What changed in this filing

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Item 1. Financial Statements

2025-05-12 compared with 2024-11-14 · 330 added, 453 removed, 505 unchanged (61% of the section changed)

2 unchanged sentences

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

September 30, 2024

March 31, 2025

December 31, 2024

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Property and equipment, net

Restricted cash

Other noncurrent assets

5 unchanged sentences

Accrued expenses and other current liabilities

Contract liabilities

Convertible note, current

Total current liabilities

1 unchanged sentence

Operating lease liabilities, noncurrent

Convertible note

Convertible note, noncurrent

Other noncurrent liabilities

8 unchanged sentences

600,000,000 shares authorized;

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

18,690,177 and 13,734,160 shares issued and outstanding at March 31, 2025 and December 31, 2024

Additional paid-in capital

10 unchanged sentences

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

Three months ended September 30,

Nine months ended September 30,

Prototype sales

Development contracts

Total revenue

Three months ended March 31,

Cost of revenue

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Provision for income tax expense

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

Comprehensive loss

PER SHARE DATA

1 unchanged sentence

Weighted average shares outstanding (basic and diluted)

COMPREHENSIVE LOSS:

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

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

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

Comprehensive loss

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

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS ’ EQUITY

For the nine months ended September 30, 2024 and 2023

For the three months ended March 31, 2025 and 2024

(In thousands, except share amounts)

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Stockholders’

Income (Loss)

BALANCE—December 31, 2024

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Taxes related to net share settlement of equity awards

Issuance of common stock under the Common Stock Purchase Agreement

Other comprehensive loss, net of tax

BALANCE—March 31, 2024

Stock-based compensation

Issuance of common stock upon exercise of options

Issuance of common stock upon vesting of restricted stock units

Taxes related to net share settlement of equity awards

Issuance of common stock under the Common Stock Purchase Agreements

Stock issuance costs related to Common Stock Purchase Agreements

Issuance of common stock through Employee Stock Purchase Plan

Other comprehensive loss, net of tax

BALANCE—June 30, 2024

Stock-based compensation

Issuance of common stock upon vesting of restricted stock units

Taxes related to net share settlement of equity awards

Issuance of common stock under Common Stock Purchase Agreements

Transaction costs related to the Common Stock Purchase Agreements

Other comprehensive income, net of tax

BALANCE—September 30, 2024

BALANCE—March 31, 2025

Accumulated Other

5 unchanged sentences

Stock-based compensation

Issuance of common stock upon exercise of options

Issuance of common stock upon vesting of restricted stock units

Taxes related to net share settlement of equity awards

Conversion of convertible note into common stock

Other comprehensive income, net of tax

BALANCE—March 31, 2023

Stock-based compensation

Issuance of common stock upon vesting of restricted stock units

Taxes related to net share settlement of equity awards

Conversion of convertible note into common stock

Issuance of common stock through Employee Stock Purchase Plan

Other comprehensive income, net of tax

BALANCE—June 30, 2023

Stock-based compensation

Issuance of common stock upon exercise of stock options

Issuance of common stock upon vesting of restricted stock units

Taxes related to net share settlement of equity awards

Conversion of convertible note into common stock

Issuance of common stock under the Common Stock Purchase Agreement

Transaction costs related to Common Stock Purchase Agreement

Other comprehensive income, net of tax

BALANCE—September 30, 2023

BALANCE—March 31, 2024

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

1 unchanged sentence

(In thousands)

Nine months ended September 30,

Three months ended March 31,

CASH FLOWS FROM OPERATING ACTIVITIES:

1 unchanged sentence

Depreciation and amortization

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

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

1 unchanged sentence

Common stock purchase agreement costs

Impairment of right-of-use assets

Debt issuance costs

Inventory write-downs, net of scrapped inventory

Change in fair value of convertible note and warrant liabilities

Realized loss on instrument-specific credit risk

Stock-based compensation

9 unchanged sentences

Operating lease liabilities

Contract liabilities

Other noncurrent liabilities

2 unchanged sentences

Purchases of property and equipment

Proceeds from sale of property and equipment

Purchases of marketable securities

Proceeds from redemptions and maturities of marketable securities

Net cash provided by investing activities

Net cash (used in) provided by investing activities

CASH FLOWS FROM FINANCING ACTIVITIES:

Proceeds from exercise of stock options

Proceeds from the issuance of convertible note

Payments for convertible note redemptions

Proceeds from issuance of convertible note

Transaction costs related to issuance of convertible note

Taxes paid related to the net share settlement of equity awards

1 unchanged sentence

Stock issuance costs related to Common Stock Purchase Agreements

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

Net cash provided by (used in) financing activities

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

Net cash provided by 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 income taxes, net of refund

Cash paid for interest

SUPPLEMENTAL DISCLOSURE OF NONCASH INVESTING AND FINANCING ACTIVITIES:

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

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

Operating lease liabilities extinguished upon termination of lease

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

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

Noncash debt issuance costs

Stock issuance costs included in accounts payable and accrued liabilities

Stock issuance costs through issuance of common stock

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

Debt issuance costs included in accounts payable and accrued liabilities

The accompanying notes are an integral part of these condensed 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.

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 TM Intelligent Sensing Platform includes a solid-state software definable active lidar sensor, an adaptive sensing SmartScan architecture to scan dynamic scenes/targets, and 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.

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

and its wholly owned subsidiaries.

Unaudited Condensed Consolidated Financial Statements

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Actual results could differ from those estimates.

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, and convertible notes.

Principle of Consolidation and Liquidity

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

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

and its wholly owned subsidiaries.

All intercompany balances and transactions have been eliminated in consolidation.

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

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

As of March 31, 2025 , the Company’s existing sources of liquidity included cash, cash equivalents, and marketable securities of $ 25,926 .

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

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

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

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

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

As of March 31, 2025 , the Company had an accumulated deficit of $ 381,111 .

For the three months ended March 31, 2025 and 2024 , the Company incurred a net loss of $ 8,016 and $ 10,219 , respectively, and the Company had net cash outflows from operating activities of $ 7,803 and $ 7,885 , respectively.

As of March 31, 2025 , the Company had $ 25,926 of cash, cash equivalents, and marketable securities.

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

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

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

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

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

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

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

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

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

During the three months ended March 31, 2025 , the Company issued shares through stock purchase agreements and a convertible note totaling $ 11,055 .

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.

The extent of the Company’s ability to raise additional capital through the issuance of equity is dependent on the market price of its common stock and declines in stock price may materially and adversely affect the Company’s capacity to secure necessary financing to support ongoing operations.

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

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

Reverse Stock Split

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

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

The Company did not issue fractional shares in connection with the Reverse Stock Split.

