UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM
(Mark one)
For the quarterly period ended
OR
For the transition period from to
Commission file number
(Exact name of registrant as specified in its charter)
| (State or other jurisdiction of | (I.R.S. Employer | |
| Incorporation or organization) | Identification Number) |
(Address of principal executive office and zip code)
(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 | ||
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.
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).
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 | ☐ | |
| ☒ | 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 exchangeable shares, no par value, was 58,542 as of May 5, 2025.
The number of outstanding
shares of the registrant’s common stock, par value $0.001 per share, was
PERASO INC.
FORM 10-Q
For the Quarterly Period Ended March 31, 2025
TABLE OF CONTENTS
i
PART I—FINANCIAL INFORMATION
Item 1. Financial Statements
PERASO INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands, except par value)
| March 31, | December 31, | |||||||
| 2025 | 2024 | |||||||
| (unaudited) | ||||||||
| ASSETS | ||||||||
| Current assets | ||||||||
| Cash and cash equivalents | $ | $ | ||||||
| Accounts receivable, net | ||||||||
| Inventories, net | ||||||||
| Prepaid expenses and other | ||||||||
| Total current assets | ||||||||
| Property and equipment, net | ||||||||
| Right-of-use lease assets | ||||||||
| Other | ||||||||
| Total assets | $ | $ | ||||||
| LIABILITIES AND STOCKHOLDERS’ EQUITY | ||||||||
| Current liabilities | ||||||||
| Accounts payable | $ | $ | ||||||
| Accrued expenses and other | ||||||||
| Deferred revenue | ||||||||
| Short-term lease liabilities | ||||||||
| Total current liabilities | ||||||||
| Long-term lease liabilities | ||||||||
| Warrant liabilities | ||||||||
| Total liabilities | ||||||||
| Commitments and contingencies (Note 5) | ||||||||
| Stockholders’ equity | ||||||||
| Preferred stock, $ | ||||||||
| Series A, special voting preferred stock, $ | ||||||||
| Common stock, $ | ||||||||
| Issuable shares, | ||||||||
| Additional paid-in capital | ||||||||
| Accumulated deficit | ( | ) | ( | ) | ||||
| Total stockholders’ equity | ||||||||
| Total liabilities and stockholders’ equity | $ | $ | ||||||
The accompanying notes are an integral part of these condensed consolidated financial statements.
1
PERASO INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
(In thousands, except per share data)
| Three Months Ended | ||||||||
| March 31, | ||||||||
| 2025 | 2024 | |||||||
| Net revenue | ||||||||
| Product | $ | $ | ||||||
| Royalty and other | ||||||||
| Total net revenue | ||||||||
| Cost of net revenue | ||||||||
| Gross profit | ||||||||
| Operating expenses | ||||||||
| Research and development | ||||||||
| Selling, general and administrative | ||||||||
| Total operating expenses | ||||||||
| Loss from operations | ( | ) | ( | ) | ||||
| Change in fair value of warrant liabilities | ||||||||
| Other income, net | ||||||||
| Net loss | $ | ( | ) | $ | ( | ) | ||
| Net loss per share | ||||||||
| Basic and diluted | $ | ( | ) | $ | ( | ) | ||
| Shares used in computing net loss per share | ||||||||
| Basic and diluted | ||||||||
The accompanying notes are an integral part of these condensed consolidated financial statements.
2
PERASO INC.
CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY
(Unaudited)
(In thousands)
| Additional | ||||||||||||||||||||||||||||||||||||
| Common Stock | Issuable Shares | Exchangeable Shares | Paid-In | Accumulated | ||||||||||||||||||||||||||||||||
| Shares | Amount | Shares | Amount | Shares | Amount | Capital | Deficit | Total | ||||||||||||||||||||||||||||
| Balance as of December 31, 2024 | $ | | $ | $ | $ | $ | ( | ) | $ | |||||||||||||||||||||||||||
| At-the market sales of stock, net | — | — | ||||||||||||||||||||||||||||||||||
| Shares issued for services | — | — | ||||||||||||||||||||||||||||||||||
| Stock-based compensation | — | — | — | |||||||||||||||||||||||||||||||||
| Net loss | — | — | — | — | ( | ) | ( | ) | ||||||||||||||||||||||||||||
| Balance as of March 31, 2025 | $ | $ | $ | $ | $ | ( | ) | $ | ||||||||||||||||||||||||||||
| Additional | ||||||||||||||||||||||||||||||||||||
| Common Stock | Issuable Shares | Exchangeable Shares | Paid-In | Accumulated | ||||||||||||||||||||||||||||||||
| Shares | Amount | Shares | Amount | Shares | Amount | Capital | Deficit | Total | ||||||||||||||||||||||||||||
| Balance as of December 31, 2023 | $ | | $ | $ | $ | $ | ( | ) | $ | |||||||||||||||||||||||||||
| Shares issued for reverse stock split | — | — | ||||||||||||||||||||||||||||||||||
| Sale of common stock and warrants, net | — | — | ||||||||||||||||||||||||||||||||||
| Issuance of common stock upon exercise of warrants | — | — | ||||||||||||||||||||||||||||||||||
| Stock-based compensation | — | — | — | |||||||||||||||||||||||||||||||||
| Net loss | — | — | — | ( | ) | ( | ) | |||||||||||||||||||||||||||||
| Balance as of March 31, 2024 | $ | $ | $ | $ | $ | ( | ) | $ | ||||||||||||||||||||||||||||
The accompanying notes are an integral part of these condensed consolidated financial statements.
3
PERASO INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
(In thousands)
| Three Months Ended | ||||||||
| March 31, | ||||||||
| 2025 | 2024 | |||||||
| Cash flows from operating activities: | ||||||||
| Net loss | $ | ( | ) | $ | ( | ) | ||
| Adjustments to reconcile net loss to net cash used in operating activities: | ||||||||
| Depreciation and amortization | ||||||||
| Stock-based compensation | ||||||||
| Change in fair value of warrant liabilities | ( | ) | ( | ) | ||||
| Shares issued for services | ||||||||
| Other | ( | ) | ||||||
| Changes in assets and liabilities | ||||||||
| Accounts receivable | ( | ) | ( | ) | ||||
| Inventories | ( | ) | ||||||
| Prepaid expenses and other assets | ( | ) | ( | ) | ||||
| Accounts payable | ( | ) | ||||||
| Right-of-use assets | ||||||||
| Lease liabilities - operating | ( | ) | ( | ) | ||||
| Deferred revenue, accrued expenses and other | ( | ) | ||||||
| Net cash used in operating activities | ( | ) | ( | ) | ||||
| Cash flows from investing activities: | — | — | ||||||
| Cash flows from financing activities: | ||||||||
| Proceeds from sale of common stock and warrants, net | ||||||||
| Proceeds from at-the-market sales of stock, net | ||||||||
| Repayment of financing leases | ( | ) | ( | ) | ||||
| Net cash provided by financing activities | ||||||||
| Net increase (decrease) in cash and cash equivalents | ( | ) | ||||||
| Cash and cash equivalents at beginning of period | ||||||||
| Cash and cash equivalents at end of period | $ | $ | ||||||
The accompanying notes are an integral part of these condensed consolidated financial statements.
4
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 semiconductor devices and modules and performance of non-recurring engineering services.
On September 14, 2021, the Company and its subsidiaries, 2864552 Ontario Inc. (Callco) and 2864555 Ontario Inc. (Canco), entered into an Arrangement Agreement (as amended, 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.”
