Peraso Inc. (NASDAQ:PRSO) Q4 2022 Earnings Conference Call March 22, 2023 5:00 PM ET Company Participants Jim Sullivan - Chief Financial Officer Ron Glibbery - Chief Executive Officer Conference Call Participants David Williams - Benchmark Company Kevin Liu - K. Liu & Company Operator Good afternoon and welcome to Peraso, Inc.’s Fourth Quarter and Full Year Financial Results Conference Call. [Operator Instructions] As a reminder, this conference is being recorded today, Wednesday, March 22, 2023. I would no ...

Peraso Inc. (NASDAQ:PRSO) Q3 2022 Earnings Conference Call November 14, 2022 5:00 PM ET Company Participants Jim Sullivan - Chief Financial Officer Ron Glibbery - Chief Executive Officer Conference Call Participants David Williams - Benchmark Operator Good afternoon and welcome to Peraso Inc.'s Third Quarter 2022 Conference Call. At this time, all participants have been placed on a listen-only mode and we will open the floor for your questions-and-comments after the presentation. As a reminder, this confere ...

UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, DC 20549 FORM 10-Q (Mark one) ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended September 30, 2022 OR ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to Commission file number 000-32929 PERASO INC. (Exact name of registrant as specified in its charter) Indicate by check mark whether the registrant is a la ...

Financial Data and Key Metrics Changes - Total revenue for Q2 2022 was $4.3 million, up from $3.4 million in Q1 2022 and $0.7 million in Q2 2021, representing a 25% sequential increase and nearly 30% year-over-year growth [10][26] - Product revenue was $4.1 million, compared to $3.2 million in the previous quarter and $0.6 million in the same quarter last year [26] - GAAP gross margin was 34.7% in Q2 2022, down from 42.8% in Q1 2022 and 37.6% in Q2 2021; non-GAAP gross margin was 43%, compared to 53.3% in Q1 2022 [27][28] - GAAP net loss for Q2 2022 was $7 million, or a loss of $0.33 per share, compared to a net loss of $6.8 million in Q1 2022 [33] Business Line Data and Key Metrics Changes - The growth in revenue was primarily driven by the ramp-up of mmWave ICs and modules for the fixed wireless access market [10][26] - Product gross margin was 32.1% in Q2 2022, down from 39.2% in Q1 2022, reflecting increased volume shipments of mmWave modules [28] Market Data and Key Metrics Changes - The fixed wireless access market is expected to see over 100 million connections in 2022, doubling by 2027, with Verizon and T-Mobile reporting over 550,000 new fixed wireless customers in Q2 2022 [19][20] - The Rural Digital Opportunity Fund is set to provide $20 billion to incentivize broadband deployment in rural areas across the U.S. [20] Company Strategy and Development Direction - The company entered into a technology license and patent assignment agreement with Intel, expected to generate up to $3.5 million in gross proceeds, which will reduce operating expenses going forward [11][12][38] - The company aims to target the end device market with its new 5G mmWave product, expanding its total addressable market by an estimated $1.5 billion by 2025 [17] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the fixed wireless market's growth, indicating that the company is well-positioned for continued momentum into Q3 and Q4 2022 [44][59] - The company anticipates total net revenue for Q3 2022 to be in the range of $4.3 million to $4.5 million, supported by a significant backlog extending into 2023 [39] Other Important Information - The company is navigating inflationary costs in the supply chain, experiencing increased prices from suppliers, but has managed to keep delivery timelines relatively stable [30][56] - The company has a cash and investments balance of $6 million as of June 30, 2022, down from $12.2 million at the end of Q1 2022 [36] Q&A Session Summary Question: What are the trends in fixed wireless access deployment? - Management noted significant momentum in fixed wireless access, with major carriers gaining subscribers and the company seeing strong bookings [44] Question: What benefits does the Intel agreement provide? - The agreement is a nondilutive source of capital, expected to reduce operating expenses by $2.7 million annually, while also potentially opening new opportunities for memory products [48][51] Question: How is the company managing its balance sheet and working capital? - The company is focused on maintaining adequate inventory and leveraging nondilutive transactions to strengthen its balance sheet, with a positive outlook on backlog and customer relationships [56][59]

WIRELESS UNLEASHED™ UNLEASH THE POWER OF 5G mmWAVE JUNE 2022 Copyright © 2022 Peraso Inc. 1 DISCLAIMER This presentation is for information purposes only. Certain information contained herein has been derived from sources prepared by third parties. While such information is believed to be reliable for the purposes used herein, we makes no representation or warrant with respect to the accuracy of such information. Trademarks and trade names referred to in this presentation are the property of their respectiv ...

