinquent account balances are written off after management has determined that the likelihood of collection is remote. The Company grants credit only to customers deemed creditworthy in the judgment of management. The allowance for doubtful accounts receivable was zero as of June 30, 2022 and approximately $61,000 as of December 31, 2021.

Inventories

The Company values its inventories at the lower of cost, which approximates actual cost on a first-in, first-out basis, or net realizable value. Costs of inventories primarily consisted of material and third party assembly costs. The Company records inventory reserves for estimated obsolescence or unmarketable inventories based upon assumptions about future demand and market conditions. Once a reserve is established, it is maintained until the product to which it relates is sold or otherwise disposed of. If actual market conditions are less favorable than those expected by management, additional adjustment to inventory valuation may be required. Charges for obsolete and slow-moving inventories are recorded based upon an analysis of specific identification of obsolete inventory items and quantification of slow moving inventory items. The Company recorded write-downs of inventory of approximately $160,000 and $37,000 during the six months ended June 30, 2022 and 2021, respectively.

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, as a Canadian Controlled Private Corporation (CCPC), the Company is also a part of the Scientific Research and Experimental Development (SRED) 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.

As of December 17, 2021, Peraso Tech ceased to be a CCPC and is no longer eligible for the expenditure refund program. However, it is eligible for a tax credit of 15% on qualified SRED expenditures.  Unused tax credits can be carried back three years or forward for 20 years

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. Amortization of developed technology and other intangibles directly related to the Company’s products is included in cost of net revenue, while amortization of customer relationships and other intangibles not associated with the Company’s products is included in SG&A in the condensed consolidated statements of operations.

10

The Company regularly reviews the carrying value and estimated lives of its long-lived assets and finite-lived intangible assets 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.

Purchased Intangible Assets

Intangible assets acquired in business combinations are accounted for based on the fair value of assets purchased and are amortized over the period in which economic benefit is estimated to be received. Intangible assets subject to amortization, including those acquired in business combinations were as follows (amounts in thousands):

	June 30, 2022
	Gross				Net
	Carrying		Accumulated		Carrying
	Amount		Amortization		Amount
Developed technology	$	5,726	$	776	$	4,950
Customer relationships		2,556		346		2,210
Other		186		19		167
Total	$	8,468	$	1,141	$	7,327

	December 31, 2021
	Gross				Net
	Carrying		Accumulated		Carrying
	Amount		Amortization		Amount
Developed technology	$	5,726	$	60	$	5,666
Customer relationships		2,556		27		2,529
Other		165		5		160
Total	$	8,447	$	92	$	8,355

Developed technology primarily consisted of MoSys’ products that have reached technological feasibility and primarily relate to its memory semiconductor products and technology. The value of the developed technology was determined by discounting estimated net future cash flows of these products. The Company is amortizing the developed technology on a straight-line basis over four years. Amortization related to developed technology of $0.3 million and $0.7 million for the three and six months ended June 30, 2022, respectively, has been included in cost of net revenue in the condensed consolidated statements of operations and comprehensive loss.

Customer relationships relate to the Company's ability to sell existing and future versions of products to MoSys’ customers existing at the time of the arrangement. The fair value of the customer relationships was determined by discounting estimated net future cash flows from the customer relationships. The Company is amortizing customer relationships on a straight-line basis over an estimated life of 4 years. Amortization related to customer relationships of $0.2 million and $0.3 million for the three and six months ended June 30, 2022, respectively, has been included in selling, general and administrative expense in the condensed consolidated statements of operations and comprehensive loss.

Amortization expense was $0.5 million and $1.0 million for the three and six months ended June 30, 2022, respectively. There was no amortization expense for the three and six months ended June 30, 2021.

11

As of June 30, 2022, estimated future amortization expense related to intangible assets was as follows (in thousands):

Year ending December 31,
2022	$	1,050
2023		2,099
2024		2,099
2025		2,011
2026		28
2027		10
Thereafter		30
	$	7,327

Goodwill

The Company determines the amount of a potential goodwill impairment by comparing the fair value of the reporting unit with its carrying amount. To the extent the carrying value of a reporting unit exceeds its fair value, a goodwill impairment charge is recognized.

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 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. The Company first assesses qualitative factors to determine whether it is more-likely-than-not that the fair value of the reporting unit is less than the carrying amount as a basis for determining whether it is necessary to perform an impairment test. If the qualitative assessment warrants further analysis, the Company compares the fair value of the reporting unit to its carrying value. 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 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.  

Leases

ASC No. 842, Leases (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 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 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. Revenue recognition is evaluated through the following five steps: (i) identification of the contract, or contracts, with a customer; (ii) identification of the performance obligations in the contract; (iii) determination of the transaction price; (iv) allocation of the transaction price to the performance obligations in the contract; and (v) recognition of revenue when or as a performance obligation is satisfied.

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Product revenue

Revenue is recognized when performance obligations under the terms of a contract with a customer are satisfied. The majority of the Company's contracts have a single performance obligation to transfer products. Accordingly, the Company recognizes revenue when title and risk of loss have been transferred to the customer, generally at the time of shipment of products. Revenue is measured as the amount of consideration the Company expects to receive in exchange for transferring products and is generally based upon a negotiated, formula, list or fixed price. The Company sells its products both directly to customers and through distributors generally under agreements with payment terms typically 60 days or less.

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.

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. The Company estimates its royalty revenue in the calendar quarter in which the licensee uses the licensed technology.  Payments are received in the subsequent quarter. The Company also generates revenue from licensing its technology. The Company recognizes license fees 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

The Company’s contract liabilities consist of advance customer payments and deferred revenue. The Company classifies advance customer payments and deferred revenue as current or non-current based on the timing of when the Company expects to recognize revenue. As of June 30, 2022 and December 31, 2021, contract liabilities were in a current position and included in deferred revenue.

During the six months ended June 30, 2022, the Company recognized approximately $61,000 of revenue that had been included in deferred revenue as of December 31, 2021.

See Note 6 for disaggregation of revenue by geography.

The Company does not have significant financing components, as payments from customers are typically due within 60 days of invoicing, and the Company has elected the practical expedient to not value financing components that are less than one year. Shipping and handling costs are generally incurred by the customer, and, therefore, are not recorded as revenue.

Cost of Net Revenue

Cost of net revenue consists primarily of direct and indirect costs of product sales, including amortization of intangible assets and depreciation of production-related fixed assets.

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.

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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 and ending in the fourth quarter of 2021.

During the six months ended June 30, 2021, the Company recognized payroll subsidies of $861,352 as a reduction in the associated wage costs and rent subsidies of $160,865 as a reduction of operating expenses in the condensed consolidated statement of operations.

Stock-Based Compensation

The Company periodically issues stock options and restricted stock awards to employees and non-employees. The Company accounts for such grants based on ASC No. 718, whereby the value of the award is measured on the date of grant and recognized as compensation expense on a straight-line basis over the vesting period. The fair value of the Company’s stock options is estimated using the Black-Scholes-Merton Option Pricing (Black Scholes) model, which uses certain assumptions related to risk-free interest rates, expected volatility, expected life of the options, and future dividends. Compensation expense is recorded based upon the value derived from the Black-Scholes model. 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

Basic net loss per share is computed by dividing net loss for the period by the weighted-average number of shares of common stock outstanding during the period. Diluted net loss per share gives effect to all potentially dilutive common shares outstanding during the period. Potentially dilutive common shares consist of incremental shares of common stock issuable upon the exercise of stock options, vesting of stock awards and exercise of warrants.  

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

	June 30,
	2022		2021
Escrow shares		1,815		—
Options to purchase common stock		1,537		1,048
Unvested restricted common stock units		1,303		—
Convertible debt		—		5,500
Warrants		134		508
Total		4,789		7,056

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

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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 May 2021, the FASB issued ASU 2021-04, Earnings Per Share (Topic 260), Debt — Modifications and Extinguishments (Subtopic 470-50), Compensation — Stock Compensation (Topic 718), and Derivatives and Hedging — Contracts in Entity’s Own Equity (Subtopic 815-40): Issuer’s Accounting for Certain Modifications or Exchanges of Freestanding Equity-Classified Written Call Options (ASU 2021-04). ASU 2021-04 provides guidance as to how an issuer should account for a modification of the terms or conditions or an exchange of a freestanding equity-classified written call option (i.e., a warrant) that remains classified after modification or exchange as an exchange of the original instrument for a new instrument. An issuer should measure the effect of a modification or exchange as the difference between the fair value of the modified or exchanged warrant and the fair value of that warrant immediately before modification or exchange and then apply a recognition model that comprises four categories of transactions and the corresponding accounting treatment for each category (equity issuance, debt origination, debt modification, and modifications unrelated to equity issuance and debt origination or modification). ASU 2021-04 is effective for all entities for fiscal years beginning after December 15, 2021, including interim periods within those fiscal years. An entity should apply the guidance provided in ASU 2021-04 prospectively to modifications or exchanges occurring on or after the effective date. The Company adopted ASU 2021-04 effective January 1, 2022. The adoption of ASU 2021-04 did not have any impact on the Company’s consolidated financial statement presentation or disclosures.

Management does not believe that any other recently issued, but not yet effective, authoritative guidance, if currently adopted, would have a material impact on the Company’s financial statement presentation or disclosures.

Note 2: Business Combination

Arrangement

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. Prior to the Arrangement, as a fabless semiconductor company, the Company’s primary focus was the manufacture and sale of high-performance memory semiconductor devices for a wide range of markets. Peraso Tech was also a fabless semiconductor company specializing in the development of mmWave technology, including 60GHz and 5G products, and deriving revenue from selling semiconductor devices, proprietary modules based on its semiconductor devices and performance of non-recurring engineering services. The primary reason for the business combination was to produce a larger fabless semiconductor company with greater size and scale with access to the public capital markets for the benefit of the stockholders of both companies.

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

Securities Conversion

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

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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 (the Certificate) with the Secretary of State of the State of Delaware to designate Series A Special Voting Preferred Stock (the Special Voting Share) in accordance with the terms of the Arrangement Agreement in order to enable the holders of Exchangeable Shares to exercise their voting rights. 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. The Special Voting Share was issued to a third-party administrative agent (the Agent) solely to facilitate the exercise of rights by holders of Exchangeable Shares, The rights of the Agent, as holder of the Special Voting Share, are limited to effecting the rights of the holders of the Exchangeable Shares; the Special Voting Share does not confer any independent rights to the Agent. Under the Certificate, when all of the Exchangeable shares have been converted into shares of the Company’s common stock, the Special Voting Share shall be automatically cancelled and shall not be reissued.

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

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the fair value of the Company’s equity including the fair value of its common shares outstanding and its warrants, plus the portion of the share-based award fair value allocated to the pre-combination service of the accounting acquiree’s awards. The fair value of the total consideration effectively transferred is summarized in the following table (in thousands, except per-share amount):

Company share price (i)	$	4.21
Company common shares outstanding (ii)		8,716
Fair value of the Company's common shares outstanding		36,694
Fair value of the Company's warrants (iii)		301
Total fair value of the Company's share-based awards (iii)		782
Percent related to pre-combination service		80.76	%
Fair value of the Company's pre-combination service share-based awards (iii)		632
Consideration effectively transferred	$	37,627
(i) Represents the Company's share price as of December 16, 2021
(ii) Represents the Company's outstanding shares as of December 16, 2021
(iii) Represents the fair value of the Company's warrants outstanding and calculated as of December 16, 2021

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

	December 31,
	2021
Assets:	(in thousands)
Cash, cash equivalents and investments	$	19,064
Other current assets		2,558
Other assets		833
Intangibles
Developed technology		5,726
Customer relationships		2,556
		8,282
Goodwill		9,946
Liabilities:
Current liabilities		3,056
	$	37,627

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Unaudited pro forma results of operations for the three and six months ended June 30, 2021 are included below as if the business combination occurred on January 1, 2021.  This summary of the unaudited pro forma results of operations is not necessarily indicative of what the Company’s results of operations would have been had Peraso Tech been acquired at the beginning of 2021, nor does it purport to represent results of operations for any future periods.

	Three Months Ended			Six Months Ended
(in thousands)	June 30, 2021			June 30, 2021
Revenue	$	1,865		$	4,304
Net loss	$	(6,634	)	$	(12,160	)

Note 3: Fair Value of Financial Instruments

The estimated fair values of financial instruments outstanding were (in thousands):

	June 30, 2022
			Unrealized		Unrealized			Fair
	Cost		Gains		Losses			Value
Cash and cash equivalents	$	2,820	$	—	$	—		$	2,820
Short-term investments		2,100		—		(6	)		2,094
Long-term investments		1,117		—		(35	)		1,082
	$	6,037	$	—	$	(41	)	$	5,996

	December 31, 2021
			Unrealized		Unrealized			Fair
	Cost		Gains		Losses			Value
Cash and cash equivalents	$	5,893	$	—	$	—		$	5,893
Short-term investments		9,276		—		(9	)		9,267
Long-term investments		2,935		—		(7	)		2,928
	$	18,104	$	—	$	(16	)	$	18,088

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

	June 30, 2022
	Fair Value		Level 1		Level 2		Level 3
Money market funds	$	263	$	263	$	—	$	—
Corporate notes and commercial paper	$	3,176	$	—	$	3,176	$	—
	$	3,439	$	263	$	3,176	$	—

	December 31, 2021
	Fair Value		Level 1		Level 2		Level 3
Money market funds	$	1,159	$	1,159	$	—	$	—
Corporate notes and commercial paper	$	12,195	$	—	$	12,195	$	—

There were no transfers in or out of Level 1 and Level 2 securities during the six months ended June 30, 2022 or December 31, 2021.

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Note 4. Balance Sheet Detail

Inventories

	June 30,		December 31,
	2022		2021
	(in thousands)
Raw materials	$	1,238	$	879
Work-in-process		2,597		2,170
Finished goods		550		775
	$	4,385	$	3,824

Note 5. Revision of Prior Period Financial Statements

The Company previously classified amortization expense related to the developed technology and customer relationships intangible assets within R&D in its condensed consolidated statements of operations and comprehensive loss. Amortization expense on the developed technology intangible asset is now classified within cost of net revenue, and amortization expense on customer relationships is now classified in SG&A. Prior period amounts have been conformed to the current period presentation. The reclassification had no impact on the Company's net loss or cash flows for the three months ended March 31, 2022 and six months ended June 30, 2022.

The effects of the adjustments for the three months ended March 31, 2022 were as follows (in thousands):

	As Reported		Adjustment			As Revised
Condensed Consolidated Statement of Operations:
Cost of net revenue	$	1,590	$	358		$	1,948
Gross profit		1,813		(358	)		1,455
Research and development		6,003		(517	)		5,486
Selling, general and administrative		2,546		159			2,705
Total operating expenses	$	8,549	$	(358	)	$	8,191

Note 6. Commitments and Contingencies

Leases

The Company has five facility 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, Markham and Waterloo, Ontario, Canada. The Waterloo and Toronto leases expire in September 2022 and December 2023, respectively. The current San Jose lease with a sublessor expires in July 2022, and the Company entered into a new, direct lease with the facility landlord, dated April 13, 2022, for an 18-month term, which commenced July 15, 2022. In addition, on May 26, 2022, the Company entered into a new lease for a facility in Markham, Ontario with a 60-month term, which commenced June 21, 2022. The Markham landlord also provided a lease incentive of approximately $220,000 (the Incentive), which will be payable to the Company as follows:  one-half of the Incentive payable subsequent to the completion of the improvements to the leased space and the second half-ratably on an annual basis commencing with the second year of the lease.

The 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.

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On March 1, 2022, the Company entered into a 36-month finance lease agreement for the lease of equipment resulting in the recognition of a right-of-use asset and lease liability on the balance sheet of approximately $274,000.

The following table provides the details of right-of-use assets and lease liabilities as of June 30, 2022 (in thousands):

	Six Months Ended
	June 30, 2022
Right-of-use assets:
Operating leases	$	1,111
Finance lease		245
Total right-of-use assets	$	1,356
Lease liabilities:
Operating leases	$	1,140
Finance lease		254
Total lease liabilities	$	1,394

Future minimum payments under the leases at June 30, 2022 are listed in the table below (in thousands):

	Operating
Year ending December 31,	leases
2022	$	223
2023		768
2024		222
2025		139
2026		113
2027		84
Total future lease payments		1,549
Less: imputed interest		(155	)
Present value of lease liabilities	$	1,394

The following table provides the details of supplemental cash flow information (in thousands):

	Six Months Ended
	June 30,
	2022		2021
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows for leases	$	283	$	147

Rent expense was approximately $0.2 million for each of the three month periods ended June 30, 2022 and 2021.  Rent expense was approximately $0.4 million for the six months ended June 30, 2022 and $0.3 million for the six months ended June 30, 2021. In addition to the minimum lease payments, the Company is responsible for property taxes, insurance and certain other operating costs related to the leased facilities and equipment.

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Indemnification

In the ordinary course of business, the Company enters into contractual arrangements under which it may agree to indemnify the counterparties from any losses incurred relating to breach of representations and warranties, failure to perform certain covenants, or claims and losses arising from certain events as outlined within the particular contract, which may include, for example, losses arising from litigation or claims relating to past performance. Such indemnification clauses may not be subject to maximum loss clauses. The Company has also entered into indemnification agreements with its officers and directors. No material amounts were reflected in the Company’s condensed consolidated financial statements for the six months ended June 30, 2022 and 2021 related to these indemnifications.

The Company has not estimated the maximum potential amount of indemnification liability under these agreements due to the limited history of prior claims and the unique facts and circumstances applicable to each particular agreement. To date, the Company has not made any payments related to these indemnification agreements. 

Product Warranties

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 six months ended June 30, 2022 and 2021.

Legal Matters

The Company is not a party to any legal proceeding that the Company believes is likely to have a material adverse effect on its condensed consolidated financial position or results of operations. From time to time the Company may be subject to legal proceedings and claims in the ordinary course of business. These claims, even if not meritorious, could result in the expenditure of significant financial resources and diversion of management efforts.

Note 7. Business Segments, Concentration of Credit Risk and Significant Customers

The Company determined its reporting units in accordance with ASC 280, Segment Reporting (ASC 280). Management evaluates a reporting unit by first identifying its operating segments under ASC 280. The Company then evaluates each operating segment to determine if it includes one or more components that constitute a business. If there are components within an operating segment that meet the definition of a business, the Company evaluates those components to determine if they must be aggregated into one or more reporting units. If applicable, when determining if it is appropriate to aggregate different operating segments, the Company determines if the segments are economically similar and, if so, the operating segments are aggregated.

Management has determined that the Company has one consolidated operating segment. The Company’s reporting segment reflects the manner in which its chief operating decision maker reviews results and allocates resources. The Company’s reporting segment meets the definition of an operating segment and does not include the aggregation of multiple operating segments.

The Company recognized revenue from shipments of product, licensing of its technologies and performance of services to customers by geographical location as follows (in thousands):

	Three Months Ended				Six Months Ended
	June 30,				June 30,
	2022		2021		2022		2021
North America	$	3,127	$	106	$	5,503	$	161
Hong Kong		587		555		879	$	1,030
Taiwan		204		23		515		588
Japan		245		—		537		—
Rest of world		121		13		253		19
Total net revenue	$	4,284	$	697	$	7,687	$	1,798

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Customers who accounted for at least 10% of total net revenue were:

	Three Months Ended		Six Months Ended
	June 30,		June 30,
	2022	2021	2022	2021
Customer A	36%	*	31%	*
Customer B	21%	*	12%	*
Customer C	14%	69%	11%	52%
Customer D	13%	*	23%	*
Customer E	*	*	*	33%

* Represents less than 10%

Three customers accounted for 80% of accounts receivable as of June 30, 2022. Three customers accounted for 96% of accounts receivable as of December 31, 2021.

Note 8. Income Tax Provision

The Company determines deferred tax assets and liabilities based upon the differences between the financial statement and tax bases of the Company’s assets and liabilities using tax rates in effect for the year in which the Company expects the differences to affect taxable income. A valuation allowance is established for any deferred tax assets for which it is more likely than not that all or a portion of the deferred tax assets will not be realized.

The Company files U.S. federal and state and foreign income tax returns in jurisdictions with varying statutes of limitations.  All tax returns from 2015 to 2020 may be subject to examination by the Internal Revenue Service, California and other states. Returns filed in foreign jurisdictions may be subject to examination for the years 2011 to 2020.  As of June 30, 2022, the Company has not recorded any liability for unrecognized tax benefits related to uncertain tax positions.  

Note 9. Stock-Based Compensation

Common Stock Equity Plans

In 2010, the Company adopted the 2010 Equity Incentive Plan and later amended it in 2014, 2017 and 2018 (the Amended 2010 Plan). 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. 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 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. The exercise price of stock options granted under the 2019 Plan must be at least equal to the fair market value of the shares on the date of grant.  Generally, awards under the 2019 Plan will vest over a three to four-year period, and options will have a term of 10 years from the date of grant.  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.

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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 Company reflected compensation costs of $2.2 million and $2.3 million related to the vesting of stock options during the six month periods ended June 30, 2022 and 2021, respectively. At June 30, 2022, the unamortized compensation cost was approximately $10.2 million related to stock options and is expected to be recognized as expense over a weighted average period of approximately 2.6 years. The Company reflected compensation costs of $0.7 million and zero related to the vesting of restricted stock options during the six month ended June 30, 2022 and 2021, respectively.   The unamortized compensation cost at June 30, 2022 was $2.8 million related to restricted stock units and is expected to be recognized as expense over a weighted average period of approximately 2.5 years.

Valuation Assumptions and Expense Information for Stock-Based Compensation

There were no stock options granted or exercised during the six months ended June 30, 2022 and 2021. 