The accompanying condensed consolidated financial statements of the Company have been prepared without audit. The condensed consolidated balance sheet as of December 31, 2024 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 Quarterly Report on Form 10-Q 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 months ended March 31, 2025 are not necessarily indicative of the results that may be expected for the year ending December 31, 2025 or for any other future period.
Liquidity and Going Concern
The Company incurred net losses
of approximately $
The Company expects to continue to incur operating losses for the foreseeable future as it secures additional 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. In addition, the Company’s independent registered public accounting firm, in its report on the Company’s consolidated financial statements for the year ended December 31, 2024, expressed substantial doubt about the Company’s ability to continue as a going concern. 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 is currently seeking additional financing in order to meet its cash requirements for the foreseeable future. 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 cost reduction strategies may include, but are not limited to, reducing headcount and curtailing business activities.
5
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. Certain prior year amounts have been reclassified for consistency with the current period presentation. These reclassifications had no effect on the reported results of operations or cash flows.
Reverse Stock Split
On December 15, 2023, the Company filed a certificate of amendment to its amended and restated certificate of incorporation with the Secretary of State of the State of Delaware to effect a 1-for-40 reverse stock split of the Company’s shares of common stock. Further, on January 2, 2024, Canco filed a certificate of amendment to its amended and restated certificate of incorporation under the Ontario Business Corporations Act to effect a 1-for-40 reverse stock split of the outstanding exchangeable shares. Such amendments and ratio were previously approved by the Company’s stockholders and board of directors.
As a result of the reverse
stock split, which was effective for trading purposes on January 3, 2024, every
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, the volatility of public markets, rapidly changing customer requirements, limited operating history, tariffs, pandemics, wars and acts of terrorism. The Company may be unable to access the capital markets, and additional capital may only be available to the Company on terms that could be significantly detrimental to its existing stockholders and to its business.
6
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, valuation allowance on deferred tax assets, accruals for potential liabilities and assumptions made in valuing equity instruments and warrant liabilities. Actual results could differ from those estimates.
Cash Equivalents and Investments
The Company has invested its 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, 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. The Company measures the fair value of its warrant liabilities using Level 3 inputs.
7
Derivatives and Liability-Classified Instruments
The Company accounts for common stock warrants as either equity-classified or liability-classified instruments based on an assessment of the specific terms of the warrants and the guidance provided by the Financial Accounting Standards Board (FASB) in Accounting Standards Codification (ASC) 480, Distinguishing Liabilities from Equity (ASC 480) and ASC 815, Derivatives and Hedging (ASC 815). The assessment considers whether the warrants are freestanding financial instruments pursuant to ASC 480, meet the definition of a liability pursuant to ASC 480, and meet all of the requirements for equity classification under ASC 815, including whether the warrants are indexed to the Company’s own stock and whether the holders of the warrants could potentially require net cash settlement in a circumstance outside of the Company’s control, among other conditions for equity classification. This assessment, which requires the use of professional judgment, is conducted at the time of warrant issuance and as of each subsequent quarterly period end date while the warrants are outstanding.
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
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 write-downs for estimated obsolescence or unmarketable inventories based upon assumptions about future demand and market conditions. If actual market conditions are less favorable than those expected by management, additional adjustments 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. If the Company’s recognition of excess or obsolete inventory is, or if its estimates of potential utility become, less favorable than currently expected, inventory write-downs may be required.
Intangible and Long-lived Assets
Intangible assets are recorded
at cost and amortized on a straight-line method over their estimated useful lives of
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.
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 antenna 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.
8
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.
Royalty 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 March 31, 2025 and December 31, 2024, contract liabilities were in a current position and included in deferred revenue.
During the three months ended
March 31, 2025, the Company recognized approximately $
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.
9
Stock-Based Compensation
The Company periodically issues stock options and restricted stock units (RSUs) to employees and non-employees. The Company accounts for such awards based on ASC 718, whereby the value of the award is measured on the date of award 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. The fair value of restricted stock awards, restricted stock units, and performance-based restricted stock units is based on the closing price of the Company’s common stock on the date of grant. Recognition of compensation expense for non-employees is in the same period and manner as if the Company had paid cash for the services.
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 exchangeable shares and shares of common stock outstanding during the period. In addition, the Company includes the number of shares of common stock issuable upon exercise of pre-funded warrants as outstanding. Diluted net loss per share gives effect to all potentially dilutive exchangeable and common shares outstanding during the period. Potentially dilutive common shares consist of incremental exchangeable shares and shares of common stock issuable upon the achievement of escrow terms, 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):
| March 31, | ||||||||
| 2025 | 2024 | |||||||
| Escrow shares - exchangeable shares | ||||||||
| Escrow shares - common stock | ||||||||
| Options to purchase common stock | ||||||||
| Unvested restricted common stock units | ||||||||
| Warrants classified as equity | ||||||||
| Warrants classified as liabilities | ||||||||
| Total | ||||||||
10
Recently Issued Accounting Pronouncements
In December 2023, the FASB issued ASU No. 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures, which expands disclosures in an entity’s income tax rate reconciliation table and disclosures regarding cash taxes paid both in the U.S. and foreign jurisdictions. The update will be effective for annual periods beginning after December 15, 2024. The Company does not expect the adoption of ASU No. 2023-09 to have a material impact on its consolidated financial statements.
In November 2024, the FASB issued ASU No. 2024-03, Income Statement – Reporting Comprehensive Income – Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses. The new standard requires disclosures about specific types of expenses included in the expense captions presented on the face of the income statement as well as disclosures about selling expenses. The standard is effective for the Company for annual periods beginning January 1, 2027 and interim periods beginning January 1, 2028, with early adoption permitted. The standard may be applied either prospectively to financial statements issued for reporting periods after the effective date or retrospectively to any or all prior periods presented in the financial statements. The Company is evaluating the impact that this ASU will have on the presentation of its consolidated financial statements.
Other recent authoritative guidance issued by the FASB (including technical corrections to the ASCs), the American Institute of Certified Public Accountants, and the SEC did not, or is not expected to, have a material impact on the Company’s consolidated financial statements and related disclosures.
