What changed in this filing

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Item 1. Financial Statements

2024-11-14 compared with 2024-08-07 · 269 added, 216 removed, 689 unchanged (41% of the section changed)

2 unchanged sentences

(In thousands, except share amounts and par value data)

June 30, 2024

September 30, 2024

December 31, 2023

10 unchanged sentences

Right-of-use assets

10,499 11,226

Property and equipment, net

9 unchanged sentences

Total current liabilities

Operating lease liabilities, noncurrent

10,712 10,027

Operating lease liabilities, noncurrent

Convertible note

9 unchanged sentences

600,000,000 shares authorized;

8,437,733 and 6,310,090 shares issued and outstanding at June 30, 2024 and December 31, 2023

8,940,942 and 6,310,090 shares issued and outstanding at September 30, 2024 and December 31, 2023

Additional paid-in capital

379,425 366,647

Accumulated other comprehensive (loss) income

Accumulated other comprehensive income

Accumulated deficit

7 unchanged sentences

(In thousands, except share amounts and per share data)

Three months ended June 30,

Six months ended June 30,

Three months ended September 30,

Nine months ended September 30,

Prototype sales

19 unchanged sentences

COMPREHENSIVE LOSS:

Change in net unrealized gain (loss) on available-for-sale securities, net of tax

Change in net unrealized gain on available-for-sale securities, net of tax

Change in fair value due to instrument-specific credit risk, net of tax

Net losses reclassified into income during the period, net of tax

Comprehensive loss

1 unchanged sentence

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS ’ EQUITY

For the six months ended June 30, 2024 and 2023

For the nine months ended September 30, 2024 and 2023

(In thousands, except share amounts)

20 unchanged sentences

BALANCE—June 30, 2024

Stock-based compensation

Issuance of common stock upon vesting of restricted stock units

Taxes related to net share settlement of equity awards

Issuance of common stock under Common Stock Purchase Agreements

Other comprehensive income, net of tax

BALANCE—September 30, 2024

Accumulated Other

18 unchanged sentences

BALANCE—June 30, 2023

Stock-based compensation

Issuance of common stock upon exercise of stock options

Issuance of common stock upon vesting of restricted stock units

Taxes related to net share settlement of equity awards

Conversion of convertible note into common stock

Issuance of common stock under the Common Stock Purchase Agreement

Transaction costs related to Common Stock Purchase Agreement

Other comprehensive income, net of tax

BALANCE—September 30, 2023

The accompanying notes are an integral part of these condensed consolidated financial statements.

1 unchanged sentence

(In thousands)

Six months ended June 30,

Nine months ended September 30,

CASH FLOWS FROM OPERATING ACTIVITIES:

1 unchanged sentence

Depreciation and amortization

Gain on sale of property and equipment, net

(Gain) loss on sale of property and equipment, net

Noncash lease expense relating to operating lease right-of-use assets

Gain on termination of operating lease, net

Common stock purchase agreement costs

Impairment of right-of-use assets

1 unchanged sentence

Change in fair value of convertible note and warrant liabilities

Realized loss on instrument-specific credit risk

Stock-based compensation

Amortization of premiums and accretion of discounts on marketable securities, net of change in accrued interest

Expected credit losses

Expected credit losses, net of write-off

Changes in operating assets and liabilities:

20 unchanged sentences

Taxes paid related to the net share settlement of equity awards

Proceeds from issuance of common stock under the Common Stock Purchase Agreements

Stock issuance costs related to the Common Stock Purchase Agreements

Proceeds from issuance of common stock under Common Stock Purchase Agreements

Stock issuance costs related to Common Stock Purchase Agreements

Proceeds from issuance of common stock through the Employee Stock Purchase Plan

Net cash provided by (used in) financing activities

NET DECREASE IN CASH, CASH EQUIVALENTS AND RESTRICTED CASH

NET (DECREASE) INCREASE IN CASH, CASH EQUIVALENTS AND RESTRICTED CASH

CASH, CASH EQUIVALENTS AND RESTRICTED CASH—Beginning of period

1 unchanged sentence

SUPPLEMENTAL CASH FLOW INFORMATION:

Cash paid for income taxes

Cash paid for income taxes, net of refund

Cash paid for interest

2 unchanged sentences

Conversion of convertible notes and accrued interest into Class A common stock

Operating lease liabilities extinguished upon termination of lease

Operating lease right-of-use asset derecognized upon termination of lease

Operating lease right-of-use assets obtained in exchange for lease obligations

Stock issuance costs included in accounts payable and accrued liabilities

Stock issuance costs through issuance of common stock

Taxes related to net share settlement of equity awards included in accrued liabilities

25 unchanged sentences

The Company has funded its operations primarily through the business combination and issuances of stock.

As of June 30, 2024 , the Company’s existing sources of liquidity included cash, cash equivalents, and marketable securities of $ 27,989 .

As of September 30, 2024 , the Company’s existing sources of liquidity included cash, cash equivalents, and marketable securities of $ 22,435 .

ASC 205 - 40, Presentation of Financial Statements - Going Concern , requires management to assess an entity’s ability to continue as a going concern within one year of the date the financial statements are issued.

In each reporting period, including interim periods, an entity is required to assess conditions known and reasonably knowable as of the financial statement issuance date to determine whether it is probable an entity will not meet its financial obligations within one year from the financial statement issuance date.

These condensed consolidated financial statements have been prepared on a going concern basis.

As is common in early-stage companies with limited operating histories, the Company is subject to risks and uncertainties such as its ability to develop and commercialize its products;

4 unchanged sentences

secure additional capital to support the business plan;

and other risks and uncertainties such as those described in Part II, Item 1A of this Quarterly Report on Form 10 -Q.

and other risks and uncertainties.

Since its inception, the Company has incurred net losses and negative cash flows from operations.

As of June 30, 2024 , the Company had an accumulated deficit of $ 355,841 .

For the six months ended June 30, 2024 and 2023 , the Company incurred a net loss of $ 18,206 and $ 42,296 , respectively, and the Company had net cash outflows from operating activities of $ 14,241 and $ 32,445 , respectively.

As of June 30, 2024 , the Company had $ 27,989 of cash, cash equivalents, and marketable securities.

As of September 30, 2024 , the Company had an accumulated deficit of $ 364,547 .

For the nine months ended September 30, 2024 and 2023 , the Company incurred a net loss of $ 26,912 and $ 59,344 , respectively, and the Company had net cash outflows from operating activities of $ 21,814 and $ 41,508 , respectively.

As of September 30, 2024 , the Company had $ 22,435 of cash, cash equivalents, and marketable securities.

As the Company is still in its early stages, it is expected to incur additional operating losses and negative cash flows as it continues to focus on achieving commercialization of its lidar solutions.

As described in Note 17, the Company was served with a complaint related to the alleged default of the lease for the Company’s former headquarters.

The former landlord has claimed that the amount owed could be up to $ 8,500 and drew down the standby letter credit of $ 2,150 , which was held as security for payment of rent.

Management, with the assistance of legal counsel, has determined that it is remote that the Company would be required to make any payment related to this matter to the former landlord within one year from the financial statement issuance date.

Depending on the outcome of this matter, there could be a material adverse effect on the liquidity, financial position, results of operations, or cash flows of the Company.

When conditions and events, in the aggregate, impact an entity’s ability to continue as a going concern, management evaluates the mitigating effect of its plans to determine if it is probable that the plans will be effectively implemented, and, when implemented, the plans will mitigate the relevant conditions or events.

The Company is dependent upon raising additional capital to provide the cash necessary to continue its ongoing operations.

The Company has been able to do so;

for example, during the second quarter of 2024 it was able to raise $5,541 in gross proceeds from financing activities.

Should the Company not be able to raise additional capital, the Company will require alternative sources of liquidity to continue its operations over the next 12 months.

In those circumstances, the Company would also plan to adjust spending in order to preserve and extend liquidity, and has plans to further reduce operating expenses and cash outlays should it need to.

The Company believes that these plans can be successfully implemented and alleviate substantial doubt about the Company's ability to continue as a going concern, which will result in adequate cash flows to support its ongoing operations for at least one year following the date these financial statements are issued.

Based upon the results of management’s assessment, which has been performed as of August 7, 2024 , these condensed consolidated financial statements have been prepared on a going concern basis.

The Company is dependent upon raising additional capital to provide the cash necessary to continue its ongoing operations and execute against its strategic objectives.

During the nine months ended September 30, 2024 , the Company raised $ 6,009 in gross proceeds from financing activities.

However, successfully raising capital is outside of management's control and there can be no assurance that the Company will be able to obtain additional financing on terms acceptable to the Company, on a timely basis, or at all.

