What changed in Peraso Inc.'s 10-K — 2023 vs 2024
vs
Paragraph-level year-over-year comparison of Peraso Inc.'s 2023 and 2024 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2024 report.
+347 added−354 removedSource: 10-K (2025-03-28) vs 10-K (2024-03-29)
Top changes in Peraso Inc.'s 2024 10-K
347 paragraphs added · 354 removed · 240 edited across 6 sections
- Item 1. Business+147 / −148 · 111 edited
- Item 1A. Risk Factors+107 / −99 · 74 edited
- Item 7. Management's Discussion & Analysis+78 / −96 · 45 edited
- Item 1C. Cybersecurity+9 / −7 · 7 edited
- Item 5. Market for Registrant's Common Equity+5 / −2 · 2 edited
Item 1. Business
Business — how the company describes what it does
111 edited+36 added−37 removed103 unchanged
Item 1. Business
Business — how the company describes what it does
111 edited+36 added−37 removed103 unchanged
2023 filing
2024 filing
Biggest changeF-32 Unlimited Unlimited 26.00 64.41 503000 646000 http://www.PRSO.com/20231231#RightofuseLeaseAssets http://www.PRSO.com/20231231#RightofuseLeaseAssets http://www.PRSO.com/20231231#LeaseLiabilities http://www.PRSO.com/20231231#LeaseLiabilities As of December 31, 2023, the Company had the following equity-classified warrants outstanding (share amounts in thousands): false FY 0000890394 0000890394 2023-01-01 2023-12-31 0000890394 2023-06-30 0000890394 2024-03-18 0000890394 2023-12-31 0000890394 2022-12-31 0000890394 us-gaap:SeriesAPreferredStockMember 2023-12-31 0000890394 us-gaap:SeriesAPreferredStockMember 2022-12-31 0000890394 2022-01-01 2022-12-31 0000890394 us-gaap:ProductMember 2023-01-01 2023-12-31 0000890394 us-gaap:ProductMember 2022-01-01 2022-12-31 0000890394 prso:RoyaltyAndOtherMember 2023-01-01 2023-12-31 0000890394 prso:RoyaltyAndOtherMember 2022-01-01 2022-12-31 0000890394 us-gaap:SeriesAPreferredStockMember us-gaap:PreferredStockMember 2021-12-31 0000890394 us-gaap:CommonStockMember 2021-12-31 0000890394 prso:ExchangeableSharesMember 2021-12-31 0000890394 us-gaap:AdditionalPaidInCapitalMember 2021-12-31 0000890394 us-gaap:AccumulatedOtherComprehensiveIncomeMember 2021-12-31 0000890394 us-gaap:RetainedEarningsMember 2021-12-31 0000890394 2021-12-31 0000890394 us-gaap:SeriesAPreferredStockMember us-gaap:PreferredStockMember 2022-01-01 2022-12-31 0000890394 us-gaap:CommonStockMember 2022-01-01 2022-12-31 0000890394 prso:ExchangeableSharesMember 2022-01-01 2022-12-31 0000890394 us-gaap:AdditionalPaidInCapitalMember 2022-01-01 2022-12-31 0000890394 us-gaap:AccumulatedOtherComprehensiveIncomeMember 2022-01-01 2022-12-31 0000890394 us-gaap:RetainedEarningsMember 2022-01-01 2022-12-31 0000890394 us-gaap:SeriesAPreferredStockMember us-gaap:PreferredStockMember 2022-12-31 0000890394 us-gaap:CommonStockMember 2022-12-31 0000890394 prso:ExchangeableSharesMember 2022-12-31 0000890394 us-gaap:AdditionalPaidInCapitalMember 2022-12-31 0000890394 us-gaap:AccumulatedOtherComprehensiveIncomeMember 2022-12-31 0000890394 us-gaap:RetainedEarningsMember 2022-12-31 0000890394 us-gaap:SeriesAPreferredStockMember us-gaap:PreferredStockMember 2023-01-01 2023-12-31 0000890394 us-gaap:CommonStockMember 2023-01-01 2023-12-31 0000890394 prso:ExchangeableSharesMember 2023-01-01 2023-12-31 0000890394 us-gaap:AdditionalPaidInCapitalMember 2023-01-01 2023-12-31 0000890394 us-gaap:AccumulatedOtherComprehensiveIncomeMember 2023-01-01 2023-12-31 0000890394 us-gaap:RetainedEarningsMember 2023-01-01 2023-12-31 0000890394 us-gaap:SeriesAPreferredStockMember us-gaap:PreferredStockMember 2023-12-31 0000890394 us-gaap:CommonStockMember 2023-12-31 0000890394 prso:ExchangeableSharesMember 2023-12-31 0000890394 us-gaap:AdditionalPaidInCapitalMember 2023-12-31 0000890394 us-gaap:AccumulatedOtherComprehensiveIncomeMember 2023-12-31 0000890394 us-gaap:RetainedEarningsMember 2023-12-31 0000890394 2023-10-01 2023-12-31 0000890394 us-gaap:InventoriesMember 2023-01-01 2023-12-31 0000890394 us-gaap:InventoriesMember 2022-01-01 2022-12-31 0000890394 srt:MinimumMember 2023-12-31 0000890394 srt:MaximumMember 2023-12-31 0000890394 us-gaap:DevelopedTechnologyRightsMember 2023-01-01 2023-12-31 0000890394 us-gaap:DevelopedTechnologyRightsMember 2022-01-01 2022-12-31 0000890394 us-gaap:CustomerRelationshipsMember 2023-01-01 2023-12-31 0000890394 us-gaap:CustomerRelationshipsMember 2022-01-01 2022-12-31 0000890394 us-gaap:DevelopedTechnologyRightsMember 2023-12-31 0000890394 us-gaap:CustomerRelationshipsMember 2023-12-31 0000890394 prso:OtherMember 2023-12-31 0000890394 us-gaap:DevelopedTechnologyRightsMember 2022-12-31 0000890394 us-gaap:CustomerRelationshipsMember 2022-12-31 0000890394 prso:OtherMember 2022-12-31 0000890394 prso:EscrowSharesExchangeableSharesMember 2023-01-01 2023-12-31 0000890394 prso:EscrowSharesExchangeableSharesMember 2022-01-01 2022-12-31 0000890394 prso:EscrowSharesCommonStockMember 2023-01-01 2023-12-31 0000890394 prso:EscrowSharesCommonStockMember 2022-01-01 2022-12-31 0000890394 prso:OptionsToPurchaseCommonStockMember 2023-01-01 2023-12-31 0000890394 prso:OptionsToPurchaseCommonStockMember 2022-01-01 2022-12-31 0000890394 prso:UnvestedRestrictedCommonStockUnitsMember 2023-01-01 2023-12-31 0000890394 prso:UnvestedRestrictedCommonStockUnitsMember 2022-01-01 2022-12-31 0000890394 prso:CommonStockWarrantsMember 2023-01-01 2023-12-31 0000890394 prso:CommonStockWarrantsMember 2022-01-01 2022-12-31 0000890394 us-gaap:FairValueInputsLevel1Member 2023-12-31 0000890394 us-gaap:FairValueInputsLevel2Member 2023-12-31 0000890394 us-gaap:FairValueInputsLevel3Member 2023-12-31 0000890394 us-gaap:FairValueInputsLevel1Member 2022-12-31 0000890394 us-gaap:FairValueInputsLevel2Member 2022-12-31 0000890394 us-gaap:FairValueInputsLevel3Member 2022-12-31 0000890394 us-gaap:CashAndCashEquivalentsMember 2022-12-31 0000890394 us-gaap:ShortTermInvestmentsMember 2022-12-31 0000890394 prso:MarkhamLandlordMember 2023-12-31 0000890394 prso:TorontoLeaseMember 2023-12-31 0000890394 2022-03-01 2022-03-01 0000890394 2022-11-01 2022-11-01 0000890394 prso:CustomerMember us-gaap:SalesRevenueNetMember us-gaap:CustomerConcentrationRiskMember 2023-01-01 2023-12-31 0000890394 prso:CustomerOneMember us-gaap:AccountsReceivableMember us-gaap:CustomerConcentrationRiskMember 2023-01-01 2023-12-31 0000890394 prso:CustomerTwoMember us-gaap:AccountsReceivableMember us-gaap:CustomerConcentrationRiskMember 2023-01-01 2023-12-31 0000890394 prso:CustomerThreeMember us-gaap:AccountsReceivableMember us-gaap:CustomerConcentrationRiskMember 2023-01-01 2023-12-31 0000890394 prso:CustomerMember 2023-01-01 2023-12-31 0000890394 prso:CustomerOneMember us-gaap:AccountsReceivableMember us-gaap:CustomerConcentrationRiskMember 2022-01-01 2022-12-31 0000890394 prso:CustomerTwoMember us-gaap:AccountsReceivableMember us-gaap:CustomerConcentrationRiskMember 2022-01-01 2022-12-31 0000890394 prso:CustomerThreeMember us-gaap:AccountsReceivableMember us-gaap:CustomerConcentrationRiskMember 2022-01-01 2022-12-31 0000890394 prso:CustomerFourMember us-gaap:AccountsReceivableMember us-gaap:CustomerConcentrationRiskMember 2022-01-01 2022-12-31 0000890394 country:US 2023-01-01 2023-12-31 0000890394 country:US 2022-01-01 2022-12-31 0000890394 country:HK 2023-01-01 2023-12-31 0000890394 country:HK 2022-01-01 2022-12-31 0000890394 country:TW 2023-01-01 2023-12-31 0000890394 country:TW 2022-01-01 2022-12-31 0000890394 prso:RestOfWorldMember 2023-01-01 2023-12-31 0000890394 prso:RestOfWorldMember 2022-01-01 2022-12-31 0000890394 prso:MemoryICsMember 2023-01-01 2023-12-31 0000890394 prso:MemoryICsMember 2022-01-01 2022-12-31 0000890394 prso:mmWaveICsMember 2023-01-01 2023-12-31 0000890394 prso:mmWaveICsMember 2022-01-01 2022-12-31 0000890394 prso:mmWaveModulesMember 2023-01-01 2023-12-31 0000890394 prso:mmWaveModulesMember 2022-01-01 2022-12-31 0000890394 prso:mmWaveOtherProductsMember 2023-01-01 2023-12-31 0000890394 prso:mmWaveOtherProductsMember 2022-01-01 2022-12-31 0000890394 prso:CustomerAMember us-gaap:SalesRevenueNetMember us-gaap:CustomerConcentrationRiskMember 2023-01-01 2023-12-31 0000890394 prso:CustomerAMember us-gaap:SalesRevenueNetMember us-gaap:CustomerConcentrationRiskMember 2022-01-01 2022-12-31 0000890394 prso:CustomerBMember us-gaap:SalesRevenueNetMember us-gaap:CustomerConcentrationRiskMember 2023-01-01 2023-12-31 0000890394 prso:CustomerBMember us-gaap:SalesRevenueNetMember us-gaap:CustomerConcentrationRiskMember 2022-01-01 2022-12-31 0000890394 prso:CustomerCMember us-gaap:SalesRevenueNetMember us-gaap:CustomerConcentrationRiskMember 2023-01-01 2023-12-31 0000890394 prso:CustomerCMember us-gaap:SalesRevenueNetMember us-gaap:CustomerConcentrationRiskMember 2022-01-01 2022-12-31 0000890394 prso:CustomerDMember us-gaap:SalesRevenueNetMember us-gaap:CustomerConcentrationRiskMember 2023-01-01 2023-12-31 0000890394 prso:CustomerDMember us-gaap:SalesRevenueNetMember us-gaap:CustomerConcentrationRiskMember 2022-01-01 2022-12-31 0000890394 prso:CustomerEMember us-gaap:SalesRevenueNetMember us-gaap:CustomerConcentrationRiskMember 2023-01-01 2023-12-31 0000890394 prso:CustomerEMember us-gaap:SalesRevenueNetMember us-gaap:CustomerConcentrationRiskMember 2022-01-01 2022-12-31 0000890394 prso:SectionThreeEightTwoLimitationMember 2023-01-01 2023-12-31 0000890394 stpr:CA 2023-12-31 0000890394 prso:FederalStatutoryRateMember 2023-01-01 2023-12-31 0000890394 prso:FederalStatutoryRateMember 2022-01-01 2022-12-31 0000890394 prso:StockIncentivePlan2019Member 2019-08-31 0000890394 prso:StockIncentivePlan2019Member 2021-11-30 0000890394 prso:StockIncentivePlan2019Member 2023-12-31 0000890394 prso:StockIncentivePlan2019Member 2023-01-01 2023-12-31 0000890394 srt:MinimumMember prso:StockIncentivePlan2019Member 2023-01-01 2023-12-31 0000890394 us-gaap:RestrictedStockMember 2023-01-01 2023-12-31 0000890394 us-gaap:RestrictedStockMember 2022-01-01 2022-12-31 0000890394 us-gaap:RestrictedStockMember 2023-12-31 0000890394 us-gaap:RestrictedStockUnitsRSUMember 2021-12-31 0000890394 us-gaap:RestrictedStockUnitsRSUMember 2022-01-01 2022-12-31 0000890394 us-gaap:RestrictedStockUnitsRSUMember 2022-12-31 0000890394 us-gaap:RestrictedStockUnitsRSUMember 2023-01-01 2023-12-31 0000890394 us-gaap:RestrictedStockUnitsRSUMember 2023-12-31 0000890394 srt:MinimumMember prso:OutstandingAndExercisableOptionsOneMember 2023-01-01 2023-12-31 0000890394 srt:MaximumMember prso:OutstandingAndExercisableOptionsOneMember 2023-01-01 2023-12-31 0000890394 prso:OutstandingAndExercisableOptionsOneMember 2023-12-31 0000890394 prso:OutstandingAndExercisableOptionsOneMember 2023-01-01 2023-12-31 0000890394 srt:MinimumMember prso:OutstandingAndExercisableOptionsTwoMember 2023-01-01 2023-12-31 0000890394 srt:MaximumMember prso:OutstandingAndExercisableOptionsTwoMember 2023-01-01 2023-12-31 0000890394 prso:OutstandingAndExercisableOptionsTwoMember 2023-12-31 0000890394 prso:OutstandingAndExercisableOptionsTwoMember 2023-01-01 2023-12-31 0000890394 srt:MinimumMember prso:OutstandingAndExercisableOptionsThreeMember 2023-01-01 2023-12-31 0000890394 srt:MaximumMember prso:OutstandingAndExercisableOptionsThreeMember 2023-01-01 2023-12-31 0000890394 prso:OutstandingAndExercisableOptionsThreeMember 2023-12-31 0000890394 prso:OutstandingAndExercisableOptionsThreeMember 2023-01-01 2023-12-31 0000890394 srt:MinimumMember prso:OutstandingAndExercisableOptionsFourMember 2023-01-01 2023-12-31 0000890394 srt:MaximumMember prso:OutstandingAndExercisableOptionsFourMember 2023-01-01 2023-12-31 0000890394 prso:OutstandingAndExercisableOptionsFourMember 2023-12-31 0000890394 prso:OutstandingAndExercisableOptionsFourMember 2023-01-01 2023-12-31 0000890394 srt:MinimumMember prso:OutstandingAndExercisableOptionsFiveMember 2023-01-01 2023-12-31 0000890394 srt:MaximumMember prso:OutstandingAndExercisableOptionsFiveMember 2023-01-01 2023-12-31 0000890394 prso:OutstandingAndExercisableOptionsFiveMember 2023-12-31 0000890394 prso:OutstandingAndExercisableOptionsFiveMember 2023-01-01 2023-12-31 0000890394 us-gaap:CommonStockMember 2023-05-31 0000890394 2023-05-31 2023-05-31 0000890394 prso:PrefundedWarrantsMember 2023-05-31 0000890394 prso:PrefundedWarrantsMember 2023-05-31 2023-05-31 0000890394 prso:PrefundedWarrantsMember 2023-06-01 2023-06-30 0000890394 prso:PrefundedWarrantsMember 2023-09-01 2023-09-30 0000890394 srt:MaximumMember 2023-06-02 2023-06-02 0000890394 srt:MinimumMember 2023-06-02 2023-06-02 0000890394 us-gaap:CommonStockMember 2023-06-02 0000890394 prso:TwoThousandTwentyThreePurchaseWarrantMember 2023-01-01 2023-12-31 0000890394 prso:TwoThousandTwentyThreePurchaseWarrantMember 2023-12-31 0000890394 2022-11-28 0000890394 2022-11-28 2022-11-28 0000890394 prso:PrefundedWarrantsMember 2022-11-28 0000890394 prso:PrefundedWarrantsMember 2022-11-28 2022-11-28 0000890394 prso:TwoThousandTwentyTwoPurchaseWarrantMember 2023-12-31 0000890394 prso:TwoThousandTwentyTwoPurchaseWarrantMember 2023-05-29 0000890394 prso:TwoThousandTwentyTwoPurchaseWarrantMember 2023-05-29 2023-05-29 0000890394 prso:PurchaseWarrantsMember 2023-01-01 2023-12-31 0000890394 prso:TwoThousandTwentyTwoPurchaseWarrantMember 2023-01-01 2023-12-31 0000890394 prso:PurchaseWarrantsMember 2022-01-01 2022-12-31 0000890394 prso:TwoThousandTwentyThreePurchaseWarrantMember 2023-06-02 2023-06-02 0000890394 us-gaap:WarrantMember prso:TwoThousandTwentyTwoPurchaseWarrantMember 2023-01-01 2023-12-31 0000890394 us-gaap:WarrantMember prso:TwoThousandTwentyThreePurchaseWarrantMember 2023-01-01 2023-12-31 0000890394 prso:JanuaryTwoThousandTwentyThreeMember us-gaap:WarrantMember 2022-12-31 0000890394 prso:JanuaryTwoThousandTwentyThreeMember us-gaap:WarrantMember 2023-12-31 0000890394 prso:JanuaryTwoThousandTwentyThreeMember us-gaap:WarrantMember 2023-01-01 2023-12-31 0000890394 prso:OctoberTwoThousandTwentyThreeMember us-gaap:WarrantMember 2022-12-31 0000890394 prso:OctoberTwoThousandTwentyThreeMember us-gaap:WarrantMember 2023-12-31 0000890394 prso:OctoberTwoThousandTwentyThreeMember us-gaap:WarrantMember 2023-01-01 2023-12-31 0000890394 prso:PrefundedWarrantsIssuedMember 2022-12-31 0000890394 prso:PrefundedWarrantsIssuedMember 2023-12-31 0000890394 prso:PrefundedWarrantsIssuedMember 2023-01-01 2023-12-31 0000890394 prso:PrefundedWarrantsExercisedMember 2022-12-31 0000890394 prso:PrefundedWarrantsExercisedMember 2023-12-31 0000890394 prso:PrefundedWarrantsExercisedMember 2023-01-01 2023-12-31 0000890394 prso:JanuaryTwoThousandTwentyThreeMember us-gaap:CommonStockMember 2021-12-31 0000890394 prso:JanuaryTwoThousandTwentyThreeMember us-gaap:CommonStockMember 2022-12-31 0000890394 prso:JanuaryTwoThousandTwentyThreeMember us-gaap:CommonStockMember 2022-01-01 2022-12-31 0000890394 prso:OctoberTwoThousandTwentyThreeMember us-gaap:CommonStockMember 2021-12-31 0000890394 prso:OctoberTwoThousandTwentyThreeMember us-gaap:CommonStockMember 2022-12-31 0000890394 prso:OctoberTwoThousandTwentyThreeMember us-gaap:CommonStockMember 2022-01-01 2022-12-31 0000890394 us-gaap:CommonStockMember 2021-12-31 0000890394 us-gaap:CommonStockMember 2022-12-31 0000890394 us-gaap:CommonStockMember 2022-01-01 2022-12-31 0000890394 2022-08-31 2022-08-31 0000890394 2023-01-31 2023-01-31 0000890394 us-gaap:SubsequentEventMember us-gaap:IPOMember 2024-02-06 0000890394 prso:PrefundedWarrantsMember us-gaap:SubsequentEventMember 2024-02-06 0000890394 prso:SeriesAWarrantsMember us-gaap:SubsequentEventMember 2024-02-06 0000890394 prso:SeriesBWarrantsMember us-gaap:SubsequentEventMember 2024-02-06 0000890394 us-gaap:CommonStockMember us-gaap:SubsequentEventMember 2024-02-06 0000890394 prso:SeriesAWarrantsMember us-gaap:CommonStockMember us-gaap:SubsequentEventMember 2024-02-06 0000890394 prso:SeriesBWarrantsMember us-gaap:CommonStockMember us-gaap:SubsequentEventMember 2024-02-06 0000890394 us-gaap:CommonStockMember us-gaap:SubsequentEventMember 2024-02-07 0000890394 prso:SeriesAWarrantsMember us-gaap:CommonStockMember us-gaap:SubsequentEventMember 2024-02-07 0000890394 prso:SeriesBWarrantsMember us-gaap:CommonStockMember us-gaap:SubsequentEventMember 2024-02-07 0000890394 prso:PrefundedWarrantsMember us-gaap:CommonStockMember 2024-02-06 0000890394 prso:SeriesAWarrantsMember us-gaap:CommonStockMember 2023-01-01 2023-12-31 0000890394 prso:SeriesAWarrantsMember 2023-12-31 0000890394 prso:PrefundedWarrantsMember 2023-12-31 0000890394 prso:PrefundedWarrantsMember us-gaap:SubsequentEventMember 2024-03-18 2024-03-18 0000890394 srt:MaximumMember 2023-01-01 2023-12-31 0000890394 srt:MinimumMember 2023-01-01 2023-12-31 0000890394 us-gaap:CommonStockMember us-gaap:SubsequentEventMember 2024-02-08 0000890394 us-gaap:WarrantMember us-gaap:SubsequentEventMember 2024-02-08 2024-02-08 iso4217:USD xbrli:shares iso4217:USD xbrli:shares xbrli:pure
