What changed in this filing

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Item 1. Financial Statements

2026-05-14 compared with 2025-11-07 · 296 added, 473 removed, 517 unchanged (60% of the section changed)

2 unchanged sentences

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

September 30, 2025

March 31, 2026

December 31, 2025

18 unchanged sentences

Accrued expenses and other current liabilities

Convertible note, current

Total current liabilities

10 unchanged sentences

600,000,000 shares authorized;

41,776,670 and 13,734,160 shares issued and outstanding at September 30, 2025 and December 31, 2024

45,345,919 and 45,169,913 shares issued and outstanding at March 31, 2026 and December 31, 2025

Additional paid-in capital

10 unchanged sentences

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

Three months ended September 30,

Nine months ended September 30,

$ 50 $ 104 $ 136 $ 156

Three months ended March 31,

Cost of revenue

103 306 307 729

( 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

$ ( 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.

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS ’ EQUITY

For the nine months ended September 30, 2025 and 2024

For the three months ended March 31, 2026 and 2025

(In thousands, except share amounts)

5 unchanged sentences

BALANCE—December 31, 2025

— $ — 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

— — — — — — ( 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 )

— — — — — — ( 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 )

— — — — — — ( 9,330 ) ( 9,330 )

BALANCE—September 30, 2025

— $ — 41,776,670 $ 4 $ 477,903 $ ( 4 ) $ ( 399,711 ) $ 78,192

BALANCE—March 31, 2026

Accumulated Other

8 unchanged sentences

Issuance of common stock under the Common Stock Purchase Agreement

Other comprehensive loss, net of tax

BALANCE—March 31, 2024

Stock-based compensation

Issuance of common stock upon exercise of stock options

Issuance of common stock upon vesting of restricted stock units

Taxes related to net share settlement of equity awards

Issuance of common stock under the Common Stock Purchase Agreements

Stock issuance costs related to Common Stock Purchase Agreements

Issuance of common stock through Employee Stock Purchase Plan

Other comprehensive loss, net of tax

BALANCE—June 30, 2024

Stock-based compensation

Issuance of common stock upon vesting of restricted stock units

Taxes related to net share settlement of equity awards

Issuance of common stock under the Common Stock Purchase Agreement

Transaction costs related to the Common Stock Purchase Agreements

Other comprehensive income, net of tax

BALANCE—September 30, 2024

BALANCE—March 31, 2025

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

1 unchanged sentence

(In thousands)

Nine months ended September 30,

Three months ended March 31,

CASH FLOWS FROM OPERATING ACTIVITIES:

1 unchanged sentence

Depreciation and amortization

Gain on sale of property and equipment, net

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

2 unchanged sentences

Debt issuance costs

Gain on extinguishment of warrant

Inventory write-downs, net of scrapped inventory

2 unchanged sentences

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

Expected credit losses, net of write-off

Changes in operating assets and liabilities:

6 unchanged sentences

Operating lease liabilities

Contract liabilities

Other noncurrent liabilities

Net cash used in operating activities

1 unchanged sentence

Purchases of property and equipment

Proceeds from sale of property and equipment

Purchases of marketable securities

Proceeds from redemptions and maturities of marketable securities

Net cash (used in) provided by investing activities

Net cash provided by (used in) investing activities

CASH FLOWS FROM FINANCING ACTIVITIES:

Proceeds from exercise of stock options

Proceeds from issuance of convertible note

Payments for convertible note redemptions

Transaction costs related to issuance of convertible note

2 unchanged sentences

Taxes paid related to the net share settlement of equity awards

Proceeds from exercise of warrant

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

Net cash provided by financing activities

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

CASH, CASH EQUIVALENTS AND RESTRICTED CASH—Beginning of period

CASH, CASH EQUIVALENTS AND RESTRICTED CASH—End of period

Net cash provided by (used in) financing activities

NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS

CASH AND CASH EQUIVALENTS—Beginning of period

CASH AND CASH EQUIVALENTS—End of period

SUPPLEMENTAL CASH FLOW INFORMATION:

Cash paid for income taxes, net of refund

Cash paid for interest

SUPPLEMENTAL DISCLOSURE OF NONCASH INVESTING AND FINANCING ACTIVITIES:

Noncash debt issuance costs

Debt issuance costs included in accounts payable and accrued liabilities

Stock issuance costs included in accounts payable and accrued liabilities

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

Operating lease liabilities extinguished upon termination of lease

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

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

Stock issuance costs through issuance of common stock

Modification of operating lease liabilities and right-of-use asset

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

2 unchanged sentences

ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

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.

and its wholly owned subsidiaries (the “Company” or “AEye”) is a provider of physical AI sensing solutions built on high-performance, active lidar systems for vehicle autonomy, advanced driver-assistance systems, or ADAS, robotic vision applications and a range of Non-Automotive applications.

