Peraso(PRSO) - 2025 Q2 - Quarterly Report

PART I — FINANCIAL INFORMATION This section presents Peraso Inc.'s unaudited condensed consolidated financial statements and management's discussion and analysis for the periods ended June 30, 2025, and December 31, 2024 Item 1. Financial Statements (Unaudited) This section presents the unaudited condensed consolidated financial statements for Peraso Inc., including the balance sheets, statements of operations, stockholders' equity, and cash flows, along with detailed notes explaining significant accounting policies, fair value measurements, balance sheet details, commitments, contingencies, and other financial disclosures for the periods ended June 30, 2025, and December 31, 2024 Condensed Consolidated Balance Sheets The Condensed Consolidated Balance Sheets provide a snapshot of the company's financial position as of June 30, 2025, and December 31, 2024, showing a decrease in total assets and total liabilities, and a slight decrease in total stockholders' equity | ASSETS (in thousands) | June 30, 2025 (unaudited) | December 31, 2024 | | :-------------------- | :------------------------ | :------------------ | | Cash and cash equivalents | $1,761 | $3,344 | | Accounts receivable, net | 1,003 | 682 | | Inventories, net | 1,296 | 2,079 | | Prepaid expenses and other | 736 | 188 | | Total current assets | 4,796 | 6,293 | | Property and equipment, net | 432 | 512 | | Right-of-use lease assets | 194 | 267 | | Other | 109 | 134 | | Total assets | $5,531 | $7,206 | | LIABILITIES AND STOCKHOLDERS' EQUITY (in thousands) | | | | Accounts payable | $1,278 | $1,036 | | Accrued expenses and other | 962 | 1,987 | | Deferred revenue | 24 | 341 | | Short-term lease liabilities | 99 | 139 | | Total current liabilities | 2,363 | 3,503 | | Long-term lease liabilities | 132 | 182 | | Warrant liabilities | 49 | 55 | | Total liabilities | 2,544 | 3,740 | | Total stockholders' equity | 2,987 | 3,466 | | Total liabilities and stockholders' equity | $5,531 | $7,206 | Condensed Consolidated Statements of Operations The Condensed Consolidated Statements of Operations show a significant reduction in net loss for both the three and six months ended June 30, 2025, compared to the same periods in 2024, primarily driven by decreased operating expenses, despite a decline in total net revenue | (In thousands, except per share data) | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :------------------------------------ | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Total net revenue | $2,220 | $4,238 | $6,089 | $7,054 | | Cost of net revenue | 1,147 | 1,887 | 2,336 | 3,397 | | Gross profit | 1,073 | 2,351 | 3,753 | 3,657 | | Total operating expenses | 2,850 | 6,826 | 6,044 | 11,763 | | Loss from operations | (1,777) | (4,475) | (2,291) | (8,106) | | Net loss | $(1,829) | $(4,425) | $(2,300) | $(6,456) | | Net loss per share (Basic and diluted) | $(0.31) | $(1.88) | $(0.39) | $(2.75) | | Shares used in computing net loss per share (Basic and diluted) | 5,977 | 2,358 | 5,862 | 2,345 | - Net loss significantly decreased for the three months ended June 30, 2025, to $(1,829) thousand from $(4,425) thousand in the prior year, and for the six months ended June 30, 2025, to $(2,300) thousand from $(6,456) thousand in the prior year[11] - Total net revenue decreased by 47.6% for the three months ended June 30, 2025, and by 13.6% for the six months ended June 30, 2025, compared to the same periods in 2024[11] Condensed Consolidated Statements of Stockholders' Equity The Condensed Consolidated Statements of Stockholders' Equity detail changes in equity components, showing an increase in common stock shares and additional paid-in capital, alongside an accumulated deficit, reflecting financing activities and net losses for the periods ended June 30, 2025, and 2024 | (In thousands) | Common Stock Shares (June 30, 2025) | Common Stock Amount (June 30, 2025) | Additional Paid-In Capital (June 30, 2025) | Accumulated Deficit (June 30, 2025) | Total (June 30, 2025) | | :------------- | :---------------------------------- | :---------------------------------- | :--------------------------------------- | :---------------------------------- | :-------------------- | | Balance as of December 31, 2024 | 4,474 | $3 | $179,390 | $(177,120) | $3,466 | | At-the market sales of stock, net | 1,270 | 2 | 1,510 | — | 1,512 | | Shares issued for services | 40 | — | 40 | — | 40 | | Stock-based compensation | — | — | 266 | — | 266 | | Net loss | — | — | — | (2,300) | (2,300) | | Balance as of June 30, 2025 | 5,933 | $5 | $181,391 | $(179,420) | $2,987 | - Total stockholders' equity decreased from $3,466 thousand at December 31, 2024, to $2,987 thousand at June 30, 2025, primarily due to net loss, partially offset by at-the-market stock sales and stock-based compensation[13] Condensed Consolidated Statements of Cash Flows