Note 2. Fair Value of Financial Instruments
The following tables represent the Company’s assets and liabilities measured at fair value on a recurring basis and the basis for that measurement (in thousands):
| March 31, 2025 | ||||||||||||||||
| Fair Value | Level 1 | Level 2 | Level 3 | |||||||||||||
| Assets: | ||||||||||||||||
| Money market funds (1) | $ | $ | $ | $ | ||||||||||||
| Liabilities: | ||||||||||||||||
| Warrant liabilities | $ | $ | $ | $ | ||||||||||||
| December 31, 2024 | ||||||||||||||||
| Fair Value | Level 1 | Level 2 | Level 3 | |||||||||||||
| Assets: | ||||||||||||||||
| Money market funds (1) | $ | $ | $ | $ | ||||||||||||
| Liabilities: | ||||||||||||||||
| Warrant liabilities | $ | $ | $ | $ | ||||||||||||
| (1) |
11
The following tables represent the Company’s determination of fair value for its financial assets (cash equivalents) (in thousands):
| March 31, 2025 | ||||||||||||||||
| Unrealized | Unrealized | Fair | ||||||||||||||
| Cost | Gains | Losses | Value | |||||||||||||
| Cash and cash equivalents | $ | $ | $ | $ | ||||||||||||
| December 31, 2024 | ||||||||||||||||
| Unrealized | Unrealized | Fair | ||||||||||||||
| Cost | Gains | Losses | Value | |||||||||||||
| Cash and cash equivalents | $ | $ | $ | $ | ||||||||||||
Note 3. Balance Sheet Detail
| March 31, | December 31, | |||||||
| 2025 | 2024 | |||||||
| (in thousands) | ||||||||
| Inventories: | ||||||||
| Raw materials | $ | $ | ||||||
| Work-in-process | ||||||||
| Finished goods | ||||||||
| $ | $ | |||||||
| March 31, | December 31, | |||||||
| 2025 | 2024 | |||||||
| (in thousands) | ||||||||
| Accrued Expenses and Other: | ||||||||
| Accrued wages and employee benefits | $ | $ | ||||||
| Professional fees, legal and consulting | ||||||||
| Software license obligations | ||||||||
| Severance benefits | ||||||||
| Warranty accrual | ||||||||
| Other | ||||||||
| $ | $ | |||||||
Note 4. Severance and Software License Obligations
In November 2023, the Company
implemented an employee lay-off and terminated certain consulting positions (the Reductions) to reduce operating expenses and cash burn,
as the Company prioritized business activities and projects that it believes will have a higher return on investment. As part of the Reductions,
the Company implemented a temporary lay-off that impacted 16 employees (the Employees) of Peraso Tech. During the six months ended June
30, 2024, the Company determined that it would not recall any of the 11 Employees that remained on the Company’s payroll and commenced
notifying the remaining Employees that their employment would be terminated. As a result of the termination of the Employees’ employment,
the Company recorded severance charges of approximately $
12
As a result of the decision
to not recall the Employees, the Company determined that it was probable that a number of its non-cancelable licenses for computer-aided
design software would not be utilized during the remaining license terms. During the three months ended June 30, 2024, the Company accrued
the value of the remaining contractual liabilities of approximately $
Note 5. Commitments and Contingencies
Leases
The Company has operating leases for its facilities in Toronto and Markham, Ontario, Canada and recognizes lease expense on a straight-line basis over the respective lease terms. The Company had an operating lease for its corporate headquarters facility in San Jose, California that was not renewed when the lease term expired on January 14, 2025.
In December 2024, the Company renewed the Toronto office lease for a one-year term, which commenced January 1, 2025, and the Company ceased accounting for the lease under ASC 842.
In
May 2022, the Company entered into a lease for the facility in Markham with a
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 of approximately $
On
November 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 of approximately $
The following table provides the details of right-of-use assets and lease liabilities as of March 31, 2025 (in thousands):
| Right-of-use assets: | ||||
| Operating leases | $ | |||
| Finance leases | ||||
| Total right-of-use assets | $ | |||
| Lease liabilities: | ||||
| Operating leases | $ | |||
| Finance leases | ||||
| Total lease liabilities | $ | |||
Future minimum payments under the leases at March 31, 2025 are listed in the table below (in thousands):
| Year ending December 31, | |||||
| 2025 | $ | ||||
| 2026 | |||||
| 2027 | |||||
| Total future lease payments | |||||
| Less: imputed interest | ( | ) | |||
| Present value of lease liabilities | $ | ||||
13
The following table provides the details of supplemental cash flow information (in thousands):
| Three Months Ended March 31, | ||||||||
| 2025 | 2024 | |||||||
| Cash paid for amounts included in the measurement of lease liabilities: | ||||||||
| Operating cash flows for leases | $ | $ | ||||||
Rent expense was approximately
$
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 three months ended March 31, 2025 and 2024 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 three months ended March 31, 2025 and 2024.
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.
Purchase Obligations
The Company’s primary
purchase obligations include non-cancelable purchase orders for inventory. At March 31, 2025, the Company had outstanding non-cancelable
purchase orders for inventory, primarily wafers and substrates, and related expenditures of approximately $
Note 6. Business Segments, Concentration of Credit Risk and Significant Customers
Segment Information
The Company determines its reporting units in accordance with ASC No. 280, Segment Reporting (ASC 280), as amended by ASU No. 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures, which the Company adopted effective December 31, 2024. 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.
14
The Company’s chief
executive officer is the chief operating decision maker (CODM), and the CODM evaluates financial performance and makes operating decisions
about allocating resources based on financial data presented on a consolidated basis, including consolidated net income (loss). Because
the CODM evaluates financial performance on a consolidated basis, the Company operates and manages its business as
Significant segment expenses
include research and development expenditures, salaries and benefits, stock-based compensation and software license obligations. Operating
expenses include all remaining costs necessary to operate the Company’s business, which primarily include facilities, external professional
services and other administrative expenses.
| Three Months Ended | ||||||||
| March 31, | ||||||||
| 2025 | 2024 | |||||||
| Total net revenue | $ | $ | ||||||
| Less: | ||||||||
| Cost of net revenue | ||||||||
| Research and development | ||||||||
| Salaries | ||||||||
| Stock-based compensation | ||||||||
| Other operating expenses | ||||||||
| Other income | ( | ) | ( | ) | ||||
| Net loss | $ | ( | ) | $ | ( | ) | ||
Concentrations
The Company recognized revenue from shipments of products, licensing of its technologies and performance of services to customers by geographical location as follows (in thousands):
| Three Months Ended | ||||||||
| March 31, | ||||||||
| 2025 | 2024 | |||||||
| North America | $ | $ | ||||||
| Hong Kong | ||||||||
| Taiwan | ||||||||
| Rest of world | ||||||||
| Total net revenue | $ | $ | ||||||
15
The following is a breakdown of product revenue by category (in thousands):
| (amounts in thousands) | For the Three Months Ended March 31, | |||||||
| Product category | 2025 | 2024 | ||||||
| Memory ICs | $ | $ | ||||||
| mmWave ICs | ||||||||
| mmWave modules | ||||||||
| mmWave other products | ||||||||
| $ | $ | |||||||
The following table lists significant customers that represented more than 10% of the Company’s total revenue during each respective period:
| Three Months Ended March 31, | ||||||||
| 2025 | 2024 | |||||||
| Customer A | % | % | ||||||
| Customer B | % | |||||||
| Customer C | % | |||||||
| Customer D | % | |||||||
| Customer E | % | |||||||
| * |
The following table lists significant customers that represented more than 10% of the Company’s net accounts receivable balance at each respective balance sheet date:
| Accounts Receivable | ||||||||
| March 31, | December 31, | |||||||
| 2025 | 2024 | |||||||
| Customer A | % | |||||||
| Customer B | % | % | ||||||
| Customer C | % | % | ||||||
| Customer D | % | |||||||
| * | Represents less than 10% |
The following table lists significant vendors that represented more than 10% of the Company’s total accounts payable balance at each respective balance sheet date:
| Accounts Payable | ||||||||
| March 31, | December 31, | |||||||
| 2025 | 2024 | |||||||
| Vendor A | % | |||||||
| Vendor B | % | % | ||||||
| Vendor C | % | |||||||
| Vendor C | % | |||||||
| * | Represents less than 10% |
16
Note 7. 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) to replace 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,
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
In December 2021, 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. 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 related to the vesting of stock options of $
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
17
The following table summarizes the activity in the shares available for grant under the Plans during the three months ended March 31, 2025 and options outstanding as of March 31, 2025 (in thousands, except exercise price):
| Options Outstanding | ||||||||||||
| Weighted | ||||||||||||
| Shares | Average | |||||||||||
| Available | Number of | Exercise | ||||||||||
| for Grant | Shares | Prices | ||||||||||
| Balance as of December 31, 2024 | $ | |||||||||||
| Options granted | ( | ) | $ | |||||||||
| RSUs granted | ( | ) | ||||||||||
| Balance as of March 31, 2025 | $ | |||||||||||
The following table summarizes significant ranges of outstanding and exercisable options as of March 31, 2025 (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 | ||||||||||||||||||
| $ | $ | $ | $ | |||||||||||||||||||||
| $ | $ | $ | $ | |||||||||||||||||||||
| $ | $ | $ | $ | |||||||||||||||||||||
| $ | $ | $ | $ | |||||||||||||||||||||
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, 2024 | $ | |||||||
| Granted | $ | |||||||
| Non-vested shares as of March 31, 2025 | $ | |||||||
Note 8. Stockholders’ Equity
February 2024 Public Offering
On
February 6, 2024, the Company entered into an underwriting agreement (the Underwriting Agreement) with Ladenburg Thalmann & Co. Inc.
