AEye, Inc. 10-Q

Item 1. Financial statements (Unaudited) AEYE, INC. CONDENSED CONSOLIDATED BALANCE SHEETS (In thousands, except share amounts and par value data) September 30, 2025 December 31, 2024 (Unaudited) ASSETS CURRENT ASSETS: Cash and cash equivalents $ 43,035 $ 10,266 Marketable securities 41,298 12,012 Accounts receivable, net 56 11 Inventories, net 884 176 Prepaid and other current assets 935 2,706 Total current assets 86,208 25,171 Right-of-use assets 495 652 Property and equipment, net 549 605 Other noncurrent assets 296 692 Total assets $ 87,548 $ 27,120 LIABILITIES AND STOCKHOLDERS’ EQUITY CURRENT LIABILITIES: Accounts payable $ 4,471 $ 3,598 Accrued expenses and other current liabilities 3,508 7,709 Convertible note, current 106 — Total current liabilities 8,085 11,307 Operating lease liabilities, noncurrent 299 479 Convertible note, noncurrent 146 146 Other noncurrent liabilities 826 64 Total liabilities 9,356 11,996 COMMITMENTS AND CONTINGENCIES (Note 17) STOCKHOLDERS’ EQUITY: Preferred stock—$ 0.0001 par value: 1,000,000 shares authorized; no shares issued and outstanding — — Common stock—$ 0.0001 par value: 600,000,000 shares authorized; 41,776,670 and 13,734,160 shares issued and outstanding at September 30, 2025 and December 31, 2024 4 1 Additional paid-in capital 477,903 388,213 Accumulated other comprehensive income (loss) ( 4 ) 5 Accumulated deficit ( 399,711 ) ( 373,095 ) Total stockholders’ equity 78,192 15,124 Total liabilities and stockholders’ equity $ 87,548 $ 27,120 The accompanying notes are an integral part of these condensed consolidated financial statements. 4 Table of Contents AEYE, INC. CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS (In thousands, except share amounts and per share data) (Unaudited) Three months ended September 30, Nine months ended September 30, 2025 2024 2025 2024 Revenue $ 50 $ 104 $ 136 $ 156 Cost of revenue 103 306 307 729 Gross loss ( 53 ) ( 202 ) ( 171 ) ( 573 ) OPERATING EXPENSES: Research and development 3,061 3,767 10,221 12,137 Sales and marketing 631 74 1,615 482 General and administrative 4,080 3,803 11,323 13,641 Total operating expenses 7,772 7,644 23,159 26,260 LOSS FROM OPERATIONS ( 7,825 ) ( 7,846 ) ( 23,330 ) ( 26,833 ) OTHER INCOME (EXPENSE): Change in fair value of convertible note and warrant liabilities ( 2,210 ) 9 ( 2,123 ) ( 4 ) Interest income and other 650 233 1,257 656 Interest expense and other 55 ( 1,102 ) ( 2,418 ) ( 729 ) Total other income (expense), net ( 1,505 ) ( 860 ) ( 3,284 ) ( 77 ) Loss before income tax ( 9,330 ) ( 8,706 ) ( 26,614 ) ( 26,910 ) Provision for income tax — — 2 2 Net loss $ ( 9,330 ) $ ( 8,706 ) $ ( 26,616 ) $ ( 26,912 ) Change in net unrealized gain (loss) on available-for-sale securities, net of tax ( 4 ) 35 ( 9 ) 17 Comprehensive loss $ ( 9,334 ) $ ( 8,671 ) $ ( 26,625 ) $ ( 26,895 ) PER SHARE DATA Net loss per common share (basic and diluted) $ ( 0.30 ) $ ( 1.01 ) $ ( 1.34 ) $ ( 3.90 ) Weighted average common shares outstanding (basic and diluted) 31,262,997 8,629,683 19,880,145 6,892,910 The accompanying notes are an integral part of these condensed consolidated financial statements. 5 Table of Contents AEYE, INC. CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS ’ EQUITY For the nine months ended September 30, 2025 and 2024 (In thousands, except share amounts) (Unaudited) Additional Accumulated Other Total Preferred Stock Common Stock Paid-in Comprehensive Accumulated Stockholders’ Shares Amount Shares Amount Capital Income (Loss) Deficit Equity BALANCE—December 31, 2024 — $ — 13,734,160 $ 1 $ 388,213 $ 5 $ ( 373,095 ) $ 15,124 Stock-based compensation — — — — 2,501 — — 2,501 Issuance of common stock upon vesting of restricted stock units — — 838,656 — — — — — Taxes related to net share settlement of equity awards — — ( 396,662 ) — ( 333 ) — — ( 333 ) Issuance of common stock under the Common Stock Purchase Agreements — — 4,514,023 1 7,815 — — 7,816 Transaction costs related to the Common Stock Purchase Agreements — — — — ( 95 ) — — ( 95 ) Other comprehensive income, net of tax — — — — — 1 — 1 Net loss — — — — — — ( 8,016 ) ( 8,016 ) BALANCE—March 31, 2025 — $ — 18,690,177 $ 2 $ 398,101 $ 6 $ ( 381,111 ) $ 16,998 Stock-based compensation — — — — 1,160 — — 1,160 Issuance of common stock upon vesting of restricted stock units — — 126,766 — — — — — Taxes related to net share settlement of equity awards — — ( 44,536 ) — ( 31 ) — — ( 31 ) Issuance of common stock under the Common Stock Purchase Agreements — — 508,003 — 581 — — 581 Transaction costs related to the Common Stock Purchase Agreements — — — — ( 18 ) — — ( 18 ) Conversions of convertible note into common stock 1,184,549 — 716 716 Issuance of common stock through Employee Stock Purchase Plan — — 85,307 — 52 — — 52 Other comprehensive loss, net of tax — — — — — ( 6 ) — ( 6 ) Net loss — — — — — — ( 9,270 ) ( 9,270 ) BALANCE—June 30, 2025 — $ — 20,550,266 $ 2 $ 400,561 $ — $ ( 390,381 ) $ 10,182 Stock-based compensation — — — — 1,071 — — 1,071 Issuance of common stock upon vesting of restricted stock units — — 141,618 — — — — — Taxes related to net share settlement of equity awards — — ( 53,024 ) — ( 135 ) — — ( 135 ) Issuance of common stock under Common Stock Purchase Agreements — — 19,160,596 2 70,910 — — 70,912 Transaction costs related to the Common Stock Purchase Agreements — — — — ( 989 ) — — ( 989 ) Conversions of convertible note into common stock — — 1,171,951 — 1,769 — — 1,769 Issuance of common stock through exercise of convertible note warrant — — 805,263 — 4,716 — — 4,716 Other comprehensive loss, net of tax — — — — — ( 4 ) — ( 4 ) Net loss — — — — — — ( 9,330 ) ( 9,330 ) BALANCE—September 30, 2025 — $ — 41,776,670 $ 4 $ 477,903 $ ( 4 ) $ ( 399,711 ) $ 78,192 6 Table of Contents Additional Accumulated Other Total Preferred Stock Common Stock Paid-in Comprehensive Accumulated Stockholders’ Shares Amount Shares Amount Capital Income (Loss) Deficit Equity BALANCE—December 31, 2023 — $ — 6,310,090 $ 1 $ 366,647 $ 10 $ ( 337,635 ) $ 29,023 Stock-based compensation — — — — 3,014 — — 3,014 Issuance of common stock upon vesting of restricted stock units — — 98,623 — — — — — Taxes related to net share settlement of equity awards — — ( 34,694 ) — ( 45 ) — — ( 45 ) Issuance of common stock under the Common Stock Purchase Agreement — — 129,000 — 165 — — 165 Other comprehensive loss, net of tax — — — — — ( 14 ) — ( 14 ) Net loss — — — — — — ( 10,219 ) ( 10,219 ) BALANCE—March 31, 2024 — $ — 6,503,019 $ 1 $ 369,781 $ ( 4 ) $ ( 347,854 ) $ 21,924 Stock-based compensation — — — — 1,740 — — 1,740 Issuance of common stock upon exercise of stock options — — 44,255 — 134 — — 134 Issuance of common stock upon vesting of restricted stock units — — 167,143 — — — — — Taxes related to net share settlement of equity awards — — ( 1,292 ) — ( 2 ) — — ( 2 ) Issuance of common stock under the Common Stock Purchase Agreements — — 1,693,929 — 5,395 — — 5,395 Stock issuance costs related to Common Stock Purchase Agreements — — — — ( 416 ) — — ( 416 ) Issuance of common stock through Employee Stock Purchase Plan — — 30,679 — 26 — — 26 Other comprehensive loss, net of tax — — — — — ( 4 ) — ( 4 ) Net loss — — — — — — ( 7,987 ) ( 7,987 ) BALANCE—June 30, 2024 — $ — 8,437,733 $ 1 $ 376,658 $ ( 8 ) $ ( 355,841 ) $ 20,810 Stock-based compensation — — — — 2,248 — — 2,248 Issuance of common stock upon vesting of restricted stock units — — 146,463 — — — — — Taxes related to net share settlement of equity awards — — ( 53,767 ) — ( 66 ) — — ( 66 ) Issuance of common stock under the Common Stock Purchase Agreement — — 410,513 — 585 — — 585 Other comprehensive income, net of tax — — — — — 35 — 35 Net loss — — — — — — ( 8,706 ) ( 8,706 ) BALANCE—September 30, 2024 — $ — 8,940,942 $ 1 $ 379,425 $ 27 $ ( 364,547 ) $ 14,906 The accompanying notes are an integral part of these condensed consolidated financial statements. 