The Condensed Consolidated Statements of Cash Flows indicate a net decrease in cash and cash equivalents for the six months ended June 30, 2025, primarily due to cash used in operating activities, partially offset by cash provided by financing activities | (In thousands) | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :------------------------------------------ | :----------------------------- | :----------------------------- | | Net cash used in operating activities | $(3,007) | $(3,209) | | Net cash used in investing activities | $(45) | $0 | | Net cash provided by financing activities | $1,469 | $3,494 | | Net increase (decrease) in cash and cash equivalents | $(1,583) | $285 | | Cash and cash equivalents at end of period | $1,761 | $1,868 | - Net cash used in operating activities decreased slightly from $3,209 thousand in H1 2024 to $3,007 thousand in H1 2025[16] - Cash and cash equivalents at the end of the period decreased from $3,344 thousand at the beginning of 2025 to $1,761 thousand by June 30, 2025[16] Notes to Condensed Consolidated Financial Statements These notes provide detailed explanations and disclosures supporting the condensed consolidated financial statements, covering the company's business, significant accounting policies, fair value measurements, balance sheet specifics, severance and software license obligations, commitments, contingencies, business segments, stock-based compensation, stockholders' equity, warrants, related party transactions, memory IC product end-of-life, and subsequent events Note 1. The Company and Summary of Significant Accounting Policies This note describes Peraso Inc. as a fabless semiconductor company specializing in millimeter wave (mmWave) wireless technology, deriving revenue from semiconductor devices, modules, and engineering services. It also highlights the company's acquisition of Peraso Technologies Inc. in 2021, its ongoing net losses and accumulated deficit, raising substantial doubt about its ability to continue as a going concern without additional capital. Key accounting policies for revenue recognition, stock-based compensation, and per-share amounts are also detailed - Peraso Inc. is a fabless semiconductor company focused on millimeter wave (mmWave) wireless technology, generating revenue from semiconductor devices, modules, and non-recurring engineering services[18] - The company incurred net losses of $2.3 million for the six months ended June 30, 2025, and $10.7 million for the year ended December 31, 2024, resulting in an accumulated deficit of $179.4 million as of June 30, 2025[21] - Substantial doubt exists about the company's ability to continue as a going concern due to expected operating losses and cash burn, necessitating additional capital raises[22] - A 1-for-40 reverse stock split was effective January 3, 2024, impacting common stock and exchangeable shares, with all share and per-share amounts restated to reflect this[24][25] Note 2. Fair Value of Financial Instruments This note outlines the fair value measurements of the company's financial instruments, categorizing them into Level 1, Level 2, and Level 3 inputs. As of June 30, 2025, and December 31, 2024, money market funds are classified as Level 1, while warrant liabilities are classified as Level 3 | (in thousands) | June 30, 2025 Fair Value Level 1 | June 30, 2025 Fair Value Level 3 | December 31, 2024 Fair Value Level 1 | December 31, 2024 Fair Value Level 3 | | :------------- | :------------------------------- | :------------------------------- | :----------------------------------- | :----------------------------------- | | Assets: Money market funds | $1 | $— | $1 | $— | | Liabilities: Warrant liabilities | $— | $49 | $— | $55 | - Warrant liabilities are measured using Level 3 inputs, indicating significant management judgment and unobservable inputs[31][32] Note 3. Balance Sheet Detail This note provides a detailed breakdown of specific balance sheet accounts, including inventories and accrued expenses and other liabilities, highlighting changes between June 30, 2025, and December 31, 2024 | Inventories (in thousands) | June 30, 2025 | December 31, 2024 | | :------------------------ | :------------ | :---------------- | | Raw materials | $296 | $627 | | Work-in-process | 283 | 473 | | Finished goods | 717 | 979 | | Total Inventories | $1,296 | $2,079 | | Accrued Expenses and Other (in thousands) | June 30, 2025 | December 31, 2024 | | :-------------------------------------- | :------------ | :---------------- | | Accrued wages and employee benefits | $401 | $457 | | Professional fees, legal and consulting | 257 | 223 | | Software license obligations | 197 | 1,118 | | Severance benefits | 10 | 118 | | Warranty accrual | 23 | 34 | | Other | 74 | 37 | | Total Accrued Expenses and Other | $962 | $1,987 | - Total inventories decreased from $2,079 thousand at