What changed in this filing

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Item 8. Financial Statements and Supplementary Data

2025-02-24 compared with 2024-03-27 · 360 added, 294 removed, 722 unchanged (48% of the section changed)

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Opinion on the Financial Statements

We have audited the accompanying consolidated balance sheet of AEye, Inc.

and subsidiaries (the "Company") as of December 31, 2024, the related consolidated statement of operations and comprehensive loss, stockholders’ equity (deficit), and cash flows for the year then ended, and the related notes to the consolidated financial statements.

In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2024, and the results of its operations and its cash flows for the year then ended, in conformity with U.S.

generally accepted accounting principles.

Basis for Opinion

These financial statements are the responsibility of the Company's management.

Our responsibility is to express an opinion on the Company's financial statements based on our audit.

We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S.

federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audit in accordance with the standards of the PCAOB.

Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud.

Our audit included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks.

Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements.

Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements.

We believe that our audits provide a reasonable basis for our opinion.

We have served as the Company’s auditor since 2024.

Santa Clara, California

February 24, 2025

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the stockholders and Board of Directors of AEye, Inc.

Opinion on the Financial Statements

We have audited the accompanying consolidated balance sheets of AEye, Inc.

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In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2023, and 2022, and the results of its operations and its cash flows for each of the two years in the period ended December 31, 2023, in conformity with accounting principles generally accepted in the United States of America.

Change in Accounting Principle

As discussed in Note 16 to the financial statements, the accompanying 2023 and 2022 financial statements have been retrospectively adjusted for the adoption of Accounting Standards Update 2023-07, Segment Reporting (Topic 280):

Improvements to Reportable Segment Disclosures .

Basis for Opinion

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San Francisco, California

March 26, 2024

We have served as the Company’s auditor since 2018.

March 26, 2024 (February 24, 2025 as to Note 16)

We began serving as the Company’s auditor in 2018.

In 2024 we became the predecessor auditor.

CONSOLIDATED BALANCE SHEETS

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Cash and cash equivalents

$ 10,266 $ 16,932

Marketable securities

12,012 19,591

Accounts receivable, net

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Total current assets

25,171 39,754

Right-of-use assets

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Other noncurrent assets

Total assets $ 54,317 $ 133,340

$ 27,120 $ 54,317

LIABILITIES AND STOCKHOLDERS’ EQUITY

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Accounts payable

$ 3,598 $ 3,442

Accrued expenses and other current liabilities

Contract liabilities — 987

Convertible notes — 8,594

Total current liabilities

11,307 10,027

Operating lease liabilities, noncurrent

Convertible notes

Other noncurrent liabilities

Total liabilities

11,996 25,294

COMMITMENTS AND CONTINGENCIES (Note 20)

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Additional paid-in capital

Accumulated other comprehensive income (loss) 10 ( 1,279 )

388,213 366,647

Accumulated other comprehensive income

Accumulated deficit

( 373,095 ) ( 337,635 )

Total stockholders’ equity

15,124 29,023

Total liabilities and stockholders’ equity

$ 27,120 $ 54,317

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

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(In thousands, except share and per share data)

Twelve Months Ended December 31,

Year Ended December 31,

Prototype sales

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Cost of revenue

Gross loss ( 13,855 ) ( 5,085 )

OPERATING EXPENSES:

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Total other income (expense), net

Provision for income tax expense 57 58

Net loss $ ( 87,126 ) $ ( 98,714 )

Change in net unrealized gain (loss) on available-for-sale securities, net of tax 1,264 ( 940 )

Loss before income tax

(Benefit) provision for income tax

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

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

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(In thousands, except share data)

Preferred Stock Common Stock Additional Paid-in Capital Accumulated Other Comprehensive Income (Loss)

Accumulated Deficit Total Stockholders’ Equity

Shares Amount Shares Amount

Comprehensive

Stockholders’

Preferred Stock

Income (Loss)

BALANCE—December 31, 2023

— $ — 5,436,637 $ 1 $ 345,757 $ ( 1,279 ) $ ( 250,509 ) $ 93,970

Stock-based compensation

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Taxes related to net share settlement of equity awards

Issuance of common stock under the Common Stock Purchase Agreement — — 19,500 — 136 — — 136

Stock issuance costs related to the Common Stock Purchase Agreement — — — — ( 3 ) — — ( 3 )

Issuance of common stock under the Common Stock Purchase Agreements

Stock issuance costs related to the Common Stock Purchase Agreements

Issuance of common stock through the Employee Stock Purchase Plan

Conversions of convertible note into common stock — — 502,530 — 3,338 — — 3,338

Other comprehensive income, net of tax — — — — — 1,289 — 1,289

Net loss — — — — — — ( 87,126 ) ( 87,126 )

Other comprehensive loss, net of tax

BALANCE—December 31, 2024

— $ — 6,310,090 $ 1 $ 366,647 $ 10 $ ( 337,635 ) $ 29,023

Preferred Stock Common Stock Additional Paid-in Capital Accumulated Other Comprehensive Loss Accumulated Deficit Total Stockholders’ Equity

Shares Amount Shares Amount

Comprehensive

Stockholders’

Preferred Stock

Income (Loss)

BALANCE—December 31, 2022

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Issuance of common stock under the Common Stock Purchase Agreement

Transaction costs related to the Common Stock Purchase Agreement — — — — ( 29 ) — — ( 29 )

Issuance of common stock upon exercise of public warrants — — — — — — — —

Stock issuance costs related to the Common Stock Purchase Agreement

Issuance of common stock through the Employee Stock Purchase Plan

Conversions of convertible note into common stock

Other comprehensive loss, net of tax — — — — — ( 888 ) — ( 888 )

Net loss — — — — — — ( 98,714 ) ( 98,714 )

Other comprehensive income, net of tax

BALANCE—December 31, 2023

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(In thousands)

Twelve months ended December 31,

Year Ended December 31,

CASH FLOWS FROM OPERATING ACTIVITIES:

Net loss $ ( 87,126 ) $ ( 98,714 )

Adjustments to reconcile net loss to net cash used in operating activities:

Depreciation and amortization

Loss on sale of property and equipment, net 59 —

(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

Impairment of long-lived assets

Gain from early termination of right-of-use assets ( 35 ) —

Common stock purchase agreement costs

Inventory write-downs, net of scrapped inventory

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Stock-based compensation

Convertible note issuance costs — 474

Realized loss on redemption of marketable securities — 77

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

Expected credit losses 35 —

Expected credit losses, net of write-off

Changes in operating assets and liabilities:

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Payments for convertible note redemptions

Payment of 2022 convertible note issuance costs — ( 324 )

Taxes paid related to the net share settlement of equity awards

Proceeds from issuance of common stock under the Common Stock Purchase Agreement 136 2,891

Stock issuance costs related to the Common Stock Purchase Agreement ( 3 ) ( 29 )

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 through the Employee Stock Purchase Plan

Net cash (used in) provided by financing activities

( 6,758 ) 8,067

NET (DECREASE) INCREASE IN CASH, CASH EQUIVALENTS AND RESTRICTED CASH ( 2,132 ) 4,881

Net cash provided by (used in) financing activities

NET DECREASE IN CASH, CASH EQUIVALENTS AND RESTRICTED CASH

CASH, CASH EQUIVALENTS AND RESTRICTED CASH—Beginning of period

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Cash paid for interest

Cash paid for income taxes 16 20

Cash (refunded) paid for income taxes, net

SUPPLEMENTAL DISCLOSURE OF NONCASH INVESTING AND FINANCING ACTIVITIES:

Purchases of property and equipment included in accounts payable and accrued liabilities — 28

Operating lease right-of-use assets obtained in exchange for lease obligations upon adoption of ASC 842 — 16,284

Operating lease liabilities extinguished upon early lease termination 335 —

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 obligation

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

Taxes related to net share settlement of equity awards included in accrued liabilities — 4

Stock issuance costs included in accounts payable and accrued liabilities

Stock issuance costs through issuance of common stock

Proceeds from issuance of common stock in prepaid and other current assets

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

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ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

(the “Company” or “AEye”) is a provider of high-performance, active lidar systems for vehicle autonomy, advanced driver-assistance systems (ADAS), and smart industrial applications.

AEye’s software-definable 4Sight TM Intelligent Sensing Platform combines solid-state active lidar and integrated deterministic artificial intelligence to capture more intelligent information with less data, enabling faster, more accurate, and more reliable perception of the surroundings.