(Ladenburg), as the sole underwriter, relating to the issuance and sale in a public offering (the Offering) of: (i)
18
The
net proceeds from the Offering, including the additional shares of common stock, Series A warrants and Series B warrants sold pursuant
to the partial exercise of Ladenburg’s option, after deducting underwriting discounts and commissions and other estimated Offering
expenses payable by the Company and excluding any proceeds from the exercise of the Series A warrants, Series B warrants and pre-funded
warrants, were approximately $
The
Series A warrants have an exercise price of $
On February 8, 2024, pursuant
to the Underwriting Agreement, the Company paid Ladenburg a cash fee of
Shares Issued for Services
In January 2025, the Company
issued
ATM Offering
On August 30, 2024, the Company
entered into an At The Market Offering Agreement (the Sales Agreement) with Ladenburg with respect to an “at the market” offering
program, under which the Company may, from time to time, in its sole discretion, issue and sell through Ladenburg, acting as agent or
principal, shares of the Company’s common stock initially having an aggregate offering price of up to $
Note 9. Warrants
Warrant Inducement Offering
On August 6, 2024, the Company extended the expiration date of the Series B warrants issued in the Offering to October 7, 2024, by entering into an amendment to the Warrant Agency Agreement dated as of February 8, 2024 by and between the Company and the warrant agent, Equiniti Trust Company, LLC. On October 3, 2024, the Company extended the expiration date of the Series B warrants to November 8, 2024, by entering into a further amendment to the Warrant Agency Agreement.
On November 5, 2024, the Company
entered into inducement offer letter agreements (the Inducement Letters) with certain holders (the Holders) of existing Series B warrants
(the Existing Warrants) to purchase up to an aggregate of
19
Upon exercise of the Existing
Warrants, the Company issued
In relation to the above warrant
inducement offering, the Company engaged Ladenburg as placement agent and paid cash compensation of
Warrants Classified as Liabilities
The securities purchase agreements
governing warrants issued in registered direct offerings completed in November 2022 and June 2023 (collectively, the Purchase Warrants)
provide for a value calculation for such warrants using the Black Scholes model in the event of certain fundamental transactions. The
fair value calculation provides for a floor on the volatility amount utilized in the value calculation at
As of March 31, 2025, the Company had the following Purchase Warrants outstanding (share amounts in thousands):
| Number of Shares | Exercise Price | Expiration Date | ||||||||
| Warrants issued - November 2022 | $ | |||||||||
| Warrants issued - June 2023 | $ | |||||||||
The following table sets forth changes in the fair value of the Purchase Warrants outstanding (amounts in thousands):
| Number of Warrants | ||||||||
| on Common Shares | Amount | |||||||
| Balance as of December 31, 2024 | $ | |||||||
| Change in fair value of warrants | ( | ) | ||||||
| Balance as of March 31, 2025 | $ | |||||||
The outstanding liability-classified warrants had intrinsic value at March 31, 2025.
The fair value of the Purchase Warrants at March 31, 2025 was determined using the Black Scholes model with the assumptions in the following table.
| 2022 Purchase Warrant | 2023 Purchase Warrant | |||||||
| Expected term based on contractual term | | | ||||||
| Interest rate (risk-free rate): | % | % | ||||||
| Expected volatility | % | % | ||||||
| Expected dividend | ||||||||
| Fair value of warrants (in thousands) | $ | $ | ||||||
20
The fair value of the Purchase Warrants at December 31, 2024 was determined using the Black Scholes model with the assumptions in the following table.
| 2022 Purchase Warrant | 2023 Purchase Warrant | |||||||
| Expected term based on contractual term | | | ||||||
| Interest rate (risk-free rate): | % | % | ||||||
| Expected volatility | % | % | ||||||
| Expected dividend | ||||||||
| Fair value of warrants (in thousands) | $ | $ | ||||||
Warrants Classified as Equity
As of March 31, 2025, the Company had the following equity-classified common stock purchase warrants outstanding (share amounts in thousands):
| Warrant Type | Number of Shares | Exercise Price | Expiration | |||||||
| Common Stock Warrant | $ | |||||||||
| Series A warrants | $ | |||||||||
| Series A warrants | $ | |||||||||
| Series C warrants | $ | |||||||||
| Series C warrants | $ | |||||||||
| Series D warrants | $ | |||||||||
| Balance as of March 31, 2025 | ||||||||||
The outstanding equity-classified warrants had intrinsic value at March 31, 2025.
Note 10. Related Party Transactions
A family member of one of
the Company’s executive officers is an employee of the Company. The Company recorded compensation expense of approximately $
Note 11. Memory IC Product End-of-Life
Taiwan Semiconductor Manufacturing Corporation, the sole foundry that manufactured the wafers used to produce the Company’s memory IC products, discontinued the foundry process used to produce such wafers. As a result, the Company commenced an end-of-life (EOL) of its memory products in 2023. In March 2025, the Company fulfilled all outstanding EOL orders for its memory IC products.
Note 12. Subsequent Events
Amendment to Series C Warrants
On May 2, 2025, the Company
extended the expiration date of its Series C Warrants to purchase an aggregate of
Issuance of Common Stock under ATM Offering Program
During
May 2025, the Company sold
21
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 Quarterly Report on Form 10-Q. This Quarterly Report on 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 strategies, competition, expected financial performance and capital raising efforts. Any statements about our business, financial results, financial condition and operations contained in this Quarterly Report on 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 Part I, Item 1A of our Annual Report on Form 10-K for the year ended December 31, 2024 and the risk factors described below under Part II, Item 1A of this Quarterly Report on 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
Our strategy and primary business objective is to be a profitable, IP-rich fabless semiconductor company offering integrated circuits, or ICs, antenna modules and related non-recurring engineering services. We specialize in the development of mmWave semiconductors, primarily in the unlicensed 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 antenna modules based on using those mmWave semiconductor devices. We have pioneered a high-volume mmWave IC 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 the operational challenges of delivering mmWave products into high-volume markets. We also produce and sell complete mmWave antenna modules. The primary advantage provided by our antenna modules is that our proprietary mmWave ICs and the antenna are integrated into a single device. A differentiating characteristic of mmWave technology is that the RF amplifiers must be as close as possible to the antenna to minimize loss. With our module, we can guarantee the performance of the amplifier/antenna interface and simplify customers’ radio frequency (“RF”) engineering, facilitating more opportunities for customer prospects that have not provided RF-type systems, as well as shortening the time to market for new products.