Should the Company not be able to raise additional capital, the Company plans to adjust spending to preserve and extend liquidity over the next 12 months, these plans include managing its workforce to reduce payroll costs and managing other discretionary spending.

There can be no assurance that the Company will be successful in these efforts to preserve cash.

Management believes that these plans can be successfully implemented and alleviate the substantial doubt that was raised about the Company's ability to continue as a going concern, which will result in sufficient liquidity and cash flows to support its ongoing operations and meet its obligations for at least one year following the date these condensed consolidated financial statements are issued.

Reverse Stock Split

29 unchanged sentences

Level 3 —Unobservable inputs in which there is little or no market data, which require the reporting entity to develop its own assumptions.

The Company's financial instruments that are not remeasured at fair value include accounts receivable, prepaid and other current assets, accounts payable, accrued expenses, other current liabilities, and convertible note.

The carrying values of these financial instruments approximate their fair values.

The Company’s financial assets and liabilities measured at fair value on a recurring basis and the level of inputs used for such measurements were as follows (in thousands):

Fair Value Measured as of June 30, 2024 Using:

Fair Value Measured as of September 30, 2024 Using:

Adjusted Cost

Unrealized Losses

Unrealized Gains

Cash and Cash Equivalent

1 unchanged sentence

Money market funds

$ 9,464 $ — $ 9,464 $ 9,464 $ —

Corporate bonds

10,062 ( 3 ) 10,059 1,272 8,787

Commercial paper

6,135 ( 5 ) 6,130 — 6,130

Government securities

1,857 — 1,857 — 1,857

Total financial assets

$ 27,518 $ ( 8 ) $ 27,510 $ 10,736 $ 16,774

Private placement warrant liability

$ — $ — $ — $ — $ —

Derivative warrant liability

Total financial liabilities

$ — $ — $ 39 $ — $ —

Fair Value Measured as of December 31, 2023 Using:

4 unchanged sentences

Money market funds

$ 16,377 $ — $ 16,377 $ 16,377 $ —

Corporate bonds

2,880 1 2,881 — 2,881

Commercial paper

8,809 5 8,814 — 8,814

Government securities

7,892 4 7,896 — 7,896

Total financial assets

$ 35,958 $ 10 $ 35,968 $ 16,377 $ 19,591

Private placement warrant liability

$ — $ — $ — $ — $ —

Derivative warrant liability

Total financial liabilities

$ — $ — $ 26 $ — $ —

The Company’s financial assets and liabilities subject to fair value procedures were comprised of the following:

28 unchanged sentences

Private Placement Warrant liability is included within other noncurrent liabilities on the condensed consolidated balance sheets.

For the six months ended June 30, 2024 , there were no net transfers between Level 1 and Level 2 inputs.

The following table presents a summary of the changes in fair value of the Company’s Level 3 financial instruments for the six months ended June 30, 2024 (in thousands):

For the nine months ended September 30, 2024 , there were no net transfers between Level 1 and Level 2 inputs.

The following table presents a summary of the changes in fair value of the Company’s Level 3 financial instruments for the nine months ended September 30, 2024 (in thousands):

Derivative Warrant Liability

1 unchanged sentence

Change in fair value included in other income (expense), net

Balance at June 30, 2024

The key inputs into the Monte-Carlo simulation model for the derivative warrant liability valued at June 30, 2024 are as follows:

June 30, 2024

Balance at September 30, 2024

The key inputs into the Monte-Carlo simulation model for the derivative warrant liability valued at September 30, 2024 are as follows:

September 30, 2024

Expected term (years)

7 unchanged sentences

CASH, CASH EQUIVALENTS, AND RESTRICTED CASH

Cash, cash equivalents, and restricted cash as of June 30, 2024 and December 31, 2023 were as follows (in thousands):

June 30, 2024

Cash, cash equivalents, and restricted cash as of September 30, 2024 and December 31, 2023 were as follows (in thousands):

September 30, 2024

December 31, 2023

2 unchanged sentences

Total cash, cash equivalents, and restricted cash

Inventory, net of write-downs, as of June 30, 2024 and December 31, 2023 were as follows (in thousands):

June 30, 2024

Restricted cash of $ 2,150 as of December 31, 2023 consisted of funds that were contractually restricted as to usage or withdrawal due to a contractual agreement.

The Company had a letter of credit in the amount of $ 2,150 with Citibank N.A.

as security for the payment of rent on its headquarters.

In August 2024, the landlord drew down on the letter of credit and the restricted cash was used to offset the letter of credit draw (see further discussion in Note 6, Leases).

Inventory, net of write-downs, as of September 30, 2024 and December 31, 2023 were as follows (in thousands):

September 30, 2024

December 31, 2023

3 unchanged sentences

Total inventory, net

The Company also had $ 209 and $ 208 of non-current inventory (raw materials), net of write-downs, classified within other noncurrent assets on the condensed consolidated balance sheet as of June 30, 2024 and December 31, 2023 , respectively.

The Company's current and non-current inventory as of June 30, 2024 and December 31, 2023 was written down by $ 5,097 and $ 5,062 , respectively, in order to reduce inventory to the lower of cost or net realizable value.

The Company also had $ 209 and $ 208 of noncurrent inventory (raw materials), net of write-downs, classified within other noncurrent assets on the condensed consolidated balance sheet as of September 30, 2024 and December 31, 2023 , respectively.

The Company’s current and noncurrent inventory as of September 30, 2024 and December 31, 2023 was written down by $ 4,485 and $ 5,062 , respectively, in order to reduce inventory to the lower of cost or net realizable value.

PREPAID AND OTHER CURRENT ASSETS

Prepaid and other current assets as of June 30, 2024 and December 31, 2023 were as follows (in thousands):

June 30, 2024

Prepaid and other current assets as of September 30, 2024 and December 31, 2023 were as follows (in thousands):

September 30, 2024

December 31, 2023

4 unchanged sentences

$ 1,482 $ 2,517

The Company's advances to suppliers as of June 30, 2024 and December 31, 2023 was written down by $ 1,385 associated with the winding down of its existing industrial product as part of its revised strategic plan.

The Company’s advances to suppliers as of September 30, 2024 and December 31, 2023 were written down by $ 1,433 and $ 1,385 , respectively, associated with the winding down of its existing industrial product as part of its revised strategic plan.

See Note 15, Restructuring, for further details.

The components of operating lease expenses for the three and six months ended June 30, 2024 and 2023 were as follows (in thousands):

Three months ended June 30,

Six months ended June 30,

The Company leases office facilities in Northern California under non-cancelable operating leases.

In July 2024 , the Company entered into two new long-term leases, one of which the Company uses as its headquarters.

In August 2024 , one of the Company's existing leases, originally set to expire on November 30, 2026 , was terminated early.

In conjunction with the early termination, the Company recorded a net gain of $ 680 on termination of the operating lease.

The net gain included a gain of $ 5,954 , comprised of a $ 16,325 net liability reduction, partially offset by a $ 10,371 decrease in its remaining right of use asset.

Additionally, in accordance with terms in the lease agreement and based on certain assumptions, the Company recorded a lease termination loss of $ 5,274 , representing estimated unpaid rent for the remaining term.

The net gain was recorded in general and administrative expenses in the condensed consolidated statement of operations and comprehensive loss.

The lease termination liability was reduced by the draw-down of the $ 2,150 letter of credit by the landlord in August 2024 ;

the remaining lease termination liability of $ 3,124 is recorded in accrued expenses and other current liabilities in the condensed consolidated balance sheets.

See Note 15, Restructuring, and Note 17, Commitments and Contingencies, for further discussion.

The components of operating lease expenses, excluding the gain on lease termination, net, of $ 680 , for the three and nine months ended September 30, 2024 and 2023 were as follows (in thousands):

Three months ended September 30,

Nine months ended September 30,

Operating lease cost

7 unchanged sentences

Years ending - December 31:

2024 (remaining six months)

2024 (remaining three months)

Total lease payments

1 unchanged sentence

Present value of lease liabilities

ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES

Accrued expenses and other current liabilities as of September 30, 2024 and December 31, 2023 were as follows (in thousands):

September 30, 2024

December 31, 2023

Lease termination liability

Accrued bonuses

Accrued payroll

Operating lease liabilities

Accrued severance

Accrued payroll taxes

Warranty reserve

Income tax payable

Accrued other

Total accrued expenses and other current liabilities

CONVERTIBLE NOTES

22 unchanged sentences

As part of the debt extinguishment, the Company reclassified the accumulated change in fair value due to instrument-specific credit risk out of accumulated other comprehensive loss on the condensed consolidated balance sheet and into interest expense and other on the condensed consolidated statement of operations and comprehensive loss.