AEye, Inc., formerly known as CF Finance Acquisition Corp.

and its wholly owned subsidiaries (the “Company” or “AEye”) is a provider of high-performance, active lidar systems for vehicle autonomy, advanced driver-assistance systems, or ADAS, and robotic vision applications.

AEye's 4Sight™ Intelligent Sensing Platform includes a solid-state software definable active lidar sensor, an adaptive sensing SmartScan architecture to scan dynamic scenes/targets, and a sophisticated signal processing capability that provides precise measurements and imaging for various safety-critical applications.

The 4Sight™ Intelligent Sensing platform captures more information with less data, facilitating faster, more accurate, and more reliable perception of the environment.

AEye, formerly known as CF Finance Acquisition Corp.

III, (“CF III”), was originally incorporated in Delaware on March 15, 2016 under the name CF SPAC Re Inc.

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Unless otherwise specified, “we,” “us,” “our,” “AEye,” and the “Company” refers to AEye, Inc.

and its wholly owned subsidiaries.

Principle of Consolidation and Liquidity

The accompanying consolidated financial statements include the accounts of the Company and its wholly owned subsidiaries.

The accompanying consolidated financial statements include the accounts of AEye, Inc.

and its wholly owned subsidiaries.

All intercompany balances and transactions have been eliminated in consolidation.

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secure additional capital to support the business plan;

and other risks and uncertainties such as those described in Part I, Item 1A of this Annual Report on Form 10-K.

and other risks and uncertainties related to liquidity.

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

As of December 31, 2024 , the Company had an accumulated deficit of $ 373,095 .

For the twelve months ended December 31, 2023 and 2022, the Company incurred a net loss of $ 87,126 and $ 98,714 , respectively, and the Company had net cash outflows from operating activities of $ 50,725 and $ 71,649 , respectively.

As of December 31, 2023, the Company had $ 36,523 of cash and marketable securities.

For the years ended December 31, 2024 and 2023 , the Company incurred a net loss of $ 35,460 and $ 87,126 , respectively, and the Company had net cash outflows from operating activities of $ 26,620 and $ 50,725 , respectively.

As of December 31, 2024 , the Company had $ 22,278 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.

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 decision by the Company's Tier 1 partner, Continental, to discontinue its joint lidar development program, may have a material and adverse effect on the Company's business, which is predicated on licensing its lidar designs and other intellectual property to Tier 1 partners.

The Company has a plan to improve its results and

liquidity through securing additional financing and finding a replacement Tier 1 partner.

Should the Company not be able to do so, the Company has plans which would further reduce operating expenses and cash outlays.

The Company believes that these plans 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 March 26, 2024, these consolidated financial statements have been prepared on a going concern basis.

It remains critical for the Company to preserve cash and manage spending to extend its liquidity.

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 twelve months ended December 31, 2024 , the Company issued shares through stock purchase agreements and a convertible note totaling $ 12,905 .

Subsequent to year-end, the Company raised an additional $ 11,055 in gross proceeds through financing activities (see Note 23, Subsequent Events.) 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.

Based on cash, cash equivalents and marketable securities at December 31, 2024, together with the net proceeds from financing activities subsequent to year-end, cash, available cash equivalents and marketable securities is sufficient to fund the Company’s operations for at least the next 12 months from the filing date of these consolidated financial statements.

At some point after that time, the Company anticipates it will require additional financing to fund its future operations.

Based upon the results of Management’s assessment, which has been performed as of February 24, 2025 , these consolidated financial statements have been prepared on a going concern basis.

Reverse Stock Split

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The number of shares of common stock issuable under our equity incentive plans and exercisable under the outstanding warrants were also proportionately adjusted.

In connection with the Reverse Stock Split, there was no change to the shares authorized or in the par value per share of common stock of $ 0.0001 .

In connection with the Reverse Stock Split, there was no change to the number of shares authorized or in the par value per share of common stock of $ 0.0001 .

Accordingly, all historical per share data, number of shares issued and outstanding, stock awards, and other common stock equivalents for the periods presented in the accompanying consolidated financial statements and notes thereto have been adjusted retroactively, where applicable, to reflect the Reverse Stock Split.

Reclassification of Prior Year Presentation

Certain prior year amounts have been reclassified for consistency with the current year presentation.

Accrued severance has been broken out from Accrued payroll within Footnote 9, Accrued expenses and other current liabilities.

Emerging Growth Company

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Actual results could differ from those estimates.

items subject to such estimates and assumptions include impairment of long-lived assets, write-downs of inventory to the lower of cost or net realizable value, investments, fair value of the 2022 convertible note, embedded derivative and warrant liabilities, and stock-based compensation.

Segment Reporting

The Company manages its business on the basis of one reportable and operating segment.

Operating segments are defined as components of an enterprise with separate financial information, and are evaluated regularly by the chief operating decision maker, which is the Company's Chief Executive Officer (“CEO”).

The CEO decides how to allocate resources and assesses the Company’s performance based upon consolidated financial information.

All of the Company's sales were made to customers in USD located in the U.S., Europe, and Asia-Pacific through AEye, Inc.

All of the Company's $ 281 of net property and equipment as of December 31, 2023 is located in the United States.

Significant items subject to such estimates and assumptions include lease termination liability, write-downs of inventory to the lower of cost or net realizable value, investments, embedded derivative and warrant liabilities, stock-based compensation, impairment of long-lived assets, and fair value of the 2022 convertible note.

Cash, Cash Equivalents, and Marketable Securities

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Restricted Cash

Restricted cash of $ 2,150 as of December 31, 2023 and 2022, consists of funds that are contractually restricted as to usage or withdrawal due to a contractual agreement.

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

as of December 31, 2023 as security for the payment of rent on its headquarters in Dublin, CA which require lease payments through 2026.

At December 31, 2022, the letter of credit was held with Silicon Valley Bank.

The Company determines current or non-current classification of restricted cash based on the expected duration of the restriction.

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 to the amount of $ 2,150 with Citibank N.A.

as of December 31, 2023 as security for the payment of rent on its headquarters.

In August 2024, the former 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 ).

The Company had no restricted cash as of December 31, 2024 .

Concentration of Credit Risk

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The Company’s marketable securities have investment grade ratings when purchased which mitigates risk.

The Company’s accounts receivables are derived from customers located in the U.S., Europe, and Asia-Pacific.

The Company’s accounts receivable are derived from customers located in the U.S.

The Company mitigates its credit risks by performing ongoing credit evaluations of its customers’ financial conditions.

The Company generally does not require collateral.

The Company’s concentration of risk related to accounts receivable and accounts payable was determined by evaluating the number of customers and vendors accounting for 10% or more of accounts receivable (“AR”) and

accounts payable (“AP”).

As of December 31, 2023, AEye had four customers, each accounting for 10 % or more of AR and one vendor accounting for 10 % or more of AP.

As of December 31, 2022, AEye had four customers, each accounting for 10 % or more of AR and two vendors, each accounting for 10 % or more of AP.

As of December 31, 2024 , the Company had three customers, each accounting for 10 % or more of AR and one vendor accounting for 10 % or more of AP.

As of December 31, 2023 , the Company had four customers, each accounting for 10 % or more of AR and one vendor accounting for 10 % or more of AP.

For the years ended December 31, 2024 and 2023 , revenue from the Company’s major customers representing 10% or more of total revenue was as follows:

Twelve months ended December 31,

Customer A 70 % 51 %

Customer B * 13 %

Customer C * 10 %

Year ended December 31,

*Customer accounted for less than 10% of total revenue in the period.

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The Company reviews the provision quarterly based on historical experience with each customer and the specifics of each arrangement.

During the years ended December 31, 2023 and 2022, the Company did not have any write-offs, and at December 31, 2023 and 2022, recorded a $ 35 and $ 0 provision for expected credit losses, respectively.

During the years ended December 31, 2024 and 2023 , the Company had write-offs of $ 70 and $ 0 , respectively.

As of December 31, 2023, the Company recorded a $ 35 provision for expected credit losses.

There is no provision for credit losses as of December 31, 2024.

Inventories, net

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The Company evaluates the need for inventory write-downs associated with obsolete, slow moving, and non-sellable inventory by reviewing estimated net realizable values on a periodic basis and records a provision for excess and obsolete inventory to adjust the carrying value of inventory as needed.

The Company's current and non-current

inventory as of December 31, 2023 and 2022 was written down by $ 5,062 and $ 833 , respectively, in order to record inventory at its estimated net realizable value.