We also had a memory product line comprising our Bandwidth Engine IC products. Taiwan Semiconductor Manufacturing Corporation, or TSMC, the sole foundry that manufactured the wafers used to produce our memory IC products, discontinued the foundry process used to produce such wafers. As a result, in May 2023, we initiated an end-of-life, or EOL, of our memory IC products, and we fulfilled the backlog and completed the final EOL shipments of our memory IC products in March 2025.
We incurred net losses of approximately $0.5 million for the three months ended March 31, 2025 and $10.7 million for the year ended December 31, 2024, and we had an accumulated deficit of approximately $177.6 million as of March 31, 2025. These and prior year losses have resulted in significant negative cash flows and historically have required us to raise substantial amounts of additional capital. As discussed below, this raises significant doubt about our ability to continue as a going concern. 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.
Recent Developments
Compliance with Nasdaq Continued Listing Requirements
On April 4, 2025, we received a letter from the Listing Qualifications Staff of The Nasdaq Stock Market LLC (“Nasdaq”) indicating that, based upon the closing bid price of our common stock for the 30 consecutive business days ending on April 3, 2025, we no longer met the requirement to maintain a minimum bid price of $1 per share, as set forth in Nasdaq Listing Rule 5550(a)(2).
In accordance with Nasdaq Listing Rule 5810(c)(3)(A), we have been provided a period of 180 calendar days, or until October 1, 2025, in which to regain compliance. In order to regain compliance with the minimum bid price requirement, the closing bid price of our common stock must be at least $1 per share for a minimum of ten consecutive business days during this 180-day period. In the event we do not regain compliance within this 180-day period, we may be eligible to seek an additional compliance period of 180 calendar days provided we meet the continued listing requirement for market value of publicly held shares and all other initial listing standards for the Nasdaq Capital Market, with the exception of the bid price requirement, and if we provide written notice to Nasdaq of our intent to cure the deficiency during this second compliance period by effecting a reverse stock split, if necessary. However, if it appears to the Nasdaq staff that we will not be able to cure the deficiency, or if we are otherwise not eligible, Nasdaq will provide notice to us that our common stock will be subject to delisting.
22
The above mentioned letter does not result in the immediate delisting of our common stock from the Nasdaq Capital Market. We are monitoring the closing bid price of our common stock and considering our available options in the event the closing bid price of our common stock remains below $1 per share.
Risks and Uncertainties
We are 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, pandemics, wars and acts of terrorism and the volatility of public markets. 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 of operations, please refer to “Risk Factors” in Part II, Item 1A of this Quarterly Report on Form 10-Q.
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 Condensed Consolidated Financial Statements” included in Part I, Item 1 of this Quarterly Report on Form 10-Q and Note 1 of the “Notes to Consolidated Financial Statements” in our Annual Report on Form 10-K for the year ended December 31, 2024. As of March 31, 2025, there have been no material changes to our significant accounting policies and estimates.
Results of Operations
Net Revenue
| March 31, | Change | |||||||||||||||
| 2025 | 2024 | 2024 to 2025 | ||||||||||||||
| (dollar amounts in thousands) | ||||||||||||||||
| Product - three months ended | $ | 3,800 | $ | 2,676 | $ | 1,124 | 42 | % | ||||||||
| Percentage of total net revenue | 98 | % | 95 | % | ||||||||||||
The following table details revenue by product category for the three months ended March 31, 2025 and 2024:
| (amounts in thousands) | For the Three Months Ended March 31, | |||||||||||
| Product category | 2025 | 2024 | change | |||||||||
| Memory ICs | $ | 2,267 | $ | 2,383 | (116 | ) | ||||||
| mmWave ICs | 975 | 77 | 898 | |||||||||
| mmWave modules | 558 | 203 | 355 | |||||||||
| mmWave other products | - | 13 | (13 | ) | ||||||||
| $ | 3,800 | $ | 2,676 | $ | 1,124 | |||||||
Product revenue increased for the three months ended March 31, 2025 compared with the same period of 2024 primarily due to the increase in shipments of our mmWave ICs and antenna modules. The decrease in memory IC product shipments during 2025 was primarily attributable to the completion of final EOL shipments.
23
We expect revenues to decrease in 2025 as compared with 2024, as we do not expect further sales of our memory IC products after March 31, 2025; however, we expect sales of our mmWave products to increase from a volume and revenue perspective during 2025, based on our current order backlog and the expected commencement of production shipments to new customers.
| March 31, | Change | |||||||||||||||
| 2025 | 2024 | 2024 to 2025 | ||||||||||||||
| (dollar amounts in thousands) | ||||||||||||||||
| Royalty and other - three months ended | $ | 69 | $ | 140 | $ | (71 | ) | -51 | % | |||||||
| Percentage of total net revenue | 2 | % | 5 | % | ||||||||||||
Royalty and other revenue includes royalty, non-recurring engineering services and license revenues. The decrease in royalty and other revenue for the three months ended March 31, 2025 compared with the same period of 2024 was primarily due to a decrease in royalty revenues from licensees of our memory technology due to reduced shipments by these licensees, which we attribute to the discontinuation of the foundry process by TSMC, and decreases in non-recurring engineering services revenue related to our mmWave technology.
Cost of Net Revenue and Gross Profit
| March 31, | Change | |||||||||||||||
| 2025 | 2024 | 2024 to 2025 | ||||||||||||||
| (dollar amounts in thousands) | ||||||||||||||||
| Cost of net revenue -three months ended | $ | 1,189 | $ | 1,510 | $ | (321 | ) | -21 | % | |||||||
| Percentage of total net revenue | 31 | % | 54 | % | ||||||||||||
Cost of net revenue is primarily comprised of direct and indirect costs related to the sale of our products, including depreciation of production-related fixed assets and, prior to January 1, 2025, amortization of intangible assets.
Cost of net revenue decreased for the three months ended March 31, 2025 when compared with the same period in 2024, primarily related to the decrease of amortization of developed technology intangible assets of approximately $0.6 million, as these assets were fully amortized as of December 31, 2024. The decrease was partially offset by an increase in cost of sales of our mmWave IC and module products attributable to increased shipments during the three months ended March 31, 2025 as compared with the prior year period.
| March 31, | Change | |||||||||||||||
| 2025 | 2024 | 2024 to 2025 | ||||||||||||||
| (dollar amounts in thousands) | ||||||||||||||||
| Gross profit -three months ended | $ | 2,680 | $ | 1,306 | $ | 1,374 | 105 | % | ||||||||
| Percentage of total net revenue | 69 | % | 46 | % | ||||||||||||
Gross profit increased for the three months ended March 31, 2025 compared with the same period of 2024 primarily due to an increase in sales of our mmWave IC and module products, partially offset by a decrease in royalty and other revenue and a decrease in sales of our memory IC products. During the three months ended March 31, 2025, we sold mmWave inventory with a value of approximately $94,000 that had been written down in prior periods.
Research and Development
| March 31, | Change | |||||||||||||||
| 2025 | 2024 | 2024 to 2025 | ||||||||||||||
| (dollar amounts in thousands) | ||||||||||||||||
| Research and development -three months ended | $ | 1,583 | $ | 2,835 | $ | (1,252 | ) | (44 | )% | |||||||
| Percentage of total net revenue | 41 | % | 101 | % | ||||||||||||
Our research and development, or R&D, expenses include costs related to the development of our products. We expense R&D costs as they are incurred.
