United States securities and exchange commission logo
September 20, 2022
James Sullivan
Chief Financial Officer
Peraso Inc.
2309 Bering Drive
San Jose, CA 95131
Re: Peraso Inc.
Form 10-K for the
Fiscal Year ended December 31, 2021
Filed March 31,
2022
File No. 000-32929
Dear Mr. Sullivan:
We have reviewed your August 17, 2022 response to our comment
letter and have the
following additional comments. In some of our comments, we may ask you
to provide us with
information so we may better understand your disclosure.
Please respond to these comments within ten business days by
providing the requested
information or advise us as soon as possible when you will respond. If
you do not believe our
comments apply to your facts and circumstances, please tell us why in
your response.
After reviewing your response to these comments, we may have
additional
comments. Unless we note otherwise, our references to prior comments are
to comments in our
July 28, 2022 letter.
Form 10-K for the Fiscal Year ended December 31, 2021
Management's Discussion and Analysis of Financial Condition and Results
of Operations
Results of Operations, page 31
1. We note that in
response to prior comment 5 you explain that higher revenues in 2022 are
attributable to
increases in memory product sales and mmWave module sales.
We also see that you
provided disclosure on page 30 of your recent interim report of the
reasons for higher
revenue and cost of net revenue, attributing the changes to increased
volume shipments of
your LineSpeed and Bandwidth Engine IC and mmWave module
products. You also
explain that your module products have higher cost of goods sold per
unit, and generate
lower gross profit margins, than your IC products.
James Sullivan
FirstName
Peraso Inc.LastNameJames Sullivan
Comapany 20,
September NamePeraso
2022 Inc.
September
Page 2 20, 2022 Page 2
FirstName LastName
Please address changes in revenues with reference to both quantities
and prices of the
products sold, as previously requested, to comply with Item 303(b)(2)
of Regulation S-K.
In other words, include volumetric measures of sales for the differing
product types for
each period, and clarify the extent to which changes in revenues
resulted from changes in
prices, as opposed to changes in volumes sold. We reissue prior
comment 5.
Controls and Procedures, page 35
2. We understand from your response to prior comment 6 that you continue
to
believe your disclosure controls and procedures and internal control
over financial
reporting have been appropriately assessed as effective at December
31, 2021.
Tell us how you considered the accounting and disclosure requirements
applicable to
minority interests and participating interests, as referenced in other
comments in this
letter, in formulating your view. We reissue prior comment 6.
Financial Statements
Note 2 - Business Combination
Securities Conversion, page 75
3. We note that in response to prior comment 9 you revised your balance
sheet when filing
your second quarter interim report to include the Series A Special
Voting Preferred Stock,
although you continue to exclude the instrument from your Statements
of Stockholders'
Equity (Deficit) on page 5 of that report; and have not identified any
accounting literature
to support your combined equity presentation.
Rules 3-04, 5-02.29, 5-02.31, and 5-03.19 of Regulation S-X prescribe
distinct reporting
requirements for common stock and non-controlling interests in the
Statements of
Changes in Stockholders' Equity, the Balance Sheets and Statements of
Operations.
There are also specific requirements in FASB ASC 810-10-45-16, as to
the balance sheet
presentation for non-controlling interests; FASB ASC 810-10-45-20 and
21, as to the
allocation of earnings and losses between a parent and non-controlling
interests; FASB
ASC 260-10-45-11A, regarding non-controlling interests in EPS
computations; and FASB
ASC 260-10-45-60A, 65, 66 and 68, and FASB ASC 260-10-55-25, regarding
the two-
class method for participating securities in EPS computations.
Unless you are able to show how you are not subject to these
requirements, it appears that
you would need to restate your financial statements to comply with the
applicable sections
of the aforementioned guidance. However, please consider how economic
interests are
conveyed to holders of the exchangeable shares in distinguishing
between non-controlling
interests and participating securities in your application of this
guidance, particularly as it
relates to allocations of earnings and losses for each period.
James Sullivan
FirstName
Peraso Inc.LastNameJames Sullivan
Comapany 20,
September NamePeraso
2022 Inc.
September
Page 3 20, 2022 Page 3
FirstName LastName
Tell us how you have considered the configuration of entities within
the consolidated
entity, including any rights that attach to the exchangeable shares in
operations of the
subsidiary, apart from those of the parent, in formulating your view.