The Company's current and noncurrent inventory held as of December 31, 2024 and 2023 was written down by $ 4,659 and $ 5,062 , respectively, in order to record inventory at its estimated net realizable value.

Property and Equipment, net

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When an impairment loss is recognized for assets to be held and used, the adjusted carrying amount of the long-lived asset becomes its new cost basis which is depreciated over the asset's remaining useful life.

There were $ 9,988 of non-cash impairment charges recorded in the consolidated statements of operations and comprehensive loss for the year ended December 31, 2023.

The Company recorded $ 9,988 of non-cash impairment charges in the consolidated statements of operations and comprehensive loss for the year ended December 31, 2023 .

No impairment charges were recorded for the year ended December 31, 2024.

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Operating leases, consisting of office leases, are included in Right-of-use ("ROU") assets, Accrued expenses and other current liabilities, and Operating lease liabilities, noncurrent, on the Company's consolidated balance sheets.

The Company did not have any finance leases as of December 31, 2023 and December 31, 2022.

The Company did not have any finance leases as of December 31, 2024.

ROU assets represent the Company's right to an underlying asset for the lease term, and lease liabilities represent the Company's obligation to make lease payments arising from the lease.

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The Company's lease term includes the noncancelable period, any rent-free periods provided by the lessor, and options to extend or terminate the lease when it is reasonably certain that it will exercise that option.

At lease inception, and in subsequent periods as necessary, the Company estimates the lease term based on its assessment of extension and termination options that are

reasonably certain to be exercised.

At lease inception, and in subsequent periods as necessary, the Company estimates the lease term based on its assessment of extension and termination options that are reasonably certain to be exercised.

Operating lease expense for lease payments is recognized on a straight-line basis over the lease term and is included in operating expenses on the consolidated statements of operations and comprehensive loss.

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The Company acknowledges that its election to apply the fair value option is irrevocable.

The Company recognized costs incurred upon issuance of the 2022 convertible note as an expense in its consolidated statement of operations for the twelve months ended December 31, 2022.

The 2022 convertible note was classified and presented as a current liability on the consolidated balance sheet as of December 31, 2022.

As of December 31, 2024 , the 2022 convertible note has no outstanding principal balance as all outstanding principal and accrued interest has been fully settled.

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The consideration is allocated between separate performance obligations in proportion to their estimated standalone selling price (SSP).

The SSP reflects the price the Company would charge for a specific

product or service if it were sold separately in similar circumstances and to similar customers.

The SSP reflects the price the Company would charge for a specific product or service if it were sold separately in similar circumstances and to similar customers.

If the selling price is not directly observable, the Company determines SSP using information that may include other observable inputs, such as the cost plus margin approach, to estimate SSP.

In instances where SSP is not directly observable, the Company determines SSP using information that may include other observable inputs such as expected costs plus margin, or uses the residual approach for performance obligations whose SSP is highly variable or uncertain.

The Company provides standard product warranties for a term of typically one year to ensure that its products comply with agreed-upon specifications.

The Company provides standard product warranties for a term of typically 30 days to one year to ensure that its products comply with agreed-upon specifications.

Standard warranties are considered to be assurance type warranties and are not accounted for as separate performance obligations.

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Contract assets primarily represent revenues recognized for performance obligations that have been satisfied but for which amounts have not been billed.

The Company did no t have any contract assets as of December 31, 2023.

Contract liabilities relate to deferred revenue.

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Deferred revenue that will be realized during the succeeding 12 -month period is recorded within current liabilities and the remaining deferred revenue is recorded as noncurrent liabilities.

The Company did not have any contract assets or contract liabilities as of December 31, 2024 .

Right of return.

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The Company’s contracts with customer prepayment terms do not include a significant financing component because the primary purpose is not to receive financing from the customers.

The Company did not have any outstanding receivables with financing components as of December 31, 2024 .

Contract modifications.

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Other costs such as indirect manufacturing costs are recognized in research and development and general and administrative expenses on the consolidated statements of operations and comprehensive loss.

Costs associated with development arrangements include the

direct costs and allocation of overhead costs involved in the execution of the contract.

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

Research and Development Expenses

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Basic net loss per share is computed using net loss available to common stockholders divided by the weighted average number of common shares outstanding during the period.

Diluted net loss per share reflects the dilutive effects of stock options, restricted stock units, preferred stock, stock to be issued under the ESPP, convertible notes, and warrants outstanding during the period to the extent such securities would not be anti-dilutive

and is determined using the if-converted and treasury stock methods.

The Company calculates weighted average number of common shares outstanding during the period using the Company’s common stock outstanding.

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The Company is currently in the process of evaluating the effects of the new guidance.

Recently Adopted Accounting Guidance

In June 2016, the Financial Accounting Standards Board, ("FASB"), issued Accounting Standards Update ("ASU") 2016-13, Measurement of Credit Losses on Financial Instruments , which has subsequently been amended by ASU No.

2018-19, ASU No.

2019-04, ASU No.

2019-05, ASU No.

2019-10, and ASU No.

The objective of the guidance in ASU 2016-13 is to allow entities to recognize estimated credit losses in the period that the change in valuation occurs.

ASU 2016-13 requires an entity to present financial assets measured on an amortized cost basis on the balance sheet net of an allowance for credit losses.

Available-for-sale and held to maturity debt securities are also required to be held net of an allowance for credit losses.

For public business entities, this standard is effective for fiscal years beginning after December 15, 2019.

For smaller reporting companies, the standard is effective for fiscal years beginning after December 15, 2022, including interim periods within those fiscal years.

Early adoption is permitted.

The Company adopted ASU 2016-13 on January 1, 2023 which resulted in an immaterial impact to the consolidated financial statements.

In November 2024, the FASB issued ASU 2024 - 03, Disaggregation of Income Statement Expenses , which requires annual and interim disclosure of disaggregated disclosures of certain costs and expenses on the income statement.

The standard is effective for fiscal years beginning after December 15, 2026, and interim periods within fiscal years beginning after December 15, .2027, with early adoption permitted.

Amendments are applied on a prospective basis with retrospective application permitted.

The Company is currently evaluating the impact of this guidance.

Recently Adopted Accounting Pronouncements

The Company adopted ASU 2023 - 07, Segment Reporting (Topic 280 ):

Improvements to Reportable Segment Disclosures , in the fourth quarter of 2024.

The amendments in this update require public entities to disclose, on an annual and interim basis, significant segment expenses that are regularly provided to the chief operating decision maker (the “CODM”) and which are included within each reported measure of segment profit or loss as well as disclosure of other segment items and a description of their composition.

The amendments also require public entities to disclose the title and position of the CODM and an explanation of how the CODM uses the reported measure(s) of segment profit or loss in assessing segment performance and deciding how to allocate resources.

The adoption of this guidance resulted in incremental disclosures in the Company’s consolidated financial statements.

FAIR VALUE MEASUREMENTS

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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, and other current liabilities.

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

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Fair Value Measured as of December 31, 2024 Using:

Adjusted Cost Unrealized gains

Fair Value Cash and Cash Equivalent Marketable Securities

Money market funds

$ 5,823 $ — $ 5,823 $ 5,823 $ —

Corporate bonds

9,660 4 9,664 — 9,664

Commercial paper

945 — 945 — 945

Government securities

1,402 1 1,403 — 1,403

Total financial assets

$ 17,830 $ 5 $ 17,835 $ 5,823 $ 12,012

Private placement warrant liability

Convertible notes — — — — —

$ — $ — $ — $ — $ —

Derivative warrant liability

Total financial liabilities

$ — $ — $ 26 $ — $ —

Fair Value Measured as of December 31, 2023 Using:

Adjusted Cost Unrealized losses Fair Value Cash and Cash Equivalent Marketable Securities

Money market funds

Asset-backed securities 3,507 ( 119 ) 3,388 — 3,388

$ 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

Convertible notes — — 8,594 — —

$ — $ — $ — $ — $ —

Derivative warrant liability

Total financial liabilities

$ — $ — $ 26 $ — $ —

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

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The Company holds financial assets consisting of fixed-income U.S.

government agency securities, corporate bonds, commercial paper and asset-backed securities.

government agency securities, corporate bonds, and commercial paper.

The securities are valued using prices from independent pricing services based on quoted prices of identical instruments in less active or inactive markets.

Additionally, quoted prices of similar instruments in active market or industry models using data inputs such as interest rates and prices that can be directly observed or corroborated in active markets are used to value marketable securities.

