AEye Inc

AEYE,** INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(in thousands, except share and per share data or otherwise stated)

AEye, Inc. (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-definable4SightTM Intelligent Sensing Platform combines solid-state active lidar and integrated deterministic artificial intelligence to capture more intelligent information with less data, enabling faster, more accurate, and more reliable perception of the surroundings.

AEye, formerly known as CF Finance Acquisition Corp. III (“CF III”), was originally incorporated in Delaware on* March 15, 2016under the name CF SPAC Re Inc. On February 17, 2021,AEye Technologies, Inc., then known as AEye, Inc., entered into an Agreement and Plan of Merger with CF III. Based on CF III’s business activities, it was a “shell company” as defined under the Securities Exchange Act of1934,* as amended. On* August 16, 2021,*the business combination contemplated by the Agreement and Plan of Merger was closed and CF III changed its name to AEye, Inc.

The Company’s common stock and public warrants are listed on the Nasdaq Stock Market LLC (“Nasdaq”) under the symbols “LIDR” and “LIDRW”, respectively. Unless otherwise specified, “we,” “us,” “our,” “AEye,” and the “Company” refers to AEye, Inc.

Unaudited Condensed Consolidated Financial Statements

The accompanying condensed consolidated financial statements are unaudited and have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) for interim financial statements and pursuant to the rules and regulations of the Securities and Exchange Commission. Accordingly, they donot include all of the information and footnotes required by GAAP for complete financial statements. In the opinion of management, all adjustments considered necessary for fair presentation have been included. The accompanying interim unaudited condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements and related notes thereto for the year ended* December 31, 2023* included in the Company's Annual Report on Form10-K for the year ended* December 31, 2023*.

Use of Estimates

The preparation of condensed consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the condensed consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

Principle of Consolidation and Liquidity

The accompanying condensed consolidated financial statements include the accounts of the Company 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.

ASC205-40, Presentation of Financial Statements - Going Concern, requires management to assess an entity’s ability to continue as a going concern withinone year of the date the financial statements are issued. In each reporting period, including interim periods, an entity is required to assess conditions known and reasonably knowable as of the financial statement issuance date to determine whether it is probable an entity willnot meet its financial obligations withinone year from the financial statement issuance date. These condensed consolidated financial statements have been prepared on a going concern basis.

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As is common in early-stage companies with limited operating histories, the Company is subject to risks and uncertainties such as its ability to develop and commercialize its products; produce and deliver lidar and software products meeting acceptable performance metrics; attract new and retain existing customers; develop, obtain, or progress strategic partnerships; secure an automotive OEM design win; secure additional capital to support the business plan; and other risks and uncertainties.

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 thenine months ended* September 30, 2024and2023*, the Company incurred a net loss of $26,912 and $59,344, respectively, and the Company had net cash outflows from operating activities of $21,814 and $41,508, respectively. As of* September 30, 2024*, the Company had $22,435 of cash, cash equivalents, and marketable securities. As the Company is still in its early stages, it is expected to incur additional operating losses and negative cash flows as it continues to focus on achieving commercialization of its lidar solutions.

As described in Note17, 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 withinone year from the financial statement issuance date. Depending on the outcome of this matter, there could be a material adverse effect on the liquidity, financial position, results of operations, or cash flows of the Company.

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

The Company is dependent upon raising additional capital to provide the cash necessary to continue its ongoing operations and execute against its strategic objectives. During thenine months ended* September 30, 2024*, the Company raised $6,009 in gross proceeds from financing activities. However, successfully raising capital is outside of management's control and there can beno assurance that the Company will be able to obtain additional financing on terms acceptable to the Company, on a timely basis, or at all. Should the Companynot be able to raise additional capital, the Company plans to adjust spending to preserve and extend liquidity over the next12 months, these plans include managing its workforce to reduce payroll costs and managing other discretionary spending. There can beno assurance that the Company will be successful in these efforts to preserve cash.

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

Reverse Stock Split

On* December 27, 2023*, the Company effected a1-for-30 reverse stock split of its issued and outstanding shares of common stock (the "Reverse Stock Split"). Pursuant to the Reverse Stock Split, everythirty (30) shares of issued and outstanding shares of common stock were combined intoone (1) share of common stock. The Company didnot 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 wasno 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.

Concentration of Credit Risk

Financial instruments which potentially subject the Company to concentration of credit risk consist primarily of cash, cash equivalents, and marketable securities, and accounts receivable. The Company places its cash and cash equivalents with major financial institutions, which management assesses to be of high credit quality, to limit the exposure of each investment. 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 mitigates its credit risks by performing ongoing credit evaluations of its customers’ financial conditions. The Company generally doesnot require collateral.