7 Table of Contents AEYE, INC. CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (In thousands) (Unaudited) Nine months ended September 30, 2025 2024 CASH FLOWS FROM OPERATING ACTIVITIES: Net loss $ ( 26,616 ) $ ( 26,912 ) Adjustments to reconcile net loss to net cash used in operating activities: Depreciation and amortization 113 80 Gain on sale of property and equipment, net — ( 12 ) Noncash lease expense relating to operating lease right-of-use assets 157 905 Gain on termination of operating lease, net ( 1,014 ) ( 680 ) Common stock purchase agreement costs 325 1,136 Debt issuance costs 2,020 — Gain on extinguishment of warrant ( 64 ) — Inventory write-downs, net of scrapped inventory 24 167 Change in fair value of convertible note and warrant liabilities 2,123 4 Stock-based compensation 4,732 7,002 Amortization of premiums and accretion of discounts on marketable securities, net of change in accrued interest ( 180 ) ( 491 ) Expected credit losses, net of write-off 2 35 Changes in operating assets and liabilities: Accounts receivable, net ( 47 ) 20 Inventories, current and noncurrent, net ( 523 ) 157 Prepaid and other current assets 92 1,035 Other noncurrent assets 187 123 Accounts payable 800 275 Accrued expenses and other current liabilities ( 804 ) ( 3,411 ) Operating lease liabilities ( 1,574 ) ( 936 ) Contract liabilities — 35 Other noncurrent liabilities — ( 346 ) Net cash used in operating activities ( 20,247 ) ( 21,814 ) CASH FLOWS FROM INVESTING ACTIVITIES: Purchases of property and equipment ( 52 ) ( 420 ) Proceeds from sale of property and equipment — 45 Purchases of marketable securities ( 44,989 ) ( 24,241 ) Proceeds from redemptions and maturities of marketable securities 15,874 27,756 Net cash (used in) provided by investing activities ( 29,167 ) 3,140 CASH FLOWS FROM FINANCING ACTIVITIES: Proceeds from exercise of stock options — 134 Proceeds from issuance of convertible note 2,950 146 Payments for convertible note redemptions ( 989 ) — Transaction costs related to issuance of convertible note ( 658 ) — Proceeds from issuance of common stock under Common Stock Purchase Agreements 80,988 5,863 Stock issuance costs related to Common Stock Purchase Agreements ( 1,449 ) ( 613 ) Taxes paid related to the net share settlement of equity awards ( 499 ) ( 113 ) Proceeds from exercise of warrant 1,788 — Proceeds from issuance of common stock through the Employee Stock Purchase Plan 52 26 Net cash provided by financing activities 82,183 5,443 NET INCREASE (DECREASE) IN CASH, CASH EQUIVALENTS AND RESTRICTED CASH 32,769 ( 13,231 ) CASH, CASH EQUIVALENTS AND RESTRICTED CASH—Beginning of period 10,266 19,082 CASH, CASH EQUIVALENTS AND RESTRICTED CASH—End of period $ 43,035 $ 5,851 SUPPLEMENTAL CASH FLOW INFORMATION: Cash paid for income taxes, net of refund $ 36 $ ( 2 ) Cash paid for interest — — SUPPLEMENTAL DISCLOSURE OF NONCASH INVESTING AND FINANCING ACTIVITIES: Noncash debt issuance costs $ 1,362 $ — Stock issuance costs included in accounts payable and accrued liabilities 176 657 Purchases of property and equipment included in accounts payable and accrued liabilities 5 42 Operating lease liabilities extinguished upon termination of lease — 16,325 Operating lease right-of-use asset derecognized upon termination of lease — 10,371 Operating lease right-of-use assets obtained in exchange for lease obligations — 753 Stock issuance costs through issuance of common stock — 282 The accompanying notes are an integral part of these condensed consolidated financial statements. 8 Table of Contents AEYE, INC. NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (in thousands, except share and per share data or otherwise stated) 1. ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AEye, Inc. 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 ("ADAS"), and robotic vision applications. AEye’s 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 Intelligent Sensing Platform captures more information with less data, facilitating faster, more accurate, and more reliable perception of the environment. AEye, formerly known as CF Finance Acquisition Corp. III, (“CF III”), was originally incorporated in Delaware on March 15, 2016 under the name CF SPAC Re Inc. 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 of 1934, 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. and its wholly owned subsidiaries. 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 (“GAAP”) for interim financial statements and pursuant to the rules and regulations of the Securities and Exchange Commission. Accordingly, they do not 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 included in the Company's Annual Report on Form 10 -K for the year ended December 31, 2024 . Reclassification of Prior Period Presentation Certain prior year amounts have been reclassified for consistency with the current year presentation. 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. 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 AEye, Inc. and its wholly owned subsidiaries. All intercompany balances and transactions have been eliminated in consolidation. 9 Table of Contents The Company has funded its operations primarily through the issuances of common stock. Since its inception, the Company has incurred net losses and negative cash flows from operations and expects to incur additional operating losses and negative operating cash flows as management continues to focus on achieving commercialization of its lidar solutions and execute on its strategic initiatives. As of September 30, 2025 , the Company’s existing sources of liquidity included cash, cash equivalents, and marketable securities of $ 84,333 . Management believes that the Company has sufficient financial resources to fund operations and meet its capital requirements and anticipated obligations as they come due in the next twelve months from the date of issuance of these condensed consolidated financial statements. 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 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 does not require collateral. 10 Table of Contents Recent Accounting Pronouncements In December 2023, the Financial Accounting Standards Board (“FASB”), issued Accounting Standards Update (“ASU”) 2023 - 09, Income Taxes (Topic 740 ) - 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 December 15, 2024. The Company is currently assessing the effect that the updated standard will have on its financial statement disclosures. In November 2024, 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. 2. FAIR VALUE MEASUREMENTS The fair value of the Company’s financial assets and liabilities is determined in accordance with the fair value hierarchy established in FASB ASC Topic 820, Fair Value Measurements and Disclosures (“ASC 820” ). ASC 820 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 ASC 820 requires an entity to maximize the use of observable inputs when measuring fair value and classifies those inputs into three levels: Level 1 —Observable inputs, such as quoted prices in active markets for identical assets or liabilities. Level 2 —Observable inputs, other than Level 1 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 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 the noncurrent convertible note. The carrying values of these financial instruments approximate their fair values. 11 Table of Contents 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, 2025 Using: Adjusted Cost Unrealized Gains (Losses) Fair Value Cash and Cash Equivalent Marketable Securities Assets Level 1 Money market funds $ 42,531 $ — $ 42,531 $ 42,531 $ — Level 2 Asset-backed securities 4,986 1 4,987 — $ 4,987 Corporate bonds 19,380 ( 2 ) 19,378 — 19,378 Commercial paper 7,453 ( 2 ) 7,451 — 7,451 U.S. Government securities 9,483 ( 1 ) 9,482 — 9,482 Total financial assets $ 83,833 $ ( 4 ) $ 83,829 $ 42,531 $ 41,298 Liabilities Level 2 Private placement warrant liability $ — $ — $ 1 $ — $ — Level 3 Convertible note, current — — 106 — — Derivative warrant liabilities — — 787 — — Total financial liabilities $ — $ — $ 894 $ — $ — Fair Value Measured as of December 31, 2024 Using: Adjusted Cost Unrealized Gains Fair Value Cash and Cash Equivalent Marketable Securities Assets Level 1 Money market funds $ 6,965 $ — $ 6,965 $ 6,965 $ — Level 2 Corporate bonds 9,660 4 9,664 — 9,664 Commercial paper 945 — 945 — 945 U.S. Government securities 1,402 1 1,403 — 1,403 Total financial assets $ 18,972 $ 5 $ 18,977 $ 6,965 $ 12,012 Liabilities Level 2 Private placement warrant liability $ — $ — $ — $ — $ — Level 3 Derivative warrant liability — — 26 — — Total financial liabilities $ — $ — $ 26 $ — $ — 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. 12 Table of Contents Marketable Securities : The Company holds financial assets consisting of fixed-income U.S. government agency securities, corporate bonds, commercial paper, and asset-backed securities. 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. 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 issued warrants as part of the 2022 Note. The warrants are recorded on the 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 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. 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. These warrants were cancelled on July 28, 2025. 