2022 Convertible Note :

On September 15, 2022, the Company entered into a convertible note agreement with a face value of $ 10,500 (the "2022 Note").

The Company elected the fair value option to account for the 2022 Note.

The fair value estimate of the 2022 Note was based on a binomial lattice model, which represents Level 3 measurements.

Significant assumptions include the discount rate used in the model, remaining term, stock price, and volatility.

The discount rate is derived from the estimated credit spread and the risk-free interest rate, which is based on interpolated U.S.

Treasury rates, commensurate with a similar term to the 2022 Note.

The remaining term is calculated based on the estimated maturity date of the 2022 Note.

The stock price is based on the publicly traded price of the Company's common stock as of the measurement date.

The Company estimated the volatility for the Note based on the historical and implied volatilities of the Company's publicly traded common stock.

The changes in fair value are recognized in other income (expense), net for each reporting period.

Refer to Note 10 for details of the terms and conditions of the 2022 Note.

Derivative Warrant Liability :

On September 15, 2022, the Company entered into a convertible note agreement with a face value of $ 10,500 (the "2022 Note").

The Company’s derivative warrant liability includes the warrants that were issued by the Company as part of the 2022 Note.

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Treasury rates, commensurate with a similar term to the warrants.

The term to expiration was calculated as the contractual term of the warrants of 4 years.

The term to expiration was calculated as the contractual term of the warrants of four years.

Finally, the Company does not currently anticipate paying a dividend.

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The Private Placement Warrants are recorded on the consolidated balance sheets at fair value.

The fair value is based on observable Level 2 inputs, specifically, the observable input of the Company's public warrants.

The fair value is based on observable Level 2 inputs, specifically, the observable input of the Company's public warrants, as terms of both warrants are substantially similar.

Any changes in the fair value of the liability are reflected in other income (expense), net, on the consolidated statements of operations and comprehensive loss.

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As the fair value of property and equipment was estimated using primarily unobservable inputs, these are considered Level 3 fair value measurements.

The fair value of the Company's headquarter ROU asset and associated leasehold improvements were based on a value-in-use approach utilizing market rent comparable information, and is considered a Level 2 fair value measurement.

The fair value of the Company’s headquarters ROU asset and associated leasehold improvements were based on a value-in-use approach utilizing market rent comparable information, and is considered a Level 2 fair value measurement.

For more information regarding impairment charges, see Notes 1, 6, 7, and 18.

For the years ended December 31, 2024 and 2023 , there were no 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 year ended December 31, 2023 (in thousands):

2022 Convertible Note Derivative Warrant Liability Total

Balance at December 31, 2022 $ 8,594 $ 119 $ 8,713

Additions — — —

Payments or conversions ( 9,573 ) — ( 9,573 )

Change in fair value included in other income (expense), net 958 ( 93 ) 865

Change in fair value due to instrument specific credit risk included in other comprehensive income 21 — 21

Balance at December 31, 2023 $ — $ 26 $ 26

The key inputs into the Monte-Carlo simulation model for the derivative warrant liability valued at December 31, 2023 are as follows:

December 31, 2023

Expected term (years) 2.7

Expected volatility 155.7 %

Risk-free interest rate 4.1 %

Dividend yield — %

Exercise price $ 105.00

If factors or assumptions change, the estimated fair values could be materially different.

The value of the Company’s derivative warrant liability would increase if a higher risk-free interest rate was used, and would decrease if a lower risk-free interest rate was used.

Similarly, a higher volatility assumption would increase the value of the liability, and a lower volatility assumption would decrease the value of the liability.

CASH, CASH EQUIVALENTS, AND RESTRICTED CASH

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Cash and cash equivalents

$ 10,266 $ 16,932

Restricted cash

Total cash, cash equivalents, and restricted cash

$ 10,266 $ 19,082

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 December 31, 2024 and 2023 were as follows (in thousands):

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Total inventory, net

The Company also had $ 208 and $ 1,491 of non-current inventory (raw materials), net of write-downs, classified within Other noncurrent assets on the consolidated balance sheet as of December 31, 2023 and December 31, 2022, respectively.

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

PREPAID AND OTHER CURRENT ASSETS

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Prepaid expenses

Demonstration units — 281

$ 966 $ 2,386

Advances to suppliers

Receivable for issuance of common stock

Total prepaid and other current assets

During the twelve months ended December 31, 2023, the Company recorded a loss on advances to suppliers of $ 1,385 associated with the winding down of its existing industrial product as part of its revised strategic plan.

$ 2,706 $ 2,517

The Company's advances to suppliers as of December 31, 2024 and 2023 were written down by $ 1,041 and $ 1,385 , respectively, associated with the winding down of its legacy Non-Automotive product as part of its revised strategic plan in 2023.

See Note 18, Restructuring, for further details.

The Company primarily leases office facilities in Northern California under non-cancelable operating leases expiring at various dates through November 2026.

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.

Some of the Company's leases include options to renew, with renewal terms that, if exercised by the Company, extend the lease term from two to five years.

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The Company's short-term lease expense was determined to not be material.

The Company recorded a gain of $ 35 on early lease termination within Interest income and other on the consolidated statements of operations for the twelve months ended December 31, 2023.

During the twelve months ended December 31, 2023, the Company recorded an impairment charge on right-of-use assets of $ 2,570 , included within impairment of long-lived assets within the Company's consolidated statements of operations.

No impairment charges were recorded for the twelve months ended December 31, 2022.

On November 14, 2023, the Company assigned an operating lease resulting in the Company being relieved of its primary obligation under this lease.

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The resulting maximum exposure includes $ 265 of undiscounted future minimum lease payments plus potential additional payments to satisfy maintenance, taxes, and insurance requirements for the remainder of the lease term.

The components of operating lease expenses for the twelve months ended December 31, 2023 and 2022 were as follows (in thousands):

Twelve months ended December 31,

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 $ 491 on termination of the operating lease during the year ended December 31, 2024.

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 $ 5,463 , 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 $ 3,313 is recorded in accrued expenses and other current liabilities in the consolidated balance sheets.

See Note 18, Restructuring, and Note 21, Commitments and Contingencies, for further discussion.

The Company recorded a gain of $ 35 on early lease termination for one of its leases, originally set to expire in August 2027, within interest income and other on the consolidated statements of operations during the twelve months ended December 31, 2023.

During the year ended December 31, 2023, the Company recorded an impairment charge on right-of-use assets of $ 2,570 , included within impairment of long-lived assets within the Company's consolidated statements of operations.

See Note 18, Restructuring.

No impairment charges were recorded for the year ended December 31, 2024.

The components of operating lease expenses, excluding the gain on lease termination, for the years ended December 31, 2024 and 2023 were as follows (in thousands):

Year ended December 31,

Operating lease cost

$ 1,498 $ 2,379

Variable lease cost

Total operating lease cost

Supplemental cash flow information for the twelve months ended December 31, 2023 and 2022 were as follows (in thousands):

Twelve months ended December 31,

$ 1,702 $ 2,719

Supplemental cash flow information for the years ended December 31, 2024 and 2023 were as follows (in thousands):

Year ended December 31,

Cash paid for operating leases included in operating cash flows

$ ( 1,497 ) $ ( 2,500 )

Supplemental balance sheet information related to operating leases as of December 31, 2024 and 2023 was as follows (in thousands):

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Operating lease right-of-use assets

$ 652 $ 11,226

Operating lease liabilities:

Operating lease liabilities, current

$ 267 $ 2,415

Lease termination liability

Operating lease liabilities, non-current

Total operating lease liabilities

$ 4,059 $ 17,273

As of December 31,

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Weighted average discount rate

Maturities of lease liabilities were as follows (in thousands).

6.40 % 5.32 %

Maturities of lease liabilities, excluding the lease termination liability, were as follows (in thousands).

Years ending - December 31:

Thereafter 8,400

Total lease payments

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Office furniture and equipment

Vehicles 60 846

Leasehold improvements

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Property and equipment, net

For the year ended December 31, 2023, the Company recorded impairment charges on assets classified as property and equipment of $ 7,418 , included within impairment of long-lived assets within the Company's consolidated statements of operations.

During the year ended December 31, 2023 , the Company recorded impairment charges on assets classified as property and equipment of $ 7,418 , included within impairment of long-lived assets within the Company's consolidated statements of operations.

No impairment charges were recorded for the year ended December 31, 2024 .