```markdown PART I — FINANCIAL INFORMATION [Financial Statements (Unaudited)](index=3&type=section&id=Item%201.%20Financial%20Statements) This section presents the unaudited condensed consolidated financial statements for Peraso Inc. as of June 30, 2022, and for the three and six-month periods then ended. It includes the balance sheets, statements of operations, statements of stockholders' equity, and statements of cash flows, along with accompanying notes. These financials reflect the reverse acquisition of MoSys, Inc. by Peraso Technologies Inc., with Peraso Tech being the accounting acquirer - The financial statements are a continuation of Peraso Tech's statements following the reverse acquisition completed on December 17, 2021. For accounting purposes, Peraso Tech is treated as the acquirer[16](index=16&type=chunk) - The company has a history of net losses, including a **$13.8 million loss** for the first six months of 2022, and an accumulated deficit of **$131.0 million**. This raises substantial doubt about its ability to continue as a going concern without raising additional capital[21](index=21&type=chunk)[22](index=22&type=chunk) [Condensed Consolidated Balance Sheets](index=3&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) The balance sheet as of June 30, 2022, shows a decrease in total assets to $37.0 million from $48.0 million at year-end 2021, primarily driven by a reduction in cash, cash equivalents, and investments. Total liabilities remained stable at approximately $5.9 million, while total stockholders' equity decreased from $42.1 million to $31.1 million due to the net loss incurred during the period Condensed Consolidated Balance Sheet Highlights (in thousands) | Balance Sheet Item | June 30, 2022 (unaudited) | December 31, 2021 | | :--- | :--- | :--- | | **Current Assets** | | | | Cash and cash equivalents | $2,820 | $5,893 | | Short-term investments | $2,094 | $9,267 | | Total current assets | $15,042 | $23,678 | | **Total Assets** | **$36,952** | **$47,951** | | **Total Liabilities** | **$5,871** | **$5,882** | | **Total Stockholders' Equity** | **$31,081** | **$42,069** | [Condensed Consolidated Statements of Operations and Comprehensive Loss](index=4&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations%20and%20Comprehensive%20Loss) For the second quarter of 2022, the company reported a significant increase in total net revenue to $4.3 million compared to $0.7 million in Q2 2021. However, operating expenses also rose sharply, leading to a larger loss from operations of $7.0 million versus $4.4 million in the prior-year period. The net loss for Q2 2022 was $7.0 million, or ($0.33) per share Q2 and H1 2022 vs 2021 Performance (in thousands, except per share data) | Metric | Q2 2022 | Q2 2021 | H1 2022 | H1 2021 | | :--- | :--- | :--- | :--- | :--- | | Total Net Revenue | $4,284 | $697 | $7,687 | $1,798 | | Gross Profit | $1,485 | $262 | $2,940 | $744 | | Loss from Operations | $(7,036) | $(4,429) | $(13,772) | $(8,041) | | Net Loss | $(7,043) | $(5,430) | $(13,797) | $(9,586) | | Net Loss Per Share (Basic & Diluted) | $(0.33) | $(1.03) | $(0.64) | $(1.83) | [Condensed Consolidated Statements of Stockholders' Equity (Deficit)](index=5&type=section&id=Condensed%20Consolidated%20Statements%20of%20Stockholders'%20Equity%20(Deficit)) Stockholders' equity decreased from $42.1 million at the end of 2021 to $31.1 million as of June 30, 2022. The decline was primarily driven by a net loss of $13.8 million for the six-month period, which was partially offset by $2.9 million in stock-based compensation - The accumulated deficit grew from **$(117.2) million** at December 31, 2021, to **$(131.0) million** at June 30, 2022, reflecting the ongoing net losses[10](index=10&type=chunk) [Condensed Consolidated Statements of Cash Flows](index=6&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) For the six months ended June 30, 2022, net cash used in operating activities was $11.6 million, a significant increase from $5.7 million in the same period of 2021. Net cash provided by investing activities was $8.6 million, mainly from maturities of marketable securities. A net decrease in cash of $3.1 million resulted in an ending cash and cash equivalents balance of $2.8 million Cash Flow Summary (in thousands) | Cash Flow Activity | Six Months Ended June 30, 2022 | Six Months Ended June 30, 2021 | | :--- | :--- | :--- | | Net cash used in operating activities | $(11,562) | $(5,651) | | Net cash provided by (used in) investing activities | $8,574 | $(147) | | Net cash provided by (used in) financing activities | $(85) | $6,127 | | **Net decrease in cash and cash equivalents** | **$(3,073)** | **$329** | | **Cash and cash equivalents at end of period** | **$2,820** | **$2,040** | [Notes to Condensed Consolidated Financial Statements](index=7&type=section&id=Notes%20to%20Condensed%20Consolidated%20Financial%20Statements) The notes provide critical details on accounting policies, the reverse acquisition, fair value measurements, customer concentration, and subsequent events. Key highlights include the reclassification of amortization expenses, details on lease obligations, and a significant post-quarter technology licensing agreement with Intel - The company reclassified amortization expense for developed technology to 'cost of net revenue' and for customer relationships to 'SG&A'. This change did not impact net loss or cash flows but adjusted gross profit and operating expense line items[88](index=88&type=chunk)[89](index=89&type=chunk) - Subsequent to the quarter's end, on August 5, 2022, the company entered into a Technology License and Patent Assignment Agreement with Intel, expecting to receive **$3.5 million** in gross proceeds over the next six months[120](index=120&type=chunk)[121](index=121&type=chunk) - For the six months ended June 30, 2022, four customers (A, B, C, D) accounted for **31%**, **12%**, **11%**, and **23%** of total net revenue, respectively, indicating significant customer