Biggest changeF-34 Unlimited Unlimited http://fasb.org/us-gaap/2024#PropertyPlantAndEquipmentNet http://fasb.org/us-gaap/2024#PropertyPlantAndEquipmentNet http://fasb.org/us-gaap/2024#PropertyPlantAndEquipmentNet http://fasb.org/us-gaap/2024#PropertyPlantAndEquipmentNet http://fasb.org/us-gaap/2024#OperatingLeaseLiability http://fasb.org/us-gaap/2024#OperatingLeaseLiability http://fasb.org/us-gaap/2024#FinanceLeaseLiability http://fasb.org/us-gaap/2024#FinanceLeaseLiability 0000890394 false FY 0000890394 2024-01-01 2024-12-31 0000890394 2024-06-28 0000890394 2025-03-18 0000890394 2024-12-31 0000890394 2023-12-31 0000890394 us-gaap:SeriesAPreferredStockMember 2024-12-31 0000890394 us-gaap:SeriesAPreferredStockMember 2023-12-31 0000890394 2023-01-01 2023-12-31 0000890394 prso:IssuableSharesMember 2024-12-31 0000890394 prso:IssuableSharesMember 2023-12-31 0000890394 us-gaap:ProductMember 2024-01-01 2024-12-31 0000890394 us-gaap:ProductMember 2023-01-01 2023-12-31 0000890394 prso:RoyaltyAndOtherMember 2024-01-01 2024-12-31 0000890394 prso:RoyaltyAndOtherMember 2023-01-01 2023-12-31 0000890394 us-gaap:SeriesAPreferredStockMember us-gaap:PreferredStockMember 2022-12-31 0000890394 us-gaap:CommonStockMember 2022-12-31 0000890394 prso:IssuableSharesMember 2022-12-31 0000890394 prso:ExchangeableSharesMember 2022-12-31 0000890394 us-gaap:AdditionalPaidInCapitalMember 2022-12-31 0000890394 us-gaap:AccumulatedOtherComprehensiveIncomeMember 2022-12-31 0000890394 us-gaap:RetainedEarningsMember 2022-12-31 0000890394 2022-12-31 0000890394 us-gaap:SeriesAPreferredStockMember us-gaap:PreferredStockMember 2023-01-01 2023-12-31 0000890394 us-gaap:CommonStockMember 2023-01-01 2023-12-31 0000890394 prso:IssuableSharesMember 2023-01-01 2023-12-31 0000890394 prso:ExchangeableSharesMember 2023-01-01 2023-12-31 0000890394 us-gaap:AdditionalPaidInCapitalMember 2023-01-01 2023-12-31 0000890394 us-gaap:AccumulatedOtherComprehensiveIncomeMember 2023-01-01 2023-12-31 0000890394 us-gaap:RetainedEarningsMember 2023-01-01 2023-12-31 0000890394 us-gaap:SeriesAPreferredStockMember us-gaap:PreferredStockMember 2023-12-31 0000890394 us-gaap:CommonStockMember 2023-12-31 0000890394 prso:IssuableSharesMember 2023-12-31 0000890394 prso:ExchangeableSharesMember 2023-12-31 0000890394 us-gaap:AdditionalPaidInCapitalMember 2023-12-31 0000890394 us-gaap:AccumulatedOtherComprehensiveIncomeMember 2023-12-31 0000890394 us-gaap:RetainedEarningsMember 2023-12-31 0000890394 us-gaap:SeriesAPreferredStockMember us-gaap:PreferredStockMember 2024-01-01 2024-12-31 0000890394 us-gaap:CommonStockMember 2024-01-01 2024-12-31 0000890394 prso:IssuableSharesMember 2024-01-01 2024-12-31 0000890394 prso:ExchangeableSharesMember 2024-01-01 2024-12-31 0000890394 us-gaap:AdditionalPaidInCapitalMember 2024-01-01 2024-12-31 0000890394 us-gaap:AccumulatedOtherComprehensiveIncomeMember 2024-01-01 2024-12-31 0000890394 us-gaap:RetainedEarningsMember 2024-01-01 2024-12-31 0000890394 us-gaap:SeriesAPreferredStockMember us-gaap:PreferredStockMember 2024-12-31 0000890394 us-gaap:CommonStockMember 2024-12-31 0000890394 prso:IssuableSharesMember 2024-12-31 0000890394 prso:ExchangeableSharesMember 2024-12-31 0000890394 us-gaap:AdditionalPaidInCapitalMember 2024-12-31 0000890394 us-gaap:AccumulatedOtherComprehensiveIncomeMember 2024-12-31 0000890394 us-gaap:RetainedEarningsMember 2024-12-31 0000890394 2024-10-01 2024-12-31 0000890394 2024-02-01 2024-02-29 0000890394 2024-11-01 2024-11-30 0000890394 us-gaap:CommonStockMember 2024-01-03 0000890394 us-gaap:CustomerRelationshipsMember 2024-01-01 2024-12-31 0000890394 us-gaap:CustomerRelationshipsMember 2023-01-01 2023-12-31 0000890394 srt:MinimumMember 2024-12-31 0000890394 srt:MaximumMember 2024-12-31 0000890394 us-gaap:DevelopedTechnologyRightsMember 2024-01-01 2024-12-31 0000890394 us-gaap:DevelopedTechnologyRightsMember 2023-01-01 2023-12-31 0000890394 prso:ProductShipmentsMember 2022-01-01 2022-12-31 0000890394 us-gaap:DevelopedTechnologyRightsMember 2022-01-01 2022-12-31 0000890394 prso:ProductShipmentsMember 2024-01-01 2024-12-31 0000890394 us-gaap:DevelopedTechnologyRightsMember 2024-12-31 0000890394 us-gaap:CustomerRelationshipsMember 2024-12-31 0000890394 prso:OtherMember 2024-12-31 0000890394 us-gaap:DevelopedTechnologyRightsMember 2023-12-31 0000890394 us-gaap:CustomerRelationshipsMember 2023-12-31 0000890394 prso:OtherMember 2023-12-31 0000890394 prso:EscrowSharesExchangeableSharesMember 2024-01-01 2024-12-31 0000890394 prso:EscrowSharesExchangeableSharesMember 2023-01-01 2023-12-31 0000890394 prso:EscrowSharesCommonStockMember 2024-01-01 2024-12-31 0000890394 prso:EscrowSharesCommonStockMember 2023-01-01 2023-12-31 0000890394 prso:OptionsToPurchaseCommonStockMember 2024-01-01 2024-12-31 0000890394 prso:OptionsToPurchaseCommonStockMember 2023-01-01 2023-12-31 0000890394 prso:UnvestedRestrictedCommonStockUnitsMember 2024-01-01 2024-12-31 0000890394 prso:UnvestedRestrictedCommonStockUnitsMember 2023-01-01 2023-12-31 0000890394 prso:WarrantsClassifiedAsEquityMember 2024-01-01 2024-12-31 0000890394 prso:WarrantsClassifiedAsEquityMember 2023-01-01 2023-12-31 0000890394 prso:CommonStockWarrantsMember 2024-01-01 2024-12-31 0000890394 prso:CommonStockWarrantsMember 2023-01-01 2023-12-31 0000890394 us-gaap:FairValueMeasurementsRecurringMember 2024-12-31 0000890394 us-gaap:FairValueInputsLevel1Member us-gaap:FairValueMeasurementsRecurringMember 2024-12-31 0000890394 us-gaap:FairValueInputsLevel2Member us-gaap:FairValueMeasurementsRecurringMember 2024-12-31 0000890394 us-gaap:FairValueInputsLevel3Member us-gaap:FairValueMeasurementsRecurringMember 2024-12-31 0000890394 us-gaap:FairValueMeasurementsRecurringMember 2023-12-31 0000890394 us-gaap:FairValueInputsLevel1Member us-gaap:FairValueMeasurementsRecurringMember 2023-12-31 0000890394 us-gaap:FairValueInputsLevel2Member us-gaap:FairValueMeasurementsRecurringMember 2023-12-31 0000890394 us-gaap:FairValueInputsLevel3Member us-gaap:FairValueMeasurementsRecurringMember 2023-12-31 0000890394 us-gaap:CashAndCashEquivalentsMember 2024-12-31 0000890394 us-gaap:CashAndCashEquivalentsMember 2023-12-31 0000890394 2024-01-01 2024-06-30 0000890394 us-gaap:LiabilityMember 2024-01-01 2024-12-31 0000890394 2024-04-01 2024-06-30 0000890394 prso:TorontoLeaseMember 2023-12-31 0000890394 2022-05-01 2022-05-31 0000890394 2022-05-31 0000890394 prso:MarkhamLandlordMember 2023-01-01 2023-12-31 0000890394 2023-10-01 2023-12-31 0000890394 2022-03-01 0000890394 2022-11-01 2022-11-01 0000890394 2022-11-01 0000890394 srt:NorthAmericaMember 2024-01-01 2024-12-31 0000890394 srt:NorthAmericaMember 2023-01-01 2023-12-31 0000890394 country:HK 2024-01-01 2024-12-31 0000890394 country:HK 2023-01-01 2023-12-31 0000890394 country:TW 2024-01-01 2024-12-31 0000890394 country:TW 2023-01-01 2023-12-31 0000890394 prso:RestOfWorldMember 2024-01-01 2024-12-31 0000890394 prso:RestOfWorldMember 2023-01-01 2023-12-31 0000890394 prso:MemoryICsMember 2024-01-01 2024-12-31 0000890394 prso:MemoryICsMember 2023-01-01 2023-12-31 0000890394 prso:MemoryICsMember prso:YearOverYearChangeMember 2024-01-01 2024-12-31 0000890394 prso:mmWaveICsMember 2024-01-01 2024-12-31 0000890394 prso:mmWaveICsMember 2023-01-01 2023-12-31 0000890394 prso:mmWaveICsMember prso:YearOverYearChangeMember 2024-01-01 2024-12-31 0000890394 prso:mmWaveModulesMember 2024-01-01 2024-12-31 0000890394 prso:mmWaveModulesMember 2023-01-01 2023-12-31 0000890394 prso:mmWaveModulesMember prso:YearOverYearChangeMember 2024-01-01 2024-12-31 0000890394 prso:mmWaveOtherProductsMember 2024-01-01 2024-12-31 0000890394 prso:mmWaveOtherProductsMember 2023-01-01 2023-12-31 0000890394 prso:mmWaveOtherProductsMember prso:YearOverYearChangeMember 2024-01-01 2024-12-31 0000890394 us-gaap:ProductMember prso:YearOverYearChangeMember 2024-01-01 2024-12-31 0000890394 prso:CustomerAMember us-gaap:SalesRevenueNetMember us-gaap:CustomerConcentrationRiskMember 2024-01-01 2024-12-31 0000890394 prso:CustomerAMember us-gaap:SalesRevenueNetMember us-gaap:CustomerConcentrationRiskMember 2023-01-01 2023-12-31 0000890394 prso:CustomerBMember us-gaap:SalesRevenueNetMember us-gaap:CustomerConcentrationRiskMember 2024-01-01 2024-12-31 0000890394 prso:CustomerBMember us-gaap:SalesRevenueNetMember us-gaap:CustomerConcentrationRiskMember 2023-01-01 2023-12-31 0000890394 prso:CustomerCMember us-gaap:SalesRevenueNetMember us-gaap:CustomerConcentrationRiskMember 2024-01-01 2024-12-31 0000890394 prso:CustomerCMember us-gaap:SalesRevenueNetMember us-gaap:CustomerConcentrationRiskMember 2023-01-01 2023-12-31 0000890394 prso:CustomerAMember us-gaap:AccountsReceivableMember us-gaap:CustomerConcentrationRiskMember 2024-01-01 2024-12-31 0000890394 prso:CustomerAMember us-gaap:AccountsReceivableMember us-gaap:CustomerConcentrationRiskMember 2023-01-01 2023-12-31 0000890394 prso:CustomerBMember us-gaap:AccountsReceivableMember us-gaap:CustomerConcentrationRiskMember 2024-01-01 2024-12-31 0000890394 prso:CustomerBMember us-gaap:AccountsReceivableMember us-gaap:CustomerConcentrationRiskMember 2023-01-01 2023-12-31 0000890394 prso:CustomerCMember us-gaap:AccountsReceivableMember us-gaap:CustomerConcentrationRiskMember 2024-01-01 2024-12-31 0000890394 prso:CustomerCMember us-gaap:AccountsReceivableMember us-gaap:CustomerConcentrationRiskMember 2023-01-01 2023-12-31 0000890394 prso:CustomerDMember us-gaap:AccountsReceivableMember us-gaap:CustomerConcentrationRiskMember 2024-01-01 2024-12-31 0000890394 prso:CustomerDMember us-gaap:AccountsReceivableMember us-gaap:CustomerConcentrationRiskMember 2023-01-01 2023-12-31 0000890394 prso:CustomerEMember us-gaap:AccountsReceivableMember us-gaap:CustomerConcentrationRiskMember 2024-01-01 2024-12-31 0000890394 prso:CustomerEMember us-gaap:AccountsReceivableMember us-gaap:CustomerConcentrationRiskMember 2023-01-01 2023-12-31 0000890394 us-gaap:AccountsPayableMember us-gaap:SupplierConcentrationRiskMember prso:VendorAMember 2024-01-01 2024-12-31 0000890394 us-gaap:AccountsPayableMember us-gaap:SupplierConcentrationRiskMember prso:VendorAMember 2023-01-01 2023-12-31 0000890394 us-gaap:AccountsPayableMember us-gaap:SupplierConcentrationRiskMember prso:VendorBMember 2024-01-01 2024-12-31 0000890394 us-gaap:AccountsPayableMember us-gaap:SupplierConcentrationRiskMember prso:VendorBMember 2023-01-01 2023-12-31 0000890394 us-gaap:AccountsPayableMember us-gaap:SupplierConcentrationRiskMember prso:VendorCMember 2024-01-01 2024-12-31 0000890394 us-gaap:AccountsPayableMember us-gaap:SupplierConcentrationRiskMember prso:VendorCMember 2023-01-01 2023-12-31 0000890394 prso:StockholdersMember 2024-12-31 0000890394 prso:SectionThreeEightTwoLimitationMember 2024-01-01 2024-12-31 0000890394 stpr:CA 2024-12-31 0000890394 us-gaap:CommonStockMember 2024-01-01 2024-12-31 0000890394 us-gaap:CommonStockMember 2024-12-31 0000890394 2024-01-02 2024-01-02 0000890394 us-gaap:CommonStockMember 2024-02-06 2024-02-06 0000890394 prso:PrefundedWarrantsMember 2024-02-06 0000890394 prso:SeriesACommonStockMember 2024-02-06 0000890394 prso:SeriesBCommonStockMember 2024-02-06 0000890394 2024-02-06 2024-02-06 0000890394 prso:SeriesAWarrantsMember 2024-02-06 0000890394 prso:SeriesBWarrantsMember 2024-02-06 0000890394 2024-02-07 2024-02-07 0000890394 prso:SeriesAWarrantsMember 2024-02-07 0000890394 prso:SeriesBWarrantsMember 2024-02-07 0000890394 prso:SeriesAWarrantsAndSeriesBWarrantsMember us-gaap:CommonStockMember 2024-02-07 0000890394 prso:SeriesAWarrantsAndSeriesBWarrantsMember 2024-02-07 0000890394 prso:SeriesAWarrantsMember 2024-12-31 0000890394 prso:SeriesBWarrantsMember 2024-12-31 0000890394 prso:PrefundedWarrantsMember 2024-12-31 0000890394 2024-02-08 2024-02-08 0000890394 us-gaap:CommonStockMember 2024-02-08 0000890394 2024-02-08 0000890394 prso:BoardMember prso:PurchaseAgreementMember 2024-06-01 2024-06-30 0000890394 us-gaap:CommonStockMember 2024-08-01 2024-08-31 0000890394 prso:AtTheMarketOfferingMember 2024-08-30 2024-08-30 0000890394 2024-08-30 2024-08-30 0000890394 2024-12-10 2024-12-10 0000890394 us-gaap:WarrantMember prso:SalesAgreementMember 2024-01-01 2024-12-31 0000890394 us-gaap:CommonStockMember 2023-05-31 2023-05-31 0000890394 2023-05-31 2023-05-31 0000890394 prso:TheTwoZeroTwoThreePFWarrantsMember 2023-05-31 0000890394 prso:PrefundedWarrantsMember 2023-05-31 0000890394 srt:MaximumMember 2023-06-02 0000890394 srt:MinimumMember 2023-06-02 0000890394 us-gaap:WarrantMember 2023-06-02 2023-06-02 0000890394 2022-11-28 2022-11-28 0000890394 prso:PrefundedWarrantsMember 2022-11-28 2022-11-28 0000890394 prso:PrefundedWarrantsMember 2022-11-28 0000890394 2022-11-28 0000890394 prso:TwoZeroTwoTwoPurchaseWarrantMember 2024-12-31 0000890394 srt:MaximumMember prso:TwoZeroTwoTwoPurchaseWarrantMember 2024-12-31 0000890394 srt:MinimumMember prso:TwoZeroTwoTwoPurchaseWarrantMember 2024-12-31 0000890394 prso:SeriesBWarrantsMember 2024-11-05 2024-11-05 0000890394 2024-11-05 2024-11-05 0000890394 prso:SeriesCWarrantsMember 2024-11-05 2024-11-05 0000890394 prso:SeriesDWarrantsMember 2024-11-05 2024-11-05 0000890394 prso:SeriesCWarrantsMember 2024-11-05 0000890394 prso:SeriesDWarrantsMember 2024-11-05 0000890394 us-gaap:WarrantMember 2024-12-31 0000890394 us-gaap:NoteWarrantMember us-gaap:CommonStockMember 2024-01-01 2024-12-31 0000890394 us-gaap:WarrantMember 2024-01-01 2024-12-31 0000890394 prso:SeriesCWarrantsMember 2024-01-01 2024-12-31 0000890394 prso:SeriesDWarrantsMember 2024-01-01 2024-12-31 0000890394 srt:MinimumMember 2024-01-01 2024-12-31 0000890394 srt:MaximumMember 2024-01-01 2024-12-31 0000890394 prso:WarrantsOutstandingMember 2022-12-31 0000890394 prso:WarrantsOutstandingMember 2023-01-01 2023-12-31 0000890394 prso:WarrantsOutstandingMember 2023-12-31 0000890394 prso:WarrantsOutstandingMember 2024-01-01 2024-12-31 0000890394 prso:WarrantsOutstandingMember 2024-12-31 0000890394 prso:TwoZeroTwoTwoPurchaseWarrantMember us-gaap:MeasurementInputExpectedTermMember 2024-12-31 0000890394 prso:TwoZeroTwoThreePurchaseWarrantMember us-gaap:MeasurementInputExpectedTermMember 2024-12-31 0000890394 prso:TwoZeroTwoTwoPurchaseWarrantMember us-gaap:MeasurementInputRiskFreeInterestRateMember 2024-12-31 0000890394 prso:TwoZeroTwoThreePurchaseWarrantMember us-gaap:MeasurementInputRiskFreeInterestRateMember 2024-12-31 0000890394 prso:TwoZeroTwoTwoPurchaseWarrantMember us-gaap:MeasurementInputPriceVolatilityMember 2024-12-31 0000890394 prso:TwoZeroTwoThreePurchaseWarrantMember us-gaap:MeasurementInputPriceVolatilityMember 2024-12-31 0000890394 prso:TwoZeroTwoTwoPurchaseWarrantMember us-gaap:MeasurementInputExpectedDividendRateMember 2024-12-31 0000890394 prso:TwoZeroTwoThreePurchaseWarrantMember us-gaap:MeasurementInputExpectedDividendRateMember 2024-12-31 0000890394 prso:TwoZeroTwoTwoPurchaseWarrantMember prso:MeasurementInputFairValueOfWarrantsMember 2024-12-31 0000890394 prso:TwoZeroTwoThreePurchaseWarrantMember prso:MeasurementInputFairValueOfWarrantsMember 2024-12-31 0000890394 prso:TwoZeroTwoTwoPurchaseWarrantMember us-gaap:MeasurementInputExpectedTermMember 2023-12-31 0000890394 prso:TwoZeroTwoThreePurchaseWarrantMember us-gaap:MeasurementInputExpectedTermMember 2023-12-31 0000890394 prso:TwoZeroTwoTwoPurchaseWarrantMember us-gaap:MeasurementInputRiskFreeInterestRateMember 2023-12-31 0000890394 prso:TwoZeroTwoThreePurchaseWarrantMember us-gaap:MeasurementInputRiskFreeInterestRateMember 2023-12-31 0000890394 prso:TwoZeroTwoTwoPurchaseWarrantMember us-gaap:MeasurementInputPriceVolatilityMember 2023-12-31 0000890394 prso:TwoZeroTwoThreePurchaseWarrantMember us-gaap:MeasurementInputPriceVolatilityMember 2023-12-31 0000890394 prso:TwoZeroTwoTwoPurchaseWarrantMember us-gaap:MeasurementInputExpectedDividendRateMember 2023-12-31 0000890394 prso:TwoZeroTwoThreePurchaseWarrantMember us-gaap:MeasurementInputExpectedDividendRateMember 2023-12-31 0000890394 prso:TwoZeroTwoTwoPurchaseWarrantMember prso:MeasurementInputFairValueOfWarrantsMember 2023-12-31 0000890394 prso:TwoZeroTwoThreePurchaseWarrantMember prso:MeasurementInputFairValueOfWarrantsMember 2023-12-31 0000890394 prso:PrefundedWarrantsIssuedMember 2024-01-01 2024-12-31 0000890394 prso:PrefundedWarrantsExercisedMember 2024-01-01 2024-12-31 0000890394 prso:SeriesAWarrantsIssuedMember 2024-01-01 2024-12-31 0000890394 prso:SeriesAWarrantsIssuedOneMember 2024-01-01 2024-12-31 0000890394 prso:SeriesBWarrantsIssuedMember 2024-01-01 2024-12-31 0000890394 prso:SeriesBWarrantsExercisedMember 2024-01-01 2024-12-31 0000890394 prso:SeriesBWarrantsExpiredMember 2024-01-01 2024-12-31 0000890394 prso:SeriesCWarrantsIssuedMember 2024-01-01 2024-12-31 0000890394 prso:SeriesCWarrantsIssuedOneMember 2024-01-01 2024-12-31 0000890394 prso:SeriesDWarrantsIssuedMember 2024-01-01 2024-12-31 0000890394 prso:StockIncentivePlan2019Member 2019-08-31 0000890394 prso:StockIncentivePlan2019Member 2021-11-30 0000890394 prso:StockIncentivePlan2019Member us-gaap:ShareBasedCompensationAwardTrancheOneMember 2024-01-01 2024-12-31 0000890394 prso:StockIncentivePlan2019Member 2024-01-01 2024-12-31 0000890394 srt:MinimumMember prso:StockIncentivePlan2019Member 2024-01-01 2024-12-31 0000890394 us-gaap:StockOptionMember 2024-01-01 2024-12-31 0000890394 us-gaap:StockOptionMember 2023-01-01 2023-12-31 0000890394 us-gaap:StockOptionMember 2024-12-31 0000890394 us-gaap:RestrictedStockUnitsRSUMember 2024-01-01 2024-12-31 0000890394 us-gaap:RestrictedStockUnitsRSUMember 2023-01-01 2023-12-31 0000890394 us-gaap:RestrictedStockUnitsRSUMember 2023-12-31 0000890394 us-gaap:ShareBasedCompensationAwardTrancheOneMember 2024-01-01 2024-12-31 0000890394 us-gaap:RestrictedStockUnitsRSUMember 2022-12-31 0000890394 us-gaap:RestrictedStockUnitsRSUMember prso:TwoThousandTwentyNineteenPlanMember 2023-01-01 2023-12-31 0000890394 us-gaap:RestrictedStockUnitsRSUMember prso:TwoThousandTwentyNineteenPlanMember 2024-01-01 2024-12-31 0000890394 us-gaap:RestrictedStockUnitsRSUMember 2024-12-31 0000890394 srt:MinimumMember prso:OutstandingAndExercisableOptionsOneMember 2024-01-01 2024-12-31 0000890394 srt:MaximumMember prso:OutstandingAndExercisableOptionsOneMember 2024-01-01 2024-12-31 0000890394 prso:OutstandingAndExercisableOptionsOneMember 2024-12-31 0000890394 prso:OutstandingAndExercisableOptionsOneMember 2024-01-01 2024-12-31 0000890394 srt:MinimumMember prso:OutstandingAndExercisableOptionsTwoMember 2024-01-01 2024-12-31 0000890394 srt:MaximumMember prso:OutstandingAndExercisableOptionsTwoMember 2024-01-01 2024-12-31 0000890394 prso:OutstandingAndExercisableOptionsTwoMember 2024-12-31 0000890394 prso:OutstandingAndExercisableOptionsTwoMember 2024-01-01 2024-12-31 0000890394 srt:MinimumMember prso:OutstandingAndExercisableOptionsThreeMember 2024-01-01 2024-12-31 0000890394 srt:MaximumMember prso:OutstandingAndExercisableOptionsThreeMember 2024-01-01 2024-12-31 0000890394 prso:OutstandingAndExercisableOptionsThreeMember 2024-12-31 0000890394 prso:OutstandingAndExercisableOptionsThreeMember 2024-01-01 2024-12-31 0000890394 2022-08-01 2022-08-31 0000890394 2023-01-01 2023-01-31 0000890394 us-gaap:CommonStockMember us-gaap:SubsequentEventMember 2025-01-01 2025-01-31 iso4217:USD xbrli:shares iso4217:USD xbrli:shares xbrli:pure iso4217:CAD
The Exchangeable Share Purchase Price is payable only by the Company delivering or causing to be delivered to the relevant holder one share of the Company’s common stock for each Exchangeable Share purchased plus a cash amount equal to the amount of any accrued and unpaid dividends on such Exchangeable Share.