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As of December 31,

Non-current inventory $ 208 $ 1,491

Noncurrent inventory

Long-term prepaid expenses

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As of December 31,

Accrued purchases and other $ 681 $ 4,092

Operating lease liabilities - current 2,415 2,455

Lease termination liability

Accrued bonuses

Accrued payroll

Operating lease liabilities

Accrued severance

Accrued payroll taxes

Warranty reserve 102 480

Income tax payable 75 41

Accrued other

Total accrued expenses and other current liabilities

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2022 Convertible Note

On September 14, 2022, the Company entered into a Securities Purchase Agreement, or SPA, with an investor allowing for the sale and issue of two convertible notes, each with a principal balance of $ 10,500 and gross cash proceeds of $ 10,000 , for a total of $ 20,000 in proceeds between the two issuances (each, a "Note Closing").

On September 14, 2022 , the Company entered into a Securities Purchase Agreement with an investor allowing for the sale and issue of up to two convertible notes, each with a principal balance of $ 10,500 and gross cash proceeds of $ 10,000 , for a total of $ 20,000 in proceeds between the two issuances (each, a "Note Closing").

The first Note Closing ("First Closing") occurred on September 15, 2022 , and the Company entered into a Senior Unsecured Convertible Note with the investor pursuant to which the Company issued to the investor one convertible note ( "2022 Note") with a principal balance of $ 10,500 for net cash proceeds of $ 9,850 .

As part of the First Closing, the Company also issued warrants to the investor see Note 12 for further details.

The second Note Closing ("Second Closing") may occur, at the Company's option, until March 15, 2024, upon which the Company's right to effect a Second Closing shall automatically terminate.

As of March 15, 2024, the Company did not effect a Second Closing.

The 2022 Note bore interest at an annual rate of 5.0 %, in addition to an original issue discount of 4.76 %, and had an initial a maturity date of March 15, 2024 ("Maturity Date").

Beginning December 15, 2022, and the first of each subsequent month (each a "Monthly Redemption Date" or an "Installment Date"), the Company was required to redeem the Monthly Redemption Amount until the 2022 Note was fully redeemed.

The second Note Closing ("Second Closing") lapsed on March 15, 2024 , upon which the Company's right to effect a Second Closing automatically terminated.

The 2022 Note bore interest at an annual rate of 5.0 %, in addition to an original issue discount of 4.76 %, and had an initial a maturity date of March 15, 2024 .

Beginning December 14, 2022 , and the first trading day of each subsequent month (each a "Monthly Redemption Date" or an "Installment Date"), the Company was required to redeem the Monthly Redemption Amount until the 2022 Note was fully redeemed.

The Monthly Redemption Amount, in most instances, was 1/15 th of the original principal amount, plus any amount accelerated pursuant to the 2022 Note, accrued but unpaid interest, and late fees, if any.

The principal and interest could be settled in cash or, so long as certain equity conditions were met, shares of common stock at the option of the Company and was payable together with the monthly redemptions of the outstanding principal amount of the Note.

If the Company elected to settle such redemptions in shares of Common Stock, the number of shares to be settled was based on an Installment Conversion Price equal to the lower of (i) $ 75.00 or (ii) 95 % of the lowest daily volume weighted average price of the Common Stock during the five ( 5 ) trading days immediately preceding the applicable Monthly Redemption Date.

If the Company elected to settle redemptions in cash, the Monthly Redemption Amount included a 5 % premium.

The principal and interest could be settled in cash or, so long as certain equity conditions were met and at the option of the Company, shares of common stock, which was payable together with the Monthly Redemption Amount.

If the Company elected to settle the Monthly Redemption Amount in shares of common stock, the number of shares to be settled was based on an Installment Conversion Price equal to the lower of (i) $ 75.00 or (ii) 95 % of the lowest daily volume weighted average price of the common stock during the five trading days immediately preceding the applicable Monthly Redemption Date.

If the Company elected to settle the Monthly Redemption Amount in cash, the Monthly Redemption Amount would have included a 5 % premium.

The investor was permitted to accelerate up to four Monthly Redemption Amounts in any calendar month (each, an "Acceleration," and each such amount, an "Acceleration Amount", and the Conversion Date of any such Acceleration, each an "Acceleration Date") at the Acceleration Conversion Price, subject to a $ 2,800 limit per month.

The Acceleration Conversion Price was the lower of (i) the Installment Conversion Price for such current Installment Date or (ii) the greater of $ 9.00 and 95 % of the lowest daily volume weighted average price of the common stock during the five trading days immediately preceding the Acceleration Date.

As these terms are defined in the 2022 Note, if either the relevant Installment Conversion Price or Acceleration Conversion Price, as applicable, is less than $ 9.00 per share, then a Conversion Floor Price Condition exists and the Company must deliver to the lender the Conversion Installment Floor Amount in cash, in addition to the required number of shares, which are valued at $ 9.00 regardless of the actual trading price of the Company's shares.

The Conversion Installment Floor Amount is an amount in cash equal to the product obtained by multiplying

(A) the higher of (i) the highest price that the Common Stock trades at on the Trading Day immediately preceding the relevant Share Delivery Date and (ii) the applicable Installment or Acceleration Conversion Price and (B) the difference obtained by subtracting (i) the number of shares of Common Stock delivered to the investor on the applicable Share Delivery Date with respect to such Conversion from (ii) the quotient obtained by dividing (x) the applicable Installment or Acceleration amount subject to such Conversion, by (y) the applicable Installment Conversion Price.

Interest payments are also trued-up in cash when the value of the Company's shares is below $ 9.00 per share.

If either the relevant Installment Conversion Price or Acceleration Conversion Price, as applicable, was less than $ 9.00 per share, then a Conversion Floor Price Condition existed and the Company must deliver to the investor the Conversion Installment Floor Amount in cash, in addition to the required number of shares, which were valued at $ 9.00 regardless of the actual trading price of the Company's shares.

The Conversion Installment Floor Amount was an amount in cash equal to the product obtained by multiplying (A) the higher of (i) the highest price that the common stock traded at on the Trading Day immediately preceding the relevant Share Delivery Date and (ii) the applicable Installment Conversion Price or Acceleration Conversion Price and (B) the difference obtained by subtracting (i) the number of shares of common stock delivered to the investor on the applicable Share Delivery Date with respect to such Conversion from (ii) the quotient obtained by dividing ( x ) the applicable Installment or Acceleration amount subject to such Conversion, by (y) the applicable Installment Conversion Price.

Interest payments were also trued-up in cash when the value of the Company's shares was below $ 9.00 per share.

The Company elected to apply the fair value option to the measurement of the 2022 Note.

As a result of adopting the fair value option, no embedded derivatives are bifurcated from the 2022 Note.

The Company classifies the 2022 Note as a liability at fair value and remeasures the 2022 Note to fair value at each reporting period.

The fair value measurement includes the assumption of accrued interest and expense and thus a separate amount is not reflected on the consolidated statement of operations.

As of December 31, 2023, the 2022 Note has no outstanding principal balance as all outstanding principal and accrued interest has been fully settled through Monthly Redemptions and Accelerations.

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 consolidated balance sheet and into interest expense and other on the consolidated statement of operations.

As a result of adopting the fair value option, no embedded derivatives were bifurcated from the 2022 Note.

The Company classified the 2022 Note as a liability at fair value and remeasured the 2022 Note to fair value at each reporting period.

The fair value measurement included the assumption of accrued interest and expense and thus a separate amount was not reflected on the consolidated statement of operations.

The 2022 Note was fully settled through Monthly Redemptions and Accelerations in 2023.

The Company evaluated the Second Closing and associated warrants to be a contingently issuable financial asset with a fair value of zero at inception in accordance with ASC 815 - 40 Contracts in an Entity's own Equity.

The contingently issuable warrants are considered issued for accounting purposes - see Note 12 for further details.

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 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 years ended December 31, 2024 and 2023 consisted of the following (in thousands):

Twelve months ended December 31,

Year ended December 31,

Common stock purchase agreement costs

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

Convertible note issuance costs — 474

Loss on disposal of assets 111 —

Realized loss on instrument-specific credit risk 46 —

( 694 ) ( 474 )

Expected credit losses

Realized losses on redemptions of marketable securities — 77

Common Stock Purchase Agreement costs — 29

Loss on disposal of assets

Interest expense and other

$ 433 $ ( 248 )

STOCKHOLDERS ’ EQUITY

The Company is authorized to issue 600,000,000 shares of common stock, par value $ 0.0001 per share.

As of December 31, 2023, the Company had 6,310,090 shares of common stock issued and outstanding, post the reverse stock split.