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Recent Accounting Pronouncements

In* December2023,* the Financial Accounting Standards Board (“FASB”), issued Accounting Standards Update (“ASU”)2023-09, Income Taxes (Topic740*) - Improvements to Income Tax Disclosures*, to increase the transparency and usefulness of income tax information through improvements to the income tax disclosures primarily related to the rate reconciliation and income taxes paid information. The guidance is effective for fiscal years beginning after* December15,* 2024. The Company is currently in the process of evaluating the effects of the new guidance.

In* November 2023,the FASB issued ASU2023*-07,* Segment Reporting (Topic280): 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, 2024on a retrospective basis, with early adoption permitted. The Company doesnot* expect the adoption of the new standard to have a material effect on its consolidated financial statements.

The fair value of the Company’s financial assets and liabilities is determined in accordance with the fair value hierarchy established in FASB ASC Topic820, Fair Value Measurements and Disclosures (“ASC820”). ASC820 defines fair value as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. The fair value hierarchy of ASC820 requires an entity to maximize the use of observable inputs when measuring fair value and classifies those inputs intothree levels:

Level 1—Observable inputs, such as quoted prices in active markets for identical assets or liabilities.

Level 2—Observable inputs, other than Level1 inputs, which are observable either directly or indirectly or can be corroborated by observable market data using quoted prices for similar assets or liabilities.

Level 3—Unobservable inputs in which there is little orno market data, which require the reporting entity to develop its own assumptions.

The Company's financial instruments that arenot 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.

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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):

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

*Money Market Funds:*The Company holds financial assets consisting of money market funds. These securities are valued using observable inputs, such as quoted prices in active markets for identical assets or liabilities.

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Marketable Securities: The Company holds financial assets consisting of fixed-income U.S. government agency securities, corporate bonds, and commercial paper. The securities are valued using prices from independent pricing services based on quoted prices of identical instruments in less active or inactive markets. Additionally, quoted prices of similar instruments in active market or industry models using data inputs such as interest rates and prices that can be directly observed or corroborated in active markets are used to value marketable securities.

Derivative Warrant Liability: On* September 15, 2022*, the Company entered into a convertible note agreement with a face value of $10,500 (the*"2022* Note"). The Company’s derivative warrant liability includes the warrants that were issued by the Company as part of the2022 Note. The warrants are recorded on the condensed consolidated balance sheets at fair value. The fair value is based on unobservable inputs, which represent Level3 measurements within the fair value hierarchy. The fair value estimate of the warrants was based on a Monte-Carlo simulation model. 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 offour years. Finally, the Company doesnot 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.

Private Placement Warrant Liability: The Private Placement Warrants are recorded on the condensed consolidated balance sheets at fair value. The fair value is based on observable Level2 inputs, specifically, the observable input of the Company's public warrants, as terms of both warrants are substantially similar. Any changes in the fair value of the liability are reflected in other income (expense), net, on the condensed consolidated statements of operations and comprehensive loss. Private Placement Warrant liability is included within other noncurrent liabilities on the condensed consolidated balance sheets.

For thenine months ended* September 30, 2024*, there wereno net transfers between Level1 and Level2 inputs.

The following table presents a summary of the changes in fair value of the Company’s Level3 financial instruments for thenine months ended* September 30, 2024* (in thousands):

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

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.

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

Restricted cash of $2,150 as of* December 31, 2023consisted 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 Note6,* Leases).

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

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

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

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

The Company’s advances to suppliers as of September 30, 2024 and December 31, 2023 were written down by $1,433 and $1,385, respectively, associated with the winding down of its existing industrial product as part of its revised strategic plan. See Note 15, Restructuring, for further details.

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The Company leases office facilities in Northern California under non-cancelable operating leases. In* July 2024*, the Company entered intotwo new long-term leases, one of which the Company uses as its headquarters.

In* August 2024*, one of the Company's existing leases, originally set to expire on* November 30, 2026*, was terminated early. In conjunction with the early termination, the Company recorded a net gain of $680 on termination of the operating lease. The net gain included a gain of $5,954, comprised of a $16,325 net liability reduction, partially offset by a $10,371 decrease in its remaining right of use asset. Additionally, in accordance with terms in the lease agreement and based on certain assumptions, the Company recorded a lease termination loss of $5,274, representing estimated unpaid rent for the remaining term. The net gain was recorded in general and administrative expenses in the condensed consolidated statement of operations and comprehensive loss. The lease termination liability was reduced by the draw-down of the $2,150 letter of credit by the landlord in* August 2024*; the remaining lease termination liability of $3,124 is recorded in accrued expenses and other current liabilities in the condensed consolidated balance sheets. See Note15, Restructuring, and Note17, Commitments and Contingencies, for further discussion.