Our approach to supporting the developing physical AI infrastructure combines software‑defined sensing with adaptive perception capabilities that enable machines to interpret and respond to complex physical environments in real time.

Our proprietary Intelligent Sensing Platform incorporates a nearly solid state, software‑definable active lidar sensor;

an adaptive SmartScan architecture that dynamically adjusts scan patterns for different scenes and targets;

and a signal processing pipeline designed to deliver precise measurements and imaging for safety critical use cases.

This platform is designed to support a broad set of markets beyond passenger vehicles, including rail, aerospace and defense, smart infrastructure, and security, where long‑range performance, environmental robustness, and software‑based configurability are key requirements.

AEye, formerly known as CF Finance Acquisition Corp.

16 unchanged sentences

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.

Significant items subject to such estimates and assumptions include 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

4 unchanged sentences

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 .

As of March 31, 2026 , the Company’s existing sources of liquidity included cash, cash equivalents, and marketable securities of $ 77,238 .

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.

Financial instruments which potentially subject the Company to concentration of credit risk consist primarily of cash, cash equivalents, and marketable securities, and accounts receivable, net.

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’s accounts receivable, net are derived from customers located in North America, Europe, the Middle East, Africa (EMEA), and the Asia-Pacific (APAC) region.

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

1 unchanged sentence

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.

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

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

11 unchanged sentences

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:

Fair Value Measured as of March 31, 2026 Using:

Adjusted Cost

Unrealized Gains (Losses)

Cash and Cash Equivalent

Unrealized Losses

Cash and Cash Equivalents

Marketable Securities

1 unchanged sentence

$ 44,398 $ — $ 44,398 $ 44,398 $ —

Asset-backed securities

4,986 1 4,987 — $ 4,987

Corporate bonds

4 unchanged sentences

6,529 ( 5 ) 6,524 — 6,524

1,999 ( 7 ) 1,992 — 1,992

Asset-backed securities

5,879 ( 5 ) 5,874 — 5,874

Total financial assets

2 unchanged sentences

$ — $ — $ — $ — $ —

Convertible note, current

Derivative warrant liabilities

Derivative warrant liability

Total financial liabilities

3 unchanged sentences

Unrealized Gains

Cash and Cash Equivalent

Cash and Cash Equivalents

Marketable Securities

7 unchanged sentences

8,003 9 8,012 — 8,012

2,018 — 2,018 — 2,018

Asset-backed securities

5,902 5 5,907 — 5,907

Total financial assets

2 unchanged sentences

$ — $ — $ — $ — $ —

Derivative warrant liability

Derivative warrant liabilities

Total financial liabilities

6 unchanged sentences

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

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

government securities, corporate bonds, commercial paper, agency bonds, 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:

1 unchanged sentence

The Company issued warrants as part of the 2022 Note.

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

The warrants were 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.

1 unchanged sentence

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.

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

Derivative Warrant Liability was 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.

In January 2025, the Company entered into a convertible note agreement with a face value of $ 3,000 (the "2025 Note").

The Company issued a warrant to purchase up to 805,263 shares of the Company’s common stock.

The warrant was recorded on the accompanying consolidated balance sheet at fair value.

The fair value was 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.

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

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

These warrants were exercised in full on July 28, 2025.

10 unchanged sentences

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):

For the three months ended March 31, 2026 , there were no transfers between Level 1 and Level 2 inputs.

The following table presents a summary of the changes in fair value of the Company’s Level 3 financial instruments for the three months ended March 31, 2026 (in thousands):

Derivative Warrant Liabilities

Balance at December 31, 2025

$ 26 $ — $ 26

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

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)

Expected volatility

Risk-free interest rate

Dividend yield

Exercise price

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

Balance at March 31, 2026

The key inputs into the Black-Scholes model for the derivative warrant issued as a result of the lease settlement valued at March 31, 2026 are as follows:

March 31, 2026

Expected term (years)

4 unchanged sentences

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.

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

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

Inventory, net of write-downs, as of September 30, 2025 and December 31, 2024 were as follows (in thousands):

September 30, 2025

Inventory, net of write-downs, as of March 31, 2026 and December 31, 2025 were as follows (in thousands):

March 31, 2026

December 31, 2025

3 unchanged sentences

Total inventory, net

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.

$ 963 $ 1,015

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

Prepaid and other current assets as of March 31, 2026 and December 31, 2025 were as follows (in thousands):

March 31, 2026

December 31, 2025

Prepaid expenses

Receivable for issuance of common stock

$ 1,241 $ 2,022

Total prepaid and other current assets

$ 1,397 $ 2,081

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.