As of December 31, 2024 , the Company had 13,734,160 shares of common stock issued and outstanding.

Class A Common Stock — Class A common stock has the following rights:

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The holders of shares of the Class A common stock will not have cumulative voting rights.

Except as otherwise required in the Amended Charter or by applicable law, the holders of the Class A common stock vote together as a single class on all matters on which stockholders are generally entitled to vote.

Except as otherwise required in the Charter or by applicable law, the holders of the Class A common stock vote together as a single class on all matters on which stockholders are generally entitled to vote.

Dividend rights:

Subject to any other provisions of the Amended Charter, each holder of Class A common stock will be entitled to receive, in proportion to the number of shares of the Class A common stock held, such dividends and other distributions in cash, stock or property of the Company when, as and if declared thereon by the

Board from time to time out of assets or funds of the Company legally available therefor.

Subject to any other provisions of the Charter, each holder of Class A common stock will be entitled to receive, in proportion to the number of shares of the Class A common stock held, such dividends and other distributions in cash, stock or property of the Company when, as and if declared thereon by the Board from time to time out of assets or funds of the Company legally available therefor.

Rights upon liquidation:

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As the Company did not effect a Second Closing by March 15, 2024 , these warrants are no longer outstanding and will not be issued to the investor.

Tumim Stone Common Stock Purchase Agreement — On December 8, 2021, the Company entered into a Common Stock Purchase Agreement (the “CSPA”) and a Registration Rights Agreement with Tumim Stone Capital LLC (“Tumim Stone”).

Under the terms and subject to the conditions of the CSPA, the Company has the right, but not the obligation, to sell to Tumim Stone, and Tumim Stone is obligated to purchase up to the lesser of (i) $ 125,000 of the Company’s common stock, or (ii) the Exchange Cap equal to 1,028,847 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 Tumim Stone under the CSPA equals or exceeds $ 148.46 per share.

Tumim Stone Common Stock Purchase Agreement — On December 8, 2021, the Company entered into a Common Stock Purchase Agreement (the “Purchase Agreement”) and a Registration Rights Agreement with Tumim Stone Capital LLC (“Tumim Stone”).

Under the terms and subject to the conditions of the Purchase Agreement, the Company has the right, but not the obligation, to sell to Tumim Stone, and Tumim Stone is obligated to purchase up to the lesser of (i) $ 125,000 of the Company’s common stock, or (ii) the Exchange Cap equal to 1,028,847 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 Tumim Stone under the Purchase Agreement equals or exceeds $ 148.46 per share.

Upon the satisfaction of various commencement conditions, such as the filing of the registration statement which provides for the resale of such shares pursuant to the Registration Rights Agreement, the Company has sole discretion to initiate such sales of common stock over the period of 36 months commencing December 8, 2021.

In all instances, the Company may not sell shares of its common stock to Tumim Stone under the CSPA if doing so would result in Tumim Stone beneficially owning more than 9.99 % of its common stock.

The purchase price per share to be purchased by Tumim is equal to the volume-weighted average price for common stock on the applicable purchase date multiplied by 0.9615 (to be adjusted for any reorganization, recapitalization, non-cash dividend, stock split, reverse stock split, or similar transaction).

In all instances, the Company may not sell shares of its common stock to Tumim Stone under the Purchase Agreement if doing so would result in Tumim Stone beneficially owning more than 9.99 % of its common stock.

The purchase price per share to be purchased by Tumim Stone is equal to the volume-weighted average price for common stock on the applicable purchase date multiplied by 0.9615 (to be adjusted for any reorganization, recapitalization, non-cash dividend, stock split, reverse stock split, or similar transaction).

The maximum number of shares the Company may sell to Tumim Stone on any single business day is the lesser of (i) $ 20,000 divided by the closing sale price of the common stock on the trading day immediately preceding the purchase date, and (ii) 0.15 multiplied by the average daily trading volume in common stock for the three trading days preceding the purchase date.

In connection with the CSPA, the Company issued to Tumim Stone 10,087 restricted common shares in the Company.

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 December 8, 2021.

During the twelve months ended December 31, 2023, the Company issued 19,500 shares of its common stock under the CSPA for gross proceeds of $ 136 .

During the twelve months ended December 31, 2022, the Company issued 38,167 shares of its common stock under the CSPA for gross proceeds of $ 2,891 .

As of December 31, 2023, 961,093 shares remain available for issuance under the CSPA.

In connection with the Purchase Agreement, the Company issued 10,087 restricted common shares in the Company to Tumim Stone.

During the year ended December 31, 2024 , the Company issued 939,200 shares of its common stock under the Purchase Agreement for gross proceeds of $ 2,489 .

During the year ended December 31, 2023 , the Company issued 19,500 shares of its common stock under the Purchase Agreement for gross proceeds of $ 136 .

In July 2024 this Purchase Agreement was terminated.

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 either over a one -day trading period or 15 minutes after the number of intraday shares traded exceeds 500% of the shares included the purchase notice or one hour after the receipt of the purchase notice, 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% 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 consolidated statement of operations and comprehensive loss.

The Company determined that the right to sell additional shares represents a freestanding put option under ASC

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 December 31, 2024 , including the commitment shares, the Company had issued 1,325,713 shares of its common stock to New Circle under the CSPA for gross proceeds totaling $ 1,679 .

Alliance Global Partners (“AGP”) 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 value 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.

In December 2024, the Company increased the amount of the Company's common stock that it may issue and sell through AGP, having a new aggregate value offering of up to $5,230.

As of December 31, 2024, the Company sold 3,528,617 shares through A.G.P.

under the ATM Agreement for gross proceeds totaling $ 5,229 .

Registered Direct Offering — On May 29, 2024, the Company entered into a Securities Purchase Agreement with certain institutional investors pursuant to which the Company agreed to issue and sell, in a registered direct offering, an aggregate of 727,706 shares of the Company's common stock, par value $ 0.0001 per share, at a per share purchase price of $ 3.4480 for gross proceeds totaling $ 2,509 .

ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS)

The changes in accumulated other comprehensive income (loss) by component for the twelve months ended December 31, 2023 and 2022 are as follows (in thousands):

Unrealized gains (losses) on available-for-sale securities Change in fair value due to instrument-specific credit risk Total

Balance at December 31, 2021 $ ( 391 ) $ — $ ( 391 )

Other comprehensive loss before reclassifications, net of tax ( 940 ) ( 25 ) ( 965 )

Amounts reclassified from accumulated other comprehensive loss, net of tax 77 — 77

Net other comprehensive loss ( 863 ) ( 25 ) ( 888 )

The changes in accumulated other comprehensive income (loss) by component for the years ended December 31, 2024 and 2023 are as follows (in thousands):

Unrealized gains

available-for-sale

due to instrument-

specific credit risk

Balance at December 31, 2022

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Balance at December 31, 2023

The amounts reclassified out of accumulated other comprehensive income (loss) in the twelve months ended December 31, 2023 and 2022 are included within Interest expense and other on the consolidated statement of operations.

Other comprehensive loss before reclassifications, net of tax

Balance at December 31, 2024

The amounts reclassified out of accumulated other comprehensive income (loss) in the years ended December 31, 2024 and 2023 are included within Interest expense and other on the consolidated statement of operations.

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 per share data):

Twelve months ended December 31,

Year ended December 31,

Net loss attributable to common stockholders

$ ( 35,460 ) $ ( 87,126 )

Weighted average common shares outstanding- Basic

7,253,683 5,827,721

Dilutive effect of potential common shares

Weighted average common shares outstanding- Diluted

7,253,683 5,827,721

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

$ ( 4.89 ) $ ( 14.95 )

Due to net losses for the years ended December 31, 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:

Twelve months ended December 31,

Warrants 319,443 319,443

Year ended December 31,

Common stock options issued and outstanding

139,320 289,015

Unvested restricted stock units

384,783 652,453

319,443 319,443

Common Stock Purchase Agreements

Conversion of convertible notes

ESPP 23,816 66,666

Total 1,284,727 2,201,383

37,882 23,816

24,676,184 1,284,727

STOCK-BASED COMPENSATION

21 unchanged sentences

On May 10, 2022, the Company's stockholders approved the 2022 Employee Stock Purchase Plan (the "ESPP"), authorizing 66,666 shares of common stock to be reserved for issuance under the ESPP.

The number of

shares reserved and available for issuance under the ESPP shall be cumulatively increased by the 1 % of the number of shares issued and outstanding on December 31 of the preceding calendar year for each year thereafter, or a lesser number of shares as determined by the Board of Directors.