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. These warrants were exercised in full on July 28, 2025. In August 2025, in connection with the lease settlement (see Note 5 for details of the settlement), 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 : The Private Placement Warrants are recorded on the condensed consolidated balance sheets at fair value. The fair value is based on observable Level 2 inputs, specifically, the observable input of the Company's public warrants, 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 the nine months ended September 30, 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 nine months ended September 30, 2025 (in thousands): Derivative Warrant Liabilities 2025 Note Total Balance at December 31, 2024 $ 26 $ — $ 26 Additions 1,945 3,266 5,211 Change in fair value included in other income (expense), net 1,809 314 2,123 Payments and conversions — ( 3,474 ) ( 3,474 ) Extinguishment and exercise ( 2,992 ) — ( 2,992 ) Balance at September 30, 2025 $ 788 $ 106 $ 894 13 Table of Contents The key inputs into the Black-Scholes model for the derivative warrant liability from the 2025 Note as of the exercise date of July 28, 2025 are as follows: July 28, 2025 Expected term (years) 3.9 Expected volatility 144.3 % Risk-free interest rate 3.9 % Dividend yield — % Exercise price $ 2.22 The key inputs into the Black-Scholes model for the derivative warrant issued as a result of the lease settlement valued at September 30, 2025 are as follows: September 30, 2025 Expected term (years) 4.9 Expected volatility 143.0 % Risk-free interest rate 3.7 % Dividend yield — % Exercise price $ 2.22 If factors or assumptions change, the estimated fair values could be materially different. 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. 3. INVENTORIES Inventory, net of write-downs, as of September 30, 2025 and December 31, 2024 were as follows (in thousands): September 30, 2025 December 31, 2024 (unaudited) Raw materials $ 448 $ 158 Work in-process 418 — Finished goods 18 18 Total inventory, net $ 884 $ 176 The Company also had $ 0 and $ 209 of noncurrent inventory (raw materials), net of write-downs, classified within other noncurrent assets on the condensed consolidated balance sheet as of September 30, 2025 and December 31, 2024 , respectively. The Company’s current and noncurrent inventory as of September 30, 2025 and December 31, 2024 was written down by $ 4,607 and $ 4,659 , respectively, in order to reduce inventory to the lower of cost or net realizable value. 4. PREPAID AND OTHER CURRENT ASSETS Prepaid and other current assets as of September 30, 2025 and December 31, 2024 were as follows (in thousands): September 30, 2025 December 31, 2024 (unaudited) Prepaid expenses $ 871 $ 966 Receivable for issuance of common stock — 1,679 Other 64 61 Total prepaid and other current assets $ 935 $ 2,706 14 Table of Contents The Company’s advances to suppliers as of September 30, 2025 and December 31, 2024 had been previously written down by $ 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. 5. LEASES The Company leases office facilities in Northern California under non-cancelable operating leases. In July 2024, the Company entered into two new long-term leases, one of which the Company uses as its headquarters. In August 2024 , one of the Company's existing leases, originally set to expire on November 30, 2026 , was terminated early. In conjunction with the early termination, the Company recorded a net gain of $ 491 on termination of the operating lease during the year ended December 31, 2024 . The net gain included a gain of $ 5,954 , comprised of a $ 16,325 net liability reduction, partially offset by a $ 10,371 decrease in its remaining right of use asset. Additionally, in accordance with terms in the lease agreement and based on certain assumptions, the Company recorded a lease termination loss of $ 5,463 , representing estimated unpaid rent for the remaining term. The net gain was recorded in general and administrative expenses in the condensed consolidated statement of operations and comprehensive loss. The lease termination liability was reduced by the draw-down of the $ 2,150 letter of credit by the landlord in August 2024 ; the remaining 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 paid $ 1,400 in cash and has issued a warrant to purchase up to 350,000 shares of the Company's common stock at an exercise price of $ 2.22 per share with an estimated fair value of $ 899 on the date of issuance. The Company recorded a net gain on termination of operating lease of $ 1,014 during the nine months ended September 30, 2025. See Note 17, Commitments and Contingencies, for further discussion. The components of operating lease expenses, excluding the loss (gain) on early termination of operating lease, for the nine months ended September 30, 2025 and 2024 , are as follows (in thousands): Three months ended September 30, Nine months ended September 30, 2025 2024 2025 2024 Operating lease cost $ 74 $ 264 $ 215 $ 1,435 Variable lease cost 4 32 12 201 Total operating lease cost $ 78 $ 296 $ 227 $ 1,636 Maturities of lease liabilities are as follows (in thousands): Operating leases Years ending - December 31: (unaudited) 2025 (remaining three months) $ 70 2026 283 2027 258 Total lease payments 611 Less amount to discount to present value ( 39 ) Present value of lease liabilities $ 572 15 Table of Contents 6. ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES Accrued expenses and other current liabilities as of September 30, 2025 and December 31, 2024 are as follows (in thousands): September 30, 2025 December 31, 2024 (unaudited) Lease termination liability $ — $ 3,313 Accrued payroll 380 347 Operating lease liabilities 273 267 Accrued payroll taxes 96 159 Accrued bonuses 1,961 2,875 Accrued other 798 748 Total accrued expenses and other current liabilities $ 3,508 $ 7,709 7. CONVERTIBLE NOTES 2024 Promissory Note On May 10, 2024 , the Company entered into a Securities Purchase Agreement with an investor for the sale and issuance of 330,823 shares of common stock and a 5 -year promissory note with a principal balance of $ 146 ( “May 2024 Note”) for total gross cash proceeds of $ 1,000 . The May 2024 Note bears interest at an annual rate equal to the Secured Overnight Financing Rate plus 1.0 %, which is compounded quarterly in arrears, and has a maturity date of June 4, 2029 . At maturity, the principal balance and accrued, unpaid and uncapitalized interest can be settled in cash, shares of common stock based on the closing price of the common stock as of the immediately preceding trading day, or any combination of the foregoing at the option of the investor.  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 2025 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 2025 Note. Monthly redemptions began in April 2025 and were due on the first of each subsequent month (each a "Monthly Redemption Date" or an "Installment Date"). The Company was required to redeem the Monthly Redemption Amount until the 2025 Note was fully redeemed, paid in cash or, so long as certain equity conditions are met, shares of our Common Stock. The equity conditions that must be met in order for the Company to settle the Monthly Redemption Amount in Common Stock 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, not exceeding five times, to accelerate up to one Monthly Installment Amount, 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. 16 Table of Contents 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 cost 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. During the nine months ended September 30, 2025 , the Company made cash payments of $ 989 . Additionally, $ 2,485 in aggregate principal and interest were converted into 2,356,500 shares of common stock. As of September 30, 2025 , the 2025 Note has an outstanding principal balance and accrued interest of $ 106 and is recorded as a current liability at fair value of $ 106 . 