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 February 2026, the Company entered into an agreement with the landlord to amend the existing operating lease at its corporate headquarters.

The amendment added additional square footage, extended the lease term to February 28, 2029, and included an option to renew with renewal terms that, if exercised by the Company, extends the lease term for an additional five years.

The Company determined that the amendment represents a lease modification and remeasured its right-of-use asset and operating lease liability using an updated incremental borrowing rate as of the modification date.

The Company recognized a $ 1,033 increase in its right-of-use asset and operating lease liability and no gain or loss was recognized as a result of the modification.

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,

Under the terms of the agreement, the Company paid $ 1,400 in cash and 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 which had a fair value of $ 899 on the date of issuance in August 2025.

The Company recorded a net gain on termination of operating lease of $ 1,685 during the three months ended March 31, 2025 .

All liabilities were settled in 2025.

The components of operating lease expenses, excluding the gain on early termination of operating lease, for the three months ended March 31, 2026 and 2025 , are as follows (in thousands):

Three months ended March 31,

Operating lease cost

$ 74 $ 264 $ 215 $ 1,435

Variable lease cost

Total operating lease cost

$ 78 $ 296 $ 227 $ 1,636

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

1 unchanged sentence

Years ending - December 31:

2025 (remaining three months)

2026 (remaining nine months)

Total lease payments

2 unchanged sentences

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

Accrued expenses and other current liabilities as of March 31, 2026 and December 31, 2025 are as follows (in thousands):

March 31, 2026

December 31, 2025

Lease termination liability

Accrued payroll

12 unchanged sentences

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 2025 Note, subject to an original issue discount of 7.4 %, had a term of eighteen months and accrued 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.

The 2025 Note was 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.

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 investor was permitted to accelerate up to one Monthly Installment Amount, between Installments.

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 classified the 2025 Note as a liability at fair value and remeasured the 2025 Note to fair value at each reporting period.

The total proceeds received from the investor of $ 3,000 was 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.

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 .

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

During the year ended December 31, 2025 , the Company made cash payments of $ 989 .

Additionally, $ 2,591 in aggregate principal and interest were converted into 2,405,573 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 .

As of December 31, 2025, the 2025 Note was fully repaid and all associated warrants were fully exercised.

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,

Interest expense and other for the three months ended March 31, 2026 and 2025 consisted of the following (in thousands):

Three months ended March 31,

Common stock purchase agreements costs

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

Expected credit losses

( 91 ) ( 91 )

Foreign exchange gains (losses)

Interest expense and other

$ ( 22 ) $ 2,108

STOCKHOLDERS' EQUITY

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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.

Under the terms and subject to the conditions of the CSPA, the Company had the right, but not the obligation, to sell to New Circle, and New Circle was 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 had sole discretion to initiate such sales of common stock over a period of 36 months.

In all instances, the Company could 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 would equal either (i) the lowest volume-weighted average price for common stock either over a one -day trading period or 15 minutes after the number of intraday shares traded exceeds 500% of the shares included in the purchase notice or one hour after the receipt of the purchase notice, or (ii) the volume-weighted average price for common stock for the three consecutive trading days commencing on the purchase notice date multiplied by 97.5 %.

The maximum number of shares the Company could sell to New Circle on any single business day was the lesser of (i) the number of shares equal to 100% of the average daily trading volume of the common stock of the Company during the five trading days immediately preceding the purchase notice, and (ii) 400,000 shares of common stock.

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

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

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 .

The Company determined that the right to sell additional shares represented 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 .

This CSPA agreement was terminated in December 2025.

In total, the Company issued 8,980,713 shares of its common stock, including commitment shares, for gross proceeds totaling $ 27,754 .

Alliance Global Partners ( “ A.G.P.

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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 .

Under the terms and subject to the conditions of the ATM Agreement, the Company may issue and sell through A.G.P.

the Company’s common stock having an aggregate value offering price of up to $ 2,600 ("Placement Shares") from time to time through an "at-the-market" equity offering program.

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

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

The Company has sold 20,056,239 shares under the ATM Agreement for gross proceeds totaling $ 58,462 through September 30, 2025 .

In December 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 $ 125,000 , following multiple prior increases since the original agreement.

The Company has sold 23,220,784 shares through A.G.P.

under the ATM Agreement for gross proceeds totaling $ 68,436 through March 31, 2026 .

The remaining availability under the agreement is $ 56,564 as of March 31, 2026 .