Common Stock Options and Restricted Stock

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. The exercise price of stock options granted under the 2019 Plan must be at least equal to the fair market value of the shares on the date of grant.  Generally, options granted under the 2019 Plan will vest over a three to four-year period and have a term of 10 years from the date of grant.  In addition, the 2019 Plan provides for automatic acceleration of vesting for options granted to non-employee directors upon a change of control (as defined in the 2019 Plan) of the Company.  

The following table summarizes the activity in the shares available for grant under the Plans during the six months ended June 30, 2022 (in thousands, except exercise price):

				Options Outstanding
							Weighted
	Shares						Average
	Available			Number of			Exercise
	for Grant			Shares			Prices
Balance as of December 31, 2021		3,024			1,558		$	3.49
Options cancelled		—			(13	)	$	10.98
Balance as of March 31, 2022		3,024			1,545		$	3.43
RSUs granted		(1,511	)		—		$	-
RSUs cancelled and returned to the Plan		43			—		$	-
Options cancelled		—			(8	)	$	2.63
Balance as of June 30, 2022		1,556			1,537		$	3.38

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

				Weighted
				Average
	Number of			Grant-Date
	Shares			Fair Value
Non-vested shares as of December 31, 2021		88		$	4.84
Vested		(13	)	$	3.70
Non-vested shares as of March 31, 2022		75		$	5.67
Granted		1,511			—
Vested		(271	)	$	2.49
Cancelled		(12	)		—
Non-vested shares as of June 30, 2022		1,303		$	2.28

The following table summarizes significant ranges of outstanding and exercisable options as of June 30, 2022 (in thousands, except contractual life and exercise price):

	Options Outstanding						Options Exercisable
			Weighted
			Average
			Remaining		Weighted				Weighted
			Contractual		Average				Average		Aggregate
	Number		Life		Exercise		Number		Exercise		Intrinsic
Range of Exercise Price	Outstanding		(in Years)		Price		Exercisable		Price		value
$1.57 - $14.99		1,526		8.17	$	2.65		834	$	2.52	$	39
$15.00 - $25.59		4		1.24	$	15.00		4	$	15.00	$	—
$25.60 - $143.99		1		2.18	$	50.00		1	$	50.00	$	—
$144.00 - $409.99		5		4.15	$	144.00		5	$	144.00	$	—
$410.00 - $924.00		1		2.75	$	410.00		1	$	410.00	$	—
$1.57 - $924.00		1,537		8.13	$	3.38		845	$	3.85	$	39

Note 10. Equity

Warrants

As of June 30, 2022, the Company had the following warrants outstanding (share amounts in thousands):

Type	Number of Shares		Exercise Price		Expiration
Common stock		33	$	47.00	January 2023
Common stock		101	$	2.40	October 2023

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Note 11. Debt

Loan Facilities

On November 30, 2020, the Company entered into a loan agreement (the SRED Financing) to raise funds against the Company’s present and after acquired personal property. 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). Each borrowing carried an interest rate of 1.6% per month, compounded monthly (20.98%). The SRED financing was sanctioned against the Company’s SRED tax credit refund.

The first, second and third draws, including interest of $136,900 (CDN$174,417), were repaid through proceeds from the Company’s tax credit refund of $1,093,230 (CDN$1,392,831) received in August 2021, and the balance of $184,558 (CDN$ 235,132) was paid from the fourth draw.  The remaining loan balance, including interest, of $816,964 (CDN$1,044,177) was repaid on December 16, 2021.

Interest expense of $513,438 for the three and six months ended June 30, 2021 consisted of i) $348,134 of amortization of debt discount, ii) $120,950 of interest expense on convertible debt, which was outstanding and retired in 2021, and iii) $44,354 of interest expense on the SRED financing. 

Note 12. Related Party Transactions

A family member of one of the Company’s executive officers serves as a consultant to the Company. During the six months ended June 30, 2022 and 2021, the Company paid approximately $92,400 and $103,300, respectively, to the consultant. Additionally, a family member of one of the Company’s executive officers is an employee of the Company. During the six months ended June 30, 2022, the Company paid approximately $92,400 to the employed family member, which includes the aggregate grant date fair value, as determined pursuant to FASB ASC Topic 718, of an RSU awarded in April 2022. During the six months ended June 30, 2021, the Company paid approximately $46,000 to the employed family member.

Note 13. Subsequent Event

On August 5, 2022, the Company entered into a Technology License and Patent Assignment Agreement (the Intel Agreement) with Intel Corporation (Intel), pursuant to which Intel has (i) licensed from the Company on an exclusive basis certain software and technology assets related to the Company’s Stellar packet classification intellectual property, including its graph memory engine technology, and any roadmap variant, in the form existing as of the date of the Agreement (the Licensed Technology); (ii) acquired from the Company certain patent applications and patents owned by the Company; and (iii) assumed a professional services agreement, dated March 24, 2020, between Fabulous Inventions AB (Fabulous) and the Company (the Fabulous Agreement), pursuant to which, among other things, the Company licensed from Fabulous certain technology incorporated into the Licensed Technology.

As consideration for the Company to enter into the Agreement, Intel agreed to pay the Company $3,062,500 at the closing of the transaction (the Closing) and $437,500 upon the satisfaction by the Company, as mutually agreed upon by the parties in good faith, of certain release criteria set forth in the Agreement relating to various due diligence activities of Intel regarding the Licensed Technology (the Release Criteria). Intel and the Company agreed to work together in good faith so as to ensure that the Release Criteria is satisfied by the Company no later than six months following the Closing. The Company is currently evaluating the accounting for the Intel Agreement, which will be reflected in the financial statements for the three months ending September 30, 2022.

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ITEM 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

This Management’s Discussion and Analysis of Financial Condition and Results of Operations should be read in conjunction with the accompanying condensed consolidated financial statements and notes included in this report. This Form 10-Q contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, which include, without limitation, statements about the market for our technology, our strategy, competition, expected financial performance and capital raising effort., the impacts of COVID-19 on our business, the effects of the Russia/Ukraine conflict, and inflation, which could cause customers to delay or reduce purchases of our products or delay payments to us, which would adversely affect our financial results, including cash flows, and other aspects of our business identified in our most recent annual report on Form 10-K filed with the Securities and Exchange Commission on March 31, 2022 and in other reports that we file from time to time with the Securities and Exchange Commission. Any statements about our business, financial results, financial condition and operations contained in this Form 10-Q that are not statements of historical fact may be deemed to be forward-looking statements. Without limiting the foregoing, the words “believes,” “anticipates,” “expects,” “intends,” “plans,” “projects” or similar expressions are intended to identify forward-looking statements. Our actual results could differ materially from those expressed or implied by these forward-looking statements as a result of various factors, including the risk factors described under Item 1A of our annual report on Form 10-K for the year ended December 31, 2021 and the risk factors described below under Item 1A of this Form 10-Q. We undertake no obligation to update publicly any forward-looking statements for any reason, except as required by law, even as new information becomes available or events occur in the future.

Overview

We were formerly known as MoSys, Inc. (MoSys) and were incorporated in California in 1991 and reincorporated in Delaware in 2000. On September 14, 2021, we and our subsidiaries, 2864552 Ontario Inc. and 2864555 Ontario Inc., 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 under the symbol “PRSO.”

For accounting purposes, the legal subsidiary, Peraso Tech, has been treated as the accounting acquirer and we, the legal parent, have been treated as the accounting acquiree. The transaction has been accounted for as a reverse acquisition in accordance with Financial Accounting Standards Board Accounting Standards Codification (ASC) No. 805, Business Combinations. Accordingly, the financial condition and results of operations discussed herein are a continuation of Peraso Tech’s financial results prior to December 17, 2021 and exclude the financial results of us prior to December 17, 2021. See Note 2 to the condensed consolidated financial statements for additional disclosure.

Our strategy and primary business objective is to be a profitable, IP-rich, fabless semiconductor company offering integrated circuits (ICs), modules and related non-recurring engineering services. We specialize in the development of mmWave semiconductors, primarily in the 60 GHz spectrum band for 802.11ad/ay compliant devices and in the 28/39 GHz spectrum bands for 5G-compliant devices. We derive our revenue from selling semiconductor devices, as well as modules based on using those mmWave semiconductor devices. We have pioneered a high-volume mmWave production test methodology using standard low cost production test equipment. It has taken us several years to refine performance of this production test methodology, and we believe this places us in a leadership position in addressing operational challenges of delivering mmWave products into high-volume markets. During 2021, we augmented our business model and began selling complete mmWave modules. The primary advantage provided by a module is the silicon and the antenna are integrated into a single device. A differentiating characteristic of mmWave technology is that the radio frequency amplifiers must be as close as possible to the antenna to minimize loss, and, by providing a module, we can guarantee the performance of the amplifier/antenna interface.

We also acquired a memory product line, marketed under the Accelerator Engine name, which includes our Bandwidth Engine IC products, which integrate our 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.  As we are not developing new memory products, from a product development

26

perspective, we continue to leverage our current technologies and core competencies to expand our product offerings without incurring significant additional research and development (R&D) expenses.

We incurred net losses of approximately $13.8 million for the six months ended June 30, 2022 and $10.9 million for the year ended December 31, 2021 and had an accumulated deficit of approximately $124.0 million as of June 30, 2022. These and prior year losses have resulted in significant negative cash flows and have required us to raise substantial amounts of additional capital during this period. We expect to incur operating losses and will need to increase revenues substantially beyond levels that we have attained in the past in order to generate sustainable operating profit and sufficient cash flows to continue doing business without raising additional capital from time to time.

COVID-19 and Macroeconomic Factors

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. government in March 2020. This has negatively affected the U.S. and global economy, disrupted global supply chains, significantly restricted travel and transportation, resulted in mandated closures and orders to “shelter-in-place” and created significant disruption of the financial markets. The full extent of the COVID-19 impact on our 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 our control, and cannot be predicted.

Since March 2020, certain jurisdictions in which we operate have issued ’shelter-in-place” orders. We have complied with these orders and, when such orders were in place, minimized business activities at our facilities. We have implemented a teleworking policy for our employees and contractors to reduce on-site activity.

We believe that as the COVID-19 pandemic evolves, the direct and indirect impacts of the pandemic on global macroeconomic conditions, as well as conditions specific to us, are becoming more difficult to isolate or quantify. In addition, these direct and indirect factors can make it difficult to isolate and quantify the portion of our costs that are a direct result of the pandemic and costs arising from factors that may have been influenced by the pandemic, such as supply chain constraints, rising inflation, and recessionary fears. We expect these factors and their effects on our operations may persist for a longer period, even after the COVID-19 pandemic has subsided. We continue to closely monitor impacts, especially to customer programs and our supply chain. We are working internally and with suppliers on programs (i.e., new production flows, etc.) to allow us to increase our peak throughput to better handle unplanned disruptions to our supply chain. To date, we have not experienced a material impact on our cash flows, liquidity, capital resources, cash requirements, financial position, or results of operations, attributable to the global semiconductor supply chain disruption and inflation. We have experienced increased prices from our suppliers, and, for certain products, we have increased prices to our customers to mitigate the impacts, although to date in 2022 the impacts of these price increases have been minimal. We have and continue to experience longer lead times for certain components used to manufacture our products, and, therefore, and, in response, we have identified second and third sources for certain components used in our module products. Also, we have increased lead times for our customers. We have not experienced any issues over our product quality and product development activities, as we do not rely significantly on outside vendors to manage and perform these activities for us. We currently have not identified any current impacts of the supply chain disruption and inflation that will affect our future results, and it is difficult to differentiate whether higher prices are due to supply chain disruption, inflation or a mix of both.

While we believe that our operations personnel are currently in a position to meet expected customer demand levels in the coming quarters, we recognize that unpredictable events could create difficulties in the months ahead. We may not be able to address these difficulties in a timely manner, which could negatively impact our business, results of operations, financial condition and cash flows.

The continued spread of COVID-19 has also led to disruption and volatility in the global capital markets. The Russian invasion of Ukraine in February 2022 has led to further economic disruptions. Mounting inflationary cost pressures and recessionary fears have negatively impacted the global economy. The U.S. Federal Reserve increased interest rates starting in March 2022 and additional increases are expected throughout the year. Given current market conditions, we may be unable to access the capital markets, and additional capital may only be available to us on terms that could be significantly detrimental to our existing stockholders and to our business.

For additional information on risks that could impact our future results, please refer to “Risk Factors” in Part II, Item 1A. of this quarterly report on Form 10-Q.

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Sources of Revenue

Product revenue

Revenue is recognized when performance obligations under the terms of a contract with a customer are satisfied. The majority of our contracts have a single performance obligation to transfer products. Accordingly, we recognize revenue when title and risk of loss have been transferred to the customer, generally at the time of shipment of products. Revenue is measured as the amount of consideration we expect to receive in exchange for transferring products and is generally based upon a negotiated, formula, list or fixed price. We sell our products both directly to customers and through distributors generally under agreements with payment terms typically 60 days or less.

We 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

Our licensing contracts typically provide for royalties based on the licensee’s use of our memory technology in its currently shipping commercial products. We estimate its royalty revenue in the calendar quarter in which the licensee uses the licensed technology.  Payments are received in the subsequent quarter. We also generate revenue from licensing our technology. We recognize license fees as revenue at the point of time when the control of the license has been transferred and we have 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.

Critical Accounting Policies and Estimates

The discussion and analysis of our financial condition and results of operations are based upon our condensed consolidated financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States (GAAP). The preparation of these condensed consolidated financial statements requires us to make certain estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses. On an ongoing basis we make these estimates based on our historical experience and on assumptions that we consider reasonable under the circumstances. Actual results may differ from these estimates and reported results could differ under different assumptions or conditions. Our significant accounting policies and estimates are disclosed in Note 1 of the “Notes to Consolidated Financial Statements” in our annual report on Form 10-K for the year ended December 31, 2021. As of June 30, 2022, there have been no material changes to our significant accounting policies and estimates.

Reclassifications

We previously classified intangible asset amortization expense related to the developed technology and customer relationships intangibles within research and development expenses (R&D) in our condensed consolidated statements of operations and comprehensive loss. Amortization expense on the developed technology intangible asset is now classified within cost of net revenue, and amortization expense on customer relationships is now classified in selling, general and administrative expenses (SG&A). Prior period amounts have been conformed to the current period presentation. See Note 5 to the condensed consolidated financial statements for a discussion of the reclassifications.

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Results of Operations

Net Revenue

	June 30,						Change
	2022			2021			2021 to 2022
	(dollar amounts in thousands)
Product -three months ended	$	4,120		$	576		$	3,544	615	%
Percentage of total net revenue		96	%		83	%
Product -six months ended	$	7,324		$	1,627		$	5,697	350	%
Percentage of total net revenue		95	%		90	%

Product revenue increased for the three months ended June 30, 2022 compared with the same period of 2021 primarily due to a $1.9 million increase in revenues attributable to our memory IC products. Our results for the prior year period included no memory product sales, as we completed our business combination in December 2021. In addition, shipments of our mmWave module products increased by $1.5 million over the prior year period, as we commenced selling module products in the second half of 2021.

Product revenue increased for the six months ended June 30, 2022 compared with the same period of 2021 primarily due to a $3.8 million increase in revenues attributable to our memory IC products. Shipments of our mmWave module products increased by $2.3 million. These increases were partially offset by decreases in sales of our mmWave IC products. We expect revenues to increase for the remainder of 2022, as we expect increased sales of our mmWave products, including the benefits of price increases implemented in 2022, and will experience a full-year contribution of revenues from our memory products.

.

	June 30,						Change
	2022			2021			2021 to 2022
	(dollar amounts in thousands)
Royalty and other -three months ended	$	164		$	121		$	43	36	%
Percentage of total net revenue		4	%		17	%
Royalty and other -six months ended	$	363		$	171		$	192	112	%
Percentage of total net revenue		5	%		10	%

Royalty and other includes royalty, non-recurring engineering, services and licenses revenues. The increase in royalty and other revenue for the three and six months ended June 30, 2022 compared with the same period of 2021 was primarily due to a full six-month contribution of royalty revenues from licensees of our memory technology.

Cost of Net Revenue and Gross Profit

	June 30,						Change
	2022			2021			2021 to 2022
	(dollar amounts in thousands)
Cost of net revenue -three months ended	$	2,799		$	435		$	2,364	543	%
Percentage of total net revenue		65	%		62	%
Cost of net revenue -six months ended	$	4,747		$	1,054		$	3,693	350	%
Percentage of total net revenue		62	%		59	%

	June 30,						Change
	2022			2021			2021 to 2022
	(dollar amounts in thousands)
Gross profit -three months ended	$	1,485		$	262		$	1,223	467	%
Percentage of total net revenue		35	%		38	%
Gross profit -six months ended	$	2,940		$	744		$	2,196	295	%
Percentage of total net revenue		38	%		41	%

Cost of net revenue is primarily comprised of direct and indirect costs related to the sale of our products, including amortization of intangible assets and depreciation of production-related fixed assets.

29

Cost of net revenue increased for the three and six months ended June 30, 2022 when compared with the same period in 2021, primarily due to increased shipment volumes of our LineSpeed and Bandwidth Engine IC and mmWave module products. Our module products have higher cost of goods sold per unit and generate lower gross profit margin than our IC products.

Gross profit increased for the three and six months ended June 30, 2022 compared with the same period of 2021 due to the increased product shipments. The decrease in our gross profit margin for the three and six months ended June 30, 2022 compared with the prior year periods was primarily attributable to the increased volume shipments of our mmWave modules, which carry lower gross margins than our IC products.

 Research and Development

	June 30,						Change
	2022			2021			2021 to 2022
	(dollar amounts in thousands)
R&D -three months ended	$	5,643		$	2,892		$	2,751	95	%
Percentage of total net revenue		132	%		415	%
Research and development -six months ended	$	11,127		$	5,679		$	5,448	96	%
Percentage of total net revenue		145	%		316	%

Our R&D expenses include costs related to the development of our products. We expense R&D costs as they are incurred.

The increase for the three and six months ended June 30, 2022 compared with the same period of 2021 was primarily due to the inclusion of a full six months of expenses related to the former operations of MoSys, amortization of intangible assets in the first six months of 2022 and recognition of government wage and rent subsidies in the first quarter of 2021 that reduced operating expenses. We expect that total research and development expenses will increase in 2022 compared with 2021, as we will include the operations related to our memory products and increase development of our mmWave products and technologies, including our new 5G products. In addition, we do not expect to receive any government subsidies in 2022 to reduce our expenses.  

Selling, General and Administrative

	June 30,						Change
	2022			2021			2021 to 2022
	(dollar amounts in thousands)
SG&A -three months ended	$	2,878		$	1,799		$	1,079	60	%
Percentage of total net revenue		67	%		258	%
SG&A -six months ended	$	5,585		$	3,106		$	2,479	80	%
Percentage of total net revenue		73	%		173	%

SG&A expenses consist primarily of personnel and related overhead costs for sales, marketing, finance, human resources and general management and amortization of intangible assets.  

The increase for the three and six months ended June 30, 2022 compared with the same period of 2021 was primarily due to the inclusion of a full quarter of expenses related to our memory product line.

Interest expense

Interest expense incurred during the six months ended June 30, 2021 related to our convertible debt and loans payable, which were repaid and/or converted into equity during 2021.

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Liquidity and Capital Resources; Changes in Financial Condition

Cash Flows

As of June 30, 2022, we had cash, cash equivalents and investments of $6.0 million and working capital of $9.9 million.   

Net cash used in operating activities was $11.6 million for the first six months of 2022, which primarily resulted from our net loss of $13.8 million and $2.4 million in net changes in assets and liabilities, partially offset by non-cash charges of $1.5 million of depreciation and amortization, $2.9 million of stock based compensation and a $0.2 million other non-cash items. The changes in assets and liabilities primarily related to the timing of accounts receivable collections, purchases of inventory and other vendor payables and prepayments.

Net cash used in operating activities was $5.7 million for the first six months of 2021, which primarily resulted from our net loss of $9.6 million and $0.5 million in net changes in assets and liabilities, which was offset by non-cash charges of $2.3 million of stock-based compensation, $0.5 million of depreciation and amortization expenses, $0.9 million amortization of debt discount, $0.4 million of accrued interest and a $0.3 million other non-cash items.  The changes in assets and liabilities primarily related to the timing of accounts receivable collections and other vendor payables and prepayments.

Net cash provided by investing activities of $8.6 million for the six months ended June 30, 2022 represented $9.4 million in proceeds from maturities of short-term investments, partially offset by $0.5 million purchases of short and long-term investments and $0.3 million of purchases of property and equipment. Net cash used in investing activities for the six months ended June 30, 2021 represented approximately $52,000 of purchases of property and equipment and $95,000 of intangible assets.

Net cash used in financing activities for the six months ended June 30, 2022 consisted of taxes paid to net share settle equity awards.

Net cash provided by financing activities for the six months ended June 30, 2021 consisted of net proceeds received from an unsecured loan.

Our future liquidity and capital requirements are expected to vary from quarter-to-quarter, depending on numerous factors, including:

• level of revenue;

• cost, timing and success of technology development efforts;

• inventory levels, as supply chain disruption has required us to maintain higher inventory levels and place purchase orders with our suppliers longer into the future, which exposes us to additional inventory risk;

• timing of product shipments, which may be impacted by supply chain disruptions;

• length of billing and collection cycles, which may be impacted in the event of a global recession or economic downturn;

• fabrication costs, including mask costs, of our ICs, currently under development;

• variations in manufacturing yields, material lead time and costs and other manufacturing risks;

• costs of acquiring other businesses and integrating the acquired operations; and

• profitability of our business.

