Form N-CSR PERRITT FUNDS INC For: Oct 31

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM N-CSR

CERTIFIED SHAREHOLDER REPORT OF REGISTERED

MANAGEMENT INVESTMENT COMPANIES

Investment Company Act file number  811-21556

Perritt Funds, Inc.
(Exact name of registrant as specified in charter)

300 South Wacker Drive, Suite 600, Chicago, IL 60606
(Address of principal executive offices) (Zip code)

Michael J. Corbett, 300 South Wacker Drive, Suite 600, Chicago, IL 60606
(Name and address of agent for service)

Registrant's telephone number, including area code

Date of fiscal year end: October 31, 2021

Date of reporting period:  October 31, 2021

(a)

Table of Contents

Perritt MicroCap Opportunities Fund
From the Portfolio Managers	2
Performance	6
Ten Largest Common Stock Holdings	8
Allocation of Portfolio Investments	9
Perritt Ultra MicroCap Fund
From the Portfolio Managers	10
Performance	14
Ten Largest Common Stock Holdings	16
Allocation of Portfolio Investments	17
Perritt Funds
Schedules of Investments	18
Statements of Assets and Liabilities	25
Statements of Operations	26
Statements of Changes in Net Assets	27
Financial Highlights	29
Notes to Financial Statements	31
Report of the Independent Registered Public Accounting Firm	39
Expense Example	40
Directors and Officers	42
Information	45

Portfolio Manager’s Message

Performance (Unaudited)

October 31, 2021

*

The graph illustrates the performance of a hypothetical $10,000 investment made in the period presented.  Assumes reinvestment of dividends and capital gains, but does not reflect the effect of any applicable sales charge or redemption fees or the deduction of taxes that a shareholder would pay on the Fund’s distributions or the redemption of the Fund shares.  The graph does not imply any future performance.  It is not possible to invest directly in an index.

Performance (Unaudited) (Continued)

October 31, 2021

Average Annual Total Returns*
Year ended October 31, 2021 (Unaudited)
	Past	Past	Past	Past	Past
	1 Year	5 Years	10 Years	15 Years	25 Years
Perritt MicroCap Opportunities Fund	64.12%	9.37%	10.73%	6.58%	9.61%
Russell Microcap® Index	62.55%	16.33%	14.23%	8.14%	n/a
(reflects no deduction
for fees and expenses)
Russell 2000® Index	50.80%	15.52%	13.50%	9.05%	9.37%
(reflects no deduction
for fees and expenses)

*	The performance data quoted does not reflect the deduction of taxes that a shareholder would pay on the Fund’s distributions or the 2% redemption or exchange fee for shares held 90 days or less. If reflected, total return would be reduced.

Ten Largest Common Stock Holdings (Unaudited)

Allocation of Portfolio Investments (Unaudited)

October 31, 2021

Portfolio Managers’ Message

Michael Corbett,	Matthew Brackmann,
Portfolio Manager	Portfolio Manager

Performance* (Unaudited)

October 31, 2021

*

The graph illustrates the performance of a hypothetical $10,000 investment made in the period presented.  Assumes reinvestment of dividends and capital gains, but does not reflect the effect of any applicable sales charge or redemption fees or the deduction of taxes that a shareholder would pay on the Fund’s distributions or the redemption of Fund shares.  The graph does not imply any future performance.  It is not possible to invest directly in an index.

Performance (Unaudited) (Continued)

October 31, 2021

Average Annual Total Returns*
Year ended October 31, 2021 (Unaudited)
	Past	Past	Past	Past
	1 Year	5 Years	10 Years	15 Years
Perritt Ultra MicroCap Fund	91.16%	12.50%	11.88%	7.01%
Russell Microcap® Index	62.55%	16.33%	14.23%	8.14%
(reflects no deduction for fees and expenses)
Russell 2000® Index	50.80%	15.52%	13.50%	9.05%
(reflects no deduction for fees and expenses)

*	The performance data quoted does not reflect the deduction of taxes that a shareholder would pay on the Fund’s distributions or the 2% redemption or exchange fee for shares held 90 days or less. If reflected, total return would be reduced.

Allocation of Portfolio Investments (Unaudited)

October 31, 2021

Schedule of Investments

October 31, 2021

Shares			COMMON STOCKS – 98.68%		Value
Administrative and
Support Services – 1.69%
	36,500		BGSF, Inc.		$	439,095
	46,746		Hudson Global, Inc.(a)			780,658
						1,219,753
Auto Parts & Equipment – 3.22%
	43,800		Miller Industries, Inc.			1,582,932
	40,000		Motorcar Parts
			of America, Inc.(a)			756,800
						2,339,732
Biotechnology – 0.73%
	22,500		Opiant Pharmaceuticals,
			Inc.(a)			530,325
						530,325
Building Materials – 2.92%
	10,000		BlueLinx
			Holdings, Inc.(a)			476,300
	30,000		PGT Innovations, Inc.(a)			640,500
	35,000		Tecnoglass,
			Inc. – ADR(c)			1,010,800
						2,127,600
Business Services – 8.22%
	253,041		DLH Holdings Corp.(a)			3,851,284
	140,000		Information Services
			Group, Inc.			1,141,000
	83,000		Intrusion, Inc.(a)			327,020
	50,000		PFSweb, Inc.(a)			650,000
						5,969,304
Chemical & Related Products – 4.66%
	221,625		Northern Technologies
			International Corp.			3,379,781
						3,379,781
Chemical Manufacturing – 1.41%
	218,750		Assertio
			Holdings, Inc.(a)			225,313
	135,000		ProPhase Labs, Inc.			795,150
						1,020,463
Commercial Services – 1.66%
	40,000		TriState Capital
			Holdings, Inc.(a)			1,202,000
						1,202,000
Computer & Electronic Product
Manufacturing – 4.06%
	93,000		Coda Octopus
			Group, Inc.(a)			784,920
	54,000		Gilat Satellite Networks
			Ltd. – ADR(c)			442,260
	50,000		Powerfleet, Inc.(a)			346,000
	94,000		Senstar Technologies
			Ltd. – ADR(c)			382,580
	1,050,000		Singing Machine
			Co., Inc.(a)(e)			325,500
	46,500		TransAct
			Technologies, Inc.(a)			656,580
						2,937,840
Construction & Engineering – 2.84%
	57,655		Gencor
			Industries, Inc.(a)			643,430
	28,400		IES Holdings, Inc.(a)			1,415,740
						2,059,170
Consumer Goods – 1.59%
	40,000		Turtle Beach Corp.(a)			1,150,400
						1,150,400
Consumer Products –
Manufacturing – 1.72%
	14,000		Delta Apparel, Inc.(a)			375,900
	22,000		Superior Group
			of Cos., Inc.			571,780
	26,000		VOXX
			International Corp.(a)			294,060
						1,241,740
Consumer Services – 0.67%
	103,800		DHI Group, Inc.(a)			487,860
						487,860
Data Processing, Hosting and
Related Services – 0.80%
	25,000		Ooma, Inc.(a)			577,500
						577,500
Educational Services – 1.87%
	90,000		Lincoln Educational
			Services Corp.(a)			648,000
	100,000		Universal Technical
			Institute, Inc.(a)			704,000
						1,352,000