2024 Convertible Note

On May 10, 2024 , the Company entered into a Securities Purchase Agreement with an investor for the sale and issuance of 330,823 shares of common stock and a 5 -year convertible note with a principal balance of $ 146 ( "2024 Note") for total gross cash proceeds of $ 1,000 .

The 2024 Note bears interest at an annual rate equal to the Secured Overnight Financing Rate plus 1.0 %, which is compounded quarterly in arrears, and has a maturity date of June 4, 2029 .

2024 Promissory Note

On May 10, 2024 , the Company entered into a Securities Purchase Agreement with an investor for the sale and issuance of 330,823 shares of common stock and a 5 -year promissory note with a principal balance of $ 146 ( “May 2024 Note”) for total gross cash proceeds of $ 1,000 .

The May 2024 Note bears interest at an annual rate equal to the Secured Overnight Financing Rate plus 1.0 %, which is compounded quarterly in arrears, and has a maturity date of June 4, 2029 .

At maturity, the principal balance and accrued, unpaid and uncapitalized interest can be settled in cash, shares of common stock based on the closing price of the common stock as of the immediately preceding trading day, or any combination of the foregoing at the option of the investor.

INTEREST EXPENSE AND OTHER

Interest expense and other for the three and six months ended June 30, 2024 and 2023 consisted of the following (in thousands):

Three months ended June 30,

Six months ended June 30,

Interest expense and other for the three and nine months ended September 30, 2024 and 2023 consisted of the following (in thousands):

Three months ended September 30,

Nine months ended September 30,

Common stock purchase agreements costs

Amortization of premiums (accretion of discounts) on marketable securities, net

$ ( 170 ) $ ( 41 ) $ ( 441 ) $ ( 229 )

Expected credit losses

Loss on disposal of assets

Impairment of right-of-use assets

Realized loss on instrument-specific credit risk

Interest expense and other

$ ( 56 ) $ 11 $ ( 373 ) $ ( 165 )

STOCKHOLDERS' EQUITY

New Circle Principal Investments LLC ( “ New Circle ” ) Common Stock Purchase Agreement (the “ CSPA ” )

On July 25, 2024 , the Company entered into a CSPA and a Registration Rights Agreement with New Circle.

Under the terms and subject to the conditions of the CSPA, the Company has the right, but not the obligation, to sell to New Circle, and New Circle is obligated to purchase up to the lesser of (i) $ 50,000 of the Company’s common stock, or (ii) the Exchange Cap equal to 1,721,755 shares of the Company's common stock, unless the Company’s stockholders approve the issuance of shares in excess of the Exchange Cap, or the average price of all applicable sales of common stock to New Circle equals or exceeds $1.41 per share.

The Company has sole discretion to initiate such sales of common stock over a period of 36 months.

In all instances, the Company may not sell shares of its common stock to New Circle under the CSPA if doing so would result in New Circle beneficially owning more than 4.99 % of the Company's common stock.

The purchase price per share to be purchased by New Circle shall equal either (i) the lowest volume-weighted average price for common stock over a one -day trading period or intraday trading period on the applicable purchase date multiplied by 96.5 %, or (ii) the volume-weighted average price for common stock for the three consecutive trading days commencing on the purchase notice date multiplied by 97.5 %.

The maximum number of shares the Company may sell to New Circle on any single business day is the lesser of (i) the number of shares equal to 100.0 % of the average daily trading volume of the common stock of the Company during the five trading days immediately preceding the purchase notice, and (ii) 400,000 shares of common stock.

In connection with the CSPA, the Company issued to New Circle 225,563 shares of common stock in the Company as commitment shares for the facility.

At issuance, the 225,563 shares of common stock had a fair value of $ 282 and were recorded to Interest expense and other in the Company’s condensed consolidated statements of operations and comprehensive loss.

The Company determined that the right to sell additional shares represents a freestanding put option under ASC 815, Derivatives and Hedging , and as such, the financial instrument was classified as a derivative asset with a fair value of zero at inception of the CSPA on July 25, 2024 .

As of September 30, 2024 , other than the commitment shares, the Company had issued 150 shares of its common stock to New Circle under the CSPA.

Alliance Global Partners ( “ A.G.P.

” ) At Market Issuance Sales Agreement (the “ ATM Agreement ” )

On September 12, 2024 , the Company entered into the ATM and a Registration Rights Agreement with A.G.P.

Under the terms and subject to the conditions of the ATM Agreement, the Company may issue and sell through AGP the Company’s common stock having an aggregate offering price of up to $ 2,600 ("Placement Shares") from time to time through an "at-the-market" equity offering program.

The Company has sole discretion to initiate such sales of common stock over a period of 36 months.

Under the terms and subject to the conditions of the ATM Agreement, the Company will set the parameters for the sale of shares, including the number or dollar amount of Placement Shares to be issued, the time period during which sales are requested to be made, any limitation on the number or dollar amount of Placement Shares that may be sold in any one trading day and any minimum price below which sales may not be made.

The Company will pay a cash commission rate of up to 3.0 % of the gross proceeds from the sale of Placement Shares sold pursuant to the ATM Agreement.

As of September 30, 2024 , the Company had sold 10,000 shares through A.G.P.

under the ATM Agreement.

ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS)

The changes in accumulated other comprehensive income (loss) by component for the six months ended June 30, 2024 and 2023 are as follows (in thousands):

The changes in accumulated other comprehensive income (loss) by component for the nine months ended September 30, 2024 and 2023 are as follows (in thousands):

Unrealized gains (losses) on available-for-sale securities

4 unchanged sentences

Balance at June 30, 2024

Other comprehensive income, net of tax

Balance at September 30, 2024

Unrealized gains (losses) on available-for-sale securities

5 unchanged sentences

Balance at June 30, 2023

Other comprehensive loss before reclassifications, net of tax

Amounts reclassified from accumulated other comprehensive loss, net of tax

Other comprehensive income

Balance at September 30, 2023

NET LOSS PER SHARE

The following table sets forth the basic and diluted net loss per share attributable to common stockholders for the periods presented (in thousands, except share amounts and per share data):

Three months ended June 30,

Six months ended June 30,

Three months ended September 30,

Nine months ended September 30,

Net loss attributable to common stockholders

$ ( 7,987 ) $ ( 16,031 ) $ ( 18,206 ) $ ( 42,296 )

Weighted average common shares outstanding - Basic

6,874,454 5,855,866 6,499,089 5,632,091

Weighted average common shares outstanding - Diluted

6,874,454 5,855,866 6,499,089 5,632,091

Net loss per share attributable to common stockholders - Basic and Diluted

$ ( 1.16 ) $ ( 2.74 ) $ ( 2.80 ) $ ( 7.51 )

Due to net losses for the six months ended June 30, 2024 and 2023 , basic and diluted net loss per share were the same, as the effect of all potentially dilutive securities would have been anti-dilutive.

Due to net losses for the nine months ended September 30, 2024 and 2023 , basic and diluted net loss per share were the same, as the effect of all potentially dilutive securities would have been anti-dilutive.

The following table sets forth the anti-dilutive common share equivalents for the periods listed:

Six months ended June 30,

Nine months ended September 30,

Common stock options issued and outstanding

144,287 416,634

Unvested restricted stock units

715,297 876,578

319,443 319,443

Common Stock Purchase Agreement

206,780 990,681

Conversion of convertible notes

75,469 307,841

30,679 213,196

1,491,955 3,124,373

STOCK-BASED COMPENSATION

The following table summarizes stock-based compensation expense recorded in each financial statement line item in the Company’s condensed consolidated statements of operations and comprehensive loss for the three and six months ended June 30, 2024 and 2023 (in thousands):

Three months ended June 30,

Six months ended June 30,

The following table summarizes stock-based compensation expense recorded in each financial statement line item in the Company’s condensed consolidated statements of operations and comprehensive loss for the three and nine months ended September 30, 2024 and 2023 (in thousands):

Three months ended September 30,

Nine months ended September 30,

Cost of revenue

$ — $ 34 $ — $ 95

Research and development

499 1,530 1,708 3,808

Sales and marketing

3 674 185 2,042

General and administrative

1,238 1,872 2,861 4,678

Total stock-based compensation

$ 1,740 $ 4,110 $ 4,754 $ 10,623

The Company uses the Monte-Carlo simulation model to estimate the grant date fair value of awards with a market condition, which requires the input of subjective assumptions such as expected term, expected stock price volatility, risk-free interest rate, and dividend yield as discussed below.