8. INTEREST EXPENSE AND OTHER Interest expense and other for the nine months ended September 30, 2025 and 2024 consisted of the following (in thousands): Three months ended September 30, Nine months ended September 30, 2025 2024 2025 2024 Common stock purchase agreements costs $ 19 $ 1,136 $ 325 $ 1,136 Debt issuance costs — — 2,020 $ — Amortization of premiums (accretion of discounts) on marketable securities, net ( 79 ) ( 149 ) ( 260 ) ( 590 ) Expected credit losses — 1 2 35 Other 5 114 331 148 Interest expense and other $ ( 55 ) $ 1,102 $ 2,418 $ 729 17 Table of Contents 9. STOCKHOLDERS' EQUITY New Circle Principal Investments LLC ( “ New Circle ” ) Common Stock Purchase Agreement (the “ CSPA ” ) On July 25, 2024 , the Company entered into a CSPA and a Registration Rights Agreement with New Circle. Under the terms and subject to the conditions of the CSPA, the Company has the right, but not the obligation, to sell to New Circle, and New Circle is obligated to purchase up to the lesser of (i) $ 50,000 of the Company’s common stock, or (ii) the Exchange Cap equal to 1,721,755 shares of the Company's common stock, unless the Company’s stockholders approve the issuance of shares in excess of the Exchange Cap, or the average price of all applicable sales of common stock to New Circle equals or exceeds $1.41 per share. The Company has sole discretion to initiate such sales of common stock over a period of 36 months. In all instances, the Company may not sell shares of its common stock to New Circle under the CSPA if doing so would result in New Circle beneficially owning more than 4.99 % of the Company's common stock. The purchase price per share to be purchased by New Circle shall equal either (i) the lowest volume-weighted average price for common stock over a one -day trading period or intraday trading period on the applicable purchase date multiplied by 96.5 %, or (ii) the volume-weighted average price for common stock for the three consecutive trading days commencing on the purchase notice date multiplied by 97.5 %. The maximum number of shares the Company may sell to New Circle on any single business day is the lesser of (i) the number of shares equal to 100.0 % of the average daily trading volume of the common stock of the Company during the five trading days immediately preceding the purchase notice, and (ii) 400,000 shares of common stock. In connection with the CSPA, the Company issued to New Circle 225,563 shares of common stock in the Company as commitment shares for the facility. At issuance, the 225,563 shares of common stock had a fair value of $ 282 . 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 . The Company has issued 8,980,713 shares of its common stock to New Circle under the CSPA for gross proceeds totaling $ 27,754 through September 30, 2025 . 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 original ATM Agreement, the Company had been allowed to issue and sell through AGP the Company’s common stock having an aggregate offering price of up to $ 2,600 ("Placement Shares") from time to time through an "at-the-market" equity offering program. In July 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 to a new aggregate value offering of up to $ 75,000 . The Company has sole discretion to initiate such sales of common stock over a period of 36 months. Under the terms and subject to the conditions of the ATM Agreement, the Company will set the parameters for the sale of shares, including the number or dollar amount of Placement Shares to be issued, the time period during which sales are requested to be made, any limitation on the number or dollar amount of Placement Shares that may be sold in any one trading day and any minimum price below which sales may not be made. The Company will pay a cash commission rate of up to 3.0 % of the gross proceeds from the sale of Placement Shares sold pursuant to the ATM Agreement. The Company has sold 20,056,239 shares under the ATM Agreement for gross proceeds totaling $ 58,462 through September 30, 2025 . 18 Table of Contents 10. ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS) The changes in accumulated other comprehensive income (loss) by component for the nine months ended September 30, 2025 and 2024 are as follows (in thousands): Unrealized gains (losses) on available-for-sale securities Balance at December 31, 2024 $ 5 Other comprehensive income (loss), net of tax 1 Balance at March 31, 2025 $ 6 Other comprehensive income (loss), net of tax ( 6 ) Balance at June 30, 2025 $ — Other comprehensive income (loss), net of tax ( 4 ) Balance at September 30, 2025 $ ( 4 ) Unrealized gains (losses) on available-for-sale securities Balance at December 31, 2023 $ 10 Other comprehensive income (loss), net of tax ( 14 ) Balance at March 31, 2024 $ ( 4 ) Other comprehensive income (loss), net of tax ( 4 ) Balance at June 30, 2024 $ ( 8 ) Other comprehensive income (loss), net of tax 35 Balance at September 30, 2024 $ 27 11. 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, 2025 2024 2025 2024 Numerator: Net loss attributable to common stockholders $ ( 9,330 ) $ ( 8,706 ) $ ( 26,616 ) $ ( 26,912 ) Denominator: Weighted average common shares outstanding - Basic 31,262,997 8,629,683 19,880,145 6,892,910 Weighted average common shares outstanding - Diluted 31,262,997 8,629,683 19,880,145 6,892,910 Net loss per share attributable to common stockholders - Basic and Diluted $ ( 0.30 ) $ ( 1.01 ) $ ( 1.34 ) $ ( 3.90 ) 19 Table of Contents Due to net losses for the nine months ended September 30, 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, 2025 2024 Common stock options issued and outstanding 123,046 143,683 Unvested restricted stock units 656,435 540,996 Warrants 611,110 319,443 Common Stock Purchase Agreements 22,660,946 27,045,121 Conversion of convertible note 112,343 131,196 ESPP 62,096 71,565 Total 24,225,976 28,252,004 12. 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, 2025 and 2024 (in thousands): Three months ended September 30, Nine months ended September 30, 2025 2024 2025 2024 Research and development $ 201 $ 926 $ 1,212 $ 2,634 Sales and marketing 79 37 334 222 General and administrative 791 1,285 3,186 4,146 Total stock-based compensation $ 1,071 $ 2,248 $ 4,732 $ 7,002 13. 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 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. 14. REVENUE Sale of Prototypes The Company recorded revenue for prototype sales of $ 41 and $ 63 in the three and nine months ended September 30, 2025 , respectively, and $ 65 and $ 91 in the three and nine months ended September 30, 2024 , respectively. The Company does not incur significant contract costs in fulfilling or obtaining its contracts with customers. 20 Table of Contents D evelopment Contracts The Company has entered into research and development contracts as well as a sales, marketing and technical support services contract with companies in both the Automotive and in Non-Automotive markets. The Company assessed the number of performance obligations associated with the promises under each agreement and recognized $ 9 and $ 73 in revenue for performance obligations that had been satisfied as of the three and nine months ended September 30, 2025 , respectively, and $ 39 and $ 65 during the three and nine months ended September 30, 2024 in the condensed consolidated statements of operations and comprehensive loss. Disaggregation of Revenue The Company recognized the following revenues by geographic area based on the primary billing address of the customer and by the timing of the transfer of goods or services to customers (point in time or over time), as it believes such criteria best depict how the nature, amount, timing, and uncertainty of its revenue and cash flows are affected by economic factors. Total revenue based on the disaggregation criteria described above is as follows (in thousands): Three months ended September 30, Nine months ended September 30, 2025 2024 2025 2024 Revenue by primary geographical market: United States $ 43 $ 39 $ 48 $ 80 Europe 1 65 66 76 Asia-Pacific 6 — 22 — Total $ 50 $ 104 $ 136 $ 156 Revenue by timing of recognition: Recognized at a point in time $ 41 $ 65 $ 63 $ 91 Recognized over time 9 39 73 65 Total $ 50 $ 104 $ 136 $ 156 Contract Liabilities The Company had $ 0 and $ 35 in contract liabilities balance as of September 30, 2025 and 2024. There were no remaining performance obligations as of September 30, 2025 and December 31, 2024. 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 does not include contracts where the customer is not committed. The customer is not considered committed where they are able to terminate for convenience without payment of a substantive penalty under the contract. The Company has not disclosed the value of unsatisfied performance obligations for contracts with an original expected length of one year or less. The contract liabilities balance represents the remaining performance obligations for contracts with an original duration of greater than one year. 15. RESTRUCTURING 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, 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 further discussion regarding the settlement of the lease termination liability. 21 Table of Contents Restructuring charges are summarized as follows for the nine months ended September 30, 2025 (in thousands): Losses on purchase commitments Lease Termination Liability Other Total Balance as of December 31, 2024 $ 297 $ 3,313 $ 5 $ 3,615 Adjustments — ( 1,014 ) — ( 1,014 ) Cash payments ( 30 ) ( 1,400 ) — ( 1,430 ) Issuance of warrants — ( 899 ) — ( 899 ) Balance as of September 30, 2025 $ 267 $ — $ 5 $ 272 16. INCOME TAXES For the nine months ended September 30, 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. 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. 