concentration[100](index=100&type=chunk) [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=26&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management discusses the company's financial performance, highlighting a significant increase in revenue driven by memory IC products from the recent business combination and growth in mmWave module sales. However, this was accompanied by higher costs and operating expenses, leading to increased net losses. The report emphasizes the company's liquidity challenges, stating there is substantial doubt about its ability to continue as a going concern without raising additional capital. The recent Intel agreement is noted as a positive development for future liquidity - The company's primary business objective is to be a profitable, IP-rich, fabless semiconductor company specializing in mmWave technology (60GHz and 5G) and its acquired memory product line[125](index=125&type=chunk)[126](index=126&type=chunk) - Management acknowledges that due to expected operating losses and cash burn, there is substantial doubt about the company's ability to continue as a going concern. The company is actively seeking additional financing[161](index=161&type=chunk) - The August 2022 agreement with Intel is expected to generate **$3.5 million** in gross proceeds and reduce annual operating expenses by approximately **$2.7 million**, providing a near-term liquidity boost[161](index=161&type=chunk) [Results of Operations](index=29&type=section&id=Results%20of%20Operations) Net revenue for Q2 2022 increased by 515% year-over-year, primarily due to a $1.9 million contribution from memory IC products (not present in 2021) and a $1.5 million increase in mmWave module sales. Gross margin decreased from 38% to 35% in Q2 due to a higher mix of lower-margin module products. R&D and SG&A expenses increased by 95% and 60% respectively, driven by the inclusion of the former MoSys operations Product Revenue Growth (in thousands) | Period | 2022 | 2021 | Change ($) | Change (%) | | :--- | :--- | :--- | :--- | :--- | | Three months ended June 30 | $4,120 | $576 | $3,544 | 615% | | Six months ended June 30 | $7,324 | $1,627 | $5,697 | 350% | Operating Expense Growth (in thousands) | Expense Category (Three Months Ended June 30) | 2022 | 2021 | Change ($) | Change (%) | | :--- | :--- | :--- | :--- | :--- | | Research & Development (R&D) | $5,643 | $2,892 | $2,751 | 95% | | Selling, General & Administrative (SG&A) | $2,878 | $1,799 | $1,079 | 60% | [Liquidity and Capital Resources](index=31&type=section&id=Liquidity%20and%20Capital%20Resources) As of June 30, 2022, the company had $6.0 million in cash, cash equivalents, and investments. Net cash used in operations for the first half of 2022 was $11.6 million. Management states these funds are not sufficient for the next 12 months, raising substantial doubt about the company's ability to continue as a going concern. The company is seeking additional financing and highlights the recent Intel deal as a measure to improve its financial position - The company had cash, cash equivalents and investments of **$6.0 million** and working capital of **$9.9 million** as of June 30, 2022[154](index=154&type=chunk) - Net cash used in operating activities was **$11.6 million** for the first six months of 2022, primarily due to a net loss of **$13.8 million**[155](index=155&type=chunk) - The company has a history of losses and negative cash flows, requiring it to raise substantial additional capital. It expects to continue incurring operating losses for the foreseeable future[159](index=159&type=chunk)[160](index=160&type=chunk) [Controls and Procedures](index=33&type=section&id=Item%204.%20Controls%20and%20Procedures) Management, including the CEO and CFO, evaluated the company's disclosure controls and procedures. They concluded that as of June 30, 2022, these controls were effective. No material changes to internal control over financial reporting were identified during the six-month period - Management concluded that as of June 30, 2022, the company's disclosure controls and procedures were effective[167](index=167&type=chunk) - There were no changes in internal control over financial reporting during the six months ended June 30, 2022, that materially affected, or are reasonably likely to materially affect, internal controls[168](index=168&type=chunk) PART II — OTHER INFORMATION [Legal Proceedings](index=34&type=section&id=Item%201.%20Legal%20Proceedings) The company states that it is not a party to any legal proceeding that it believes is likely to have a material adverse effect on its financial position or results of operations. It may be subject to ordinary course claims from time to time - The company is not currently involved in any legal proceedings expected to have a material adverse effect on its business[96](index=96&type=chunk)[169](index=169&type=chunk) [Risk Factors](index=34&type=section&id=Item%201A.%20Risk%20Factors) This section highlights significant risks to the business, with no material changes from the last annual report except for updated emphasis. The primary risk is the company's ability to continue as a going concern due to its history of losses and insufficient cash reserves for the next 12 months. Other key risks include the need to raise additional capital, the potential negative impacts of the Russia-Ukraine conflict, and sustained inflation on costs and customer demand - **Going Concern Risk:** The company does not believe its current cash is sufficient for the next 12 months, raising substantial doubt about its ability to continue as a going concern[171](index=171&type=chunk) - **Capital Requirement:** The company has a history of losses and will need to raise additional capital, which may not be available on acceptable terms, if at all[173](index=173&type=chunk) - **Macroeconomic Risks:** The invasion of Ukraine by Russia and sustained inflation are cited as risks that could negatively impact the global economy, the company's costs, and its overall business operations[175](index=175&type=chunk)[176](index=176&type=chunk) [Exhibits](index=36&type=section&id=Item%206.%20Exhibits) This section lists the exhibits filed with the Form 10-Q. Notable exhibits include amendments to employment agreements for executives, CEO and CFO certifications (Rule 13a-14 and Section 1350), and the financial statements formatted in Inline XBRL - Filed exhibits include amendments to employment agreements for Daniel Lewis, James Sullivan, and Brad Lynch[178](index=178&type=chunk) - Standard CEO and CFO certifications under Sarbanes-Oxley (Rule 13a-14 and Section 1350) are included[178](index=178&type=chunk) Signatures - The report was duly signed and authorized on August 15, 2022, by Ronald Glibbery, Chief Executive Officer, and James W. Sullivan, Chief Financial Officer[183](index=183&type=chunk)[184](index=184&type=chunk) ```