The Exchangeable Share Purchase Price is payable only by the Company delivering or causing to be delivered to the relevant holder one share of the Company’s common stock for each Exchangeable Share purchased plus a cash amount equal to the amount of any accrued and unpaid dividends on such Exchangeable Share.
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.
F-15 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.
F-28 In a concurrent private placement that closed on June 2, 2023, the Company also sold to the Investor a warrant to purchase up to 142,858 shares of common stock (the 2023 Purchase Warrant). The 2023 Purchase Warrant was immediately exercisable at an exercise price of $28.00 per share with a five-year term.
In a concurrent private placement that closed on June 2, 2023, the Company also sold to the Investor a warrant to purchase up to 142,858 shares of common stock (the 2023 Purchase Warrant). The 2023 Purchase Warrant was immediately exercisable at an exercise price of $28.00 per share with a five-year term.
The remaining balance of the Incentive is paid to the Company in the form of an adjustment to rent during the last three months of each year during the remaining lease term. During 2023, a credit of $35,775 was made against the rent during the three months ended December 31, 2023.
The remaining balance of the Incentive is paid to the Company in the form of an adjustment to rent during the last three months of each year during the remaining lease term. During 2023, a credit of CAD$35,775 was made against the rent during the three months ended December 31, 2023.
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.
F-19 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.
In addition, the Company and Callco have the right to purchase all outstanding Exchangeable Shares at the Exchangeable Share Purchase Price if there is a change of law that permits holders of Exchangeable Shares to exchange their Exchangeable Shares for shares of common stock on a basis that will not require holders to recognize any gain or loss or any actual or deemed dividend for Canadian tax purposes.
F-25 In addition, the Company and Callco have the right to purchase all outstanding Exchangeable Shares at the Exchangeable Share Purchase Price if there is a change of law that permits holders of Exchangeable Shares to exchange their Exchangeable Shares for shares of common stock on a basis that will not require holders to recognize any gain or loss or any actual or deemed dividend for Canadian tax purposes.
F-9 Basis of Presentation The 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.
F-8 Basis of Presentation The 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.
Revenue is recognized using an output method that is consistent with the satisfaction of the performance obligation as a measure of progress. F-15 Deferred cost of net revenue During the year ended December 31, 2022, the Company had $1.1 million of product shipments for which the revenue recognition criteria under ASC 606 had not been met.
Revenue is recognized using an output method that is consistent with the satisfaction of the performance obligation as a measure of progress. Deferred cost of net revenue During the year ended December 31, 2022, the Company had $1.1 million of product shipments for which the revenue recognition criteria under ASC 606 had not been met.
The Exchangeable Share structure is commonly used for cross-border transactions of this nature so as to provide non-tax-exempt Canadian shareholders with the same economic rights and benefits as holders of the Company’s shares into which the Exchangeable Shares are exchangeable, while allowing those Canadian shareholders to benefit from the tax-rollover available on the issuance of the Exchangeable Shares.
F-24 The Exchangeable Share structure is commonly used for cross-border transactions of this nature so as to provide non-tax-exempt Canadian shareholders with the same economic rights and benefits as holders of the Company’s shares into which the Exchangeable Shares are exchangeable, while allowing those Canadian shareholders to benefit from the tax-rollover available on the issuance of the Exchangeable Shares.
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.
F-9 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.
The pre-funded warrants were exercised in full by the Investor in April 2023. Net proceeds to the Company from the registered direct offering, after offering costs, were approximately $2.1 million. In a concurrent private placement, the Company also sold to the Investor a warrant to purchase up to 91,875 shares of common stock (the 2022 Purchase Warrant).
The pre-funded warrants were exercised in full by the Investor in April 2023. Net proceeds to the Company from the registered direct offering, after offering costs, were approximately $2.1 million. F-28 In a concurrent private placement, the Company also sold to the Investor a warrant to purchase up to 91,875 shares of common stock (the 2022 Purchase Warrant).
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 consolidated financial statements for the years ended December 31, 2023 and 2022 related to these indemnifications.
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 consolidated financial statements for the years ended December 31, 2024 and 2023 related to these indemnifications.
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 years ended December 31, 2023 and 2022.
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 years ended December 31, 2024 and 2023.
F-11 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 ASC 480 , Distinguishing Liabilities from Equity (ASC 480) and ASC 815, Derivatives and Hedging (ASC 815) .
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 ASC 480 , Distinguishing Liabilities from Equity (ASC 480) and ASC 815, Derivatives and Hedging (ASC 815) .
Other recent authoritative guidance issued by the FASB (including technical corrections to the ASC), the American Institute of Certified Public Accountants, and the Securities and Exchange Commission (the SEC) did not, or is not expected to, have a material impact on the Company’s consolidated financial statements and related disclosures.
Other recent authoritative guidance issued by the FASB (including technical corrections to the ASCs), the American Institute of Certified Public Accountants, and the Securities and Exchange Commission (the SEC) did not, or is not expected to, have a material impact on the Company’s consolidated financial statements and related disclosures.
The 2022 Purchase Warrant became exercisable on May 29, 2023 at an initial exercise price of $54.40 per share, which was subsequently reduced to $40.00 per share per the Amendment, and expires on May 29, 2028. As discussed below, the 2022 Purchase Warrant is accounted for as a liability.
The 2022 Purchase Warrant became exercisable on May 29, 2023 at an initial exercise price of $54.40 per share, which was subsequently reduced to $40.00 per share per the Amendment, and expires on May 29, 2028. As discussed below, the 2022 Purchase Warrant is accounted for as a liability. Note 10.
The Company determined that the license and asset sale did not qualify as a sale of a business, but as a sale of a non-financial asset, with the resultant gain recorded as income from operations in accordance with ASC 610-20, Other Income - Gains and Losses from the Derecognition of Nonfinancial Assets .
F-33 The Company determined that the license and asset sale did not qualify as a sale of a business, but as a sale of a non-financial asset, with the resultant gain recorded as income from operations in accordance with ASC 610-20, Other Income - Gains and Losses from the Derecognition of Nonfinancial Assets .
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. Advertising Costs Advertising costs are expensed as incurred. Advertising costs were not significant for the years ended December 31, 2023 and 2022.
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. Advertising Costs Advertising costs are expensed as incurred. Advertising costs were not significant for the years ended December 31, 2024 and 2023.
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.
Note 11. 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.
F-10 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.
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.
Amortization of developed technology and other intangibles directly related to the Company’s products is included in cost of net revenue, while amortization of customer relationships and other intangibles not associated with the Company’s products is included in selling, general and administrative expenses in the consolidated statements of operations and comprehensive loss.
Amortization of developed technology and other intangibles directly related to the Company’s products is included in cost of net revenue, while amortization of customer relationships and other intangibles not associated with the Company’s products is included in selling, general and administrative expenses in the consolidated statements of operations.
At December 31, 2023, the Company did not have any material unrecognized tax benefits nor expect its unrecognized tax benefits to change significantly over the next 12 months. The Company recognizes interest related to unrecognized tax benefits as income tax expense and penalties related to unrecognized tax benefits as other income and expense.
At December 31, 2024, the Company did not have any material unrecognized tax benefits nor expect its unrecognized tax benefits to change significantly over the next 12 months. The Company recognizes interest related to unrecognized tax benefits as income tax expense and penalties related to unrecognized tax benefits as other income and expense.
F-26 Callco was incorporated to exercise the call rights, while Canco was incorporated to acquire the shares of Peraso Tech from Canadian shareholders that wished to receive Exchangeable Shares as consideration, so it was a tax deferred transaction for such Canadian shareholders.
Callco was incorporated to exercise the call rights, while Canco was incorporated to acquire the shares of Peraso Tech from Canadian shareholders that wished to receive Exchangeable Shares as consideration, so it was a tax deferred transaction for such Canadian shareholders.
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. Diluted net loss per share gives effect to all potentially dilutive exchangeable and common shares outstanding during the period.
F-14 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. Diluted net loss per share gives effect to all potentially dilutive exchangeable and common shares outstanding during the period.
F-8 PERASO INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 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.
F-7 PERASO INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 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.
F-12 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 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.
Purchased Intangible Assets Intangible assets acquired in business combinations are accounted for based on the fair value of assets purchased and are amortized over the period in which economic benefit is estimated to be received.
F-11 Purchased Intangible Assets Intangible assets acquired in business combinations are accounted for based on the fair value of assets purchased and are amortized over the period in which economic benefit is estimated to be received.
Inc., as the sole underwriter (the “Underwriter”), relating to the issuance and sale in a public offering (the “Offering”) of: (i) 480,000 shares of the Company’s common stock, (ii) pre-funded warrants to purchase up to 1,424,760 shares of common stock, (iii) Series A warrants to purchase up to 3,809,520 shares of common stock, (iv) Series B warrants to purchase up to 3,809,520 shares of common stock, and (v) up to 285,714 additional shares of common stock, Series A warrants to purchase up to 571,428 shares of common stock and Series B warrants to purchase up to 571,428 shares of common stock that may be purchased pursuant to a 45-day option to purchase additional securities granted to the Underwriter by the Company.
(Ladenburg), as the sole underwriter, relating to the issuance and sale in a public offering (the Offering) of: (i) 480,000 shares of the Company’s common stock, (ii) pre-funded warrants to purchase up to 1,424,760 shares of common stock, (iii) Series A warrants to purchase up to 3,809,520 shares of common stock, (iv) Series B warrants (the Series B Warrants) to purchase up to 3,809,520 shares of common stock, and (v) up to 285,714 additional shares of common stock, Series A warrants to purchase up to 571,428 shares of common stock and Series B Warrants to purchase up to 571,428 shares of common stock that may be purchased pursuant to a 45-day option to purchase additional securities granted to Ladenburg by the Company.
F-21 Note 5: Retirement Savings Plan Effective January 1997, the Company adopted the Peraso 401(k) Plan (the Savings Plan), which qualifies as a thrift plan under Section 401(k) of the Internal Revenue Code. Full-time and part-time employees who are at least 21 years of age are eligible to participate in the Savings Plan at the time of hire.
Note 6: Retirement Savings Plan Effective January 1997, the Company adopted the Peraso 401(k) Plan (the Savings Plan), which qualifies as a thrift plan under Section 401(k) of the Internal Revenue Code. Full-time and part-time employees who are at least 21 years of age are eligible to participate in the Savings Plan at the time of hire.
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 the Underwriter’s option, after deducting underwriting discounts and commissions and other estimated Offering expenses payable by the Company and excluding any net proceeds from the exercise of the Series A warrants, Series B warrants and pre-funded warrants, were approximately $3.3 million.
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 net proceeds from the exercise of the Series A warrants, Series B Warrants and pre-funded warrants, were approximately $3.4 million.
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.
F-13 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.
The Company believes the Section 382 limitations will result in approximately 91% of the federal and state NOLs expiring before they can be utilized, and approximately 98% of the federal tax credit carryforwards expiring before they can be utilized.
The Company believes the Section 382 limitations will result in approximately 91% of the federal and state NOLs expiring before they can be utilized, and approximately 94% of the federal tax credit carryforwards expiring before they can be utilized.
The Offering, including the additional shares of common stock, Series A warrants and Series B warrants sold pursuant to the partial exercise of the Underwriter’s option, closed on February 8, 2024.
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, closed on February 8, 2024.
The following table summarizes the activity in the shares available for grant under the Plans during the years ended December 31, 2023 and 2022 and options outstanding as of December 31, 2023 and 2022.
The following table summarizes the activity in the shares available for grant under the Plans during the years ended December 31, 2024 and 2023 and options outstanding as of December 31, 2024 and 2023.
The classification of the Purchase Warrants, including whether the Purchase Warrants should be recorded as liabilities or as equity, is evaluated at the end of each reporting period with changes in the fair value reported in other income (expense) in the consolidated statements of operations and comprehensive loss.
The classification of the Purchase Warrants, including whether the Purchase Warrants should be recorded as liabilities or as equity, is evaluated at the end of each reporting period with changes in the fair value reported in other income (expense) in the consolidated statements of operations.
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.
No new awards may be made under the Amended 2010 Plan. In August 2019, the Company’s stockholders approved the Amended and Restated 2019 Stock Incentive Plan (the 2019 Plan) to replace the Amended 2010 Plan.
Net proceeds to the Company from the registered direct offering, after offering costs, were approximately $3.4 million. The Company also offered and sold to the Investor pre-funded warrants to purchase up to 86,608 shares of common stock (the 2023 PF Warrants). Each pre-funded warrant is exercisable for one share of common stock.
Net proceeds to the Company from the registered direct offering, after offering costs, were approximately $3.6 million. The Company also offered and sold to the Investor pre-funded warrants to purchase up to 86,608 shares of common stock (the 2023 PF Warrants). Each pre-funded warrant was exercisable for one share of common stock.
Under the Certificate, when all of the Exchangeable shares have been converted into shares of the Company’s common stock, the Special Voting Share shall be automatically cancelled and shall not be reissued. During the years ended December 31, 2023 and 2022, 133 and 5 exchangeable shares were exchanged into an equivalent number of shares of common stock.
Under the Certificate, when all of the Exchangeable Shares have been converted into shares of the Company’s common stock, the Special Voting Share shall be automatically cancelled and shall not be reissued. During the years ended December 31, 2024 and 2023, 35 and 133 exchangeable shares were exchanged into an equivalent number of shares of common stock.
Revenue Recognition The Company recognizes revenue in accordance with ASC Topic 606, Revenue from Contracts with Customers, and its amendments (ASC 606).
F-12 Revenue Recognition The Company recognizes revenue in accordance with ASC Topic 606, Revenue from Contracts with Customers, and its amendments (ASC 606).
The Underwriter partially exercised this option on February 7, 2024 for 82,500 shares of common stock, Series A warrants to purchase up to 165,000 shares of common stock and Series B warrants to purchase up to 165,000 shares of common stock.
Ladenburg partially exercised this option on February 7, 2024 for 82,500 shares of common stock, Series A warrants to purchase up to 165,000 shares of common stock and Series B Warrants to purchase up to 165,000 shares of common stock.
Warrants Classified as Liability Purchase Warrants The securities purchase agreements governing the 2023 Purchase Warrant and the 2022 Purchase Warrant (collectively, the “Purchase Warrants”) provide for a value calculation for such warrants using the Black Scholes model in the event of certain fundamental transactions.
Warrants Classified as Liabilities The securities purchase agreements governing the 2023 Purchase Warrant and the 2022 Purchase Warrant (collectively, the Purchase Warrants) provide for a value calculation for such warrants using the Black Scholes model in the event of certain fundamental transactions.
F-23 As of December 31, 2023, the Company had NOLs of approximately $212.7 million for federal income tax purposes and approximately $131.2 million for state income tax purposes. Only approximately $18.7 million of the federal NOLs and $13.3 million of the state NOLs are expected to be available before expiration due to the Section 382 limitation.
F-23 As of December 31, 2024, the Company had NOLs of approximately $212.1 million for federal income tax purposes and approximately $131.1 million for state income tax purposes. Only approximately $18.1 million of the federal NOLs and $13.3 million of the state NOLs are expected to be available before expiration due to the Section 382 limitation.
The 2009 Plan, the Amended 2010 Plan and the 2019 Plan are referred to collectively as the “Plans.” F-24 Stock-Based Compensation Expense The Company recorded compensation costs of $4.2 million and $4.3 million related to the vesting of stock options during the years ended December 31, 2023 and 2022, respectively.
F-31 The 2009 Plan, the Amended 2010 Plan and the 2019 Plan are referred to collectively as the “Plans.” Stock-Based Compensation Expense The Company recorded compensation costs of $2.8 million and $4.2 million related to the vesting of stock options during the years ended December 31, 2024 and 2023, respectively.
During 2023, the Company revised the remaining estimated life for its developed technology and customer relationship intangible assets to 18 months as a result of the end-of-life of its memory products (see Note 12). Other amortization expense was approximately $28,000 and $27,000 for the years ended December 31, 2023 and 2022, respectively.
During 2023, the Company revised the remaining estimated life for its developed technology and customer relationship intangible assets to 18 months as a result of the end-of-life of its memory products (see Note 14). Other amortization expense was approximately $6,000 and $28,000 for the years ended December 31, 2024 and 2023, respectively.
As of December 31, 2023 and 2022, contract liabilities were in a current position and included in deferred revenue. During the year ended December 31, 2023, the Company recognized approximately $332,000 of revenue that had been included in deferred revenue as of December 31, 2022. See Note 7 for disaggregation of revenue by geography.
As of December 31, 2024 and 2023, contract liabilities were in a current position and included in deferred revenue. During the year ended December 31, 2024, the Company recognized approximately $1,040,000 of revenue that had been included in deferred revenue as of December 31, 2023. See Note 7 for disaggregation of revenue by geography.
These NOLs are available to reduce future taxable income and will expire at various times from 2025 through 2037, except federal NOLs from 2018 to 2023 which have no expiration date.
These NOLs are available to reduce future taxable income and will expire at various times from 2025 through 2044, except federal NOLs from 2018 and later which have no expiration date.