December 31, 2024, to $1,296 thousand at June 30, 2025[57] - Software license obligations within accrued expenses significantly decreased from $1,118 thousand to $197 thousand, reflecting terminations and reversals[57][59] Note 4. Severance and Software License Obligations This note details the financial impact of employee layoffs and software license obligations. The company recorded severance charges of approximately $446,000 in H1 2024 due to employee terminations and accrued $1,617,000 for non-cancelable software licenses. In H1 2025, a refund for a terminated license agreement resulted in a reversal of $222,600 in expense - Severance charges of approximately $446 thousand were recorded during the six months ended June 30, 2024, due to employee terminations[58] - Approximately $1,617 thousand was accrued for non-cancelable computer-aided design software licenses during the three months ended June 30, 2024, due to non-utilization[59] - A reversal of approximately $222.6 thousand in expense and $166.3 thousand in related contractual liabilities occurred during the three months ended June 30, 2025, due to a terminated license agreement and refund[59] Note 5. Commitments and Contingencies This note outlines the company's lease commitments, indemnification agreements, product warranties, legal matters, and purchase obligations. It details operating and finance leases, including a renewed Toronto office lease and a Markham facility lease, and notes that no material amounts were reflected for indemnifications or product warranties. The company also has $3.1 million in non-cancelable purchase orders for inventory | Lease Liabilities (in thousands) | June 30, 2025 | | :----------------------------- | :------------ | | Operating leases | $224 | | Finance leases | $7 | | Total lease liabilities | $231 | | Future Minimum Lease Payments (in thousands) | | | :----------------------------------------- | :------------ | | Year ending December 31, 2025 | $48 | | Year ending December 31, 2026 | $107 | | Year ending December 31, 2027 | $99 | | Total future lease payments | $254 | | Less: imputed interest | $(23) | | Present value of lease liabilities | $231 | - The company had outstanding non-cancelable purchase orders for inventory, primarily wafers and substrates, totaling approximately $3.1 million as of June 30, 2025[72] - Rent expense was approximately $0.1 million and $0.2 million for the three months ended June 30, 2025 and 2024, respectively, and $0.2 million and $0.3 million for the six months ended June 30, 2025 and 2024, respectively[67] Note 6. Business Segments, Concentration of Credit Risk and Significant Customers This note clarifies that Peraso Inc. operates as a single reportable segment, focusing on mmWave wireless technology. It provides a geographical breakdown of revenue, showing a shift in revenue concentration, and identifies significant customers and vendors, highlighting changes in their contribution to total revenue and accounts receivable/payable - The company operates and manages its business as one reportable and operating segment, focused on mmWave wireless technology, semiconductor devices, antenna modules, NRE services, and intellectual property licensing[74] | Revenue by Geographical Destination (in thousands) | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :----------------------------------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Europe | $1,204 | $561 | $1,733 | $755 | | Taiwan | 570 | 71 | 1,590 | 161 | | North America | 8 | 3,308 | 1,779 | 5,539 | | Hong Kong | 2 | 234 | 8 | 446 | | Rest of the world | 436 | 64 | 979 | 153 | | Total net revenue | $2,220 | $4,238 | $6,089 | $7,054 | | Product Revenue by Category (in thousands) | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--------------------------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Memory ICs | $— | $3,428 | $2,267 | $5,811 | | mmWave ICs | 1,318 | 127 | 2,293 | 204 | | mmWave modules | 886 | 553 | 1,444 | 757 | | mmWave other products | 14 | 1 | 14 | 13 | | Total product revenue | $2,218 | $4,109 | $6,018 | $6,785 | - Customer A represented 32% of total revenue for the three months ended June 30, 2025, and 71% of net accounts receivable at June 30, 2025[77][78] Note 7. Stock-Based Compensation This note details the company's stock-based compensation plans, including the 2019 Stock Incentive Plan and assumed 2009 Share Option Plan. It reports compensation costs related to stock options and restricted stock units (RSUs), along with the valuation assumptions used in the Black-Scholes model for option grants - Stock-based compensation expense for stock options was $0.2 million for the six months ended June 30, 2025, a significant decrease from $2.0 million in the prior year period[84] - The unamortized compensation cost for stock options was approximately $0.8 million at June 30, 2025, expected