Schedule of Investments (Continued)

October 31, 2021

Shares					Value
Electronic Equipment &
Instruments – 1.37%
	26,000		Bel Fuse, Inc. – Class B		$	361,920
	33,000		Identiv, Inc.(a)			632,280
						994,200
Engineering & Construction – 0.93%
	61,150		Infrastructure & Energy
			Alternatives, Inc.(a)			676,931
						676,931
Environmental Services – 1.20%
	150,000		Quest Resource
			Holdings Corp.(a)			873,000
						873,000
Financial Services – 10.29%
	32,000		First Internet Bancorp			1,089,280
	20,000		Hennessy Advisors, Inc.			230,800
	227,643		Silvercrest Asset
			Management Group,
			Inc. – Class A			3,642,288
	406,600		U.S. Global Investors,
			Inc. – Class A			2,492,458
						7,454,826
Food – 0.47%
	35,000		Landec Corp.(a)			340,200
						340,200
Gold – 2.12%
	125,000		Fortuna Silver
			Mines, Inc. – ADR(a)(c)			607,500
	337,500		Gold Resource Corp.			621,000
	280,000		McEwen Mining, Inc.(a)			308,000
						1,536,500
Healthcare Services – 0.81%
	35,000		InfuSystem
			Holdings, Inc.(a)			582,050
						582,050
Home Builder – 1.08%
	30,100		Green Brick
			Partners, Inc.(a)			784,105
						784,105
Housing – 2.40%
	98,000		Legacy Housing Corp.(a)			1,739,500
						1,739,500
Leisure – 2.38%
	84,000		Century Casinos, Inc.(a)			1,243,200
	90,000		Galaxy Gaming, Inc.(a)			389,700
	30,000		Super League
			Gaming, Inc.(a)			94,200
						1,727,100
Machinery Manufacturing – 1.07%
	16,000		Mayville Engineering
			Co, Inc.(a)			284,160
	245,400		TechPrecision Corp.(a)			489,573
						773,733
Medical Supplies & Services – 1.39%
	3,000		Addus HomeCare
			Corp.(a)			280,500
	18,041		IntriCon Corp.(a)			306,697
	20,000		Lakeland
			Industries, Inc.(a)			418,200
						1,005,397
Merchant Wholesalers,
Durable Goods – 2.07%
	20,000		A-Mark Precious
			Metals, Inc.			1,499,800
						1,499,800
Merchant Wholesalers, Nondurable
Goods – 0.46%
	225,000		NewAge, Inc.(a)			333,000
						333,000
Mining (except Oil and Gas) – 0.41%
	43,610		Fortitude Gold Corp.			296,112
						296,112
Miscellaneous Manufacturing – 0.58%
	40,000		iCAD, Inc.(a)			422,000
						422,000
Motion Pictures and Sound
Recording Industries – 1.75%
	402,605		WildBrain Ltd.(a)(c)			1,272,232
						1,272,232
Oil & Gas – 1.21%
	147,367		Evolution
			Petroleum Corp.			875,360
						875,360
Oil & Gas Services – 0.61%
	371,895		Profire Energy, Inc.(a)			442,555
						442,555

Schedule of Investments (Continued)

October 31, 2021

Shares					Value
Primary Metal Manufacturing – 0.99%
	127,404		Ampco-Pittsburgh
			Corp.(a)		$	716,011
						716,011
Professional, Scientific, and
Technical Services – 3.86%
	38,703		Bowman Consulting
			Group Ltd.(a)			596,026
	8,500		CRA International, Inc.			933,470
	230,880		Heritage Global, Inc.(a)			438,672
	328,400		Research
			Solutions, Inc.(a)			824,284
						2,792,452
Publishing Industries
(except Internet) – 0.57%
	40,000		eGain Corp.(a)			412,800
						412,800
Securities, Commodity Contracts, and
Other Financial Investments and
Related Activities – 0.56%
	10,000		Sprott, Inc.(c)			406,100
						406,100
Semiconductor Related Products – 1.61%
	80,000		AXT, Inc.(a)			653,600
	40,000		Photronics, Inc.(a)			519,600
						1,173,200
Software – 4.80%
	21,720		American Software, Inc. –
			Class A			628,359
	100,000		Asure Software, Inc.(a)			966,000
	130,000		Immersion Corp.(a)			1,038,700
	100,000		Zix Corp.(a)			847,000
						3,480,059
Specialty Manufacturing – 1.67%
	20,000		LB Foster Co. –
			Class A(a)			318,600
	40,400		LSI Industries, Inc.			300,576
	25,223		Northwest Pipe Co.(a)			599,298
						1,218,474
Support Activities for Mining – 0.23%
	100,000		Alexco Resource
			Corp.(a)(c)			167,000
						167,000
Telecommunications – 2.87%
	150,000		Ceragon Networks,
			Ltd. – ADR(a)(c)			526,500
	34,000		Digi
			International, Inc.(a)			732,700
	142,000		PC-Tel, Inc.			817,920
						2,077,120
Transportation – 3.46%
	373,000		Radiant
			Logistics, Inc.(a)			2,510,290
						2,510,290
Transportation Equipment
Manufacturing – 3.94%
	60,000		The Shyft
			Group, Inc.			2,472,600
	11,000		Strattec Security
			Corp.(a)			381,370
						2,853,970
Utilities – 1.08%
	50,000		Pure Cycle Corp.(a)			784,500
						784,500
Waste Management & Remediation
Services – 1.56%
	100,000		Perma-Fix Environmental
			Services, Inc.(a)			720,000
	50,000		Sharps Compliance
			Corp.(a)			412,500
						1,132,500
Water Transportation – 0.82%
	19,000		Euroseas Ltd.(a)(c)			592,990
						592,990
			TOTAL COMMON
			STOCKS
			(Cost $41,942,713)		$	71,541,535

Schedule of Investments (Continued)

October 31, 2021

Contracts			WARRANTS – 0.01%		Value
Engineering & Construction – 0.01%
	5,000		Infrastructure & Energy
			Alternatives, Inc.
			Expiration : 03/26/2023,
			Exercise Price   $11.50(a)
					$	6,000
Computer & Electronic Product
Manufacturing – 0.00%
	1,000,000		Singing Machine Co., Inc.
			Expiration : 08/06/2026,
			Exercise Price   $0.35(a)(d)
						0
			TOTAL WARRANTS
			(Cost $8,100)		$	6,000
	Shares		SHORT-TERM
			INVESTMENTS – 1.53%
Money Market Funds – 1.53%
	1,108,605		First American Government
			Obligations Fund, Class X,   0.03%(b)
					$	1,108,605
			TOTAL SHORT-TERM
			INVESTMENTS
			(Cost $1,108,605)		$	1,108,605
			Total Investments
			(Cost $43,059,418) –   100.22%
					$	72,656,140
			Liabilities in Excess
			of Other Assets –   (0.22)%
						(160,280	)
			TOTAL NET ASSETS –
			100.00%		$	72,495,860

ADR	American Depository Receipt
(a)	Non-income producing security.
(b)	The rate shown is the seven-day yield as of October 31, 2021.
(c)	Foreign issued security.
(d)	This security is deemed to be illiquid. This security represents $0 of value or 0.00% of net assets.
(e)	Security was purchased in a transaction exempt from registration in the U.S. under the Securities Act of 1933 (the “Act”) and, unless registered under the Act, may only be sold pursuant to exemption from registration and, in the case of a Rule 144A offering under the Act, may only be sold to “qualified institutional buyers.” The value of this security is $325,500 or 0.45% of the Fund’s net assets. This security is deemed to be liquid.