Depreciation is recorded in cost of sales and operating expenses in the consolidated statements of operations and comprehensive loss. Leasehold improvements and assets acquired through capital leases are amortized over the shorter of their estimated useful life or the lease term, and related amortization is recorded in operating expenses in the consolidated statements of operations.
Leasehold improvements and assets acquired through capital leases are amortized over the shorter of their estimated useful life or the lease term, and related amortization is recorded in operating expenses in the consolidated statements of operations.
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.
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.
As of December 31, 2023, the Company also had federal research and development tax credit carryforwards of approximately $8.1 million that will expire at various times through 2042, and California research and development credits of approximately $8.5 million, which do not have an expiration date.
As of December 31, 2024, the Company also had federal research and development tax credit carryforwards of approximately $8.2 million that will expire at various times through 2044, and California research and development credits of approximately $8.5 million, which do not have an expiration date.
The value of the developed technology was determined by discounting estimated net future cash flows of these products. Amortization related to developed technology of $2.0 million and $1.4 million for the years ended December 31, 2023 and 2022, respectively, was included in cost of net revenue in the consolidated statements of operations and comprehensive loss.
The value of the developed technology was determined by discounting estimated net future cash flows of these products. Amortization related to developed technology of $2.3 million and $2.0 million for the years ended December 31, 2024 and 2023, respectively, was included in cost of net revenue in the consolidated statements of operations.
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): December 31, 2023 2022 Escrow shares - exchangeable shares 33 33 Escrow shares - common stock 13 13 Options to purchase common stock 36 37 Unvested restricted common stock units 15 26 Common stock warrants 242 124 Total 339 233 Income Taxes The Company determines deferred tax assets and liabilities based upon the differences between the financial statement and tax bases of the Company’s assets and liabilities using tax rates in effect for the year in which the Company expects the differences to affect taxable income.
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): December 31, 2024 2023 Escrow shares - exchangeable shares 33 33 Escrow shares - common stock 13 13 Options to purchase common stock 30 36 Unvested restricted common stock units 3 15 Warrants classified as equity 8,770 — Warrants classified as liabilities 235 242 Total 9,084 339 Income Taxes The Company determines deferred tax assets and liabilities based upon the differences between the financial statement and tax bases of the Company’s assets and liabilities using tax rates in effect for the year in which the Company expects the differences to affect taxable income.
The unamortized compensation cost at December 31, 2023 was $1.0 million related to restricted stock units and is expected to be recognized as expense over a weighted average period of approximately two years.
The unamortized compensation cost at December 31, 2024 was $0.1 million related to restricted stock units and is expected to be recognized as expense over a weighted average period of approximately one year.
Amortization related to customer relationships of $0.9 million and $0.6 million for the years ended December 31, 2023 and 2022, respectively, was included in selling, general and administrative expense in the consolidated statements of operations and comprehensive loss.
Amortization related to customer relationships of $1.0 million and $0.9 million for the years ended December 31, 2024 and 2023, respectively, was included in selling, general and administrative expense in the consolidated statements of operations.
The 2015 through 2020 tax years generally remain subject to examination by U.S. federal and state tax authorities, and the 2011 through 2020 tax years generally remain subject to examination by foreign tax authorities.
The 2018 through 2023 tax years generally remain subject to examination by U.S. federal and state tax authorities, and the 2020 through 2023 tax years generally remain subject to examination by foreign tax authorities.
Note 13. Subsequent Events Reverse Stock Split As disclosed in Note 1, effective January 2, 2024, the Company effected a 1-for-40 reverse stock split of its outstanding common stock. Public Offering On February 6, 2024, the Company entered into an underwriting agreement (the “Underwriting Agreement”) with Ladenburg Thalmann & Co.
F-26 Reverse Stock Split As disclosed in Note 1, effective January 2, 2024, the Company effected a 1-for-40 reverse stock split of its outstanding common stock. February 2024 Public Offering On February 6, 2024, the Company entered into an underwriting agreement (the Underwriting Agreement) with Ladenburg Thalmann & Co. Inc.
The Company recorded compensation costs of $1.0 million and $1.4 million related to the vesting of restricted stock options during the years ended December 31, 2023 and 2022, respectively.
The Company recorded compensation costs of $0.8 million and $1.0 million related to the vesting of restricted stock units during the years ended December 31, 2024 and 2023, respectively.
Related Party Transactions A family member of one of the Company’s executive officers is an employee of the Company. During the years ended December 31, 2023 and 2022, the Company paid approximately $111,400 and $101,000, respectively, to the employee.
Related Party Transactions A family member of one of the Company’s executive officers is an employee of the Company. During the years ended December 31, 2024 and 2023, the Company paid approximately $113,800 and $111,400, respectively, to the employee. Note 13.
The table also includes the total fair value determined at valuation date based on these assumptions. 2022 Purchase Warrant 2023 Purchase Warrant Expected term based on contractual term 5.5 years 5.0 years Interest rate (risk-free rate): 3.75 % 4.16 % Expected volatility 123 % 118 % Expected dividend — — Fair value of warrants (in thousands) $ 3,674 $ 3,162 The fair value of the Purchase Warrants at December 31, 2023 was determined using the Black Scholes model with the assumptions in the following table.
The table also includes the total fair value determined at valuation date based on these assumptions. 2022 Purchase Warrant 2023 Purchase Warrant Expected term based on contractual term 3.4 years 3.4 years Interest rate (risk-free rate): 4.38 % 4.38 % Expected volatility 115 % 117 % Expected dividend — — Fair value of warrants (in thousands) $ 25 $ 30 The fair value of the Purchase Warrants at December 31, 2023 was determined using the Black Scholes model with the assumptions in the following table.
Intangible assets subject to amortization, including those acquired in business combinations were as follows (amounts in thousands): December 31, 2023 Gross Net Carrying Accumulated Other Carrying Amount Amortization Impairment Amount Developed technology $ 5,726 $ (3,471 ) $ — $ 2,255 Customer relationships 2,556 (1,550 ) — 1,006 Other 186 (61 ) (106 ) 19 Total $ 8,468 $ (5,082 ) $ (106 ) $ 3,280 December 31, 2022 Gross Net Carrying Accumulated Carrying Amount Amortization Amount Developed technology $ 5,726 $ (1,491 ) $ 4,235 Customer relationships 2,556 (666 ) 1,890 Other 186 (33 ) 153 Total $ 8,468 $ (2,190 ) $ 6,278 Developed technology primarily consisted of MoSys’ products that have reached technological feasibility and primarily relate to its memory semiconductor products and technology.
Intangible assets subject to amortization, including those acquired in business combinations were as follows (amounts in thousands): December 31, 2024 Gross Net Carrying Accumulated Other Carrying Amount Amortization Impairment Amount Developed technology $ 5,726 $ (5,726 ) $ — $ — Customer relationships 2,556 (2,556 ) — — Other 186 (67 ) (106 ) 13 Total $ 8,468 $ (8,349 ) $ (106 ) $ 13 December 31, 2023 Gross Net Carrying Accumulated Other Carrying Amount Amortization Impairment Amount Developed technology $ 5,726 $ (3,471 ) $ — $ 2,255 Customer relationships 2,556 (1,550 ) — 1,006 Other 186 (61 ) (106 ) 19 Total $ 8,468 $ (5,082 ) $ (106 ) $ 3,280 Developed technology primarily consisted of MoSys’ products that had reached technological feasibility and primarily related to its memory semiconductor products and technology.
The following table provides the details of right-of-use assets and lease liabilities as of December 31, 2023 (in thousands): Year Ended December 31, 2023 Right-of-use assets: Operating leases $ 422 Finance lease 193 Total right-of-use assets $ 615 Lease liabilities: Operating leases $ 525 Finance lease 194 Total lease liabilities $ 719 F-20 Future minimum payments under the leases at December 31, 2023 are listed in the table below (in thousands): Year ending December 31, 2024 $ 413 2025 166 2026 110 2027 108 Total future lease payments 797 Less: imputed interest (78 ) Present value of lease liabilities $ 719 The following table provides the details of supplemental cash flow information (in thousands): Year Ended December 31, 2023 2022 Cash paid for amounts included in the measurement of lease liabilities: Operating cash flows for leases $ 674 $ 704 Rent expense was approximately $0.6 million and $0.7 million for the years ended December 31, 2023 and 2022, respectively.
The following table provides the details of right-of-use assets and lease liabilities as of December 31, 2024 (in thousands): Year Ended December 31, 2024 2023 Right-of-use assets: Operating leases $ 213 $ 422 Finance leases 54 193 Total right-of-use assets $ 267 $ 615 Lease liabilities: Operating leases $ 266 $ 525 Finance leases 55 194 Total lease liabilities $ 321 $ 719 Future minimum payments under the leases at December 31, 2024 are listed in the table below (in thousands): Year ending December 31, 2025 $ 158 2026 101 2027 94 Total future lease payments 353 Less: imputed interest (32 ) Present value of lease liabilities $ 321 The following table provides the details of supplemental cash flow information (in thousands): Year Ended December 31, 2024 2023 Cash paid for amounts included in the measurement of lease liabilities: Operating cash flows for leases $ 487 $ 674 Rent expense was approximately $0.7 million and $0.6 million for the years ended December 31, 2024 and 2023, respectively.
At December 31, 2023, the unamortized compensation cost was approximately $3.3 million related to stock options and is expected to be recognized as expense over a weighted average period of approximately two years.
At December 31, 2024, the unamortized compensation cost was approximately $0.2 million related to stock options and is expected to be recognized as expense over a weighted average period of approximately one year.
The pre-funded warrants have an exercise price of $0.001 per share, are exercisable immediately and may be exercised at any time until all of the pre-funded warrants are exercised in full. Subsequent to the closing of the Offering, as of March 18, 2024, the holders exercised pre-funded warrants for 1,001,110 shares of common stock.
The pre-funded warrants have an exercise price of $0.001 per share, were exercisable immediately and may be exercised at any time until all of the pre-funded warrants are exercised in full. As of December 31, 2024, the holders exercised pre-funded warrants for 1,424,760 shares of common stock.
Note 2: Fair Value of Financial Instruments The following table represents the Company’s assets and liabilities measured at fair value on a recurring basis as of December 31, 2023 and 2022 and the basis for that measurement (in thousands): December 31, 2023 Fair Value Level 1 Level 2 Level 3 Assets: Money market funds (1) $ 1 $ — $ — $ — Liabilities: Warrant liability $ 1,748 $ — $ — $ 1,748 December 31, 2022 Fair Value Level 1 Level 2 Level 3 Assets: Money market funds (1) $ 73 $ — $ — $ — Corporate notes and commercial paper $ 1,078 $ — $ 1,078 $ — Liabilities: Warrant liability $ 2,079 $ — $ — $ 2,079 (1) Included in cash and cash equivalents The following table represents the Company’s determination of fair value for its financial assets (cash equivalents and investments) (in thousands): December 31, 2023 Unrealized Unrealized Fair Cost Gains Losses Value Cash and cash equivalents $ 1,583 $ — $ — $ 1,583 December 31, 2022 Unrealized Unrealized Fair Cost Gains Losses Value Cash and cash equivalents $ 1,828 $ — $ — $ 1,828 Short-term investments 1,103 — (25 ) 1,078 $ 2,931 $ — $ (25 ) $ 2,906 F-18 Note 3.
Note 2: Fair Value of Financial Instruments The following table represents the Company’s assets and liabilities measured at fair value on a recurring basis as of December 31, 2024 and 2023 and the basis for that measurement (in thousands): December 31, 2024 Fair Value Level 1 Level 2 Level 3 Assets: Money market funds (1) $ 1 $ — $ — $ — Liabilities: Warrant liability $ 55 $ — $ — $ 55 December 31, 2023 Fair Value Level 1 Level 2 Level 3 Assets: Money market funds (1) $ 1 $ — $ — $ — Liabilities: Warrant liability $ 1,748 $ — $ — $ 1,748 (1) Included in cash and cash equivalents F-16 The following table represents the Company’s determination of fair value for its financial assets (cash equivalents and investments) (in thousands): December 31, 2024 Unrealized Unrealized Fair Cost Gains Losses Value Cash and cash equivalents $ 3,344 $ — $ — $ 3,344 December 31, 2023 Unrealized Unrealized Fair Cost Gains Losses Value Cash and cash equivalents $ 1,583 $ — $ — $ 1,583 Note 3.
Of the shares issued to the holders of Peraso Tech Shares, pursuant to the terms of the Agreement, the Company held in escrow an aggregate of 1,312,878 Exchangeable Shares and 502,567 shares of common stock (collectively, the Escrow Shares).
Of the shares issued to the holders of Peraso Tech Shares, pursuant to the terms of the Agreement, the Company held in escrow an aggregate of 32,822 Exchangeable Shares and 12,564 shares of common stock (collectively, the Escrow Shares).
In November 2023, the Company renewed the San Jose facility lease for a one-year term commencing January 15, 2024 (the Renewal Term), and effective with the commencement of the Renewal term the Company ceased accounting for the lease under ASC 842. In December 2023, the Company renewed the Toronto office lease for a one-year term commencing January 1, 2024.
In November 2023, the Company renewed the San Jose facility lease for a one-year term, which commenced January 15, 2024 (the Renewal Term), and, effective with the commencement of the Renewal Term, the Company ceased accounting for the lease under ASC 842. The Company did not renew the lease upon the expiration of the Renewal Term.
Balance Sheet Detail December 31, 2023 2022 (in thousands) Inventories: Raw materials $ 209 $ 1,279 Work-in-process 1,517 2,595 Finished goods 880 1,474 $ 2,606 $ 5,348 Prepaid expenses and other: Prepaid inventory and production costs $ 452 $ 186 Prepaid insurance 37 77 Prepaid software 67 173 Other 28 138 $ 584 $ 574 Property and equipment, net: Machinery and equipment $ 4,848 $ 4,630 Computer equipment and software 377 342 Furniture and fixtures 93 93 Leasehold improvements 428 555 Total property and equipment 5,746 5,620 Less: Accumulated depreciation and amortization (4,590 ) (3,395 ) $ 1,156 $ 2,225 During the year ended December 31, 2023, the Company wrote off assets with a book value of approximately $243,000 to depreciation expense as a loss on disposal.
Balance Sheet Detail December 31, 2024 2023 (in thousands) Inventories: Raw materials $ 627 $ 209 Work-in-process 473 1,517 Finished goods 979 880 $ 2,079 $ 2,606 Prepaid expenses and other: Prepaid inventory and production costs $ 9 $ 452 Prepaid insurance 41 37 Prepaid software 39 67 Other 99 64 $ 188 $ 620 Property and equipment, net: Machinery and equipment $ 4,848 $ 4,848 Computer equipment and software 377 377 Furniture and fixtures 93 93 Leasehold improvements 428 428 Total property and equipment 5,746 5,746 Less: Accumulated depreciation and amortization (5,234 ) (4,590 ) $ 512 $ 1,156 F-17 During the year ended December 31, 2023, the Company wrote off assets with a book value of approximately $243,000 to depreciation expense as a loss on disposal.
A reconciliation of income taxes provided at the federal statutory rate (21%) to the actual income tax provision is as follows (in thousands): Year Ended December 31, 2023 2022 Income tax benefit computed at U.S. statutory rate $ 277 $ (6,804 ) Research and development credits — (38 ) Stock-based compensation 9 1,033 Amortization of intangible assets (60 ) (60 ) Goodwill impairment — 2,089 Change in fair value of warrant liabilities (734 ) — Valuation allowance changes affecting tax provision 506 3,774 Other 2 6 Income tax provision $ — $ — Note 8.
A reconciliation of income taxes provided at the federal statutory rate to the actual income tax provision is as follows (in thousands): Year Ended December 31, 2024 2023 Income tax benefit computed at U.S. statutory rate $ 359 $ 277 Stock-based compensation — 9 Amortization of intangible assets (60 ) (60 ) Change in fair value of warrant liabilities (356 ) (734 ) Valuation allowance changes affecting tax provision 62 506 Other (5 ) 2 Income tax provision $ — $ — Note 9.
ASU No. 2023-07 is effective for fiscal years beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024, and it requires retrospective application to all prior periods presented in the financial statements. The Company is currently evaluating the impact that this ASU will have on the presentation of its consolidated financial statements.
ASU No. 2023-07 is effective for fiscal years beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024, and it requires retrospective application to all prior periods presented in the financial statements. The Company adopted ASU 2023-07 as of December 31, 2024.
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 $274,000.
As of December 31, 2024, the pending Incentive to be received was CAD$71,510. 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 $274,000.
The Special Voting Share was issued to a third-party administrative agent (the Agent) solely to facilitate the exercise of rights by holders of Exchangeable Shares, The rights of the Agent, as holder of the Special Voting Share, are limited to effecting the rights of the holders of the Exchangeable Shares; the Special Voting Share does not confer any independent rights to the Agent.
The rights of the Agent, as holder of the Special Voting Share, are limited to effecting the rights of the holders of the Exchangeable Shares; the Special Voting Share does not confer any independent rights to the Agent.
F-29 As of December 31, 2023, the Company had the following liability-classified warrants outstanding (amounts in thousands): Number of warrants on common shares Amount Balance as of December 31, 2021 — $ — Recognition of warrant liabilities 92 3,674 Change in fair value of warrants — (1,595 ) Balance as of December 31, 2022 92 2,079 Recognition of warrant liabilities 143 3,162 Change in fair value of warrants — (3,493 ) Balance as of December 31, 2023 235 $ 1,748 The initial fair value of each of the Purchase Warrants was determined using the Black Scholes model with the assumptions in the following table.
F-29 As of December 31, 2024, the Company had the following liability-classified warrants outstanding (amounts in thousands): Number of warrants on common shares Amount Balance as of December 31, 2022 92 $ 2,079 Recognition of warrant liabilities 143 3,162 Change in fair value of warrants — (3,493 ) Balance as of December 31, 2023 235 1,748 Change in fair value of warrants — (1,693 ) Balance as of December 31, 2024 235 $ 55 The outstanding liability-classified warrants had no intrinsic value at December 31, 2024.
CONSOLIDATED STATEMENTS OF CASH FLOWS (In thousands) Year Ended December 31, 2023 2022 Cash flows from operating activities: Net loss $ (16,795 ) $ (32,398 ) Adjustments to reconcile net loss to net cash used in operating activities: Depreciation and amortization 3,811 3,057 Stock-based compensation 5,213 5,730 Change in fair value of warrant liabilities (3,493 ) (1,595 ) Inventory write-down 3,558 — Financing costs - warrant issuances — 1,576 Impairment of goodwill — 9,946 Allowance for bad debt (154 ) — Accrued interest on debt obligation (22 ) 9 Interest portion of financing lease repayment — (16 ) Impairment of intangible assets and property and equipment 349 — Other 3 89 Changes in assets and liabilities Accounts receivable 2,667 (808 ) Inventories (816 ) (1,525 ) Prepaid expenses and other assets 590 (59 ) Tax credits and receivables 5 1,160 Accounts payable 604 (94 ) Right-of-use assets 670 578 Lease liabilities - operating (447 ) (542 ) Deferred revenue and other liabilities (433 ) (1,128 ) Net cash used in operating activities (4,690 ) (16,020 ) Cash flows from investing activities: Purchases of property and equipment (94 ) (988 ) Purchases of intangible assets — (21 ) Proceeds from maturities of marketable securities 1,100 11,534 Purchases of marketable securities — (488 ) Net cash provided by investing activities 1,006 10,037 Cash flows from financing activities: Proceeds from sale of common stock, net 3,595 2,099 Repayment of financing lease (107 ) (61 ) Taxes paid to net share settle equity awards (49 ) (120 ) Net cash provided by financing activities 3,439 1,918 Net decrease in cash and cash equivalents (245 ) (4,065 ) Cash and cash equivalents at beginning of year 1,828 5,893 Cash and cash equivalents at end of year $ 1,583 $ 1,828 Supplemental disclosure: Noncash investing and financing activities: Initial recognition of warrant liability $ 3,162 $ 3,673 Recognition of right-of-use assets and lease liabilities $ 138 $ 1,003 Unrealized gain (loss) on available-for-sale securities $ (26 ) $ 26 The accompanying notes are an integral part of these consolidated financial statements.
CONSOLIDATED STATEMENTS OF CASH FLOWS (In thousands) Year Ended December 31, 2024 2023 Cash flows from operating activities: Net loss $ (10,728 ) $ (16,795 ) Adjustments to reconcile net loss to net cash used in operating activities: Depreciation and amortization 3,911 3,811 Stock-based compensation 3,588 5,213 Change in fair value of warrant liabilities (1,693 ) (3,493 ) Inventory write-down 359 3,558 Shares issued for services 54 — Allowance for bad debt (2 ) (154 ) Accrued interest on debt obligation (10 ) (22 ) Impairment of intangible assets and property and equipment — 349 Other 3 3 Changes in assets and liabilities Accounts receivable 51 2,667 Inventories 168 (816 ) Prepaid expenses and other assets 432 595 Accounts payable (1,412 ) 604 Right-of-use assets 348 670 Lease liabilities - operating (260 ) (447 ) Accrued expenses and other 1,376 (1,206 ) Deferred revenue (764 ) 773 Net cash used in operating activities (4,579 ) (4,690 ) Cash flows from investing activities: Purchases of property and equipment — (94 ) Proceeds from maturities of marketable securities — 1,100 Net cash provided by investing activities — 1,006 Cash flows from financing activities: Proceeds from at-the-market sales of stock, net 333 — Proceeds from warrant inducement, net 2,582 — Proceeds from sale of common stock and warrants, net 3,559 3,595 Repayment of financing lease (128 ) (107 ) Taxes paid to net share settle equity awards (6 ) (49 ) Net cash provided by financing activities 6,340 3,439 Net decrease in cash and cash equivalents 1,761 (245 ) Cash and cash equivalents at beginning of year 1,583 1,828 Cash and cash equivalents at end of year $ 3,344 $ 1,583 Supplemental disclosure: Noncash investing and financing activities: Initial recognition of warrant liability $ — $ 3,162 Recognition of right-of-use assets and lease liabilities $ — $ 138 Unrealized loss on available-for-sale securities $ — $ (26 ) The accompanying notes are an integral part of these consolidated financial statements.