Stockholders who were otherwise entitled to fractional shares of common stock were instead entitled to receive a proportional cash payment.

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 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 condensed consolidated financial statements and notes thereto have been adjusted retroactively, where applicable, to reflect the Reverse Stock Split.

Emerging Growth Company

The Company is an “emerging growth company,” as defined in Section 2 (a) of the Securities Act, as modified by the Jumpstart Our Business Startups Act of 2012 (the “JOBS Act”), and it may take advantage of certain exemptions from various reporting requirements that are applicable to other public companies that are not emerging growth companies including, but not limited to, not being required to comply with the independent registered public accounting firm attestation requirements of Section 404 of the Sarbanes-Oxley Act, reduced disclosure obligations regarding executive compensation in its periodic reports and proxy statements, and exemptions from the requirements of holding a nonbinding advisory vote on executive compensation and stockholder approval of any golden parachute payments not previously approved.

Further, Section 102 (b)( 1 ) of the JOBS Act exempts emerging growth companies from being required to comply with new or revised financial accounting standards until private companies (that is, those that have not had a Securities Act registration statement declared effective or do not have a class of securities registered under the Exchange Act) are required to comply with the new or revised financial accounting standards.

The JOBS Act provides that a company can elect to opt out of the extended transition period and comply with the requirements that apply to non-emerging growth companies but any such election to opt out is irrevocable.

The Company has elected to take advantage of the benefits of the extended transition period for new or revised financial accounting standards.

This may make it difficult or impossible to compare the Company’s financial results with the financial results of another public company that is either not an emerging growth company or is an emerging growth company that has chosen not to take advantage of the extended transition period exemptions because of the potential differences in accounting standards used.

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 receivable 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.

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The guidance is effective for fiscal years beginning after December 15, 2024.

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

In November 2023, the FASB issued ASU 2023 - 07, Segment Reporting (Topic 280 ):

Improvements to Reportable Segment Disclosures .

This standard requires public companies, including entities with a single reportable segment, to disclose information about their reportable segments’ significant expenses and other items on an interim and annual basis to provide more transparency about the expenses they incur from revenue generating business units.

The new standard is effective for fiscal years beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024 on a retrospective basis, with early adoption permitted.

The Company does not expect the adoption of the new standard to have a material effect on its consolidated financial statements.

The Company is currently assessing the effect that the updated standard will have on its financial statement disclosures.

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.

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, other current and noncurrent liabilities, and convertible note.

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

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

Fair Value Measured as of September 30, 2024 Using:

Fair Value Measured as of March 31, 2025 Using:

Adjusted Cost

3 unchanged sentences

Money market funds

$ 4,778 $ — $ 4,778 $ 4,778 $ —

Asset-backed securities

905 ( 1 ) 904 — $ 904

Corporate bonds

13,140 4 13,144 — 13,144

Commercial paper

3,358 1 3,359 — 3,359

Government securities

3,250 2 3,252 — 3,252

Total financial assets

$ 25,431 $ 6 $ 25,437 $ 4,778 $ 20,659

Private placement warrant liability

Derivative warrant liability

$ — $ — $ — $ — $ —

Convertible note, current

— — 3,233 — —

Derivative warrant liabilities

Total financial liabilities

$ — $ — $ 3,658 $ — $ —

Fair Value Measured as of December 31, 2024 Using:

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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

$ — $ — $ — $ — $ —

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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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.

Derivative Warrant Liability:

2025 Convertible Note :

In January 2025, the Company entered into a convertible note agreement with a face value of $ 3,240 (the "2025 Note").

The Company elected the fair value option to account for the 2025 Note.

The fair value estimate of the 2025 Note is 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 changes in fair value are recognized in other income (expense), net for each reporting period.

See Note 7 for details of the terms and conditions of the 2025 Note.

Derivative Warrant Liabilities:

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.

The Company issued warrants as part of the 2022 Note.

The warrants are recorded on the condensed consolidated balance sheets at fair value.

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Inherent in a Monte-Carlo simulation model are assumptions related to price, volatility, risk-free interest rate, term to expiration, and dividend yield.

The 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 warrants based on the historical and implied volatilities of the Company's publicly traded common stock.

The risk-free interest rate is based on interpolated U.S.

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

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.

Any changes in these assumptions can change the valuation significantly.

Changes in fair value are recognized in other income (expense) for each reporting period.

Derivative Warrant Liability is included within other noncurrent liabilities on the condensed consolidated balance sheets.

In January 2025, in connection with the 2025 Note, the Company issued warrants, which are recorded on the accompanying condensed consolidated balance sheets at fair value.

The fair value is based on unobservable inputs, which represent Level 3 measurements within the fair value hierarchy.

The fair value estimate of the warrants was based on a Black-Scholes model.

Inherent in a Black-Scholes model are assumptions related to price, volatility, risk-free interest rate, term to expiration, and dividend yield.

Changes in fair value are recognized in other income (expense) for each reporting period.

Derivative Warrant Liability is included within other noncurrent liabilities on the condensed consolidated balance sheets.

Private Placement Warrant Liability :

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

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

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

Derivative Warrant Liability

For the three months ended March 31, 2025 , there were no net transfers between Level 1 and Level 2 inputs.

The following table presents a summary of the changes in fair value of the Company’s Level 3 financial instruments for the three months ended March 31, 2025 (in thousands):

Derivative Warrant Liabilities

Balance at December 31, 2024

$ 26 $ — $ 26

1,046 3,266 4,312

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

Balance at September 30, 2024

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

September 30, 2024

( 647 ) ( 33 ) ( 680 )

Balance at March 31, 2025

$ 425 $ 3,233 $ 3,658

The key inputs into the Black-Scholes model for the derivative warrant liability from the 2025 Note valued at March 31, 2025 are as follows:

March 31, 2025

Expected term (years)

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Exercise price

The key inputs into the binomial-lattice model for the 2025 Note valued at March 31, 2025 are as follows:

March 31, 2025

Expected term (years)

Expected volatility

Risk-free interest rate

Dividend yield

Estimated credit spread

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

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

September 30, 2024

December 31, 2023

Cash and cash equivalents

Restricted cash

Total cash, cash equivalents, and restricted cash

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

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

as security for the payment of rent on its headquarters.

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

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

September 30, 2024

The value of the Company’s convertible note and derivative warrant liabilities 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 liabilities, and a lower volatility assumption would decrease the value of the liabilities.

Inventory, net of write-downs, as of March 31, 2025 and December 31, 2024 were as follows (in thousands):

March 31, 2025

December 31, 2024

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Total inventory, net

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

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

The Company also had $ 256 and $ 209 of noncurrent inventory (raw materials), net of write-downs, classified within other noncurrent assets on the condensed consolidated balance sheet as of March 31, 2025 and December 31, 2024 , respectively.

