What changed in this filing

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Item 1. Financial Statements

2026-08-06 compared with 2026-05-14 · 206 added, 162 removed, 651 unchanged (36% of the section changed)

2 unchanged sentences

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

March 31, 2026

June 30, 2026

December 31, 2025

1 unchanged sentence

Cash and cash equivalents

$ 45,162 $ 43,356

Marketable securities

32,076 43,104

Accounts receivable, net

2 unchanged sentences

Total current assets

79,694 89,633

Right-of-use assets

1 unchanged sentence

Other noncurrent assets

$ 82,052 $ 90,893

LIABILITIES AND STOCKHOLDERS’ EQUITY

1 unchanged sentence

Accounts payable

$ 3,843 $ 3,615

Accrued expenses and other current liabilities

11 unchanged sentences

600,000,000 shares authorized;

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

46,488,312 and 45,169,913 shares issued and outstanding at June 30, 2026 and December 31, 2025

Additional paid-in capital

489,651 488,361

Accumulated other comprehensive income (loss)

Accumulated other comprehensive (loss) income

Accumulated deficit

( 415,398 ) ( 407,053 )

Total stockholders’ equity

74,216 81,342

Total liabilities and stockholders’ equity

$ 82,052 $ 90,893

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

1 unchanged sentence

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

Three months ended March 31,

Three months ended June 30,

Six months ended June 30,

Cost of revenue

19 unchanged sentences

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS ’ EQUITY

For the three months ended March 31, 2026 and 2025

For the six months ended June 30, 2026 and 2025

(In thousands, except share amounts)

10 unchanged sentences

BALANCE—March 31, 2026

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 Agreement

Issuance of common stock through Employee Stock Purchase Plan

Other comprehensive loss, net of tax

BALANCE—June 30, 2026

Accumulated Other

11 unchanged sentences

BALANCE—March 31, 2025

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 Agreements

Transaction costs related to Common Stock Purchase Agreements

Conversions of convertible note into common stock

Issuance of common stock through Employee Stock Purchase Plan

Other comprehensive loss, net of tax

BALANCE—June 30, 2025

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

1 unchanged sentence

(In thousands)

Three months ended March 31,

Six months ended June 30,

CASH FLOWS FROM OPERATING ACTIVITIES:

9 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:

11 unchanged sentences

Proceeds from redemptions and maturities of marketable securities

Net cash provided by (used in) investing activities

Net cash used in investing activities

CASH FLOWS FROM FINANCING ACTIVITIES:

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

Net cash provided by (used in) financing activities

NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS

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

Net cash provided by financing activities

NET DECREASE IN CASH AND CASH EQUIVALENTS

CASH AND CASH EQUIVALENTS—Beginning of period

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

As of June 30, 2026 , the Company’s existing sources of liquidity included cash, cash equivalents, and marketable securities of $ 71,503 .

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.

21 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 March 31, 2026 Using:

Fair Value Measured as of June 30, 2026 Using:

Adjusted Cost

3 unchanged sentences

Money market funds

$ 44,398 $ — $ 44,398 $ 44,398 $ —

Corporate bonds

15,925 ( 24 ) 15,901 — 15,901

Commercial paper

1,785 — 1,785 — 1,785

Government securities

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

$ 76,515 $ ( 41 ) $ 76,474 $ 44,398 $ 32,076

Private placement warrant liability

$ — $ — $ — $ — $ —

Derivative warrant liability

Total financial liabilities

$ — $ — $ 541 $ — $ —

Fair Value Measured as of December 31, 2025 Using:

4 unchanged sentences

Money market funds

$ 42,718 $ — $ 42,718 $ 42,718 $ —

Corporate bonds

19,620 13 19,633 — 19,633

Commercial paper

7,531 3 7,534 — 7,534

Government securities

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

$ 85,792 $ 30 $ 85,822 $ 42,718 $ 43,104

Private placement warrant liability

$ — $ — $ — $ — $ —

Derivative warrant liabilities

Derivative warrant liability

Total financial liabilities

$ — $ — $ 560 $ — $ —

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

33 unchanged sentences

Private Placement Warrant Liability :

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

The warrants originally issued in connection with the initial public offering of CF Finance Acquisition Corp.