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):

The changes in accumulated other comprehensive income (loss) by component for the three months ended March 31, 2026 and 2025 are as follows (in thousands):

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

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Balance at March 31, 2026

Other comprehensive income (loss), net of tax

Balance at June 30, 2025

Other comprehensive income (loss), net of tax

Balance at September 30, 2025

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

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Balance at March 31, 2025

Other comprehensive income (loss), net of tax

Balance at June 30, 2024

Other comprehensive income (loss), net of tax

Balance at September 30, 2024

NET LOSS PER SHARE

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

Three months ended September 30,

Nine months ended September 30,

Three months ended March 31,

Net loss attributable to common stockholders

$ ( 8,345 ) $ ( 8,016 )

Weighted average common shares outstanding - Basic

45,214,397 17,448,617

Weighted average common shares outstanding - Diluted

45,214,397 17,448,617

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

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.

$ ( 0.18 ) $ ( 0.46 )

Due to net losses for the three months ended March 31, 2026 and 2025 , basic and diluted net loss per share were the same, as the effect of all potentially dilutive securities would have been anti-dilutive.

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

Nine months ended September 30,

Three months ended March 31,

Common stock options issued and outstanding

122,199 134,242

Unvested restricted stock units

1,621,603 401,857

611,110 1,124,706

Common Stock Purchase Agreements

31,250,908 33,657,478

Conversion of convertible note

89,592 2,975,504

120,232 81,070

33,815,644 38,374,857

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,

Market-Based Restricted Stock Uni ts

In February 2026, the Board of Directors approved grants totaling 1,248,426 market-based RSUs to certain executive officers of the Company that vest based on satisfaction of certain market conditions and upon continued service (“PSU Awards”).

The PSU Awards will vest in increments of one - third of the total grant when the closing price of the Company's common stock, as reported by NASDAQ, (i) meets or exceeds an average of $3.00 per share for any five ( 5 ) consecutive trading days, (ii) meets or exceeds an average of $4.00 per share for any five ( 5 ) consecutive trading days, and (iii) meets or exceeds an average of $5.00 per share for any five ( 5 ) consecutive trading days, prior to December 31, 2030.

To the extent common stock is available under the 2021 Equity Incentive Plan ("the Plan"), common stock will be used to settle vested PSU Awards on a prorated basis for all participants on the settlement date.

Otherwise, vested PSU Awards will be settled in cash equal to the fair market value of common stock on the settlement date, defined as the five -day trailing average of the closing price of the stock as reported by NASDAQ.

The Company estimated the initial grant date fair value of the PSU Awards using the Monte Carlo simulation model with the following assumptions:

Expected term (years)

Expected volatility

Risk-free interest rate

Dividend yield

The Company classified these awards as equity at the initial grant date and at March 31, 2026.

If, in a future period, the Company does not have sufficient shares available under the Plan to settle the awards upon vesting, some or all of the PSU Awards may be reclassified to liability and remeasured to fair value.

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 months ended March 31, 2026 and 2025 (in thousands):

Three months ended March 31,

Research and development

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Total stock-based compensation

$ 1,542 $ 2,501

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”).

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

Sale of Prototypes

The Company recorded revenue for prototype sales of $ 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.

Product revenue

The Company recorded revenue for product sales of $ 101 and $ 0 in the three months ended March 31, 2026 and 2025 , respectively.

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

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.

The Company has entered into research and development contracts as well as a sales, marketing, and technical support service contract with companies in both the Automotive and Non-Automotive markets.

The Company assessed the number of performance obligations associated with the promises under each agreement and recognized $ 0 and $ 64 in revenue for performance obligations that had been satisfied as of the three months ended March 31, 2026 and 2025 , respectively, in the condensed consolidated statements of operations and comprehensive loss.

Disaggregation of Revenue

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

Three months ended September 30,

Nine months ended September 30,

Three months ended March 31,

Revenue by primary geographical market:

United States

$ 43 $ 39 $ 48 $ 80

$ 50 $ 104 $ 136 $ 156

North America

Revenue by timing of recognition:

Recognized at a point in time

$ 41 $ 65 $ 63 $ 91

Recognized over time

$ 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.

The Company had no contract liabilities as of three months ended March 31, 2026 and 2025 .

Remaining Performance Obligations

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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.

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.

Restructuring charges are summarized as follows for the nine months ended September 30, 2025 (in thousands):

Losses on purchase commitments

Lease Termination Liability

Balance as of December 31, 2024

Cash payments

Issuance of warrants

Balance as of September 30, 2025

For the nine months ended September 30, 2025 and 2024 , the Company recognized $ 2 and $ 2 provision for income taxes, respectively.

Additionally, as a practical expedient, the Company has not disclosed the value of unsatisfied performance obligations for contracts with an original expected length of one year or less.

For the three months ended March 31, 2026 and 2025 , the Company recognized $ 2 and $ 2 provision for income taxes, respectively.