During 2023, the Board of Directors have authorized the addition of 54,366 shares of common stock to be added to the ESPP for issuance.

The number of shares reserved and available for issuance under the ESPP shall be cumulatively increased by the 1 % of the number of shares issued and outstanding on December 31 of the preceding calendar year for each year thereafter, or a lesser number of shares as determined by the Board of Directors.

Since January 1, 2023, the Board of Directors have authorized the addition of 117,465 shares of common stock to be added to the ESPP for issuance.

The ESPP provides an offering period of 24 months, with four purchase periods that are generally six months long and end on April 30 and October 31 of each year.

1 unchanged sentence

Each employee who is a participant in the ESPP may purchase shares by authorizing contributions at a minimum of 1 % up to a maximum of 10 % of his or her compensation for each pay period, to a maximum of $ 15 per purchase period and $ 25 per year, which will then be used to purchase shares on the last business day of the purchase period at a price equal to 85 % of the fair market value of common stock on the offering date or the exercise date whichever is less.

During the year ended December 31, 2023, 64,773 shares were purchased under the ESPP.

During the year ended December 31, 2022, no shares were purchased under the ESPP.

As of December 31, 2023, the Company has withheld $ 58 of contributions from its employees within accrued expenses and other current liabilities on the consolidated balance sheets.

During the years ended December 31, 2024 and 2023, 107,336 and 64,773 shares, respectively, were purchased under the ESPP.

As of December 31, 2024 and 2023, the Company has withheld $ 41 and $ 58 of contributions from its employees within accrued expenses and other current liabilities on the consolidated balance sheets.

2023 CEO Inducement Grant Plan

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As the market condition was not satisfied by March 1, 2024, the market-based RSUs were forfeited.

As of December 31, 2023, 233,332 RSUs were granted under the CEO Plan.

A summary of stock option activity related to the Plans as of December 31, 2024 is as follows:

Outstanding Stock Options Weighted Average Exercise Price Weighted Average Contractual Life (Years) Aggregate Intrinsic Value

Balance at December 31, 2023

Exercised ( 81,814 ) 5.57

Forfeited ( 111,937 ) 18.78

Expired ( 363,685 ) 18.77

Repurchased — —

289,015 $ 11.29 3.07 $ —

( 44,255 ) 3.02

( 1,504 ) 18.79

( 103,936 ) 13.23

Balance at December 31, 2024

139,320 $ 12.39 3.84 $ —

Vested and expected to vest as of December 31, 2024

139,320 $ 12.39 3.84 $ —

Vested and exercisable as of December 31, 2024

139,320 $ 12.39 3.84 $ —

The aggregate intrinsic value is the difference between the current fair value of the underlying common stock and the exercise price for in-the-money stock options.

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The following table summarizes the RSU award activity under the Plans:

Shares Weighted Average Grant date Fair Value per Share

Unvested at December 31, 2023

Granted 901,472 10.66

Forfeited ( 344,061 ) 67.82

Vested ( 330,661 ) 53.07

652,453 $ 30.29

( 206,990 ) 26.52

( 558,223 ) 17.41

Unvested at December 31, 2024

384,783 $ 16.88

The total fair value of RSUs that vested during the year ended December 31, 2024 was $ 9,716 .

Stock-Based Compensation Expense —The following table summarizes stock-based compensation expense recorded in each financial statement line item in the Company’s consolidated statements of operations and comprehensive loss for the year ended December 31, 2024 and 2023 (in thousands):

Twelve months ended December 31,

Year ended December 31,

Cost of revenue

Research and development

1 unchanged sentence

General and administrative

Cost of revenue 136 131

Total stock-based compensation

As of December 31, 2023, the Company had $ 362 of unrecognized compensation expense for related stock option grants.

This cost is expected to be recognized over an estimated weighted average period of 0.79 years.

$ 9,047 $ 18,071

The total unrecognized compensation expense for RSUs was $ 5,603 as of December 31, 2024 which is expected to be recognized over an estimated weighted average period of 1.03 years.

The total unrecognized compensation expense for the ESPP was $ 282 as of December 31, 2024 which is expected to be recognized over an estimated weighted average period of 1.00 years.

There is no unrecognized compensation expense for stock options as of December 31, 2024 .

The Company uses the Black-Scholes option-pricing model to estimate the grant-date fair value of ESPP purchase rights.

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The following table summarizes the range of valuation assumptions used in estimating the fair value of the ESPP during the period:

Twelve months ended December 31, 2023

Expected term (years) 0.50 - 2.00

Expected volatility 107.3 % - 136.0 %

Risk-free interest rate 4.1 % - 5.1 %

Dividend yield — %

The following table summarizes the valuation assumptions used in estimating the fair value of awards granted during the period with a market condition:

Twelve months ended December 31, 2023

December 31, 2024

Expected term (years)

Expected volatility

122.2% - 165.9%

Risk-free interest rate

Dividend yield

Segment Reporting

The Company adopted ASU 2023 - 07 during the year ended December 31, 2024 retrospectively to all periods presented in the consolidated financial statements.

The Company has one reportable segment managed on a consolidated basis by the Chief Executive Officer (CEO) who is the chief operating decision maker (“CODM”).

In identifying one reportable segment, the Company considered the basis of organization for the design and development of high-performance, active lidar systems and applications.

The accounting policies of the segment are the same as those described in the summary of significant accounting policies.

The CODM assesses performance and decides how to allocate resources based on consolidated net loss as reported in the consolidated statements of operations and comprehensive loss.

There are no other expense categories regularly provided to the CODM that are not already included in the consolidated statements of operations and comprehensive loss.

The measure of segment assets is reported on the balance sheet as cash, cash equivalents and marketable securities.

Sale of Prototypes

2 unchanged sentences

Development Contracts

The Company has entered into research and development contracts with companies primarily in the automotive industry.

The Company has entered into research and development contracts as well as a sales, marketing and technical support service 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 $ 105 and $ 987 in revenue for performance obligations satisfied during years ended 2024 and 2023 respectively, in the consolidated statements of operations and comprehensive loss.

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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):

Twelve months ended December 31,

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

Year ended December 31,

Revenue by primary geographical market:

United States

Europe 184 920

Asia-Pacific 57 256

$ 154 $ 1,223

$ 202 $ 1,464

Revenue by timing of recognition:

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Contract Liabilities

Contract liabilities consisted of the following as of December 31, 2023 and 2022 (in thousands):

As of December 31,

Contract liabilities, current $ — $ 987

Total $ — $ 987

The Company had no contract liabilities as of December 31, 2024 and 2023 .

The following table shows the significant changes in contract liabilities balance as of December 31, 2024 and 2023 (in thousands):

Twelve months ended December 31,

Year ended December 31,

Beginning balance

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RESTRUCTURING

In the first quarter of 2023, the Company began the implementation of a revised strategic plan to focus on key products and critical customer engagements it believes will generate the best long-term results for all stakeholders.

In the fourth quarter of 2023, the Company implemented the second phase of its revised strategic plan to align the Company's operations with evolving business needs by focusing on the transition from research and development to the commercialization of its automotive products and winding down its existing industrial product, while reducing fixed operating costs.

The winding down of the Company's existing industrial product, in combination with an accumulation of other triggering events, indicated that the carrying amount of the Company's long-lived assets may not be recoverable.

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 legacy Non-Automotive product, and reducing fixed operating costs.

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

See discussion in Note 6, Leases.

The winding down of the Company's legacy non-Automotive product in 2023, in combination with an accumulation of other triggering events, indicated that the carrying amount of the Company's long-lived assets may not be recoverable.

An impairment review was performed on the Company's long-lived assets as of December 31, 2023, resulting in a write-down of its property and equipment and ROU asset to fair value.

As a result of the implementation of both phases of the revised strategic plan and the impairment review of long-lived assets, the Company recorded restructuring charges of $ 19,153 in the twelve months ended December 31, 2023 primarily relating to one-time employee termination benefits, inventory and other current asset write-downs, losses on purchase commitments, and impairment and disposal charges on its long-lived assets.

The Company did not have any restructuring charges during fiscal year 2022.

As a result of the implementation of the revised strategic plan and the impairment review of long-lived assets, the Company recorded restructuring charges of $ 19,153 for the year ended December 31, 2023 primarily relating to one -time employee termination benefits, inventory and other current asset write-downs, losses on purchase commitments, and impairment and disposal charges on its long-lived assets.