Schedule of Investments

October 31, 2021

Shares			COMMON STOCKS – 93.40%		Value
Administrative and Support
Services – 1.50%
	10,000		BGSF, Inc.		$	120,300
	12,548		Hudson Global, Inc.(a)			209,552
						329,852
Auto Parts & Equipment – 1.37%
	30,000		Commercial Vehicle
			Group, Inc.(a)			301,200
						301,200
Biotechnology – 1.01%
	9,500		Opiant Pharmaceuticals,
			Inc.(a)			223,915
						223,915
Building Materials – 2.50%
	19,093		Tecnoglass, Inc.(d)			551,406
						551,406
Business Services – 12.75%
	90,000		CynergisTek, Inc.(a)			158,400
	60,000		DLH Holdings Corp.(a)			913,200
	50,000		Information Services
			Group, Inc.			407,500
	10,000		Intrusion, Inc.(a)			39,400
	13,486		Issuer Direct Corp.(a)			343,488
	97,958		Medicine Man
			Technologies, Inc.(a)			200,814
	10,000		Transcat, Inc.(a)			748,800
						2,811,602
Chemical & Related Products – 2.86%
	37,000		Flexible Solutions
			International, Inc. –
			ADR(a)(d)			135,420
	32,560		Northern Technologies
			International Corp.			496,540
						631,960
Chemical Manufacturing – 2.40%
	60,000		AgroFresh
			Solutions, Inc.(a)			121,800
	20,000		Alimera Sciences, Inc.(a)			88,400
	24,000		Aridis Pharmaceuticals,
			Inc.(a)			84,000
	40,000		ProPhase Labs, Inc.			235,600
						529,800
Computer & Electronic Product
Manufacturing – 10.03%
	20,000		Airgain, Inc.(a)			224,600
	65,000		BK Technologies Corp.			191,750
	175,000		Dynatronics Corp.(a)			250,250
	30,000		Luna
			Innovations, Inc.(a)			292,200
	55,000		One Stop
			Systems, Inc.(a)			275,550
	65,000		Orbital Energy
			Group, Inc.(a)			173,550
	50,000		PC-Tel, Inc.			288,000
	700,000		Singing Machine
			Co., Inc.(a)(b)			217,000
	21,000		TransAct
			Technologies, Inc.(a)			296,520
						2,209,420
Computers & Electronics – 2.17%
	10,000		Napco Security
			Technologies, Inc.(a)			479,600
						479,600
Construction & Engineering – 0.76%
	15,000		Gencor Industries,
			Inc.(a)			167,400
						167,400
Consumer Goods – 2.73%
	25,000		Jerash Holdings
			US, Inc.			163,750
	12,000		Natural Alternatives
			International, Inc.(a)			151,200
	10,000		Turtle Beach Corp.(a)			287,600
						602,550
Consumer Services – 1.28%
	60,000		DHI Group, Inc.(a)			282,000
						282,000
Diversified Financials – 0.76%
	20,000		Safeguard
			Scientifics, Inc.(a)			167,800
						167,800
Educational Services – 1.61%
	45,000		VirTra, Inc.(a)			354,600
						354,600

Schedule of Investments (Continued)

October 31, 2021

Shares					Value
Electronic Equipment &
Instruments – 2.47%
	20,000		Identiv, Inc.(a)		$	383,200
	30,000		Iteris, Inc.(a)			160,800
						544,000
Environmental Services – 2.38%
	90,000		Quest Resource Holding
			Corp.(a)			523,800
						523,800
Fabricated Metal Product
Manufacturing – 1.03%
	9,500		The Eastern Company			228,285
						228,285
Financial Services – 2.18%
	17,500		Hennessy Advisors, Inc.			201,950
	17,500		Silvercrest Asset
			Management
			Group, Inc. – Class A			280,000
						481,950
Leisure – 3.98%
	30,000		Century Casinos, Inc.(a)			444,000
	100,000		Galaxy Gaming, Inc.(a)			433,000
						877,000
Machinery Manufacturing – 2.25%
	25,000		Cantaloupe, Inc.(a)			312,500
	5,000		Graham Corporation			63,550
	60,000		TechPrecision Corp.(a)			119,700
						495,750
Medical Supplies & Services – 2.90%
	30,000		Biomerica, Inc.(a)			137,700
	58,424		Check Cap,
			Ltd. – ADR(a)(d)			52,283
	7,500		Lakeland
			Industries, Inc.(a)			156,825
	25,000		Sensus
			Healthcare, Inc.(a)			100,000
	16,211		Taylor Devices, Inc.(a)			193,721
						640,529
Merchant Wholesalers, Durable
Goods – 3.40%
	10,000		A-Mark Precious
			Metals, Inc.			749,900
						749,900
Merchant Wholesalers, Nondurable
Goods – 0.76%
	8,198		Educational Development
			Corp.			80,095
	60,000		NewAge, Inc.(a)			88,800
						168,895
Miscellaneous Manufacturing – 2.28%
	78,125		INVO BioScience,
			Inc.(a)			269,531
	22,965		Myomo, Inc.(a)			232,636
						502,167
Miscellaneous Store Retailers – 0.88%
	50,000		Better Choice
			Co, Inc.(a)			194,000
						194,000
Oil & Gas Services – 0.76%
	140,010		Profire Energy, Inc.(a)			166,612
						166,612
Pharmaceuticals – 2.00%
	50,000		ImmuCell Corp.(a)			440,000
						440,000
Primary Metal Manufacturing – 0.97%
	38,000		Ampco-Pittsburgh
			Corp.(a)			213,560
						213,560
Professional, Scientific, and Technical
Services – 4.73%
	21,000		Bowman Consulting
			Group Ltd.(a)			323,400
	20,000		Perion Network Ltd. –
			ADR(a)(d)			568,400
	60,000		Research Solutions,
			Inc.(a)			150,600
						1,042,400
Publishing Industries
(except Internet) – 0.82%
	60,000		FalconStor Software,
			Inc.(a)(b)			180,000
						180,000
Real Estate – 1.72%
	15,000		Fathom Holdings,
			Inc.(a)			379,350
						379,350

Schedule of Investments (Continued)