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

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failed to pay approximately $ 3,300 plus interest from the date the former vendor alleges such payments were due.

In February 2026, the former vendor initiated a binding arbitration proceeding against AEye Technologies, Inc.

pursuant to the underlying purchase agreement.

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.

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 .

has disputed, and continues to dispute, the total amount owed based, in part, on the 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.

While it is reasonably possible that a loss may be incurred, the Company is unable to estimate the possible loss or range of loss that could result from an unfavorable outcome in this legal proceeding.

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

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

We believe that an understanding of these trends is important to understanding our financial results for the nine months ended September 30, 2025, as well as our future prospects.

We believe that an understanding of these trends is important to understanding our financial results for the three months ended March 31, 2026, as well as our future prospects.

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

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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;

successfully develop new solutions to enhance the experience of, and deliver value to, our customers.

developing, commercializing, and scaling our products and technology, including meeting performance, reliability, and cost objectives;

maintaining and expanding our relationships with Tier 1 automotive suppliers to facilitate design wins with automotive OEMs;

maintaining and protecting our intellectual property, including patents, trade secrets, and proprietary software;

navigating changes in international trade policies, including the imposition or modification of tariffs, increasing trade tensions, and the introduction of new trade restrictions

complying with existing and new laws and regulations applicable to our operations, products, and markets;

maintaining and enhancing our reputation and brand in competitive and emerging markets;

hiring, integrating, and retaining qualified personnel at all levels of the organization as we grow;

developing and delivering new products and solutions successfully, and ensuring our products meet customer expectations and provide value;

significant competition from companies, including several based in China, that manufacture lower‑cost lidar solutions and may be able to offer aggressive pricing, faster volume production, or vertically integrated supply chains that could place downward pressure on market pricing or reduce our ability to compete in certain segments.

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 anticipate growing demand for our Apollo TM 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.

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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.

The Automotive market for lidar is projected to see significant growth in the mid- and long-term.

We anticipate that Non‑Automotive applications will be a more significant driver of our near‑term revenue given the generally shorter sales cycles and development timelines in these markets.

We are beginning to see adoption across a diverse group of sectors.

Our typical engagement model begins with proof‑of‑concept evaluations, which allow customers to validate performance in their operational environments;

however, there is no guarantee that these evaluations will ultimately result in a commercial deployment, and timelines may extend significantly, due to many factors, including, competing customer priorities or broader program changes.

In many Non‑Automotive opportunities, we work through third‑party systems integrators or solution providers who deliver complete solutions to the end customer, and in those situations our visibility into, and ability to influence, the final customer decision process may be limited.

Partnerships and Commercialization

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

In 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.

We have unified our supply chain for the Automotive and Non-Automotive markets and plan to 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.

In 2023, as part of our effort to reduce fixed operating costs, simplify our supply chain, and focus resources on our next‑generation architecture, we wound down support for our legacy Non‑Automotive product.

Since launching Apollo TM in 2024, we have seen renewed interest from Non‑Automotive customers across a broad range of sectors and are now actively engaged on multiple opportunities.

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

We announced an expansion of this relationship and the creation of a dedicated production line for Apollo TM , with capacity to produce up to 60,000 units annually.

We are starting to see an inflection point in customer demand, and this expansion ensures we can meet that growth if it develops.

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.

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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.

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 announced the validation of our lidar technology on the NVIDIA DRIVE AGX Orin TM platform.

We have since expanded our collaboration and demonstrated our lidar with NVIDIA's next-generation DRIVE AGX Thor TM platform, enabling our sensors to interface directly with NVIDIA’s autonomous driving compute architecture and development toolchain.

These integrations are intended to support alignment with NVIDIA’s Hyperion reference architecture and may provide opportunities to engage with global automotive OEMs and Tier 1 suppliers that adopt NVIDIA‑based ADAS and automated driving systems.

We continue to demonstrate advances in the high‑speed and long‑range performance of our lidar systems, which we believe further strengthen the technical basis for these integrations.

Because these engagements are relatively recent, there can be no guarantee that they will result in commercial adoption.

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.

OPTIS™ integrates our software-defined Apollo TM 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.

Our flagship OPTIS™ deployment in California is live at an active intersection and provides the potential for a complete traffic management solution that integrates our lidar, perception, and actuation in conjunction with our partners Flasheye and Blue-Band, with several additional deployments planned.

Recent additions to our partner network include Black Sesame Technologies and Vueron.

In January 2026, we introduced STRATOS™, the next product in our lidar family.

STRATOS™ is based on the same underlying software‑defined Apollo TM architecture but delivers an extended detection range of up to approximately 1.5 kilometers and roughly twice the angular resolution.