[PART I — FINANCIAL INFORMATION](index=3&type=section&id=PART%20I%20%E2%80%94%20FINANCIAL%20INFORMATION) [Item 1. Financial Statements (Unaudited)](index=3&type=section&id=Item%201.%20Financial%20Statements%20%28Unaudited%29) This section presents Peraso Inc.'s unaudited condensed consolidated financial statements for the period ended March 31, 2022, including balance sheets, statements of operations and comprehensive loss, statements of stockholders' equity (deficit), and statements of cash flows, along with detailed notes explaining significant accounting policies, business combinations, fair value measurements, and other financial details [Condensed Consolidated Balance Sheets](index=3&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) | ASSETS (in millions) | March 31, 2022 | December 31, 2021 | | :-------------------- | :------------- | :---------------- | | Cash and cash equivalents | $3.791 | $5.893 | | Short-term investments | $5.993 | $9.267 | | Total current assets | $18.861 | $23.678 | | Total assets | $41.948 | $47.951 | | LIABILITIES AND STOCKHOLDERS' EQUITY (in millions) | March 31, 2022 | December 31, 2021 | | :-------------------------------- | :------------- | :---------------- | | Total current liabilities | $5.097 | $5.594 | | Total liabilities | $5.508 | $5.882 | | Total stockholders' equity | $36.440 | $42.069 | - Total assets decreased from **$47.951 million** at December 31, 2021, to **$41.948 million** at March 31, 2022, primarily driven by a reduction in cash, cash equivalents, and short-term investments[7](index=7&type=chunk) - Total stockholders' equity decreased from **$42.069 million** to **$36.440 million**, largely due to an accumulated deficit of **$(123.953) million** as of March 31, 2022[7](index=7&type=chunk) [Condensed Consolidated Statements of Operations and Comprehensive Loss](index=4&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations%20and%20Comprehensive%20Loss) | (in millions, except per share data) | Three Months Ended March 31, 2022 | Three Months Ended March 31, 2021 | | :------------------------------------ | :-------------------------------- | :-------------------------------- | | Total net revenue | $3.403 | $1.101 | | Gross profit | $1.813 | $0.482 | | Total operating expenses | $8.549 | $4.094 | | Loss from operations | $(6.736) | $(3.612) | | Net loss | $(6.754) | $(4.157) | | Basic and diluted net loss per share | $(0.34) | $(0.79) | - Total net revenue increased significantly by **209%** from **$1.101 million** in Q1 2021 to **$3.403 million** in Q1 2022[8](index=8&type=chunk) - Net loss widened to **$(6.754) million** in Q1 2022 from **$(4.157) million** in Q1 2021, primarily due to a substantial increase in operating expenses, particularly research and development[8](index=8&type=chunk) [Condensed Consolidated Statements of Stockholders' Equity (Deficit)](index=5&type=section&id=Condensed%20Consolidated%20Statements%20of%20Stockholders%27%20Equity%20%28Deficit%29) | (in millions) | Balance as of Dec 31, 2021 | Stock-based Compensation | Unrealized Loss on AFS Securities | Net Loss | Balance as of Mar 31, 2022 | | :------------- | :------------------------- | :----------------------- | :-------------------------------- | :------- | :------------------------- | | Total Equity | $42.069 | $1.171 | $(0.037) | $(6.754) | $36.440 | - Total stockholders' equity decreased from **$42.069 million** at December 31, 2021, to **$36.440 million** at March 31, 2022, primarily due to a net loss of **$6.754 million**[9](index=9&type=chunk) - Stock-based compensation contributed **$1.171 million** to additional paid-in capital during the three months ended March 31, 2022[9](index=9&type=chunk) [Condensed Consolidated Statements of Cash Flows](index=6&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) | (in millions) | Three Months Ended March 31, 2022 | Three Months Ended March 31, 2021 | | :------------- | :-------------------------------- | :-------------------------------- | | Net cash used in operating activities | $(5.740) | $(1.252) | | Net cash provided by (used in) investing activities | $3.647 | $(0.009) | | Net cash provided by (used in) financing activities | $(0.009) | $0.552 | | Net decrease in cash and cash equivalents | $(2.102) | $(0.709) | | Cash and cash equivalents at end of period | $3.791 | $1.002 | - Net cash used in operating activities increased significantly to **$5.740 million** in Q1 2022 from **$1.252 million** in Q1 2021, driven by a larger net loss[12](index=12&type=chunk) - Investing activities provided **$3.647 million** in Q1 2022, primarily from maturities of marketable securities, a reversal from **$0.009 million** used in Q1 2021[12](index=12&type=chunk) [Notes to Condensed Consolidated Financial Statements](index=7&type=section&id=Notes%20to%20Condensed%20Consolidated%20Financial%20Statements) [Note 1. The Company and Summary of Significant Accounting Policies](index=7&type=section&id=Note%201.