October 31, 2021

Shares					Value
Real Estate Investment Trusts – 1.73%
	35,000		Sachem Capital Corp.		$	202,300
	35,000		Global Self
			Storage, Inc.			178,150
						380,450
Semiconductor Related Products – 2.18%
	25,000		AXT, Inc.(a)			204,250
	25,000		inTEST Corp.(a)			276,750
						481,000
Software – 2.13%
	30,000		Asure Software, Inc.(a)			289,800
	40,000		NetSol Technologies,
			Inc.(a)			180,800
						470,600
Specialty Manufacturing – 4.05%
	45,000		Data I/O Corp.(a)			243,900
	17,500		GSI Technology, Inc.(a)			90,825
	25,000		Gulf Island Fabrication,
			Inc.(a)			98,500
	70,000		MIND
			Technology, Inc.(a)			119,000
	5,500		UFP Technologies,
			Inc.(a)			340,395
						892,620
Telecommunications – 1.63%
	25,000		Data Storage Corp.(a)			104,500
	172,383		Mobivity Holdings
			Corp.(a)			256,851
						361,351
Textile Product Mills – 0.52%
	25,000		Dixie Group, Inc.(a)			114,750
						114,750
Utilities – 1.72%
	20,000		Global Water
			Resources, Inc.			378,400
						378,400
Wholesale Electronic Markets and
Agents and Brokers – 0.20%
	20,387		DecisionPoint
			Systems, Inc.(a)			44,851
						44,851
			TOTAL COMMON
			STOCKS
			(Cost $12,921,954)		$	20,595,325
Contracts			WARRANTS – 0.06%
Medical Supplies & Services – 0.00%
	250,000		Titan Medical, Inc.
			Expiration: 08/10/2023,
			Exercise Price   $3.20(a)(b)
					$	0
Primary Metal Manufacturing – 0.06%
	15,000		Ampco-Pittsburgh Corp.
			Expiration: 08/01/2025,
			Exercise Price   $5.75(a)
						13,500
			TOTAL WARRANTS
			(Cost $85,000)		$	13,500
Shares			SHORT-TERM
			INVESTMENTS – 7.18%
Money Market Funds – 7.18%
	1,582,589		First American Government
			Obligations Fund, Class X,   0.03%(c)
					$	1,582,589
			TOTAL SHORT-TERM
			INVESTMENTS
			(Cost $1,582,589)		$	1,582,589
			Total Investments
			(Cost $14,589,543) –   100.64%
					$	22,191,414
			Liabilities in Excess
			of Other Assets –   (0.64)%
						(142,157	)
			TOTAL NET ASSETS –
			100.00%		$	22,049,257

ADR	American Depository Receipt
(a)	Non-income producing security.
(b)	These securities are deemed to be illiquid. These securities represent $397,000 of value or 1.80% of net assets.
(c)	The rate shown is the seven-day yield as of October 31, 2021.
(d)	Foreign issued security.

Statements of Assets and Liabilities

		Perritt MicroCap				Perritt Ultra
		Opportunities Fund				MicroCap Fund
Assets:
Investments at value		$	72,656,140			$	22,191,414
Receivable for fund shares issued			—				12,395
Dividends and interest receivable			3,391				42
Prepaid expenses			1,965				1,879
Total Assets			72,661,496				22,205,730
Liabilities:
Payable for investments purchased			11,602				85,508
Payable for fund shares purchased			6,264				1,748
Payable to Advisor			59,765				23,060
Payable to Officer & Directors			2,800				1,100
Accrued accounting expense			14,135				3,305
Accrued administration expense			17,330				7,268
Accrued audit expense			17,500				17,500
Accrued printing & mailing expense			10,896				3,666
Accrued transfer agent expense			13,962				7,972
Other accrued expenses & liabilities			11,382				5,346
Total Liabilities			165,636				156,473
Net Assets		$	72,495,860			$	22,049,257
Net Assets Consist of:
Capital Stock		$	33,266,497			$	13,540,672
Total Distributable Earnings			39,229,363				8,508,585
Total Net Assets		$	72,495,860			$	22,049,257
Capital Stock, $0.0001 par value
Authorized			100,000,000				100,000,000
Outstanding			2,263,932				999,472
Net Assets		$	72,495,860			$	22,049,257
Net asset value and offering price per share		$	32.02			$	22.06
Cost of Investments		$	43,059,418			$	14,589,543

Statements of Operations

		Perritt MicroCap				Perritt Ultra
		Opportunities Fund				MicroCap Fund
Investment Income:
Dividend Income (net of $68,024 and $0 foreign
withholding tax and issuance fees)		$	713,558			$	100,854
Interest income			238				179
Total investment income			713,796				101,033
Expenses:
Investment advisory fee			692,099				228,752
Shareholder servicing			127,110				36,340
Administration fee			65,678				34,505
Officer & directors’ fees & expenses			50,899				50,890
Fund accounting expenses			37,494				10,106
Federal & state registration fees			35,493				33,319
Professional fees			33,353				37,596
Other expense			18,126				6,882
Printing & mailing fees			11,685				2,547
Custodian fees			7,547				2,608
Total expenses			1,079,484				443,545
Net investment loss			(365,688	)			(342,512	)
Realized and Unrealized Gain on Investments:
Net realized gain on investments			11,475,458				2,836,726
Change in unrealized appreciation on investments			20,589,785				7,565,696
Net realized and unrealized gain on investments			32,065,243				10,402,422
Net increase in net assets resulting from operations		$	31,699,555			$	10,059,910

Statements of Changes in Net Assets

		For the				For the
		Year Ended				Year Ended
		October 31, 2021				October 31, 2020
Operations:
Net investment loss		$	(365,688	)		$	(510,080	)
Net realized gain on investments			11,475,458				1,646,827
Net change in unrealized appreciation/(depreciation)
on investments			20,589,785				(15,762,510	)
Net increase/(decrease) in net
assets resulting from operations			31,699,555				(14,625,763	)
Dividends and Distributions to Shareholders:
Distributable Earnings			—				(3,593,867	)
Total dividends and distributions			—				(3,593,867	)
Capital Share Transactions:
Proceeds from shares issued			1,840,135				3,364,259
Reinvestment of distributions			—				3,508,721
Cost of shares redeemed			(13,801,023	)			(43,781,601	)
Redemption fees			1,544				9,268
Net decrease in net assets from capital share transactions			(11,959,344	)			(36,899,353	)
Total Increase/(Decrease) in Net Assets			19,740,211				(55,118,983	)
Net Assets
Beginning of the year			52,755,649				107,874,632
End of the year		$	72,495,860			$	52,755,649
Capital Share Transactions:
Shares sold			63,095				183,094
Shares issued on reinvestment of distributions			—				163,424
Shares redeemed			(503,819	)			(2,307,998	)
Net decrease from capital share transactions			(440,724	)			(1,961,480	)

Statements of Changes in Net Assets

		For the				For the
		Year Ended				Year Ended
		October 31, 2021				October 31, 2020
Operations:
Net investment loss		$	(342,512	)		$	(152,246	)
Net realized gain/(loss) on investments			2,836,726				(1,147,634	)
Net change in unrealized
appreciation/(depreciation) on investments			7,565,696				(1,333,569	)
Net increase/(decrease) in net
assets resulting from operations			10,059,910				(2,633,449	)
Dividends and Distributions to Shareholders:
Distributable Earnings			—				(17,594	)
Return of capital			—				(34,626	)
Total dividends and distributions			—				(52,220	)
Capital Share Transactions:
Proceeds from shares issued			5,130,104				776,958
Reinvestment of distributions			—				50,759
Cost of shares redeemed			(4,741,542	)			(20,714,603	)
Redemption fees			19,111				150
Net decrease in net assets from capital share transactions			407,673				(19,886,736	)
Total Increase/(Decrease) in Net Assets			10,467,583				(22,572,405	)
Net Assets
Beginning of the year			11,581,674				34,154,079
End of the year		$	22,049,257			$	11,581,674
Capital Share Transactions:
Shares sold			251,322				64,582
Shares issued on reinvestment of distributions			—				4,028
Shares redeemed			(255,221	)			(1,731,047	)
Net decrease from capital share transactions			(3,899	)			(1,662,437	)