The Company’s current and noncurrent inventory as of March 31, 2025 and December 31, 2024 was written down by $ 4,668 and $ 4,659 , respectively, in order to reduce inventory to the lower of cost or net realizable value.

PREPAID AND OTHER CURRENT ASSETS

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

September 30, 2024

Prepaid and other current assets as of March 31, 2025 and December 31, 2024 were as follows (in thousands):

March 31, 2025

December 31, 2024

Prepaid expenses

$ 1,414 $ 2,386

Advances to suppliers

Receivable for issuance of common stock

Total prepaid and other current assets

$ 929 $ 2,706

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

The Company’s advances to suppliers as of March 31, 2025 and December 31, 2024 were written down by $ 1,041 and $ 1,041 , respectively, associated with the winding down of its legacy Non-Automotive product as part of its revised strategic plan.

See Note 15, Restructuring, for further details.

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

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

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.

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

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

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

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

Three months ended September 30,

Nine months ended September 30,

the remaining liability of $ 3,313 as of December 31, 2024 was recorded in accrued expenses and other current liabilities in the condensed consolidated balance sheet.

On April 28, 2025, the Company and the former landlord entered into a settlement agreement to resolve all outstanding disputes related to the early termination of the lease.

Under the terms of the agreement, the Company will pay $ 1,400 in cash and issue a warrant to purchase up to 350,000 shares of common stock at an initial exercise price of $ 2.22 per share with an estimated fair value of $ 228 .

The settlement was treated as a Type 1 subsequent event, and as a result, the Company adjusted the termination liability to $ 1,628 as of March 31, 2025 and recorded a gain on termination of operating lease of $ 1,685 during three months ended March 31, 2025 .

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

The components of operating lease expenses, excluding the gain on early termination of operating lease, for the three months ended March 31, 2025 and 2024 , are as follows (in thousands):

Three months ended March 31,

Operating lease cost

$ 264 $ 593 $ 1,435 $ 1,797

Variable lease cost

32 89 201 248

Total operating lease cost

$ 296 $ 682 $ 1,636 $ 2,045

Maturities of lease liabilities are as follows (in thousands):

Maturities of lease liabilities, excluding the lease termination liability, are as follows (in thousands):

Operating leases

Years ending - December 31:

2024 (remaining three months)

2025 (remaining nine months)

Total lease payments

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ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES

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

September 30, 2024

Accrued expenses and other current liabilities as of March 31, 2025 and December 31, 2024 are as follows (in thousands):

March 31, 2025

December 31, 2024

Lease termination liability

Accrued bonuses

$ 1,628 $ 3,313

Accrued payroll

Operating lease liabilities

Accrued severance

Accrued payroll taxes

Warranty reserve

Income tax payable

Accrued bonuses

Accrued other

Total accrued expenses and other current liabilities

$ 3,686 $ 7,709

CONVERTIBLE NOTES

2022 Convertible Note

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.

The second Note Closing (“Second Closing”) could have occurred up to March 15, 2024 , upon which the Company’s right to effect a Second Closing automatically terminated.

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 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 1/15th 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 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) $ 2.50 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.

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 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 condensed consolidated statement of operations.

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

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

2024 Promissory Note

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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.

2025 Convertible Note

In January 2025, the Company entered into a Securities Purchase Agreement with a certain institutional investor and issued (i) a senior unsecured convertible promissory note (the "2025 Note") for an aggregate principal amount of $ 3,240 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 2025 Note, subject to an original issue discount of 7.4 %, has a term of eighteen months and accrues interest at the rate of 7 % per annum.

The interest may be settled in cash or shares at the option of the Company and is payable together with monthly redemptions of the outstanding principal amount of the Note.

The 2025 Note is convertible into Common Stock, at a per share conversion price equal to $ 2.22 , subject to adjustments noted in the Note.

Beginning April 2025, and the first of each subsequent month (each a "Monthly Redemption Date or an "Installment Date"), the Company shall redeem the Monthly Redemption Amount until the 2025 Note is fully redeemed, payable in cash or, so long as certain equity conditions are met, shares of Common Stock at the option of the Company.

The equity conditions that must be met in order for the Company to settle the Monthly Redemption Amount in shares include requirements for the daily volume weighted average price of the Company's Common Stock to exceed $ 0.50 and the average daily trading volume of the Company's Common Stock to exceed $ 100 for the twenty ( 20 ) trading days prior to the applicable Installment Notice Date (which is the sixth ( 6th ) trading day prior to each Installment Date).

The Monthly Redemption Amount, in most instances, will be 1/15th of the original principal amount, plus any amount accelerated pursuant to the 2025 Note, accrued but unpaid interest, and late fees, if any.

If the Company elects to settle such redemptions in shares of Common Stock, the number of shares to be settled shall be based on an Installment Conversion Price equal to the lower of (i) $ 2.22 or (ii) the greater of $ 0.30 and 90 % of average volume weighted average price of the Common Stock during the five ( 5 ) trading days immediately preceding the applicable Monthly Redemption Date.

The investor is permitted to accelerate up to one Monthly Installment Amount, not exceeding five times between Installments, (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.

The Acceleration Conversion Price shall be the lower of (i) $ 2.22 or (ii) the greater of $ 0.30 and 90 % of average volume weighted average price of the Common Stock during the five ( 5 ) trading days immediately preceding the applicable Acceleration Date.

The 2025 Note may not be converted into Common Stock to the extent such conversion would result in the investor and its affiliates having beneficial ownership of more than 19.99 % of our then outstanding shares of Common Stock.

This limitation is waived if the Company either obtains stockholder approval as required by the applicable exchange rules or secures a satisfactory written opinion from its counsel stating that such approval is unnecessary.

The Company and investor entered into a registration rights agreement (the “Registration Rights Agreement”) to which the Company is required to file a registration statement registering the resale by the investor of any shares of the Company’s common stock issuable upon conversion, including the resale of shares issuable upon exercise of the associated warrants.

The Company is required to meet certain obligations with respect to the timeliness of the filing and effectiveness of the registration statement.

The Company filed such registration statement on January 16, 2025, and an amendment thereto on February 25, 2025, which was declared effective by the U.S.

Securities and Exchange Commission on March 4, 2025.

The Company elected to apply the fair value option to the measurement of the 2025 Note.

As a result of adopting the fair value option no embedded derivatives are bifurcated from the 2025 Note.

The Company classifies the 2025 Note as a liability at fair value and will remeasure the 2025 Note to fair value at each reporting period.