3 unchanged sentences

Dividend Yield —The expected dividend-yield assumption is based on the Company’s current expectations about its anticipated dividend policy.

There were no awards granted with a market condition during the six months ended June 30, 2024 .

There were no awards granted with a market condition during the nine months ended September 30, 2024 .

Sale of Prototypes

The Company recorded revenue for prototype sales of $ 6 and $ 26 in the three and six months ended June 30, 2024 , respectively, and $ 245 and $ 370 in the three and six months ended June 30, 2023 , respectively.

The Company recorded revenue for prototype sales of $ 65 and $ 91 in the three and nine months ended September 30, 2024 , respectively, and $ 56 and $ 426 in the three and nine months ended September 30, 2023 , respectively.

The Company does not incur significant contract costs in fulfilling or obtaining its contracts with customers.

1 unchanged sentence

The Company has entered into research and development contracts as well as a sales, marketing and technical support services contract with companies primarily in the automotive industry.

The Company assessed the number of performance obligations associated with the promises under each agreement, primarily the delivery of customized 4Sight TM perception-related goods and services, and recognized $ 26 in revenue for performance obligations satisfied during both the three and six months ended June 30, 2024 and $ 326 and $ 837 during the three and six months ended June 30, 2023 , respectively, in the condensed consolidated statements of operations and comprehensive loss.

The Company assessed the number of performance obligations associated with the promises under each agreement, primarily the delivery of customized 4Sight TM perception-related goods and services, and recognized $ 39 and $ 65 in revenue for performance obligations satisfied during the three and nine months ended September 30, 2024 , respectively, and $ 132 and $ 969 during the three and nine months ended September 30, 2023 , respectively, in the condensed consolidated statements of operations and comprehensive loss.

Disaggregation of Revenue

The Company recognized the following revenues by geographic area based on the primary billing address of the customer and by the timing of the transfer of goods or services to customers (point in time or over time), as it believes such criteria best depict how the nature, amount, timing, and uncertainty of its revenue and cash flows are affected by economic factors.

Total revenue based on the disaggregation criteria described above are as follows (in thousands):

Three months ended June 30,

Six months ended June 30,

Total revenue based on the disaggregation criteria described above is as follows (in thousands):

Three months ended September 30,

Nine months ended September 30,

Revenue by primary geographical market:

United States

$ 26 $ 443 $ 41 $ 990

$ 32 $ 571 $ 52 $ 1,207

Revenue by timing of recognition:

Recognized at a point in time

$ 6 $ 245 $ 26 $ 370

Recognized over time

26 326 26 837

$ 32 $ 571 $ 52 $ 1,207

Contract Liabilities

The Company had $ 74 and $ 0 contract liabilities as of June 30, 2024 and December 31, 2023 , respectively.

The following table shows the significant changes in contract liabilities balance for the six months ended June 30, 2024 and 2023 (in thousands):

Six months ended June 30,

The Company had $ 35 and $ 0 contract liabilities as of September 30, 2024 and December 31, 2023 , respectively.

The following table shows the significant changes in contract liabilities balance for the nine months ended September 30, 2024 and 2023 (in thousands):

Nine months ended September 30,

Beginning balance

10 unchanged sentences

In 2023, the Company implemented a revised strategic plan, which focused on key products and critical customer engagements in the Automotive market, and aligned the Company's operations with evolving business needs by focusing on a transition from research and development to the commercialization of the Company's automotive products, while winding down the existing industrial product and reducing fixed operating costs.

As a result of the implementation of the revised strategic plan, the Company recorded restructuring charges of $ 0 and $ 123 in the three and six months ended June 30, 2024 , respectively, and $ 45 and $ 1,298 in the three and six months ended June 30, 2023 , respectively, primarily relating to one -time employee termination benefits and losses on purchase commitments.

In August 2024, the Company further reduced fixed operating costs and terminated its headquarters lease.

See discussion in Footnote 6, Leases.

The Company recorded restructuring benefits, net, of ($ 680 ) and ($ 557 ) in the three and nine months ended September 30, 2024 , respectively, and restructuring charges of $ 172 and $ 1,470 in the three and nine months ended September 30, 2023 , respectively, primarily relating to the net gain on termination of operating lease, one -time employee termination benefits and losses on purchase commitments.

Restructuring-related liabilities are included in accrued expenses and other current liabilities in the condensed consolidated balance sheets.

Restructuring activity is summarized as follows as of June 30, 2024 (in thousands):

Restructuring charges are summarized as follows as of September 30, 2024 (in thousands):

One-time employee termination benefits

Losses on purchase commitments

Lease Termination Liability

Balance as of December 31, 2023

$ 402 $ 233 $ — $ 56 $ 691

Cash payments

18 105 5,274 — 5,397

Balance as of March 31, 2024

$ 200 $ 336 $ 33 $ 569

Cash payments

( 420 ) ( 36 ) ( 2,150 ) ( 51 ) ( 2,657 )

Balance as of June 30, 2024

Balance as of September 30, 2024

$ — $ 302 $ 3,124 $ 5 $ 3,431

Restructuring charges were included in the condensed consolidated statements of operations and comprehensive loss during the three and six months ended June 30, 2024 and 2023 as follows (in thousands):

Three months ended June 30,

Six months ended June 30,

Restructuring charges (benefits) are included in the condensed consolidated statements of operations and comprehensive loss during the three and nine months ended September 30, 2024 and 2023 as follows (in thousands):

Three months ended September 30,

Nine months ended September 30,

Cost of revenue

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General and administrative

Total restructuring charges

( 680 ) 72 ( 680 ) 259

For the three and six months ended June 30, 2024 , the Company recognized $ 0 and $ 2 provision for income taxes, respectively.

For the three and six months ended June 30, 2023 , the Company recognized $ 19 and $ 38 provision for income taxes, respectively.

Total restructuring charges (benefits)

$ ( 680 ) $ 172 $ ( 557 ) $ 1,470

For the three and nine months ended September 30, 2024 , the Company recognized $ 0 and $ 2 provision for income taxes, respectively.

For the three and nine months ended September 30, 2023 , the Company recognized $ 5 and $ 43 provision for income taxes, respectively.

The income tax rates vary from the federal and state statutory rates due to the valuation allowances on the Company’s net operating losses and foreign tax rate differences.

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The Company may be subject to legal proceedings and claims that arise in the ordinary course of business.

Management is not currently aware of any matters that will have a material effect on the financial position, results of operations, or cash flows of the Company.

Litigation can be expensive and disruptive to normal business operations.

Moreover, the results of complex legal proceedings are difficult to predict and the Company’s view of these matters may change in the future as the litigation and events related thereto unfold.

The Company expenses legal fees as incurred.

The Company records a provision for contingent losses when it is both probable that a liability has been incurred and the amount of the loss can be reasonably estimated.

As previously disclosed, on August 28, 2024 , the Company was served with a complaint that was filed in the Superior Court of California for the County of Alameda on August 26, 2024 that ( 1 ) alleges the Company is in breach of the lease for its former headquarters office in Dublin, California because of the Company’s failure to pay rent as required by the lease and ( 2 ) provides notice that the lease had been terminated by the landlord effective as of August 23, 2024 .

The landlord claimed that the amount owed could be up to $ 8,500 .

Thereafter, in August 2024, the landlord fully drew down the standby letter of credit of $ 2,150 , which was held as security for the payment of rent, due to the alleged default of the lease.

The Company disputes, among other things, that the total damages claimed by the landlord equal the amount claimed.

Depending on the outcome of this matter, there could be a material adverse effect on the financial position, results of operations, or cash flows of the Company.

RELATED PARTIES

From November 2016 to December 2023, the Company employed a sibling of Mr.

Dussan, a director and the Company’s former Chief Technology Officer, who held the position of Director, Human Resources during 2023.

For the six months ended June 30, 2023 , Mr.

Dussan, a director and the Company’s former Chief Technology Officer, who held the position of Director, Human Resources.

For the nine months ended September 30, 2023 , Mr.

Dussan’s sibling received total cash compensation of $ 113 and was granted 2,000 RSUs.

In addition, he participated in all other benefits that the Company generally offers to all of its employees.

There were no related party transactions for the six months ended June 30, 2024 .

SUBSEQUENT EVENTS

Management has evaluated subsequent events through August 7, 2024 and determined that there were no such events requiring recognition or disclosure in the condensed consolidated financial statements, other than as noted below.

On July 25, 2024 , the Company entered into a Share Purchase Agreement ("Purchase Agreement") with an investor, in which the investor has committed to purchase, subject to certain limitations, up to $ 50,000 ("Total Commitment") of the Company's common stock.