17. COMMITMENTS AND CONTINGENCIES Legal matters The Company may be subject to legal proceedings and claims that arise in the ordinary course of business. Litigation can be expensive and disruptive to normal business operations. Moreover, the results of complex legal proceedings are difficult to predict and the Company’s view of these matters may change in the future as the litigation and events related thereto unfold. The Company expenses legal fees as incurred. The Company records a provision for contingent losses when it is both probable that a liability has been incurred and the amount of the loss can be reasonably estimated. In 2025, the Company was notified by a former vendor that it intended to pursue a claim against the Company’s wholly owned subsidiary, AEye Technologies, Inc., arising out of an agreement entered into in May 2020, in which the former vendor alleges that AEye Technologies, Inc. failed to pay approximately $ 3,300 plus interest from the date the former vendor alleges such payments were due. AEye Technologies, Inc. has, and continues to dispute the total amount owed based, in part, on AEye Technologies, Inc.’s claim that the products supplied by the former vendor were largely defective and such former vendor was repeatedly made aware of the existence of such defects. In 2024, the Company was purportedly served with a complaint that ( 1 ) alleged 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 ) provided 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. 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 paid $ 1,400 in cash in May 2025 and issued warrants to purchase up to 350,000 shares of common stock at an exercise price of $ 2.22 per share in August 2025. 18. SUBSEQUENT EVENTS Subsequent to September 30, 2025, the Company issued 3,164,545 shares of its common stock under the CSPA for total gross proceeds of $ 9,974 . 22 Table of Contents Item 2. Management ’ s Discussion and Analysis of Financial Condition and Results of Operations This Management ’ s Discussion and Analysis of Financial Condition and Results of Operations contains forward-looking statements that are based on current expectations, estimates, assumptions, and projections about our industry, business, and future financial results. Our actual results and the timing of events may differ materially from those described in or implied by these forward-looking statements due to a number of factors, including those discussed below and those set forth under in Part II, Item 1A, of this Quarterly Report under the heading “ Risk Factors ” and other filings we make with the SEC from time to time. Unless the context otherwise requires, references in this Management ’ s Discussion and Analysis of Financial Condition and Results of Operations to “ we, ” “ our, ” “ us, ” and “ AEye, ” refer to the business and operations of AEye, Inc. Overview 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 nine months ended September 30, 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. Key Factors Affecting Our Operating Results We believe that our future performance and success depends, to a substantial extent, on our ability to capitalize on the opportunities described herein, which in turn are subject to significant risks and challenges, including those discussed below and the information described in Part II, Item 1A, of this Quarterly Report under the heading “Risk Factors”. We are subject to those risks common in the technology industry and also those risks common to early stage companies including, but not limited to: • the possibility of not being able to successfully develop or commercialize our products; • 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; • maintain and enhance the value of our reputation and brand; • hire, integrate, and retain talented people at all levels of our organization; and • successfully develop new solutions to enhance the experience of, and deliver value to, our customers. 23 Table of Contents Market Trends and Uncertainties We anticipate growing demand for our Intelligent Sensing Platform across our two major markets, Automotive and Non-Automotive, and 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, airport safety and security, perimeter monitoring, aerospace and defense, transportation logistics, 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, 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 held by our Tier 1 partners. 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. Partnerships and Commercialization 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. The time to achieve a design win varies based on the market and application. 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 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 us to sell into 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 an expansion of this relationship and an investment from a leading global institutional investor to fund a dedicated production line for Apollo, with capacity to produce up to 60,000 units annually. We are seeing an inflection point in customer demand, and this expansion ensures we can meet that growth head-on. This partnership enables us to leverage LITEON’s manufacturing expertise to produce high-quality products 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 Accelight Technologies, Inc. ("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. 24 Table of Contents In July 2025, we announced the integration of our lidar technology into Nvidia’s DRIVE AGX Orin platform, which we believe represents a significant milestone in expanding our reach within the automotive ecosystem. This integration is expected to open new opportunities to engage with global automotive OEMs and Tier 1 suppliers as they adopt Nvidia’s autonomous driving solutions. In addition, we continue to demonstrate significant advances in the high-speed and long-range detection performance of our lidar systems, which we believe positions us well for future integration with Nvidia’s Hyperion platform. Given these engagements are relatively recent, there is no guarantee that these endeavors will be successful. In July 2025, we launched OPTIS™, a complete physical AI solution designed to modernize legacy infrastructure and deliver actionable intelligence across diverse industries. OPTIS™ integrates our software-defined Apollo LiDAR technology with advanced computing to bridge the gap between perception and real-time action. Beyond addressing critical needs in transportation, safety, and security, OPTIS™ opens our platform to third-party partners and developers, creating an ecosystem for innovation and growth beyond automotive applications. Since launch, we’ve transitioned OPTIS™ from concept to a structured offering, with initial deployments already completed. Recent additions to our partner network include Black Sesame Technologies, BlueBand, and Flasheye. 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. Gross Margin 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 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 be more cost competitive in other markets. To date, we have primarily generated revenue through development contracts with OEMs and Tier 1 suppliers, as well as sales of our products to Non-Automotive customers. These contracts primarily focus on customization of our product's 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, contracts that require more complex configurations have higher prices. Investment and Innovation 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 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, our next generation lidar sensor. 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 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 kilometer, Apollo is poised to be a key player in advancing vehicle safety and autonomy, as well as smart infrastructure and logistics applications. Building on this foundation, we launched OPTIS™ in July 2025, a complete physical AI solution that extends our capabilities beyond automotive. OPTIS™ combines Apollo’s software-defined LiDAR with advanced computing to deliver actionable intelligence for modernizing legacy infrastructure. This platform not only addresses critical needs in transportation, safety, and security but also opens our ecosystem to third-party partners and developers, fostering innovation across industries. Since launch, OPTIS™ has moved from concept to structured offering, with initial deployments completed and new partners such as Black Sesame Technologies, BlueBand, and Flasheye joining our network. 