(in thousands, except exercise price): Options Outstanding Weighted Shares Average Available Number of Exercise for Grant Shares Prices Balance as of December 31, 2021 76 39 $ 139.60 RSUs granted (44 ) — — RSUs cancelled and returned to the Plans 7 — — Options cancelled — (2 ) $ 250.80 Balance as of December 31, 2022 39 37 $ 132.80 RSUs granted (5 ) — — RSUs cancelled and returned to the 2019 Plan 5 — — Options cancelled — (1 ) $ 321.30 Balance as of December 31, 2023 39 36 $ 127.00 The following table summarizes significant ranges of outstanding and exercisable options as of December 31, 2023 (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 $62.80 - $599.60 36 6.77 $ 105.20 26 $ 103.60 $ — $1,024.00 - $5,759.60 — 2.73 $ 4,050.80 — $ 4,050.80 $ — $5,760.00 - $16,399.60 — 2.73 $ 5,760.00 — $ 5,760.00 $ — $16,400.00 - $36,960.00 — 1.33 $ 16,400.00 — $ 16,400.00 $ — $62.80 - $36,960.00 36 6.76 $ 122.80 26 $ 127.00 $ — F-25 A summary of RSU activity under the Plans is presented below (in thousands, except for fair value): Weighted Average Number of Grant-Date Shares Fair Value Non-vested shares as of December 31, 2021 2 $ 180.00 Granted 44 $ 84.00 Vested (15 ) $ 91.60 Effect of business combination (4 ) $ 87.61 Non-vested shares as of December 31, 2022 27 $ 82.46 Granted 4 $ 24.62 Vested (14 ) $ 75.72 Cancelled (2 ) $ 82.90 Non-vested shares as of December 31, 2023 15 $ 69.63 Note 9.
(in thousands, except exercise price): Options Outstanding Weighted Shares Average Available Number of Exercise for Grant Shares Prices Balance as of December 31, 2022 39 37 $ 132.80 RSUs granted (5 ) — — RSUs cancelled and returned to the 2019 Plan 5 — — Options cancelled — (1 ) $ 321.30 Balance as of December 31, 2023 39 36 $ 127.00 Additional shares authorized under the 2019 Plan 1,500 — — RSUs granted (2 ) — — RSUs cancelled and returned to the 2019 Plan 7 — — Options cancelled — (6 ) $ 110.88 Balance as of December 31, 2024 1,544 30 $ 130.14 F-32 The following table summarizes significant ranges of outstanding and exercisable options as of December 31, 2024 (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 $0.00 - $62.80 2 4.89 $ 62.80 2 $ 62.80 $ — $62.81 - $599.60 28 5.99 $ 110.31 27 $ 110.71 $ — $0.00 - $599.60 30 5.90 $ 130.14 29 $ 131.60 $ — 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, 2022 27 $ 82.46 Granted 4 $ 24.62 Vested (14 ) $ 75.72 Effect of business combination (2 ) $ 82.90 Non-vested shares as of December 31, 2023 15 $ 69.63 Granted 2 $ 1.55 Vested (12 ) $ 1.24 Cancelled (3 ) $ 63.10 Non-vested shares as of December 31, 2024 2 $ 37.69 Note 12.
The Series A warrants and Series B warrants each have an exercise price of $2.25 per share and are immediately exercisable upon issuance. The Series A warrants expire on the five-year anniversary of the date of issuance and the Series B warrants expire on the six-month anniversary of the date of issuance.
The Series C Warrants have an exercise price of $1.61 per share, were exercisable upon issuance and expire on the six-month anniversary of the date of issuance. The Series D Warrants have an exercise price of $1.61 per share, were exercisable upon issuance and expire on the five-year anniversary of the date of issuance.
On February 8, 2024, pursuant to the Underwriting Agreement, the Company issued warrants to the Underwriter to purchase up to 139,108 shares of common stock at an exercise price of $2.625, subject to adjustments, which are exercisable at any time and from time to time, in whole or in part, until February 8, 2029, and have substantially similar terms to the Series A warrants.
On February 8, 2024, pursuant to the Underwriting Agreement, the Company paid Ladenburg a cash fee of 9% of the gross proceeds received from the Offering and issued warrants to Ladenburg to purchase up to 139,108 shares of common stock at an exercise price of $2.625, subject to adjustments, which were exercisable immediately and have substantially similar terms to the Series A warrants.
Callco discharges this obligation by arranging for the Company to issue and deliver those shares to the holders on behalf of Callco. As consideration for satisfying the delivery obligation, Callco would issue its own shares to the Company.
Callco discharges this obligation by arranging for the Company to issue and deliver those shares to the holders on behalf of Callco. As consideration for satisfying the delivery obligation, Callco would issue its own shares to the Company. There are no cash redemption features, as all redemption and exchange scenarios are payable in a share of the Company’s common stock.
As disclosed in Note 13, in February 2024, the Company completed a public offering of its common stock and warrants for net proceeds of $3.3 million. 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 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 table also includes the total fair value determined at valuation date based on these assumptions. 2022 Purchase Warrant 2023 Purchase Warrant Expected term based on contractual term 4.4 years 4.2 years Interest rate (risk-free rate): 3.84 % 3.84 % Expected volatility 116 % 116 % Expected dividend — — Fair value of warrants (in thousands) $ 653 $ 1,095 Warrants Classified as Equity As of December 31, 2023, the Company had the following equity-classified warrants outstanding (share amounts in thousands): Warrant Type Number of Shares Exercise Price Expiration Balance as of December 31, 2022 33 Warrants expired (1 ) $ 47.00 January 2023 Warrants expired (3 ) $ 96.00 October 2023 Pre-funded warrants issued 86 $ 0.40 — Pre-funded warrants exercised (115 ) $ 0.40 — Balance as of December 31, 2023 - F-30 As of December 31, 2022, the Company had the following equity-classified warrants outstanding (share amounts in thousands): Warrant Type Number of Shares Exercise Price Expiration Common stock 1 $ 1,880.00 January 2023 Common stock 3 $ 96.00 October 2023 Common stock 29 $ 0.40 — 33 Note 10.
The table also includes the total fair value determined at valuation date based on these assumptions. 2022 Purchase Warrant 2023 Purchase Warrant Expected term based on contractual term 4.4 years 4.4 years Interest rate (risk-free rate): 3.84 % 3.84 % Expected volatility 116 % 116 % Expected dividend — — Fair value of warrants (in thousands) $ 653 $ 1,095 F-30 Warrants Classified as Equity As of December 31, 2024, the Company had the following equity-classified warrants outstanding (share amounts in thousands): Warrant Type Number of Shares Exercise Price Expiration Balance as of December 31, 2023 7 $ 28.00 June 2, 2028 Pre-funded warrants issued 1,425 $ 0.001 — Pre-funded warrants exercised (1,425 ) $ 0.001 — Series A warrants issued 3,975 $ 2.250 February 8, 2029 Series A warrants issued 139 $ 2.625 February 8, 2029 Series B warrants issued 3,974 $ 2.250 November 8, 2024 Series B warrants exercised (2,246 ) $ 1.310 — Series B warrants expired (1,728 ) $ 1.310 November 8, 2024 Series C warrants issued 2,246 $ 1.610 May 5, 2025 Series C warrants issued 157 $ 1.625 November 5, 2029 Series D warrants issued 2,246 $ 1.610 November 5, 2029 Balance as of December 31, 2024 8,770 The outstanding equity-classified warrants had no intrinsic value at December 31, 2024.
In November 2021, in connection with the approval of the Arrangement, the Company’s stockholders approved an amendment increasing the number of shares reserved for issuance under the 2019 Plan by 77,674 shares.
In November 2021 and December 2024, the Company’s stockholders approved amendments increasing the number of shares reserved for issuance under the 2019 Plan by 77,674 and 1,500,000 shares, respectively.
… 104 more changes not shown on this page.
Item 1A. Risk Factors
Risk Factors — what could go wrong, per management
74 edited+33 added−25 removed143 unchanged
Item 1A. Risk Factors
Risk Factors — what could go wrong, per management
74 edited+33 added−25 removed143 unchanged
2023 filing
2024 filing
Biggest changeIn addition, we may incur substantial litigation expense which would adversely affect our profitability. ● The discovery of defects in our technology and products could expose us to liability for damages. ● We might not be able to protect and enforce our IP rights which could impair our ability to compete and reduce the value of our technology. ● Third parties might attempt to gain unauthorized access to our network or seek to compromise our products and services. ● There may be future sales of our common stock, which could adversely affect the market price of our common stock and dilute a stockholder’s ownership of common stock. ● Provisions of our certificate of incorporation and bylaws or Delaware law might delay or prevent a change-of-control transaction and depress the market price of our stock. ● 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. 10 We might not be able to continue as a going concern.
Biggest changeRisks Related to Our Securities ● There may be future sales of our common stock, which could adversely affect the market price of our common stock and dilute a stockholder’s ownership of common stock. ● Provisions of our certificate of incorporation and bylaws or Delaware law might delay or prevent a change-of-control transaction and depress the market price of our stock. ● 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. 10 Risks Related to Our Business, Operations and Industry We might not be able to continue as a going concern.
If we do not continue to win designs in the short term, our product revenue in the following years will not grow. We sell our ICs to customers that include our ICs and modules in their products.
If we do not continue to win designs in the short term, our product revenue in the following years will not grow. We sell our ICs and modules to customers that include our products in their products.
The sale of our common stock resulting from exercise of any options or vesting of restricted stock units granted to executive officers and other employees under our equity compensation plan and of any warrants, and other issuances of our common stock could have an adverse effect on the market price of the shares of our common stock.
The sale of our common stock resulting from the exercise of any options or vesting of restricted stock units granted to executive officers and other employees under our equity compensation plan and the exercise of any warrants, and other issuances of our common stock could have an adverse effect on the market price of the shares of our common stock.
Acquisitions may involve additional risks, including: ● the acquired product lines, technologies or businesses may not improve our financial and strategic position as planned; ● we may determine we have overpaid for the product lines, technologies or businesses, or that the economic conditions underlying our acquisition have changed; ● we may have difficulty integrating the operations and personnel of the acquired company; ● we may have difficulty retaining the employees with the technical skills needed to enhance and provide services with respect to the acquired product lines or technologies; ● the acquisition may be viewed negatively by customers, employees, suppliers, financial markets or investors; ● we may have difficulty incorporating the acquired product lines or technologies with our existing technologies; ● we may encounter a competitive response, including price competition or IP litigation; ● we may become a party to product liability or IP infringement claims as a result of our sale of the acquired company’s products; ● we may incur one-time charges, such as for acquired in-process research and development costs, and restructuring charges; ● we may acquire goodwill and other intangible assets that are subject to impairment tests, which could result in future impairment charges; ● our ongoing business and management’s attention may be disrupted or diverted by transition or integration issues and the complexity of managing geographically or culturally diverse enterprises; and ● our due diligence process may fail to identify significant existing issues with the target business.
Acquisitions may involve additional risks, including: ● the acquired product lines, technologies or businesses may not improve our financial and strategic position as planned; ● we may determine we have overpaid for the product lines, technologies or businesses, or that the economic conditions underlying our acquisition have changed; ● we may have difficulty integrating the operations and personnel of the acquired company; ● we may have difficulty retaining the employees with the technical skills needed to enhance and provide services with respect to the acquired product lines or technologies; ● the acquisition may be viewed negatively by customers, employees, suppliers, financial markets or investors; ● we may have difficulty incorporating the acquired product lines or technologies with our existing technologies; 23 ● we may encounter a competitive response, including price competition or IP litigation; ● we may become a party to product liability or IP infringement claims as a result of our sale of the acquired company’s products; ● we may incur one-time charges, such as for acquired in-process research and development costs, and restructuring charges; ● we may acquire goodwill and other intangible assets that are subject to impairment tests, which could result in future impairment charges; ● our ongoing business and management’s attention may be disrupted or diverted by transition or integration issues and the complexity of managing geographically or culturally diverse enterprises; and ● our due diligence process may fail to identify significant existing issues with the target business.
Our efforts to increase our revenue and expand our markets have been subject to various risks and uncertainties, including, but not limited to: ● a lack of working capital; ● customer acceptance; ● difficulties and delays in our product development, manufacturing, testing and marketing activities; ● timeliness of new product introductions; ● the anticipated costs and technological risks of developing and bringing our products to market; ● the willingness of our manufacturing partners to assist successfully with fabrication; ● our ability to qualify our products for mass production and achieve wafer yield levels and the final test results necessary to be price competitive; ● the availability of quantities of our products supplied by our manufacturing partners at a competitive cost; ● our ability to generate the desired gross margin percentages and return on our product development investment; ● competition from established competitors; ● the adequacy of our IP protection for our proprietary IC designs and technologies; ● customer concerns over our financial condition and viability to be a long-term profitable supplier; and ● the vigor and growth of markets served by our current and prospective customers.
Our efforts to increase our revenue and expand our markets have been subject to various risks and uncertainties, including, but not limited to: ● a lack of working capital; ● customer acceptance; ● difficulties and delays in our product development, manufacturing, testing and marketing activities; ● timeliness of new product introductions; ● the anticipated costs and technological risks of developing and bringing our products to market; ● the willingness of our manufacturing partners to assist successfully with fabrication; 15 ● our ability to qualify our products for mass production and achieve wafer yield levels and the final test results necessary to be price competitive; ● the availability of quantities of our products supplied by our manufacturing partners at a competitive cost; ● our ability to generate the desired gross margin percentages and return on our product development investment; ● competition from established competitors; ● the adequacy of our IP protection for our proprietary IC designs and technologies; ● customer concerns over our financial condition and viability to be a long-term profitable supplier; and ● the vigor and growth of markets served by our current and prospective customers.
A product liability claim brought against us, even if unsuccessful, would likely be time consuming and costly to defend. 14 We may experience difficulties in transitioning to new wafer fabrication process technologies or in achieving higher levels of design integration, which may result in reduced manufacturing yields, delays in product deliveries and increased costs.
A product liability claim brought against us, even if unsuccessful, would likely be time consuming and costly to defend. We may experience difficulties in transitioning to new wafer fabrication process technologies or in achieving higher levels of design integration, which may result in reduced manufacturing yields, delays in product deliveries and increased costs.
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; 25 ● reduced liquidity for our stockholders; ● potential loss of confidence by customers, collaboration partners and employees; and ● loss of institutional investor interest.
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 addition, responding to any such proceeding may result in a significant diversion of management’s attention and resources, significant defense costs, and other professional fees. Our failure to successfully market our products could seriously harm our ability to execute our business strategy and may force us to curtail our research and development plans or existing operations.
In addition, responding to any such proceeding may result in a significant diversion of management’s attention and resources, significant defense costs, and other professional fees. 13 Our failure to successfully market our products could seriously harm our ability to execute our business strategy and may force us to curtail our research and development plans or existing operations.
We cannot be certain, however, that the waivers or limitations of liability contained in our agreements with customers will be enforceable. We might not be able to protect and enforce our IP rights which could impair our ability to compete and reduce the value of our technology. Our technology is complex and is intended for use in complex systems.
We cannot be certain, however, that the waivers or limitations of liability contained in our agreements with customers will be enforceable. 19 We might not be able to protect and enforce our IP rights, which could impair our ability to compete and reduce the value of our technology. Our technology is complex and is intended for use in complex systems.
Our failure to enhance our existing products and develop future products that achieve broad market acceptance will harm our competitive position and impede our future growth. Our products have a lengthy sales cycle, which makes it difficult to predict success in this market and the timing of future revenue.
Our failure to enhance our existing products and develop future products that achieve broad market acceptance will harm our competitive position and impede our future growth. 16 Our products have a lengthy sales cycle, which makes it difficult to predict success in this market and the timing of future revenue.
Any such event could reduce the amount of future sales of our products. 13 Future revenue growth depends on our winning designs with existing and new customers, retaining current customers, and having those customers design our solutions into their product offerings and successfully selling and marketing such products.
Any such event could reduce the amount of future sales of our products. Future revenue growth depends on our winning designs with existing and new customers, retaining current customers, and having those customers design our solutions into their product offerings and successfully selling and marketing such products.
Our future revenues from these products may not increase in accordance with our growth and strategic objectives if, instead, our OEM customers modify their product designs, select products sold by our competitors or develop their own proprietary technologies.
Our future revenues from these products may not increase in accordance with our growth and strategic objectives, if, instead, our customers modify their product designs, select products sold by our competitors or develop their own proprietary technologies.
We have recorded a full valuation allowance for our deferred tax assets. 20 Third parties might attempt to gain unauthorized access to our network or seek to compromise our products and services.
We have recorded a full valuation allowance for our deferred tax assets. Third parties might attempt to gain unauthorized access to our network or seek to compromise our products and services.
Our failure to collect receivables from any customer that represents a large percentage of receivables on a timely basis, or at all, could adversely affect our cash flow or results of operations. Our products must meet exact specifications and defects and failures may occur, which may cause customers to return or stop buying our products.
Our failure to collect receivables from any customer, which represents a large percentage of receivables, on a timely basis, or at all, could adversely affect our cash flow or results of operations. 17 Our products must meet exact specifications and defects and failures may occur, which may cause customers to return or stop buying our products.
Accordingly, our stockholders bear the risk that our future offerings will reduce the market price of our common stock and dilute their stock holdings in us. 23 Potential volatility of the price of our common stock could negatively affect your investment. We cannot assure you that there will continue to be an active trading market for our common stock.
Accordingly, our stockholders bear the risk that our future offerings will reduce the market price of our common stock and dilute their stock holdings in us. 24 Potential volatility of the price of our common stock could negatively affect your investment. We cannot assure you that there will continue to be an active trading market for our common stock.
At each reporting period (i) the warrants will be reevaluated for proper accounting treatment as a liability or equity and (ii) the fair value of the liability of the warrants will be re-measured. The change in the fair value of the liability will be recorded as other income (expense) in our consolidated statement of operations and comprehensive loss.
At each reporting period (i) the warrants are reevaluated for proper accounting treatment as a liability or equity and (ii) the fair value of the liability of the warrants is re-measured. The change in the fair value of the liability will be recorded as other income (expense) in our consolidated statement of operations and comprehensive loss.
If we do not continue to win designs in the short term, our product revenue in the following years will not grow. ● To date, we have not achieved the anticipated benefits of a fabless semiconductor company. ● Our main objective is the development and sale of our technologies to service providers, cloud networking, security, test and video system providers and their subsystem and component vendors and, if demand for these products does not grow, we may not achieve revenue growth and our strategic objectives. ● Our failure to continue to develop new products and enhance our products on a timely basis could diminish our ability to attract and retain customers. ● Our products have a lengthy sales cycle, which makes it difficult to predict success in this market and the timing of future revenue. ● The semiconductor industry is cyclical in nature and subject to periodic downturns, which can negatively affect our revenue. ● Our revenue has been highly concentrated among a small number of customers, and our results of operations could be harmed if we lose a key revenue source and fail to replace it. ● Our revenue concentration may also pose credit risks which could negatively affect our cash flow and financial condition. ● Our products must meet exact specifications and defects and failures may occur, which may cause customers to return or stop buying our products. ● Because we sell our products on a purchase order basis and rely on estimated forecasts of our customers’ needs, inaccurate forecasts could adversely affect our business. ● We rely on independent foundries and contractors for the manufacture, assembly, testing and packaging of our integrated circuits and modules, and the failure of any of these third parties to deliver products or otherwise perform as requested could damage our relationships with our customers and harm our sales and financial results. ● Disruptions in our supply chain due to shortages in the global semiconductor supply chain could cause delays for customers and impact revenue. ● Any claim that our products or technology infringe third party IP rights could increase our costs of operation and distract management and could result in expensive settlement costs or the discontinuance of our technology licensing or product offerings.
If we do not continue to win designs in the short term, our product revenue in the following years will not grow. ● To date, we have not achieved the anticipated benefits of a fabless semiconductor company. ● Our main objective is the development and sale of our technologies to OEMS, service providers and other equipment manufacturers and their subsystem and component vendors and, if demand for these products does not grow, we may not achieve revenue growth and our strategic objectives. ● Our failure to continue to develop new products and enhance our products on a timely basis could diminish our ability to attract and retain customers. ● Our products have a lengthy sales cycle, which makes it difficult to predict success in this market and the timing of future revenue. ● The semiconductor industry is cyclical in nature and subject to periodic downturns, which can negatively affect our revenue. ● Our revenue has been highly concentrated among a small number of customers, and our results of operations could be harmed if we lose a key revenue source and fail to replace it. 9 ● Our revenue concentration may also pose credit risks which could negatively affect our cash flow and financial condition. ● Our products must meet exact specifications and defects and failures may occur, which may cause customers to return or stop buying our products. ● Because we sell our products on a purchase order basis and rely on estimated forecasts of our customers’ needs, inaccurate forecasts could adversely affect our business. ● We rely on independent foundries and contractors for the manufacture, assembly, testing and packaging of our integrated circuits and modules, and the failure of any of these third parties to deliver products or otherwise perform as requested could damage our relationships with our customers and harm our sales and financial results. ● Disruptions in our supply chain due to shortages in the global semiconductor supply chain could cause delays for customers and impact revenue. ● Any claim that our products or technology infringe third party IP rights could increase our costs of operation and distract management and could result in expensive settlement costs or the discontinuance of our technology licensing or product offerings.