III (the “Private Placement Warrants”) are recorded on the condensed consolidated balance sheets at fair value.

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

1 unchanged sentence

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

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):

For the six months ended June 30, 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 six months ended June 30, 2026 (in thousands):

Derivative Warrant Liabilities

1 unchanged sentence

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

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

Balance at June 30, 2026

The key inputs into the Black-Scholes model for the derivative warrant issued as a result of the lease settlement valued at June 30, 2026 are as follows:

June 30, 2026

Expected term (years)

6 unchanged sentences

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

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

March 31, 2026

Inventory, net of write-downs, as of June 30, 2026 and December 31, 2025 were as follows (in thousands):

June 30, 2026

December 31, 2025

3 unchanged sentences

Total inventory, net

$ 963 $ 1,015

PREPAID AND OTHER CURRENT ASSETS

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

March 31, 2026

Prepaid and other current assets as of June 30, 2026 and December 31, 2025 were as follows (in thousands):

June 30, 2026

December 31, 2025

Prepaid expenses

$ 1,241 $ 2,022

Total prepaid and other current assets

$ 1,397 $ 2,081

The Company leases office facilities in Northern California under non-cancelable operating leases.

7 unchanged sentences

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 .

The Company recorded a net gain on termination of operating lease of $ 1,612 during the six months ended June 30, 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,

The components of operating lease expenses, excluding the gain (loss) on early termination of operating lease, for the three and six months ended June 30, 2026 and 2025 , are as follows (in thousands):

Three months ended June 30,

Six months ended June 30,

Operating lease cost

4 unchanged sentences

Years ending - December 31:

2026 (remaining nine months)

2026 (remaining six months)

Total lease payments

2 unchanged sentences

ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES

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

March 31, 2026

Accrued expenses and other current liabilities as of June 30, 2026 and December 31, 2025 are as follows (in thousands):

June 30, 2026

December 31, 2025

1 unchanged sentence

Operating lease liabilities

Accrued payroll taxes

Accrued bonuses

1 unchanged sentence

Total accrued expenses and other current liabilities

$ 2,341 $ 4,957

CONVERTIBLE NOTES

4 unchanged sentences

2025 Convertible Note

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

In January 2025, the Company entered into a Securities Purchase Agreement with a certain institutional investor and issued (i) 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 %, had a term of eighteen months and accrued interest at the rate of 7 % per annum.

3 unchanged sentences

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

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

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

9 unchanged sentences

INTEREST EXPENSE AND OTHER

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,

Interest expense and other for the three and six months ended June 30, 2026 and 2025 consisted of the following (in thousands):

Three months ended June 30,

Six months ended June 30,

Common stock purchase agreements costs

1 unchanged sentence

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

( 91 ) ( 91 )

Expected credit losses

Foreign exchange gains (losses)

Interest expense and other

$ ( 22 ) $ 2,108

STOCKHOLDERS' EQUITY

1 unchanged sentence

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 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.

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 from the Company, 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 approved 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.

4 unchanged sentences

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 .

The CSPA was terminated in December 2025.

Prior to its termination, the Company issued 8,980,713 shares of its common stock, including commitment shares, for gross proceeds totaling $ 27,754 , pursuant to the CSPA.

Alliance Global Partners ( “ A.G.P.

” ) At Market Issuance Sales Agreement (the “ ATM Agreement ” )

On September 12, 2024 , the Company entered into the ATM and a Registration Rights Agreement with A.G.P.

On September 12, 2024 , the Company entered into the ATM with A.G.P.

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

6 unchanged sentences

The Company has sold 24,070,541 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 .

under the ATM Agreement for gross proceeds totaling $ 70,412 through June 30, 2026 .

The remaining availability under the agreement is $ 54,588 as of June 30, 2026 .

ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS)

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):

The changes in accumulated other comprehensive income (loss) by component for the three and six months ended June 30, 2026 and 2025 are as follows (in thousands):

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

2 unchanged sentences

Balance at March 31, 2026

Other comprehensive income (loss), net of tax

Balance at June 30, 2026

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

2 unchanged sentences

Balance at March 31, 2025

Other comprehensive income (loss), net of tax

Balance at June 30, 2025

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 March 31,

Three months ended June 30,

Six months ended June 30,

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

$ ( 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.

Due to net losses for the three and six months ended June 30, 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:

Three months ended March 31,

Six months ended June 30,

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

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:

Market-Based Restricted Stock Units

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 the achievement of specified market conditions and continued service (the “February 2026 PSU Awards”).

In June 2026, the Board of Directors approved additional grants totaling 1,800,000 market-based RSUs with the same vesting conditions (the “June 2026 PSU Awards”).

Vesting occurs 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, in each case prior to December 31, 2030.

The February 2026 PSU Awards will be settled in common stock on a prorated basis to the extent shares are available under the 2021 Equity Incentive Plan (the “Plan”);

otherwise, vested awards will be settled in cash based on the fair market value of the Company’s common stock on the settlement date, defined as the five -day trailing average closing price as reported by NASDAQ.

The June 2026 PSU Awards do not provide a cash-settlement alternative and will be settled in common stock upon vesting.

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

Expected term (years)

2 unchanged sentences

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.

The Company classified these awards as equity at the initial grant date and at June 30, 2026.

If, in a future period, the Company does not have sufficient shares available under the Plan to settle the February 2026 PSU Awards upon vesting, some or all of the February 2026 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,

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 six months ended June 30, 2026 and 2025 (in thousands):

Three months ended June 30,

Six months ended June 30,

Research and development

2 unchanged sentences

Total stock-based compensation

$ 1,542 $ 2,501

SEGMENT INFORMATION

6 unchanged sentences

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 recorded revenue for product sales of $ 172 and $ 273 in the three and six months ended June 30, 2026 and $ 22 and $ 22 .

in the three and six months ended June 30, 2025 , respectively.

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

1 unchanged sentence

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.

The Company assessed the number of performance obligations associated with the promises under each agreement and recognized $ 30 and $ 30 in revenue for performance obligations that had been satisfied as of the three and six months ended June 30, 2026 , respectively, and $ 0 and $ 64 in the three and six months ended June 30, 2025 , in the condensed consolidated statements of operations and comprehensive loss.

Disaggregation of Revenue

1 unchanged sentence

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

Three months ended March 31,

Three months ended June 30,

Six months ended June 30,

Revenue by primary geographical market:

4 unchanged sentences

Contract Liabilities

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

The Company had no contract liabilities as of six months ended June 30, 2026 and 2025 .

Remaining Performance Obligations

3 unchanged sentences

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.

For the six months ended June 30, 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.

12 unchanged sentences

AEye Technologies, Inc.

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.

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, that the former vendor was repeatedly made aware of the existence of such defects, and has asserted counterclaims in the arbitration.

The arbitration hearing was held in July 2026, and the Company expects the arbitrator to issue an award in the second half of 2026.

Because the outcome turns on disputed issues concerning the alleged defective and late delivery of the devices and the Company’s counterclaims, the Company is unable to predict the outcome of the arbitration or to estimate the amount of probable loss, if any, at this time.

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

This Management ’ s Discussion and Analysis of Financial Condition and Results of Operations contains forward-looking statements that are based on current expectations, estimates, assumptions, and projections about our industry, business, and future financial results.

Our actual results and the timing of events may differ materially from those described in or implied by these forward-looking statements due to a number of factors, including those discussed below and those set forth under in Part II, Item 1A, of this Quarterly Report under the heading “ Risk Factors ” and other filings we make with the SEC from time to time.

Our actual results and the timing of events may differ materially from those described in or implied by these forward-looking statements due to a number of factors.

You should read the sections of this Quarterly Report on Form 10-Q titled “ Risk Factors ” and “Cautionary Note Regarding Forward-Looking Statements” for a discussion of such factors that could cause our actual results to differ materially from the results described in or implied by the forward-looking statements contained in the following discussion and analysis.