25 Table of Contents We believe our financial performance is significantly dependent on our ability to maintain a technology leadership position. This is further dependent on the investments we make in research and development and our ability to commercialize our products. We believe price is becoming a critical differentiator in the marketplace and OEMs are favoring companies that have the infrastructure to build lower cost products at higher volumes. It is essential that we continually identify and respond to rapidly evolving customer requirements, develop and introduce innovative new products, enhance and service existing products, lower the bill of materials, or BOM, industrialize the manufacturing process, and generate strong market demand for our products. If we fail to do this, our market position and revenue may be adversely affected, and our investments in that area will not be recovered. Basis of Presentation We currently conduct our business through one operating segment. Components of Results of Operations Total Revenues Our prototype sales revenue primarily relates to unit sales of our lidar products. Revenue from prototype sales is typically recognized at a point in time when the control of the goods is transferred to the customer, generally upon delivery of or shipment to the customer. Revenue from development and/or collaboration contracts are earned from R&D activities and collaboration with OEMs and Tier 1 suppliers. These contracts primarily focus on customization of our product's capabilities to our customers’ applications, typically involving software implementation to assist with sensor connection and control, customization of scan patterns, and enhancement of perception capabilities to meet specific customer needs. Revenue from development contracts is recognized when we satisfy performance obligations in the contract, which can result in recognition at either a point in time or over time. This assessment is made at the outset of the arrangement for each performance obligation. We are seeing strong, renewed interest in Apollo from non-automotive customers across multiple industries and are actively advancing these opportunities, which typically have shorter cycle times as compared to automotive customers. Proof-of-concept deployments are validating our technology in real-world scenarios, creating a solid foundation for future growth. While customer evaluation and testing cycles are typically extended, these engagements position us well for gradual revenue contributions and set the stage for meaningful expansion. We view this as the first step in a disciplined growth roadmap designed to unlock adoption and scale with confidence. Cost of Revenue Cost of revenue includes the costs directly associated with the production of prototypes and certain costs associated with development contracts. Such costs for prototypes include direct materials, costs of the contract manufacturer, direct labor, indirect labor, inventory write downs, losses on purchase commitments, warranty expense, and allocation of overhead. Costs associated with development contracts include the direct costs and allocation of overhead costs involved in the execution of the contracts. Operating Expenses Research and Development Our research and development ("R&D"), efforts are focused primarily on hardware, software, and system engineering related to the design and development of our advanced lidar solutions. R&D expenses include: • personnel-related expenses, including salaries, benefits, bonuses, one-time termination benefits, and stock-based compensation expense, net of allocations to other departments; • third-party engineering and contractor costs; • lab equipment; • engineering parts and test units; • new hardware and software expenses; and • allocated personnel and overhead expenses. R&D costs are expensed as they are incurred. We expect our R&D costs to increase as we continue to invest in the development and commercialization of our products. 26 Table of Contents Sales and Marketing Our sales and marketing ("S&M"), efforts are focused primarily on sales, business development, and marketing programs in pursuit of revenue contracts from potential and existing customers. S&M expenses include: • personnel-related expenses, including salaries, benefits, bonuses, one-time termination benefits, and stock-based compensation expense; • demonstration equipment; • trade shows expenses, advertising, and promotions expenses for press releases and other public relations services; and • 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 Our general and administrative ("G&A"), spending supports all business functions. G&A expenses include: • personnel-related costs, including salaries, benefits, bonuses, one-time termination benefits, and stock-based compensation expense for executive, finance, legal, operations, human resources, technical support, and other administrative personnel, net of allocations to other departments; • consulting, accounting, audit, legal, and other professional fees; • insurance premiums, software and computer equipment costs, general office expenses; and • allocated overhead expenses. We expect our G&A expenses to increase to support growth as we pursue Non-Automotive opportunities and as we continue to develop and commercialize our products. Change in Fair Value of Convertible Note and Warrant Liabilities 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. We also elected to record interest expense on the 2025 Note as changes in fair value. We expect the change in fair value of the convertible note to decrease in future periods, reflecting the lower outstanding balance as of September 30, 2025. In addition, we expect the change in fair value of warrant liabilities to decrease as the warrants associated with the 2022 Note were cancelled and the warrants associated with the 2025 Note were exercised in full. 27 Table of Contents Interest Income, Interest Expense and Other Interest income and other consists primarily of interest and investment income earned on our cash, cash equivalents, and marketable securities. These amounts will vary based on our cash, cash equivalents, and marketable securities balances and market rates. Interest income and other also includes gains on sale of property and equipment. Interest expense and other consists primarily of financing costs, and amortization of premiums and accretion of discounts on marketable securities, net. We expect interest income will increase due to higher cash, cash equivalents, and marketable securities balances. Results of Operations Comparison of the three months ended September 30, 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 three months ended September 30, 2025 and 2024 (in thousands, except for percentages): Three months ended September 30, Change Change 2025 2024 $ % Revenue $ 50 $ 104 $ (54 ) (52 )% Cost of revenue 103 306 (203 ) (66 )% Gross loss (53 ) (202 ) 149 (74 )% Research and development 3,061 3,767 (706 ) (19 )% Sales and marketing 631 74 557 NM General and administrative 4,080 3,803 277 7 % Total operating expenses 7,772 7,644 128 2 % Loss from operations (7,825 ) (7,846 ) 21 (0 )% Change in fair value of convertible note and warrant liabilities (2,210 ) 9 (2,219 ) NM Interest income and other 650 233 417 179 % Interest expense and other 55 (1,102 ) 1,157 NM Total other income (expense), net (1,505 ) (860 ) (645 ) 75 % Loss before income tax (9,330 ) (8,706 ) (624 ) (7 )% Provision for income tax — — — — % Net loss $ (9,330 ) $ (8,706 ) $ (624 ) (7 )% NM - not meaningful 28 Table of Contents Revenue Revenues decreased by $54, or 52%, to $50 for the three months ended September 30, 2025, from $104 for the three months ended September 30, 2024. This decrease is primarily due to lower contract development revenues in the current quarter and also due to higher unit sales of our legacy product in the three months ended September 30, 2024. Cost of Revenue Cost of revenue decreased by $203, or 66%, to $103 for the three months ended September 30, 2025, from $306 for the three months ended September 30, 2024. This decrease was primarily due to lower contract development costs in the current quarter; the decrease is also due to higher unit sales of our legacy product and inventory write-downs recorded in the three months ended September 30, 2024 related to certain legacy Non-Automotive components. Operating Expenses Research and Development Research and development expenses decreased by $706, or 19%, to $3,061 for the three months ended September 30, 2025, from $3,767 for the three months ended September 30, 2024. This decrease was primarily driven by decreases in stock-based compensation expense of $715 and allocated information technology and facilities expense of $225. The decreases were partially offset by an increase in personnel costs, net of allocations, of $262. Sales and Marketing Sales and marketing expenses increased by $557, to $631 for the three months ended September 30, 2025, from $74 for the three months ended