During the years ended December 31, 2023 and 2022, we recorded inventory write-downs of approximately $3.5 million and $0.4 million, respectively. We have a history of losses, and we will need to raise additional capital.
During the years ended December 31, 2024 and 2023, we recorded inventory write-downs of approximately $0.4 million and $3.5 million, respectively. We have a history of losses, and we will need to raise additional capital.
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. We intend to discontinue the production of our memory products.
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. We discontinued the production of our memory products.
Conversely, if we underestimate customer demand or if sufficient manufacturing and testing capacity are unavailable, we would forego revenue opportunities and could lose market share in the markets served by our products and could incur penalty payments under our customer purchase agreements.
Conversely, if we underestimate customer demand or if sufficient manufacturing and testing capacity are unavailable, we would forego revenue opportunities and could lose market share in the markets served by our products and could incur penalties under our customer purchase agreements.
In addition, the product design cycle for our customers can be lengthy and it may be difficult for us to accurately anticipate when they will commence commercial shipments of products that include our ICs or modules. 17 Furthermore, if we experience substantial warranty claims, our customers may cancel existing orders or cease to place future orders.
In addition, the product design cycle for our customers can be lengthy and it may be difficult for us to accurately anticipate when our customers will commence commercial shipments of products that include our products. Furthermore, if we experience substantial warranty claims, our customers may cancel existing orders or cease to place future orders.
Taiwan Semiconductor Manufacturing Corporation, or TSMC, is the sole foundry that manufactures the wafers used to produce our memory IC products. TSMC has informed us that it will be discontinuing the foundry process used to produce the wafers necessary to produce our memory ICs.
Taiwan Semiconductor Manufacturing Corporation, or TSMC, is the sole foundry that manufactures the wafers used to produce our memory IC products. TSMC informed us that it would be discontinuing the foundry process used to produce the wafers necessary to produce our memory ICs.
For the years ended December 31, 2023 and 2022, our three largest customers represented approximately 75% and 63% of total revenue, respectively. We expect that a relatively small number of customers will continue to account for a substantial portion of our revenue for the foreseeable future.
For the years ended December 31, 2024 and 2023, our three largest customers represented approximately 86% and 75% of our total revenue, respectively. We expect that a relatively small number of customers will continue to account for a substantial portion of our revenue for the foreseeable future.
As discussed under “ We intend to discontinue the production of our memory products ,” TSMC, which is the sole foundry that manufactures the wafers used to produce our memory IC products, has informed us that it will be discontinuing the foundry process used to produce the wafers necessary to produce our memory ICs.
As discussed under “ We discontinued the production of our memory products ,” TSMC, which is the sole foundry that manufactures the wafers used to produce our memory IC products, informed us that it will be discontinuing the foundry process used to produce the wafers necessary to produce our memory ICs.
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.
While our common stock is currently listed on Nasdaq, we can give no assurance that we will be able to maintain compliance with the continued listing requirements of Nasdaq, including, but not limited to, the corporate governance requirements, the minimum closing bid price requirement or the minimum equity requirement.
There may be future sales of our common stock, which could adversely affect the market price of our common stock and dilute a stockholder’s ownership of common stock.
Risks Related to Our Securities There may be future sales of our common stock, which could adversely affect the market price of our common stock and dilute a stockholder’s ownership of common stock.
The reverse stock split alone had no effect on our authorized capital stock, and the total number of authorized shares remains the same as before the reverse stock split.
The reverse stock split effected in January 2024 alone had no effect on our authorized capital stock, and the total number of authorized shares remains the same as before the reverse stock split.
Our consolidated financial statements as of December 31, 2023 have been prepared under the assumption that we will continue as a going concern for the next twelve months. As of December 31, 2023, we had cash and cash equivalents of $1.6 million and an accumulated deficit of $166.0 million.
Our consolidated financial statements as of December 31, 2024 have been prepared under the assumption that we will continue as a going concern for the next twelve months. As of December 31, 2024, we had cash and cash equivalents of $3.3 million and an accumulated deficit of $177.1 million.
Our common stock warrants outstanding at December 31, 2023 are accounted for as a warrant liability and recorded at fair value with changes in fair value each period reported in earnings, which may have an adverse effect on the market price of our common stock.
Certain of our common stock warrants outstanding at December 31, 2024 are accounted for as liabilities and recorded at fair value with changes in fair value each period reported in earnings, which may have an adverse effect on the market price of our common stock.
Although our reverse stock split is prompted by other considerations and not by the threat of any hostile takeover attempt, stockholders should be aware that our reverse stock split could facilitate future efforts by us to deter or prevent changes in control, including transactions in which our stockholders might otherwise receive a premium for their shares over then-current market prices.
Although our reverse stock split is prompted by other considerations and not by the threat of any hostile takeover attempt, stockholders should be aware that our reverse stock split could facilitate future efforts by us to deter or prevent changes in control, including transactions in which our stockholders might otherwise receive a premium for their shares over then-current market prices. 25 Provisions of our certificate of incorporation and bylaws or Delaware law might delay or prevent a change-of-control transaction and depress the market price of our stock.
Our vendors that provide substrates and wafer sorting and handle the testing of our products are headquartered in either Asia or the San Francisco Bay Area of California. The risk of an earthquake in the Pacific Rim region is significant due to the proximity of major earthquake fault lines.
Some of our vendors that provide substrates and wafer sorting and handle the testing of our products are headquartered in Asia. The risk of an earthquake in the Pacific Rim region is significant due to the proximity of major earthquake fault lines.
We incurred net losses of approximately $16.8 million and $32.4 million for the years ended December 31, 2023 and 2022, respectively, and we had an accumulated deficit of approximately $166.4 million as of December 31, 2023. These and prior-year losses have resulted in significant negative cash flows.
We incurred net losses of approximately $10.7 million and $16.8 million for the years ended December 31, 2024 and 2023, respectively, and we had an accumulated deficit of approximately $177.1 million as of December 31, 2024. These and prior-year losses have resulted in significant negative cash flows.
The successful assertion of claims against us that exceed available insurance coverage, or the occurrence of changes in our insurance policies, including premium increases or the imposition of large deductible or co-insurance requirements, could have a material adverse effect on our business, including our financial condition, operating results, and reputation. 21 Acquisitions or other business combinations that we pursue in the future, whether or not consummated, could result in other operating and financial difficulties.
The successful assertion of claims against us that exceed available insurance coverage, or the occurrence of changes in our insurance policies, including premium increases or the imposition of large deductible or co-insurance requirements, could have a material adverse effect on our business, including our financial condition, operating results, and reputation.
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. 12 We may fail to achieve the intended cost savings and related benefits from our reduction in workforce and temporary lay-offs.
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. 12 Our 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.
If we fail to maintain compliance with any such continued listing requirement, there can also be no assurance that we will be able to regain compliance with any such continued listing requirement in the future or that our common stock will not be delisted in the future.
If we fail to maintain compliance with any such continued listing requirement, there can also be no assurance that we will be able to regain compliance with any such continued listing requirement in the future or that our common stock will not be delisted in the future. 26 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.
Our revenue concentration may also pose credit risks which could negatively affect our cash flow and financial condition. We might also face credit risks associated with the concentration of our revenue among a small number of licensees and customers. At December 31, 2023 and 2022, four customers represented approximately 83% and 79% of total trade receivables, respectively.
Our revenue concentration may also pose credit risks which could negatively affect our cash flow and financial condition. We might also face credit risks associated with the concentration of our revenue among a small number of licensees and customers.
Any failure or perceived failure by us or our service providers to prevent information security breaches or other incidents or system disruptions, or any compromise of security that results in or is perceived or reported to result in unauthorized access to, or loss, theft, alteration, release or transfer of, our information, or any personal information, confidential information, or other data could result in loss or theft of proprietary or sensitive data and intellectual property, could harm our reputation and competitive position and could expose us to legal claims, regulatory investigations and proceedings, and fines, penalties, and other liability.
Further, retaliatory acts by foreign governments or terrorist organizations in response to policies of the United States government could include cyber attacks that could disrupt the economy more generally or that could also impact our operations directly or indirectly. 22 Any failure or perceived failure by us or our service providers to prevent information security breaches or other incidents or system disruptions, or any compromise of security that results in or is perceived or reported to result in unauthorized access to, or loss, theft, alteration, release or transfer of, our information, or any personal information, confidential information, or other data could result in loss or theft of proprietary or sensitive data and intellectual property, could harm our reputation and competitive position and could expose us to legal claims, regulatory investigations and proceedings, and fines, penalties, and other liability.
We generally have not entered into employment or non-competition agreements with any of our employees and do not maintain key-man life insurance on the lives of any of our key personnel.
We generally have not entered into employment or non-competition agreements with any of our employees and do not maintain key-man life insurance on the lives of any of our key personnel. We currently maintain and may expand operations outside of the United States, which exposes us to significant risks.
The semiconductor industry is cyclical and has experienced pronounced downturns for sustained periods of up to several years. To respond to any downturn, many semiconductor manufacturers and their customers will slow their research and development activities, cancel or delay new product developments, reduce their workforces and inventories and take a cautious approach to acquiring new equipment and technologies.
To respond to any downturn, many semiconductor manufacturers and their customers will slow their research and development activities, cancel or delay new product developments, reduce their workforces and inventories and take a cautious approach to acquiring new equipment and technologies.
We seek yield improvements and volume-based cost reductions to enable cost reductions. To the extent that such cost reductions do not occur at a sufficient level and in a timely manner, our business, financial condition, and results of operations could be adversely affected and may vary from our estimates.
To the extent that such cost reductions do not occur at a sufficient level and in a timely manner, our business, financial condition, and results of operations could be adversely affected and may vary from our estimates. In addition, we maintain an inventory of our products at various stages of production, as well as an inventory of finished goods.
We market and sell our products and technology to mmWave, cloud networking, communications, data center and other equipment providers and their subsystem and component vendors. We believe our future business and financial success depends on market acceptance and increasing sales of these products.
We market and sell our mmWave products and technology to OEMs, service providers and other equipment manufacturers in the defense and aerospace and consumer product markets and their subsystem and component vendors. We believe our future business and financial success depends on market acceptance and increasing sales of these products.
Our business has been dependent to a significant degree upon the services of a small number of executive officers and technical employees. The loss of key personnel could negatively impact our technology development efforts, our ability to deliver products under our existing agreements, maintain strategic relationships with our partners and obtain new customers.
The loss of key personnel could negatively impact our technology development efforts, our ability to deliver products under our existing agreements, maintain strategic relationships with our partners and obtain new customers.
Summary of Risk Factors The following summarizes the risks and uncertainties that could materially adversely affect our business, financial condition, results of operation and stock price.
Summary of Risk Factors The following summarizes the risks and uncertainties that could materially adversely affect our business, financial condition, results of operation and stock price. You should read this summary together with the more detailed description of each risk factor contained below.
Finding and qualifying alternate or additional suppliers in response to increased pricing from suppliers can be a lengthy process and can lead to production delays or additional costs, and such alternatives are sometimes not available. If we are unable to increase the price of our products to our customers in response to increased costs, we would face reduced margins.
Finding and qualifying alternate or additional suppliers in response to increased pricing from suppliers can be a lengthy process and can lead to production delays or additional costs, and such alternatives are sometimes not available. We may be unable to successfully pass on these costs through price increases.
In addition, our inability to meet customer requirements for our products could lead to delays in product shipments, force customers to identify alternative sources and otherwise adversely affect our ongoing relationships with our customers. We depend on contract manufacturers for a significant portion of our revenue from the sale of our products.
In addition, our inability to meet customer requirements for our products could lead to delays in product shipments, force customers to identify alternative sources, result in certain of our customers obtaining manufacturing rights to our products and otherwise adversely affect our ongoing relationships with our customers.
We are not in a position to transition wafer production to a new foundry and continue to manufacture these products. As a result, we have informed our customers that we have initiated an end-of-life, or EOL, of our memory IC products. We expect to fulfill product EOL orders through at least December 31, 2024.
As we were not in a position to transition wafer production to a new foundry and continue to manufacture these products, we initiated an end-of-life, or EOL, of our memory IC products in 2023, and ceased production of these products in 2024.
Our gross profit may fluctuate due to a variety of factors, which could negatively impact our results of operations and our financial condition.
The discontinuation of the production and sale of our memory IC products will negatively impact our future revenues, results of operations and cash flows. 11 Our gross profit may fluctuate due to a variety of factors, which could negatively impact our results of operations and our financial condition.
To meet our growth and strategic objectives, networking infrastructure OEMs must incorporate our products into their systems and the demand for their systems must grow as well. We cannot provide assurance that sales of our products to these OEMs will increase substantially in the future or that the demand for our customers’ systems will increase.
We cannot provide assurance that sales of our products to these customers will increase substantially in the future or that the demand for our customers’ or their customers’ systems will increase.
Sustained inflation could have a material adverse effect on our business, financial condition, results of operations and liquidity. Inflation rates in the markets in which we operate have increased and may continue to rise. Inflation over the last several months has led us to experience higher costs, including, among others, labor, wafer and transportation.
Inflation rates in the markets in which we operate have increased and may continue to rise. Inflation over the last two years has led us to experience higher costs, including, among others, labor, wafer and transportation.
If we experience significant delays in bringing our products to market, if customer adoption of our products is delayed or if our customers’ products that include our products are not successful, this could have a material adverse effect on our anticipated revenues in upcoming years due to the potential loss of design wins and future revenues. 15 Our main objective is the development and sale of our technologies to service providers, cloud networking, security, test and video system providers and their subsystem and component vendors and, if demand for these products does not grow, we may not achieve revenue growth and our strategic objectives.
If we experience significant delays in bringing our products to market, if customer adoption of our products is delayed or if our customers’ products that include our products are not successful, this could have a material adverse effect on our anticipated revenues in upcoming years due to the potential loss of design wins and future revenues.
To the extent we may offer or be contractually obligated to offer certain customers favorable prices, it would decrease our average selling prices and likely impact our gross profit.
To the extent we may offer or be contractually obligated to offer certain customers favorable prices, it would decrease our average selling prices and likely impact our gross profit. In the possible event our customers, including our larger customers, exert more pressure with respect to pricing and other terms, it could put downward pressure on our profit.
You should read this summary together with the more detailed description of each risk factor contained below. ● We intend to discontinue the production of our memory products. ● We have a history of losses, and we will need to raise additional capital. ● Our failure to generate the significant capital necessary or raise additional capital to expand our operations and invest in new products could reduce our ability to compete and could harm our business. ● We may fail to achieve the intended cost savings and related benefits from our reduction in workforce and temporary lay-offs. ● Our failure to successfully market our products could seriously harm our ability to execute our business strategy and may force us to curtail our research and development plans or existing operations. 9 ● Future revenue growth depends on our winning designs with existing and new customers, retaining current customers, and having those customers design our solutions into their product offerings and successfully selling and marketing such products.
Risks Related to Our Business, Operations and Industry ● We might not be able to continue as a going concern. ● We discontinued the production of our memory products. ● We have a history of losses, and we will need to raise additional capital. ● Our failure to generate the significant capital necessary or raise additional capital to expand our operations and invest in new products could reduce our ability to compete and could harm our business. ● Our 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. ● Our failure to successfully market our products could seriously harm our ability to execute our business strategy and may force us to curtail our research and development plans or existing operations. ● Future revenue growth depends on our winning designs with existing and new customers, retaining current customers, and having those customers design our solutions into their product offerings and successfully selling and marketing such products.
The delays inherent in our protracted sales cycle increase the risk that a customer will decide to cancel, curtail, reduce or delay its product plans, causing us to lose anticipated revenue. In addition, any change, delay or cancellation of a customer’s plans could harm our financial results, as we may have incurred significant expense while generating no revenue.
The delays inherent in our protracted sales cycle increase the risk that a customer will decide to cancel, curtail, reduce or delay its product plans, causing us to lose anticipated revenue.
Certain of these provisions eliminate cumulative voting in the election of directors, limit the right of stockholders to call special meetings and establish specific procedures for director nominations by stockholders and the submission of other proposals for consideration at stockholder meetings. 24 We are also subject to provisions of Delaware law which could delay or make more difficult a merger, tender offer or proxy contest involving our company.
Certain of these provisions eliminate cumulative voting in the election of directors, limit the right of stockholders to call special meetings and establish specific procedures for director nominations by stockholders and the submission of other proposals for consideration at stockholder meetings.
Litigation by us could result in significant expense and divert the efforts of our technical and management personnel whether or not such litigation results in a determination favorable to us. 19 Our existing patents might not provide us with sufficient protection of our IP, and our patent applications might not result in the issuance of patents, either of which could reduce the value of our core technology and harm our business.
Litigation by us could result in significant expense and divert the efforts of our technical and management personnel whether or not such litigation results in a determination favorable to us.
We may not be able to obtain alternate capacity on favorable terms, if at all. 18 Global pandemics, such as the COVID-19 pandemic, which was declared a pandemic by the World Health Organization and a national emergency by the U.S. government in March 2020, along with outbreaks of new contagious diseases or the resurgence of existing diseases that significantly affect the Asia-Pacific region could disrupt the operations of our key suppliers and manufacturing partners.
We may not be able to obtain alternate capacity on favorable terms, if at all. Global pandemics along with outbreaks of new contagious diseases or the resurgence of existing diseases could disrupt the operations of our key suppliers and manufacturing partners worldwide.
In the possible event our customers, including our larger customers, exert more pressure with respect to pricing and other terms, it could put downward pressure on our profit. 11 Because we do not operate our own wafer fabrication, assembly, or testing facilities, we may not be able to reduce our costs as rapidly as companies that operate their own facilities, and in fact, our costs may even increase, which could further reduce our gross profit.
Because we do not operate our own wafer fabrication, assembly, or testing facilities, we may not be able to reduce our costs as rapidly as companies that operate their own facilities, and in fact, our costs may even increase, which could further reduce our gross profit. We seek yield improvements and volume-based cost reductions to enable cost reductions.
Our third-party wafer foundry and testing and assembly vendors are located in regions at high risk for earthquakes and other natural disasters and adverse consequences related to the outbreak of contagious diseases, such as COVID-19.
Any problems with our manufacturing supply chain could adversely impact our ability to ship our products to our customers on time and in the quantity required which in turn could damage our customer relationships and impede market acceptance of our IC products. 18 Our third-party wafer foundry and testing and assembly vendors are located in regions at high risk for earthquakes and other natural disasters and adverse consequences related to the outbreak of contagious diseases, such as COVID-19.
In addition, we maintain an inventory of our products at various stages of production, as well as an inventory of finished goods. As we are generally a sole-source supplier, we hold these inventories in anticipation of customer orders.
As we are generally a sole-source supplier, we hold these inventories in anticipation of customer orders.
Geopolitical issues around the world can impact macroeconomic conditions and could have a material adverse impact on our business. For instance, world unrest due to wars, terrorist attacks and other disruptive events, such as the COVID-19 pandemic, have led to global economic disruptions, and mounting inflationary cost pressures and recessionary fears have negatively impacted the global and domestic economy.
For instance, world unrest due to wars, terrorist attacks and other disruptive events, such as the COVID-19 pandemic, have led to global economic disruptions, and mounting inflationary cost pressures and recessionary fears have negatively impacted the global and domestic economy. Since mid-2022, the U.S. Federal Reserve has addressed elevated inflation by periodically increasing interest rates.
If our foundries do not achieve satisfactory yields or quality, our cost of net revenue will increase, our operating margins will decline and our reputation and customer relationships could be harmed.
In addition, any change, delay or cancellation of a customer’s plans could harm our financial results, as we may have incurred significant expense while generating no revenue. 14 If our foundries do not achieve satisfactory yields or quality, our cost of net revenue will increase, our operating margins will decline and our reputation and customer relationships could be harmed.
Decreased disclosures in our SEC filings due to our status as a “smaller reporting company” may make it harder for investors to analyze our operating results and financial prospects. War, terrorism, other acts of violence, natural disasters and global pandemics, such as the COVID-19 pandemic and associated macroeconomic pressures in the markets in could adversely impact our business.
Decreased disclosures in our SEC filings due to our status as a “smaller reporting company” may make it harder for investors to analyze our operating results and financial prospects.
These negotiations could result in significant diversion of management time, as well as substantial out-of-pocket costs, any of which could have a material adverse effect on our business, operating results and financial condition. 22 Holders of exchangeable shares are expected to experience a delay in receiving shares of our common stock from the date they request an exchange, which may affect the value of the shares the holder receives in an exchange.
From time to time, we may enter into negotiations for acquisitions or investments that are not ultimately consummated. These negotiations could result in significant diversion of management time, as well as substantial out-of-pocket costs, any of which could have a material adverse effect on our business, operating results and financial condition.
We cannot provide any assurances that our efforts to build a strong and profitable business based on the sale of ICs will succeed.
We cannot provide any assurances that our efforts to build a strong and profitable business based on the sale of ICs will succeed. If these efforts are not successful, in light of the substantial resources that we have invested, our future operating results and cash flows could be materially and adversely affected.
If such claims are successful and not mitigated by employment practices insurance coverage, our required payments may be higher than we have initially estimated.
Recently, the Company has received and, may in the future receive, claims made on behalf of employees, whom were part of the Reductions, regarding statutory and common law severance payments. If such claims are successful and not mitigated by employment practices insurance coverage, our required payments may be higher than we have initially estimated.