Financial Highlights

		For the Years Ended October 31,
		2021				2020				2019				2018				2017
Net asset value, beginning of year		$	19.51			$	23.12			$	28.17			$	38.59			$	34.18
Income/(loss) from investment operations:
Net investment income (loss)2			(0.15	)			(0.15	)			(0.11	)			(0.20	)			(0.15	)
Net realized and unrealized
gain (loss) on investments			12.66				(2.66	)			(1.74	)			(1.83	)			7.94
Total from investment operations			12.51				(2.81	)			(1.85	)			(2.03	)			7.79
Less dividends and distributions:
From net investment income			—				—				—				—				(0.09	)
From net realized gains			—				(0.80	)			(3.20	)			(8.39	)			(3.29	)
Total dividends and distributions			—				(0.80	)			(3.20	)			(8.39	)			(3.38	)
Redemption fees2,3			0.00				0.00				0.00				0.00				0.00
Net asset value, end of year		$	32.02			$	19.51			$	23.12			$	28.17			$	38.59
Total return1			64.12	%			(12.46	%)			(6.80	%)			(5.89	%)			24.20	%
Supplemental data and ratios:
Net assets, end of year (in thousands)		$	72,496			$	52,756			$	107,875			$	160,698			$	225,445
Ratio of net expenses to average net assets			1.56	%			1.64	%			1.38	%			1.28	%			1.23	%
Ratio of net investment loss
to average net assets			(0.53	%)			(0.73	%)			(0.48	%)			(0.63	%)			(0.41	%)
Portfolio turnover rate			23.5	%			19.1	%			22.1	%			14.0	%			18.0	%

1	Total return reflects reinvested dividends but does not reflect the impact of taxes.
2	Net investment income (loss) and redemption fees per share has been calculated based on average shares outstanding during the year.
3	Amount is less than $0.01 per share.

Financial Highlights

		For the Years Ended October 31,
		2021				2020				2019				2018				2017
Net asset value, beginning of year		$	11.54			$	12.81			$	15.62			$	18.49			$	15.46
Income/(loss) from investment operations:
Net investment income2			(0.36	)			(0.11	)			(0.12	)			(0.17	)			(0.18	)
Net realized and unrealized
gain (loss) on investments			10.86				(1.14	)			(1.60	)			(0.77	)			3.94
Total from investment operations			10.50				(1.25	)			(1.72	)			(0.94				3.76
Less dividends and distributions:
From net realized gains			—				(0.01	)			(1.09	)			(1.93	)			(0.73	)
From return of capital			—				(0.01	)			—				—				—
Total dividends and distributions			—				(0.02	)			(1.09	)			(1.93	)			(0.73	)
Redemption fees2			0.02				0.00	3			0.00	3			0.00	3			0.00	3
Net asset value, end of year		$	22.06			$	11.54			$	12.81			$	15.62			$	18.49
Total return1			91.16	%			(9.75	)%			(11.54	%)			(5.73	%)			25.27	%
Supplemental data and ratios:
Net assets, end of year (in thousands)		$	22,049			$	11,582			$	34,154			$	61,042			$	69,636
Ratio of net expenses to average net assets			2.42	%			2.68	%			1.83	%			1.71	%			1.70	%
Ratio of net investment loss
to average net assets			(1.85	)%			(0.92	%)			(0.85	%)			(0.99	%)			(1.07	%)
Portfolio turnover rate			25.7	%			14.3	%			13.3	%			28.4	%			43.0	%

1	Total return reflects reinvested dividends but does not reflect the impact of taxes.
2	Net investment income (loss) and redemption fees per share has been calculated based on average shares outstanding during the year.
3	Amount is less than $0.01 per share.

Notes to Financial Statements

1.	Organization
	Perritt Funds, Inc. (the “Corporation”) was organized on March 19, 2004 as a Maryland corporation and is registered under the Investment Company Act of 1940, as amended (the “1940 Act”), as an open-end investment company, with each series below being a diversified fund. The Corporation currently consists of the following series: Perritt MicroCap Opportunities Fund (“MicroCap Fund”) and Perritt Ultra MicroCap Fund (“Ultra MicroCap Fund”) (each, a “Fund,” and collectively, the “Funds”). Perritt MicroCap Opportunities Fund, Inc., the predecessor to the MicroCap Fund, commenced operations on April 11, 1988. As part of a plan of reorganization, on February 28, 2013, Perritt MicroCap Opportunities Fund, Inc. merged into the MicroCap Fund, a series within the Corporation. The Ultra MicroCap Fund commenced operations on August 30, 2004. The MicroCap Fund’s investment objective is to invest in mainly common stocks of companies with market capitalizations that are below $500 million at the time of the initial purchase. The Ultra MicroCap Fund’s investment objective is to invest in mainly common stocks of companies with market capitalizations that are below $300 million at the time of the initial purchase. The Funds are each an investment company and accordingly follow the investment company accounting and reporting guidance of the Financial Accounting Standards Board (“FASB”) Accounting Standards Codification Topic 946 “Financial Services – Investment Companies.”
2.	Summary of Significant Accounting Policies

	a.	Exchange-listed securities are generally valued at the last sales price reported by the principal security exchange on which the security is traded, or if no sale is reported, the mean between the latest bid and ask price unless the Funds’ investment advisor believes that the mean does not represent a fair value, in which case the securities are fair valued as set forth below. Securities listed on NASDAQ are valued at the NASDAQ Official Closing Price. Demand notes, commercial paper, U.S. Treasury Bills and warrants are stated at fair value using market prices if available, or a pricing service when such prices are believed to reflect fair value. Money Market Funds are valued at amortized cost. Securities for which market quotations are not readily available are valued at their fair value as determined in good faith by the Funds’ advisor under procedures established by and under the supervision of the Board of Directors of the Funds. The Funds’ fair value procedures allow for the use of certain methods performed by the Funds’ advisor to value those securities for which market quotations are not readily available, at a price that a Fund might reasonably expect to receive upon a sale of such securities. For example, these methods may be based on a multiple of earnings, or a discount from market of a similar freely traded security, or a yield to maturity with respect to debt issues, or a combination of these and other methods.
	b.	Net realized gains and losses on securities are computed using the first-in, first-out method.
	c.	Dividend income is recognized on the ex-dividend date, and interest income is recognized on the accrual basis. Withholding taxes on foreign dividends and capital gains, which are included as a component of net investment income and realized gain

Notes to Financial Statements (Continued)