to be recognized over 2.3 years[84] Stock Option Valuation Assumptions (Six Months Ended June 30, 2025) | Stock Option Valuation Assumptions (Six Months Ended June 30, 2025) | | | :------------------------------------------------ | :-------- | | Interest rate (risk-free rate) | 4.34% | | Expected volatility | 119% | | Expected term | 4.38 years | | Expected dividend | 0% | | Fair value of option grants (in thousands) | $832 | Note 8. Stockholders' Equity This note describes changes in stockholders' equity, including a February 2024 public offering that generated $3.4 million in net proceeds, the issuance of shares for services, and sales under an At The Market (ATM) offering program. The ATM program generated $1.5 million in net proceeds from the sale of 1,270,158 shares during the six months ended June 30, 2025 - A public offering in February 2024, including common stock, pre-funded warrants, Series A and Series B warrants, generated approximately $3.4 million in net proceeds[89][90] - During the six months ended June 30, 2025, the company sold 1,270,158 shares of common stock through its At The Market (ATM) offering program, yielding approximately $1.512 million in net proceeds[94] - In January 2025, 40,000 unregistered shares of common stock with a fair value of approximately $40 thousand were issued to a service provider[93] Note 9. Warrants This note details the company's warrant activities, including extensions of Series B and C warrants, a November 2024 inducement offering that issued Series C and D warrants, and the classification of certain warrants as liabilities or equity. The inducement offering generated approximately $2.92 million in gross proceeds. Warrants classified as liabilities had a fair value of $49 thousand at June 30, 2025, while equity-classified warrants totaled 8,770 thousand shares - The expiration date of Series B warrants was extended twice, first to October 7, 2024, and then to November 8, 2024[95] - A November 2024 inducement offering resulted in the exercise of existing Series B warrants at a reduced price and the issuance of new Series C and D warrants, generating approximately $2.92 million in gross proceeds[96][97] Warrants Classified as Liabilities (in thousands) | Warrants Classified as Liabilities (in thousands) | Number of Shares | Exercise Price | Expiration Date | | :---------------------------------------------- | :--------------- | :------------- | :-------------- | | Warrants issued - November 2022 | 92 | $40.00 | May 28, 2028 | | Warrants issued - June 2023 | 143 | $28.00 | June 2, 2028 | | Total | 235 | | | Fair Value of Purchase Warrants (in thousands) | Fair Value of Purchase Warrants (in thousands) | Amount | | :------------------------------------------- | :----- | | Balance as of December 31, 2024 | $55 | | Change in fair value of warrants | $(35) | | Balance as of March 31, 2025 | $20 | | Change in fair value of warrants | $29 | | Balance as of June 30, 2025 | $49 | Warrants Classified as Equity (in thousands) | Warrants Classified as Equity (in thousands) | Number of Shares | Exercise Price | Expiration | | :----------------------------------------- | :--------------- | :------------- | :--------- | | Common Stock Warrant | 7 | $28.00 | June 2, 2028 | | Series A warrants | 3,975 | $2.250 | February 8, 2029 | | Series A warrants (Ladenburg) | 139 | $2.625 | February 8, 2029 | | Series C warrants | 2,246 | $1.610 | August 4, 2025 | | Series C warrants (Ladenburg) | 157 | $1.625 | November 6, 2029 | | Series D warrants | 2,246 | $1.610 | November 6, 2029 | | Balance as of June 30, 2025 | 8,770 | | | Note 10. Related Party Transactions This note discloses compensation paid to a family member of one of the company's executive officers who is also an employee. Compensation expense for this individual was approximately $28,600 and $27,800 for the three months ended June 30, 2025 and 2024, respectively, and $56,100 and $55,300 for the six months ended June 30, 2025 and 2024, respectively - Compensation expense for an employed family member of an executive officer was approximately $56.1 thousand for the six months ended June 30, 2025, compared to $55.3 thousand for the same period in 2024[105] Note 11. Memory IC Product End-of-Life This note announces the completion of the end-of-life (EOL) process for the company's memory IC products in March 2025, due to the discontinuation of the foundry process by Taiwan Semiconductor Manufacturing Corporation (TSMC). All outstanding EOL orders have been fulfilled - The company completed all outstanding end-of-life (EOL) orders for its memory IC products in March 2025, following TSMC's discontinuation of the manufacturing process[106] Note 12. Subsequent Events This note discloses events occurring after June 30, 2025, including a second extension of the Series C Warrants' expiration date to December 5, 2025, and the sale of 