September 30, 2024. This increase was primarily driven by increases in personnel costs, including allocations, of $484 and marketing spend of $86. General and Administrative General and administrative expenses increased by $277, or 7%, to $4,080 for the three months ended September 30, 2025, from $3,803 for the three months ended September 30, 2024. This increase was primarily driven by an increase in rent expense of $1,061, primarily resulting from the lease settlement expense of $598, attributable to an increase in the liability related to the fair value of the warrant issued in connection with the settlement, compared to a gain recorded in the three months ended September 30, 2024. This increase was partially offset by decreases in stock-based compensation and personnel costs, net of allocations, of $814. Change in Fair Value of Convertible Note and Warrant Liabilities Change in fair value of convertible note and warrant liabilities increased by $2,219 to an expense of $2,210 for the three months ended September 30, 2025, from a gain of $9 for the three months ended September 30, 2024. This increase was primarily due to the change in fair value of the 2025 Note and related warrants, which were newly issued in 2025, and also due to higher stock prices in the current quarter, resulting in a higher valuation of the warrant associated with the 2022 Note through the cancellation date in the current quarter. Interest Income and Other Interest income and other increased by $417, or 179%, to $650 for the three months ended September 30, 2025, from $233 for the three months ended September 30, 2024. This increase was primarily due to higher interest and investment income earned on our cash, cash equivalents, and marketable securities in the current period. Interest Expense and Other Interest expense and other decreased by $1,157, to a net income of $55 for the three months ended September 30, 2025, from a net expense of $1,102 for the three months ended September 30, 2024. This decrease was primarily due to a decrease in costs related to financing arrangements of $1,117 and lower foreign exchange losses of $110, partially offset by lower accretion of discount on marketable securities, net of $69. Provision for Income Tax Provision for income tax expenses remained constant at $0 for the three months ended September 30, 2025 and September 30, 2024. 29 Table of Contents Net Loss Net loss increased by $624, or 7%, to $9,330 for the three months ended September 30, 2025, from $8,706 for the three months ended September 30, 2024. This increase was primarily due to increased personnel costs and changes in fair value of convertible note and warrants, partially offset by decreases in stock-based compensation and facilities expenses. Results of Operations Comparison of the nine months ended September 30, 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, 2025 and 2024 (in thousands, except for percentages): Nine months ended September 30, Change Change 2025 2024 $ % Total revenue $ 136 $ 156 $ (20 ) (13 )% Cost of revenue 307 729 (422 ) (58 )% Gross loss (171 ) (573 ) 402 (70 )% Research and development 10,221 12,137 (1,916 ) (16 )% Sales and marketing 1,615 482 1,133 235 % General and administrative 11,323 13,641 (2,318 ) (17 )% Total operating expenses 23,159 26,260 (3,101 ) (12 )% Loss from operations (23,330 ) (26,833 ) 3,503 13 % Change in fair value of convertible note and warrant liabilities (2,123 ) (4 ) (2,119 ) NM Interest income and other 1,257 656 601 92 % Interest expense and other (2,418 ) (729 ) (1,689 ) (232 )% Total other income (expense), net (3,284 ) (77 ) (3,207 ) NM Loss before income tax (26,614 ) (26,910 ) 296 (1 )% Provision for income tax 2 2 — — % Net loss $ (26,616 ) $ (26,912 ) $ 296 (1 )% NM - not meaningful Revenue Revenues decreased by $20, or 13%, to $136 for the nine months ended September 30, 2025, from $156 for the nine months ended September 30, 2024. This decrease is primarily due to higher unit sales of our legacy product in the prior year, partially offset by higher contract development revenues. Cost of Revenue Cost of revenue decreased by $422, or 58%, to $307 for the nine months ended September 30, 2025, from $729 for the nine months ended September 30, 2024. This decrease was primarily due to inventory write-downs and losses on purchase commitments recorded in the nine months ended September 30, 2024, resulting from implementation of our strategic plan to wind down support for our legacy Non-Automotive product. Operating Expenses Research and Development Research and development expenses decreased by $1,916, or 16% to $10,221 for the nine months ended September 30, 2025, from $12,137 for the nine months ended September 30, 2024. This decrease was primarily driven by decreases in stock-based compensation expense of $1,381, and allocated information technology and facilities expense of $1,118. The decreases were offset by a $400 increase in fees paid to third parties for development work and engineering parts and lab equipment expenses. 30 Table of Contents Sales and Marketing Sales and marketing expenses increased by $1,133, or 235% to $1,615 for the nine months ended September 30, 2025, from $482 for the nine months ended September 30, 2024. This increase was primarily driven by increases in allocated personnel of $1,262 and marketing and consultant spend of $171 as we pursue Non-Automotive opportunities. These increases were partially offset by a $329 decrease in stock-based compensation and allocated information technology and facilities expense. General and Administrative General and administrative expenses decreased by $2,318, or 17%, to $11,323 for the nine months ended September 30, 2025, from $13,641 for the nine months ended September 30, 2024. This decrease was primarily due to a decrease in rent expense of $1,730, primarily due to the net gain recorded for the lease settlement in the nine months ended September 30, 2025 and reduced rent expense as a result of leasing smaller facilities. The decrease is also due to lower stock-based compensation and personnel cost, net of allocations, of $2,016. These decreases were partially offset by an increase in accounting, legal, and professional fees of $681 and lower facilities and IT allocations of $1,137. Change in Fair Value of Convertible Note and Warrant Liabilities Change in fair value of convertible note and warrant liabilities increased by $2,119 to a $2,123 expense for the nine months ended September 30, 2025, from a net gain of $4 for the nine months ended September 30, 2024. This increase was primarily due to the change in fair value of the 2025 Note and related warrants, which were newly issued in 2025. Interest Income and Other Interest income and other increased by $601 or 92%, to $1,257 for the nine months ended September 30, 2025, from $656 for the nine months ended September 30, 2024. This increase was primarily due to insurance proceeds received of $250 and higher interest earned on cash, cash equivalents, and marketable securities in the current period. Interest Expense and Other Interest expense and other increased by $1,689, or 232%, to $2,418 for the nine months ended September 30, 2025, from $729 for the nine months ended September 30, 2024. This increase was primarily due to an increase in costs related to financing arrangements in the current period and a decrease in accretion of discounts on marketable securities, net. Provision for Income Tax Provision for income tax expenses remained constant at $2 for the nine months ended September 30, 2025 and September 30, 2024. Net Loss Net loss decreased by $296, or 1% to $26,616 for the nine months ended September 30, 2025, from $26,912 for the nine months ended September 30, 2024. This decrease was primarily due to decreases in stock-based compensation, personnel and facilities expenses, partially offset by the increase in the change in fair value of convertible note and warrants, and 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 a relationship with one or more Tier 1 automotive suppliers and the timing of any OEM design wins, our ability to effectively and efficiently manage our expenses, 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. To date, our principal sources of liquidity have been the proceeds received from the issuance of equity. 31 Table of Contents 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 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 Purchase Agreement. 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"). On September 15, 2022, we closed the first Note Closing with the investor and received cash proceeds of $9,850 (net of fees paid to the investor). 