		(loss) on investments, respectively, have been provided for in accordance with the Funds’ understanding of the applicable country’s tax rules and rates. Discounts and premiums on securities purchased are amortized over the life of the respective securities using the interest method. Distributions received from real estate investment trusts (“REITs”) are classified as investment income or realized gains based on the U.S. income tax characteristics of the distribution. Return of capital distributions received from REIT securities and partnerships are recorded as an adjustment to the cost of the security and thus may impact unrealized or realized gains or losses on the security. Investment and shareholder transactions are recorded on the trade date.
	d.	Each Fund is charged for those expenses that are directly attributable to it. Expenses that are not readily identifiable to a specific Fund are generally allocated among the Funds in proportion to the relative net assets of the Funds.
	e.	Provision has not been made for federal income tax since the Funds have each elected to be taxed as a “regulated investment company” and intend to distribute substantially all income to their shareholders and otherwise comply with the provisions of the Internal Revenue Code applicable to regulated investment companies.
	f.	The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America (“GAAP”) requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and reported amounts of increases and decreases in net assets from operations during the reporting period. Actual results could differ from those estimates.
		In preparing these financial statements, the Funds have evaluated events and transactions for potential recognition or disclosure through the date the financial statements were issued.
	g.	Dividends from net investment income and net realized capital gains, if any, are declared and paid annually. Distributions to shareholders are recorded on the ex-dividend date. Each Fund may utilize earnings and profit distributed to shareholders on redemption of shares as part of the dividends paid deduction. The Funds may periodically make reclassifications among certain of their capital accounts as a result of the timing and characterization of certain income and realized gain distributions, including reclassifying net operating loss, as determined annually in accordance with federal tax regulations which may differ from GAAP. The MicroCap Fund has reclassified the components of its capital accounts for the year ended October 31, 2021 by increasing paid-in capital by $769,229 and decreasing distributable earnings/(losses) by $769,229. The Ultra Microcap Fund has reclassified the components of its capital accounts for the year ended October 31, 2021 by decreasing paid-in capital by $12,069 and increasing distributable earnings/(losses) by $12,069. These adjustments were primarily due to the utilization of earnings and profits distributed to shareholders on redemptions of shares and the write off of net operating losses.
	h.	As of and during the year ended October 31, 2021, the Funds did not have a liability for any unrecognized tax benefits. The Funds recognize interest and penalties, if any, related to unrecognized tax benefits as income tax expense on the Statements of

Notes to Financial Statements (Continued)

Operations. During the year ended October 31, 2021, the Funds did not incur any interest or penalties. The Funds are not subject to examination by U.S. federal tax authorities for any tax years before 2018.

3.	Security Valuation
	GAAP establishes an authoritative definition of fair value and sets out a hierarchy for measuring fair value. GAAP also requires additional disclosures about the various inputs used to develop the measurements of fair value. These inputs are summarized in the three broad levels listed below:

	• Level 1 –	Quoted prices in active markets for identical securities that the Funds have the ability to access.
	• Level 2 –	Other significant observable inputs (including quoted prices for similar securities or the identical security on an inactive market, interest rates, prepayment speeds, credit risk, etc.).
	• Level 3 –	Significant unobservable inputs (including the Funds’ own assumptions in determining the fair value of investments).

The inputs or methodology used for valuing securities are not necessarily an indication of the risk associated with investing in those securities. The following is a summary of the inputs used to value the Funds’ net assets as of October 31, 2021:

	Perritt MicroCap Opportunities Fund
	Description		Level 1				Level 2				Level 3				Total
	Investments in Securities
	Common Stocks
	Communication Services		$	2,431,792			$	—			$	—			$	2,431,792
	Consumer Discretionary			8,306,615				325,500				—				8,632,115
	Consumer Staples			673,200				—				—				673,200
	Energy			1,317,915				—				—				1,317,915
	Financial			11,001,398				—				—				11,001,398
	Health Care			3,554,534				—				—				3,554,534
	Industrials			22,208,253				—				—				22,208,253
	Information Technology			14,842,424				—				—				14,842,424
	Materials			6,095,404				—				—				6,095,404
	Utilities			784,500				—				—				784,500
	Total Common Stocks			71,216,035				325,500				—				71,541,535
	Warrants
	Industrials			6,000				—				—				6,000
	Consumer Discretionary			—				0				—				0
	Total Warrants			6,000				0				—				6,000
	Short-Term Investments			1,108,605				—				—				1,108,605
	Total Investments in Securities		$	72,330,640			$	325,500			$	—			$	72,656,140

Notes to Financial Statements (Continued)

	Perritt Ultra MicroCap Fund
	Description		Level 1				Level 2				Level 3				Total
	Investments in Securities
	Common Stocks
	Communication Services		$	1,107,251			$	—			$	—			$	1,107,251
	Consumer Discretionary			1,392,419				217,000				—				1,609,419
	Consumer Staples			434,000				—				—				434,000
	Energy			384,112				—				—				384,112
	Financial			1,601,950				—				—				1,601,950
	Health Care			2,473,529				—				—				2,473,529
	Industrials			4,992,464				—				—				4,992,464
	Information Technology			5,568,985				180,000				—				5,748,985
	Materials			1,307,715				—				—				1,307,715
	Real Estate Investment Trusts			557,500				—				—				557,500
	Utilities			378,400				—				—				378,400
	Total Common Stocks			20,198,325				397,000				—				20,595,325
	Warrants
	Health Care			—				0				—				0
	Materials			13,500				—				—				13,500
	Total Warrants			13,500				0				—				13,500
	Short-Term Investments			1,582,589				—				—				1,582,589
	Total Investments in Securities		$	21,794,414			$	397,000			$	—			$	22,191,414

	Please refer to the Schedule of Investments for additional information regarding the composition of the amounts listed above.
	During the year ended October 31, 2021, the MicroCap Fund and the Ultra MicroCap Fund did not hold any Level 3 securities.
4.	Investment Advisory Agreement
	For each Fund, the Corporation entered into an investment advisory agreement (collectively, the “Agreements”) with Perritt Capital Management, Inc. (the “Advisor”), with whom certain officers and directors of the Corporation are affiliated, to furnish investment advisory services to the Funds. Under the terms of the Agreements, the MicroCap Fund pays the Advisor a monthly fee at the annual rate of 1.00% of the Fund’s daily average net assets, and the Ultra MicroCap Fund pays the Advisor a monthly fee equal to 1.25% of its daily average net assets less than or equal to $100 million; 1.00% with respect to daily average net assets in excess of $100 million and less than or equal to $200 million; and 0.50% with respect to daily average net assets in excess of $200 million. At October 31, 2021, the MicroCap Fund and Ultra MicroCap Fund had fees due to the Advisor of $59,765 and $23,060, respectively. For the year ended October 31, 2021, the MicroCap Fund and Ultra MicroCap Fund had incurred advisory fees of $692,099 and $228,752, respectively.
	The Advisor manages the Funds’ investments subject to the supervision of the Funds’ Board of Directors. The Advisor is responsible for investment decisions and supplies