31

Going Concern - Working Capital

We incurred net losses of approximately $13.8 million for the six months ended June 30, 2022 and $10.8 million for the year ended December 31, 2021 and had an accumulated deficit of approximately $131.0 million as of June 30, 2022.  These and prior year losses have resulted in significant negative cash flows and have required us to raise substantial amounts of additional capital. To date, we have primarily financed our operations through multiple offerings of common stock and issuance of convertible notes and loans to investors and affiliates.

We expect to continue to incur operating losses for the foreseeable future as we continue to secure new customers for and continue to invest in the development of our products, and we expect our cash expenditures to continue to exceed receipts for the foreseeable future, as our revenues will not be sufficient to offset our operating expenses.  

We will need to increase revenues substantially beyond levels that we have attained in the past in order to generate sustainable operating profit and sufficient cash flows to continue doing business without raising additional capital from time to time.  As a result of our expected operating losses and cash burn for the foreseeable future and recurring losses from operations, if we are unable to raise sufficient capital through additional debt or equity arrangements, there will be uncertainty regarding our ability to maintain liquidity sufficient to operate our business effectively, which raises substantial doubt as to our ability to continue as a going concern within one year from the date of issuance of these condensed consolidated financial statements. The condensed consolidated financial statements presented in Item 1 of this Report have been prepared assuming that we will continue as a going concern, and do not include any adjustments that might result from the outcome of this uncertainty.  There can be no assurance that such additional capital, whether in the form of debt or equity financing, will be sufficient or available and, if available, that such capital will be offered on terms and conditions acceptable to us. We are currently seeking additional financing in order to meet our cash requirements for the foreseeable future. If the Company is unsuccessful in these efforts, it will need to implement cost reduction strategies, which could further affect its near- and long-term business plan. These efforts may include, but are not limited to, reducing headcount and curtailing business activities. As further discussed in Note 11 to the condensed consolidated financial statements, in August 2022, we entered into an exclusive technology license and patent assignment agreement with Intel Corporation, which is expected to generate gross proceeds to us of $3.5 million over the next six months and result in a reduction of operating expenses of approximately $2.7 million on annual basis.

If we were to raise additional capital through sales of our equity securities, our stockholders would suffer dilution of their equity ownership. If we engage in debt financing, we may be required to accept terms that restrict our ability to incur additional indebtedness, prohibit us from paying dividends, repurchasing our stock or making investments, and force us to maintain specified liquidity or other ratios, any of which could harm our business, operating results and financial condition. If we need additional capital and cannot raise it on acceptable terms, we may not be able to, among other things:

• develop or enhance our products;

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

• acquire complementary technologies, products or businesses;

• expand operations, in the United States or internationally;

• hire, train and retain employees; or

• respond to competitive pressures or unanticipated working capital requirements.

Our failure to do any of these things could seriously harm our ability to execute our business strategy and may force us to curtail our existing operations.

Off-Balance Sheet Arrangements

We do not maintain any off-balance sheet arrangements or obligations that are reasonably likely to have a material current or future effect on our financial condition, results of operations, liquidity or capital resources.

32

Recent Accounting Pronouncements

See Note 1 to the condensed consolidated financial statements for a discussion of recent accounting policies.

ITEM 4. Controls and Procedures

Disclosure Controls and Procedures. Our management is responsible for establishing and maintaining adequate internal control over our financial reporting. Because of inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

Under the supervision and with the participation of our management, including our Chief Executive Officer and Chief Financial Officer, we conducted an evaluation of the effectiveness of the design and operation of our disclosure controls and procedures, as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934. Based on this evaluation, our management concluded that, as of June 30, 2022, our disclosure controls and procedures were effective.

Changes in Internal Control over Financial Reporting. During the six months ended June 30, 2022, there was no change in our internal control over financial reporting that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

33

PART II—OTHER INFORMATION

ITEM 1. Legal Proceedings

The discussion of legal matters in Note 4 of the Notes to Condensed Consolidated Financial Statements included in Part I, Item 1 of this report under the heading “Legal Matters” is incorporated by reference in response to this Part II, Item 1.

ITEM 1A. Risk Factors

We face many significant risks in our business, some of which are unknown to us and not presently foreseen. These risks could have a material adverse impact on our business, financial condition and results of operations in the future. Other than as set forth below, there have been no material changes with respect to the risk factors disclosed under Item 1A of our annual report on Form 10-K for the year ended December 31, 2021, which we filed with the SEC on March 31, 2022.

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

Our unaudited condensed consolidated financial statements as of June 30, 2022 have been prepared under the assumption that we will continue as a going concern for the next twelve months. As of June 30, 2022, we had cash and cash equivalents of $6.0 million and an accumulated deficit of $131.0 million. We do not believe that our cash, cash equivalents and investments are sufficient for the next 12 months. We will need to increase revenues substantially beyond levels that we have attained in the past in order to generate sustainable operating profit and sufficient cash flows to continue doing business without raising additional capital from time to time.  As a result of our expected operating losses and cash burn for the foreseeable future and recurring losses from operations, if we are unable to raise sufficient capital through additional debt or equity arrangements, there will be uncertainty regarding our ability to maintain liquidity sufficient to operate our business effectively, which raises substantial doubt as to our ability to continue as a going concern. If we cannot continue as a viable entity, our stockholders would likely lose most or all of their investment in us.

If we are unable to generate sustainable operating profit and sufficient cash flows, then our future success will depend on our ability to raise capital. We are seeking additional financing and evaluating financing alternatives in order to meet our cash requirements for the next 12 months. We cannot be certain that raising additional capital, whether through selling additional debt or equity securities or obtaining a line of credit or other loan, will be available to us or, if available, will be on terms acceptable to us. If we issue additional securities to raise funds, these securities may have rights, preferences, or privileges senior to those of our common stock, and our current stockholders may experience dilution. If we are unable to obtain funds when needed or on acceptable terms, we may be required to curtail our current product development programs, cut operating costs, forego future development and other opportunities or even terminate our operations.

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

We recorded net losses of approximately $7.0 million and $10.9 million for the six months ended June 30, 2022 and year ended December 31, 2021, respectively. These and prior-year losses have resulted in significant negative cash flows. To remain competitive and expand our product offerings to customers, we will need to increase revenues substantially beyond levels that we have attained in the past in order to generate sustainable operating profit and sufficient cash flows to continue doing business without raising additional capital from time to time. Given our history of fluctuating revenues and operating losses, and the challenges we face in securing customers for our products, we cannot be certain that we will be able to achieve and maintain profitability on either a quarterly or annual basis in the future. As a result, we will need to raise additional capital to meet our cash requirements for the next 12 months, which may or may not be available to us at all or only on unfavorable terms.

34

The invasion of Ukraine by Russia could negatively impact our business.

Russia’s recent military invasion of Ukraine has led to, and may lead to, additional sanctions being levied by the United States, European Union and other countries against Russia. Russia’s military invasion and the resulting sanctions have had an adverse effect on global markets. We cannot predict the progress or outcome of the situation in Ukraine, as the conflict and governmental reactions are rapidly developing and beyond our control. Prolonged unrest, intensified military activities, or more extensive sanctions impacting the region could have a material adverse effect on the global economy, and such effect could in turn have a material adverse effect on the operations, results of operations, financial condition, liquidity and business outlook of our business.  

Sustained inflation could have a material adverse effect on our business, financial condition, results of operations and liquidity.

Inflation rates in the markets in which we operate have increased and may continue to rise. Inflation over the last several months has led us to experience higher costs, including higher labor costs, wafer and other costs for materials from suppliers, and transportation costs. Our suppliers have raised their prices and may continue to raise prices, and, although we have made minimal price increases thus far, in the competitive markets in which we operate, we may not be able to make corresponding price increases to preserve our gross margins and profitability. In addition, inflationary pressures could cause customers to delay or reduce purchases of our products or delay payments to us. If inflation rates continue to rise or remain elevated for a sustained period of time, they could have a material adverse effect on our business, financial condition, results of operations and liquidity.

35

ITEM 6. Exhibits

(a)	Exhibits
	10.1*+	Amendment to offer of employment between the Company and Daniel Lewis dated April 25, 2022
	10.2*+	Amendment to offer of employment between the Company and James Sullivan dated April 25, 2022
	10.3*+	Amendment to employment agreement between Peraso Technologies Inc. and Brad Lynch dated April 25, 2022
	31.1*	Rule 13a-14 certification
	31.2*	Rule 13a-14 certification
	32.1**	Section 1350 certifications
	101*	The following financial information from Peraso Inc.’s quarterly report on Form 10-Q for the period ended June 30, 2022, filed with the SEC on August 15, 2022, formatted in Inline Extensible Business Reporting Language (Inline XBRL): (i) the Condensed Consolidated Statements of Operations and Comprehensive Income (Loss) for the three and six months ended June 30, 2022 and 2021, (ii) the Condensed Consolidated Balance Sheets as of June 30, 2022 and December 31, 2021, (iii) the Condensed Consolidated Statements of Stockholders’ Equity (Deficit) for the three and six months ended June 30, 2022 and 2021, (iv) the Condensed Consolidated Statements of Cash Flows for the six months ended June 30, 2022 and 2021, and (v) Notes to Condensed Consolidated Financial Statements.
	104*	Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101).

*Filed herewith.

**Furnished herewith.

+Management contract, compensatory plan or arrangement.

36

Signatures

Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

Dated: August 15, 2022		PERASO INC.
	By:	/s/ Ronald Glibbery
		Ronald Glibbery
		Chief Executive Officer (Principal Executive Officer)
	By:	/s/ James W. Sullivan
		James W. Sullivan
		Chief Financial Officer
		(Principal Financial and Accounting Officer)

37

EX-10.1

Peraso Inc. 2309 Bering Drive San Jose, CA 95131

Exhibit 10.1

April 15, 2022

Daniel Lewis

Re: Amendment to Offer of Employment dated August 8, 2018

Dear Dan:

This letter (this “Amendment”) amends certain terms of your offer of employment, dated as of August 8, 2018 (the “Offer Letter”), with MoSys, Inc. (now known as Peraso Inc., the “Company”).  This Amendment will be effective through December 17, 2022, at which time it will automatically terminate, and is intended to be a binding agreement, and if the terms contained in this Amendment are acceptable to you, please acknowledge your acceptance by signing in the signature block below. Capitalized terms used and not otherwise defined herein shall have the meaning given to them in the Company’s Amended and Restated Executive Change-In-Control and Severance Policy adopted as of April 15, 2022 (the “Change-In-Control and Severance Policy”).

1. Position; Responsibilities.  Your title will be Vice President, General Manager of Memory Products (“Vice President”), and you will report directly to the Chief Executive Officer of the Company (“CEO”). As Vice President, you will have the duties and responsibilities consistent with such position, including management of the Company’s memory product line and such other duties and responsibilities as may be assigned to you from time to time by the Company. You acknowledge and agree that upon the effectiveness of this Amendment, you will no longer serve as President of the Company.

2. Base Salary.  Your annual base salary will be $275,000, less applicable withholdings and deductions (“Base Salary”) payable in accordance with the Company’s normal payroll procedures.

3. Bonus.  You will be eligible to receive an annual target incentive bonus of up to 50% of your Base Salary (“Target Bonus”), based upon the achievement of certain goals and performance criteria determined by the CEO and the Compensation Committee of the Company’s board of directors (the “Board”). In addition to the Target Bonus, (i) upon the closing of a VAE Sale (the “VAE Sale Closing”), the Company will pay (or will arrange for the payment) to you in cash of a sum equal to 3% of the gross proceeds payable to the Company or its stockholders at the VAE Sale Closing (the “VAE Bonus”) and (ii) following the VAE Sale Closing, the Company will pay (or will arrange for the payment) to you in cash of a sum equal to 3% of the royalties paid to the Company during the 24 month period following the VAE Sale Closing (the “VAE Royalty Payments” and, together with the VAE Bonus, the “VAE Incentive Payments”). For the purposes hereof, “VAE Sale” means the sale of all or any part of the Company’s Virtual Accelerator Engine intellectual property, the definitive agreement for which sale is entered into during the period beginning after the date hereof and ending 12 months from the date you are no longer an employee of the Company.  Notwithstanding the foregoing, in no event shall the aggregate VAE Incentive Payments exceed $300,000.For the avoidance of doubt, a Change-in-Control shall not constitute a VAE Sale for the purposes of determining the VAE Incentive Payments.If, prior to a VAE Sale, the Company terminates your employment for Cause or you voluntarily terminate your employment without Good Reason, then you will not be entitled to receive any VAE Incentive Payments. If the Company terminates your employment for any reason other than for Cause, you will be entitled to receive the VAE Incentive Payments as set forth herein. The VAE Incentive Payments will be subject to applicable withholdings and other taxes.

4. Equity Award.  You will be eligible to receive equity awards pursuant to the Peraso Inc. Amended and Restated 2019 Stock Incentive Plan. The type and amount of an equity award will be (i) determined by the Compensation Committee of the Board, (ii) commensurate with awards granted to other executives of the Company, and (iii) subject to accelerated vesting in the event you are not named as a nominee to be elected to the Board at the Company’s next annual meeting of stockholders.

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Peraso Inc. 2309 Bering Drive San Jose, CA 95131

5. Severance.  You will remain eligible to receive the benefits that may be payable or offered pursuant to the Change-In-Control and Severance Policy. In addition, if you experience a Constructive Termination not in Connection with a Change-in-Control, then, subject to Section 6 below, you will be entitled to receive the following severance benefits from the Company:

a. a single lump sum severance payment equal to one year of your then-current Base Salary, payable to you within 60 days following the termination of your employment;

b. reimbursement of the full premium amount (less withholding taxes) charged under the Consolidated Omnibus Budget Reconciliation Act (COBRA) for continuation of the group health insurance in effect for you and your participating dependents, for a period of 12 months following the termination of your employment, subject to earlier termination of reimbursement as of the effective date you receive coverage under a group health insurance plan of another employer;

c. payment of any Target Bonus earned but unpaid for the fiscal year preceding that in which, and the fiscal year in which (pro-rated until the date of termination of your employment), your employment was terminated; and

d. all of your then unvested outstanding equity awards of the Company will, as of the date of termination of your employment, immediately vest, become exercisable and remain exercisable and until the later of 24 months following the termination of your employment and the expiration of the equity award’s initial term.

6. Release of Claims.  Your right to receive any severance benefits pursuant to Section 5 above if you experience a Constructive Termination not in Connection with a Change-in-Control will be subject to your signing and not revoking a release of claims agreement in a form approved by the Company, and such release becoming effective and irrevocable within 60 days of the termination of your employment or such earlier deadline required by the release. If the release does not become effective within the time period set forth above, you will forfeit all rights to receive such severance benefits.

In the event of any conflicts or inconsistencies between the provisions of this Amendment and the Offer Letter, the provisions of this Amendment will control. Except as set forth in this Amendment, the remainder of the Offer Letter will remain in full force and effect.

If you have any questions, please feel free to call me. We look forward to your favorable reply and to a continued productive working relationship.

Sincerely,

Peraso Inc.

/s/Ronald Glibbery

Name: Ronald Glibbery

Title: Chief Executive Officer

ACCEPTED AND AGREED TO

this 25th day of April, 2022.

/s/ Daniel Lewis

Daniel Lewis

2

EX-10.2

Peraso Inc. 2309 Bering Drive San Jose, CA 95131

Exhibit 10.2

April 15, 2022

James Sullivan

Re: Second Amendment to Offer of Employment dated December 21, 2007

Dear Jim:

This letter (this “Amendment”) further amends certain terms of your offer of employment, dated as of December 21, 2007 (as amended, the “Offer Letter”), with MoSys, Inc. (now known as Peraso Inc., the “Company”).  This Amendment is intended to be a binding agreement, and if the terms contained in this Amendment are acceptable to you, please acknowledge your acceptance by signing in the signature block below. Capitalized terms used and not otherwise defined herein shall have the meaning given to them in the Company’s Amended and Restated Executive Change-In-Control and Severance Policy adopted as of April 15, 2022 (the “Change-In-Control and Severance Policy”).

1. Position; Responsibilities.  You will continue serving as the Chief Financial Officer of the Company (“CFO”), and you will report directly to the Chief Executive Officer of the Company (“CEO”). As CFO, you will have the duties and responsibilities consistent with such position, including such other duties and responsibilities as may be assigned to you from time to time by the Company.

2. Base Salary.  Effective retroactively as of December 17, 2021, your annual base salary will be $305,000, less applicable withholdings and deductions (“Base Salary”), payable in accordance with the Company’s normal payroll procedures.

3. Bonus.  You will be eligible to receive an annual target incentive bonus of up to 60% of your Base Salary (“Target Bonus”), based upon the achievement of certain goals and performance criteria determined by the CEO and the Compensation Committee of the Company’s board of directors (the “Board”).

4. Equity Award.  You will be eligible to receive equity awards pursuant to the Peraso Inc. Amended and Restated 2019 Stock Incentive Plan. The type and amount of an equity award will be (i) determined by the Compensation Committee of the Board and (ii) commensurate with awards granted to other executives of the Company.

5. Severance.  You will remain eligible to receive the benefits that may be payable or offered pursuant to the Change-In-Control and Severance Policy. In addition, if you experience a Constructive Termination not in Connection with a Change-in-Control, then, subject to Section 6 below, you will be entitled to receive the following severance benefits from the Company:

a. a single lump sum severance payment equal to one year of your then-current Base Salary, payable to you within 60 days following the termination of your employment;

b. reimbursement of the full premium amount (less withholding taxes) charged under the Consolidated Omnibus Budget Reconciliation Act (COBRA) for continuation of the group health insurance in effect for you and your participating dependents, for a period of 12 months following the termination of your employment, subject to earlier termination of reimbursement as of the effective date you receive coverage under a group health insurance plan of another employer;

c. payment of any Target Bonus earned but unpaid for the fiscal year preceding that in which, and the fiscal year in which (pro-rated until the date of termination of your employment), your employment was terminated; and

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Peraso Inc. 2309 Bering Drive San Jose, CA 95131

d. all of your then unvested outstanding equity awardsof the Company will, as of the date of termination of your employment, immediately vest, become exercisable and remain exercisable and until the later of 24 months following the termination of your employment and the expiration of the equity award’s initial term.

6. Release of Claims.  Your right to receive any severance benefits pursuant to Section 5 above if you experience a Constructive Termination not in Connection with a Change-in-Control will be subject to your signing and not revoking a release of claims agreement in a form approved by the Company, and such release becoming effective and irrevocable within 60 days of the termination of your employment or such earlier deadline required by the release. If the release does not become effective within the time period set forth above, you will forfeit all rights to receive such severance benefits.

7. MANDATORY ARBITRATION AND WAIVER OF RIGHT TO JURY TRIAL.: You agree that any dispute arising out of or related to your employment, including termination of your employment, with the Company shall be resolved only by an arbitrator through final and binding arbitration pursuant to the then current Employment Arbitration Rules of the JAMS (Judicial Arbitration & Mediation Services) (available at www.jamsadr.com) or, at the parties’ option, under the American Arbitration Association’s National Rules for the Resolution of Employment Disputes (available at www.aadr.org), and not by way of court or jury trial. Attached for your reference is a copy of the current JAMS Employment Arbitration Rules, which are also available on JAMS’ website. Please acknowledge your receipt here of the JAMS Employment Arbitration Rules: _________ (please initial).

You and the Company agree that any dispute regarding any aspect of this Agreement, including the confidentiality provisions, shall be submitted exclusively to final and binding arbitration before a mutually agreed upon arbitrator in accordance with the Federal Arbitration Act (“FAA”), 9 U.S.C. §§ 1, et seq. In the event that the FAA does not apply for any reason, then the arbitration will proceed pursuant to the California Arbitration Act, California Code of Civil Procedure §§ 1280, et seq. The arbitrator shall be empowered to award any appropriate relief, including remedies at law, in equity or injunctive relief. The arbitrator may award any party any remedy to which that party is entitled under applicable law, but such remedies shall be limited to those that would be available to a party in a court of law for the claims presented to and decided by the arbitrator. The arbitrator will issue a decision or award in writing, stating the essential findings of fact and conclusions of law. The location of the arbitration proceeding shall be in the general geographical vicinity of the place where you last worked for the Company, unless each party to the arbitration agrees in writing otherwise. You and the Company agree that this arbitration shall be the exclusive means of resolving any dispute under this Agreement and that no other action will be brought by them in any court or other forum. If you and the Company cannot agree on an arbitrator, then an arbitrator will be selected using the alternate striking method from a list of 5 neutral arbitrators provided by the applicable JAMS Rule. Each party will pay the fees for their own counsel, subject to any remedies to which that party may later be entitled under applicable law. However, in all cases where required by applicable law, the Company will pay the arbitrator’s fees and the arbitration costs. If under applicable law the Company is not required to pay the arbitrator’s fees and the arbitration costs, then such fees and costs will be apportioned equally between each set of adverse parties.

Except as may be permitted or required by law, neither a party nor an arbitrator may disclose the existence, content, or results of any arbitration hereunder without the prior written consent of all parties. A court of competent jurisdiction shall have the authority to enter a judgment upon the award made pursuant to the arbitration. Claims may be brought before an administrative agency, but only to the extent applicable law permits access to such an agency notwithstanding the existence of an agreement to arbitrate. However, there will be no right or authority for any dispute to be brought, heard or arbitrated as a class or collective action.

In the event of any conflicts or inconsistencies between the provisions of this Amendment and the Offer Letter, the provisions of this Amendment will control. Except as set forth in this Amendment, the remainder of the Offer Letter will remain in full force and effect.