Since mid-2022, the U.S. Federal Reserve has addressed elevated inflation by periodically increasing interest rates. Given current market conditions, we may be unable to access the capital markets, and additional capital may only be available to us on terms that could be significantly detrimental to our existing stockholders and to our business.
Given current market conditions, we may be unable to access the capital markets, and additional capital may only be available to us on terms that could be significantly detrimental to our existing stockholders and to our business. Sustained inflation could have a material adverse effect on our business, financial condition, results of operations and liquidity.
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 believe that our existing cash and cash equivalents will enable us to meet our capital needs through at least the second 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 are subject to various employment-related laws in the jurisdictions in which our employees are based. We face risks if we fail to comply with applicable U.S. federal or state employment and wage laws, or employment wage laws applicable to our employees located in Canada. In November 2023, we initiated a temporary lay-off in Canada of 16 positions.
We face risks if we fail to comply with applicable U.S. federal or state employment and wage laws, or employment wage laws applicable to our employees located in Canada. The Reductions create an additional risk of claims being made on behalf of affected employees.
Our memory IC products represented over 50% of our revenues for the year ended December 31, 2022 and over 60% of our revenues for the year ended December 31, 2023. The discontinuation of the production and sale of our memory IC products will negatively impact our future revenues, results of operations and cash flows.
For the years ended December 31, 2024 and 2023, our memory IC products represented over 85% and 60% of our revenues, respectively.
We rely on a combination of patents, trademarks, trade secret laws and confidentiality procedures to protect our IP rights.
Our existing patents might not provide us with sufficient protection of our IP, and our patent applications might not result in the issuance of patents, either of which could reduce the value of our core technology and harm our business. We rely on a combination of patents, trademarks, trade secret laws and confidentiality procedures to protect our IP rights.
Our ability to utilize our net operating loss carryforwards is limited as a result of an “ownership change,” as defined in Section 382 of the Internal Revenue Code of 1986, as amended. As of December 31, 2023, we had approximately $212.7 million of net operating loss, or NOL, carryforwards for U.S. federal tax purposes.
Any of the above factors could impact our supply chain, as well as our operations and business, and adversely affect our results of operations and financial condition. 21 Our ability to utilize our net operating loss carryforwards is limited as a result of an “ownership change,” as defined in Section 382 of the Internal Revenue Code of 1986, as amended.
Failure of our patents or patent applications to provide meaningful protection might allow others to utilize our technology without any compensation to us. If our intangible assets become impaired, we would be required to record a charge to earnings.
Failure of our patents or patent applications to provide meaningful protection might allow others to utilize our technology without any compensation to us. If we fail to retain key personnel, our business and growth could be negatively affected. Our business has been dependent to a significant degree upon the services of a small number of executive officers and technical employees.
Any failure to achieve the expected benefits from the reduction in workforce and any charges we incur if we do not recall the impacted Canadian employees could adversely affect our stock price, financial condition and ability to achieve our goals. Failure to comply with laws relating to employment could subject us to penalties and other adverse consequences.
Failure to comply with laws relating to employment could subject us to penalties and other adverse consequences. We are subject to various employment-related laws in the jurisdictions in which our employees are based.
If these efforts are not successful, in light of the substantial resources that we have invested, our future operating results and cash flows could be materially and adversely affected. 16 The semiconductor industry is cyclical in nature and subject to periodic downturns, which can negatively affect our revenue.
The semiconductor industry is cyclical in nature and subject to periodic downturns, which can negatively affect our revenue. The semiconductor industry is cyclical and has experienced pronounced downturns for sustained periods of up to several years.
Removed
In February 2024, we completed a public offering of our common stock and warrants for net proceeds of approximately $3.4 million. We believe that the net proceeds that we received from our February 2024 offering, together with our existing cash and cash equivalents, will enable us to meet our capital needs through at least the fourth quarter of 2024.
Added
In addition, we may incur substantial litigation expense which would adversely affect our profitability. ● The discovery of defects in our technology and products could expose us to liability for damages. ● We might not be able to protect and enforce our IP rights, which could impair our ability to compete and reduce the value of our technology. ● We currently maintain and may expand operations outside of the United States, which exposes us to significant risks. ● International trade policies, including protectionist trade policies, such as tariffs and sanctions, could adversely affect our business, results of operations and financial condition. ● Third parties might attempt to gain unauthorized access to our network or seek to compromise our products and services.
Removed
In February 2023, we implemented a reduction in our workforce and eliminated five positions to help us achieve a more cost-efficient organization.
Added
As of December 31, 2024, we had remaining EOL purchase orders from customers totaling approximately $2.3 million, and we expect to ship all of these orders by March 2025. We do not expect any further shipments or to generate any meaningful revenue from shipments of our memory IC products after March 2025.
Removed
In November 2023, we further reduced our workforce by eliminating three full-time equivalent positions, which included one employee and two consultants, and we initiated a temporary lay-off in Canada of 16 positions, all intended to preserve cash while keeping capital expenditures to minimum levels in order to reduce operating costs and our short-term cash needs.
Added
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.
… 52 more changes not shown on this page.
Item 1C. Cybersecurity
Cybersecurity — threats and controls disclosure
7 edited+2 added−0 removed7 unchanged
Item 1C. Cybersecurity
Cybersecurity — threats and controls disclosure
7 edited+2 added−0 removed7 unchanged
2023 filing
2024 filing
Biggest changePersonnel at all levels and departments are made aware of our cybersecurity policies through internal communications, training and annual policy updates, and are requested to promptly report any suspected breach of our information systems to management.
Biggest changePersonnel at all levels and departments are made aware of our cybersecurity policies through internal communications, training and annual policy updates, and are requested to promptly report any suspected breach of our information systems to management. Additionally, we have implemented annual security training for all employees and staff, which includes targeting the recognition of phishing campaigns.
For additional information regarding whether any risks from cybersecurity threats, including as a result of any previous cybersecurity incidents, have materially affected or are reasonably likely to materially affect us, including our business strategy, results of operations, or financial condition, please refer to Item 1A, “Risk Factors,” in this Report on Form 10-K, including the risk factors entitled “Third parties might attempt to gain unauthorized access to our network or seek to compromise our products and services.” Governance A role of our board of directors is informed oversight of our risk management process, including risks from cybersecurity threats.
For additional information regarding whether any risks from cybersecurity threats, including as a result of any previous cybersecurity incidents, have materially affected or are reasonably likely to materially affect us, including our business strategy, results of operations, or financial condition, please refer to Item 1A, “Risk Factors,” in this Report on Form 10-K, including the risk factors entitled “Third parties might attempt to gain unauthorized access to our network or seek to compromise our products and services.” 28 Governance A role of our board of directors is informed oversight of our risk management process, including risks from cybersecurity threats.
Following these risk assessments, we will evaluate whether and how to re-design, implement, and maintain reasonable safeguards to minimize identified risks; evaluate how to reasonably address any identified gaps in existing safeguards; and regularly monitor the effectiveness of our safeguards.
Following these risk assessments, we evaluate whether and how to re-design, implement, and maintain reasonable safeguards to minimize identified risks; evaluate how to reasonably address any identified gaps in existing safeguards; and regularly monitor the effectiveness of our safeguards.
The Chief Executive Officer and Chief Financial Officer work with our incident response team in an effort to help the Company mitigate and remediate cybersecurity incidents of which they are notified. In addition, the Company’s management and its designees report to the board of directors for certain cybersecurity incidents.
The Chief Executive Officer and Chief Financial Officer work with our incident response team to help the Company mitigate and remediate cybersecurity incidents of which they are notified. In addition, the Company’s management and its designees report to the board of directors for certain cybersecurity incidents.
We also plan to conduct programmatic risk assessments including identification of reasonably foreseeable internal and external risks, the likelihood and potential damage that could result from such risks, and the sufficiency of existing policies, procedures, systems, and safeguards in place to manage such risks.
We conduct programmatic risk assessments, including identification of reasonably foreseeable internal and external risks, the likelihood and potential damage that could result from such risks, and the sufficiency of existing policies, procedures, systems, and safeguards in place to manage such risks.
Our Manager of Information Technology, who has over 20 years of information technology experience, and our Chief Operating Officer, who has over 10 years of information technology management experience, manage the risk assessment and mitigation process.
Our Manager of Information Technology, who has over 25 years of information technology experience, and our Chief Operating Officer, who has over 15 years of information technology management experience, manage the risk assessment and mitigation process.
Our board of directors will receive periodic reports from management and its designees concerning our significant cybersecurity threats and risks, and the processes we plan to implement and/or have implemented in an effort to address them. 26
Our board of directors receives periodic reports from management and its designees concerning our significant cybersecurity threats and risks, and the processes we plan to implement and/or have implemented to address them.
Added
We continually review and update our processes to safeguard our information systems. This includes the deployment of advanced security measures and regular audits. We have implemented multi-factor authentication (MFA) for email and cloud services and implement controls for incoming email to mitigate various cyber-attacks, including phishing attacks, malware, viruses and other security breaches.
Added
Additionally, we review and revise, as necessary, our incident response and disaster recovery policies on an annual basis.
Item 2. Properties
Properties — owned and leased real estate
1 edited+0 added−1 removed0 unchanged
Item 2. Properties
Properties — owned and leased real estate
1 edited+0 added−1 removed0 unchanged
2023 filing
2024 filing
Biggest changeItem 2. Properties. We currently maintain leased facilities for our administrative, sales, marketing, support and research and development functions. We believe that our existing facilities are adequate to meet our current needs. The table below summarizes our leased facilities.
Biggest changeItem 2. Properties. We currently maintain leased facilities for our administrative, sales, marketing, support and research and development functions. We believe that our existing facilities are adequate to meet our current needs. The table below summarizes our leased facilities. Location Square Footage (approximate) Lease Expiration Markham, Ontario, Canada 9,500 September 2027 Toronto, Ontario, Canada 6,535 December 2024
Removed
Location Square Footage (approximate) Lease Expiration Markham, Ontario, Canada 9,500 September 2027 Toronto, Ontario, Canada 12,700 December 2024 San Jose, California 10,000 January 2025
Item 5. Market for Registrant's Common Equity
Market for Common Equity — stock, dividends, buybacks
2 edited+3 added−0 removed2 unchanged
Item 5. Market for Registrant's Common Equity
Market for Common Equity — stock, dividends, buybacks
2 edited+3 added−0 removed2 unchanged
2023 filing
2024 filing
Biggest changeSecurities Authorized for Issuance under Equity Compensation Plan For information regarding securities authorized for issuance under equity compensation plans, please refer to Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters. Item 6. [Reserved]
Biggest changeAny future determination as to the payment of cash dividends on our common stock will be at the discretion of our board of directors. Securities Authorized for Issuance under Equity Compensation Plan For information regarding securities authorized for issuance under equity compensation plans, please refer to Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters.
Market Information for Common Stock Our common stock is currently listed on the Nasdaq Stock Market under the symbol “PRSO.” Holders of Record As of December 31, 2023, there were 67 holders of record of our common stock and 58 holders of record of our exchangeable shares.
Market Information for Common Stock Our common stock is currently listed on the Nasdaq Stock Market under the symbol “PRSO.” Holders of Record As of December 31, 2024, there were 83 holders of record of our common stock and 50 holders of record of our exchangeable shares.
Added
Dividend Policy To date, we have paid no cash dividends on our shares of common stock and we do not expect to pay cash dividends on our common stock in the foreseeable future. We intend to retain future earnings, if any, to provide funds for operations of our business.
Added
Therefore, any potential return investors may have in our common stock will be in the form of appreciation, if any, in the market value of their shares of common stock. We are not subject to any legal restrictions respecting the payment of dividends, except that we may not pay dividends if the payment would render us insolvent.
Added
Purchases of Equity Securities by the Issuer and Affiliated Purchasers We had no share repurchase activity for the three months ended December 31, 2024. Recent Sale of Unregistered Securities and Use of Proceeds None.
Item 7. Management's Discussion & Analysis
Management's Discussion & Analysis (MD&A) — revenue / margin commentary
45 edited+33 added−51 removed32 unchanged
Item 7. Management's Discussion & Analysis
Management's Discussion & Analysis (MD&A) — revenue / margin commentary
45 edited+33 added−51 removed32 unchanged
2023 filing
2024 filing
Biggest changeThe expected volatility is based on the historical volatility of our stock price. 34 Results of Operations Net Revenue Years Ended December 31, Year-Over-Year Change 2023 2022 2022 to 2023 (dollar amounts in thousands) Product $ 12,853 $ 14,199 $ (1,346 ) (9 )% Percentage of total net revenue 93 % 96 % The following table details revenue by product category: (amounts in thousands) Years Ended December 31, Year-Over-Year Product category 2023 2022 change Memory ICs $ 8,446 $ 7,722 724 mmWave ICs 2,726 3,289 (563 ) mmWave modules 1,677 3,170 (1,493 ) mmWave other products 4 18 (14 ) $ 12,853 $ 14,199 $ (1,346 ) Product revenue decreased for the year ended December 31, 2023 compared with the same period of 2022 primarily due to the decrease in shipments of our mmWave ICs and antenna modules, which was partially offset by increases in EOL shipments of our memory IC products.
Biggest changeResults of Operations Net Revenue Years Ended December 31, Year-Over-Year Change 2024 2023 2023 to 2024 (dollar amounts in thousands) Product $ 14,248 $ 12,853 $ 1,395 11 % Percentage of total net revenue 98 % 93 % 35 The following table details revenue by product category: (amounts in thousands) Years Ended December 31, Year-Over-Year Product category 2024 2023 change Memory ICs $ 12,914 $ 8,446 4,468 mmWave ICs 302 2,726 (2,424 ) mmWave modules 1,007 1,677 (670 ) mmWave other products 25 4 21 $ 14,248 $ 12,853 $ 1,395 Product revenue increased for 2024 compared with 2023 primarily due to the increase in shipments of our memory IC products due to the EOL we initiated in 2023.
In 2023, we used $4.7 million in cash from operating activities, which primarily resulted from our net loss of $16.8 million and changes to operating assets and liabilities of approximately $2.8 million, adjusted for non-cash charges and gains, including stock-based compensation expenses of $5.2 million, and depreciation and amortization expenses of $3.8 million, $3.6 million in inventory write-downs and $0.3 million of asset impairment charges, partially offset by a $3.5 million non-cash gain on the change in fair value of warrant liability and $0.1 million of other changes.
In 2023, we used $4.7 million in cash from operating activities, which primarily resulted from our net loss of $16.8 million and changes to operating assets and liabilities of approximately $2.8 million, adjusted for non-cash charges and gains, including stock-based compensation expenses of $5.2 million, depreciation and amortization expenses of $3.8 million, $3.6 million in inventory write-downs and $0.3 million of asset impairment charges, partially offset by a $3.5 million non-cash gain on the change in fair value of warrant liability and $0.1 million of other changes.
On December 17, 2021, following the satisfaction of the closing conditions set forth in the Arrangement Agreement, the Arrangement was completed and we changed our name to “Peraso Inc.” and began trading on the Nasdaq Stock Market (the “Nasdaq”) under the symbol “PRSO.” 28 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.
On December 17, 2021, following the satisfaction of the closing conditions set forth in the Arrangement Agreement, the Arrangement was completed and we changed our name to “Peraso Inc.” and began trading on the Nasdaq Stock Market (the “Nasdaq”) under the symbol “PRSO.” 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 may record an estimated allowance, at the time of shipment, for future returns and other charges against revenue consistent with the terms of sale. 32 Royalty and other Our licensing contracts typically provide for royalties based on the licensee’s use of our memory technology in its currently shipping commercial products.
We may record an estimated allowance, at the time of shipment, for future returns and other charges against revenue consistent with the terms of sale. Royalty and other Our licensing contracts typically provide for royalties based on the licensee’s use of our memory technology in its currently shipping commercial products.
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 acquired a memory product line comprising our Bandwidth Engine IC products.
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.
Actual results may differ from these estimates and reported results could differ under different assumptions or conditions. Our significant accounting policies and estimates are disclosed in Note 1 of the “Notes to Consolidated Financial Statements” as of and for the years ended December 31, 2023 and 2022 included elsewhere in this Report.
Actual results may differ from these estimates and reported results could differ under different assumptions or conditions. Our significant accounting policies and estimates are disclosed in Note 1 of the “Notes to Consolidated Financial Statements” as of and for the years ended December 31, 2024 and 2023 included elsewhere in this Report.
These variables include, but are not limited to, the expected stock price volatility over the term of the awards, and actual and projected employee stock option exercise behaviors. The expected term of options granted is derived from historical data on employee exercises and post-vesting employment termination behavior.
These variables include, but are not limited to, the expected stock price volatility over the term of the awards, and actual and projected employee stock option exercise behaviors. The expected term of options granted is derived from historical data on employee exercises and post-vesting employment termination behavior. The expected volatility is based on the historical volatility of our stock price.
See Note 4 to the consolidated financial statements in Item 15 of this report for an additional description of these limitations.
See Note 8 to the consolidated financial statements in Item 15 of this report for an additional description of these limitations.
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.
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.
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.
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. 33 Product revenue Revenue is recognized when performance obligations under the terms of a contract with a customer are satisfied.
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 operational challenges of delivering mmWave products into high-volume markets. We also produce and sell complete mmWave antenna modules.
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.
Liquidity and Capital Resources; Changes in Financial Condition At December 31, 2023, we had cash and cash equivalents totaling $1.6 million compared with cash, cash equivalents and investments of $2.9 million as of December 31, 2022.
Liquidity and Capital Resources; Changes in Financial Condition At December 31, 2024, we had cash and cash equivalents totaling $3.3 million compared with cash, cash equivalents and investments of $1.6 million as of December 31, 2023.
We incurred net losses of approximately $16.8 million and $32.4 million for the years ended December 31, 2023 and 2022, respectively, and we had an accumulated deficit of approximately $166.4 million as of December 31, 2023. These and prior year losses have resulted in significant negative cash flows and historically have required us to raise substantial amounts of additional capital.
We incurred net losses of approximately $10.7 million and $16.8 million for the years ended December 31, 2024 and 2023, respectively, and we had an accumulated deficit of approximately $177.1 million as of December 31, 2024. These and prior year losses have resulted in significant negative cash flows and historically have required us to raise substantial amounts of additional capital.
TSMC has informed us that it would be discontinuing the foundry process used to produce wafers, in turn, necessary to manufacture our memory ICs. As a result, in May 2023, we initiated an end-of-life, or EOL, of our memory IC products.
TSMC informed us that it would be discontinuing the foundry process used to produce wafers, in turn, necessary to manufacture our memory ICs. As a result, in May 2023, we initiated an end-of-life, or EOL, of our memory IC products, and we commenced initial EOL shipments during the quarter ended September 30, 2023.
Years Ended December 31, Year-Over-Year Change 2023 2022 2022 to 2023 (dollar amounts in thousands) Royalty and other $ 896 $ 669 $ 227 34 % Percentage of total net revenue 7 % 4 % Royalty and other includes royalty, non-recurring engineering services and license revenues.
Years Ended December 31, Year-Over-Year Change 2024 2023 2023 to 2024 (dollar amounts in thousands) Royalty and other $ 325 $ 896 $ (571 ) (64 )% Percentage of total net revenue 2 % 7 % Royalty and other revenue includes royalty, non-recurring engineering services and license revenues.
Going Concern - Working Capital We incurred net losses of approximately $16.8 million and $32.4 million for the years ended December 31, 2023 and 2022, respectively, and we had an accumulated deficit of approximately $166.4 million as of December 31, 2023.
Going Concern - Working Capital We incurred net losses of approximately $10.7 million and $16.8 million for the years ended December 31, 2024 and 2023, respectively, and we had an accumulated deficit of approximately $177.1 million as of December 31, 2024.
Product revenue Revenue is recognized when performance obligations under the terms of a contract with a customer are satisfied. The majority of our contracts have a single performance obligation to transfer products. Accordingly, we recognize revenue when title and risk of loss have been transferred to the customer, generally at the time of shipment of products.
The majority of our contracts have a single performance obligation to transfer products. Accordingly, we recognize revenue when title and risk of loss have been transferred to the customer, generally at the time of shipment of products.
We expect to continue to incur operating losses during 2024, as we continue to secure new customers for and continue to invest in the development of our products.
We expect to continue to incur operating losses during 2025, as we will cease shipments of our memory products after March 2025 and continue to secure new customers for and continue to invest in the development of our products.
In 2022, net cash provided by financing activities was $1.9 million and consisted of $2.1 million in net proceeds from a registered direct offering of our common stock and common stock purchase warrants completed in November 2022, partially offset by $0.1 million of taxes paid to net share settle equity awards and $0.1 million of repayment of finance lease. 37 Our future liquidity and capital requirements are expected to vary from quarter-to-quarter, depending on numerous factors, including: ● level of revenue; ● cost, timing and success of technology development efforts; ● inventory levels, as supply chain disruption has required us to maintain higher inventory levels and place purchase orders with our suppliers longer into the future, which exposes us to additional inventory risk; ● timing of product shipments, which may be impacted by supply chain disruptions; ● length of billing and collection cycles, which may be impacted in the event of a global recession or economic downturn; ● fabrication costs, including mask costs, of our ICs, currently under development; ● variations in manufacturing yields, material lead time and costs and other manufacturing risks; ● costs of acquiring other businesses and integrating the acquired operations; and ● profitability of our business.