24
The decrease for the three months ended March 31, 2025 compared with the same period of 2024 was primarily due to: i) reduced salary and consulting costs, as we implemented reductions in force in February and November 2023 and terminated consultant contracts, ii) reduced rent expense for our San Jose office as we significantly reduced the space we rent effective January 2025, and iii) reduced software license expense, as during the three months ended June 30, 2024, we accrued the value of certain of our software license obligations (see Note 4 to the condensed consolidated financial statements in Part I, Item 1 of this Quarterly Report on Form 10-Q).
We expect that total R&D expenses will decrease during 2025 compared with 2024, as a result of our cost reduction initiatives.
Selling, General and Administrative
| March 31, | Change | |||||||||||||||
| 2025 | 2024 | 2024 to 2025 | ||||||||||||||
| (dollar amounts in thousands) | ||||||||||||||||
| SG&A -three months ended | $ | 1,611 | $ | 2,102 | $ | (491 | ) | (23 | )% | |||||||
| Percentage of total net revenue | 42 | % | 75 | % | ||||||||||||
Selling, general and administrative, or SG&A, expenses consist primarily of personnel and related overhead costs for sales, marketing, finance, human resources and general management and amortization of certain intangible assets.
The decrease for the three months ended March 31, 2025 compared with the same period of 2024 was primarily attributable to decreased consulting and professional services costs and decreased amortization of purchased intangible assets for customer relationships, which were fully amortized as of December 31, 2024. We expect that total SG&A expense will remain flat or slightly decrease for 2025 compared with 2024, as we continue to manage our SG&A costs.
Liquidity and Capital Resources; Changes in Financial Condition
Cash Flows
As of March 31, 2025, we had cash and cash equivalents of $2.8 million and working capital of $3.0 million.
Net cash used in operating activities was $1.0 million for the first three months of 2025, which primarily resulted from our net loss of $0.5 million, as adjusted for $0.7 million in net changes in assets and liabilities, as partially offset by non-cash charges of $0.1 million of depreciation and amortization and $0.1 million of stock based compensation. The changes in assets and liabilities primarily related to the timing of collections of receivables, purchases of inventory and other vendor payables and prepayments.
Net cash used in operating activities was $2.6 million for the first three months of 2024, which primarily resulted from our net loss of $2.0 million, as adjusted for a $1.6 million non-cash gain on the change in fair value of warrant liability, $1.0 million in net changes in assets and liabilities and $0.2 million in other non-cash changes, as partially offset by non-cash charges of $1.0 million of depreciation and amortization and $1.2 million of stock based compensation. The changes in assets and liabilities primarily related to the timing of accounts receivable collections, purchases of inventory and other vendor payables and prepayments.
For the three months ended March 31, 2025 and 2024, no cash was provided by or used in investing activities.
Net cash provided by financing activities for the three months ended March 31, 2025 comprised $0.4 million of net proceeds from sales under our at-the market offering program, partially offset by repayment of financing lease liabilities.
Net cash provided by financing activities for the three months ended March 31, 2024 comprised $3.4 million in net proceeds from a public offering of our common stock and common stock purchase warrants completed in February 2024, partially offset by repayment of financing lease liabilities.
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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 during the COVID-19 pandemic 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; |
| ● | 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. |
Purchase Obligations
Our primary purchase obligations include non-cancelable purchase orders for inventory. At March 31, 2025, we had outstanding non-cancelable purchase orders for inventory, primarily wafers and substrates, and related expenditures of approximately $2.9 million.
Going Concern - Working Capital
We incurred net losses of approximately $0.5 million for the three months ended March 31, 2025 and $10.7 million for the year ended December 31, 2024, and we had an accumulated deficit of approximately $177.6 million as of March 31, 2025. These and prior year losses have resulted in significant negative cash flows and have required us to raise substantial amounts of additional capital. To date, we have primarily financed our operations through loans, offerings of common stock and warrants and issuances of convertible notes.
We expect to continue to incur operating losses during 2025, as we ceased shipments of our memory products in March 2025 and continue to secure new customers for and continue to invest in the development of our products. Further, we expect our cash expenditures to continue to exceed receipts for at least the next 12 months, as our revenues will not be sufficient to offset our operating expenses. We believe that our existing cash and cash equivalents as of March 31, 2025 will enable us to meet our capital needs into the third quarter of 2025.
We will need to increase revenues beyond the 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 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 our condensed consolidated financial statements. In addition, the Company’s independent registered public accounting firm, in its report on the Company’s consolidated financial statements for the year ended December 31, 2024, expressed substantial doubt about the Company’s ability to continue as a going concern. The condensed consolidated financial statements presented in Part I, Item 1 of this Quarterly Report on Form 10-Q 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 we are unsuccessful in these efforts, we will need to implement additional cost reduction strategies, which could further affect our near- and long-term business plan. These cost reduction strategies may include, but are not limited to, reducing headcount and curtailing business activities.
As further discussed in Note 9 to the condensed consolidated financial statements, in November 2024, we entered into a warrant inducement offering for net proceeds of approximately $2.6 million. Additionally, as further discussed in Note 8 to the condensed consolidated financial statements, on August 30, 2024, we entered into the Sales Agreement with Ladenburg, pursuant to which we may offer and sell, from time to time at our sole discretion, shares of our common stock through Ladenburg as agent and/or principal (subject to the limitations of General Instruction I.B.6 of Form S-3) through an at-the-market program. During the three months ended March 31, 2025, the Company sold 328,966 shares of common stock for proceeds of approximately $433,000 (net of commissions of approximately $13,000 paid to Ladenburg) pursuant to the Sales Agreement. Further, during 2023 and 2024, we implemented reductions in our workforce and eliminated 19 full-time equivalent positions. These cost reduction actions were intended to preserve cash, as we kept capital expenditures to minimum levels in order to reduce operating costs and our short-term cash needs.
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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.
Indemnifications
In the ordinary course of business, we enter into contractual arrangements under which we may agree to indemnify the counter-party from losses relating to a breach of representations and warranties, a failure to perform certain covenants, or claims and losses arising from certain external events as outlined within the 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. We have also entered into indemnification agreements with our officers and directors. No material amounts related to these indemnifications are reflected in our condensed consolidated financial statements for the three months ended March 31, 2025.
Recent Accounting Pronouncements
See Note 1 to the condensed consolidated financial statements for a discussion of recently-issued accounting pronouncements.
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 March 31, 2025, our disclosure controls and procedures were effective.
Changes in Internal Control over Financial Reporting. During the three months ended March 31, 2025, 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.
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PART II—OTHER INFORMATION
ITEM 1. Legal Proceedings
The discussion of legal matters in Note 5 of the Notes to Condensed Consolidated Financial Statements included in Part I, Item 1 of this Quarterly Report on Form 10-Q 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 Part I, Item 1A of our Annual Report on Form 10-K for the year ended December 31, 2024, which we filed with the SEC on March 28, 2025.
We might not be able to continue as a going concern.
Our consolidated financial statements as of March 31, 2025 have been prepared under the assumption that we will continue as a going concern for the next twelve months. As of March 31, 2025, we had cash and cash equivalents of $2.8 million and an accumulated deficit of $177.6 million. We believe that our existing cash and cash equivalents as of March 31, 2025 and expected receipts associated with forecasted product sales, will enable us to meet our capital needs into the third quarter of 2025.