STRATOS™ is designed for applications requiring enhanced long‑distance performance, including sensing requirements in certain automotive, infrastructure, aviation, industrial, and defense use cases.

In March 2026, we joined the NVIDIA Halos AI Systems Inspection Lab, the world’s first ANAB-accredited AI systems inspection lab, which we believe further reinforces our positioning within the NVIDIA ecosystem and may support our engagement with global automotive OEMs and Tier 1 suppliers.

Also, during the first quarter of 2026, we entered into a commercial relationship with SynTech, a global defense systems company with established ties to leading defense primes, under which SynTech began promoting Apollo™ to its customers and we have commenced initial shipments.

We believe this relationship could expand our addressable market into international defense and aviation;

however, there can be no assurance that this relationship, or the integrations described above, will result in commercial sales for us.

In aerospace and defense, our customer engagements continued to ramp during the first quarter of 2026, with multiple repeat orders from existing customers and active development across multiple programs with certain customers.

We are evaluating expanded use cases for our products with these customers, and we expect to receive additional requests for quotation in the near term.

While we are encouraged by the trajectory of these engagements, there can be no assurance that they will translate into commercial sales for us.

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.

Geographic Opportunities

While our commercial activities remain primarily focused in North America, we are also actively engaging with customers in EMEA and APAC.

Our APAC strategy has begun to evolve through business development activities in Korea, where we have established on-the-ground support and have engaged with multiple customers across the ITS, rail, and mobility sectors.

In China, we have multiple customer evaluations in progress, supported by our existing partnerships with ATI and LighTekton.

Additional proof-of-concept activity is underway in other geographies, including Australia and Thailand.

There can be no assurance that any of these international engagements will result in commercial sales for us.

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.

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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.

To date, we have primarily generated revenue through sales of our products to Non‑Automotive customers and through development contracts with OEMs and Tier 1 suppliers.

Non‑Automotive applications typically command higher average selling prices and may carry higher gross margins than Automotive programs due to lower volume sensitivity, more specialized operating requirements, and greater willingness by customers to pay for performance differentiation.

These engagements often involve customization of our product’s capabilities to address application‑specific needs, including software‑based configuration of scan patterns, region‑of‑interest tuning, advanced perception features, and other enhancements.

In many cases, customers require more complex configurations or software‑enabled feature additions, which allows us greater latitude to price these solutions at a premium.

As a result, customized Non‑Automotive deployments generally reflect higher contractual pricing and may contribute more favorably to gross margin relative to standard Automotive configurations.

Investment and Innovation

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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.

Our next‑generation lidar portfolio is built on our Intelligent Sensing Platform, a modular and software‑defined architecture that allows us to create differentiated product offerings with limited incremental hardware changes.

By maintaining a common core design and enabling performance enhancements through software—such as configurable scan patterns, range distribution, and perception features—we are able to address diverse application requirements while minimizing the operational complexity typically associated with managing a large product portfolio.

This platform‑based approach also allows us to introduce new products efficiently.

For example, STRATOS™, launched in January 2026, is derived from the Apollo's TM architecture but offers extended range and higher angular resolution to support long‑distance and higher‑performance applications.

In June 2024, we introduced Apollo TM , our next generation lidar sensor.

Apollo TM 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 TM 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.

With a horizontal field of view up to 120° and long-range detection capabilities of up to one kilometer, Apollo TM 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.

OPTIS™ combines Apollo’s TM 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.

Since launch, OPTIS™ has moved from concept to structured offering, with initial deployments completed and new partners such as Black Sesame Technologies, BlueBand, Flasheye, and Vueron joining our network.

In addition, in January 2026, we announced STRATOS™, the next product in this family.

STRATOS™ is based on the same underlying architecture as Apollo™ but offers extended detection range of up to approximately 1.5 kilometers and roughly twice the angular resolution.

STRATOS™ is intended for applications that require enhanced long‑distance performance or operate at higher speeds, including certain automotive, infrastructure, defense, and industrial sensing environments.

Like Apollo™, STRATOS™ leverages our software‑defined sensing approach, enabling performance updates without a hardware redesign.

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

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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.

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 bill of materials, or BOM costs, 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.

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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.

Our product revenue primarily relates to unit sales of our lidar units, software, and support.

Revenue from these 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, or when services have been provided.

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

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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.

We are seeing strong interest in Apollo TM from non-automotive customers across multiple industries and are actively advancing these opportunities.

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.

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 through higher volume programs.

We view this as the first step in a disciplined growth roadmap designed to unlock adoption and scale with confidence.

Several partners are also exploring new platforms based on our Apollo TM architecture and have initiated discussions on development work, which we expect will increase over time.