The total proceeds received from the investor of $ 3,000 is allocated between the 2025 Note and the related warrants issued using the relative fair value method at issuance date.

This resulted in an initial fair value of $ 3,266 being allocated to the 2025 Note, and $ 1,046 allocated to the associated warrants (see Note 2 for further details).

The Company recorded a non-cash issuance costs of $ 1,312 , representing the difference between the fair value and proceeds received, within Interest expense and other on the condensed consolidated statement of operations.

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

As of March 31, 2025, the 2025 Note has an outstanding principal balance and accrued interest of $ 3,296 and is recorded as a current liability at fair value of $ 3,233 .

INTEREST EXPENSE AND OTHER

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

Three months ended September 30,

Nine months ended September 30,

Interest expense and other for the three months ended March 31, 2025 and 2024 consisted of the following (in thousands):

Three months ended March 31,

Common stock purchase agreements costs

Debt issuance costs

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

( 91 ) ( 271 )

Expected credit losses

Loss on disposal of assets

Impairment of right-of-use assets

Realized loss on instrument-specific credit risk

Interest expense and other

$ 2,108 $ ( 317 )

STOCKHOLDERS' EQUITY

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

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

At issuance, the 225,563 shares of common stock had a fair value of $ 282 .

The Company also recorded a final cash commitment fee of $ 200 .

The fair value of the commitment shares and the final commitment fee were recorded to Interest expense and other in the Company’s condensed consolidated statements of operations and comprehensive loss.

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

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

The Company has issued 3,480,713 shares of its common stock to New Circle under the CSPA for gross proceeds totaling $ 6,480 through March 31, 2025.

Alliance Global Partners ( “ A.G.P.

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

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

under the ATM Agreement.

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 $ 15,292 .

The Company has sold 5,887,640 shares under the ATM Agreement for gross proceeds totaling $ 8,244 through March 31, 2025.

ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS)

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

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

The changes in accumulated other comprehensive income (loss) by component for the three months ended March 31, 2025 and 2024 are as follows (in thousands):

Unrealized gains on available-for-sale securities

Balance at December 31, 2024

Other comprehensive loss, net of tax

Other comprehensive gain, net of tax

Balance at March 31, 2025

Other comprehensive loss, net of tax

Balance at June 30, 2024

Other comprehensive income, net of tax

Balance at September 30, 2024

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

Change in fair value due to instrument-specific credit risk

Balance at December 31, 2023

Other comprehensive income (loss), net of tax

Other comprehensive loss, net of tax

Balance at March 31, 2024

Other comprehensive income, net of tax

Balance at June 30, 2023

Other comprehensive loss before reclassifications, net of tax

Amounts reclassified from accumulated other comprehensive loss, net of tax

Other comprehensive income

Balance at September 30, 2023

NET LOSS PER SHARE

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

Three months ended September 30,

Nine months ended September 30,

Three months ended March 31,

Net loss attributable to common stockholders

$ ( 8,016 ) $ ( 10,219 )

Weighted average common shares outstanding - Basic

17,448,617 6,352,835

Weighted average common shares outstanding - Diluted

17,448,617 6,352,835

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

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

$ ( 0.46 ) $ ( 1.61 )

Due to net losses for the three months ended March 31, 2025 and 2024 , 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:

Nine months ended September 30,

Three months ended March 31,

Common stock options issued and outstanding

134,242 205,910

Unvested restricted stock units

Common Stock Purchase Agreement

401,857 494,216

1,124,706 319,443

Common Stock Purchase Agreements

33,657,478 842,180

Conversion of convertible notes

81,070 33,655

38,374,857 1,895,404

STOCK-BASED COMPENSATION

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

Three months ended September 30,

Nine months ended September 30,

Cost of revenue

The following table summarizes stock-based compensation expense recorded in each financial statement line item in the Company’s condensed consolidated statements of operations and comprehensive loss for the three months ended March 31, 2025 and 2024 (in thousands):

Three months ended March 31,

Research and development

$ 695 $ 1,209

Sales and marketing

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Total stock-based compensation

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

Expected Term —The expected term for awards with a market condition is the length of time from the grant date to the date the market condition expires.

Expected Volatility —Expected volatility is estimated using a combination of the average historical volatility of the Company's own stock and those of comparable companies’ stock at the time of the grant.

Risk-Free Interest Rate —The risk-free interest rates are based on US Treasury yields in effect at the grant date for notes with comparable terms as the awards.

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

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

$ 2,501 $ 3,014

SEGMENT INFORMATION

The Company adopted ASU 2023 - 07 during the year ended December 31, 2024.

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

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

The Company recorded revenue for prototype sales of $ 0 and $ 20 in the three months ended March 31, 2025 and 2024 , respectively.

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

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

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

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 $ 64 and $ 0 in revenue for performance obligations that had been satisfied as of March 31, 2025 and 2024 , respectively, in the condensed consolidated statements of operations and comprehensive loss.

Disaggregation of Revenue

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

Three months ended September 30,

Nine months ended September 30,

Three months ended March 31,

Revenue by primary geographical market:

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Contract Liabilities

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

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

Nine months ended September 30,

Beginning balance

Revenue recognized that was included in the contract liabilities beginning balance

Increase due to cash received and not recognized as revenue and billings in excess of revenue recognized during the period

Ending balance

There were no changes in contract liabilities balance for the three months ended March 31, 2025 and 2024 and there were no remaining performance obligations as of March 31, 2025 , and December 31, 2024.

Remaining Performance Obligations

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RESTRUCTURING

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

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

See discussion in Footnote 6, Leases.

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

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

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

One-time employee termination benefits

In 2023, the Company implemented a revised strategic plan, which focused on reducing fixed operating activities by simplifying business operations and focusing development and commercial activities on a single unifying product for both the Automotive and Non-Automotive markets.

As part of its effort to reduce fixed operating costs, focus operations, simplify supply chains and streamline manufacturing to unify around a single product – Apollo, the company wound down support for its legacy Non-Automotive product.

In August 2024, the Company further reduced fixed operating costs and terminated its headquarters lease and in 2025, settled the amount of the lease termination liability.

See discussion in Note 5, Leases and Note 17, Commitment and Contingencies for the settlement of the lease termination liability.

Restructuring charges are summarized as follows as of March 31, 2025 (in thousands):

Losses on purchase commitments

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( 30 ) — — ( 30 )

Balance as of September 30, 2024

$ — $ 302 $ 3,124 $ 5 $ 3,431

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

Three months ended September 30,

Nine months ended September 30,

Cost of revenue

$ — $ — $ 105 $ 50

Research and development

Sales and marketing

General and administrative

( 680 ) 72 ( 680 ) 259

Total restructuring charges (benefits)

Balance as of March 31, 2025

$ 267 $ 1,628 $ 5 $ 1,900

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

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

For the three months ended March 31, 2025 and 2024 , the Company recognized $ 2 and $ 2 provision for income taxes, respectively.