The Company recorded a net gain of $ 368 , primarily relating to the net gain on termination of lease, losses on purchase commitments and one -time termination benefits.

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

Restructuring charges were included in the consolidated statements of operations and comprehensive loss during the twelve months ended December 31, 2023 as follows (in thousands):

Twelve months ended December 31, 2023

One-time employee termination benefits Inventory and other current asset write-downs Losses on purchase commitments Long-lived asset disposals and impairment charges Other Total

Restructuring charges were included in the consolidated statements of operations and comprehensive loss during the years ended December 31, 2024 and 2023 as follows (in thousands):

Year ended December 31,

Cost of revenue

$ 105 $ 5,721

Research and development

3 unchanged sentences

Total restructuring charges

A reconciliation of the beginning and ending balance of cash restructuring charges, including one-time employee termination benefits, losses on purchase commitments, and other restructuring charges, which are included in accrued expenses and other current liabilities in the consolidated balance sheets, is as follows (in thousands):

One-time employee termination benefits Losses on purchase commitments Other

Balance as of December 31, 2022

$ ( 368 ) $ 19,153

Charges 3,224 360 123 3,707

A reconciliation of the beginning and ending balance of cash restructuring charges, including one -time employee termination benefits, losses on purchase commitments, and other restructuring charges, which are included in accounts payable and accrued expenses and other current liabilities in the consolidated balance sheets, is as follows (in thousands):

Balance as of December 31, 2023

Cash payments

Balance as of December 31, 2024

$ 402 $ 233 $ 56 $ 691

EMPLOYEE BENEFIT PLAN

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The Company made contributions of $ 447 and $ 899 for the years ended December 31, 2024 and 2023 , respectively.

For the years ended December 31, 2023 and 2022, the Company recognized $ 57 and $ 58 provision for income taxes, respectively.

The provision for the year ended December 31, 2023 was comprised of $ 3 and $ 54 in state and foreign taxes, respectively.

For the years ended December 31, 2024 and 2023 , the Company recognized a (benefit) provision for income taxes of $( 2 ) and $ 57 , respectively.

The benefit for the year ended December 31, 2024 was comprised of $ 2 and $( 4 ) in state and foreign taxes, respectively.

The provision for the year ended December 31, 2023 was comprised of $ 3 and $ 54 in state and foreign taxes, respectively.

The following table presents a reconciliation of the federal statutory rate of 21 % to the Company's effective tax rate for the periods presented:

Twelve months ended December 31,

Year ended December 31,

federal tax benefit at statutory rate

State income taxes, net of federal benefit — % — %

Non-deductible expenses and other

( 0.8 )% ( 0.4 )%

Stock-based compensation

( 6.7 )% ( 4.6 )%

Research and development credits

Foreign rate differential — % ( 4.1 ) %

Change in valuation allowance, net

( 15.7 )% ( 18.4 )%

Effective tax rate

0.0 % ( 0.1 )%

For 2024 and 2023 , the Company's effective tax rate differs from the amount computed by applying the statutory federal and state income tax rates to net loss before income tax, primarily as the result of state income taxes, R&D credits and changes in the Company's valuation allowance.

Significant components of the Company’s deferred tax assets as of December 31, 2023 and 2022 are presented below (in thousands):

Significant components of the Company’s deferred tax assets and liabilities as of December 31, 2024 and 2023 are presented below (in thousands):

As of December 31,

1 unchanged sentence

Net operating loss carryforwards

$ 80,580 $ 69,612

Research and development credit carryforward

2 unchanged sentences

Operating lease liabilities

Section 174 R&D capitalization 14,194 9,053

Capitalized R&D expenses

12,401 14,194

Other accruals

Gross deferred tax assets

107,928 102,068

Valuation allowance

( 107,734 ) ( 98,840 )

Deferred tax assets net of valuation allowance

1 unchanged sentence

Right-of-use assets

( 194 ) ( 3,228 )

Gross deferred tax liabilities

( 194 ) ( 3,228 )

Total deferred tax assets (liabilities), net

4 unchanged sentences

A valuation allowance reduces the deferred tax assets to the amount that is more likely than not to be realized.

Realization of deferred tax assets is dependent on future earnings, if any, the timing and amount of which are uncertain.

Realization of deferred tax assets is dependent on future taxable earnings, if any, the timing and amount of which are uncertain.

The Company has a history of operating losses and has incurred cumulative book losses since its formation.

1 unchanged sentence

The valuation allowance as of December 31, 2024 was $ 107,734 which increased from $ 98,840 at December 31, 2023 .

The increase in the valuation allowance is primarily due to additional reserve required against net operating losses and research

credits generated during the year ended December 31, 2023.

The increase in the valuation allowance is primarily related to additional deferred tax assets recorded for net operating losses and research credits generated during the year ended December 31, 2024 .

As of December 31, 2024 , the Company had $ 284,368 and $ 241,652 of federal and state net operating losses available to reduce future taxable income, respectively, of which $ 12,256 will begin to expire in 2033 for federal tax purposes and $ 241,652 will begin to expire in 2029 for state tax purposes.

Approximately $ 272,112 of federal net operating loss included above can be carried forward indefinitely.

As of December 31, 2022, the Company had $ 184,007 and $ 127,624 of federal and state net operating losses available to reduce future taxable income, which will begin to expire on 2033 for federal and 2029 for state tax purposes.

As of December 31, 2023 , the Company had $ 247,802 and $ 202,887 of federal and state net operating losses available to reduce future taxable income, which will begin to expire in 2033 for federal and 2029 for state tax purposes.

The Company also has federal and state research and development tax credit carryforwards of $ 8,203 and $ 6,255 as of December 31, 2024 and $ 7,591 and $ 5,829 as of December 31, 2023 .

4 unchanged sentences

The following is a tabular reconciliation of the total amounts of unrecognized tax benefits (in thousands):

Twelve months ended December 31,

Year ended December 31,

Unrecognized tax benefits as of the beginning of the year

Increases related to prior year tax provisions 161 182

$ 3,480 $ 2,822

Decreases (increases) related to prior year tax provisions

Increase related to current year tax provisions

Unrecognized tax benefits as of the end of the year

$ 3,740 $ 3,480

The Company recognizes interest and penalties related to income tax matters as a component of income tax expense.

8 unchanged sentences

COMMITMENTS AND CONTINGENCIES

Legal Matters —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.

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

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.

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.

An initial trial date has been set for April 2026.

RELATED PARTIES

1 unchanged sentence

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

Manager of Human Resources during 2023 and 2022, respectively.

For the years ended December 31, 2023 and 2022, Mr.

Dussan’s sibling received total cash compensation of $ 149 and $ 162 , respectively.

For the years ended December 31, 2023 and 2022, Mr.

Dussan’s sibling was granted 2,000 and 750 RSUs, respectively.

Manager of Human Resources during 2023.

For the year ended December 31, 2023, Mr.

Dussan’s sibling received total cash compensation of $ 149 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 during the year ended December 31, 2024.

SUBSEQUENT EVENTS

Management has evaluated subsequent events through March 26, 2024 and determined that there were no such events requiring recognition or disclosure in the financial statements.

Management has evaluated subsequent events through February 24, 2025 and determined that there were no such events requiring recognition or disclosure in the financial statements, other than as noted below.

In January 2025, the Company entered into a Securities Purchase Agreement to finance an aggregate principal amount of up to $ 3,240 with a certain institutional investor and issued (i) a senior unsecured convertible promissory note (the "Note") for an aggregate purchase price of $ 3,000 and (ii) a warrant to purchase up to 805,263 shares of the Company’s common stock.

The Note, subject to an original issue discount of 7.4 %, has a term of eighteen months and accrues interest at the rate of 7.0 % per annum.

The Note is convertible into Common Stock, at a per share conversion price equal to $ 2.22 , subject to adjustments noted in the Note.

The Warrant has an initial exercise price of $ 2.22 , and is exercisable after the six month and one day anniversary of its issuance (the “Initial Exercisability Date”) until for four years following the Initial Exercisability Date.

In January 2025, the Company increased the amount of the Company's common stock that it may issue and sell through A.G.P.

under the ATM Agreement, having a new aggregate value offering of up to $ 15,293 and sold 2,359,023 shares for gross proceeds totaling $ 3,015 .

Further, the Company issued 2,155,000 shares of its common stock to New Circle under the CSPA for gross proceeds totaling $ 4,800 .

Changes in and Disagreements With Accountants on Accounting and Financial Disclosure

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-K

Item 8. Financial Statements and Supplementary Data