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Peraso Inc. 2309 Bering Drive San Jose, CA 95131

If you have any questions, please feel free to call me. We look forward to your favorable reply and to a continued productive working relationship.

Sincerely,

Peraso Inc.

/s/Ronald Glibbery

Name: Ronald Glibbery

Title: Chief Executive Officer

ACCEPTED AND AGREED TO

this 25th day of April, 2022.

/s/ James Sullivan

James Sullivan

3

EX-10.3

Peraso Technologies Inc. 144 Front St W Ste 685 Toronto, Ontario M5J 2L7

Exhibit 10.3

April 15, 2022

Bradley Lynch

Dear Brad:

As you know, on December 17, 2021, Peraso Technologies Inc. (the “Company”) completed its business combination with Peraso Inc. (formerly known as MoSys, Inc., the “Parent” and together with the Company, “Peraso”),by way of a statutory plan of arrangement (the “Arrangement”) under the Business Corporations Act (Ontario). This offer letter (this “Agreement”) sets forth and confirms the amended terms and conditions of your ongoing employment with the Company and service to the Parent immediately following the completion of the Arrangement (the “Effective Time”). Except as specifically amended in this Agreement, your employment agreement dated August 1, 2009 (the “Employment Agreement”) and its terms and conditions shall remain in full force and effect.

This Agreement is intended to be binding, and if the terms contained herein are acceptable to you, please acknowledge your acceptance by signing in the signature block below. Upon your acceptance, this Agreement will become retroactively effective as of the Effective Time. Capitalized terms used and not otherwise defined herein shall have the meaning given to them in the Parent’s Amended and Restated Executive Change-In-Control and Severance Policy adopted as of April 15, 2022 (the “Change-In-Control and Severance Policy”).

Your employment with the Company as set forth herein is conditioned upon: (1) your execution of the Company’s standard form of Employment, Confidential Information and Invention Assignment Agreement; and (2) ratification of this offer by the Compensation Committee of the Parent’s board of directors (the “Committee”).

1. Position; Responsibilities.  You will serve as Chief Operating Officer of the Parent (“COO”) located in the Company’s Toronto office and will report directly to the Chief Executive Officer of the Parent (“CEO”).  As COO, you will have the duties and responsibilities consistent with such position, including such duties and responsibilities as may be assigned to you from time to time by Peraso. It is understood that you will not be employed by any other person or organization at the time of commencement of your employment with the Company.

2. Base Salary.  Effective retroactively as of the Effective Time, your annual base salary will be US$275,000, less applicable withholdings and deductions (“Base Salary”), payable in accordance with the Company’s normal payroll procedures.

3. Bonus.  You will be eligible to receive an annual target incentive bonus of up to 50% of your Base Salary (“Target Bonus”), based upon the achievement of certain goals and performance criteria determined by the CEO and the Committee.

4. Equity Award.  You will be eligible to receive equity awards pursuant to the Peraso Inc. Amended and Restated 2019 Stock Incentive Plan. The type and amount of an equity award will be (i) determined by the Committee and (ii) commensurate with awards granted to other executives of Peraso.

5. Severance.  You will be eligible to receive the benefits that may be payable or offered pursuant to the Change-In-Control and Severance Policy. In addition, if you experience a Constructive Termination not in Connection with a Change-in-Control, you will be entitled to receive the following severance benefits from the Company:

a. a single lump sum severance payment equal to one year of your then-current Base Salary, payable to you within 60 days following the termination of your employment;

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Peraso Technologies Inc. 144 Front St W Ste 685 Toronto, Ontario M5J 2L7

b. continuation of the full premium amount to provide all benefits (as existed on the date notice of termination is provided) in effect for you and your participating dependents, for a period of 12 months following the termination of your employment, subject to earlier termination of reimbursement as of the effective date you receive coverage under a group health insurance plan of another employer;

c. payment of any Target Bonus earned but unpaid for the fiscal year preceding that in which, and the fiscal year in which (pro-rated until the date of termination of your employment), your employment was terminated; and

d. all of your then unvested outstanding equity awards of the Parent will, as of the date of termination of your employment, immediately vest, become exercisable and remain exercisable and until the later of 24 months following the termination of your employment and the expiration of the equity award’s initial term.

Notwithstanding Section 5.1 of the Change-In-Control and Severance Policy, if you do not execute a release in exchange for your payments and benefits contemplated by this Section 5(a) through 5(d), then the Company shall only provide you with your minimum termination and severance payments and benefits you are entitled to pursuant to the Employment Standards Act, 2000 (Ontario), as may be amended from time to time (the “ESA”). Specifically, should you not execute a release in favour of the Company and any of its related entities, upon termination of your employment, the Company shall provide you with only your minimum entitlements pursuant to the ESA, which currently are: (A) the minimum notice or, at the Company's option, pay in lieu of notice, required to be provided by the ESA; (B) statutory severance pay required to be provided by the ESA, if applicable; (C) payment of accrued vacation pay calculated through the end of the ESA notice period; and (D) continuation of the Company’s benefit plan contributions as required to be made pursuant to the ESA in order to maintain your benefit participation at the time your employment is terminated for the minimum period required by the ESA ((A) through (D) collectively referred to as the “ESA Entitlements”). Upon termination of your employment, you shall also be entitled to all accrued wages and vacation pay, if any, earned by you up to your date of termination but not yet paid.

You understand and agree that the provisions of Section 5 of this Agreement are fair and reasonable, and that the payments, benefits and entitlements referred to in Section 5 hereof are inclusive of any statutory payments and benefits, and are reasonable estimates of the damages which will be suffered by you in the event of the termination of your employment with the Company including in the event of a Constructive Termination (in which case Section 5 shall apply). Except as otherwise provided in Section 5, you shall not be entitled to any further notice of termination, payment in lieu of notice of termination, severance, bonus, damages, or any additional compensation whatsoever, whether at common law or otherwise and by entering into this Agreement, you voluntarily waive such notice or payments in lieu. You further understand and agree that you are not entitled to any compensation or damages for any bonus payments, other than as required pursuant to the ESA, whether pursuant to common law or contract and you waive the right to receive damages or payment in lieu of any forfeited bonus payment. If the ESA Entitlements provide for a greater payment or benefit than any payment or benefit due to you pursuant to Sections 5(a) through 5(d), then the applicable ESA Entitlements shall apply and under no circumstances shall you receive less than your ESA Entitlements.

6. Other Benefits.  You will also be eligible to participate, subject to the generally applicable terms and conditions of the plan or program in question and the determination of any committee administering such plan or program, in the Company’s health and welfare plans available for senior management. Please consult the terms of those plans, which govern your eligibility and terms, and/or contact the Company’s Human Resources Department. You will be reimbursed on a regular basis for reasonable, necessary and properly documented business and travel expenses incurred for the purpose of conducting Peraso’s business, in accordance with Peraso’s policy and procedures.

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Peraso Technologies Inc. 144 Front St W Ste 685 Toronto, Ontario M5J 2L7

You should be aware that, subject to Section 5 above, your employment with the Company is for no specified period and the Company is free to conclude its employment relationship with you at any time upon the provision of the termination entitlements contemplated by Section 5 herein.

To confirm your acceptance of the Company’s amended offer of employment as set forth in this Agreement, please sign and date this Agreement in the space provided below and return it to the Company’s Human Resources Department within three business days of the date of this Agreement. This Agreement and the Employment Agreement, together with the Company’s standard employment policies and procedures in effect from time to time, constitute the entire terms of your employment with the Company and supersedes all prior representations or agreements, whether written or oral. This Agreement is to be governed by the laws of Ontario. To the extent that any of the terms of this Agreement or any of the foregoing agreements conflict with the Company’s standard employment policies and procedures in effect from time to time, the former shall govern. This Agreement may not be modified or amended except by a written agreement signed by the Company and you.

If you have any questions, please feel free to call me. We look forward to your favorable reply and to a continued productive working relationship.

Sincerely,

Peraso Technologies Inc.

/s/ Ronald Glibbery

Name: Ronald Glibbery

Title: Chief Executive Officer

ACCEPTED AND AGREED TO

this 25th day of April, 2022.

/s/ Bradley Lynch

Bradley Lynch

3

 

EX-31.1

Exhibit 31.1

CERTIFICATION PURSUANT TO

RULE 13a-14 OF THE SECURITIES EXCHANGE ACT OF 1934

I, Ronald Glibbery, certify that:

1. I have reviewed this quarterly report on Form 10-Q of Peraso Inc. for the period ended June 30, 2022;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: August 15, 2022

/s/ Ronald Glibbery

Ronald Glibbery

Chief Executive Officer

(Principal Executive Officer)

EX-31.2

Exhibit 31.2

CERTIFICATION PURSUANT TO

RULE 13a-14 OF THE SECURITIES EXCHANGE ACT OF 1934

I, James W. Sullivan, certify that:

1. I have reviewed this quarterly report on Form 10-Q of Peraso Inc. for the period ended June 30, 2022;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: August 15, 2022

/s/ James W. Sullivan

James W. Sullivan

Chief Financial Officer

(Principal Financial and Accounting Officer)

EX-32.1

Exhibit 32.1

CERTIFICATION OF CEO AND CFO FURNISHED PURSUANT TO

18 U.S.C. § 1350,

AS ADOPTED PURSUANT TO

§ 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the quarterly report on Form 10-Q of Peraso Inc. (the “Company”) for the quarterly period ended June 30, 2022, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), each of Ronald Glibbery, Chief Executive Officer of the Company, and James W. Sullivan, Chief Financial Officer of the Company, hereby certifies, pursuant to 18 U.S.C. § 1350, as adopted pursuant to § 906 of the Sarbanes-Oxley Act of 2002, to the best of his knowledge, that:

(1)The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and

(2)The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

/s/ Ronald Glibbery

Ronald Glibbery

Chief Executive Officer

(Principal Executive Officer)

August 15, 2022

/s/ James W. Sullivan

James W. Sullivan

Chief Financial Officer

(Principal Financial and Accounting Officer)

August 15, 2022

This certification accompanies this Report pursuant to § 906 of the Sarbanes-Oxley Act of 2002 and shall not, except to the extent required by the Sarbanes-Oxley Act of 2002, or otherwise required, be deemed filed by the Company for purposes of § 18 of the Securities Exchange Act of 1934, as amended.

XML

Document and Entity Information - shares	6 Months Ended
	Jun. 30, 2022	Aug. 12, 2022
Cover [Abstract]
Document Type	10-Q
Amendment Flag	false
Document Period End Date	Jun. 30, 2022
Document Fiscal Year Focus	2022
Document Fiscal Period Focus	Q2
Entity Registrant Name	PERASO INC.
Entity Central Index Key	0000890394
Current Fiscal Year End Date	--12-31
Entity Filer Category	Non-accelerated Filer
Entity Current Reporting Status	Yes
Trading Symbol	PRSO
Entity Small Business	true
Entity Emerging Growth Company	false
Entity Address, State or Province	CA
Entity Shell Company	false
Entity Interactive Data Current	Yes
Title of 12(b) Security	Common Stock, par value $0.001 per share
Security Exchange Name	NASDAQ
Entity Common Stock, Shares Outstanding		21,832,903
Entity File Number	000-32929
Entity Incorporation, State or Country Code	DE
Entity Tax Identification Number	77-0291941
Entity Address, Address Line One	2309 Bering Drive
Entity Address, City or Town	San Jose
Entity Address, Postal Zip Code	95131
City Area Code	408
Local Phone Number	418-7500
Document Quarterly Report	true
Document Transition Report	false

XML

CONDENSED CONSOLIDATED BALANCE SHEETS - USD ($) $ in Thousands	Jun. 30, 2022	Dec. 31, 2021
Current assets
Cash and cash equivalents	$ 2,820	$ 5,893
Short-term investments	2,094	9,267
Accounts receivable, net	3,227	2,436
Inventories	4,385	3,824
Tax credits and receivables	1,070	1,099
Prepaid expenses and other	1,446	1,159
Total current assets	15,042	23,678
Long-term investments	1,082	2,928
Property and equipment, net	2,047	2,349
Intangible assets, net	7,327	8,355
Goodwill	9,946	9,946
Right-of-use lease asset, net	1,356	617
Other	152	78
Total assets	36,952	47,951
Current liabilities
Accounts payable	2,385	1,937
Accrued expenses and other	1,778	2,903
Deferred revenue	314	375
Short-term lease liability	672	379
Total current liabilities	5,149	5,594
Long-term lease liability	722	288
Total liabilities	5,871	5,882
Commitments and contingencies (Note 5)
Stockholders’ equity
Preferred stock, $0.01 par value; 20,000 shares authorized; one share of Series A Special Voting Preferred Stock issued and outstanding (Note 2)
Common stock, $0.001 par value; 120,000 shares authorized; 21,832 shares and 21,579 shares issued and outstanding at June 30, 2022 and December 31, 2021, respectively	22	22
Additional paid-in capital	162,096	159,246
Accumulated other comprehensive loss	(41)
Accumulated deficit	(130,996)	(117,199)
Total stockholders’ equity	31,081	42,069
Total liabilities and stockholders’ equity	$ 36,952	$ 47,951

XML

CONDENSED CONSOLIDATED BALANCE SHEETS (Parenthetical) - $ / shares	Jun. 30, 2022	Dec. 31, 2021
Statement Of Financial Position [Abstract]
Preferred stock, par value	$ 0.01	$ 0.01
Preferred stock, shares authorized	20,000,000	20,000,000
Preferred stock, shares issued	1,000	1,000
Preferred stock, shares outstanding	1,000	1,000
Common stock, par value	$ 0.001	$ 0.001
Common stock, shares authorized	120,000,000	120,000,000
Common stock, shares issued	21,832,000	21,579,000
Common stock, shares outstanding	21,832,000	21,579,000

XML

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS - USD ($) shares in Thousands, $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2022	Jun. 30, 2021	Jun. 30, 2022	Jun. 30, 2021
Net revenue
Total net revenue	$ 4,284	$ 697	$ 7,687	$ 1,798
Cost of net revenue	2,799	435	4,747	1,054
Gross profit	1,485	262	2,940	744
Operating expenses
Research and development	5,643	2,892	11,127	5,679
Selling, general and administrative	2,878	1,799	5,585	3,106
Total operating expenses	8,521	4,691	16,712	8,785
Loss from operations	(7,036)	(4,429)	(13,772)	(8,041)
Interest expense	(6)	(786)	(6)	(1,300)
Other expense, net	(1)	(215)	(19)	(245)
Net loss	(7,043)	(5,430)	(13,797)	(9,586)
Other comprehensive loss, net of tax:
Net unrealized loss on available-for-sale securities	(4)		(41)
Comprehensive loss	$ (7,047)	$ (5,430)	$ (13,838)	$ (9,586)
Net loss per share
Basic	$ (0.33)	$ (1.03)	$ (0.64)	$ (1.83)
Diluted	$ (0.33)	$ (1.03)	$ (0.64)	$ (1.83)
Shares used in computing net loss per share
Basic	21,636	5,251	21,610	5,241
Diluted	21,636	5,251	21,610	5,241
Product
Net revenue
Total net revenue	$ 4,120	$ 576	$ 7,324	$ 1,627
Royalty and Other
Net revenue
Total net revenue	$ 164	$ 121	$ 363	$ 171

XML

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (DEFICIT) - USD ($) shares in Thousands, $ in Thousands	Total	Common Stock	Additional Paid-In Capital	Accumulated Other Comprehensive Loss	Accumulated Deficit
Beginning Balance at Dec. 31, 2020	$ (3,921)	$ 5	$ 102,361		$ (106,287)
Beginning Balance, shares at Dec. 31, 2020		5,241
Stock-based compensation	1,177		1,177
Net loss	(4,157)				(4,157)
Ending Balance at Mar. 31, 2021	(6,901)	$ 5	103,538		(110,444)
Ending Balance, shares at Mar. 31, 2021		5,241
Beginning Balance at Dec. 31, 2020	(3,921)	$ 5	102,361		(106,287)
Beginning Balance, shares at Dec. 31, 2020		5,241
Net loss	(9,586)
Ending Balance at Jun. 30, 2021	(11,164)	$ 5	104,705		(115,874)
Ending Balance, shares at Jun. 30, 2021		5,257
Beginning Balance at Dec. 31, 2020	(3,921)	$ 5	102,361		(106,287)
Beginning Balance, shares at Dec. 31, 2020		5,241
Net loss	(10,800)
Ending Balance at Dec. 31, 2021	$ 42,069	$ 22	159,246		(117,199)
Ending Balance, shares at Dec. 31, 2021	21,579	21,579
Beginning Balance at Mar. 31, 2021	$ (6,901)	$ 5	103,538		(110,444)
Beginning Balance, shares at Mar. 31, 2021		5,241
Issuance of common stock under stock plan, net	(30)		(30)
Issuance of common stock under stock plan, net, shares		16
Stock-based compensation	1,137		1,137
Net loss	(5,430)				(5,430)
Ending Balance at Jun. 30, 2021	(11,164)	$ 5	104,705		(115,874)
Ending Balance, shares at Jun. 30, 2021		5,257
Beginning Balance at Dec. 31, 2021	$ 42,069	$ 22	159,246		(117,199)
Beginning Balance, shares at Dec. 31, 2021	21,579	21,579
Issuance of common stock under stock plan, net	$ (9)		(9)
Issuance of common stock under stock plan, net, shares		9
Stock-based compensation	1,171		1,171
Net unrealized loss on available-for-sale securities	(37)			$ (37)
Net loss	(6,754)				(6,754)
Ending Balance at Mar. 31, 2022	36,440	$ 22	160,408	(37)	(123,953)
Ending Balance, shares at Mar. 31, 2022		21,588
Beginning Balance at Dec. 31, 2021	$ 42,069	$ 22	159,246		(117,199)
Beginning Balance, shares at Dec. 31, 2021	21,579	21,579
Net unrealized loss on available-for-sale securities	$ (41)
Net loss	(13,797)
Ending Balance at Jun. 30, 2022	$ 31,081	$ 22	162,096	(41)	(130,996)
Ending Balance, shares at Jun. 30, 2022	21,832	21,832
Beginning Balance at Mar. 31, 2022	$ 36,440	$ 22	160,408	(37)	(123,953)
Beginning Balance, shares at Mar. 31, 2022		21,588
Issuance of common stock under stock plan, net	(50)		(50)
Issuance of common stock under stock plan, net, shares		244
Stock-based compensation	1,738		1,738
Net unrealized loss on available-for-sale securities	(4)			(4)
Net loss	(7,043)				(7,043)
Ending Balance at Jun. 30, 2022	$ 31,081	$ 22	$ 162,096	$ (41)	$ (130,996)
Ending Balance, shares at Jun. 30, 2022	21,832	21,832

XML

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Thousands	6 Months Ended
	Jun. 30, 2022	Jun. 30, 2021
Cash flows from operating activities:
Net loss	$ (13,797)	$ (9,586)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization	1,540	533
Stock-based compensation	2,909	2,314
Change in fair value of warrant liability		211
Amortization of debt discount		910
Accrued interest expense	13	416
Amortization of lease right-of-use assets	256	120
Change in operating lease liabilities	(242)	(117)
Other	154	41
Changes in assets and liabilities:
Accounts receivable	(791)	518
Inventories	(561)	21
Tax credits and receivables	29	(554)
Prepaid expenses and other assets	(360)	(100)
Accounts payable	474	(403)
Deferred revenue and other liabilities	(1,186)	25
Net cash used in operating activities	(11,562)	(5,651)
Cash flows from investing activities:
Purchases of property and equipment	(342)	(52)
Purchases of intangible assets	(21)	(95)
Proceeds from maturities of marketable securities	9,434
Purchases of marketable securities	(497)
Net cash provided by (used in) investing activities	8,574	(147)
Cash flows from financing activities:
Taxes paid to net share settle equity awards	(59)
Payment of lease obligation	(26)
Proceeds from exercise of stock options		30
Net proceeds from loan facility		552
Net proceeds from convertible debenture		5,545
Net cash provided by (used in) financing activities	(85)	6,127
Net increase (decrease) in cash and cash equivalents	(3,073)	329
Cash and cash equivalents at beginning of period	5,893	1,711
Cash and cash equivalents at end of period	2,820	2,040
Supplemental disclosure:
Recognition of right-of-use assets and lease liabilities	995
Unrealized loss on available-for-sale securities	$ 41
Fair value of new warrants issued recognized as debt discount		$ 2,604

XML

The Company and Summary of Significant Accounting Policies

6 Months Ended

Jun. 30, 2022

Accounting Policies [Abstract]

The Company and Summary of Significant Accounting Policies

Note 1. 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 is a fabless semiconductor company specializing in the development of millimeter wave (mmWave), which is generally described as the frequency band from 24 Gigahertz (GHz) to 300GHz, wireless technology. The Company derives revenue from selling its 60GHz and 5G semiconductor devices and modules, licensing of intellectual property and performance of non-recurring engineering services. The Company also manufactures and sells high-performance memory semiconductor devices for a wide range of markets and receives royalties from licensees of its memory technology.

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 was accounted for as a reverse acquisition in accordance with Financial Accounting Standards Board Accounting Standards Codification (ASC) No. 805, Business Combinations (ASC 805). Accordingly, these condensed consolidated financial statements are a continuation of Peraso Tech’s consolidated financial statements prior to December 17, 2021 and exclude the statements of operations and comprehensive loss, statement of stockholders’ equity and statements of cash flows of the Company prior to December 17, 2021. See Note 2 for additional disclosure.

The accompanying condensed consolidated financial statements of the Company have been prepared without audit.  