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

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

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

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 was in breach of the lease for its former headquarters office in Dublin, California because of the Company’s failure to pay rent as required by the lease and ( 2 ) provides notice that the lease had been terminated by the landlord effective as of August 23, 2024.

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

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

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

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

RELATED PARTIES

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

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

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

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

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

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

On April 28, 2025, the Company and the former landlord entered into a settlement agreement to resolve all outstanding disputes related to the early termination of the lease.

Under the terms of the agreement, the Company will pay $ 1,400 in cash and issue a warrant to purchase up to 350,000 shares of common stock at an initial exercise price of $ 2.22 per share.

SUBSEQUENT EVENTS

On April 28, 2025, the Company and the former landlord entered into a settlement agreement to resolve all outstanding disputes related to the early termination of the lease.

The settlement was treated as a Type 1 subsequent event and the lease termination liability was adjusted from $ 3,313 as of December 31, 2024 to $ 1,628 as of March 31, 2025 , reflecting the final settlement of $ 1,400 in cash and 350,000 of warrants, which were valued at $ 228 .

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

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

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

We believe that an understanding of these trends is important to understanding our financial results for the three months ended March 31, 2025, as well as our future prospects.

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

All dollar amounts expressed in this Management’s Discussion and Analysis of Financial Condition and Results of Operations are in thousands of dollars, except for per share amounts and unless otherwise specified.

Reverse Stock Split

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

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

We did not issue fractional shares in connection with the Reverse Stock Split.

Stockholders who were otherwise entitled to fractional shares of common stock were instead entitled to receive a proportional cash payment.

The number of outstanding warrants was also proportionately adjusted.

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

Accordingly, unless we indicate otherwise, all historical per share data, number of shares issued and outstanding, stock awards, and other common stock equivalents for the periods presented in this Quarterly Report on Form 10-Q have been adjusted retroactively, where applicable, to reflect the Reverse Stock Split.

Dowslake Transaction

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

Registered Direct Offering

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

New Circle Transaction

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

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

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

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

Key Factors Affecting Our Operating Results

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securing additional capital in a timely manner in order to meet operating cash flow needs;

doing so on terms that are favorable to us, or at all, may be challenging given the current capital markets and overall macroeconomic conditions;

doing so on terms that are favorable to us, or at all, which may be challenging given the current capital markets and overall macroeconomic conditions;

maintain and establish relationships with one or more Tier 1 automotive suppliers to facilitate “design wins” with potential end customers, which in our case are automotive OEMs;

develop and protect our intellectual property;

changing international trade policies, including the imposition or modification of tariffs, increasing trade tensions, and the implementation of potential trade restrictions;

comply with existing and new or modified laws and regulations applicable to our business;

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Market Trends and Uncertainties

We anticipate future demand for our 4Sight TM Intelligent Sensing Platform will come from two major markets, Automotive and Industrial.

In the near term, we anticipate concentrating on the Automotive market by more effectively leveraging our business model, focusing on advanced driver-assistance systems, or ADAS, autonomous driving, and commercial trucking.

In the longer term, we will look for opportunities in the Industrial market, such as in the railway and intelligent transportation systems, or ITS segments, when it becomes cost-effective to do so based on higher volume production in the Automotive market.

This strategy provides us with multiple opportunities for sustained growth by enabling new applications and product features across these market segments.

We anticipate growing demand for our 4Sight TM Intelligent Sensing Platform across our two major markets, Automotive and Non-Automotive.

We believe this expected growth will enable us to capture market share across both the Automotive and Non-Automotive markets.

We plan to pursue opportunities in advanced driver-assistance systems, or ADAS, autonomous driving, and commercial trucking, while also exploring opportunities in the Non-Automotive market, such as in the railway, security, and intelligent transportation systems, or ITS segments.

This diversified approach provides us with multiple opportunities for sustained growth by enabling new applications and product features across a broad range of industries and market segments.

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

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

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

The decision by our former Tier 1 partner, Continental, to discontinue our joint lidar development program was a setback to our business, however, we were able to able engage LITEON as a replacement Tier 1 automotive supplier.

If we are unable to establish and maintain our relationship with LITEON or find other Tier 1 automotive suppliers in the future, this could have a material and adverse effect on our business, as our business model is predicated on licensing our lidar designs and other intellectual property to Tier 1 automotive suppliers.

Our primary focus in the Automotive market is on ADAS for passenger and commercial vehicle autonomy, particularly highway autonomy applications.

We believe that growth in that market is driven by both more stringent safety regulations and consumer demand for vehicles offering increased safety and advanced driver assist features.

We will need to anticipate and adapt to any changes in the regulatory environment, as well as changes in consumer demand, in order to take advantage of this opportunity.

In the Automotive market for example, our growth and financial performance will be heavily influenced by our ability to successfully integrate into OEM programs that require years of development, testing, and validation.

If we fail to remain engaged with one or more Tier 1 automotive suppliers, it may have an adverse effect on our business.

The markets for lidar are projected to see significant growth in both the near and long-term.

As is common in early-stage companies with limited operating histories, we are subject to risks and uncertainties such as those described in Part II, Item 1A of this Quarterly Report on Form 10-Q.

Since inception, we have incurred net losses and negative cash flows from operations and expect to continue incurring losses until after we reach commercialization.

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

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

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

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

We believe that these plans can be successfully implemented, which would likely result in adequate cash flows to support our ongoing operations for at least one year from the date of this Quarterly Report on Form 10-Q.

Since inception, we have incurred net losses and negative cash flows from operations and expect to continue incurring losses up to commercialization which means we are dependent upon raising additional capital to provide the cash necessary to continue our ongoing operations.

As a result, it remains critical for us to preserve cash and manage spending to extend our liquidity.

We also plan to improve our liquidity position through securing additional financing, engaging with partners and OEMs, and executing on our critical milestones.

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

During the three months ended March 31, 2025, we raised $11,055 in gross proceeds through share issuances on our stock purchase agreements and a convertible note.

We also have access to additional liquidity through our equity line of credit and ATM facilities.

Partnerships and Commercialization

Our technology is designed to be a key enabler in certain Automotive and Industrial market applications.

Our technology is designed to be a key enabler in certain Automotive and Non-Automotive market applications.

Because our technology must be integrated into a broader solution by our customers, it is critical that we achieve design wins with these customers.

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We consider design wins to be critical to our future success, although the revenue that may be generated by each design win and the time necessary to achieve such a design win can vary significantly, making it difficult to predict our financial performance.

