Peraso Inc. — FY2021 Form 10-K
Reporting period: Fiscal year ended December 31, 2021. Peraso Inc., formerly MoSys, completed its acquisition of Peraso Technologies Inc. on December 17, 2021. The transaction was accounted for as a reverse acquisition: Peraso Tech is the accounting acquirer, and the reported financial statements continue Peraso Tech’s results before closing and include MoSys only after closing. Accordingly, year-over-year comparisons are not fully like-for-like.
Business context
Peraso is a fabless semiconductor company focused primarily on millimeter-wave (mmWave) products, including 60 GHz devices and 5G products. It also sells modules, provides engineering and licensing services, and acquired MoSys’s memory products. Management says development resources are focused on mmWave; it does not plan to develop new memory products.
Financial and operating highlights
| Metric | FY2021 | FY2020 |
|---|---|---|
| Revenue | $5.679 million | $9.090 million |
| Product revenue | $4.906 million | $1.540 million |
| License and other revenue | $0.773 million | $7.550 million |
| Gross profit / margin | $2.409 million / 42% | $7.342 million / 81% |
| Operating loss | $16.078 million | $8.145 million |
| Net loss | $10.911 million | $10.227 million |
| Cash used in operating activities | $12.016 million | $10.237 million |
Product revenue rose 219%, reflecting increased mmWave shipments and the start of module sales. Total revenue fell 38%, principally because 2020 included a one-time $5.0 million license and higher NRE revenue. Lower-margin product revenue made up a larger share of sales, contributing to the gross-margin decline. Research and development expense increased 38% to $11.471 million; SG&A decreased 3% to $7.016 million. Interest expense rose 42% to $2.979 million. A $8.102 million gain from the change in fair value of warrant liabilities reduced the reported 2021 net loss; the warrants were settled in the transaction.
FY2021 basic and diluted loss per share was $1.86, compared with $3.60 in FY2020. The filing’s pro forma presentation, assuming the combination occurred at the start of each year, reports revenue of $10.670 million and adjusted net loss of $18.349 million for 2021, versus revenue of $15.885 million and net loss of $16.077 million for 2020. These unaudited pro forma figures are not necessarily indicative of actual results.
Liquidity, debt and capital
At December 31, 2021, cash and cash equivalents were $5.893 million, short- and long-term investments totaled $12.195 million, and cash plus investments totaled $18.088 million, versus $1.712 million in cash and short-term investments at year-end 2020. Current assets were $23.678 million and current liabilities $5.594 million. Total liabilities were $5.882 million; stockholders’ equity was $42.069 million, compared with a deficit of $3.921 million a year earlier.
Year-end balance-sheet debt included no loan payable or convertible debentures. Convertible debentures were converted into shares in December 2021, and the remaining loan facility was repaid. FY2021 financing activities provided $9.569 million, while the business combination contributed $6.464 million of cash in investing activities. Management expects cash expenditures to exceed receipts in 2022, but believes available liquidity will fund working capital and capital expenditure needs for at least 12 months from the financial-statement issuance date. The company has a history of losses and may need further financing.
Outlook, risks and unusual items
- Outlook: Management expects revenue to increase in 2022, citing anticipated growth in mmWave sales and a full-year contribution from memory products. It expects R&D and SG&A expenses to increase. These are expectations, not formal quantified guidance.
- Customer and receivables concentration: Three customers represented approximately 81% of FY2021 revenue; three represented 96% of year-end net receivables. The largest customer accounted for 48% of revenue.
- Funding and execution: The company expects ongoing losses and negative cash flows unless revenue grows substantially. Design-to-volume sales cycles can be lengthy, and design wins may not lead to production or sustained sales.
- Supply chain: Peraso relies on external foundries and contractors, has no long-term supply contracts, and reported longer lead times for some components. Its memory products rely on TSMC as sole foundry, and the company says it cannot transition those products to another foundry if the relevant process is discontinued.
- Integration and valuation: Integration of the businesses may be complex and expected synergies are uncertain. The acquisition allocation remains provisional; developed technology and customer-relationship values were based on estimates and a third-party valuation.
- Other risks: COVID-19, semiconductor cyclicality, competition, product quality, intellectual-property claims, and stock-price/Nasdaq listing volatility could adversely affect results. Management believes ownership-change limits could cause most pre-change tax attributes to expire unused.
- Unusual items and audit: The reverse acquisition materially changed the company’s reporting and capital structure. The auditor issued an unqualified opinion on the financial statements and identified reverse-acquisition valuation as a critical audit matter. Management reported effective disclosure controls and internal control over financial reporting.
Important facts for investors to verify
- How much 2022 revenue and gross margin came from recurring product shipments versus licensing, NRE, or acquired operations.
- Whether the largest customers continue purchasing and whether receivables are collected on time.
- Actual cash burn, liquidity runway, and any need for additional financing or equity issuance.
- Progress on mmWave design wins, module commercialization, supply availability, and the expected contribution from memory products.
- Final purchase-price allocation, including acquired intangible assets and goodwill, and any subsequent impairment or adjustment.
- The effect of Section 382 limitations on usable tax attributes and the status of Nasdaq continued-listing requirements.