Our future liquidity and capital requirements are expected to vary from quarter-to-quarter, depending on numerous factors, including: ● level of revenue; ● cost, timing and success of technology development efforts; ● inventory levels, as supply chain disruption has required us to maintain higher inventory levels and place purchase orders with our suppliers longer into the future, which exposes us to additional inventory risk; ● timing of product shipments, which may be impacted by supply chain disruptions; ● length of billing and collection cycles, which may be impacted in the event of a global recession or economic downturn; ● fabrication costs, including mask costs, of any new ICs that we develop; ● 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 The Company’s primary purchase obligations include non-cancelable purchase orders for inventory and computer-aided-design (CAD) software. At December 31, 2023, the Company had outstanding non-cancelable purchase orders for inventory, primarily wafers and substrates, and related expenditures of approximately $2.3 million and non-cancelable purchase orders for CAD software of $3.1 million over 24 months.
Purchase Obligations Our primary purchase obligations include non-cancelable purchase orders for inventory. At December 31, 2024, the Company had outstanding non-cancelable purchase orders for inventory, primarily wafers and substrates, and related expenditures of approximately $3.1 million.
These differences result in deferred tax assets, which we show on our consolidated balance sheet under the category of other assets. The net deferred tax assets are reduced by a valuation allowance if, based upon weighted available evidence, it is more likely than not that some or all of the deferred tax assets will not be realized.
The net deferred tax assets are reduced by a valuation allowance if, based upon weighted available evidence, it is more likely than not that some or all of the deferred tax assets will not be realized.
The changes in assets and liabilities primarily related to the timing of the collection of receivables from customers, payments to vendors and increases in inventory balances.
The changes in assets and liabilities primarily related to the timing of the collection of receivables from customers, payments to vendors and increases in inventory balances. In 2024, no cash was provided by or used in investing activities.
We expect that total R&D expenses will decrease during 2024 compared with 2023, as a result of our cost reduction initiatives initiated during 2022 and 2023. 36 Selling, General and Administrative (SG&A) Years Ended December 31, Year-Over-Year Change 2023 2022 2022 to 2023 (dollar amounts in thousands) SG&A $ 8,505 $ 11,108 $ (2,603 ) (23 )% Percentage of total net revenue 62 % 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.
Selling, General and Administrative (SG&A) Years Ended December 31, Year-Over-Year Change 2024 2023 2023 to 2024 (dollar amounts in thousands) SG&A $ 8,673 $ 8,505 $ 168 2 % Percentage of total net revenue 60 % 62 % 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.
Contract liabilities - deferred revenue Our contract liabilities consist of advance customer payments and deferred revenue. We classify advance customer payments and deferred revenue as current or non-current based on the timing of when we expect to recognize revenue. As of December 31, 2023 and 2022, contract liabilities were in a current position and included in deferred revenue.
We classify advance customer payments and deferred revenue as current or non-current based on the timing of when we expect to recognize revenue.
The increase in royalty and other revenue for the year ended December 31, 2023 compared with the same period of 2022 was due to an increase in non-recurring engineering services revenue related to our mmWave technology combined with a modest increase in royalties from licensees of our memory technology.
The decrease in royalty and other revenue for 2024 compared with 2023 was due to a decrease in non-recurring engineering services revenue related to our mmWave technology combined with a decrease in royalties from licensees of our memory technology, which were impacted by the same factors that produced our EOL.
In 2022, we used $16.0 million in cash from operating activities, which primarily resulted from the net loss of $32.4 million and changes to operating assets and liabilities of approximately $2.4 million, adjusted for non-cash charges and gains, including stock-based compensation expenses of $5.7 million, depreciation and amortization expenses of $3.1 million, a $9.9 million goodwill impairment charge and $0.1 million of other changes.
In 2024, we used $4.6 million in cash from operating activities, which primarily resulted from our net loss of $10.7 million, adjusted for non-cash charges and gains, including stock-based compensation expenses of $3.6 million, depreciation and amortization expenses of $3.9 million and $0.4 million in inventory write-downs, partially offset by a $1.7 million non-cash gain on the change in fair value of warrant liabilities and $0.1 million of changes to operating assets and liabilities.
Years Ended December 31, Year-Over-Year Change 2023 2022 2022 to 2023 (dollar amounts in thousands) Gross profit $ 1,872 $ 5,953 $ (4,081 ) (69 )% Percentage of total net revenue 14 % 40 % Gross profit decreased for the year ended December 31, 2023 compared with the same period in 2022 due to inventory write-down charges and decreased mmWave product shipments, partially offset by increases in memory IC product shipments.
Years Ended December 31, Year-Over-Year Change 2024 2023 2023 to 2024 (dollar amounts in thousands) Gross profit $ 7,533 $ 1,872 $ 5,661 302 % Percentage of total net revenue 52 % 14 % Gross profit increased for 2024 compared with 2023 primarily due to product mix, specifically the increase in memory IC shipments and reduction in mmWave product shipments combined with a $3.1 million decrease in inventory write-down charges in 2024 compared with 2023.
The inventory write-down charges recorded during 2023 totaled approximately $3.5 million and comprised approximately $0.5 million related to memory IC product inventory and $3.0 million related to mmWave product inventory. The write-downs were primarily attributable to inventory identified as excess and obsolete based on inventory expiration and customer purchase orders received to date and current customer forecasts.
Inventory write-down charges declined by $3.1 million from $3.5 million recorded in 2023 to $0.4 million recorded in 2024. The write-downs were primarily attributable to inventory identified as excess and obsolete based on inventory expiration and customer forecasts.
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. 38 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.
We believe that our existing cash and cash equivalents as of December 31, 2024 will enable us to meet our capital needs through at least the second quarter of 2025. 39 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.
Critical Accounting Policies and Estimates The discussion and analysis of our financial condition and results of operations are based upon our consolidated financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States (GAAP).
Market conditions may prevent us from accessing 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. 32 Critical Accounting Policies and Estimates The discussion and analysis of our financial condition and results of operations are based upon our consolidated financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States (“GAAP”).
Deferred tax valuation allowance When we prepare our consolidated financial statements, we estimate our income tax liability for each of the various jurisdictions where we conduct business. This requires us to estimate our actual current tax exposure and to assess temporary differences that result from differing treatment of certain items for tax and accounting purposes.
This requires us to estimate our actual current tax exposure and to assess temporary differences that result from differing treatment of certain items for tax and accounting purposes. These differences result in deferred tax assets, which we show on our consolidated balance sheet under the category of other assets.
Research and Development (R&D) Years Ended December 31, Year-Over-Year Change 2023 2022 2022 to 2023 (dollar amounts in thousands) Research and development $ 14,398 $ 19,768 $ (5,370 ) (27 )% Percentage of total net revenue 105 % 133 % Our R&D expenses include costs related to the development of our products. We expense R&D costs as they are incurred.
During the year ended December 31, 2024, we recorded revenue of approximately $139,000 from inventory that had been written down in prior periods. 36 Research and Development (R&D) Years Ended December 31, Year-Over-Year Change 2024 2023 2023 to 2024 (dollar amounts in thousands) Research and development $ 9,232 $ 14,398 $ (5,166 ) (36 )% Percentage of total net revenue 63 % 105 % Our R&D expenses include costs related to the development of our products.
Recent Accounting Pronouncements See Note 1 to the consolidated financial statements in Item 15 of this Report for a description of recent accounting pronouncements. 39
No material amounts related to these indemnifications are reflected in our consolidated financial statements for the years ended December 31, 2024 or 2023. 40 Recent Accounting Pronouncements See Note 1 to the consolidated financial statements in Item 15 of this Report for a description of recent accounting pronouncements.
Cost of Net Revenue and Gross Profit Years Ended December 31, Year-Over-Year Change 2023 2022 2022 to 2023 (dollar amounts in thousands) Cost of net revenue $ 11,877 $ 8,915 $ 2,962 33 % Percentage of total net revenue 86 % 60 % Cost of net revenue is primarily comprised of direct and indirect costs related to the sale of our products, including amortization of intangible assets and depreciation of production-related fixed assets. 35 Cost of net revenue increased for the year ended December 31, 2023 when compared with the same period in 2022, due to the increase in sales of our memory IC products and inventory write-down charges, as partially offset by a decrease in sales of our mmWave IC and module products.
Cost of Net Revenue and Gross Profit Years Ended December 31, Year-Over-Year Change 2024 2023 2023 to 2024 (dollar amounts in thousands) Cost of net revenue $ 7,040 $ 11,877 $ (4,837 ) (41 )% Percentage of total net revenue 48 % 86 % Cost of net revenue is primarily comprised of direct and indirect costs related to the sale of our products, including amortization of certain intangible assets and depreciation of production-related fixed assets.
We expect revenues to increase in 2024, as we anticipate increased sales of our memory IC products, based on EOL purchase orders received from customers to date. In addition, we expect sales of our mmWave products to increase from a volume and revenue perspective over the next 12 months, as we expect new customers to commence production during 2024.
We expect sales of our mmWave products to increase from a volume and revenue perspective over the next 12 months, as we expect i) an increase in orders from existing customers, which appear to have reduced inventory levels that had increased due to the worldwide inventory correction and ii) new customers to commence production during 2025.
The Series A warrants and Series B warrants each have an exercise price of $2.25 per share and are immediately exercisable upon issuance. The Series A warrants expire on the five-year anniversary of the date of issuance and the Series B warrants expire on the six-month anniversary of the date of issuance.
Each New Warrant has an exercise price equal to $1.61 per share, subject to adjustment as provided in the New Warrants. The Series C Warrants were exercisable upon issuance and expire on the six-month anniversary of the date of issuance. The Series D Warrants were exercisable upon issuance and expire on the five-year anniversary of the date of issuance.
World unrest due to wars and terrorist attacks have led to further economic disruptions. Mounting inflationary cost pressures and recessionary fears have negatively impacted the global economy. Since mid-2022, at times, the U.S. Federal Reserve has addressed elevated inflation by increasing interest rates.
During the quarter ended December 31, 2024, we received net proceeds of approximately $2.6 million from the warrant inducement offering. World Unrest World unrest due to wars and terrorist attacks have led to economic disruptions. Mounting inflationary cost pressures and recessionary fears have negatively impacted the global economy. Since mid-2022, at times, the U.S.
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 consolidated financial statements for the years ended December 31, 2023 or 2022.
Such indemnification clauses may not be subject to maximum loss clauses. We have also entered into indemnification agreements with our officers and directors.
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. 29 Recent Developments Cost Reductions In November 2023, we implemented a reduction in our workforce and eliminated three full-time equivalent positions, which included one employee and two consultants.
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. 31 Recent Developments ATM Offering On August 30, 2024, we entered into an At The Market Offering Agreement (the “Sales Agreement”) with Ladenburg Thalmann & Co.
These cost reduction actions are intended to preserve cash while keeping capital expenditures to minimum levels in order to reduce operating costs and our short-term cash needs. If we were to raise additional capital through sales of our equity securities, our stockholders would suffer dilution of their equity ownership.
If we were to raise additional capital through sales of our equity securities, our stockholders would suffer dilution of their equity ownership.
In 2022, net cash provided from investing activities of $10.0 million represented $11.5 million of proceeds from maturities and sales of short-term investments, partially offset by $0.5 million purchases of short and long-term investments and $1.0 million of purchases of fixed assets and intangible assets.
In 2023, net cash provided from investing activities of $1.0 million represented $1.1 million of proceeds from maturities and sales of short-term investments, partially offset by $0.1 million of purchases of fixed assets. 38 In 2024, net cash provided by financing activities of $6.3 million primarily comprised $3.5 million in net proceeds from a public offering of our common stock and common stock purchase warrants in February 2024, $2.6 million in net proceeds from a warrant inducement offering in November 2024, a $0.1 million sale of unregistered stock, and $0.3 million of net proceeds from sales under our at-the market offering program.
In addition, we initiated a temporary lay-off in Canada of 16 positions, all intended to preserve cash while keeping capital expenditures to minimum levels in order to reduce operating costs and our short-term cash needs.
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.
As further discussed in Note 13 to the consolidated financial statements, in February 2024, we completed a public offering of our common stock and warrants for net proceeds of approximately $3.3 million. Further, in November 2023, we implemented a reduction in our workforce and eliminated three full-time equivalent positions, which included one employee and two consultants.
As further discussed in Note 10 to the consolidated financial statements, in November 2024, we entered into a warrant inducement offering for net proceeds of approximately $2.6 million.
Revenue is recognized using an output method that is consistent with the satisfaction of the performance obligation as a measure of progress. Deferred cost of net revenue During the year ended December 31, 2022, the Company had $1.1 million of product shipments for which the revenue recognition criteria under ASC 606 had not been met.
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 Our contract liabilities consist of advance customer payments and deferred revenue.
In August 2022, we entered into a Technology License and Patent Assignment Agreement, or the Agreement, with Intel Corporation, or Intel, and as a result we transferred certain employees and consultants to Intel. As a result of the Agreement and other cost reductions, our memory-related R&D expenses declined by approximately $1.2 million for the year ended December 31, 2023.
Gain on license and asset sale Years Ended December 31, Year-Over-Year Change 2024 2023 2023 to 2024 (dollar amounts in thousands) Gain on license and asset sale $ - $ (406 ) $ 406 (100 )% Percentage of total net revenue 0 % -3 % On August 5, 2022, we entered into a Technology License and Patent Assignment Agreement (the Intel Agreement) with Intel Corporation (Intel).
Removed
We notified our customers to provide purchase orders by December 22, 2023, and we commenced initial EOL shipments during the quarter ended September 30, 2023. We have requested customers to pay a deposit upon purchase order placement to reserve supply and provide funding for our required inventory purchases.
Added
As of December 31, 2024, we had remaining EOL purchase orders totaling approximately $2.3 million, and we expect to ship all of these orders by March 2025. We do not expect any further shipments or to generate any revenue from shipments of our memory IC products after March 2025.
Removed
In addition, we have requested customers to accelerate payments to improve our cash flows. Under our EOL plan, we expect shipments of our memory products to continue until at least December 31, 2024.
Added
Inc. (“Ladenburg”) with respect to an “at the market” offering program, under which we may, from time to time, in our sole discretion, issue and sell through Ladenburg, acting as agent or principal, shares of our common stock initially having an aggregate offering price of up to $1,425,000.
Removed
However, the timing of EOL shipments will be dependent on receipt of purchase orders from customers, deliveries from our suppliers, and the delivery schedules requested by our customers.
Added
After selling $169,215 of shares pursuant to the Sales Agreement, on December 10, 2024, we increased the maximum aggregate offering amount of common stock issuable pursuant to the Sales Agreement to $2,693,527.
Removed
Reverse Stock Split On December 15, 2023, at our annual meeting of stockholders, our stockholders approved a certificate of amendment to our Second Amended and Restated Certificate of Incorporation (the “Charter Amendment”) to effect a reverse stock split of our outstanding shares of common stock at a ratio to be determined by our board of directors.
Added
The Sales Agreement provides that Ladenburg will be entitled to compensation for its services equal to 3.0% of the gross proceeds from sales of any shares of common stock pursuant to the Sales Agreement in addition to the reimbursement of certain expenses.
Removed
On December 15, 2023, we filed the Charter Amendment with the Secretary of State of Delaware which effected a 1-for-40 reverse stock split of our outstanding shares of common stock as of 4:01 p.m. Eastern Time on January 2, 2024.
Added
We have no obligation to sell any shares pursuant to the Sales Agreement and either we or Ladenburg may terminate the Sales Agreement in accordance with its terms. During the three months ended December 31, 2024, we sold 153,200 shares of common stock for net proceeds of approximately $186,500 pursuant to the Sales Agreement.
Removed
As a result of the reverse stock split, every forty shares of common stock were combined into one issued and outstanding share of common stock, with no change in the $0.001 par value per share. Holders of fractional shares received, in lieu of any fractional share, the number of shares rounded up to the next whole number.
Added
The shares of common stock we may issue or sell pursuant to the Sales Agreement are registered under our Registration Statement on Form S-3 (File No. 333-280798), which was declared effective by the SEC on July 22, 2024. We are currently subject to the limitations contained in General Instruction I.B.6 of Form S-3.
Removed
All equity awards outstanding and common stock reserved for issuance under our equity incentive plans and warrants outstanding immediately prior to the reverse stock split were appropriately adjusted by dividing the number of affected shares of common stock by 40 and, as applicable, multiplying the exercise price by 40, as a result of the reverse stock split.
Added
As a result, we are limited to selling no more than one-third of the aggregate market value of the equity held by non-affiliates, or the public float, during any 12-month period.
Removed
Exchangeable shares, which can be converted to common stock at any time by their respective holders, were also adjusted to reflect the reverse stock split.
Added
If our public float increases, we will have additional availability under such limitations, and if our public float increases to $75 million or more, we will no longer be subject to such limitations. There can be no assurance that our public float will increase or that we will no longer be subject to such limitations.
Removed
Compliance with Nasdaq Minimum Bid Price Requirement On January 18, 2024, we received a notification letter from the Listing Qualifications Department of the Nasdaq Stock Market notifying us that we had regained compliance with the minimum bid price requirement set forth under Nasdaq Listing Rule 5550(a)(2).
Added
Warrant Inducement Offering On August 6, 2024, we extended the expiration date of our outstanding Series B warrants, which were issued in a public offering completed in February 2024, to October 7, 2024, by entering into an amendment to the Warrant Agency Agreement dated as of February 8, 2024 by and between us and the warrant agent, Equiniti Trust Company, LLC (the Warrant Agency Agreement).
Removed
Termination of Advisory Agreement Related to Strategic Alternative Exploration In August 2023, we engaged an investment bank to assist with the exploration of strategic alternatives, including a merger, sale of assets or other similar transaction, with the intention to maximize stockholder value and further our business operations. In January 2024, we terminated such advisory agreement.
Added
On October 3, 2024, we extended the expiration date of the Series B warrants to November 8, 2024, by entering into a second amendment to the Warrant Agency Agreement. The Series B warrants would otherwise have expired on October 7, 2024. See Note 10 of the consolidated financial statements for additional information about the Series B warrants and the offering.
Removed
We currently have no commitments or agreements and are not negotiating with any parties relating to a merger, sale of assets or other similar transaction with us. Public Offering On February 6, 2024, we entered into an underwriting agreement (the “Underwriting Agreement”) with Ladenburg Thalmann & Co.
Added
On November 5, 2024, we 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 2,246,030 shares of the Company’s common stock, having an original exercise price of $2.25 per share, issued to the Holders on February 8, 2024 in the offering (see Note 10 of the consolidated financial statements).
Removed
Inc., as the sole underwriter (the “Underwriter”), relating to the issuance and sale in a public offering (the “Offering”) of: (i) 480,000 shares of our common stock, (ii) pre-funded warrants to purchase up to 1,424,760 shares of our common stock, (iii) Series A warrants to purchase up to 3,809,520 shares of our common stock, (iv) Series B warrants to purchase up to 3,809,520 shares of our common stock, and (v) up to 285,714 additional shares of our common stock, Series A warrants to purchase up to 571,428 shares of our common stock and Series B warrants to purchase up to 571,428 shares of our common stock, which may be purchased pursuant to a 45-day option to purchase additional securities granted to the Underwriter by the Company.
Added
Pursuant to the Inducement Letters, the Holders agreed to exercise for cash their Existing Warrants at a reduced exercise price of $1.30 per share (the “Reduced Exercised Price”) for gross proceeds of approximately $2.92 million in consideration for the Company’s agreement to issue in a private placement (i) new Series C common stock purchase warrants (the “Series C Warrants”) to purchase an aggregate of 2,246,030 shares of common stock, and (ii) new Series D common stock purchase warrants (the “Series D Warrants,” and collectively with the Series C Warrants, the “New Warrants”) to purchase an aggregate of 2,246,030 shares of common stock.
Removed
The Underwriter partially exercised this option on February 7, 2024 for 82,500 shares of common stock, Series A warrants to purchase up to 165,000 shares of common stock and Series B warrants to purchase up to 165,000 shares of common stock.
Added
Federal Reserve has addressed elevated inflation by increasing interest rates.
Removed
The combined public offering price of each share of common stock, together with the accompanying Series A warrants and Series B warrants, was $2.10, less underwriting discounts and commissions.
Added
As of December 31, 2024, there have been no material changes to our significant accounting policies and estimates. Revenue Recognition We recognize revenue in accordance with FASB ASC Topic 606, Revenue from Contracts with Customers, and its amendments (ASC 606).
Removed
The combined public offering price of each pre-funded warrant, together with the accompanying Series A warrants and Series B warrants, was $2.099, less underwriting discounts and commissions. 30 The Offering, including the additional shares of common stock, Series A warrants and Series B warrants sold pursuant to the partial exercise of the Underwriter’s option, closed on February 8, 2024.
Added
As of December 31, 2024 and 2023, contract liabilities were in a current position and included in deferred revenue. 34 Deferred tax valuation allowance When we prepare our consolidated financial statements, we estimate our income tax liability for each of the various jurisdictions where we conduct business.
Removed
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 the Underwriter’s option, after deducting underwriting discounts and commissions and other estimated Offering expenses payable by us and excluding any net proceeds from the exercise of the Series A warrants, Series B warrants and pre-funded warrants, were approximately $3.4 million.
Added
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.
Removed
The pre-funded warrants have an exercise price of $0.001 per share, are exercisable immediately and may be exercised at any time until all of the pre-funded warrants are exercised in full. Subsequent to the closing of the Offering, as of March 18, 2024, the holders exercised pre-funded warrants for 1,001,110 shares of common stock.
Added
The increase in memory shipments was partially offset by a decrease in shipments of our mmWave products.
Removed
On February 8, 2024, pursuant to the Underwriting Agreement, we issued warrants to the Underwriter to purchase up to 139,108 shares of our common stock at an exercise price of $2.625, subject to adjustments, which are exercisable at any time and from time to time, in whole or in part, until February 8, 2029, and have substantially similar terms to the Series A warrants.
… 49 more changes not shown on this page.