Our ability to continue as a going concern is dependent upon our ability to raise additional capital and to achieve sustainable revenues and profitable operations. We will need to increase revenues substantially beyond levels that we have attained in the past in order to generate sustainable operating profit and sufficient cash flows to continue doing business without raising additional capital from time to time. As a result of our expected operating losses and cash burn for the foreseeable future and recurring losses from operations, if we are unable to raise sufficient capital through additional debt or equity arrangements, there will be uncertainty regarding our ability to maintain liquidity sufficient to operate our business effectively, which raises substantial doubt as to our ability to continue as a going concern. In addition, our independent registered public accounting firm, in its report on our consolidated financial statements for the year ended December 31, 2024, expressed substantial doubt about our ability to continue as a going concern. If we cannot continue as a viable entity, our stockholders would likely lose most or all of their investment in us.
If we are unable to generate sustainable operating profit and sufficient cash flows, then our future success will depend on our ability to raise capital. 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.
Our forecast of the period of time through which our financial resources will be adequate to support our operating requirements is a forward-looking statement and involves risks and uncertainties, and actual results could vary as a result of a number of factors, including the factors discussed elsewhere in this “Risk Factors” section and in Part I, Item 1A of our Annual Report on Form 10-K for the year ended December 31, 2024. We have based this estimate on a number of assumptions that may prove to be wrong and changing circumstances beyond our control may cause us to consume capital more rapidly than we currently anticipate. Our inability to obtain additional funding when we need it could seriously harm our business.
If we are unable to satisfy the continued listing requirements of the Nasdaq, our common stock could be delisted and the price and liquidity of our common stock may be adversely affected.
Our common stock may lose value and could be delisted from Nasdaq due to several factors or a combination of such factors. While our common stock is currently listed on Nasdaq, we can give no assurance that we will be able to satisfy the continued listing requirements of Nasdaq in the future, including, but not limited to, the corporate governance requirements and the minimum closing bid price requirement or the minimum equity requirement.
On April 4, 2025, we received a letter from the Listing Qualifications Staff of The Nasdaq Stock Market LLC (“Nasdaq”) indicating that, based upon the closing bid price of our common stock for the 30 consecutive business days ending on April 3, 2025, we no longer met the requirement to maintain a minimum bid price of $1 per share, as set forth in Nasdaq Listing Rule 5550(a)(2).
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In accordance with Nasdaq Listing Rule 5810(c)(3)(A), we have been provided a period of 180 calendar days, or until October 1, 2025, in which to regain compliance. In order to regain compliance with the minimum bid price requirement, the closing bid price of our common stock must be at least $1 per share for a minimum of ten consecutive business days during this 180-day period. In the event we do not regain compliance within this 180-day period, we may be eligible to seek an additional compliance period of 180 calendar days provided we meet the continued listing requirement for market value of publicly held shares and all other initial listing standards for the Nasdaq Capital Market, with the exception of the bid price requirement, and if we provide written notice to Nasdaq of our intent to cure the deficiency during this second compliance period by effecting a reverse stock split, if necessary. However, if it appears to the Nasdaq staff that we will not be able to cure the deficiency, or if we are otherwise not eligible, Nasdaq will provide notice to us that our common stock will be subject to delisting.
The above mentioned letter does not result in the immediate delisting of our common stock from the Nasdaq Capital Market. We are monitoring the closing bid price of our common stock and considering our available options in the event the closing bid price of our common stock remains below $1 per share.
There can be no assurance that we will be able to regain compliance with the minimum bid price requirement, maintain compliance with the other continued listing requirements of Nasdaq, or that our common stock will not be delisted in the future.
If we were to be delisted, we would expect our common stock to be traded in the over-the-counter market which could adversely affect the liquidity of our common stock. Additionally, we could face significant material adverse consequences, including:
| ● | a limited availability of market quotations for our common stock; |
| ● | a decreased ability to issue additional securities or obtain additional financing in the future; |
| ● | reduced liquidity for our stockholders; |
| ● | potential loss of confidence by customers, collaboration partners and employees; and |
| ● | loss of institutional investor interest. |
In the event of a delisting, we can provide no assurance that any action taken by us to restore compliance with listing requirements would allow our common stock to become listed again, stabilize the market price or improve the liquidity of our common stock, prevent our common stock from dropping below the Nasdaq minimum bid price requirement, or prevent future non-compliance with Nasdaq’s listing requirements.
We discontinued the production of our memory products.
Taiwan Semiconductor Manufacturing Corporation, or TSMC, the sole foundry that manufactured the wafers used to produce our memory IC products, discontinued the foundry process used to produce such wafers. As a result, we commenced an end-of-life (EOL) of our memory products in 2023. In March 2025, we fulfilled all outstanding EOL orders for our memory IC products. We do not expect any further shipments or to generate any meaningful revenue from shipments of our memory IC products after March 2025. For the three months ended March 31, 2025 and 2024, our memory IC products represented over 58% and 84% of our revenues, respectively. The discontinuation of the production and sale of our memory IC products will negatively impact our future revenues, results of operations and cash flows.
We have a history of losses, and we will need to raise additional capital.
We incurred net losses of approximately $0.5 million for the three months ended March 31, 2025 and $10.7 million for the year ended December 31, 2024, and we had an accumulated deficit of approximately $177.6 million as of March 31, 2025. These and prior-year losses have resulted in significant negative cash flows. To remain competitive and expand our product offerings to customers, we will need to increase revenues substantially beyond levels that we have attained in the past in order to generate sustainable operating profit and sufficient cash flows to continue doing business without raising additional capital from time to time. Given our history of fluctuating revenues and operating losses, and the challenges we face in securing customers for our products, we cannot be certain that we will be able to achieve and maintain profitability on either a quarterly or annual basis in the future. As a result, we may need to raise additional capital in the future, which may or may not be available to us at all or only on unfavorable terms.
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Our recent reduction in force undertaken to significantly reduce our ongoing operating expenses may not result in our intended outcomes and may yield unintended consequences and additional costs.
In November 2023, we implemented an employee lay-off and terminated certain consulting positions (the “Reductions”) to reduce operating expenses and cash burn, as we prioritized business activities and projects that we believe will have a higher return on investment. As part of the Reductions, we implemented a temporary lay-off that impacted 16 employees (the “Employees”) of Peraso Tech. During the six months ended June 30, 2024, we determined that we would not recall any of the 11 Employees that remained on our payroll and commenced notifying the remaining Employees that their employment would be terminated. The accrued severance costs are expected to be paid through July 2025.
As a result of the decision to not recall the Employees, we determined that it was probable that a number of our non-cancelable licenses for computer-aided design software would not be utilized during the remaining license terms. During the three months ended June 30, 2024, we expensed the value of the remaining contractual liabilities and recorded liabilities of approximately $1.6 million. As of March 31, 2025, we had a remaining liability of approximately $0.6 million, and we expect to pay these license fees through September 30, 2025.