238,049 shares of common stock for approximately $254,364 in net proceeds through the ATM offering program - On August 4, 2025, the expiration date of Series C Warrants was extended to December 5, 2025[107] - Subsequent to June 30, 2025, the company sold 238,049 shares of common stock for approximately $254.364 thousand in net proceeds via its ATM offering program[108] Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations This section provides management's perspective on the company's financial condition and results of operations, highlighting its strategy as a fabless semiconductor company focused on mmWave technology. It discusses recent developments, including a Nasdaq compliance issue and an unsolicited acquisition proposal, and reiterates significant concerns about liquidity and the company's ability to continue as a going concern due to ongoing losses and cash burn. The analysis also covers detailed changes in net revenue, cost of revenue, gross profit, and operating expenses - The company's primary business objective is to be a profitable, IP-rich fabless semiconductor company specializing in mmWave semiconductors for 802.11ad/ay-compliant and 5G-compliant devices[110] - Net losses were approximately $2.3 million for the six months ended June 30, 2025, and $10.7 million for the year ended December 31, 2024, leading to an accumulated deficit of $179.4 million[112] - The company received an unsolicited, non-binding proposal from Mobix Labs, Inc. to acquire all outstanding equity securities, which the board is evaluating as part of exploring strategic alternatives[114][115] - Substantial doubt exists about the company's ability to continue as a going concern, requiring increased revenues or additional capital through debt or equity arrangements[112][144] Overview Peraso Inc. aims to be a profitable, IP-rich fabless semiconductor company focused on mmWave technology, including ICs and antenna modules. The company has developed a high-volume mmWave IC production test methodology and integrates proprietary ICs into antenna modules to simplify customer RF engineering. The memory product line was discontinued in March 2025 due to foundry process cessation. The company continues to face significant net losses and negative cash flows, raising going concern doubts - Peraso Inc. specializes in mmWave semiconductors (24-300 GHz) for 802.11ad/ay-compliant and 5G-compliant devices, offering ICs, antenna modules, and non-recurring engineering services[110] - The company completed final end-of-life (EOL) shipments of its memory IC products in March 2025, following TSMC's discontinuation of the foundry process[111] - The company reported net losses of $2.3 million for the six months ended June 30, 2025, and an accumulated deficit of $179.4 million, indicating a need for substantial revenue increase or additional capital[112] Recent Developments Recent developments include regaining compliance with Nasdaq's minimum bid price requirement on June 18, 2025, after receiving a deficiency letter in April 2025. The company also confirmed an unsolicited, non-binding acquisition proposal from Mobix Labs, Inc. on June 27, 2025, and subsequently announced on July 11, 2025, that its board is exploring strategic alternatives to maximize stockholder value, while also seeking potential funding arrangements - Regained compliance with Nasdaq's minimum bid price requirement on June 18, 2025, after being notified of non-compliance on April 4, 2025[113] - Received an unsolicited, non-binding proposal from Mobix Labs, Inc. on June 27, 2025, to acquire all equity securities for newly issued Mobix common stock, valued at approximately $1.20 per share[114] - The Board authorized the exploration of strategic alternatives, including a merger or sale of assets, and retained Craig-Hallum Capital Group LLC as a financial advisor[115] Risks and Uncertainties The company faces various risks, including intense industry competition, financing and liquidity challenges, rapidly changing customer demands, limited operating history, and market volatility. Access to capital markets may be constrained, and any additional capital could come with detrimental terms for existing stockholders. These risks are further detailed in the company's Annual Report on Form 10-K - Key risks include competition, financing and liquidity requirements, rapidly changing customer requirements, limited operating history, pandemics, wars, acts of terrorism, and public market volatility[117] - Inability to access capital markets or obtain capital on acceptable terms could significantly harm existing stockholders and the business[117] Critical Accounting Policies and Estimates The company's financial statements are prepared in accordance with GAAP, requiring management to make estimates and judgments that impact reported financial amounts. These estimates are based on