The condensed consolidated balance sheet as of December 31, 2021 has been derived from the audited consolidated financial statements at that date. Certain information and disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States (GAAP) have been condensed or omitted in accordance with the rules and regulations of the Securities and Exchange Commission (SEC). The information in this report should be read in conjunction with the Company’s consolidated financial statements and notes thereto included in its most recent annual report on Form 10-K filed with the SEC.

In the opinion of management, the accompanying unaudited condensed consolidated financial statements reflect all adjustments (consisting only of normal recurring adjustments) necessary to summarize fairly the Company’s financial position, results of operations and cash flows for the interim periods presented. The operating results for the three and six months ended June 30, 2022 are not necessarily indicative of the results that may be expected for the year ending December 31, 2022 or for any other future period.

Liquidity

The Company incurred net losses of approximately $13.8 million for the six months ended June 30, 2022 and $10.8 million for the year ended December 31, 2021 and had an accumulated deficit of approximately $131.0 million as of June 30, 2022.  These and prior year losses have resulted in significant negative cash flows and have required us to raise substantial amounts of additional capital. To date, the Company has primarily financed its operations through multiple offerings of common stock to investors and affiliates.

The Company expects to continue to incur operating losses for the foreseeable future as it secures customers and continues to invest in the commercialization of its products. The Company will need to increase revenues substantially beyond levels that it has attained in the past in order to generate sustainable operating profit and sufficient cash flows to continue doing business without raising additional capital from time to time.  As a result of the Company’s expected operating losses and cash burn for the foreseeable future, as well as recurring losses from operations, if the Company is unable to raise sufficient capital through additional debt or equity arrangements, there will be uncertainty regarding the Company’s ability to maintain liquidity sufficient to operate its business effectively, which raises substantial doubt as to the Company’s ability to continue as a going concern within one year from the date of issuance of these condensed consolidated financial statements. These condensed consolidated financial statements do not include any adjustments that might result from this uncertainty. There can be no assurance that such additional capital, whether in the form of debt or equity financing, will be sufficient or available and, if available, that such capital will be offered on terms and conditions acceptable to the Company. The Company’s primary focus is producing and selling its new products.  If the Company is unsuccessful in these efforts, it will need to implement additional cost reduction strategies, which could further affect its near- and long-term business plan. These efforts may include, but are not limited to, further reducing headcount and curtailing business activities.

Basis of Presentation

The condensed consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries. All significant intercompany transactions and balances have been eliminated in consolidation. The Company’s fiscal year ends on December 31 of each calendar year. The Company previously classified intangible asset amortization expense related to the developed technology and customer relationships intangibles within research and development expenses (R&D) in its condensed consolidated statements of operations and comprehensive loss. Amortization expense on the developed technology intangible asset is now classified within cost of net revenue, and amortization expense on customer relationships is now classified in selling, general and administrative expenses (SG&A). Prior period amounts have been conformed to the current period presentation. See Note 5 for additional disclosure.

Risks 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.

COVID-19

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. government in March 2020.  This has negatively affected the U.S. and global economy, disrupted global supply chains, significantly restricted travel and transportation, resulted in mandated closures and orders to “shelter-in-place” and created significant disruption of the financial markets. The full extent of the COVID-19 impact on the Company’s operational and financial performance will depend on future developments, including the duration and spread of the pandemic and related actions taken by U.S. and foreign government agencies to prevent disease spread, all of which are uncertain, out of the Company’s control, and cannot be predicted.

Use of Estimates

The preparation of financial statements in accordance with GAAP 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, 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.

Cash Equivalents and Investments

The Company has invested its excess cash in money market accounts, certificates of deposit, corporate debt, government-sponsored enterprise bonds and municipal bonds and considers all highly liquid debt instruments purchased with an original maturity of three months or less to be cash equivalents. Investments with original maturities greater than three months and remaining maturities less than one year are classified as short-term investments. Investments with remaining maturities greater than one year are classified as long-term investments. Management generally determines the appropriate classification of securities at the time of purchase. All securities are classified as available-for-sale. The Company’s available-for-sale short-term and long-term investments are carried at fair value, with the unrealized holding gains and losses reported in accumulated other comprehensive income (loss). Realized gains and losses and declines in the value judged to be other-than-temporary are included in the other income, net line item in the condensed consolidated statements of operations. The cost of securities sold is based on the specific identification method.

Fair Value Measurements

The Company measures the fair value of financial instruments using a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value into three broad levels:

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

Level 2—Pricing is provided by third party sources of market information obtained through the Company’s investment advisors, rather than models. The Company does not adjust for, or apply, any additional assumptions or estimates to the pricing information it receives from advisors. The Company’s Level 2 securities include cash equivalents and available-for-sale securities, which consisted primarily of certificates of deposit, corporate debt, and government agency and municipal debt securities from issuers with high-quality credit ratings. The Company’s investment advisors obtain pricing data from independent sources, such as Standard & Poor’s, Bloomberg and Interactive Data Corporation, and rely on comparable pricing of other securities because the Level 2 securities are not actively traded and have fewer observable transactions. The Company considers this the most reliable information available for the valuation of the securities.

Level 3—Unobservable inputs that are supported by little or no market activity and reflect the use of significant management judgment are used to measure fair value. These values are generally determined using pricing models for which the assumptions utilize management’s estimates of market participant assumptions. The determination of fair value for Level 3 investments and other financial instruments involves the most management judgment and subjectivity.

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.

Allowance for Doubtful Accounts

The Company establishes an allowance for doubtful accounts to ensure that its trade receivables balances are not overstated due to uncollectibility. The Company performs ongoing customer credit evaluations within the context of the industry in which it operates and generally does not require collateral from its customers. A specific allowance of up to 100% of the invoice value is provided for any problematic customer balances. Delinquent account balances are written off after management has determined that the likelihood of collection is remote. The Company grants credit only to customers deemed creditworthy in the judgment of management. The allowance for doubtful accounts receivable was zero as of June 30, 2022 and approximately $61,000 as of December 31, 2021.

Inventories

The Company values its inventories at the lower of cost, which approximates actual cost on a first-in, first-out basis, or net realizable value. Costs of inventories primarily consisted of material and third party assembly costs. The Company records inventory reserves for estimated obsolescence or unmarketable inventories based upon assumptions about future demand and market conditions. Once a reserve is established, it is maintained until the product to which it relates is sold or otherwise disposed of. If actual market conditions are less favorable than those expected by management, additional adjustment to inventory valuation may be required. Charges for obsolete and slow-moving inventories are recorded based upon an analysis of specific identification of obsolete inventory items and quantification of slow moving inventory items. The Company recorded write-downs of inventory of approximately $160,000 and $37,000 during the six months ended June 30, 2022 and 2021, respectively.

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, as a Canadian Controlled Private Corporation (CCPC), the Company is also a part of the Scientific Research and Experimental Development (SRED) 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.

As of December 17, 2021, Peraso Tech ceased to be a CCPC and is no longer eligible for the expenditure refund program. However, it is eligible for a tax credit of 15% on qualified SRED expenditures.  Unused tax credits can be carried back three years or forward for 20 years

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. Amortization of developed technology and other intangibles directly related to the Company’s products is included in cost of net revenue, while amortization of customer relationships and other intangibles not associated with the Company’s products is included in SG&A in the condensed consolidated statements of operations.

The Company regularly reviews the carrying value and estimated lives of its long-lived assets and finite-lived intangible assets 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.

Purchased Intangible Assets

Intangible assets acquired in business combinations are accounted for based on the fair value of assets purchased and are amortized over the period in which economic benefit is estimated to be received. Intangible assets subject to amortization, including those acquired in business combinations were as follows (amounts in thousands):

	June 30, 2022
	Gross				Net
	Carrying		Accumulated		Carrying
	Amount		Amortization		Amount
Developed technology	$	5,726	$	776	$	4,950
Customer relationships		2,556		346		2,210
Other		186		19		167
Total	$	8,468	$	1,141	$	7,327

	December 31, 2021
	Gross				Net
	Carrying		Accumulated		Carrying
	Amount		Amortization		Amount
Developed technology	$	5,726	$	60	$	5,666
Customer relationships		2,556		27		2,529
Other		165		5		160
Total	$	8,447	$	92	$	8,355

Developed technology primarily consisted of MoSys’ products that have reached technological feasibility and primarily relate to its memory semiconductor products and technology. The value of the developed technology was determined by discounting estimated net future cash flows of these products. The Company is amortizing the developed technology on a straight-line basis over four years. Amortization related to developed technology of $0.3 million and $0.7 million for the three and six months ended June 30, 2022, respectively, has been included in cost of net revenue in the condensed consolidated statements of operations and comprehensive loss.

Customer relationships relate to the Company's ability to sell existing and future versions of products to MoSys’ customers existing at the time of the arrangement. The fair value of the customer relationships was determined by discounting estimated net future cash flows from the customer relationships. The Company is amortizing customer relationships on a straight-line basis over an estimated life of 4 years. Amortization related to customer relationships of $0.2 million and $0.3 million for the three and six months ended June 30, 2022, respectively, has been included in selling, general and administrative expense in the condensed consolidated statements of operations and comprehensive loss.

Amortization expense was $0.5 million and $1.0 million for the three and six months ended June 30, 2022, respectively. There was no amortization expense for the three and six months ended June 30, 2021.

As of June 30, 2022, estimated future amortization expense related to intangible assets was as follows (in thousands):

Year ending December 31,
2022	$	1,050
2023		2,099
2024		2,099
2025		2,011
2026		28
2027		10
Thereafter		30
	$	7,327

Goodwill

The Company determines the amount of a potential goodwill impairment by comparing the fair value of the reporting unit with its carrying amount. To the extent the carrying value of a reporting unit exceeds its fair value, a goodwill impairment charge is recognized.

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 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. The Company first assesses qualitative factors to determine whether it is more-likely-than-not that the fair value of the reporting unit is less than the carrying amount as a basis for determining whether it is necessary to perform an impairment test. If the qualitative assessment warrants further analysis, the Company compares the fair value of the reporting unit to its carrying value. 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 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.  

Leases

ASC No. 842, Leases (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 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 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. Revenue recognition is evaluated through the following five steps: (i) identification of the contract, or contracts, with a customer; (ii) identification of the performance obligations in the contract; (iii) determination of the transaction price; (iv) allocation of the transaction price to the performance obligations in the contract; 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. The majority of the Company's contracts have a single performance obligation to transfer products. Accordingly, the Company recognizes revenue when title and risk of loss have been transferred to the customer, generally at the time of shipment of products. Revenue is measured as the amount of consideration the Company expects to receive in exchange for transferring products and is generally based upon a negotiated, formula, list or fixed price. The Company sells its products both directly to customers and through distributors generally under agreements with payment terms typically 60 days or less.

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.

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. The Company estimates its royalty revenue in the calendar quarter in which the licensee uses the licensed technology.  Payments are received in the subsequent quarter. The Company also generates revenue from licensing its technology. The Company recognizes license fees 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

The Company’s contract liabilities consist of advance customer payments and deferred revenue. The Company classifies advance customer payments and deferred revenue as current or non-current based on the timing of when the Company expects to recognize revenue. As of June 30, 2022 and December 31, 2021, contract liabilities were in a current position and included in deferred revenue.

During the six months ended June 30, 2022, the Company recognized approximately $61,000 of revenue that had been included in deferred revenue as of December 31, 2021.

See Note 6 for disaggregation of revenue by geography.

The Company does not have significant financing components, as payments from customers are typically due within 60 days of invoicing, and the Company has elected the practical expedient to not value financing components that are less than one year. Shipping and handling costs are generally incurred by the customer, and, therefore, are not recorded as revenue.

Cost of Net Revenue

Cost of net revenue consists primarily of direct and indirect costs of product sales, including amortization of intangible assets and depreciation of production-related fixed assets.

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 and ending in the fourth quarter of 2021.

During the six months ended June 30, 2021, the Company recognized payroll subsidies of $861,352 as a reduction in the associated wage costs and rent subsidies of $160,865 as a reduction of operating expenses in the condensed consolidated statement of operations.

Stock-Based Compensation

The Company periodically issues stock options and restricted stock awards to employees and non-employees. The Company accounts for such grants based on ASC No. 718, whereby the value of the award is measured on the date of grant and recognized as compensation expense on a straight-line basis over the vesting period. The fair value of the Company’s stock options is estimated using the Black-Scholes-Merton Option Pricing (Black Scholes) model, which uses certain assumptions related to risk-free interest rates, expected volatility, expected life of the options, and future dividends. Compensation expense is recorded based upon the value derived from the Black-Scholes model. 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

Basic net loss per share is computed by dividing net loss for the period by the weighted-average number of shares of common stock outstanding during the period. Diluted net loss per share gives effect to all potentially dilutive common shares outstanding during the period. Potentially dilutive common shares consist of incremental shares of common stock issuable upon the exercise of stock options, vesting of stock awards and exercise of warrants.  

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

	June 30,
	2022		2021
Escrow shares		1,815		—
Options to purchase common stock		1,537		1,048
Unvested restricted common stock units		1,303		—
Convertible debt		—		5,500
Warrants		134		508
Total		4,789		7,056

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 May 2021, the FASB issued ASU 2021-04, Earnings Per Share (Topic 260), Debt — Modifications and Extinguishments (Subtopic 470-50), Compensation — Stock Compensation (Topic 718), and Derivatives and Hedging — Contracts in Entity’s Own Equity (Subtopic 815-40): Issuer’s Accounting for Certain Modifications or Exchanges of Freestanding Equity-Classified Written Call Options (ASU 2021-04). ASU 2021-04 provides guidance as to how an issuer should account for a modification of the terms or conditions or an exchange of a freestanding equity-classified written call option (i.e., a warrant) that remains classified after modification or exchange as an exchange of the original instrument for a new instrument. An issuer should measure the effect of a modification or exchange as the difference between the fair value of the modified or exchanged warrant and the fair value of that warrant immediately before modification or exchange and then apply a recognition model that comprises four categories of transactions and the corresponding accounting treatment for each category (equity issuance, debt origination, debt modification, and modifications unrelated to equity issuance and debt origination or modification). ASU 2021-04 is effective for all entities for fiscal years beginning after December 15, 2021, including interim periods within those fiscal years. An entity should apply the guidance provided in ASU 2021-04 prospectively to modifications or exchanges occurring on or after the effective date. The Company adopted ASU 2021-04 effective January 1, 2022. The adoption of ASU 2021-04 did not have any impact on the Company’s consolidated financial statement presentation or disclosures.

Management does not believe that any other recently issued, but not yet effective, authoritative guidance, if currently adopted, would have a material impact on the Company’s financial statement presentation or disclosures.

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Business Combination

6 Months Ended

Jun. 30, 2022

Business Combinations [Abstract]

Business Combination

Note 2: Business Combination

Arrangement

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. Prior to the Arrangement, as a fabless semiconductor company, the Company’s primary focus was the manufacture and sale of high-performance memory semiconductor devices for a wide range of markets. Peraso Tech was also a fabless semiconductor company specializing in the development of mmWave technology, including 60GHz and 5G products, and deriving revenue from selling semiconductor devices, proprietary modules based on its semiconductor devices and performance of non-recurring engineering services. The primary reason for the business combination was to produce a larger fabless semiconductor company with greater size and scale with access to the public capital markets for the benefit of the stockholders of both companies.

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

Securities Conversion

Pursuant to the completion of the Arrangement, each Peraso Share that was issued and outstanding immediately prior to December 17, 2021 was converted into the right to receive 0.045239122387267 (the Exchange Ratio) newly issued shares of common stock of the Company or shares of Canco, which are exchangeable for shares of the Company’s common stock (Exchangeable Shares), at the election of each former Peraso Tech stockholder. 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 (the Certificate) with the Secretary of State of the State of Delaware to designate Series A Special Voting Preferred Stock (the Special Voting Share) in accordance with the terms of the Arrangement Agreement in order to enable the holders of Exchangeable Shares to exercise their voting rights. 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. The Special Voting Share was issued to a third-party administrative agent (the Agent) solely to facilitate the exercise of rights by holders of Exchangeable Shares, The rights of the Agent, as holder of the Special Voting Share, are limited to effecting the rights of the holders of the Exchangeable Shares; the Special Voting Share does not confer any independent rights to the Agent. Under the Certificate, when all of the Exchangeable shares have been converted into shares of the Company’s common stock, the Special Voting Share shall be automatically cancelled and shall not be reissued.

Reverse Acquisition Determination

Pursuant to ASC 805, the transaction was accounted for as a reverse acquisition because: (i) the stockholders of Peraso Tech owned the majority of the outstanding common stock of the Company after the share exchange; (ii) Peraso Tech appointed a majority of the Company’s board of directors; and (iii) Peraso Tech determined the officers of the Company.

Measuring the Consideration Transferred

In the reverse acquisition, the accounting acquirer did not issue any consideration to the accounting acquiree, rather the accounting acquiree issued its equity shares to the owners of the accounting acquirer in exchange for the accounting acquirer’s shares. The acquisition date fair value of the consideration transferred by the accounting acquirer for its interest in the accounting acquiree was calculated by Peraso Tech, as the fair value of the consideration effectively transferred. In accordance with ASC 805, the consideration effectively transferred between the Company (a public company as the accounting acquiree) and Peraso Tech (a private company as the accounting acquirer), was calculated as

the fair value of the Company’s equity including the fair value of its common shares outstanding and its warrants, plus the portion of the share-based award fair value allocated to the pre-combination service of the accounting acquiree’s awards. The fair value of the total consideration effectively transferred is summarized in the following table (in thousands, except per-share amount):

Company share price (i)	$	4.21
Company common shares outstanding (ii)		8,716
Fair value of the Company's common shares outstanding		36,694
Fair value of the Company's warrants (iii)		301
Total fair value of the Company's share-based awards (iii)		782
Percent related to pre-combination service		80.76	%
Fair value of the Company's pre-combination service share-based awards (iii)		632
Consideration effectively transferred	$	37,627
(i) Represents the Company's share price as of December 16, 2021
(ii) Represents the Company's outstanding shares as of December 16, 2021
(iii) Represents the fair value of the Company's warrants outstanding and calculated as of December 16, 2021

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

	December 31,
	2021
Assets:	(in thousands)
Cash, cash equivalents and investments	$	19,064
Other current assets		2,558
Other assets		833
Intangibles
Developed technology		5,726
Customer relationships		2,556
		8,282
Goodwill		9,946
Liabilities:
Current liabilities		3,056
	$	37,627

Unaudited pro forma results of operations for the three and six months ended June 30, 2021 are included below as if the business combination occurred on January 1, 2021.  This summary of the unaudited pro forma results of operations is not necessarily indicative of what the Company’s results of operations would have been had Peraso Tech been acquired at the beginning of 2021, nor does it purport to represent results of operations for any future periods.

	Three Months Ended			Six Months Ended
(in thousands)	June 30, 2021			June 30, 2021
Revenue	$	1,865		$	4,304
Net loss	$	(6,634	)	$	(12,160	)

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Fair Value of Financial Instruments

6 Months Ended

Jun. 30, 2022

Fair Value Disclosures [Abstract]

Fair Value of Financial Instruments

Note 3: Fair Value of Financial Instruments

The estimated fair values of financial instruments outstanding were (in thousands):

	June 30, 2022
			Unrealized		Unrealized			Fair
	Cost		Gains		Losses			Value
Cash and cash equivalents	$	2,820	$	—	$	—		$	2,820
Short-term investments		2,100		—		(6	)		2,094
Long-term investments		1,117		—		(35	)		1,082
	$	6,037	$	—	$	(41	)	$	5,996

	December 31, 2021
			Unrealized		Unrealized			Fair
	Cost		Gains		Losses			Value
Cash and cash equivalents	$	5,893	$	—	$	—		$	5,893
Short-term investments		9,276		—		(9	)		9,267
Long-term investments		2,935		—		(7	)		2,928
	$	18,104	$	—	$	(16	)	$	18,088

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

	June 30, 2022
	Fair Value		Level 1		Level 2		Level 3
Money market funds	$	263	$	263	$	—	$	—
Corporate notes and commercial paper	$	3,176	$	—	$	3,176	$	—
	$	3,439	$	263	$	3,176	$	—

	December 31, 2021
	Fair Value		Level 1		Level 2		Level 3
Money market funds	$	1,159	$	1,159	$	—	$	—
Corporate notes and commercial paper	$	12,195	$	—	$	12,195	$	—

There were no transfers in or out of Level 1 and Level 2 securities during the six months ended June 30, 2022 or December 31, 2021.

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Balance Sheet Detail

6 Months Ended

Jun. 30, 2022

Organization Consolidation And Presentation Of Financial Statements [Abstract]

Balance Sheet Detail

Note 4. Balance Sheet Detail

Inventories

	June 30,		December 31,
	2022		2021
	(in thousands)
Raw materials	$	1,238	$	879
Work-in-process		2,597		2,170
Finished goods		550		775
	$	4,385	$	3,824

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Revision of Prior Period Financial Statements

6 Months Ended

Jun. 30, 2022

Accounting Changes And Error Corrections [Abstract]

Revision of Prior Period Financial Statements

Note 5. Revision of Prior Period Financial Statements

The Company previously classified amortization expense related to the developed technology and customer relationships intangible assets within R&D in its condensed consolidated statements of operations and comprehensive loss. Amortization expense on the developed technology intangible asset is now classified within cost of net revenue, and amortization expense on customer relationships is now classified in SG&A. Prior period amounts have been conformed to the current period presentation. The reclassification had no impact on the Company's net loss or cash flows for the three months ended March 31, 2022 and six months ended June 30, 2022.