%20The%20Company%20and%20Summary%20of%20Significant%20Accounting%20Policies) Peraso Inc., formerly MoSys, Inc., reincorporated in Delaware in 2000, is a fabless semiconductor company specializing in mmWave technology (60GHz and 5G products) and memory semiconductor devices. The company completed a reverse acquisition of Peraso Technologies Inc. on December 17, 2021, with Peraso Tech treated as the accounting acquirer. The financial statements are unaudited and reflect normal recurring adjustments, with operating results not necessarily indicative of future periods. Key accounting policies include fair value measurements (Level 1, 2, 3 hierarchy), inventory valuation at lower of cost or net realizable value, recognition of tax credits, amortization of intangible assets, and revenue recognition based on transfer of control for products, estimated royalties for licenses, and over time for engineering services. The company also details its stock-based compensation and foreign currency transaction policies - Peraso Inc. (formerly MoSys, Inc.) is a fabless semiconductor company focused on mmWave technology (**60GHz** and **5G** products) and memory semiconductor devices[15](index=15&type=chunk) - On **December 17, 2021**, the company completed a reverse acquisition of Peraso Technologies Inc., with Peraso Tech treated as the accounting acquirer[16](index=16&type=chunk) - Revenue is primarily derived from product sales (recognized at shipment), licensing (royalties based on usage), and engineering services (recognized over time)[42](index=42&type=chunk)[43](index=43&type=chunk)[45](index=45&type=chunk)[46](index=46&type=chunk) - The company recorded inventory write-downs of approximately **$0.114 million** during the three months ended March 31, 2022, compared to none in the prior year period[32](index=32&type=chunk) - As of **December 17, 2021**, Peraso Tech ceased to be a Canadian Controlled Private Corporation (CCPC) and is no longer eligible for the expenditure refund program, but is eligible for a **15%** tax credit on qualified SR&ED expenditures[37](index=37&type=chunk) - The company is evaluating the impact of ASU No. **2016-13** (CECL model) effective for fiscal years beginning after **December 15, 2022**, and does not believe ASU No. **2020-06** (convertible instruments) will have a material impact[58](index=58&type=chunk)[59](index=59&type=chunk)[60](index=60&type=chunk) [Note 2: Business Combination](index=13&type=section&id=Note%202%3A%20Business%20Combination) On December 17, 2021, Peraso Inc. completed the acquisition of Peraso Technologies Inc. (Peraso Tech) via a statutory plan of arrangement. Although Peraso Inc. was the legal acquirer, Peraso Tech was deemed the accounting acquirer due to its former security holders owning approximately 61% of the combined entity and appointing a majority of the board. The transaction was accounted for as a reverse acquisition, with the fair value of consideration effectively transferred determined to be $37.6 million. The purchase price was allocated to acquired net assets, including $19.064 million in cash/investments, $8.282 million in intangibles, and $9.946 million in goodwill - The acquisition of Peraso Technologies Inc. was completed on **December 17, 2021**, with Peraso Tech treated as the accounting acquirer in a reverse acquisition[61](index=61&type=chunk)[62](index=62&type=chunk)[68](index=68&type=chunk) - Former Peraso Tech security holders owned approximately **61%** of the combined company's common stock on a fully-diluted basis and appointed a majority of the board[62](index=62&type=chunk)[68](index=68&type=chunk) - The fair value of the total consideration effectively transferred was determined to be **$37.6 million**[69](index=69&type=chunk) | Acquired Assets and Liabilities (in millions) | December 31, 2021 | | :------------------------------------- | :---------------- | | Cash, cash equivalents and investments | $19.064 | | Intangibles (Developed technology, Customer relationships) | $8.282 | | Goodwill | $9.946 | | Current liabilities | $3.056 | [Note 3: Fair Value of Financial Instruments](index=15&type=section&id=Note%203%3A%20Fair%20Value%20of%20Financial%20Instruments) The company's financial instruments, including cash equivalents and investments, are measured at fair value using a hierarchy. As of March 31, 2022, total fair value of cash and investments was $12.183 million, with an unrealized loss of $37,000. The majority of these assets are classified as Level 2, primarily consisting of corporate notes and commercial paper, with a smaller portion in Level 1 money market funds | (in millions) | March 31, 2022 Fair Value | December 31, 2021 Fair Value | | :------------- | :------------------------ | :------------------------- | | Cash and cash equivalents | $3.791 | $5.893 | | Short-term investments | $5.993 | $9.267 | | Long-term investments | $2.399 | $2.928 | | Total | $12.183 | $18.088 | - As of **March 31, 2022**, the company reported an unrealized loss of **$0.037 million** on available-for-sale securities[74](index=74&type=chunk) | (in millions) | March 31, 2022 Level 1 | March 31, 2022 Level 2 | December 31, 2021 Level 1 | December 31, 2021 Level 2 | | :------------- | :--------------------- | :--------------------- | :------------------------ | :------------------------ | | Money market funds | $0.041 | $0.000 | $1.159 | $0.000 | | Corporate notes and commercial paper | $0.000 | $8.392 | $0.000 | $12.195 | [Note 4. Balance Sheet Detail](index=16&type=section&id=Note%204.%20Balance%20Sheet%20Detail) This note provides a detailed breakdown of the company's inventory composition. As of March 31, 2022, total inventory was $4.521 million, an increase from $3.824 million at December 31, 2021, with raw materials showing the most significant increase | Inventories (in millions) | March 31, 2022 | December 31, 2021 | | :------------------------- | :------------- | :---------------- | | Raw materials | $1.408 | $0.879 | | Work-in-process | $2.327 | $2.170 | | Finished goods | $0.786 | $0.775 | | Total | $4.521 | $3.824 | - Total inventories increased by **$0.697 million** from December 31, 2021, to March 31, 2022, primarily driven by an increase in raw materials[76](index=76&type=chunk) [Note 5. Commitments and Contingencies](index=16&type=section&id=Note%205.