In addition to the costs associated with the non-cancelable license commitments for computer-aided design software, the Reductions may result in other unintended consequences and costs, such as the loss of institutional knowledge and expertise, attrition beyond the intended number of employees, decreased morale among our remaining employees, and the risk that we may not achieve the anticipated benefits of the Reductions. In addition, while positions have been eliminated certain functions necessary to our operations remain, and we may be unsuccessful in distributing the duties and obligations of departed employees among our remaining employees. We may also be unsuccessful in negotiating any desired strategic alternative or partnership relating to such functions on a timely basis, on acceptable terms, or at all. The Reductions could also make it difficult for us to pursue, or prevent us from pursuing, new opportunities and initiatives due to insufficient personnel, or require us to incur additional and unanticipated costs to hire new personnel to pursue such opportunities or initiatives. Further, inflationary pressure may increase our costs, including employee compensation costs, or result in employee attrition to the extent our compensation does not keep up with inflation, particularly if our competitors’ compensation does. If we are unable to realize the anticipated benefits from the Reductions, if we experience significant adverse consequences from the reduction in force, or if we are otherwise unable to retain our employees, our business, financial condition, and results of operations may be materially adversely affected.
International trade policies, including protectionist trade policies, such as tariffs and sanctions, could adversely affect our business, results of operations and financial condition.
Due to the interconnectedness of the global economy, policy changes in one area of the world can have an immediate and material adverse impact on markets around the world. Changes in international trade policies, including: (i) changes to existing trade agreements; (ii) greater restrictions on free trade generally; and (iii) significant increases in customs duties and tariffs on goods imported into the United States and reciprocal actions by other countries, could adversely affect our business, results of operations and financial condition.
Current or future tariffs or other restrictive trade measures may raise the costs of raw materials, components or finished goods, which may adversely impact both our product offerings and our operational expenses. Such cost increases may reduce our margins and require us to increase prices, which could harm our competitive position, reduce customer demand and damage customer relationships.
Trade disputes, trade restrictions, tariffs and other political tensions between the U.S. and other countries may also exacerbate unfavorable macroeconomic conditions including inflationary pressures, foreign exchange volatility, financial market instability, and economic recessions or downturns, which may also negatively impact customer demand for our products or services, delay purchases or renewals, limit expansion opportunities with customers, limit our access to capital, or otherwise negatively impact our business and operations. Ongoing tariff, trade restrictions and macroeconomic uncertainty has and may continue to contribute to volatility in the price of our common stock.
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Ongoing uncertainty regarding trade policies may also complicate our short- and long-term strategic planning, and that of our partners and customers, including decisions regarding hiring, product strategy, capital investment, supply chain design and geographic expansion.
While we continue to monitor trade developments, the ultimate impact of these risks remains uncertain and any prolonged economic downturn, escalation in trade tensions, or deterioration in international perception of U.S.-based companies could materially and adversely affect our supply chain, as well as our business, results of operations and financial condition. In addition, tariffs and other trade developments have and may continue to heighten the risks related to the other risk factors described in our Annual Report on Form 10-K for the year ended December 31, 2024.
ITEM 2. Unregistered Sales of Equity Securities and Use of Proceeds
Except as disclosed below, during the period covered by this Quarterly Report on Form 10-Q, the Company has not sold any equity securities that were not registered under the Securities Act that were not previously reported in a Current Report on Form 8-K.
On January 9, 2025, the Company entered into a second consulting agreement with a service provider, pursuant to which the Company agreed to issue the service provider, as partial compensation, 40,000 restricted shares of common stock. The Company issued the shares to the service provider on January 21, 2025 in reliance on an exemption from registration provided by Section 4(a)(2) and/or Rule 506 of Regulation D of the Securities Act. The service provider represented in the consulting agreement that it was an “accredited investor,” as defined in Rule 501(a) of Regulation D under the Securities Act. The shares are subject to transfer restrictions, and the book-entry records evidencing the shares contain an appropriate legend stating that such shares have not been registered under the Securities Act and may not be offered or sold absent registration or pursuant to an exemption therefrom.
ITEM 5. Other Information
None of the Company’s
directors or officers
The information set forth below is included herein for the purpose of providing the disclosure required under “Item 5.02 Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers.” of Form 8-K.
On May 9, 2025, the Company notified Mark Lunsford, its Chief Revenue Officer, that his employment with the Company would terminate effective June 30, 2025. Michael Hamilton, Vice President of Business Development, and Ben Liu, Vice President and General Manager, Asia Pacific region, will continue to lead the Company’s mmWave sales efforts and will report to Ronald Glibbery, the Company’s Chief Executive Officer.
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ITEM 6. Exhibits
(a) Exhibits
| Reference | Filed
or Furnished | |||||||||||
| Exhibit No. | Exhibit Description | Form | File No. | Form Exhibit | Filing Date | Herewith | ||||||
| 3.1 | Restated Certificate of Incorporation of the Company | 8-K | 000-32929 | 3.6 | November 12, 2010 | |||||||
| 3.1.1 | Certificate of Amendment to Restated Certificate of Incorporation of the Company | 8-K | 000-32929 | 3.1 | February 14, 2017 | |||||||
| 3.1.2 | Certificate of Amendment to the Amended and Restated Certificate of Incorporation of the Company, filed with the Secretary of State of the State of Delaware on August 27, 2019 | 8-K | 000-32929 | 3.1 | August 27, 2019 | |||||||
| 3.1.3 | Certificate of Amendment to Articles of Incorporation (Name Change) | 8-K | 000-32929 | 3.1 | December 20, 2021 | |||||||
| 3.1.4 | Certificate of Designation of Series A Special Voting Preferred Stock | 8-K | 000-32929 | 3.2 | December 20, 2021 | |||||||
| 3.1.5 | Certificate of Amendment to Amended and Restated Certificate of Incorporation of the Company, filed with the Secretary of State of the State of Delaware on December 15, 2023 | 8-K | 000-32929 | 3.1 | December 19, 2023 | |||||||
| 3.2 | Amended and Restated Bylaws of the Company | 8-K | 000-32929 | 3.1 | November 23, 2021 | |||||||
| 4.1 | Peraso Inc. Amended and Restated 2019 Stock Incentive Plan, as amended | S-8 | 333-285241 | 4.4 | February 26, 2025 | |||||||
| 31.1 | Rule 13a-14 Certification | X | ||||||||||
| 31.2 | Rule 13a-14 Certification | X | ||||||||||
| 32.1 | Section 1350 Certification | X | ||||||||||
| 101 | The following financial information from Peraso Inc.’s quarterly report on Form 10-Q for the period ended March 31, 2025, filed with the SEC on May 13, 2025, formatted in Inline Extensible Business Reporting Language (Inline XBRL): (i) the Condensed Consolidated Statements of Operations for the three months ended March 31, 2025 and 2024, (ii) the Condensed Consolidated Balance Sheets as of March 31, 2025 and December 31, 2024, (iii) the Condensed Consolidated Statements of Stockholders’ Equity for the three months ended March 31, 2025 and 2024, (iv) the Condensed Consolidated Statements of Cash Flows for the three months ended March 31, 2025 and 2024, and (v) Notes to Condensed Consolidated Financial Statements | X | ||||||||||
| 104 | Cover Page Interactive Data File (embedded within the Inline XBRL document) | X | ||||||||||
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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: May 13, 2025 | PERASO INC. | |
| By: | /s/ Ronald Glibbery | |
| Ronald Glibbery | ||
|
Chief Executive Officer (Principal Executive Officer) | ||
| By: | /s/ James Sullivan | |
| James Sullivan | ||
| Chief Financial Officer | ||
| (Principal Financial and Accounting Officer) | ||
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