The effects of the adjustments for the three months ended March 31, 2022 were as follows (in thousands):

	As Reported		Adjustment			As Revised
Condensed Consolidated Statement of Operations:
Cost of net revenue	$	1,590	$	358		$	1,948
Gross profit		1,813		(358	)		1,455
Research and development		6,003		(517	)		5,486
Selling, general and administrative		2,546		159			2,705
Total operating expenses	$	8,549	$	(358	)	$	8,191

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Commitments and Contingencies

6 Months Ended

Jun. 30, 2022

Commitments And Contingencies Disclosure [Abstract]

Commitments and Contingencies

Note 6. Commitments and Contingencies

Leases

The Company has five facility 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, Markham and Waterloo, Ontario, Canada. The Waterloo and Toronto leases expire in September 2022 and December 2023, respectively. The current San Jose lease with a sublessor expires in July 2022, and the Company entered into a new, direct lease with the facility landlord, dated April 13, 2022, for an 18-month term, which commenced July 15, 2022. In addition, on May 26, 2022, the Company entered into a new lease for a facility in Markham, Ontario with a 60-month term, which commenced June 21, 2022. The Markham landlord also provided a lease incentive of approximately $220,000 (the Incentive), which will be payable to the Company as follows:  one-half of the Incentive payable subsequent to the completion of the improvements to the leased space and the second half-ratably on an annual basis commencing with the second year of the lease.

The 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.

On March 1, 2022, the Company entered into a 36-month finance lease agreement for the lease of equipment resulting in the recognition of a right-of-use asset and lease liability on the balance sheet of approximately $274,000.

The following table provides the details of right-of-use assets and lease liabilities as of June 30, 2022 (in thousands):

	Six Months Ended
	June 30, 2022
Right-of-use assets:
Operating leases	$	1,111
Finance lease		245
Total right-of-use assets	$	1,356
Lease liabilities:
Operating leases	$	1,140
Finance lease		254
Total lease liabilities	$	1,394

Future minimum payments under the leases at June 30, 2022 are listed in the table below (in thousands):

	Operating
Year ending December 31,	leases
2022	$	223
2023		768
2024		222
2025		139
2026		113
2027		84
Total future lease payments		1,549
Less: imputed interest		(155	)
Present value of lease liabilities	$	1,394

The following table provides the details of supplemental cash flow information (in thousands):

	Six Months Ended
	June 30,
	2022		2021
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows for leases	$	283	$	147

Rent expense was approximately $0.2 million for each of the three month periods ended June 30, 2022 and 2021.  Rent expense was approximately $0.4 million for the six months ended June 30, 2022 and $0.3 million for the six months ended June 30, 2021. In addition to the minimum lease payments, the Company is responsible for property taxes, insurance and certain other operating costs related to the leased facilities and equipment.

Indemnification

In the ordinary course of business, the Company enters into contractual arrangements under which it may agree to indemnify the counterparties from any losses incurred relating to breach of representations and warranties, failure to perform certain covenants, or claims and losses arising from certain events as outlined within the particular contract, which may include, for example, losses arising from litigation or claims relating to past performance. Such indemnification clauses may not be subject to maximum loss clauses. The Company has also entered into indemnification agreements with its officers and directors. No material amounts were reflected in the Company’s condensed consolidated financial statements for the six months ended June 30, 2022 and 2021 related to these indemnifications.

The Company has not estimated the maximum potential amount of indemnification liability under these agreements due to the limited history of prior claims and the unique facts and circumstances applicable to each particular agreement. To date, the Company has not made any payments related to these indemnification agreements. 

Product Warranties

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 six months ended June 30, 2022 and 2021.

Legal Matters

The Company is not a party to any legal proceeding that the Company believes is likely to have a material adverse effect on its condensed consolidated financial position or results of operations. From time to time the Company may be subject to legal proceedings and claims in the ordinary course of business. These claims, even if not meritorious, could result in the expenditure of significant financial resources and diversion of management efforts.

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Business Segments, Concentration of Credit Risk and Significant Customers

6 Months Ended

Jun. 30, 2022

Segment Reporting [Abstract]

Business Segments, Concentration of Credit Risk and Significant Customers

Note 7. Business Segments, Concentration of Credit Risk and Significant Customers

The Company determined its reporting units in accordance with ASC 280, Segment Reporting (ASC 280). Management evaluates a reporting unit by first identifying its operating segments under ASC 280. The Company then evaluates each operating segment to determine if it includes one or more components that constitute a business. If there are components within an operating segment that meet the definition of a business, the Company evaluates those components to determine if they must be aggregated into one or more reporting units. If applicable, when determining if it is appropriate to aggregate different operating segments, the Company determines if the segments are economically similar and, if so, the operating segments are aggregated.

Management has determined that the Company has one consolidated operating segment. The Company’s reporting segment reflects the manner in which its chief operating decision maker reviews results and allocates resources. The Company’s reporting segment meets the definition of an operating segment and does not include the aggregation of multiple operating segments.

The Company recognized revenue from shipments of product, licensing of its technologies and performance of services to customers by geographical location as follows (in thousands):

	Three Months Ended				Six Months Ended
	June 30,				June 30,
	2022		2021		2022		2021
North America	$	3,127	$	106	$	5,503	$	161
Hong Kong		587		555		879	$	1,030
Taiwan		204		23		515		588
Japan		245		—		537		—
Rest of world		121		13		253		19
Total net revenue	$	4,284	$	697	$	7,687	$	1,798

Customers who accounted for at least 10% of total net revenue were:

	Three Months Ended		Six Months Ended
	June 30,		June 30,
	2022	2021	2022	2021
Customer A	36%	*	31%	*
Customer B	21%	*	12%	*
Customer C	14%	69%	11%	52%
Customer D	13%	*	23%	*
Customer E	*	*	*	33%

* Represents less than 10%

Three customers accounted for 80% of accounts receivable as of June 30, 2022. Three customers accounted for 96% of accounts receivable as of December 31, 2021.

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Income Tax Provision

6 Months Ended

Jun. 30, 2022

Income Tax Disclosure [Abstract]

Income Tax Provision

Note 8. Income Tax Provision

The Company determines deferred tax assets and liabilities based upon the differences between the financial statement and tax bases of the Company’s assets and liabilities using tax rates in effect for the year in which the Company expects the differences to affect taxable income. A valuation allowance is established for any deferred tax assets for which it is more likely than not that all or a portion of the deferred tax assets will not be realized.

The Company files U.S. federal and state and foreign income tax returns in jurisdictions with varying statutes of limitations.  All tax returns from 2015 to 2020 may be subject to examination by the Internal Revenue Service, California and other states. Returns filed in foreign jurisdictions may be subject to examination for the years 2011 to 2020.  As of June 30, 2022, the Company has not recorded any liability for unrecognized tax benefits related to uncertain tax positions.  

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Stock-Based Compensation

6 Months Ended

Jun. 30, 2022

Disclosure Of Compensation Related Costs Sharebased Payments [Abstract]

Stock-Based Compensation

Note 9. Stock-Based Compensation

Common Stock Equity Plans

In 2010, the Company adopted the 2010 Equity Incentive Plan and later amended it in 2014, 2017 and 2018 (the Amended 2010 Plan). 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. 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 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. The exercise price of stock options granted under the 2019 Plan must be at least equal to the fair market value of the shares on the date of grant.  Generally, awards under the 2019 Plan will vest over a three to four-year period, and options will have a term of 10 years from the date of grant.  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.

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 Company reflected compensation costs of $2.2 million and $2.3 million related to the vesting of stock options during the six month periods ended June 30, 2022 and 2021, respectively. At June 30, 2022, the unamortized compensation cost was approximately $10.2 million related to stock options and is expected to be recognized as expense over a weighted average period of approximately 2.6 years. The Company reflected compensation costs of $0.7 million and zero related to the vesting of restricted stock options during the six month ended June 30, 2022 and 2021, respectively.   The unamortized compensation cost at June 30, 2022 was $2.8 million related to restricted stock units and is expected to be recognized as expense over a weighted average period of approximately 2.5 years.

Valuation Assumptions and Expense Information for Stock-Based Compensation

There were no stock options granted or exercised during the six months ended June 30, 2022 and 2021. 

Common Stock Options and Restricted Stock

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. The exercise price of stock options granted under the 2019 Plan must be at least equal to the fair market value of the shares on the date of grant.  Generally, options granted under the 2019 Plan will vest over a three to four-year period and have a term of 10 years from the date of grant.  In addition, the 2019 Plan provides for automatic acceleration of vesting for options granted to non-employee directors upon a change of control (as defined in the 2019 Plan) of the Company.  

The following table summarizes the activity in the shares available for grant under the Plans during the six months ended June 30, 2022 (in thousands, except exercise price):

				Options Outstanding
							Weighted
	Shares						Average
	Available			Number of			Exercise
	for Grant			Shares			Prices
Balance as of December 31, 2021		3,024			1,558		$	3.49
Options cancelled		—			(13	)	$	10.98
Balance as of March 31, 2022		3,024			1,545		$	3.43
RSUs granted		(1,511	)		—		$	-
RSUs cancelled and returned to the Plan		43			—		$	-
Options cancelled		—			(8	)	$	2.63
Balance as of June 30, 2022		1,556			1,537		$	3.38

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

				Weighted
				Average
	Number of			Grant-Date
	Shares			Fair Value
Non-vested shares as of December 31, 2021		88		$	4.84
Vested		(13	)	$	3.70
Non-vested shares as of March 31, 2022		75		$	5.67
Granted		1,511			—
Vested		(271	)	$	2.49
Cancelled		(12	)		—
Non-vested shares as of June 30, 2022		1,303		$	2.28

The following table summarizes significant ranges of outstanding and exercisable options as of June 30, 2022 (in thousands, except contractual life and exercise price):

	Options Outstanding						Options Exercisable
			Weighted
			Average
			Remaining		Weighted				Weighted
			Contractual		Average				Average		Aggregate
	Number		Life		Exercise		Number		Exercise		Intrinsic
Range of Exercise Price	Outstanding		(in Years)		Price		Exercisable		Price		value
$1.57 - $14.99		1,526		8.17	$	2.65		834	$	2.52	$	39
$15.00 - $25.59		4		1.24	$	15.00		4	$	15.00	$	—
$25.60 - $143.99		1		2.18	$	50.00		1	$	50.00	$	—
$144.00 - $409.99		5		4.15	$	144.00		5	$	144.00	$	—
$410.00 - $924.00		1		2.75	$	410.00		1	$	410.00	$	—
$1.57 - $924.00		1,537		8.13	$	3.38		845	$	3.85	$	39

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Equity

6 Months Ended

Jun. 30, 2022

Stockholders Equity Note [Abstract]

Equity

Note 10. Equity

Warrants

As of June 30, 2022, the Company had the following warrants outstanding (share amounts in thousands):

Type	Number of Shares		Exercise Price		Expiration
Common stock		33	$	47.00	January 2023
Common stock		101	$	2.40	October 2023

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Debt

6 Months Ended

Jun. 30, 2022

Debt Disclosure [Abstract]

Debt

Note 11. Debt

Loan Facilities

On November 30, 2020, the Company entered into a loan agreement (the SRED Financing) to raise funds against the Company’s present and after acquired personal property. 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). Each borrowing carried an interest rate of 1.6% per month, compounded monthly (20.98%). The SRED financing was sanctioned against the Company’s SRED tax credit refund.

The first, second and third draws, including interest of $136,900 (CDN$174,417), were repaid through proceeds from the Company’s tax credit refund of $1,093,230 (CDN$1,392,831) received in August 2021, and the balance of $184,558 (CDN$ 235,132) was paid from the fourth draw.  The remaining loan balance, including interest, of $816,964 (CDN$1,044,177) was repaid on December 16, 2021.

Interest expense of $513,438 for the three and six months ended June 30, 2021 consisted of i) $348,134 of amortization of debt discount, ii) $120,950 of interest expense on convertible debt, which was outstanding and retired in 2021, and iii) $44,354 of interest expense on the SRED financing. 

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Related Party Transactions

6 Months Ended

Jun. 30, 2022

Related Party Transactions [Abstract]

Related Party Transactions

Note 12. Related Party Transactions

A family member of one of the Company’s executive officers serves as a consultant to the Company. During the six months ended June 30, 2022 and 2021, the Company paid approximately $92,400 and $103,300, respectively, to the consultant. Additionally, a family member of one of the Company’s executive officers is an employee of the Company. During the six months ended June 30, 2022, the Company paid approximately $92,400 to the employed family member, which includes the aggregate grant date fair value, as determined pursuant to FASB ASC Topic 718, of an RSU awarded in April 2022. During the six months ended June 30, 2021, the Company paid approximately $46,000 to the employed family member.

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Subsequent Event

6 Months Ended

Jun. 30, 2022

Subsequent Events [Abstract]

Subsequent Event

Note 13. Subsequent Event

On August 5, 2022, the Company entered into a Technology License and Patent Assignment Agreement (the Intel Agreement) with Intel Corporation (Intel), pursuant to which Intel has (i) licensed from the Company on an exclusive basis certain software and technology assets related to the Company’s Stellar packet classification intellectual property, including its graph memory engine technology, and any roadmap variant, in the form existing as of the date of the Agreement (the Licensed Technology); (ii) acquired from the Company certain patent applications and patents owned by the Company; and (iii) assumed a professional services agreement, dated March 24, 2020, between Fabulous Inventions AB (Fabulous) and the Company (the Fabulous Agreement), pursuant to which, among other things, the Company licensed from Fabulous certain technology incorporated into the Licensed Technology.

As consideration for the Company to enter into the Agreement, Intel agreed to pay the Company $3,062,500 at the closing of the transaction (the Closing) and $437,500 upon the satisfaction by the Company, as mutually agreed upon by the parties in good faith, of certain release criteria set forth in the Agreement relating to various due diligence activities of Intel regarding the Licensed Technology (the Release Criteria). Intel and the Company agreed to work together in good faith so as to ensure that the Release Criteria is satisfied by the Company no later than six months following the Closing. The Company is currently evaluating the accounting for the Intel Agreement, which will be reflected in the financial statements for the three months ending September 30, 2022.

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The Company and Summary of Significant Accounting Policies (Policies)

6 Months Ended

Jun. 30, 2022

Accounting Policies [Abstract]

Liquidity

Liquidity

The Company incurred net losses of approximately $13.8 million for the six months ended June 30, 2022 and $10.8 million for the year ended December 31, 2021 and had an accumulated deficit of approximately $131.0 million as of June 30, 2022.  These and prior year losses have resulted in significant negative cash flows and have required us to raise substantial amounts of additional capital. To date, the Company has primarily financed its operations through multiple offerings of common stock to investors and affiliates.

The Company expects to continue to incur operating losses for the foreseeable future as it secures customers and continues to invest in the commercialization of its products. The Company will need to increase revenues substantially beyond levels that it has attained in the past in order to generate sustainable operating profit and sufficient cash flows to continue doing business without raising additional capital from time to time.  As a result of the Company’s expected operating losses and cash burn for the foreseeable future, as well as recurring losses from operations, if the Company is unable to raise sufficient capital through additional debt or equity arrangements, there will be uncertainty regarding the Company’s ability to maintain liquidity sufficient to operate its business effectively, which raises substantial doubt as to the Company’s ability to continue as a going concern within one year from the date of issuance of these condensed consolidated financial statements. These condensed consolidated financial statements do not include any adjustments that might result from this uncertainty. There can be no assurance that such additional capital, whether in the form of debt or equity financing, will be sufficient or available and, if available, that such capital will be offered on terms and conditions acceptable to the Company. The Company’s primary focus is producing and selling its new products.  If the Company is unsuccessful in these efforts, it will need to implement additional cost reduction strategies, which could further affect its near- and long-term business plan. These efforts may include, but are not limited to, further reducing headcount and curtailing business activities.

Basis of Presentation

Basis of Presentation

The condensed consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries. All significant intercompany transactions and balances have been eliminated in consolidation. The Company’s fiscal year ends on December 31 of each calendar year. The Company previously classified intangible asset amortization expense related to the developed technology and customer relationships intangibles within research and development expenses (R&D) in its condensed consolidated statements of operations and comprehensive loss. Amortization expense on the developed technology intangible asset is now classified within cost of net revenue, and amortization expense on customer relationships is now classified in selling, general and administrative expenses (SG&A). Prior period amounts have been conformed to the current period presentation. See Note 5 for additional disclosure.

Risk and Uncertainties

Risks 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.

COVID 19

COVID-19

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. government in March 2020.  This has negatively affected the U.S. and global economy, disrupted global supply chains, significantly restricted travel and transportation, resulted in mandated closures and orders to “shelter-in-place” and created significant disruption of the financial markets. The full extent of the COVID-19 impact on the Company’s operational and financial performance will depend on future developments, including the duration and spread of the pandemic and related actions taken by U.S. and foreign government agencies to prevent disease spread, all of which are uncertain, out of the Company’s control, and cannot be predicted.

Use of Estimates

Use of Estimates

The preparation of financial statements in accordance with GAAP 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, 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.

Cash Equivalents and Investments

Cash Equivalents and Investments

The Company has invested its excess cash in money market accounts, certificates of deposit, corporate debt, government-sponsored enterprise bonds and municipal bonds and considers all highly liquid debt instruments purchased with an original maturity of three months or less to be cash equivalents. Investments with original maturities greater than three months and remaining maturities less than one year are classified as short-term investments. Investments with remaining maturities greater than one year are classified as long-term investments. Management generally determines the appropriate classification of securities at the time of purchase. All securities are classified as available-for-sale. The Company’s available-for-sale short-term and long-term investments are carried at fair value, with the unrealized holding gains and losses reported in accumulated other comprehensive income (loss). Realized gains and losses and declines in the value judged to be other-than-temporary are included in the other income, net line item in the condensed consolidated statements of operations. The cost of securities sold is based on the specific identification method.

Fair Value Measurements

Fair Value Measurements

The Company measures the fair value of financial instruments using a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value into three broad levels:

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

Level 2—Pricing is provided by third party sources of market information obtained through the Company’s investment advisors, rather than models. The Company does not adjust for, or apply, any additional assumptions or estimates to the pricing information it receives from advisors. The Company’s Level 2 securities include cash equivalents and available-for-sale securities, which consisted primarily of certificates of deposit, corporate debt, and government agency and municipal debt securities from issuers with high-quality credit ratings. The Company’s investment advisors obtain pricing data from independent sources, such as Standard & Poor’s, Bloomberg and Interactive Data Corporation, and rely on comparable pricing of other securities because the Level 2 securities are not actively traded and have fewer observable transactions. The Company considers this the most reliable information available for the valuation of the securities.

Level 3—Unobservable inputs that are supported by little or no market activity and reflect the use of significant management judgment are used to measure fair value. These values are generally determined using pricing models for which the assumptions utilize management’s estimates of market participant assumptions. The determination of fair value for Level 3 investments and other financial instruments involves the most management judgment and subjectivity.

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.

Allowance for Doubtful Accounts

Allowance for Doubtful Accounts

The Company establishes an allowance for doubtful accounts to ensure that its trade receivables balances are not overstated due to uncollectibility. The Company performs ongoing customer credit evaluations within the context of the industry in which it operates and generally does not require collateral from its customers. A specific allowance of up to 100% of the invoice value is provided for any problematic customer balances. Delinquent account balances are written off after management has determined that the likelihood of collection is remote. The Company grants credit only to customers deemed creditworthy in the judgment of management. The allowance for doubtful accounts receivable was zero as of June 30, 2022 and approximately $61,000 as of December 31, 2021.

Inventories

Inventories

The Company values its inventories at the lower of cost, which approximates actual cost on a first-in, first-out basis, or net realizable value. Costs of inventories primarily consisted of material and third party assembly costs. The Company records inventory reserves for estimated obsolescence or unmarketable inventories based upon assumptions about future demand and market conditions. Once a reserve is established, it is maintained until the product to which it relates is sold or otherwise disposed of. If actual market conditions are less favorable than those expected by management, additional adjustment to inventory valuation may be required. Charges for obsolete and slow-moving inventories are recorded based upon an analysis of specific identification of obsolete inventory items and quantification of slow moving inventory items. The Company recorded write-downs of inventory of approximately $160,000 and $37,000 during the six months ended June 30, 2022 and 2021, respectively.

Tax Credits and Receivables

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, as a Canadian Controlled Private Corporation (CCPC), the Company is also a part of the Scientific Research and Experimental Development (SRED) 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.

As of December 17, 2021, Peraso Tech ceased to be a CCPC and is no longer eligible for the expenditure refund program. However, it is eligible for a tax credit of 15% on qualified SRED expenditures.  Unused tax credits can be carried back three years or forward for 20 years

Intangible and Long-lived Assets

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. Amortization of developed technology and other intangibles directly related to the Company’s products is included in cost of net revenue, while amortization of customer relationships and other intangibles not associated with the Company’s products is included in SG&A in the condensed consolidated statements of operations.

The Company regularly reviews the carrying value and estimated lives of its long-lived assets and finite-lived intangible assets 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.

Purchased Intangible Assets

Intangible assets acquired in business combinations are accounted for based on the fair value of assets purchased and are amortized over the period in which economic benefit is estimated to be received. Intangible assets subject to amortization, including those acquired in business combinations were as follows (amounts in thousands):

	June 30, 2022
	Gross				Net
	Carrying		Accumulated		Carrying
	Amount		Amortization		Amount
Developed technology	$	5,726	$	776	$	4,950
Customer relationships		2,556		346		2,210
Other		186		19		167
Total	$	8,468	$	1,141	$	7,327

	December 31, 2021
	Gross				Net
	Carrying		Accumulated		Carrying
	Amount		Amortization		Amount
Developed technology	$	5,726	$	60	$	5,666
Customer relationships		2,556		27		2,529
Other		165		5		160
Total	$	8,447	$	92	$	8,355

Developed technology primarily consisted of MoSys’ products that have reached technological feasibility and primarily relate to its memory semiconductor products and technology. The value of the developed technology was determined by discounting estimated net future cash flows of these products. The Company is amortizing the developed technology on a straight-line basis over four years. Amortization related to developed technology of $0.3 million and $0.7 million for the three and six months ended June 30, 2022, respectively, has been included in cost of net revenue in the condensed consolidated statements of operations and comprehensive loss.