Under the terms and subject to the conditions of the Purchase Agreement, the Company has the right, but not the obligation, to sell to the investor, and the investor is obligated to purchase, up to the Total Commitment.

Such sales of common stock by the Company, if any, will be subject to certain limitations, and may occur from time-to-time in the Company’s sole discretion, commencing once certain customary conditions are satisfied, including the filing and securing effectiveness of a resale registration statement with the U.S.

Securities and Exchange Commission (the “SEC”) with respect to the shares to be sold to the investor under the Purchase Agreement.

There were no related party transactions for the nine months ended September 30, 2024 .

Management ’ s Discussion and Analysis of Financial Condition and Results of Operations

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This overview provides a high-level discussion of our operating results and some of the trends that affect our business.

We believe that an understanding of these trends is important to understanding our financial results for the three and six months ended June 30, 2024, as well as our future prospects.

We believe that an understanding of these trends is important to understanding our financial results for the three and nine months ended September 30, 2024, as well as our future prospects.

This summary is not intended to be exhaustive, nor is it intended to be a substitute for the detailed discussion and analysis provided elsewhere in this Quarterly Report, including our condensed consolidated financial statements and accompanying notes.

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Reverse Stock Split

On December 27, 2023, we effected a 1-for-30 reverse stock split of its issued and outstanding shares of common stock (the "Reverse Stock Split").

On December 27, 2023, we effected a 1-for-30 reverse stock split of our issued and outstanding shares of common stock (the “Reverse Stock Split”).

Pursuant to the Reverse Stock Split, every thirty (30) shares of issued and outstanding shares of common stock were combined into one (1) share of common stock.

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Dowslake Transaction

On May 10, 2024, we entered into a Securities Purchase Agreement with Dowslake Microsystems Corporate, pursuant to which Dowslake has agreed to purchase 330,823 shares of Common Stock for the purchase price of $854, which represents a per share purchase price of $2.58, and an unsecured promissory note with the principal amount of $146 for an aggregate purchase price of $1,000.

On May 10, 2024, we entered into a Securities Purchase Agreement with Dowslake Microsystems Corporation, or Dowslake, pursuant to which Dowslake agreed to purchase 330,823 shares of common stock for a purchase price of $854, which represents a per share purchase price of $2.58, and an unsecured promissory note in the principal amount of $146 for an aggregate purchase price of $1,000.

Registered Direct Offering

On May 29, 2024, we entered into Securities Purchase Agreement with certain institutional investors pursuant to which we agreed to issue and sell, in a registered direct offering, an aggregate of 727,706 shares of Common Stock at a per share purchase price of $3.448 for gross proceeds of approximately $2,509, before deducting estimated offering expenses payable by the us.

On May 29, 2024, we entered into a Securities Purchase Agreement with certain institutional investors pursuant to which we agreed to issue and sell, in a registered direct offering, an aggregate of 727,706 shares of Common Stock at a per share purchase price of $3.448 for gross proceeds of approximately $2,509, before deducting estimated offering expenses payable by us.

New Circle Transaction

On July 25, 2024, we entered into the Purchase Agreement with New Circle Principal Investments LLC ("New Circle") pursuant to which we have the right, but not the obligation, to sell to New Circle, and New Circle is obligated to purchase, up to $50,000 of our Common Stock.

Such sales of Common Stock by us, if any, and may occur from time-to-time in our sole discretion, over the period commencing once certain customary conditions are satisfied, including the filing and securing effectiveness of the resale registration statement with the SEC with respect to the shares to be sold to New Circle under the Purchase Agreement.

On July 25, 2024, we entered into a Stock Purchase Agreement with New Circle Principal Investments LLC, or New Circle, pursuant to which we have the right, but not the obligation, to sell to New Circle, and New Circle is obligated to purchase, up to $50,000 of our Common Stock.

Such sales of common stock by us, if any, and may occur from time to time at our sole discretion, over a 36-month period.

On September 12, 2024, we entered into an At Market Issuance Sales Agreement with Alliance Global Partners, or A.G.P., pursuant to which we may issue and sell through A.G.P., up to $2,600 of our common stock from time to time through an "at-the-market" equity offering program.

Such sales of common stock by us, if any, may occur from time to time at our sole discretion, over a 36-month period.

Key Factors Affecting Our Operating Results

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However, as our customers continue their R&D projects to commercialize solutions that rely on lidar technology, it is difficult to estimate the timing of ultimate end market demand and customer adoption.

In the Automotive market for example, which accounted for 0% and 71% of revenue in the six months ended June 30, 2024 and 2023, respectively, our growth and financial performance will be heavily influenced by our ability to successfully integrate into OEM programs that require years of development, testing, and validation.

In the Automotive market for example, which accounted for 0% and 71% of revenue in the nine months ended September 30, 2024 and 2023, respectively, our growth and financial performance will be heavily influenced by our ability to successfully integrate into OEM programs that require years of development, testing, and validation.

Because of the size and complexity of these OEM programs, having Tier 1 partnerships should provide a substantial competitive advantage over our competitors given their large scale, mass-production capabilities, and existing OEM relationships.

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We are dependent upon raising additional capital to provide the cash necessary to continue our ongoing operations.

We have been able to do so in the past, for example during the second quarter of 2024, we were able to raise approximately $5,541 in gross proceeds from financing activities.

We have been able to do so in the past, for example, through the nine months ended September 30, 2024, we were able to raise approximately $6,000 in gross proceeds from financing activities.

Should we not be successful in raising additional capital, we will require alternative sources of liquidity to continue our operations for the next twelve months.

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If we fail to achieve sufficient scale in our automotive products, we may not be in a position to reenter the Industrial market in the time frame we expect, or at all.

Recently, we have engaged with LITEON as our new Tier 1 automotive supplier and are actively working with LITEON to bring our products to market.

We have also recently engaged with new partners in an effort to penetrate the lidar market in China, initially focused on the autonomous trucking and railway segments.

Given both our engagement with LITEON and our partners in the China market are recent, there is no guarantee that either or both endeavors will be successful.

We believe our revenue and profitability will also be dependent upon our success in licensing our technology to Tier 1 automotive suppliers, such as our new Tier 1 partner, LITEON, or our previous partner, Continental, which represented 0% and 71% of revenue in the six months ended June 30, 2024 and 2023, respectively, that intend to use our technology in volume production of lidar sensors for OEMs.

Delays in autonomy programs by OEMs that we are currently or plan to be working with through our Tier 1 partners could result in us being unable to achieve our revenue and profitability targets in the timeframe we anticipate, or at all.

We have engaged with LITEON as our Tier 1 automotive supplier and are actively working with LITEON to bring our products to market.

We have also recently with partners in an effort to penetrate the lidar market in China.

Given both our engagement with LITEON and our partners in the China market are relatively recent, there is no guarantee that either or both endeavors will be successful.

We believe our revenue and profitability will also be dependent upon our success in licensing our technology to Tier 1 automotive suppliers, such as our Tier 1 partner, LITEON, or our previous partner, Continental, which represented 0% and 71% of revenue in the nine months ended September 30, 2024 and 2023, respectively, that intend to use our technology in volume production of lidar sensors for OEMs.

Restructuring

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This assessment is made at the outset of the arrangement for each performance obligation.

We expect our 2024 revenues related to prototype sales and development contracts to remain flat or marginally higher than in 2023.

Cost of Revenue

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Costs associated with development contracts include the direct costs and allocation of overhead costs involved in the execution of the contracts.

We expect our 2024 costs of revenue to fluctuate in line with 2024 revenues.

Operating Expenses

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Interest income and other also includes gains on sale of property and equipment.

Interest expense and other consists primarily of convertible note issuance costs and amortization of premiums and accretion of discounts on marketable securities, net.

Interest expense and other consists primarily of financing costs and amortization of premiums and accretion of discounts on marketable securities, net.

Results of Operations

Comparison of the three months ended June 30, 2024 and 2023

Comparison of the three months ended September 30, 2024 and 2023

The results of operations presented below should be reviewed in conjunction with the condensed consolidated financial statements and notes included elsewhere in this report.

The following table sets forth our consolidated results of operations data for the three months ended June 30, 2024 and 2023 (in thousands, except for percentages):

Three months ended June 30,

The following table sets forth our consolidated results of operations data for the three months ended September 30, 2024 and 2023 (in thousands, except for percentages):

Three months ended September 30,

Prototype sales

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Interest expense and other

Total other income, net

Total other income (expense), net

Loss before income tax expense

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Prototype Sales

Prototype sales decreased by $239, or 98%, to $6 for the three months ended June 30, 2024, from $245 for the three months ended June 30, 2023.