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.

Cost of revenue includes costs directly associated with the production of lidar units, cost of software and support, and certain costs associated with development contracts.

Such costs for the products include direct materials, direct labor, indirect labor, inventory write downs, losses on purchase commitments, warranty expense, and allocation of overhead.

As we increase the volume of Apollo TM units that are manufactured, we expect the bill of material costs to decrease over time.

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

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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;

personnel-related expenses, including salaries, benefits, bonuses, and stock-based compensation expense;

field application engineering and software development costs associated with customer‑driven bug fixes, feature enhancements, and improvements to reduce deployment complexity as we incorporate insights gained from customer evaluations into our product roadmap;

third-party engineering and contractor costs;

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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.

R&D costs are expensed as incurred.

We expect our R&D costs to increase as we continue to invest in product development, expanded product variations, and commercialization efforts;

however, we anticipate these increases will occur at a more moderate pace relative to our investment in sales and marketing as we prioritize execution and near‑term commercial opportunities.

Sales and Marketing

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S&M expenses include:

personnel-related expenses, including salaries, benefits, bonuses, one-time termination benefits, and stock-based compensation expense;

personnel-related expenses, including salaries, benefits, bonuses, and stock-based compensation expense;

third party contractor costs;

demonstration equipment;

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

allocated personnel and overhead expenses.

system and tooling costs to support our sales and marketing organization, including CRM systems, marketing‑automation and lead‑generation tools, data‑analytics platforms, and other software required to manage customer pipelines and enable our go‑to‑market strategy;

trade shows expenses, advertising, promotion costs, website development, branding, and other public relations services;

allocated personnel and overhead expenses, net.

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.

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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;

personnel-related costs, including salaries, benefits, bonuses, and stock-based compensation expense for executive, finance, legal, operations, human resources, technical support, and other administrative personnel;

consulting, accounting, audit, legal, and other professional fees;

insurance premiums, software and computer equipment costs, general office expenses;

allocated overhead expenses.

allocated personnel and overhead expenses, net.

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.

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

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

We also elected to record interest expense on the convertible note as changes in fair value.

We have fully repaid the 2025 convertible note and will not have a change in fair value of the convertible note in future periods.

In addition, we expect the change in fair value of warrant liabilities to decrease as the warrant associated with the 2022 convertible note was cancelled and the warrant associated with the 2025 convertible note was exercised in full.

Interest Income, Interest Expense and Other

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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,

Cost of revenue

Research and development

Sales and marketing

General and administrative

Total operating expenses

Loss from operations

Change in fair value of convertible note and warrant liabilities

Interest income and other

Interest expense and other

Total other income (expense), net

Loss before income tax

Provision for income tax

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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.

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.

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

Results of Operations

Comparison of the nine months ended September 30, 2025 and 2024

Comparison of the three months ended March 31, 2026 and 2025

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,

Total revenue

The following table sets forth our consolidated results of operations data for the three months ended March 31, 2026 and 2025 (in thousands, except for percentages):

Three months ended March 31,

Cost of revenue

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Provision for income tax

NM - not meaningful

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.

Revenues increased by $37, or 58%, to $101 for the three months ended March 31, 2026, from $64 for the three months ended March 31, 2025.

This increase is primarily due to sales of our Apollo TM lidar units, partially offset by lower 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.

Cost of revenue increased by $105, or 109%, to $201 for the three months ended March 31, 2026, from $96 for the three months ended March 31, 2025.

This increase was primarily due to higher costs of product sales in the current quarter, partially offset by lower inventory provisions.

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.

Research and development expenses increased by $275, or 8%, to $3,765 for the three months ended March 31, 2026, from $3,490 for the three months ended March 31, 2025.

This increase was primarily driven by an increase in personnel costs, net of allocations, of $537, and increased fees paid to third party development work, engineering parts and lab equipment, and other research and development expenses of $235.

These increases were partially offset by a decrease in stock-based compensation expense of $484.

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.

Sales and marketing expenses increased by $603, to $986 for the three months ended March 31, 2026, from $383 for the three months ended March 31, 2025.

This increase was primarily driven by increases in personnel costs, including allocations, of $438 and marketing, trade show and consultant expenses of $189.

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.

General and administrative expenses increased by $1,283, or 44%, to $4,178 for the three months ended March 31, 2026, from $2,895 for the three months ended March 31, 2025.

This increase was primarily driven by a favorable adjustment of $1,685 upon settlement of a lease dispute during the three months ended March 31, 2025.

The increase was also due to higher personnel costs, net of allocations, of $250, partially offset by decreases in stock-based compensation of $430, and legal fees and consulting expenses of $225.

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.