Notes to Financial Statements (Continued)

	investment research and portfolio management. Under the Agreements, the Advisor, at its own expense and without reimbursement from the Funds, will furnish office space and all necessary office facilities, equipment and personnel for making the investment decisions necessary for managing the Funds and maintaining their organization, will pay the salaries and fees of all officers and directors of the Funds (except the Chief Compliance Officer’s salary and the fees paid to disinterested directors) and will bear all sales and promotional expenses of the Funds.
	The officers of the Funds are affiliated with the Advisor. Such officers, with the exception of the Chief Compliance Officer, receive no compensation from the Funds or the Advisor for serving their respective roles. The Funds pay the salary associated with the office of the Chief Compliance Officer. Such fees are included on the Statements of Operations within officer & directors’ fees & expenses.
	The Funds reimbursed the Advisor for fees paid to financial intermediaries such as banks, broker-dealers, financial advisors or other financial institutions for sub-transfer agency, sub-administration and other services that the financial intermediaries provided to their clients, who are beneficial owners of shares of the Funds. The financial intermediaries are the record owners of the Funds on the Funds’ records through omnibus accounts, other group accounts, retirement plans or accounts traded through registered securities clearing agents. These fees are fees that the Funds are obligated to pay to such intermediaries, and the fees may vary based on, for example, the nature of services provided. The fees paid to such intermediaries by the Funds are only a portion of the full fee that is paid to the intermediaries, and the Advisor is obligated to pay the remaining amount. In determining the portion of the fees paid to the intermediaries that the Funds are obligated to pay, the Funds have used the “avoided cost” method, which is one of several permissible methods to determine the fees are reasonable. Based on this method, the Funds’ Board of Directors determines a fee per sub-account that it believes approximates the transfer agency fee that would otherwise have been payable by the Funds if such intermediaries did not maintain the sub-account. These amounts are included within shareholder servicing fees on the Statements of Operations.
5.	Investment Transactions
	Purchases and sales of securities, excluding short-term investments, for the year ended October 31, 2021, were as follows:

			Purchases								Sales
			U.S.								U.S.
			Governments				Other				Governments				Other
	MicroCap Fund		$	—			$	15,833,771			$	—			$	29,077,887
	Ultra MicroCap Fund		$	—			$	4,505,291			$	—			$	5,580,156

Notes to Financial Statements (Continued)

6.	Federal Income Tax Matters
	As of October 31, 2021, the components of distributable earnings on a tax basis were as follows:

			MicroCap				Ultra MicroCap
			Fund				Fund
	Cost of investments for tax purposes		$	43,104,749			$	14,589,543
	Gross tax unrealized appreciation			31,695,795				8,929,006
	Gross tax unrealized depreciation			(2,144,405	)			(1,327,135	)
	Net unrealized appreciation on investments			29,551,390				7,601,871
	Distributable ordinary income			384,459				—
	Distributable long-term capital gains			9,293,514				1,199,251
	Other accumulated losses			—				(292,537	)
	Total Distributable Earnings/(Losses)		$	39,229,363			$	8,508,585

	The difference between book and tax basis distributable earnings is primarily related to the deferral of losses on wash sales.
	A regulated investment company may elect for any taxable year to treat any portion of any qualified late year loss as arising on the first day of the next taxable year. Qualified late year losses are ordinary losses which occur during the portion of the Fund’s taxable year subsequent to December 31.
	At October 31, 2021, the Ultra MicroCap Fund deferred, on a tax basis, late year ordinary losses of $292,537. During the year ended October 31, 2021, the MicroCap Fund utilized $1,716 and the Ultra MicroCap Fund utilized $1,141,286 capital loss carryforwards. The Funds had no capital loss carryforward for the year ended October 31, 2021.
	The tax composition of distributions paid during the years ended October 31, 2021 and 2020 were as follows:

			Ordinary																Return of
			Income								Long-term Capital Gains								Capital
			2021				2020				2021				2020				2021				2020
	MicroCap Fund		$	—			$	—			$	—			$	3,593,867			$	—			$	—
	Ultra MicroCap Fund			—				—				—				17,594				—				34,626

	The Funds designated as long-term capital gain dividend, pursuant to Internal Revenue Code Section 852(b)(5), the amount necessary to reduce the earnings and profits of the Funds related to net capital gain to zero.
7.	Restricted Securities
	The Funds may own investment securities which are unregistered and thus restricted as to resale. These securities are valued by each Fund after giving due consideration to pertinent factors including recent private sales, market conditions and the issuer’s financial performance. Where future disposition of these securities requires registration under the Securities Act of 1933, each Fund has the right to include these securities in such registration, generally without cost to the Fund. The Funds have no right to require registration of the unregistered securities they hold. As October 31, 2021, the MicroCap

Notes to Financial Statements (Continued)

	Fund held a restricted security with an aggregate value of $325,500, which accounted for 0.45% of the Fund’s net assets. The restricted security is deemed to be liquid. During the year ended October 31, 2021, the Ultra MicroCap Fund did not hold any restricted securities.
8.	Guarantees and Indemnifications
	Under the Funds’ organizational documents, their officers and directors are indemnified by the Funds against certain liabilities arising out of the performance of their duties to the Funds. Additionally, in the normal course of business, the Funds enter into contracts with service providers that contain general indemnification clauses. The Funds’ maximum exposure under these arrangements is unknown as this would involve future claims that may be made against the Funds that have not yet occurred. Currently, the Funds expect the risk of loss to be remote.
9.	Line of Credit Arrangement
	The MicroCap Fund and Ultra MicroCap Fund are each party to uncommitted line of credit arrangements with U.S. Bank, N.A. with an expiration date of December 6, 2021, under which the MicroCap Fund may borrow up to $2,500,000 and the Ultra MicroCap Fund may borrow up to $2,000,000, subject to certain restrictions and covenants. Interest is charged on borrowings at the prevailing Prime Rate which was 3.25% as of October 31, 2021. The Funds have borrowed under these arrangements from time to time to increase the efficiency of cash flow management. For the year ended October 31, 2021, the MicroCap Fund had average borrowings of $599,250 and the weighted average interest rate on the line of credit borrowings was 3.25%. The Ultra MicroCap Fund had average borrowings of $16,750 and the weighted average interest rate on the line of credit borrowings was 3.25%. On January 27, 2021, the MicroCap Fund had borrowings of $1,771,000 and on January 21, 2021, the Ultra MicroCap Fund had borrowings of $19,000, which represent the largest borrowing amounts during the year ended October 31, 2021. As of October 31, 2021, the MicroCap Fund and Ultra MicroCap Fund had no outstanding borrowings on the lines of credit. Interest charged on the borrowings is recorded as other expense in the Statements of Operations. Subsequent to year end, the MicroCap Fund and Ultra MicroCap Fund renewed their line of credit arrangements with borrowing limits of $2,500,000 and $2,000,000, respectively. Both line of credit agreements have an expiration date of December 5, 2022.
10.	Redemption Fee
	The Funds charge a 2.00% redemption fee to those who buy and sell shares within 90 calendar days or less. The redemption fee is retained for the benefit of long-term shareholders, and recorded as additional capital in the Statements of Changes in Net Assets.
11.	Transactions with Affiliates
	During the year ended October 31, 2021, MicroCap Fund and Ultra MicroCap Fund did not hold any securities that were considered affiliated.
	The Funds are permitted to purchase or sell securities from or to each other under specified conditions outlined in procedures adopted by the Board of Directors. The procedures have been designed to ensure that any purchase or sale of securities by a Fund