%20Commitments%20and%20Contingencies) Peraso Inc. has operating leases for facilities in San Jose, Toronto, and Waterloo, and entered into a new finance lease for equipment in March 2022. Total right-of-use assets were $770,000 and total lease liabilities were $833,000 as of March 31, 2022. The company also has standard indemnification agreements and product warranties, none of which have resulted in material liabilities to date. The company is not a party to any legal proceedings likely to have a material adverse effect on its financial position - The company has three facility operating leases expiring between **July 2022** and **December 2023**, and a new **36-month** finance lease for equipment initiated in **March 2022**[77](index=77&type=chunk) | (in millions) | March 31, 2022 | | :------------- | :------------- | | Right-of-use assets: Operating leases | $0.496 | | Right-of-use assets: Finance lease | $0.274 | | Total right-of-use assets | $0.770 | | Lease liabilities: Operating leases | $0.559 | | Lease liabilities: Finance lease | $0.274 | | Total lease liabilities | $0.833 | - Rent expense was approximately **$0.1 million** for both the three months ended March 31, 2022, and 2021[80](index=80&type=chunk) - The company is not currently involved in any legal proceedings expected to have a material adverse effect on its financial position or results of operations[84](index=84&type=chunk) [Note 6. Business Segments, Concentration of Credit Risk and Significant Customers](index=18&type=section&id=Note%206.%20Business%20Segments%2C%20Concentration%20of%20Credit%20Risk%20and%20Significant%20Customers) Peraso Inc. operates as a single consolidated operating segment. Revenue concentration shifted significantly in Q1 2022, with North America becoming the largest contributor at $2.375 million (up from $55,000 in Q1 2021), while Hong Kong and Taiwan revenues decreased. Customer A and Customer B accounted for 37% and 24% of total net revenue, respectively, in Q1 2022, indicating significant customer concentration - The company has determined it has one consolidated operating segment[86](index=86&type=chunk) | Revenue by Geographical Location (in millions) | Three Months Ended March 31, 2022 | Three Months Ended March 31, 2021 | | :------------------------------------- | :-------------------------------- | :-------------------------------- | | North America | $2.375 | $0.055 | | Hong Kong | $0.290 | $0.475 | | Taiwan | $0.312 | $0.565 | | Japan | $0.293 | $0.000 | | Rest of world | $0.133 | $0.006 | | Total net revenue | $3.403 | $1.101 | | Customers accounting for at least 10% of total net revenue | | :------------------------------------------------- | | **Three Months Ended March 31, 2022:** | | Customer A: **37%** | | Customer B: **24%** | | **Three Months Ended March 31, 2021:** | | Customer C: **41%** | | Customer D: **51%** | - Three customers accounted for **67%** of accounts receivable as of **March 31, 2022**, indicating high concentration of credit risk[87](index=87&type=chunk) [Note 7. Income Tax Provision](index=19&type=section&id=Note%207.%20Income%20Tax%20Provision) The company determines deferred tax assets and liabilities based on financial statement and tax basis differences, establishing a valuation allowance when realization is unlikely. Tax returns from 2015-2020 are subject to examination by various tax authorities. As of March 31, 2022, no liability for unrecognized tax benefits related to uncertain tax positions has been recorded - The company establishes a valuation allowance for deferred tax assets where realization is not more likely than not[89](index=89&type=chunk) - Tax returns from **2015** to **2020** are subject to examination by U.S. federal, state, and foreign tax authorities[90](index=90&type=chunk) - As of **March 31, 2022**, no liability for unrecognized tax benefits related to uncertain tax positions has been recorded[90](index=90&type=chunk) [Note 8. Stock-Based Compensation](index=19&type=section&id=Note%208.%20Stock-Based%20Compensation) Peraso Inc. operates under the 2019 Stock Incentive Plan (2019 Plan), which replaced the Amended 2010 Plan, and also assumed the Peraso Technologies Inc. 2009 Share Option Plan (2009 Plan) in connection with the Arrangement. As of March 31, 2022, unamortized compensation cost for stock options was $11.4 million (expected over ~3 years) and for restricted stock units was $0.2 million (expected over ~1.6 years). No stock options were granted or exercised in Q1 2022 or Q1 2021. The number of outstanding options was 1,545,000 with a weighted average exercise price of $3.43, and 75,000 non-vested restricted stock units - The company's primary equity incentive plan is the **2019** Stock Incentive Plan, with **3,106,937** additional shares reserved for issuance approved in **November 2021**[92](index=92&type=chunk)[93](index=93&type=chunk) - Unamortized compensation cost for stock options was approximately **$11.4 million** as of **March 31, 2022**, to be recognized over approximately **3 years**[96](index=96&type=chunk) | Stock Options Activity (in millions) | Number of Shares | Weighted Average Exercise Prices | | :------------------------------------ | :--------------- | :------------------------------- | | Balance as of December 31, 2021 | 1.558 | $3.49 | | Options cancelled | (0.013) | $10.98 | | Balance as of March 31, 2022 | 1.545 | $3.43 | | RSU Activity (in millions) | Number of Shares | Weighted Average Grant-Date Fair Value | | :-------------------------- | :--------------- | :------------------------------------- | | Non-vested shares as of December 31, 2021 | 0.088 | $4.84 | | Vested | (0.013) | $3.70 | | Non-vested shares as of March 31, 2022 | 0.075 | $5.67 | [Note 9. Equity](index=21&type=section&id=Note%209.%20Equity) As of March 31, 2022, Peraso Inc. had two types of common stock warrants outstanding: 33,000 warrants with an exercise price of $47.00 expiring in January 2023, and 101,000 warrants with an exercise price of $2.40 expiring in October 2023 | Type | Number of Shares (in millions) | Exercise Price | Expiration | | :----------- | :------------------------------ | :------------- | :----------- | | Common stock | 0.033 | $47.00 | January 2023 | | Common stock | 0.101 | $2.40 | October 2023 | [Note 10. Debt](index=21&type=section&id=Note%2010.