In the Industrial market, our strategy has been to sell our lidar solutions to customers utilizing components that are sourced, in part, from the Tier 2 automotive supply chain and assembled by our contract manufacturing partners.

In the Automotive market, we will utilize a licensing model with Tier 1 suppliers that would generate a royalty for us and, hence, can be more easily replicated with multiple Tier 1 suppliers.

As the Tier 2 automotive supply chain matures, we intend to leverage those suppliers, and the volume created for the Automotive market, to participate in the Industrial market.

With that in mind, in the fourth quarter of 2023, we made the decision to wind down our existing product line for the Industrial market and curtail support until we achieve sufficient scale in our automotive products, which we believe represents our largest market opportunity.

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

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

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

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

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

In large part, we plan to unify our supply chain for the Automotive and Non-Automotive markets and leverage our Tier 1 automotive suppliers to produce products for our resale in our Non-Automotive markets, whereas in the Automotive markets, we anticipate licensing our technology to our Tier 1 suppliers in exchange for a royalty.

The unified supply chain should allow us to leverage the scale, efficiencies, and volume associated with supplying the Automotive market to benefit our Non-Automotive market customers.

During 2023, as part of our effort to reduce fixed operating costs, focus operations, simplify supply chains, and streamline manufacturing, we wound down support for our legacy Non-Automotive product.

Since the launch of our new product, Apollo, in 2024, we have seen renewed interest from Non-Automotive customers across a broad range of sectors and are actively engaged on multiple opportunities.

In early 2024, we engaged LITEON as our Tier 1 automotive supplier and are actively working with them to bring our product to market.

We recently announced the successful production of the first Apollo units by LITEON, which we believe demonstrates an ability to produce units at scale.

This partnership has enabled us to leverage LITEON’s manufacturing expertise to produce high-quality samples that meet stringent performance standards, which is a critical step towards scaling production and delivering our advanced lidar solutions to the market.

In May 2024, we announced a strategic partnership with ATI and LighTekton Co., Ltd to manufacture and distribute our products in China.

This collaboration provides us with access to a potential $2.5 billion market opportunity.

By leveraging ATI's and LighTekton's extensive networks and manufacturing capabilities, we aim to accelerate our market penetration and deliver our advanced lidar solutions to a broader audience.

We have also made substantial progress in our collaboration efforts with Nvidia, demonstrating significant advances in the high-speed and long-range detection performance of our lidar systems, which we believe puts us on track for future integration with their Hyperion platform, with Apollo having entered Nvidia’s independent testing phase.

Given these engagements are relatively recent, there is no guarantee that these endeavors will be successful.

We believe our revenue and profitability will also be dependent upon our success in licensing our technology to Tier 1 automotive suppliers, such as our current Tier 1 partner, LITEON, and these partners securing program awards from OEMS and scaling to high volume production of our lidar sensors.

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

Restructuring

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

Our gross margins will depend on numerous factors, including, among others, the selling price of our products, pricing of our development contracts with customers, royalty rates on licenses we grant to our customers, unit volumes, product mix, component costs, personnel costs, contract manufacturing costs, overhead costs, and product features.

Our gross margins have in the past been, and may continue to be, negatively impacted by inventory write-downs.

As an example, in 2023, we recorded inventory write-downs of $7,005 relating to the transition to certain higher grade components in our automotive products as well as the winding down of our existing product line for the Industrial market.

Our gross margins have in the past, and may continue to be, negatively impacted by inventory write-downs.

In the future, we expect to generate attractive gross margins from licensing our lidar technology and software to our Tier 1 partners in the Automotive market.

We also anticipate being able to leverage on our foundation in the Automotive market to move to other markets.

To date, our revenue has primarily been generated through development contracts with OEMs and Tier 1 suppliers, as well as unit sales of our products to Industrial customers.

To date, our revenue has primarily been generated through development contracts with OEMs and Tier 1 suppliers, as well as unit sales of our products to Non-Automotive market customers.

These development contracts primarily focus on customization of our proprietary 4Sight TM product capabilities to our customers’ applications, typically involving software implementation to assist with sensor connection and control, customization of scan patterns, and enhancement of particular perception capabilities to meet specific customer needs.

In general, development contracts that require more complex configurations have higher prices.

We expect development contracts to remain a significant part of our business in the near term, but represent a smaller share of our total revenue over time as we increase our focus on technology licensing in the Automotive market and over time leverage the economies of scale we achieve to move into other markets including the Industrial market.

We expect development contracts to remain a significant part of our business in the near term, but represent a smaller share of our total revenue over time as we increase our focus on technology licensing in the Automotive market and leverage these economies of scale to expand into the Non-Automotive market.

Investment and Innovation

Our proprietary adaptive intelligent lidar technology delivers industry-leading performance that helps to solve the most difficult challenges in delivering partial or full autonomy.

While traditional sensing systems passively collect data, our active 4Sight TM Intelligent Sensing Platform leverages principles from automated targeting systems and biomimicry to scan the environment, while intelligently focusing on what matters most in order to enable safer, smarter, and faster decisions in complex scenarios.

Our proprietary adaptive intelligent lidar technology delivers industry-leading performance, addressing the toughest challenges in achieving partial or full autonomy.

Unlike traditional sensing systems that passively collect data, our active 4Sight TM Intelligent Sensing Platform employs principles from automated targeting systems and biomimicry to actively scan the environment, intelligently focusing on critical elements to enable safer, smarter, and faster decisions in complex scenarios.

In June 2024, we introduced Apollo, the first product in our 4Sight™ Flex family of next-generation lidar sensors.

Apollo offers best-in-class range and resolution in a compact, power-efficient, and cost-effective form factor, making it ideal for both automotive and non-automotive applications.

Apollo can be integrated behind the windshield, on the roof, or in the grille, allowing OEMs to implement essential safety features with minimal impact on vehicle design.

This innovative sensor leverages our 4Sight™ Intelligent Sensing Platform, providing a highly programmable and customizable lidar solution that can be continually enhanced via software updates.

With a horizontal field of view up to 120° and long-range detection capabilities of up to 1 km, Apollo is poised to be a key player in advancing vehicle safety and autonomy, as well as smart infrastructure and logistics applications.

We believe our financial performance is significantly dependent on our ability to maintain a technology leadership position.

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Total Revenues

We categorize our revenue as (1) prototype sales and (2) development contracts.

In 2024 and 2023, our prototype sales revenue primarily related to unit sales of our 4Sight TM product.

Our prototype sales revenue primarily related to unit sales of our 4Sight TM product.