historical experience and reasonable assumptions, with actual results potentially differing. As of June 30, 2025, there have been no material changes to the significant accounting policies and estimates previously disclosed - Financial statements rely on management estimates and assumptions, which could lead to actual results differing from reported amounts[27][119] - No material changes to significant accounting policies and estimates as of June 30, 2025[119] Results of Operations The company experienced a decrease in total net revenue for both the three and six months ended June 30, 2025, primarily due to the cessation of memory IC product shipments. However, this was partially offset by increased mmWave product sales. Gross profit decreased for the three-month period but increased for the six-month period, influenced by product mix and prior period inventory write-downs. Operating expenses, including R&D and SG&A, significantly decreased due to cost reduction initiatives and reduced software license obligations | (dollar amounts in thousands) | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Change (2024 to 2025) | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | Change (2024 to 2025) | | :---------------------------- | :------------------------------- | :------------------------------- | :-------------------- | :----------------------------- | :----------------------------- | :-------------------- | | Product revenue | $2,218 | $4,109 | $(1,891) (-46%) | $6,018 | $6,785 | $(767) (-11%) | | Royalty and other revenue | $2 | $129 | $(127) (-98%) | $71 | $269 | $(198) (-74%) | | Total net revenue | $2,220 | $4,238 | $(2,018) (-48%) | $6,089 | $7,054 | $(965) (-14%) | | Cost of net revenue | $1,147 | $1,887 | $(740) (-39%) | $2,336 | $3,397 | $(1,061) (-31%) | | Gross profit | $1,073 | $2,351 | $(1,278) (-54%) | $3,753 | $3,657 | $96 (3%) | | Research and development | $1,662 | $2,644 | $(982) (-37%) | $3,245 | $5,457 | $(2,212) (-41%) | | Selling, general and administrative | $1,411 | $2,141 | $(730) (-34%) | $3,022 | $4,243 | $(1,221) (-29%) | | Severance and software license obligations | $(223) | $2,041 | $(2,264) (-111%) | $(223) | $2,063 | $(2,286) (-111%) | - Product revenue decreased due to the completion of memory IC product EOL shipments in March 2025, partially offset by increased mmWave IC and antenna module shipments[120] - R&D expenses decreased significantly due to reduced salary, consulting costs, rent expense, and software license expense from cost reduction initiatives[128] - SG&A expenses decreased due to reductions in facilities, stock-based compensation, and amortization of purchased intangible assets, partially offset by increased consulting and professional services[131] Liquidity and Capital Resources; Changes in Financial Condition As of June 30, 2025, the company had $1.8 million in cash and cash equivalents and $2.4 million in working capital. Net cash used in operating activities was $3.0 million for the first six months of 2025. The company expects to continue incurring operating losses and cash burn, with existing cash projected to last into Q4 2025. Significant doubt about going concern remains, necessitating additional financing or cost reduction strategies. The company has $3.1 million in non-cancelable purchase obligations for inventory - Cash and cash equivalents were $1.8 million and working capital was $2.4 million as of June 30, 2025[135] - Net cash used in operating activities was $3.0 million for the first six months of 2025, primarily from net loss and changes in assets/liabilities[136] - The company believes existing cash will meet capital needs into the fourth quarter of 2025, but expects continued operating losses and cash burn, raising substantial doubt about its ability to continue as a going concern[143][144] - Outstanding non-cancelable purchase orders for inventory totaled approximately $3.1 million at June 30, 2025[141] Off-Balance Sheet Arrangements 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 - No material off-balance sheet arrangements or obligations exist that could significantly impact financial condition, results of operations, liquidity, or capital resources[149] Indemnifications In the ordinary course of business, the company enters into contractual indemnification agreements with counterparties, officers, and directors. No material amounts related to these indemnifications were reflected in the condensed consolidated financial statements for the three and six months ended June 30, 2025 - The company has contractual indemnification agreements with counterparties, officers, and directors[150] - No material amounts related to these indemnifications were reflected in the financial statements for the three and six months ended June 30, 2025[150] Recent Accounting Pronouncements This section refers to Note 1 of the condensed consolidated