%20Debt) In 2021, Peraso Inc. raised $1.295 million (CDN$1.650 million) through SRED financing, with an interest rate of 1.6% per month. All loan balances, including interest, were repaid by December 16, 2021. Interest expense for Q1 2021 totaled $513,438, comprising amortization of debt discount, interest on convertible debt, and SRED financing interest - The company raised **$1.295 million** (**CDN$1.650 million**) from SRED financing in **2021**, with an interest rate of **1.6%** per month (**20.98%** compounded monthly)[102](index=102&type=chunk) - All SRED loan balances, including interest, were fully repaid by **December 16, 2021**[103](index=103&type=chunk) - Interest expense for the three months ended **March 31, 2021**, was **$0.513 million**, including **$0.348 million** of amortization of debt discount and **$0.121 million** of interest expense on convertible debt[104](index=104&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=22&type=section&id=Item%202.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) This section provides management's perspective on Peraso Inc.'s financial condition and operational results for the three months ended March 31, 2022. It covers the company's business strategy as a fabless semiconductor company specializing in mmWave and memory products, the impact of the reverse acquisition, and the ongoing challenges of net losses and the need for additional capital. The discussion also details revenue growth, changes in cost of revenue and operating expenses, and the company's liquidity position and future capital requirements [Overview](index=22&type=section&id=Overview) - Peraso Inc. is a fabless semiconductor company focused on mmWave (**60 GHz** and **5G**) and memory (Accelerator Engine) ICs and modules, aiming for profitability and IP richness[108](index=108&type=chunk)[109](index=109&type=chunk) - The company incurred net losses of **$6.8 million** for Q1 2022 and had an accumulated deficit of **$124.0 million** as of **March 31, 2022**, requiring substantial additional capital[110](index=110&type=chunk) - The company expects to incur operating losses and needs to substantially increase revenues to achieve sustainable operating profit and sufficient cash flows[111](index=111&type=chunk) [COVID-19](index=23&type=section&id=COVID-19) - The COVID-19 pandemic has negatively affected the global economy, disrupted supply chains, and created financial market volatility, with the full impact on the company's performance remaining uncertain[112](index=112&type=chunk) - The company has experienced longer lead times for certain components and acknowledges that unpredictable events could create difficulties in meeting customer demand[114](index=114&type=chunk) - The pandemic could impact the company's ability to raise additional capital on favorable terms, potentially leading to detrimental effects on existing stockholders and business operations[115](index=115&type=chunk) [Sources of Revenue](index=23&type=section&id=Sources%20of%20Revenue) - Product revenue is recognized when title and risk of loss transfer to the customer, typically at shipment, based on negotiated or fixed prices[117](index=117&type=chunk) - License and other revenue includes royalties from memory technology usage (estimated quarterly) and license fees recognized when control of the license is transferred with no continuing obligations[119](index=119&type=chunk)[120](index=120&type=chunk) - Engineering services revenue is recognized over time using an output method consistent with the satisfaction of performance obligations[121](index=121&type=chunk) [Critical Accounting Policies and Estimates](index=24&type=section&id=Critical%20Accounting%20Policies%20and%20Estimates) - The company's financial statements are prepared in accordance with GAAP, requiring estimates and judgments that affect reported amounts[122](index=122&type=chunk) - As of **March 31, 2022**, there have been no material changes to the company's significant accounting policies and estimates previously disclosed in its annual report on Form **10-K**[122](index=122&type=chunk) [Results of Operations](index=24&type=section&id=Results%20of%20Operations) Net Revenue (in millions) | Category | March 31, 2022 | March 31, 2021 | Change (2021 to 2022) | Percentage Change | | :------- | :------------- | :------------- | :-------------------- | :---------------- | | Product | $3.204 | $1.051 | $2.153 | 205% | | License and other | $0.199 | $0.050 | $0.149 | 298% | | Total Net Revenue | $3.403 | $1.101 | $2.302 | 209% | - Product revenue increased by **205%** due to a full quarter contribution from memory IC products and increased shipments of mmWave module products[123](index=123&type=chunk) - License and other revenue increased by **298%** primarily due to a full quarter contribution of royalty revenues from memory technology licensees[124](index=124&type=chunk) Cost of Net Revenue and Gross Profit (in millions) | Category | March 31, 2022 | March 31, 2021 | Change (2021 to 2022) | Percentage Change | | :------- | :------------- | :------------- | :-------------------- | :---------------- | | Cost of net revenue | $1.590 | $0.619 | $0.971 | 157% | | Gross profit | $1.813 | $0.482 | $1.331 | 276% | | Gross profit percentage | 53% | 44% | 9 percentage points | | - Cost of net revenue increased by **157%** due to higher shipment volumes of LineSpeed, Bandwidth Engine IC, and mmWave module products, with modules having higher cost of goods sold and lower gross profit margins[126](index=126&type=chunk) Operating Expenses (in millions) | Category | March 31, 2022 | March 31, 2021 | Change (2021 to 2022) | Percentage Change | | :------- | :------------- | :------------- | :-------------------- | :---------------- | | Research and development | $6.003 | $2.787 | $3.216 | 115% | | Selling, general and administrative | $2.546 | $1.307 | $1.239 | 95% | - R&D expenses increased by **115%** primarily due to the full inclusion of former