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 effective (the "Shelf"), which allows us to raise up to $200,000 in capital over the following three years. The use of the Shelf is subject to a limitation of one-third of our public float in any rolling twelve-month period, when our public float is below $75 million, which is referred to as the “baby shelf" rules. As of July 28, 2025, we have not been subject to the "baby shelf" rules. Since the Shelf was established, we have used the Shelf to register the shares sold in the May 29, 2024 Registered Direct Offering and the September 12, 2024 A.G.P. Transaction, both of which are further described below. 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, may occur from time to time at our sole discretion, over a 36-month period. As of September 30, 2025, we have issued 8,980,713 shares of our common stock to New Circle under the CSPA for gross proceeds totaling $27,754. A.G.P. Transaction 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. In July 2025, we increased the aggregate amount available under the ATM program to $75,000, following multiple prior increases since the original agreement. 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 September 30, 2025, we have sold 20,056,239 shares under the ATM Agreement for gross proceeds totaling $58,462. Subsequent to September 30, 2025, we raised additional capital of $9,768 through the sale of 3,164,545 shares under this agreement. 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 2025 Note. The Warrant has an 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. These warrants were exercised in full on July 28, 2025. During the nine months ended September 30, 2025, the Company made cash payments of $989. Additionally, $2,485 in aggregate principal and interest were converted into 2,356,500 shares of common stock. As of September 30, 2025, the 2025 Note has an outstanding principal balance and accrued interest of $106. 32 Table of Contents 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, are sufficient to fund our near-term cash needs. If we are required to raise additional funds by issuing equity securities, dilution of stockholders will result. Any debt securities issued may also have rights, preferences, and privileges senior to those of holders of our common stock. The terms of debt securities or borrowings could impose significant restrictions on our operations. We may also be unable to raise additional capital through the sale of securities and debt financing, or to do so on terms that are favorable to us, particularly given current capital market and overall macroeconomic conditions. For the nine months ended September 30, 2025 and 2024, we had a net loss of $26,616 and $26,912, respectively. 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 we currently have sufficient financial resources 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. Our plans for the use of cash in the long term (beyond twelve months from this Quarterly Report on Form 10-Q) are primarily related to funding operating expenses to support the commercialization of our products. For additional information regarding our cash requirements from contractual obligations, see Note 17 to the Condensed Consolidated Financial Statements in Item 1of Part I of this Quarterly Report on Form 10-Q. Cash Flow Summary Nine months ended September 30, 2025 2024 (in thousands) Net cash provided by (used in): Operating activities $ (20,247 ) $ (21,814 ) Investing activities $ (29,167 ) $ 3,140 Financing activities $ 82,183 $ 5,443 Operating Activities For the nine months ended September 30, 2025, net cash used in operating activities was $20,247. Factors affecting operating cash flows during this period were net loss of $26,616, a gain on termination of an operating lease of $1,014, partially offset by stock-based compensation of $4,732, change in fair value of convertible notes and warrant liabilities of $2,123, debt issuance costs of $2,020, and common stock purchase agreement costs of $325. Within operating activities, the net changes in operating assets and liabilities were cash used of $1,869, primarily driven by decreases in accrued expenses and other liabilities and operating lease liabilities of $804 and $1,574, respectively. Cash used was offset by cash provided by decreases in prepaid and other current assets and other noncurrent assets of $92 and $187, respectively, and an increase in accounts payable of $800. For the nine months ended September 30, 2024, net cash used in operating activities was $21,814. Factors affecting operating cash flows during this period were a net loss of $26,912, a gain on termination of an operating lease, net, of $680, amortization of premiums and accretion of discounts on marketable securities, net of $491, offset by stock-based compensation of $7,002, common stock purchase agreement costs of $1,136, and noncash lease expense of $905. Within operating activities, the net changes in operating assets and liabilities were cash used of $3,048, primarily driven by decreases in accrued expenses and other liabilities, operating lease liabilities, and other noncurrent liabilities of $3,411, $936, and $346, respectively. Cash used was offset by cash provided by a decrease 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. Investing Activities For the nine months ended September 30, 2025, net cash used in investing activities was $29,167. The primary factors affecting net cash used in investing activities during this period were the purchases of marketable securities of $44,989, partially offset by redemptions and maturities of marketable securities of $15,874. 33 Table of Contents 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 the 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. Financing Activities For the nine months ended September 30, 2025, net cash provided by financing activities was $82,183. The primary factors affecting financing cash flows during this period were proceeds from common stock purchase agreements of $80,988, the issuance of a convertible note of $2,950, and proceeds from the exercise of warrants of $1,788, partially offset by payments on convertible note of $989, payments of debt issuance costs of $658, taxes paid on net settlement of equity awards of $499, and payments of stock issuance costs related to common stock purchase agreements of $1,449. For the nine months ended September 30, 2024, net cash used in financing activities was $5,443. The primary factors affecting our financing cash flows during this period were proceeds from the exercise of the common stock purchase agreement of $5,863, partially offset by stock issuance costs related to common stock purchase agreements of $613. Critical Accounting Estimates Our condensed consolidated financial statements are in accordance with GAAP. We are required to make estimates and assumptions that affect the reported amounts of assets and liabilities as of the date of the condensed consolidated financial statements, the reported amounts of revenues and expenses during the reporting periods, fair value measures, and the related disclosures in the condensed consolidated financial statements. Our actual results may differ significantly from these estimates due to changes in judgments, assumptions and conditions as a result of unforeseen events or otherwise, which could have a material impact on our financial position and results of operations. We believe our critical accounting estimates 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, 2025, there were no significant changes in our critical accounting 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 Section 102(b)(1) of the Jumpstart Our Business Startups Act of 2012, or the JOBS Act, exempts emerging growth companies from being required to comply with new or revised financial accounting standards until private companies are required to comply with the new or revised financial accounting standards. The JOBS Act provides that a company can choose not to take advantage of the extended transition period and comply with the requirements that apply to non-emerging growth companies, and any such election to not take advantage of the extended transition period is irrevocable. We are an “emerging growth company” as defined in Section 2(a) of the Securities Act, and we have elected to take advantage of the benefits of the extended transition period for new or revised financial accounting standards. 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 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. Recent Accounting Pronouncements See Note 1 to our condensed consolidated financial statements included elsewhere in this Quarterly Report on Form 10-Q for recently adopted accounting pronouncements as of the date of this Quarterly Report on Form 10-Q. 34 Table of Contents