financial statements for a discussion of recently issued accounting pronouncements, including ASU No. 2023-09 (Income Taxes) and ASU No. 2024-03 (Income Statement – Expense Disaggregation Disclosures) - ASU No. 2023-09 (Income Taxes) will be effective for annual periods beginning after December 15, 2024, and is not expected to have a material impact[52] - ASU No. 2024-03 (Income Statement – Expense Disaggregation Disclosures) is effective for annual periods beginning January 1, 2027, and the company is evaluating its impact[53] Item 4. Controls and Procedures Management concluded that the company's disclosure controls and procedures were effective as of June 30, 2025. There were no material changes in internal control over financial reporting during the six months ended June 30, 2025 - Management concluded that disclosure controls and procedures were effective as of June 30, 2025[154] - No material changes in internal control over financial reporting occurred during the six months ended June 30, 2025[155] PART II — OTHER INFORMATION This section provides additional information on legal proceedings, risk factors, equity sales, other disclosures, and exhibits for Peraso Inc. Item 1. Legal Proceedings The company is not a party to any legal proceeding that is likely to have a material adverse effect on its financial position or results of operations. Information on legal matters is incorporated by reference from Note 5 of the financial statements - The company is not involved in any legal proceedings expected to have a material adverse effect on its financial position or results of operations[71][157] Item 1A. Risk Factors This section updates the significant risks faced by the company, emphasizing the substantial doubt about its ability to continue as a going concern due to ongoing losses and the need for additional capital. It also discusses the potential disruptions and uncertainties arising from an unsolicited acquisition proposal and the exploration of strategic alternatives, the impact of discontinuing memory product production, and the unintended consequences of workforce reductions - Substantial doubt exists about the company's ability to continue as a going concern, with cash and cash equivalents of $1.8 million and an accumulated deficit of $179.4 million as of June 30, 2025[159][160] - An unsolicited, non-binding acquisition proposal from Mobix Labs, Inc. and the exploration of strategic alternatives could divert management's attention, disrupt business operations, and create stock price volatility[164][165][167] - The discontinuation of memory IC products in March 2025 will negatively impact future revenues, as these products represented 38% and 86% of revenues for the six months ended June 30, 2025 and 2024, respectively[176] - Workforce reductions implemented in November 2023, while intended to reduce operating expenses, may lead to unintended consequences such as loss of institutional knowledge, decreased morale, and difficulties in pursuing new opportunities[178][180] Item 2. Unregistered Sales of Equity Securities and Use of Proceeds There were no unregistered sales of equity securities or use of proceeds to report for the fiscal quarter ended June 30, 2025 - No unregistered sales of equity securities or use of proceeds to report for the fiscal quarter ended June 30, 2025[186] Item 5. Other Information This section reports that no directors or officers adopted, modified, or terminated Rule 10b-5 trading arrangements during the quarter. It also discloses stock option awards granted to the CEO, CFO, and COO on August 7, 2025, each receiving 25,000 options with an exercise price of $0.8399 per share, vesting over 36 months - No Rule 10b-5 trading arrangements were adopted, modified, or terminated by directors or officers during the fiscal quarter ended June 30, 2025[187] - On August 7, 2025, the CEO, CFO, and COO were each awarded 25,000 stock options with an exercise price of $0.8399 per share, vesting monthly over 36 months[189] Item 6. Exhibits This section lists all exhibits filed with the Form 10-Q, including various certificates of incorporation, bylaws, forms of stock option awards, amendments to warrants, and certifications required by SEC rules (Rule 13a-14, Section 1350, and XBRL financial information) - Exhibits include corporate governance documents (Restated Certificate of Incorporation, Bylaws), stock option award agreements, warrant amendments, and regulatory certifications (Rule 13a-14, Section 1350, XBRL financial information)[191] Signatures The report is duly signed on behalf of Peraso Inc. by Ronald Glibbery, Chief Executive Officer, and James Sullivan, Chief Financial Officer, on August 13, 2025, certifying its submission in accordance with the Securities Exchange Act of 1934 - The report was signed by Ronald Glibbery (CEO) and James Sullivan (CFO) on August 13, 2025[194][195]