MoSys operations, amortization of intangible assets, and the absence of government wage and rent subsidies received in Q1 2021[129](index=129&type=chunk) - SG&A expenses increased by **95%** primarily due to the full inclusion of expenses related to the former operations of MoSys[131](index=131&type=chunk) [Liquidity and Capital Resources; Changes in Financial Condition](index=25&type=section&id=Liquidity%20and%20Capital%20Resources%3B%20Changes%20in%20Financial%20Condition) - As of **March 31, 2022**, the company had **$12.2 million** in cash, cash equivalents, and investments, and **$13.7 million** in working capital[133](index=133&type=chunk) - Net cash used in operating activities was **$5.7 million** for Q1 2022, primarily due to a net loss of **$6.8 million** and changes in assets and liabilities[134](index=134&type=chunk) - Net cash provided by investing activities was **$3.6 million** for Q1 2022, mainly from maturities of short-term investments[137](index=137&type=chunk) - The company expects cash expenditures to exceed receipts in **2022** and will need to raise additional capital, with no assurance of favorable terms or availability[139](index=139&type=chunk)[140](index=140&type=chunk) - Failure to raise capital could force reductions in operating costs, personnel, and R&D, potentially harming business strategy and growth opportunities[141](index=141&type=chunk)[142](index=142&type=chunk) [Off-Balance Sheet Arrangements](index=27&type=section&id=Off-Balance%20Sheet%20Arrangements) - The company does not maintain any off-balance sheet arrangements or obligations that are reasonably likely to have a material current or future effect on its financial condition, results of operations, liquidity, or capital resources[143](index=143&type=chunk) [Recent Accounting Pronouncements](index=27&type=section&id=Recent%20Accounting%20Pronouncements) - Information regarding recent accounting pronouncements is discussed in Note **1** to the condensed consolidated financial statements[144](index=144&type=chunk) [Item 4. Controls and Procedures](index=28&type=section&id=Item%204.%20Controls%20and%20Procedures) Management, including the CEO and CFO, evaluated the effectiveness of Peraso Inc.'s disclosure controls and procedures as of March 31, 2022, concluding they were effective. There were no material changes in internal control over financial reporting during the quarter - Management concluded that the company's disclosure controls and procedures were effective as of **March 31, 2022**[148](index=148&type=chunk) - No material changes in internal control over financial reporting occurred during the three months ended **March 31, 2022**[149](index=149&type=chunk) [PART II — OTHER INFORMATION](index=28&type=section&id=PART%20II%20%E2%80%94%20OTHER%20INFORMATION) [Item 1. Legal Proceedings](index=28&type=section&id=Item%201.%20Legal%20Proceedings) The company's legal matters are discussed in Note 4 of the Notes to Condensed Consolidated Financial Statements, which states that Peraso Inc. is not a party to any legal proceeding likely to have a material adverse effect on its financial position or results of operations - The company is not a party to any legal proceeding that is likely to have a material adverse effect on its condensed consolidated financial position or results of operations[84](index=84&type=chunk)[150](index=150&type=chunk) [Item 1A. Risk Factors](index=28&type=section&id=Item%201A.%20Risk%20Factors) Peraso Inc. faces significant business risks, but there have been no material changes to the risk factors disclosed in its annual report on Form 10-K for the year ended December 31, 2021 - There have been no material changes to the risk factors disclosed in the company's annual report on Form **10-K** for the year ended **December 31, 2021**[151](index=151&type=chunk) [Item 6. Exhibits](index=29&type=section&id=Item%206.%20Exhibits) This section lists the exhibits filed with the Form 10-Q, including Rule 13a-14 and Section 1350 certifications, and financial information formatted in Inline Extensible Business Reporting Language (Inline XBRL) - Exhibits include Rule **13a-14** and Section **1350** certifications, and financial information formatted in Inline XBRL[153](index=153&type=chunk) [Signatures](index=30&type=section&id=Signatures) The report is duly signed on behalf of Peraso Inc. by Ronald Glibbery, Chief Executive Officer, and James W. Sullivan, Chief Financial Officer, as of May 13, 2022 - The report was signed by Ronald Glibbery, Chief Executive Officer, and James W. Sullivan, Chief Financial Officer, on **May 13, 2022**[158](index=158&type=chunk)

Peraso Inc. (NASDAQ:PRSO) Q1 2022 Earnings Conference Call May 9, 2022 4:30 PM ET Company Participants Jim Sullivan - Chief Financial Officer Ron Glibbery - Chief Executive Officer Conference Call Participants David Williams - Benchmark Operator Good afternoon, and welcome to Peraso, Inc.’s First Quarter 2022 Conference Call. At this time, all participants are in a listen-only mode. Following the company’s prepared remarks, instructions will be given for the questions-and-answer session. [Operator Instructi ...

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-K ☒ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the Fiscal Year December 31, 2021 or ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 Commission file number: 000-32929 PERASO INC. (Exact name of registrant as specified in its charter) Delaware (State or other jurisdiction of incorporation or organization) 2309 Bering Drive San Jose, California ...

WIRELESS UNLEASHED™ UNLEASH THE POWER OF 5G mmWAVE MARCH 2022 Copyright © 2022 Peraso Inc. 1 SAFE HARBOR AND FORWARD-LOOKING STATEMENTS This presentation contains forward-looking statements. All statements other than statements of historical facts contained in this presentation, including statements regarding the completion of business combination, the future results of operations, business strategy, timing, capabilities, and likelihood of success of combined company, and plans and objectives of its potenti ...