Notes to Financial Statements (Continued)

	from or to another Fund complies with Rule 17a-7 of the 1940 Act. For the year ended October 31, 2021, the MicroCap Fund and Ultra MicroCap Fund engaged in one security transaction pursuant to Rule 17a-7 of the 1940 Act.
12.	Beneficial Ownership
	The beneficial ownership, either directly or indirectly, of more than 25% of voting securities of a fund creates a presumption of control of that fund, under Section 2(a)(9) of the 1940 Act. As of October 31, 2021, the Funds had omnibus shareholder accounts (comprised of a group of individual shareholders), which amounted to more than 25% of the total shares outstanding of the respective Fund. There were no individual shareholders of record who owned more than 5% of the outstanding shares of beneficial interest of a Fund or Class of shares of a Fund. Shareholders with a controlling interest could affect the outcome of proxy voting or direction of management of a Fund.
13.	Coronavirus (COVID-19) Pandemic
	The global outbreak of COVID-19 (commonly referred to as “coronavirus”) has disrupted economic markets and the prolonged economic impact is uncertain. The ultimate economic fallout from the pandemic, and the long-term impact on economies, markets, industries and individual issuers, are not known. The operational and financial performance of the issuers of securities in which the Funds invest depends on future developments, including the duration and spread of the outbreak, and such uncertainty may in turn adversely affect the value and liquidity of the Funds’ investments, impair the Funds’ ability to satisfy redemption requests, and negatively impact the Funds’ performance.
14.	Liquidity Risk Management (Unaudited)
	On June 30, 2021, the Directors of the Perritt MicroCap Opportunities Fund and the Perritt Ultra MicroCap Fund, the series of Perritt Funds, Inc., reviewed and considered a written report prepared by the program administrator of the Funds’ Liquidity Risk Management Program (the “Program”), the Fund’s Liquidity Risk Management Committee (the “Program Administrator”), which addressed the operation of the Program and assessed the Program’s adequacy and effectiveness of implementation. In considering the report, the Directors noted that the Program Administrator has determined that the Fund primarily holds assets that are highly liquid investments, and thus relies on the exclusion from the requirements to determine and review a highly liquid investment minimum and to adopt shortfall policies and procedures. They then confirmed with the Program Administrator that no material changes were made to the Program, and reviewed all of the material features of the Program to ensure that they understand how the Program is designed to assess and manage the risk that the Fund could not meet requests to redeem shares issued by the Fund without significant dilution of remaining investors in the Fund. Following this review and discussion, the Directors determined that they believe the disclosures in the report, taken as a whole, provide the information necessary for the Directors to effectively assess the Program and its implementation, and that they are comfortable with the report’s conclusion that the Program is reasonably designed to assess and manage the Fund’s liquidity risk, and that the Program has operated as intended during the past year.

Report of Independent Registered Public Accounting Firm

Expense Example (Unaudited)

October 31, 2021

Expense Example (Unaudited) (Continued)

October 31, 2021

	Beginning	Ending	Expenses Paid
	Account Value	Account Value	During Period
	5/1/21	10/31/21	5/1/21 – 10/31/211
Actual
Perritt MicroCap Opportunities	$1,000.00	$1,061.70	$  7.79
Perritt Ultra MicroCap Fund	$1,000.00	$1,114.10	$12.42
Hypothetical
Perritt MicroCap Opportunities	$1,000.00	$1,017.64	$  7.63
Perritt Ultra MicroCap Fund	$1,000.00	$1,013.46	$11.82

1	Expenses are equal to the Fund’s annualized expense ratio of 1.50% for the MicroCap Opportunities Fund and 2.33% for the Ultra MicroCap Fund for the six-month period, multiplied by the average account value over the period, multiplied by 184/365 (to reflect the one-half year period).

Directors and Officers (Unaudited)

	Position(s) Held
	with Funds and			Other
	Number of			Directorships
	Portfolios in			Held by
Name,	Fund Complex	Term of Office	Principal	Director
Address,	Overseen	and Length of	Occupation(s)	during the
and Age	by Director	Time Served	during Past 5 Years	Past 5 Years
“Disinterested” Directors of the Funds
Dianne C. Click	Director	Indefinite, until	Ms. Click is a licensed Real	N/A
Age: 58		successor	Estate Broker in the State
300 South	Portfolios in	elected	of Montana. She has been
Wacker Drive,	Fund Complex		a partner and a principal
Suite 600	Overseen: 2	Director	owner of a real estate sales
Chicago, IL		since 2004	company, Bozeman Brokers,
60606			since 2004. She has been
			licensed in the state of
			Montana since 1995.
David S. Maglich	Director	Indefinite, until	Mr. Maglich is a Shareholder	N/A
Age: 63		successor	with the law firm of Fergeson,
300 South	Portfolios in	elected	Skipper et. al. in Sarasota,
Wacker Drive,	Fund Complex		Florida and has been
Suite 600	Overseen: 2	Director	employed with such firm
Chicago, IL		since 2004	since 1989.
60606

Directors and Officers (Unaudited) (Continued)

	Position(s) Held
	with Funds and			Other
	Number of			Directorships
	Portfolios in			Held by
Name,	Fund Complex	Term of Office	Principal	Director
Address,	Overseen	and Length of	Occupation(s)	during the
and Age	by Director	Time Served	during Past 5 Years	Past 5 Years
“Interested” Director of the Funds
Michael J.	President	One-year term	Mr. Corbett was President	N/A
Corbett(1)		as President	of the Perritt MicroCap
Age: 55	Portfolios in		Opportunities Fund, Inc.
300 South	Fund Complex	As Director,	(1999–2013) and President
Wacker Drive,	Overseen: 2	indefinite,	of the Perritt Funds, Inc.
Suite 600		until successor	since 2004. He has served
Chicago, IL		elected	as President of the Adviser
60606			since 2010, and previously
		Director	served as Vice President of
		since 2010	the Adviser from 1997 until
			2010. Mr. Corbett began his
		President	tenure with Perritt Capital
		since 2004	Management in 1990 as a
			research analyst. He assumed
			portfolio management
			responsibilities in 1996 and
			now serves as portfolio
			manager for the Funds.

Directors and Officers (Unaudited) (Continued)

	Position(s) Held
	with Funds and			Other
	Number of			Directorships
	Portfolios in			Held by
Name,	Fund Complex	Term of Office	Principal	Director
Address,	Overseen	and Length of	Occupation(s)	during the
and Age	by Director	Time Served	during Past 5 Years	Past 5 Years
Officers of the Funds Other Than Mr. Corbett
Mark Buh	Vice President	One-year term	Mr. Buh has been Vice	N/A
Age: 59	and Treasurer	Since 2012	President and Treasurer of
300 South			the Funds and Chief Financial
Wacker Drive,			Officer of the Adviser since
Suite 600			2012. He has over 25 years
Chicago, IL			of experience in corporate
60606			accounting, administration,
			planning and business
			development. His previous
			experience includes tenures
			at Ernst and Young and
			CenturyLink
			Communications.
Lynn E.	Vice President,	One-year term	Mrs. Burmeister has been	N/A
Burmeister	Chief		the Chief Compliance
Age: 61	Compliance	Chief	Officer since May 1, 2010,
300 South	Officer and	Compliance	and oversees all compliance
Wacker Drive,	Secretary	Officer	matters for the Funds and the
Suite 600		Since 2010	Adviser. She also coordinates
Chicago, IL			the administration of the
60606		Secretary	Funds and is a liaison with
		Since 2015	the firm’s corporate counsel.
			Mrs. Burmeister has worked
			in the financial industry
			since 1980. Her previous
			experience includes work at
			Harris Associates, Gofen &
			Glossberg and Optimum
			Investments.

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