Customer relationships relate to the Company's ability to sell existing and future versions of products to MoSys’ customers existing at the time of the arrangement. The fair value of the customer relationships was determined by discounting estimated net future cash flows from the customer relationships. The Company is amortizing customer relationships on a straight-line basis over an estimated life of 4 years. Amortization related to customer relationships of $0.2 million and $0.3 million for the three and six months ended June 30, 2022, respectively, has been included in selling, general and administrative expense in the condensed consolidated statements of operations and comprehensive loss.

Amortization expense was $0.5 million and $1.0 million for the three and six months ended June 30, 2022, respectively. There was no amortization expense for the three and six months ended June 30, 2021.

As of June 30, 2022, estimated future amortization expense related to intangible assets was as follows (in thousands):

Year ending December 31,
2022	$	1,050
2023		2,099
2024		2,099
2025		2,011
2026		28
2027		10
Thereafter		30
	$	7,327

Goodwill

Goodwill

The Company determines the amount of a potential goodwill impairment by comparing the fair value of the reporting unit with its carrying amount. To the extent the carrying value of a reporting unit exceeds its fair value, a goodwill impairment charge is recognized.

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 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. The Company first assesses qualitative factors to determine whether it is more-likely-than-not that the fair value of the reporting unit is less than the carrying amount as a basis for determining whether it is necessary to perform an impairment test. If the qualitative assessment warrants further analysis, the Company compares the fair value of the reporting unit to its carrying value. 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 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.  

Leases

Leases

ASC No. 842, Leases (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

Revenue Recognition

The Company recognizes revenue in accordance with 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 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. Revenue recognition is evaluated through the following five steps: (i) identification of the contract, or contracts, with a customer; (ii) identification of the performance obligations in the contract; (iii) determination of the transaction price; (iv) allocation of the transaction price to the performance obligations in the contract; 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. The majority of the Company's contracts have a single performance obligation to transfer products. Accordingly, the Company recognizes revenue when title and risk of loss have been transferred to the customer, generally at the time of shipment of products. Revenue is measured as the amount of consideration the Company expects to receive in exchange for transferring products and is generally based upon a negotiated, formula, list or fixed price. The Company sells its products both directly to customers and through distributors generally under agreements with payment terms typically 60 days or less.

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.

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. The Company estimates its royalty revenue in the calendar quarter in which the licensee uses the licensed technology.  Payments are received in the subsequent quarter. The Company also generates revenue from licensing its technology. The Company recognizes license fees 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

The Company’s contract liabilities consist of advance customer payments and deferred revenue. The Company classifies advance customer payments and deferred revenue as current or non-current based on the timing of when the Company expects to recognize revenue. As of June 30, 2022 and December 31, 2021, contract liabilities were in a current position and included in deferred revenue.

During the six months ended June 30, 2022, the Company recognized approximately $61,000 of revenue that had been included in deferred revenue as of December 31, 2021.

See Note 6 for disaggregation of revenue by geography.

The Company does not have significant financing components, as payments from customers are typically due within 60 days of invoicing, and the Company has elected the practical expedient to not value financing components that are less than one year. Shipping and handling costs are generally incurred by the customer, and, therefore, are not recorded as revenue.

Cost of Net Revenue

Cost of Net Revenue

Cost of net revenue consists primarily of direct and indirect costs of product sales, including amortization of intangible assets and depreciation of production-related fixed assets.

Government Subsidies

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 and ending in the fourth quarter of 2021.

During the six months ended June 30, 2021, the Company recognized payroll subsidies of $861,352 as a reduction in the associated wage costs and rent subsidies of $160,865 as a reduction of operating expenses in the condensed consolidated statement of operations.

Stock-Based Compensation

Stock-Based Compensation

The Company periodically issues stock options and restricted stock awards to employees and non-employees. The Company accounts for such grants based on ASC No. 718, whereby the value of the award is measured on the date of grant and recognized as compensation expense on a straight-line basis over the vesting period. The fair value of the Company’s stock options is estimated using the Black-Scholes-Merton Option Pricing (Black Scholes) model, which uses certain assumptions related to risk-free interest rates, expected volatility, expected life of the options, and future dividends. Compensation expense is recorded based upon the value derived from the Black-Scholes model. The assumptions used in the Black-Scholes model could materially affect compensation expense recorded in future periods.

Foreign Currency Transactions

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

Per-Share Amounts

Basic net loss per share is computed by dividing net loss for the period by the weighted-average number of shares of common stock outstanding during the period. Diluted net loss per share gives effect to all potentially dilutive common shares outstanding during the period. Potentially dilutive common shares consist of incremental shares of common stock issuable upon the exercise of stock options, vesting of stock awards and exercise of warrants.  

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

	June 30,
	2022		2021
Escrow shares		1,815		—
Options to purchase common stock		1,537		1,048
Unvested restricted common stock units		1,303		—
Convertible debt		—		5,500
Warrants		134		508
Total		4,789		7,056

Recently Issued Accounting Pronouncements

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 May 2021, the FASB issued ASU 2021-04, Earnings Per Share (Topic 260), Debt — Modifications and Extinguishments (Subtopic 470-50), Compensation — Stock Compensation (Topic 718), and Derivatives and Hedging — Contracts in Entity’s Own Equity (Subtopic 815-40): Issuer’s Accounting for Certain Modifications or Exchanges of Freestanding Equity-Classified Written Call Options (ASU 2021-04). ASU 2021-04 provides guidance as to how an issuer should account for a modification of the terms or conditions or an exchange of a freestanding equity-classified written call option (i.e., a warrant) that remains classified after modification or exchange as an exchange of the original instrument for a new instrument. An issuer should measure the effect of a modification or exchange as the difference between the fair value of the modified or exchanged warrant and the fair value of that warrant immediately before modification or exchange and then apply a recognition model that comprises four categories of transactions and the corresponding accounting treatment for each category (equity issuance, debt origination, debt modification, and modifications unrelated to equity issuance and debt origination or modification). ASU 2021-04 is effective for all entities for fiscal years beginning after December 15, 2021, including interim periods within those fiscal years. An entity should apply the guidance provided in ASU 2021-04 prospectively to modifications or exchanges occurring on or after the effective date. The Company adopted ASU 2021-04 effective January 1, 2022. The adoption of ASU 2021-04 did not have any impact on the Company’s consolidated financial statement presentation or disclosures.

Management does not believe that any other recently issued, but not yet effective, authoritative guidance, if currently adopted, would have a material impact on the Company’s financial statement presentation or disclosures.

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The Company and Summary of Significant Accounting Policies (Tables)

6 Months Ended

Jun. 30, 2022

Accounting Policies [Abstract]

Summary of Intangible Assets Subject to Amortization

Intangible assets subject to amortization, including those acquired in business combinations were as follows (amounts in thousands):

	June 30, 2022
	Gross				Net
	Carrying		Accumulated		Carrying
	Amount		Amortization		Amount
Developed technology	$	5,726	$	776	$	4,950
Customer relationships		2,556		346		2,210
Other		186		19		167
Total	$	8,468	$	1,141	$	7,327

	December 31, 2021
	Gross				Net
	Carrying		Accumulated		Carrying
	Amount		Amortization		Amount
Developed technology	$	5,726	$	60	$	5,666
Customer relationships		2,556		27		2,529
Other		165		5		160
Total	$	8,447	$	92	$	8,355

Summary of Estimated Future Amortization Expense

As of June 30, 2022, estimated future amortization expense related to intangible assets was as follows (in thousands):

Year ending December 31,
2022	$	1,050
2023		2,099
2024		2,099
2025		2,011
2026		28
2027		10
Thereafter		30
	$	7,327

Schedule of Antidilutive Securities Excluded from Computation of Diluted Net Loss Per Share

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

	June 30,
	2022		2021
Escrow shares		1,815		—
Options to purchase common stock		1,537		1,048
Unvested restricted common stock units		1,303		—
Convertible debt		—		5,500
Warrants		134		508
Total		4,789		7,056

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Business Combination (Tables)

6 Months Ended

Jun. 30, 2022

Business Combinations [Abstract]

Summary of Fair Value of Total Consideration Effectively Transferred

The fair value of the total consideration effectively transferred is summarized in the following table (in thousands, except per-share amount):

Company share price (i)	$	4.21
Company common shares outstanding (ii)		8,716
Fair value of the Company's common shares outstanding		36,694
Fair value of the Company's warrants (iii)		301
Total fair value of the Company's share-based awards (iii)		782
Percent related to pre-combination service		80.76	%
Fair value of the Company's pre-combination service share-based awards (iii)		632
Consideration effectively transferred	$	37,627
(i) Represents the Company's share price as of December 16, 2021
(ii) Represents the Company's outstanding shares as of December 16, 2021
(iii) Represents the fair value of the Company's warrants outstanding and calculated as of December 16, 2021

Summary of Final Allocation of Purchase Price to Net Assets Acquired

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

	December 31,
	2021
Assets:	(in thousands)
Cash, cash equivalents and investments	$	19,064
Other current assets		2,558
Other assets		833
Intangibles
Developed technology		5,726
Customer relationships		2,556
		8,282
Goodwill		9,946
Liabilities:
Current liabilities		3,056
	$	37,627

Summary of Unaudited Pro Forma Results of Operations

This summary of the unaudited pro forma results of operations is not necessarily indicative of what the Company’s results of operations would have been had Peraso Tech been acquired at the beginning of 2021, nor does it purport to represent results of operations for any future periods.

	Three Months Ended			Six Months Ended
(in thousands)	June 30, 2021			June 30, 2021
Revenue	$	1,865		$	4,304
Net loss	$	(6,634	)	$	(12,160	)

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Fair Value of Financial Instruments (Tables)

6 Months Ended

Jun. 30, 2022

Fair Value Disclosures [Abstract]

Schedule of Estimated Fair Values of Financial Instruments Outstanding

The estimated fair values of financial instruments outstanding were (in thousands):

	June 30, 2022
			Unrealized		Unrealized			Fair
	Cost		Gains		Losses			Value
Cash and cash equivalents	$	2,820	$	—	$	—		$	2,820
Short-term investments		2,100		—		(6	)		2,094
Long-term investments		1,117		—		(35	)		1,082
	$	6,037	$	—	$	(41	)	$	5,996

	December 31, 2021
			Unrealized		Unrealized			Fair
	Cost		Gains		Losses			Value
Cash and cash equivalents	$	5,893	$	—	$	—		$	5,893
Short-term investments		9,276		—		(9	)		9,267
Long-term investments		2,935		—		(7	)		2,928
	$	18,104	$	—	$	(16	)	$	18,088

Schedule of Fair Value Hierarchy for Financial Assets (Cash Equivalents and Investments)

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

	June 30, 2022
	Fair Value		Level 1		Level 2		Level 3
Money market funds	$	263	$	263	$	—	$	—
Corporate notes and commercial paper	$	3,176	$	—	$	3,176	$	—
	$	3,439	$	263	$	3,176	$	—

	December 31, 2021
	Fair Value		Level 1		Level 2		Level 3
Money market funds	$	1,159	$	1,159	$	—	$	—
Corporate notes and commercial paper	$	12,195	$	—	$	12,195	$	—

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Balance Sheet Detail (Tables)

6 Months Ended

Jun. 30, 2022

Organization Consolidation And Presentation Of Financial Statements [Abstract]

Schedule of Inventory

	June 30,		December 31,
	2022		2021
	(in thousands)
Raw materials	$	1,238	$	879
Work-in-process		2,597		2,170
Finished goods		550		775
	$	4,385	$	3,824

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Revision of Prior Period Financial Statements (Tables)

6 Months Ended

Jun. 30, 2022

Accounting Changes And Error Corrections [Abstract]

Schedule of Adjustments

The effects of the adjustments for the three months ended March 31, 2022 were as follows (in thousands):

	As Reported		Adjustment			As Revised
Condensed Consolidated Statement of Operations:
Cost of net revenue	$	1,590	$	358		$	1,948
Gross profit		1,813		(358	)		1,455
Research and development		6,003		(517	)		5,486
Selling, general and administrative		2,546		159			2,705
Total operating expenses	$	8,549	$	(358	)	$	8,191

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Commitments and Contingencies (Tables)

6 Months Ended

Jun. 30, 2022

Commitments And Contingencies Disclosure [Abstract]

Schedule of Right-of-Use Asset and Lease Liabilities

The following table provides the details of right-of-use assets and lease liabilities as of June 30, 2022 (in thousands):

	Six Months Ended
	June 30, 2022
Right-of-use assets:
Operating leases	$	1,111
Finance lease		245
Total right-of-use assets	$	1,356
Lease liabilities:
Operating leases	$	1,140
Finance lease		254
Total lease liabilities	$	1,394

Schedule of Future Minimum Payments under Facility Leases

Future minimum payments under the leases at June 30, 2022 are listed in the table below (in thousands):

	Operating
Year ending December 31,	leases
2022	$	223
2023		768
2024		222
2025		139
2026		113
2027		84
Total future lease payments		1,549
Less: imputed interest		(155	)
Present value of lease liabilities	$	1,394

Schedule of Supplemental Cash Flow Information Related to Operating lease

The following table provides the details of supplemental cash flow information (in thousands):

	Six Months Ended
	June 30,
	2022		2021
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows for leases	$	283	$	147

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Business Segments, Concentration of Credit Risk and Significant Customers (Tables)

6 Months Ended

Jun. 30, 2022

Segment Reporting [Abstract]

Schedule of Revenue from Shipments of Product. Licensing of its Technologies and Performance of Services to Customers by Geographical Location

The Company recognized revenue from shipments of product, licensing of its technologies and performance of services to customers by geographical location as follows (in thousands):

	Three Months Ended				Six Months Ended
	June 30,				June 30,
	2022		2021		2022		2021
North America	$	3,127	$	106	$	5,503	$	161
Hong Kong		587		555		879	$	1,030
Taiwan		204		23		515		588
Japan		245		—		537		—
Rest of world		121		13		253		19
Total net revenue	$	4,284	$	697	$	7,687	$	1,798

Schedule of Customers Who Accounted for at Least 10% of Total Net Revenue

Customers who accounted for at least 10% of total net revenue were:

	Three Months Ended		Six Months Ended
	June 30,		June 30,
	2022	2021	2022	2021
Customer A	36%	*	31%	*
Customer B	21%	*	12%	*
Customer C	14%	69%	11%	52%
Customer D	13%	*	23%	*
Customer E	*	*	*	33%

* Represents less than 10%

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Stock-Based Compensation (Tables)

6 Months Ended

Jun. 30, 2022

Disclosure Of Compensation Related Costs Sharebased Payments [Abstract]

Summary of Share Available for Grant Under the 2019 Plan

The following table summarizes the activity in the shares available for grant under the Plans during the six months ended June 30, 2022 (in thousands, except exercise price):

				Options Outstanding
							Weighted
	Shares						Average
	Available			Number of			Exercise
	for Grant			Shares			Prices
Balance as of December 31, 2021		3,024			1,558		$	3.49
Options cancelled		—			(13	)	$	10.98
Balance as of March 31, 2022		3,024			1,545		$	3.43
RSUs granted		(1,511	)		—		$	-
RSUs cancelled and returned to the Plan		43			—		$	-
Options cancelled		—			(8	)	$	2.63
Balance as of June 30, 2022		1,556			1,537		$	3.38

Summary of RSU's Activity Under Plans

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

				Weighted
				Average
	Number of			Grant-Date
	Shares			Fair Value
Non-vested shares as of December 31, 2021		88		$	4.84
Vested		(13	)	$	3.70
Non-vested shares as of March 31, 2022		75		$	5.67
Granted		1,511			—
Vested		(271	)	$	2.49
Cancelled		(12	)		—
Non-vested shares as of June 30, 2022		1,303		$	2.28

Summary of Significant Ranges of Outstanding and Exercisable Options

The following table summarizes significant ranges of outstanding and exercisable options as of June 30, 2022 (in thousands, except contractual life and exercise price):

	Options Outstanding						Options Exercisable
			Weighted
			Average
			Remaining		Weighted				Weighted
			Contractual		Average				Average		Aggregate
	Number		Life		Exercise		Number		Exercise		Intrinsic
Range of Exercise Price	Outstanding		(in Years)		Price		Exercisable		Price		value
$1.57 - $14.99		1,526		8.17	$	2.65		834	$	2.52	$	39
$15.00 - $25.59		4		1.24	$	15.00		4	$	15.00	$	—
$25.60 - $143.99		1		2.18	$	50.00		1	$	50.00	$	—
$144.00 - $409.99		5		4.15	$	144.00		5	$	144.00	$	—
$410.00 - $924.00		1		2.75	$	410.00		1	$	410.00	$	—
$1.57 - $924.00		1,537		8.13	$	3.38		845	$	3.85	$	39

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Equity (Tables)

6 Months Ended

Jun. 30, 2022

Stockholders Equity Note [Abstract]

Schedule of Warrants Outstanding

As of June 30, 2022, the Company had the following warrants outstanding (share amounts in thousands):

Type	Number of Shares		Exercise Price		Expiration
Common stock		33	$	47.00	January 2023
Common stock		101	$	2.40	October 2023

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The Company and Summary of Significant Accounting Policies - Additional Information (Details) - USD ($)	3 Months Ended				6 Months Ended		12 Months Ended
	Jun. 30, 2022	Mar. 31, 2022	Jun. 30, 2021	Mar. 31, 2021	Jun. 30, 2022	Jun. 30, 2021	Dec. 31, 2021	Dec. 31, 2019
Summary Of Significant Accounting Policies [Line Items]
Net losses	$ (7,043,000)	$ (6,754,000)	$ (5,430,000)	$ (4,157,000)	$ (13,797,000)	$ (9,586,000)	$ (10,800,000)
Accumulated deficit	$ 130,996,000				$ 130,996,000		117,199,000
Maximum specific allowance as percentage of invoice value for problematic customer balances	100.00%				100.00%
Allowance for doubtful accounts receivable	$ 0				$ 0		$ 61,000
Scientific research and experimental development cost tax credit eligible percentage					15.00%
Amortization	500,000		$ 0		$ 1,000,000.0	0
Inventory write-downs					$ 160,000	37,000
Accounting Standards Update [Extensible List]								us-gaap:AccountingStandardsUpdate201602Member
Lease, Practical Expedients, Package								true
Payment terms					The Company sells its products both directly to customers and through distributors generally under agreements with payment terms typically 60 days or less.
Deferred revenue, revenue recognized					$ 61,000
Period payments due from customers					60 days
Revenue, practical expedient, financing component					true
Payroll subsidies						861,352
Rent subsidies						$ 160,865
Minimum
Summary Of Significant Accounting Policies [Line Items]
Estimated useful lives of long-lived assets					3 years
Maximum
Summary Of Significant Accounting Policies [Line Items]
Estimated useful lives of long-lived assets					10 years
Scientific Research And Experimental Development
Summary Of Significant Accounting Policies [Line Items]
Unused tax credits carried back period					3 years
Unused tax credits forward period					20 years
Developed Technology Rights
Summary Of Significant Accounting Policies [Line Items]
Amortization	300,000				$ 700,000
Developed Technology Rights | Minimum
Summary Of Significant Accounting Policies [Line Items]
Estimated useful lives of long-lived assets					4 years
Customer Relationships
Summary Of Significant Accounting Policies [Line Items]
Estimated useful lives of long-lived assets					4 years
Amortization	$ 200,000				$ 300,000

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The Company and Summary of Significant Accounting Policies - Summary of Intangible Assets Subject to Amortization (Details) - USD ($) $ in Thousands	Jun. 30, 2022	Dec. 31, 2021
Finite Lived Intangible Assets [Line Items]
Gross Carrying Amount	$ 8,468	$ 8,447
Accumulated Amortization	1,141	92
Intangible assets, net	7,327	8,355
Developed Technology Rights
Finite Lived Intangible Assets [Line Items]
Gross Carrying Amount	5,726	5,726
Accumulated Amortization	776	60
Intangible assets, net	4,950	5,666
Customer Relationships
Finite Lived Intangible Assets [Line Items]
Gross Carrying Amount	2,556	2,556
Accumulated Amortization	346	27
Intangible assets, net	2,210	2,529
Other
Finite Lived Intangible Assets [Line Items]
Gross Carrying Amount	186	165
Accumulated Amortization	19	5
Intangible assets, net	$ 167	$ 160

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The Company and Summary of Significant Accounting Policies - Summary of Estimated Future Amortization Expense (Details) $ in Thousands	Jun. 30, 2022 USD ($)
Accounting Policies [Abstract]
2022	$ 1,050
2023	2,099
2024	2,099
2025	2,011
2026	28
2027	10
Thereafter	30
Finite lived intangible assets, net	$ 7,327

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The Company and Summary of Significant Accounting Policies - Schedule of Antidilutive Securities Excluded from Computation of Diluted Net Loss Per Share (Details) - shares shares in Thousands	6 Months Ended
	Jun. 30, 2022	Jun. 30, 2021
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Antidilutive Securities Excluded from Computation of Earnings Per Share, Amount	4,789	7,056
Escrow Shares
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Antidilutive Securities Excluded from Computation of Earnings Per Share, Amount	1,815
Options to Purchase Common Stock
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Antidilutive Securities Excluded from Computation of Earnings Per Share, Amount	1,537	1,048
RSU's
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Antidilutive Securities Excluded from Computation of Earnings Per Share, Amount	1,303
Convertible Debt
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Antidilutive Securities Excluded from Computation of Earnings Per Share, Amount		5,500
Warrants
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Antidilutive Securities Excluded from Computation of Earnings Per Share, Amount	134	508