The components of operating lease expenses, excluding the gain on lease termination, net, of $680, for thethree andnine months ended* September 30, 2024and2023* were as follows (in thousands):

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

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

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 totwo 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 thetwo issuances (each, a “Note Closing”). Thefirst 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 investorone 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. Thesecond 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 didnot effect a Second Closing.

The2022 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 thefirst 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 the2022 Note was fully redeemed. The Monthly Redemption Amount, in most instances, was1/15th of the original principal amount, plus any amount accelerated pursuant to the2022 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 thefive 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.

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The investor was permitted to accelerate up tofour 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 thefive 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 the2022 Note. As a result of adopting the fair value option,no embedded derivatives were bifurcated from the2022 Note. The Company classified the2022 Note as a liability at fair value and remeasured the2022 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 wasnot reflected on the condensed consolidated statement of operations.

The2022 Note was fully settled through Monthly Redemptions and Accelerations in2023. 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

On* May 10, 2024*, the Company entered into a Securities Purchase Agreement with an investor for the sale and issuance of 330,823 shares of common stock and a 5-year promissory note with a principal balance of $146 (* “May 2024Note”) for total gross cash proceeds of $1,000. The May 2024Note bears interest at an annual rate equal to the Secured Overnight Financing Rate plus 1.0%, which is compounded quarterly in arrears, and has a maturity date of June 4, 2029*. At maturity, the principal balance and accrued, unpaid and uncapitalized interest can be settled in cash, shares of common stock based on the closing price of the common stock as of the immediately preceding trading day, or any combination of the foregoing at the option of the investor. 

Interest expense and other for thethree andnine months ended* September 30, 2024and2023* consisted of the following (in thousands):

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

On* July 25, 2024*, the Company entered into a CSPA and a Registration Rights Agreement with New Circle. Under the terms and subject to the conditions of the CSPA, the Company has the right, butnot the obligation, to sell to New Circle, and New Circle is obligated to purchase up to the lesser of (i) $50,000 of the Company’s common stock, or (ii) the Exchange Cap equal to 1,721,755 shares of the Company's common stock, unless the Company’s stockholders approve the issuance of shares in excess of the Exchange Cap, or the average price of all applicable sales of common stock to New Circle equals or exceeds$1.41 per share. The Company has sole discretion to initiate such sales of common stock over a period of 36 months. In all instances, the Company* may**not* sell shares of its common stock to New Circle under the CSPA if doing so would result in New Circle beneficially owning more than 4.99% of the Company's common stock.

The purchase price per share to be purchased by New Circle shall equal either (i) the lowest volume-weighted average price for common stock over aone-day trading period or intraday trading period on the applicable purchase date multiplied by 96.5%, or (ii) the volume-weighted average price for common stock for thethree consecutive trading days commencing on the purchase notice date multiplied by 97.5%. The maximum number of shares the Company* maysell to New Circle on any single business day is the lesser of (i) the number of shares equal to 100.0% of the average daily trading volume of the common stock of the Company during thefive* trading days immediately preceding the purchase notice, and (ii)400,000 shares of common stock.

In connection with the CSPA, the Company issued to New Circle 225,563 shares of common stock in the Company as commitment shares for the facility. At issuance, the 225,563 shares of common stock had a fair value of $282 and were recorded to Interest expense and other in the Company’s condensed consolidated statements of operations and comprehensive loss. The Company determined that the right to sell additional shares represents a freestanding put option under ASC815, Derivatives and Hedging, and as such, the financial instrument was classified as a derivative asset with a fair value ofzero at inception of the CSPA on* July 25, 2024*.