Please address all of the guidance cited above and submit any
revisions that you believe
will be necessary to include in amendments to your annual and interim
reports to conform
to generally accepted accounting principles and SEC reporting
requirements.
4. We note that in response to prior comment 9, you explain that your
subsidiary 2864555
Ontario Inc. (Canco), the issuer of the exchangeable shares, "has not
engaged in any
material operations and has no other material assets or liabilities of
any kind [and
that] Canco is, for all intents and purposes, a shell company."
However, on page 10 of your September 30, 2021 interim report, you
reported that "Under
the Agreement, the Company, indirectly through Canco, is to acquire
all of the issued and
outstanding common shares of Peraso," and we see that the Arrangement
Agreement at
Exhibit 2.1 similarly states, in referring to Mosys, Inc., that "RTO
Acquiror will,
indirectly through Canco, acquire all of the Peraso Shares in exchange
for the
Consideration...." Section 2.2(d) and (e) of Article 2 in Schedule A -
Plan of Arrangement
at Exhibit 2.2 also clearly identify Canco as the recipient of the
Peraso shares.
Please reconcile your response with these observations and explain to
us how Canco has
remained a shell company, after receiving the shares of Peraso
Technologies, Inc., if this
is your view. Provide us with an organizational chart that depicts all
of the entities
involved in your reverse merger immediately following the transaction,
and if there have
been subsequent changes, also submit an organizational chart that
depicts those changes
along with a description of, and an explanation for, the intervening
events.
5. We note that the Arrangement Agreement at Exhibit 2.1, including
Schedule A - Plan of
Arrangement provides, pursuant to Sections 5.1, 5.2, and 5.3,
regarding the Liquidation
Call Right, Redemption Call Right, and Change of Law Call Right, one
of two possible
mechanisms for settlement, where the counterparty would be either
2864552 Ontario Inc.
(Callco) or MoSys, Inc. (RTO Acquiror, subsequently known as Peraso,
Inc.).
We also note that Appendix I to Schedule A - Plan of Arrangement
provides, pursuant to
Sections 5, 6 and 7, regarding the Distribution on Liquidation,
Retraction of Exchangeable
Shares by Holder, and Redemption of Exchangeable Shares by Canco, one
of
three possible mechanisms for settlement, where the counterparty would
be either
2864555 Ontario Inc. (Canco), Callco or RTO Acquiror.
The Liquidation Call Purchase Price, Redemption Call Purchase Price,
and Change of
Law Call Purchase Price prescribed in the Plan of Arrangement; and the
Liquidation
Amount, Retraction Price, and Redemption Price prescribed in Appendix
I; all appear be
calculated and settled in a similar manner, i.e. based on the current
market price of an
RTO Acquiror Share on the last business day prior to the relevant
provision date, plus the
James Sullivan
Peraso Inc.
September 20, 2022
Page 4
Dividend Amount, and by delivering or causing to be delivered to the
holder of the
exchangeable share one RTO Acquiror Share plus any Dividend Amount.
Please expand your disclosure to include a summary of the various
circumstances under
which exchange, settlement or redemption may occur, rationale for
having options in
deciding which counterparty would be involved in an exchange, the
criteria that would
govern the selection of the counterparty, quantification of tax
liabilities assumed on behalf
of the former shareholders who elected to receive exchangeable shares,
the manner by
which such tax positions are reflected in your financial statements,
and a description of the
mechanisms by which your subsidiaries would either have or obtain
parent company
shares to settle an exchange to comply with FASB ASC 505-10-50-3.
Please also include a description of any circumstances under which the
exchangeable
shares could be redeemed for cash pursuant to these or any other
provisions of, or related
to, the Arrangement Agreement, or a statement to clarify if there are
none. If there are
such circumstances, tell us the specific provisions that would
accommodate this manner of
settlement and explain how you have assessed them from an accounting
standpoint.
You may contact Jenifer Gallagher, Staff Accountant at (202) 551-3706 or
Karl Hiller,
Branch Chief at (202) 551-3686 with any questions.
FirstName LastNameJames Sullivan Sincerely,
Comapany NamePeraso Inc.
Division of
Corporation Finance
September 20, 2022 Page 4 Office of Energy
& Transportation
FirstName LastName