This was primarily due to a decrease in units sold of our 4Sight™-based industrial product due to our focus on executing key milestones in the Automotive market.

Prototype sales increased by $9, or 16%, to $65 for the three months ended September 30, 2024, from $56 for the three months ended September 30, 2023.

This was primarily due to an increase in units sold of our 4Sight™-based industrial product, partially offset by lower average sales prices.

Development Contracts

Development contracts decreased by $300, or 92%, to $26 for the three months ended June 30, 2024, from $326 for the three months ended June 30, 2023.

The decrease was primarily due to lower development contract costs as we fulfilled our obligations on a Tier 1 automotive supplier contract in the fourth quarter of 2023.

Development contracts decreased by $93, or 70%, to $39 for the three months ended September 30, 2024, from $132 for the three months ended September 30, 2023.

The decrease was primarily due to lower revenues as we fulfilled our obligations on a Tier 1 automotive supplier contract in the fourth quarter of 2023.

Cost of Revenue

Cost of revenue decreased by $1,751, or 92%, to $160 for the three months ended June 30, 2024, from $1,911 for the three months ended June 30, 2023.

This decrease was primarily due to fewer units sold in the current period due to the wind-down of our existing industrial product and also lower development contract costs as we fulfilled our obligations on a Tier 1 automotive supplier contract in the fourth quarter of 2023.

Cost of revenue decreased by $4,173, or 93%, to $306 for the three months ended September 30, 2024, from $4,479 for the three months ended September 30, 2023.

This decrease was primarily due to non-routine inventory write-downs in the third quarter of 2023 that were associated with the transition to certain higher-grade components in our automotive products, and lower development contract costs in the current quarter as we had fulfilled our obligations on a Tier 1 automotive supplier contract in the fourth quarter of 2023.

Operating Expenses

Research and Development

Research and development expenses decreased by $2,059, or 35%, to $3,838 for the three months ended June 30, 2024, from $5,897 for the three months ended June 30, 2023.

This decrease was primarily driven by the implementation of our revised strategic plan, with decreases in stock-based compensation expense of $1,031, personnel costs of $795, and engineering parts and lab equipment expense of $124.

Research and development expenses decreased by $1,887, or 33%, to $3,767 for the three months ended September 30, 2024, from $5,654 for the three months ended September 30, 2023.

This decrease was primarily driven by the implementation of our revised strategic plan, with decreases in personnel costs of $844, stock-based compensation expense of $794, and information technology and facilities expense of $222.

Sales and Marketing

Sales and marketing expenses decreased by $2,537, or 97%, to $67 for the three months ended June 30, 2024, from $2,604 for the three months ended June 30, 2023.

Sales and marketing expenses decreased by $1,836, or 96%, to $74 for the three months ended September 30, 2024, from $1,910 for the three months ended September 30, 2023.

This decrease was primarily driven by the implementation of our revised strategic plan, with decreases in personnel costs of $863, stock-based compensation of $615, trade show, marketing, and consultant spend of $138, and information technology and facilities expense of $121.

General and Administrative

General and administrative expenses decreased by $2,122, or 33%, to $4,223 for the three months ended June 30, 2024, from $6,345 for the three months ended June 30, 2023.

This decrease was primarily driven by the implementation of our revised strategic plan, with decreases in stock-based compensation of $633, accounting, legal, and consulting fees of $590, personnel costs of $365, and insurance of $357.

General and administrative expenses decreased by $1,577, or 29%, to $3,803 for the three months ended September 30, 2024, from $5,380 for the three months ended September 30, 2023.

This decrease was primarily driven by the implementation of our revised strategic plan, with decreases in stock-based compensation of $394, accounting, legal, and consulting fees of $203, operating lease costs of $(321), and insurance of $127.

The decrease was also due to a net gain on termination of an operating lease of $680 in the current period.

Change in Fair Value of Convertible Note and Warrant Liabilities

Change in fair value of convertible note and warrant liabilities decreased by $101, or 87%, to a loss of $15 for the three months ended June 30, 2024, from a loss of $116 for the three months ended June 30, 2023.

Change in fair value of convertible note and warrant liabilities decreased by $3, or 25%, to a loss of $9 for the three months ended September 30, 2024, from a loss of $12 for the three months ended September 30, 2023.

This decrease was primarily due to settlement of the 2022 Note in the third quarter of 2023.

Interest Income and Other

Interest income and other decreased by $73, or 24%, to $228 for the three months ended June 30, 2024, from $301 for the three months ended June 30, 2023.

Interest income and other decreased by $121, or 34%, to $233 for the three months ended September 30, 2024, from $354 for the three months ended September 30, 2023.

This decrease was primarily due to less interest earned on our marketable securities in the current period.

Interest Expense and Other

Interest expense and other decreased by $67, or 609%, to a gain of $56 for the three months ended June 30, 2024, from a loss of $11 for the three months ended June 30, 2023.

This decrease was primarily due to a favorable increase in accretion of discounts on marketable securities of $129, offset by an unfavorable increase in foreign exchange loss of $89.

Interest expense and other increased by $928, or 533%, to $1,102 for the three months ended September 30, 2024, from $174 for the three months ended September 30, 2023.

This increase was primarily due to costs of $1,136 related to financing arrangements executed in the quarter and an increase in foreign exchange loss of $88, partially offset with a favorable increase in accretion of discounts on marketable securities, net, of $148

Provision for Income Tax Expense

Provision for income tax expenses decreased to $0 for the three months ended June 30, 2024, from $19 for the three months ended June 30, 2023.

Provision for income tax expenses decreased to $0 for the three months ended September 30, 2024, from $5 for the three months ended September 30, 2023.

This change is due to changes in pretax income (loss) in the U.S.

and certain foreign entities and changes in tax rates.

Net loss decreased by $8,044, or 50%, to $7,987 for the three months ended June 30, 2024, from $16,031 for the three months ended June 30, 2023.

This decrease was primarily due to decreases in operating expenses following restructuring and cost reduction efforts in connection with our revised strategic plan as announced during 2023.

Net loss decreased by $8,342, or 49%, to $8,706 for the three months ended September 30, 2024, from $17,048 for the three months ended September 30, 2023.

This decrease was primarily due to decreases in operating expenses following restructuring and cost reduction efforts in connection with our revised strategic plan as announced during 2023 and decreases in cost of revenues as we had fulfilled our obligations on a Tier 1 automotive supplier contract in the fourth quarter of 2023.

Results of Operations

Comparison of the six months ended June 30, 2024 and 2023

Comparison of the nine months ended September 30, 2024 and 2023

The results of operations presented below should be reviewed in conjunction with the condensed consolidated financial statements and notes included elsewhere in this report.

The following table sets forth our consolidated results of operations data for the six months ended June 30, 2024 and 2023 (in thousands, except for percentages):

Six months ended June 30,

The following table sets forth our consolidated results of operations data for the nine months ended September 30, 2024 and 2023 (in thousands, except for percentages):

Nine months ended September 30,

Prototype sales

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Prototype Sales

Prototype sales decreased by $344, or 93%, to $26 for the six months ended June 30, 2024, from $370 for the six months ended June 30, 2023.

Prototype sales decreased by $335, or 79%, to $91 for the nine months ended September 30, 2024, from $426 for the nine months ended September 30, 2023.

This was primarily due to a decrease in units sold of our 4Sight™-based industrial product due to our focus on executing key milestones in the Automotive market.

Development Contracts

Development contracts decreased by $811, or 97%, to $26 for the six months ended June 30, 2024, from $837 for the six months ended June 30, 2023.

The decrease was primarily due to lower development contract costs as we fulfilled our obligations on a Tier 1 automotive supplier contract in the fourth quarter of 2023.

Development contracts decreased by $904, or 93%, to $65 for the nine months ended September 30, 2024, from $969 for the nine months ended September 30, 2023.

The decrease was primarily due to lower development contract revenues as we fulfilled our obligations on a Tier 1 automotive supplier contract in the fourth quarter of 2023.

Cost of Revenue

Cost of revenue decreased by $3,749, or 90%, to $423 for the six months ended June 30, 2024, from $4,172 for the six months ended June 30, 2023.

Cost of revenue decreased by $7,922, or 92%, to $729 for the nine months ended September 30, 2024, from $8,651 for the nine months ended September 30, 2023.

This decrease was primarily due to fewer units sold in the current year to date due to the wind-down of our existing industrial product and also lower development contract costs as we had fulfilled our obligations on a Tier 1 automotive supplier contract in the fourth quarter of 2023.