Change in fair value of convertible note and warrant liabilities decreased by $661 to $19 for the three months ended March 31, 2026, from $680 for the three months ended March 31, 2025.

This decrease was primarily due to the change in fair value of the 2025 Note and warrants, which were fully settled or cancelled 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 income and other increased by $431, or 201%, to $645 for the three months ended March 31, 2026, from $214 for the three months ended March 31, 2025.

This increase was primarily due to higher interest earned on our 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 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.

Interest expense and other decreased by $2,130, to a net income of $22 for the three months ended March 31, 2026, from a net expense of $2,108 for the three months ended March 31, 2025.

This decrease was primarily due to a decrease in costs related to financing arrangements of $1,959 and higher foreign exchange gains (losses), net of $172.

Net loss increased by $329, or 4%, to $8,345 for the three months ended March 31, 2026, from $8,016 for the three months ended March 31, 2025.

This increase was primarily due to increased facilities costs as a result of the favorable adjustment from the settlement of a lease dispute in the prior year's quarter and increased personnel costs, partially offset by decreased stock-based compensation, lower changes in fair value of convertible note and warrants, and decreased financing costs.

Liquidity and Capital Resources

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

Tumim Stone Transaction

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

On 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

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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.

The use of the Shelf was subject to a limitation of one-third of our public float in any rolling twelve-month period, when our public float was below $75,000, which is commonly referred to as the “baby shelf" rules.

Since 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.

The Shelf is scheduled to expire in September 2026, and we expect to file a replacement registration statement on Form S-3 in May 2026 to maintain capacity to raise capital under our existing financing programs.

There can be no assurance that we will be able to raise additional capital under any such replacement registration statement, in the amounts anticipated, or at all.

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

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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.

In December 2025, we terminated the agreement with New Circle.

The termination was part of our broader effort to simplify our capital structure and reduce the number of outstanding financing instruments, while consolidating our equity financing capacity under our existing at‑the‑market facility, which we believe provides more operational flexibility and alignment with our long‑term capital strategy.

In total, we issued 8,980,713 shares of our common stock to New Circle under the agreement for gross proceeds totaling $27,754.

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.

In December 2025, we increased the aggregate amount available under the ATM program to $125,000, following multiple prior increases since the original agreement was entered into.

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.

As of March 31, 2026, we have sold 23,220,784 shares under the ATM Agreement for gross proceeds totaling $68,436 and have remaining availability of $56,564.

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.

The 2025 Note, subject to an original issue discount of 7.4%, had a term of eighteen months and accrued interest at the rate of 7.0% per annum.

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

The Warrant had an exercise price of $2.22 and was 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.

During the year ended December 31, 2025 the Company made cash payments of $989.

Additionally, $2,591 in aggregate principal and interest were converted into 2,405,573 shares of common stock.

As of September 30, 2025, the 2025 Note has an outstanding principal balance and accrued interest of $106.

The 2025 Note was fully paid in 2025.

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.

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

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

For the nine months ended September 30, 2025 and 2024, we had a net loss of $26,616 and $26,912, respectively.

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 the current capital market and overall macroeconomic conditions.

For the three months ended March 31, 2026 and 2025, we had a net loss of $8,345 and $8,016, 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.

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 continued development and commercialization of our products.

For additional information regarding our cash requirements from contractual obligations, see Note 16 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,

Three months ended March 31,

(in thousands)

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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.

For the three months ended March 31, 2026, net cash used in operating activities was $8,555.

Factors affecting operating cash flows during this period were net loss of $8,345, partially offset by stock-based compensation of $1,542 and common stock purchase agreement costs of $136.

Within operating activities, the net changes in operating assets and liabilities were cash used of $2,041, primarily driven by decreases in accrued expenses and other liabilities and operating lease liabilities of $2,895 and $121, respectively.

Cash used was offset by cash provided by a decrease in prepaid and other current assets of $684 and an increase in accounts payable of $205.

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

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

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

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

For the 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.

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.

For the three months ended March 31, 2026, net cash provided by investing activities was $10,713.

The primary factors affecting net cash provided by investing activities during this period were proceeds from the redemptions and maturities of marketable securities of $10,900 partially offset by purchases of property and equipment of $187.

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

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

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.

For the three months ended March 31, 2026, net cash used in financing activities was $352.

The primary factors affecting financing cash flows during this period were taxes paid on net settlement of equity awards of $252, and payments of stock issuance costs related to common stock purchase agreements of $100.

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

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

Critical Accounting Estimates

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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.

During the three months ended March 31, 2026, 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 2025 Annual Report on Form 10-K.

Recent Accounting Pronouncements

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

What changed 10-Q

Item 1. Financial Statements