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

Alliance Global Partners (“A.G.P.”) At Market Issuance Sales Agreement (the“ATM Agreement”)

On* September 12, 2024*, the Company entered into the ATM and a Registration Rights Agreement with A.G.P. Under the terms and subject to the conditions of the ATM Agreement, the Company* mayissue and sell through AGP the Company’s common stock having an aggregate offering price of up to $2,600 ("Placement Shares") from time to time through an "at-the-market" equity offering program. The Company has sole discretion to initiate such sales of common stock over a period of 36 months. Under the terms and subject to the conditions of the ATM Agreement, the Company will set the parameters for the sale of shares, including the number or dollar amount of Placement Shares to be issued, the time period during which sales are requested to be made, any limitation on the number or dollar amount of Placement Shares that maybe sold in anyone* trading day and any minimum price below which sales* may**not* be made. The Company will pay a cash commission rate of up to 3.0% of the gross proceeds from the sale of Placement Shares sold pursuant to the ATM Agreement.

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

The changes in accumulated other comprehensive income (loss) by component for thenine months ended* September 30, 2024and2023* are as follows (in thousands):

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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):

Due to net losses for thenine months ended* September 30, 2024and2023*, 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:

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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 thethree andnine months ended* September 30, 2024and2023* (in thousands):

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 wereno awards granted with a market condition during thenine months ended* September 30, 2024*.

Sale of Prototypes

The Company recorded revenue for prototype sales of $65 and $91 in thethree andnine months ended* September 30, 2024*, respectively, and $56 and $426 in thethree andnine months ended* September 30, 2023*, respectively. The Company doesnot incur significant contract costs in fulfilling or obtaining its contracts with customers.

Development Contracts

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 customized4SightTM perception-related goods and services, and recognized $39 and $65 in revenue for performance obligations satisfied during thethree andnine months ended* September 30, 2024*, respectively, and $132 and $969 during thethree andnine months ended* September 30, 2023*, respectively, in the condensed consolidated statements of operations and comprehensive loss.

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Disaggregation of Revenue

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

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 thenine months ended* September 30, 2024and2023* (in thousands):

Remaining Performance Obligations

Revenue allocated to remaining performance obligations represents the transaction price allocated to the performance obligations that are unsatisfied, or partially unsatisfied. It includes unearned revenue and amounts that will be invoiced and recognized as revenue in future periods and doesnot include contracts where the customer isnot committed. The customer isnot considered committed where they are able to terminate for convenience without payment of a substantive penalty under the contract. Additionally, as a practical expedient, the Company hasnot disclosed the value of unsatisfied performance obligations for contracts with an original expected length ofone year or less. The contract liabilities balance represents the remaining performance obligations for contracts with an original duration of greater thanone year.

In2023, 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 Footnote6,* Leases.

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The Company recorded restructuring benefits, net, of ($680) and ($557) in thethree andnine months ended* September 30, 2024*, respectively, and restructuring charges of $172 and $1,470 in thethree andnine 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):

Restructuring charges (benefits) are included in the condensed consolidated statements of operations and comprehensive loss during thethree andnine months ended* September 30, 2024and2023* as follows (in thousands):

For thethree andnine months ended* September 30, 2024*, the Company recognized $0 and $2 provision for income taxes, respectively. For thethree andnine months ended* September 30, 2023*, the Company recognized $5 and $43 provision for income taxes, respectively. The income tax rates vary from the federal and state statutory rates due to the valuation allowances on the Company’s net operating losses and foreign tax rate differences. The Company computes its quarterly income tax provision by using a forecasted annual effective tax rate and adjusts for any discrete items arising during the quarter.

Legal matters

The Company* maybe subject to legal proceedings and claims that arise in the ordinary course of business. Litigation can be expensive and disruptive to normal business operations. Moreover, the results of complex legal proceedings are difficult to predict and the Company’s view of these matters may*change in the future as the litigation and events related thereto unfold. The Company expenses legal fees as incurred. The Company records a provision for contingent losses when it is both probable that a liability has been incurred and the amount of the loss can be reasonably estimated.

As previously disclosed, on* August 28, 2024*, the Company was served with a complaint that was filed in the Superior Court of California for the County of Alameda on* August 26, 2024* that (1) alleges the Company is in breach of the lease for its former headquarters office in Dublin, California because of the Company’s failure to pay rent as required by the lease and (2) provides notice that the lease had been terminated by the landlord effective as of* August 23, 2024*. The landlord claimed that the amount owed could be up to $8,500. Thereafter, in* August 2024,*the landlord fully drew down the standby letter of credit of $2,150, which was held as security for the payment of rent, due to the alleged default of the lease. The Company disputes, among other things, that the total damages claimed by the landlord equal the amount claimed. Depending on the outcome of this matter, there could be a material adverse effect on the financial position, results of operations, or cash flows of the Company.

From* November 2016to 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 thenine* 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 wereno related party transactions for thenine months ended* September 30, 2024*.