Operating Expenses

Research and Development

Research and development expenses decreased by $6,969, or 45%, to $8,370 for the six months ended June 30, 2024, from $15,339 for the six months ended June 30, 2023.

This decrease was primarily driven by the implementation of our revised strategic plan, with decreases in personnel costs of $3,186, stock-based compensation expense of $2,100, third party research and development work of $732, engineering parts and lab equipment expense of $570, and information technology and facilities expense of $175.

Research and development expenses decreased by $8,856, or 42%, to $12,137 for the nine months ended September 30, 2024, from $20,993 for the nine months ended September 30, 2023.

This decrease was primarily driven by the implementation of our revised strategic plan, with decreases in personnel costs of $4,030, stock-based compensation expense of $2,894, engineering parts and lab equipment expense of $685, third party research and development work of $627, and information technology and facilities expense of $397.

Sales and Marketing

Sales and marketing expenses decreased by $8,464, or 95%, to $408 for the six months ended June 30, 2024, from $8,872 for the six months ended June 30, 2023.

Sales and marketing expenses decreased by $10,300, or 96%, to $482 for the nine months ended September 30, 2024, from $10,782 for the nine months ended September 30, 2023.

This decrease was primarily driven by the implementation of our revised strategic plan, with decreases in personnel costs of $4,700, trade show, marketing, and consultant spend of $2,002, stock-based compensation of $2,472, information technology and facilities expense of $555, and travel and entertainment expense of $426.

General and Administrative

General and administrative expenses decreased by $5,061, or 34%, to $9,838 for the six months ended June 30, 2024, from $14,899 for the six months ended June 30, 2023.

This decrease was primarily driven by the implementation of our revised strategic plan, with decreases in stock-based compensation of $1,817, personnel costs of $1,131, accounting, legal, and consulting fees of $1,101, insurance of $749, and travel and entertainment expense of $114.

General and administrative expenses decreased by $6,638, or 33%, to $13,641 for the nine months ended September 30, 2024, from $20,279 for the nine months ended September 30, 2023.

This decrease was primarily driven by the implementation of our revised strategic plan, with decreases in personnel costs of $968, stock-based compensation of $2,211, accounting, legal, and consulting fees of $1,304, insurance of $876, operating lease costs of $318, and travel and entertainment expense of $121.

The decrease was also due to a net gain on termination of an operating lease of $680 in the current period.

Change in Fair Value of Convertible Note and Warrant Liabilities

Change in fair value of convertible note and warrant liabilities decreased by $913, or 99%, to a loss of $13 for the six months ended June 30, 2024, from a loss of $926 for the six months ended June 30, 2023.

Change in fair value of convertible note and warrant liabilities decreased by $910, or 100%, to $4 for the nine months ended September 30, 2024, from $914 for the nine months ended September 30, 2023.

This decrease was primarily due to settlement of the 2022 Note in the third quarter of 2023.

Interest Income and Other

Interest income and other decreased by $155, or 27%, to $423 for the six months ended June 30, 2024, from $578 for the six months ended June 30, 2023.

Interest income and other decreased by $276, or 30%, to $656 for the nine months ended September 30, 2024, from $932 for the nine months ended September 30, 2023.

This decrease was primarily due to less interest earned on our marketable securities in the current period.

Interest Expense and Other

Interest expense and other decreased by $208, or 126%, to a gain of $373 for the six months ended June 30, 2024, from a gain of $165 for the six months ended June 30, 2023.

This decrease was primarily due to a favorable increase in accretion of discounts on marketable securities of $212

Interest expense and other increased by $720, or 8000%, to $729 for the nine months ended September 30, 2024, from $9 for the nine months ended September 30, 2023.

This increase was primarily due to costs of $1,136 related to financing arrangements executed in the period, partially offset with a favorable increase in accretion of discounts on marketable securities, net of $360.

Provision for Income Tax Expense

Provision for income tax expenses decreased to $2 for the six months ended June 30, 2024, from $38 for the six months ended June 30, 2023.

Provision for income tax expenses decreased to $2 for the nine months ended September 30, 2024, from $43 for the nine months ended September 30, 2023.

This change is due to changes in pretax income (loss) in the U.S.

and certain foreign entities and changes in tax rates.

Net loss decreased by $24,090, or 57%, to $18,206 for the six months ended June 30, 2024, from $42,296 for the six months ended June 30, 2023.

This decrease was primarily due to decreases in operating expenses following restructuring and cost reduction efforts in connection with our revised strategic plan as announced during 2023.

Net loss decreased by $32,432, or 55%, to $26,912 for the nine months ended September 30, 2024, from $59,344 for the nine months ended September 30, 2023.

Liquidity and Capital Resources

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Our capital requirements will depend on many factors, including, but not exclusively, sales volume and timing of revenue, our efforts to establish and maintain relationships with one or more Tier 1 automotive suppliers and the timing of an OEM design win, our ability to extend our cash runway based on the restructuring initiatives announced in the previous year, the timing and extent of spending to support R&D efforts, how quickly we can commercialize our products, and market adoption of new and enhanced products and features.

As of June 30, 2024, our cash, cash equivalents, and marketable securities totaled $27,989.

For the six months ended June 30, 2024 and 2023, we had a net loss of $18,206 and $42,258, respectively.

As of September 30, 2024, our cash, cash equivalents, and marketable securities totaled $22,435.

For the nine months ended September 30, 2024 and 2023, we had a net loss of $26,912 and $59,344, respectively.

We anticipate that we will continue to incur losses for at least the next several years.

To date, our principal sources of liquidity have been proceeds received from the issuance of equity.

In December 2021, we entered into a Common Stock Purchase Agreement with Tumim Stone Capital LLC, or Tumim Stone, pursuant to which we have the right, but not the obligation, to issue and sell to Tumim Stone over a 36-month period, up to $125,000 of our common stock.

In December 2021, we entered into a Common Stock Purchase Agreement with Tumim Stone Capital LLC, or Tumim Stone, pursuant to which we had the right, but not the obligation, to issue and sell to Tumim Stone over a 36-month period, up to $125,000 of our common stock.

On May 6, 2022, we filed a Registration Statement on Form S-1, which related to the offer and resale of up to 1,028,847 shares of our common stock to be purchased by Tumim Stone, pursuant to the Common Stock Purchase Agreement.

As of July 25, 2024, 996,866 shares have been issued under this Common Stock Purchase Agreement.

On July 24, 2024, this agreement was terminated in conjunction with us entering into the Purchase Agreement with New Circle Principal Investments LLC.

On July 24, 2024, this Common Stock Purchase Agreement was terminated in conjunction with us entering into the CSPA with New Circle.

In total, 996,866 shares were issued under this Common Stock Purchase Agreement.

In September 2022, we entered into a Securities Purchase Agreement, with an investor allowing for the sale and issuance of up to two convertible notes, each with cash proceeds of $10,000, for a total of $20,000 in proceeds between the two issuances (each, a "Note Closing").

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Securities and Exchange Commission declared our registration statement on Form S-3 to be effective.

On May 10, 2024, we entered into a Securities Purchase Agreement with Dowslake, pursuant to which Dowslake agreed to purchase 330,823 shares of Common Stock for the purchase price of approximately $854, which represents a per share purchase price of $2.58, and an unsecured convertible promissory note with the principal amount of $146 for an aggregate purchase price of $1,000.

On May 29, 2024, we entered into a Securities Purchase Agreement with certain institutional investors pursuant to which we agreed to issue and sell, in a registered direct offering using the Shelf Registration, an aggregate of 727,706 shares of Common Stock at a per share purchase price of $3.448 for gross proceeds of approximately $2,509, before deducting estimated offering expenses payable by us.

On July 25, 2024, we entered into the Purchase Agreement with New Circle, pursuant to which we agreed to issue and sell up to $50.0 million of Common Stock, at our discretion from time to time, subject to the satisfaction of the conditions in the Purchase Agreement.

On May 10, 2024, we entered into a Securities Purchase Agreement with Dowslake, pursuant to which Dowslake agreed to purchase 330,823 shares of common stock for a purchase price of approximately $854, which represents a per share purchase price of $2.58, and an unsecured convertible promissory note with a principal amount of $146 for an aggregate purchase price of $1,000.

On May 29, 2024, we entered into a Securities Purchase Agreement with certain institutional investors pursuant to which we agreed to issue and sell, in a registered direct offering using our shelf registration statement on Form S-3, an aggregate of 727,706 shares of common stock at a per share purchase price of $3.448 for gross proceeds of approximately $2,509, before deducting estimated offering expenses payable by us.