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Business Combination - Additional Information (Details) shares in Thousands, d in Thousands	6 Months Ended
	Jun. 30, 2022 d $ / shares shares	Mar. 31, 2022 shares	Dec. 31, 2021 shares	Jun. 30, 2021 shares	Mar. 31, 2021 shares	Dec. 31, 2020 shares
Business Acquisition [Line Items]
Exchangeable shares and common stock	9,295,097
Common stock, shares issued	21,832		21,579
Trading days | d	20
Consecutive trading days | d	30
Consecutive trading days per share | $ / shares	$ 8.57
Common Stock
Business Acquisition [Line Items]
Common stock, shares issued	21,832	21,588	21,579	5,257	5,241	5,241
Common Stock | Peraso Tech
Business Acquisition [Line Items]
Conversion ratio of common stock	0.045239122387267
Equity Method Investment, Ownership Percentage	61.00%
Peraso Shares [Member]
Business Acquisition [Line Items]
Exchangeable shares and common stock	1,312,878
Common stock, shares issued	3,558,151
Escrow Shares
Business Acquisition [Line Items]
Exchangeable shares and common stock	502,567

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Business Combination - Summary of Fair Value of Total Consideration Effectively Transferred (Details) - Peraso Tech $ / shares in Units, shares in Thousands, $ in Thousands	12 Months Ended
	Dec. 31, 2021 USD ($) $ / shares shares
Business Acquisition [Line Items]
Percent related to pre-combination service	80.76%
Consideration effectively transferred	$ 37,627
Common Stock
Business Acquisition [Line Items]
Company share price | $ / shares	$ 4.21
Company common shares outstanding | shares	8,716
Consideration transferred, equity interests issued and issuable, fair value	$ 36,694
Warrants
Business Acquisition [Line Items]
Consideration transferred, equity interests issued and issuable, fair value	301
Share Based Awards
Business Acquisition [Line Items]
Consideration transferred, equity interests issued and issuable, fair value	782
Precombination Service Share Based Awards
Business Acquisition [Line Items]
Consideration transferred, equity interests issued and issuable, fair value	$ 632

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Business Combination - Summary of Final Allocation of Purchase Price to Net Assets Acquired (Details) - USD ($) $ in Thousands	Jun. 30, 2022	Dec. 31, 2021
Assets:
Cash, cash equivalents and investments		$ 19,064
Other current assets		2,558
Other assets		833
Assets acquired		8,282
Goodwill	$ 9,946	9,946
Liabilities:
Current liabilities		3,056
Assets acquired and liabilities assumed, net		37,627
Developed Technology
Assets:
Intangibles		5,726
Customer Relationships
Assets:
Intangibles		$ 2,556

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Business Combination - Summary of Unaudited Pro Forma Results of Operations (Details) - USD ($) $ in Thousands	3 Months Ended	6 Months Ended
	Jun. 30, 2021	Jun. 30, 2021
Business Combinations [Abstract]
Revenue	$ 1,865	$ 4,304
Net loss	$ (6,634)	$ (12,160)

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Fair Value of Financial Instruments - Schedule of Estimated Fair Values of Financial Instruments Outstanding (Details) - USD ($) $ in Thousands	Jun. 30, 2022	Dec. 31, 2021
Debt Securities, Available-for-sale [Line Items]
Cost	$ 6,037	$ 18,104
Unrealized Gains	0	0
Unrealized Losses	(41)	(16)
Fair Value	5,996	18,088
Cash and Cash Equivalents
Debt Securities, Available-for-sale [Line Items]
Cost	2,820	5,893
Unrealized Gains	0	0
Unrealized Losses	0	0
Fair Value	2,820	5,893
Short-term investments
Debt Securities, Available-for-sale [Line Items]
Cost	2,100	9,276
Unrealized Gains	0	0
Unrealized Losses	(6)	(9)
Fair Value	2,094	9,267
Long-term investments
Debt Securities, Available-for-sale [Line Items]
Cost	1,117	2,935
Unrealized Gains	0	0
Unrealized Losses	(35)	(7)
Fair Value	$ 1,082	$ 2,928

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Fair Value of Financial Instruments - Schedule of Fair Value Hierarchy for Financial Assets (Cash Equivalents and Investments) (Details) - Fair Value, Measurements, Recurring - USD ($) $ in Thousands	Jun. 30, 2022	Dec. 31, 2021
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Fair Value	$ 3,439
Level 1
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Fair Value	263
Level 2
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Fair Value	3,176
Money market funds
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Fair Value	263	$ 1,159
Money market funds | Level 1
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Fair Value	263	1,159
Corporate notes and commercial paper
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Fair Value	3,176	12,195
Corporate notes and commercial paper | Level 2
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Fair Value	$ 3,176	$ 12,195

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Fair Value of Financial Instruments - Additional Information (Details) - USD ($)	Jun. 30, 2022	Dec. 31, 2021
Fair Value Disclosures [Abstract]
Transfer of assets between Level 1 to Level 2	$ 0	$ 0
Transfer of assets between Level 2 to Level 1	0	0
Transfer of liabilities between Level 1 to Level 2	0	0
Transfer of liabilities between Level 2 to Level 1	$ 0	$ 0

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Balance Sheet Detail - Schedule of Inventory (Details) - USD ($) $ in Thousands	Jun. 30, 2022	Dec. 31, 2021
Inventory Disclosure [Abstract]
Raw materials	$ 1,238	$ 879
Work-in-process	2,597	2,170
Finished goods	550	775
Total	$ 4,385	$ 3,824

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Revision of Prior Period Financial Statements Additional Information (Details) - USD ($) $ in Thousands	3 Months Ended				6 Months Ended		12 Months Ended
	Jun. 30, 2022	Mar. 31, 2022	Jun. 30, 2021	Mar. 31, 2021	Jun. 30, 2022	Jun. 30, 2021	Dec. 31, 2021
Reclassification [Line Items]
Net losses	$ (7,043)	$ (6,754)	$ (5,430)	$ (4,157)	$ (13,797)	$ (9,586)	$ (10,800)
Adjustment
Reclassification [Line Items]
Net losses		$ 0			$ 0

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Revision of Prior Period Financial Statements - Schedule of Adjustments (Details) - USD ($) $ in Thousands	3 Months Ended			6 Months Ended
	Jun. 30, 2022	Mar. 31, 2022	Jun. 30, 2021	Jun. 30, 2022	Jun. 30, 2021
Reclassification [Line Items]
Cost of net revenue		$ 1,948
Gross profit	$ 1,485	1,455	$ 262	$ 2,940	$ 744
Research and development	5,643	5,486	2,892	11,127	5,679
Selling, general and administrative	2,878	2,705	1,799	5,585	3,106
Total operating expenses	$ 8,521	8,191	$ 4,691	$ 16,712	$ 8,785
Reported
Reclassification [Line Items]
Cost of net revenue		1,590
Gross profit		1,813
Research and development		6,003
Selling, general and administrative		2,546
Total operating expenses		8,549
Adjustment
Reclassification [Line Items]
Cost of net revenue		358
Gross profit		(358)
Research and development		(517)
Selling, general and administrative		159
Total operating expenses		$ (358)

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Commitments and Contingencies - Additional Information (Details) - USD ($)			3 Months Ended		6 Months Ended
	May 26, 2022	Apr. 13, 2022	Jun. 30, 2022	Jun. 30, 2021	Jun. 30, 2022	Jun. 30, 2021	Mar. 01, 2022
Commitments And Contingencies [Line Items]
Operating lease, term of contract		18 months
Operating lease commencement date		Jul. 15, 2022
Lessee, operating lease, discount rate			8.00%		8.00%
Financing lease agreement							36 months
Finance lease, right-of-use asset			$ 245,000		$ 245,000		$ 274,000
Finance lease, lease liability			254,000		254,000		$ 274,000
Rent expenses			$ 200,000	$ 200,000	$ 400,000	$ 300,000
San Jose, California
Commitments And Contingencies [Line Items]
Operating lease expiration period					2022-07
Waterloo, Canada
Commitments And Contingencies [Line Items]
Operating lease expiration period					2022-09
Toronto, Canada
Commitments And Contingencies [Line Items]
Operating lease expiration period					2023-12
Markham, Ontario
Commitments And Contingencies [Line Items]
Operating lease, term of contract	60 months
Operating lease commencement date	Jun. 21, 2022
Lease incentive	$ 220,000

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Commitments and Contingencies - Schedule of Right-of-Use Asset and Lease Liabilities (Details) - USD ($)	Jun. 30, 2022	Mar. 01, 2022	Dec. 31, 2021
Right-of-use assets:
Operating leases	$ 1,111,000
Finance lease, right-of-use asset	245,000	$ 274,000
Total right-of-use assets	1,356,000		$ 617,000
Lease liabilities:
Operating leases	1,140,000
Finance lease, lease liability	254,000	$ 274,000
Total lease liabilities	$ 1,394,000

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Commitments and Contingencies - Schedule of Future Minimum Payments under Facility Leases (Details) $ in Thousands	Jun. 30, 2022 USD ($)
Leases Operating [Abstract]
2022	$ 223
2023	768
2024	222
2025	139
2026	113
2027	84
Total future lease payments	1,549
Less: imputed interest	(155)
Present value of lease liabilities	$ 1,394

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Commitments and Contingencies - Schedule of Supplemental Cash Flow Information Related to Operating lease (Details) - USD ($) $ in Thousands	6 Months Ended
	Jun. 30, 2022	Jun. 30, 2021
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows for leases	$ 283	$ 147

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Business Segments, Concentration of Credit Risk and Significant Customers - Additional Information (Details)	6 Months Ended	12 Months Ended
	Jun. 30, 2022 Segment Customer	Dec. 31, 2021 Customer
Revenues From External Customers And Long Lived Assets [Line Items]
Number of operating segments | Segment	1
Accounts receivable | Major customers | Credit concentration
Revenues From External Customers And Long Lived Assets [Line Items]
Percentage of concentration risk	80.00%	96.00%
Number of customers | Customer	3	3

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Business Segments, Concentration of Credit Risk and Significant Customers - Schedule of Revenue from Shipments of Product, Licensing of its Technologies and Performance of Services to Customers by Geographical Location (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2022	Jun. 30, 2021	Jun. 30, 2022	Jun. 30, 2021
Revenues From External Customers And Long Lived Assets [Line Items]
Total net revenue	$ 4,284	$ 697	$ 7,687	$ 1,798
North America [Member]
Revenues From External Customers And Long Lived Assets [Line Items]
Total net revenue	3,127	106	5,503	161
Hong Kong [Member]
Revenues From External Customers And Long Lived Assets [Line Items]
Total net revenue	587	555	879	1,030
Taiwan [Member]
Revenues From External Customers And Long Lived Assets [Line Items]
Total net revenue	204	23	515	588
Japan [Member]
Revenues From External Customers And Long Lived Assets [Line Items]
Total net revenue	245		537
Rest of world [Member]
Revenues From External Customers And Long Lived Assets [Line Items]
Total net revenue	$ 121	$ 13	$ 253	$ 19

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Business Segments, Concentration of Credit Risk and Significant Customers - Schedule of Customers Who Accounted for at Least 10% of Total Net Revenue (Details) - Net Revenues - Customer Concentration	3 Months Ended		6 Months Ended
	Jun. 30, 2022	Jun. 30, 2021	Jun. 30, 2022	Jun. 30, 2021
Customer A
Significant Customers
Percentage of concentration risk	36.00%		31.00%
Customer B
Significant Customers
Percentage of concentration risk	21.00%		12.00%
Customer C
Significant Customers
Percentage of concentration risk	14.00%	69.00%	11.00%	52.00%
Customer D
Significant Customers
Percentage of concentration risk	13.00%		23.00%
Customer E
Significant Customers
Percentage of concentration risk				33.00%

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Income Tax Provision - Additional Information (Details)	Jun. 30, 2022 USD ($)
Income Tax Disclosure [Abstract]
Unrecognized tax benefits recorded as liability	$ 0

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Stock-Based Compensation - Additional Information (Details) - USD ($) $ in Millions	6 Months Ended
	Jun. 30, 2022	Jun. 30, 2021	Nov. 30, 2021
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Options granted (in shares)	0	0
Options exercised (in shares)	0	0
New Employees
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Outstanding awards	0
Options
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Unamortized compensation cost, net of expected forfeitures	$ 10.2
Weighted average expected period over which the expense is to be recognized	2 years 7 months 6 days
Compensation cost	$ 2.2	$ 2.3
RSU's
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Weighted average expected period over which the expense is to be recognized	2 years 6 months
Compensation cost	$ 0.7	$ 0.0
Unamortized compensation cost, net of expected forfeitures	$ 2.8
Equity Incentive Plan 2010
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Options granted (in shares)	0
Stock Incentive Plan 2019
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Number of shares reserved for issuance	182,500		3,106,937
Stock Incentive Plan 2019 | Options
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Minimum percentage of voting rights required for applicability of a specific expiration term	10.00%
Maximum expiration term of options granted	5 years
Term of plan	10 years
Stock Incentive Plan 2019 | Minimum | Options
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Vesting period of replacement options	3 years
Stock Incentive Plan 2019 | Maximum | Options
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Vesting period of replacement options	4 years

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Stock-Based Compensation - Summary of Share Available for Grant Under the 2019 Plan (Details) - Equity Incentive Plan 2019 - $ / shares shares in Thousands	3 Months Ended
	Jun. 30, 2022	Mar. 31, 2022
Number of Shares
Balance at the beginning of the year (in shares)	3,024	3,024
Balance at the end of the period (in shares)	1,556	3,024
Balance at the beginning of the year (in shares)	1,545	1,558
Options cancelled (in shares)	(8)	(13)
Balance at the end of the period (in shares)	1,537	1,545
Weighted Average Exercise Prices
Weighted-average exercise price (in dollars per share)	$ 3.43	$ 3.49
Options cancelled (in dollars per share)	2.63	10.98
Weighted-average exercise price (in dollars per share)	$ 3.38	$ 3.43
RSU's
Number of Shares
RSUs granted (in shares)	(1,511)
RSUs cancelled and returned to the Plan	43

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Stock-Based Compensation - Summary of RSU's Activity Under Plans (Details) - Equity Incentive Plan 2019 - RSU's - $ / shares shares in Thousands	3 Months Ended
	Jun. 30, 2022	Mar. 31, 2022
Number of Shares
Non-vested shares at the beginning of the year	75	88
Granted (in shares)	1,511
Vested (in shares)	(271)	(13)
Non-vested shares at the end of the period	1,303	75
Cancelled (in shares)	(12)
Weighted Average Grant-Date Fair Value
Weighted average grant date fair value	$ 5.67	$ 4.84
Vested (in dollars per share)	2.49	3.70
Weighted average grant date fair value	$ 2.28	$ 5.67

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Stock-Based Compensation - Summary of Significant Ranges of Outstanding and Exercisable Options (Details) - Options $ / shares in Units, shares in Thousands, $ in Thousands	6 Months Ended
	Jun. 30, 2022 USD ($) $ / shares shares
$1.57 - $14.99
Share-based Compensation, Shares Authorized under Stock Option Plans, Exercise Price Range [Line Items]
Lower range limit (in dollars per share)	$ 1.57
Upper range limit (in dollars per share)	$ 14.99
Number Outstanding (in shares) | shares	1,526
Weighted Average Remaining Contractual Life (in Years)	8 years 2 months 1 day
Weighted Average Exercise Price (in dollars per share)	$ 2.65
Number Exercisable (in shares) | shares | shares	834
Weighted Average Exercise Price (in dollars per share)	$ 2.52
Options Outstanding, Aggregate Intrinsic Value | $	$ 39
$15.00 - $25.59
Share-based Compensation, Shares Authorized under Stock Option Plans, Exercise Price Range [Line Items]
Lower range limit (in dollars per share)	$ 15.00
Upper range limit (in dollars per share)	$ 25.59
Number Outstanding (in shares) | shares	4
Weighted Average Remaining Contractual Life (in Years)	1 year 2 months 26 days
Weighted Average Exercise Price (in dollars per share)	$ 15.00
Number Exercisable (in shares) | shares | shares	4
Weighted Average Exercise Price (in dollars per share)	$ 15.00
$25.60 - $143.99
Share-based Compensation, Shares Authorized under Stock Option Plans, Exercise Price Range [Line Items]
Lower range limit (in dollars per share)	25.60
Upper range limit (in dollars per share)	$ 143.99
Number Outstanding (in shares) | shares	1
Weighted Average Remaining Contractual Life (in Years)	2 years 2 months 4 days
Weighted Average Exercise Price (in dollars per share)	$ 50.00
Number Exercisable (in shares) | shares | shares	1
Weighted Average Exercise Price (in dollars per share)	$ 50.00
$144.00 - $409.99
Share-based Compensation, Shares Authorized under Stock Option Plans, Exercise Price Range [Line Items]
Lower range limit (in dollars per share)	144.00
Upper range limit (in dollars per share)	$ 409.99
Number Outstanding (in shares) | shares	5
Weighted Average Remaining Contractual Life (in Years)	4 years 1 month 24 days
Weighted Average Exercise Price (in dollars per share)	$ 144.00
Number Exercisable (in shares) | shares | shares	5
Weighted Average Exercise Price (in dollars per share)	$ 144.00
$410.00 - $924.00
Share-based Compensation, Shares Authorized under Stock Option Plans, Exercise Price Range [Line Items]
Lower range limit (in dollars per share)	410.0
Upper range limit (in dollars per share)	$ 924.00
Number Outstanding (in shares) | shares	1
Weighted Average Remaining Contractual Life (in Years)	2 years 9 months
Weighted Average Exercise Price (in dollars per share)	$ 410.00
Number Exercisable (in shares) | shares | shares	1
Weighted Average Exercise Price (in dollars per share)	$ 410.00
$1.57 - $924.00
Share-based Compensation, Shares Authorized under Stock Option Plans, Exercise Price Range [Line Items]
Lower range limit (in dollars per share)	1.57
Upper range limit (in dollars per share)	$ 924.00
Number Outstanding (in shares) | shares	1,537
Weighted Average Remaining Contractual Life (in Years)	8 years 1 month 17 days
Weighted Average Exercise Price (in dollars per share)	$ 3.38
Number Exercisable (in shares) | shares | shares	845
Weighted Average Exercise Price (in dollars per share)	$ 3.85
Options Outstanding, Aggregate Intrinsic Value | $	$ 39

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Equity - Schedule of Warrants Outstanding (Details)	Jun. 30, 2022 $ / shares shares
Common Stock Warrant One
Class Of Warrant Or Right [Line Items]
Number of Shares | shares	33,000
Exercise Price | $ / shares	$ 47.00
Expiration	Jan. 31, 2023
Common Stock Warrant Two
Class Of Warrant Or Right [Line Items]
Number of Shares | shares	101,000
Exercise Price | $ / shares	$ 2.40
Expiration	Oct. 31, 2023

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Debt - Additional Information (Details)									1 Months Ended		3 Months Ended	6 Months Ended
	Dec. 16, 2021 USD ($)	Dec. 16, 2021 CAD ($)	Sep. 17, 2021 USD ($)	Sep. 17, 2021 CAD ($)	Mar. 05, 2021 USD ($)	Mar. 05, 2021 CAD ($)	Feb. 05, 2021 USD ($)	Feb. 05, 2021 CAD ($)	Aug. 31, 2021 USD ($)	Aug. 31, 2021 CAD ($)	Jun. 30, 2021 USD ($)	Jun. 30, 2022 USD ($)	Jun. 30, 2022 CAD ($)	Jun. 30, 2021 USD ($)	Jun. 30, 2022 CAD ($)
Debt Instrument [Line Items]
Interest expense on financing											$ 513,438			$ 513,438
Amortization of debt discount														910,000
Loan Facilities
Debt Instrument [Line Items]
Amortization of debt discount											348,134			348,134
Convertible Debt Outstanding and Retired in 2021
Debt Instrument [Line Items]
Interest expense on financing											120,950			120,950
SRED Financing
Debt Instrument [Line Items]
Proceeds from financing fund			$ 745,655	$ 950,000	$ 274,715	$ 350,000	$ 274,715	$ 350,000				$ 1,295,085	$ 1,650,000
Financing fees												$ 32,770			$ 41,750
Borrowing interest rate												1.60%	1.60%
Debt instrument compounded interest rate												20.98%	20.98%
Debt instrument payment of interest									$ 136,900	$ 174,417
Debt instrument repaid amount	$ 816,964	$ 1,044,177	$ 184,558	$ 235,132					$ 1,093,230	$ 1,392,831
Interest expense on financing											$ 44,354			$ 44,354

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Related Party Transactions - Additional Information (Details) - USD ($)	6 Months Ended
	Jun. 30, 2022	Jun. 30, 2021
Consultant
Related Party Transaction [Line Items]
Compensation paid	$ 92,400	$ 103,300
Employed Family Member
Related Party Transaction [Line Items]
Compensation paid	$ 92,400	$ 46,000

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Subsequent Event - Additional Information (Details) - Subsequent Event - Technology License and Patent Assignment Agreement - Intel Corporation	Aug. 05, 2022 USD ($)
Subsequent Event [Line Items]
Agreement consideration receivable	$ 3,062,500
Agreement consideration receivable upon satisfaction as per agreement	$ 437,500