Revenue from prototype sales is typically recognized at a point in time when the control of goods is transferred to the customer, generally upon delivery or shipment to the customer.

Development contracts represented the majority of our total revenues in 2023.

Revenue from development and/or collaboration arrangement contracts are earned from R&D activities and collaboration with OEMs and Tier 1 suppliers.

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new hardware and software expenses;

allocated overhead expenses.

allocated personnel and overhead expenses.

R&D costs are expensed as they are incurred.

We expect our investment in R&D to be reduced as a result of our revised strategic plan, with a reduced workforce and consolidated global footprint.

We also plan to execute more focused spending with vendors in critical areas that support our strategy and product development, in line with our revised strategic plan and manage costs more efficiently.

We expect our R&D costs to increase slightly from 2024 as we continue to invest in the development of our Apollo product.

Sales and Marketing

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trade shows expenses, advertising, and promotions expenses for press releases and other public relations services;

allocated overhead expenses.

We expect our S&M expenses to be significantly reduced as a result of our revised strategic plan to focus on the commercialization of our automotive products.

Through our capital light business, we are able to significantly reduce our workforce and consolidate our global footprint as we expect to leverage our Tier 1 partners to commercialize our products and manage relationships with the OEMs.

allocated personnel and overhead expenses.

We expect our S&M expenses to increase as we pursue Non-Automotive opportunities to accelerate profitability while continuing to leverage our Tier 1 partners to commercialize our products and manage relationships with the OEMs in the Automotive market.

General and Administrative

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allocated overhead expenses.

We expect our G&A expenses to be reduced as a result of our revised strategic plan with a reduced workforce and consolidated global footprint.

We also plan to manage spending with vendors more effectively to support our revised strategic plan to manage costs.

We expect our G&A expenses to decrease slightly with reduced facility costs and professional fees, while continuing to incur expenses to support other departments as we continue to develop and commercialize our Apollo product.

Change in Fair Value of Convertible Note and Warrant Liabilities

Changes in fair value of the 2022 Note and warrant liabilities are the result of the change in fair value at each reporting date.

The changes in fair value of the 2025 Note and warrant liabilities are the result of the change in fair value at each reporting date.

The 2025 Note and warrant liabilities are recorded at fair value for each reporting period, and the changes in fair value are reported within other income (expense), net during the period.

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Results of Operations

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

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

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

Three months ended September 30,

Prototype sales

Development contracts

Total revenue

Cost of revenue

Research and development

Sales and marketing

General and administrative

Total operating expenses

Loss from operations

Change in fair value of convertible note and warrant liabilities

Interest income and other

Interest expense and other

Total other income (expense), net

Loss before income tax expense

Provision for income tax expense

Prototype Sales

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

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

Development Contracts

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

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

Cost of Revenue

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

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

Operating Expenses

Research and Development

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

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

Sales and Marketing

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

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

General and Administrative

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

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

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

Change in Fair Value of Convertible Note and Warrant Liabilities

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

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

Interest Income and Other

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

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

Interest Expense and Other

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

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

Provision for Income Tax Expense

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

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

and certain foreign entities and changes in tax rates.

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

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

Results of Operations

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

Comparison of the three months ended March 31, 2025 and 2024

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

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

Nine months ended September 30,

Prototype sales

Development contracts

Total revenue

The following table sets forth our consolidated results of operations data for the three months ended March 31, 2025 and 2024 (in thousands, except for percentages):

Three months ended March 31,

Cost of revenue

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Provision for income tax expense

Prototype Sales

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

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

Development Contracts

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

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

Revenues increased by $44, or 220%, to $64 for the three months ended March 31, 2025, from $20 for the three months ended March 31, 2024.

This increase is primarily due to contract development revenues, partially offset by lower prototype unit sales in the current quarter.

Cost of Revenue

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

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

Cost of revenue decreased by $167, or 63%, to $96 for the three months ended March 31, 2025, from $263 for the three months ended March 31, 2024.

This decrease was primarily due to fewer units sold in the current quarter to Non-Automotive customers.

The decrease was also due to inventory write-downs and losses on purchase commitments recorded in the three months ended March 31, 2024, which was primarily associated with transitioning to certain higher-grade components in our products for the Automotive market as a result of our revised strategic plan.

Operating Expenses

Research and Development

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

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

Research and development expenses decreased by $1,042, or 23%, to $3,490 for the three months ended March 31, 2025, from $4,532 for the three months ended March 31, 2024.

This decrease was primarily driven by decreases in personnel costs of $323, stock-based compensation expense of $477, and information technology and facilities expense of $463.

The decrease was offset by a $350 increase in fees paid to third parties for development work.

Sales and Marketing

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

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

Sales and marketing expenses increased by $42, or 12%, to $383 for the three months ended March 31, 2025, from $341 for the three months ended March 31, 2024.

This increase was primarily driven by increases in allocated personnel costs of $294 as we pursue Non-Automotive opportunities.

The increase is partially offset by decreases in stock-based compensation of $181 and facilities and information technology allocations of $90.

General and Administrative

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

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

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

General and administrative expenses decreased by $2,720, or 48%, to $2,895 for the three months ended March 31, 2025, from $5,615 for the three months ended March 31, 2024.

This decrease was primarily driven by a favorable adjustment of $1,685 upon settlement of a lease dispute, decreases in personnel cost of $803 and insurance of $106.

These decreases were partially offset by an increase in stock-based compensation of $146.

Change in Fair Value of Convertible Note and Warrant Liabilities

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

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

Change in fair value of convertible note and warrant liabilities increased by $678 to a gain of $680 for the three months ended March 31, 2025, from a gain of $2 for the three months ended March 31, 2024.

This increase was primarily due to the change in fair value of the the 2025 Note and related warrants in January 2025.

Interest Income and Other

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

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

Interest income and other increased by $19, or 10%, to $214 for the three months ended March 31, 2025, from $195 for the three months ended March 31, 2024.

This increase was primarily due to higher interest earned on our cash equivalents and marketable securities in the current period.

Interest Expense and Other

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

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

Interest expense and other increased by $2,425, or 765%, to a net expense of $2,108 for the three months ended March 31, 2025, from a net income of $317 for the three months ended March 31, 2024.

This increase was primarily due to an increase in costs related to financing arrangements of $2,095 and a decrease in amortization of premiums on marketable securities, net, of $180.

Provision for Income Tax Expense

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

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

and certain foreign entities and changes in tax rates.

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

Provision for income tax expenses remained constant at $2 for the three months ended March 31, 2025 and March 31, 2024.

Net loss decreased by $2,203, or 22%, to $8,016 for the three months ended March 31, 2025, from $10,219 for the three months ended March 31, 2024.

