Form 8-K Peraso Inc. To: Dec. 15

Peraso Technologies Inc.

Notes to Condensed Financial Statements (Unaudited)

For the three and nine month periods ended September 30, 2021 and 2020

Convertible debentures due December 31, 2023

In December 2019, the Company entered into convertible debenture agreements with a total principal amount of $ 1,748,035 maturing on June 30, 2025. In March 2020, the maturity date was changed to December 31, 2023. The convertible debentures bear interest at the rate of 6%. per year and are guaranteed by the assets of the Company. Financing costs incurred for the issuance of convertible debentures totaling $ 73,608 have been recorded as a debt discount. The Company has also granted warrants to a Noteholder enabling him to purchase 53,312 common shares of the Company. The fair value of these warrants of $ 45,971 was initially recorded as a liability and a debt discount.

In March 2020, the Company entered into convertible debenture agreements with a total principal amount of $ 3,885,000 maturing on December 31, 2023. The convertible debentures bear interest at the rate of 6% per annum and are secured by the assets of the society. Financing costs incurred for the issuance of convertible debentures totaling $ 433,122 have been recorded as a debt discount. The Company has also granted to noteholders warrants to purchase 2,160,215 common shares of the Company. The fair value of these warrants of $ 1,707,943 was initially recorded as a liability and a debt discount.

During the month of October 2020, the Company settled a portion of its DIP loan amounting to $ 2,550,000 by issuing convertible debentures which will mature on December 31, 2023. The convertible debentures bear interest at the rate of 6% per year and are guaranteed by the Company. assets. The Company has also granted to noteholders warrants to purchase 4,468,280 common shares of the Company. The fair value of these warrants of $ 3,592,855 was initially recorded as a liability and debt discount up to the face value of the convertible debt, and a finance charge of $ 1,042,856 was recorded. recorded in the income statement for the remaining portion.

In April 2021, the Company entered into convertible debenture agreements with an aggregate principal amount of $ 5,899,308 maturing December 31, 2023. The convertible debentures bear interest at the rate of 6% per annum and are secured by the assets of the society. Financial costs incurred for the issuance of convertible debentures in the amount of $ 353,958 were recorded as a debt discount, which resulted in cash proceeds for the Company of $ 5,545,350.

Upon closing of an equity financing after September 30, 2020, all unpaid principal and accrued interest will be converted at a price equal to the lesser of CA $ 0.15 (US $ 0.12) and 80% of the price per action paid by investors in such financing. In the event of liquidation before conversion or reimbursement, the Company will pay the holder an amount equal to 3 times the principal outstanding and accrued interest.

The Company has also granted to noteholders warrants to purchase 2,947,058 common shares of the Company. The fair value of these warrants of $ 2,604,420 was initially recorded as a liability and a debt discount.

The debt discount is amortized over the term of the related convertible debentures. During the three months and nine months ended September 30, 2021, the amortization of the debt discount was $ 625,913 and $ 1,510,368, respectively. During the three months and nine months ended September 30, 2020, the amortization of the debt discount was $ 147,543 and $ 345,371, respectively.

For the three-month and nine-month period ended September 30, 2021, interest expense on the convertible debentures amounted to $ 212,971 and $ 522,274, respectively. For the three-month and nine-month periods ended September 30, 2020, interest expense on the convertible debentures amounted to $ 84,957 and $ 207,169, respectively.

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