On July 25, 2024, we entered into the CSPA with New Circle, pursuant to which we agreed to issue and sell up to $50,000 of common stock, at our discretion from time to time, subject to the satisfaction of the conditions in the Purchase Agreement.

On September 12, 2024, we entered into the ATM Agreement with A.G.P., pursuant to which we agreed to issue and sell up to $2,600 of common stock, at our discretion from time to time through an "at-the-market" equity offering, subject to the satisfaction of the conditions in the ATM Agreement.

Until we can generate sufficient revenue from the sale of our products to cover operating expenses, working capital, and capital expenditures, we expect the funds raised in the transactions described above, and other potential sources of capital, to fund our near-term cash needs .

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The terms of debt securities or borrowings could impose significant restrictions on our operations.

We may also be unable to raise additional capital through the sale of securities and debt financing, or to do so on terms that are favorable to us, particularly given current capital market and overall macroeconomic condition s.

Accounting Standards Codification, or ASC, Subtopic 205-40, Presentation of Financial Statements - Going Concern , requires us to assess our ability to meet our future financial obligations as they become due within one year after the date that the financial statements are issued.

Despite the recent restructuring initiatives, we expect that our expenses will continue to exceed our operating income and, as a result, we may need additional capital resources to fund our operations.

We believe that the net proceeds from the transactions described above together with our existing cash, cash equivalents, and marketable securities and the implementation of our plans should we be unable to secure additional financing will sufficiently alleviate the risk of substantial doubt about our ability to continue as a going concern and will enable us to fund our operating expenses, working capital, and capital expenditure requirements for a period of at least twelve months from the date of this Quarterly Report on Form 10-Q.

We believe that our potential liquidity and the implementation of our plans should we be unable to secure additional financing will sufficiently alleviate the risk of substantial doubt about our ability to continue as a going concern and will enable us to fund our operating expenses, working capital, and capital expenditure requirements for a period of at least twelve months from the date of this Quarterly Report on Form 10-Q.

For additional discussion of our plans, see Note 1 in the Notes to the Condensed Consolidated Financial Statements in Item 1 of Part I of this Quarterly Report on Form 10-Q.

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Our plans for the use of cash in the long term (beyond twelve months from this Quarterly Report on Form 10-Q) are primarily related to funding operating expenses to support the commercialization of our products.

For additional information regarding our cash requirements from lease obligations and contractual obligations, see Notes 6 and 15 to the Condensed Consolidated Financial Statements in Item 1 of Part I of this Quarterly Report on Form 10-Q.

For additional information regarding our cash requirements from lease obligations, lease termination liability and contractual obligations, see Notes 6 and 17 to the Condensed Consolidated Financial Statements in Item 1 of Part I of this Quarterly Report on Form 10-Q.

On March 10, 2023, Silicon Valley Bank, or SVB, was closed by the California Department of Financial Protection and Innovation, and the Federal Deposit Insurance Corporation, or FDIC, was appointed as receiver.

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Cash Flow Summary

Six months ended June 30,

Nine months ended September 30,

(in thousands)

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Operating Activities

For the six months ended June 30, 2024, net cash used in operating activities was $14,241.

Factors affecting our operating cash flows during this period were net loss of $18,206, amortization of premiums and accretion of discounts on marketable securities, net of $428, offset by stock-based compensation of $4,754, and noncash lease expense of $727.

For the nine months ended September 30, 2024, net cash used in operating activities was $21,814.

Factors affecting our operating cash flows during this period were net loss of $26,912, gain on termination of operating lease, net, of $680, amortization of premiums and accretion of discounts on marketable securities, net of $491, offset by stock-based compensation of $7,002, common stock purchase agreement costs of $1,136, and noncash lease expense of $905.

Within operating activities, the net changes in operating assets and liabilities were cash used of $3,048, primarily driven by decreases in accrued expenses and other liabilities, operating lease liabilities and other noncurrent liabilities of $3,411, $936 and $346, respectively.

Cash used was offset by cash provided by decreases in prepaid and other current assets, and other noncurrent assets of $724 and $171, respectively, and an increase in accounts payable of $108.

For the six months ended June 30, 2023, net cash used in operating activities was $32,445.

Factors affecting our operating cash flows during this period were a net loss of $42,296, offset by stock-based compensation of $10,623, change in fair value of convertible note and warrant liabilities of $926, noncash lease expense of $706, depreciation and amortization of $666, and inventory write-downs of $544.

Within operating activities, the net change in operating assets and liabilities was cash used of $3,544, primarily driven by decreases in contract liabilities, accrued expenses and other liabilities, and operating lease liabilities of $837, $785, and $749, respectively, and increases in inventories and other noncurrent assets of $2,502 and $2,164, respectively.

Cash used was partially offset by cash provided by decreases in prepaid and other current assets and accounts receivable of $2,884 and $327, respectively, and an increase in accounts payable of $282.

Cash used was offset by cash provided by decreases in prepaid and other current assets, inventories, and other noncurrent assets of $1,035, $157 and $123, respectively, and an increase in accounts payable of $275.

For the nine months ended September 30, 2023, net cash used in operating activities was $41,508.

Factors affecting our operating cash flows during this period were a net loss of $59,344, offset by stock-based compensation of $14,707, inventory write-downs of $3,666, noncash lease expense of $1,058, depreciation and amortization of $998, and change in fair value of convertible note and warrant liabilities of $914.

Within operating activities, the net change in operating assets and liabilities was cash used of $3,686, primarily driven by decreases in accrued expenses and other liabilities, operating lease liabilities, and contract liabilities of $2,571, $1,143, and $969, respectively, and increases in inventories of $2,681.

Cash used was partially offset by cash provided by decreases in prepaid and other current assets, accounts receivable, and other noncurrent assets of $1,672, $379, and $133, respectively, and an increase in accounts payable of $1,494.

Investing Activities

For the six months ended June 30, 2024, net cash provided by investing activities was $2,993.

The primary factors affecting net cash provided by investing activities during this period were proceeds from redemptions and maturities of marketable securities of $18,400, offset by the purchases of marketable securities of $15,173 and purchases of property and equipment of $234.

For the six months ended June 30, 2023, net cash provided by investing activities was $35,138.

The primary factor affecting net cash provided by investing activities during this period were the proceeds from redemptions and maturities of marketable securities of $35,850, offset by purchases of property and equipment of $808.

For the nine months ended September 30, 2024, net cash provided by investing activities was $3,140.

The primary factors affecting net cash provided by investing activities during this period were proceeds from redemptions and maturities of marketable securities of $27,756, partially offset by the purchases of marketable securities of $24,241 and purchases of property and equipment of $420.

For the nine months ended September 30, 2023, net cash provided by investing activities was $66,436.

The primary factors affecting net cash provided by investing activities during this period were the proceeds from redemptions and maturities of marketable securities of $76,350, partially offset by purchases of marketable securities of $8,736 and purchases of property and equipment of $1,421.

Financing Activities

For the six months ended June 30, 2024, net cash provided by financing activities was $5,531.

The primary factors affecting our financing cash flows during this period were proceeds from the common stock purchase agreements of $5,560, partially offset by stock issuance costs related to the common stock purchase agreements of $288.

For the six months ended June 30, 2023, net cash used in financing activities was $5,515.

For the nine months ended September 30, 2024, net cash provided by financing activities was $5,443.

The primary factors affecting our financing cash flows during this period were proceeds from common stock purchase agreements of $5,863, partially offset by stock issuance costs related to common stock purchase agreements of $613.

For the nine months ended September 30, 2023, net cash used in financing activities was $6,843.

The primary factors affecting our financing cash flows during this period were payments for convertible note redemptions of $6,235 and payments for taxes related to net settlement of equity awards of $1,312, partially offset by proceeds from the exercise of stock options of $450.

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We believe our critical accounting policies involve the greatest degree of judgment and complexity and have the greatest potential impact on our condensed consolidated financial statements.

During the six months ended June 30, 2024, there were no significant changes in our critical accounting policies and estimates as compared to those previously disclosed in "Critical Accounting Policies and Estimates" in "Management's Discussion and Analysis of Financial Condition and Results of Operations" included in our 2023 Annual Report on Form 10-K.

During the nine months ended September 30, 2024, there were no significant changes in our critical accounting policies and estimates as compared to those previously disclosed in “Critical Accounting Policies and Estimates” in “Management's Discussion and Analysis of Financial Condition and Results of Operations” included in our 2023 Annual Report on Form 10-K.

Emerging Growth Company Status

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Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 1. Financial Statements