This decrease was primarily due to decreases in personnel and facilities expenses, partially offset by increased investments in the development of Apollo.

Liquidity and Capital Resources

Sources of Liquidity

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

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

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

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

As of March 31, 2025, our cash, cash equivalents, and marketable securities totaled $25,926.

For the three months ended March 31, 2025 and 2024, we had a net loss of $8,016 and $10,219, respectively.

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

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

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

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

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

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

Our principal sources of liquidity have been proceeds received from the issuance of equity.

Tumim Stone Transaction

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

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

In total, 996,866 shares were issued under the Tumim Stone Purchase Agreement for gross proceeds totaling $5,516.

2022 Convertible Note

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

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On March 15, 2024, our right to effect a Second Closing under the Securities Purchase Agreement terminated.

Shelf Registration

On September 26, 2023, the U.S.

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

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

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

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

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

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

Securities and Exchange Commission declared our registration statement on Form S-3 to be effective, which allows us to raise up to $200,000 in capital over the next three years subject to a limitation of one-third of our public float over a rolling twelve-month period, when our public float is below $75 million (which it is as of the date of this Quarterly Report on Form 10-Q is filed), which is referred to as the “baby shelf" rules.

Dowslake Transaction

Registered Direct Offering

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

New Circle Transaction

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

As of March 31, 2025, we have issued 3,255,150 shares of our common stock to New Circle under the CSPA for gross proceeds totaling $6,480.

On September 12, 2024, we entered into an At Market Issuance Sales Agreement with Alliance Global Partners, or A.G.P., pursuant to which we may issue and sell through A.G.P., up to $15,292 of our common stock from time to time through an "at-the-market" equity offering program.

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

As of March 31, 2025, we have sold 5,887,640 shares under the ATM Agreement for gross proceeds totaling $8,244.

2025 Convertible Note

In January 2025, we 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 "2025 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 2025 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 2025 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.

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

If we are required to raise additional funds by issuing equity securities, dilution of stockholders will result.

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

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

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

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

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For additional information regarding our cash requirements from lease obligations, lease termination liability and contractual obligations, see Notes 5 and 17 to the Condensed Consolidated Financial Statements in Item 1of Part I of this Quarterly Report on Form 10-Q.

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

On March 27, 2023, First Citizens Bank entered into a whole bank purchase of SVB.

We had and continue to have deposit accounts at SVB.

The standard deposit insurance amount is up to $250 per depositor, per insured bank, for each account ownership category.

We do not maintain any other material accounts or lines of credit with SVB.

Although we continue to maintain an operating account at SVB, we subsequently established operating accounts at other financial institutions to mitigate the risks associated with any one financial institution's potential risk of insolvency or receivership.

Cash Flow Summary

Nine months ended September 30,

Three months ended March 31,

(in thousands)

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Operating Activities

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

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

For the three months ended March 31, 2025, net cash used in operating activities was $7,803.

Factors affecting our operating cash flows during this period were net loss of $8,016, a gain on termination of an operating lease of $1,685, and change in fair value of convertible notes and warrant liabilities of $680, partially offset by stock-based compensation of $2,501, debt issuance costs of $1,984, and common stock purchase agreement costs of $111.

Within operating activities, the net changes in operating assets and liabilities were cash used of $2,056, primarily driven by decreases in accrued expenses and other liabilities and operating lease liabilities of $2,408 and $57, respectively.

Cash used was offset by cash provided by decreases in prepaid and other current assets and other noncurrent assets of $98 and $80, respectively, and an increase in accounts payable of $222.

For the three months ended March 31, 2024, net cash used in operating activities was $7,885.

Factors affecting our operating cash flows during this period were a net loss of $10,219, amortization of premiums and accretion of discounts on marketable securities, net of $252, offset by stock-based compensation of $3,014, and noncash lease expense of $364.

Within operating activities, the net changes in operating assets and liabilities were cash used of $852, primarily driven by decreases in accrued expenses and other liabilities, operating lease liabilities, and other noncurrent liabilities of $1,343, $397, and $358, respectively.

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

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

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

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

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

Cash used was offset by cash provided by a decrease in prepaid and other current assets of $772 and an increase in accounts payable of $309.

Investing Activities

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

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

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

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

For the three months ended March 31, 2025, net cash used in investing activities was $8,578.

The primary factors affecting net cash used in investing activities during this period were the purchases of marketable securities of $14,303, partially offset by redemptions and maturities of marketable securities of $5,731.

For the three months ended March 31, 2024, net cash provided by investing activities was $368.

The primary factors affecting net cash provided by investing activities during this period were the proceeds from redemptions and maturities of marketable securities of $6,500, partially offset by the purchases of marketable securities of $6,045 and purchases of property and equipment of $87.

Financing Activities

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

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

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

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

For the three months ended March 31, 2025, net cash provided by financing activities was $11,382.

The primary factors affecting our financing cash flows during this period were proceeds from common stock purchase agreements of $9,495 and from the issuance of a convertible note of $2,950, partially offset by debt issuance costs of $578, taxes paid on net settlement of equity awards of $333 and stock issuance costs related to common stock purchase agreements of $152.

For the three months ended March 31, 2024, net cash used in financing activities was $120.

The primary factors affecting our financing cash flows during this period were proceeds from the exercise of the CSPA of $165, partially offset by payments for taxes related to net settlement of equity awards of $45.

Critical Accounting Policies and Estimates

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

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

During the three months ended March 31, 2025, there were no significant changes in our critical accounting policies and estimates as compared to those previously disclosed in “Critical Accounting Policies and Estimates” in “Management's Discussion and Analysis of Financial Condition and Results of Operations” included in our 2024 Annual Report on Form 10-K.

Emerging Growth Company Status

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We will remain an emerging growth company until the earliest of (i) the last day of the fiscal year in which the market value of common stock that is held by non-affiliates exceeds $700 million as of the end of that year’s second fiscal quarter, (ii) the last day of the fiscal year in which we have total annual gross revenue of $1.07 billion or more during such fiscal year (as indexed for inflation), (iii) the date on which we have issued more than $1.0 billion in non-convertible debt in the prior three-year period, or (iv) December 31, 2025.

We expect to continue to take advantage of the benefits of the extended transition period, although we may decide to early adopt such new or revised accounting standards to the extent permitted by such standards.

We expect to continue to take advantage of the benefits of the extended transition period, although we may decide to adopt such new or revised accounting standards early to the extent permitted by such standards.

This may make it difficult or impossible to compare our financial results with the financial results of another public company that is either not an emerging growth company or is an emerging growth company that has chosen not to take advantage of the extended transition period exemptions because of the potential differences in accounting standards used.

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

What changed 10-Q

Item 1. Financial Statements