Unless the context otherwise requires, references in this Management ’ s Discussion and Analysis of Financial Condition and Results of Operations to “ we, ” “ our, ” “ us, ” and “ AEye, ” refer to the business and operations of AEye, Inc.

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

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

We believe that an understanding of these trends is important to understanding our financial results for the six months ended June 30, 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.

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

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

Key Factors Affecting Our Operating Results

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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.

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, sports analytics, and intelligent transportation systems, or ITS, segments.

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

9 unchanged sentences

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.

During the first half of 2026, we experienced increased commercial traction that we believe marks an inflection point in our transition from development toward commercialization.

Revenue was $303 for the six months ended June 30, 2026, up 252% from $86 in the six months ended June 30, 2025.

Partnerships and Commercialization

8 unchanged sentences

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.

We recently 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 believe 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.

In May 2024, we announced a strategic partnership with Accelight Technologies, Inc.

("ATI") and LighTekton Co., Ltd to manufacture and distribute our products in China.

("ATI") and LighTekton Co., Ltd ("LighTekton") to manufacture and distribute our products in China.

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

1 unchanged sentence

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.

We have since expanded our collaboration and validated 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.

4 unchanged sentences

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.

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.

Since launch, we’ve transitioned OPTIS™ from concept to a structured offering.

Our flagship OPTIS™ deployments in California and Michigan are live at active intersections and a highway, and provide the potential for a complete traffic management solution that integrates our lidar, perception, and actuation in conjunction with our partners Flasheye,Blue-Band and Vueron.

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

5 unchanged sentences

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.

During the second quarter of 2026, we partnered with MoveAWheeL to explore combining Apollo’s™ long-range 3D object detection with MoveAWheeL’s acoustic road-surface friction sensing, with the goal of providing real-time predictive road-surface friction data to improve advanced driver-assistance and autonomous driving performance in adverse weather.

Evaluations are underway in select geographies, however there can be no assurance that it will result in a commercial relationship or in commercial sales for us.

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

We are being evaluated for expanded use cases with these customers, and 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.

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

We also anticipate being able to leverage on our foundation in the Automotive market to be more cost competitive in other markets.

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

We also anticipate being able to leverage our foundation in the Automotive market to be more cost competitive in other markets.

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

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.

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

We believe the software-defined nature of our architecture has increasingly been a factor in customer evaluations and selections.

Because Apollo™ and STRATOS™ are built on a common software-defined platform, customers can configure range, resolution, and field of view, and enable perception features, through software rather than hardware changes, allowing a single architecture to address application-specific requirements across automotive, commercial trucking, aerospace and defense, intelligent transportation systems and other industries.

There can be no assurance, however, that this differentiation will result in design wins or commercial sales for us.

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

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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.

Revenue from development and/or collaboration contracts are earned from R&D activities and collaboration with OEMs, Tier 1 suppliers and other 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 perception capabilities to meet specific customer needs.

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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.

We have fully repaid the 2025 Note in 2025.

We expect the change in fair value of warrant liabilities to decrease as the warrant associated with the 2022 Note was cancelled and the warrant associated with the 2025 Note was exercised in full in 2025.

Interest Income, Interest Expense and Other

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Results of Operations

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

Comparison of the three months ended June 30, 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 three months ended March 31, 2026 and 2025 (in thousands, except for percentages):

Three months ended March 31,

The following table sets forth our consolidated results of operations data for the three months ended June 30, 2026 and 2025 (in thousands, except for percentages):

Three months ended June 30,

Cost of revenue

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Provision for income tax

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.

Revenues increased by $180, or 818%, to $202 for the three months ended June 30, 2026, from $22 for the three months ended June 30, 2025.

This increase is primarily due to the higher volume of Apollo TM lidar units sold and higher contract development revenues during the quarter.

Cost of Revenue

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.

Cost of revenue increased by $255, or 236%, to $363 for the three months ended June 30, 2026, from $108 for the three months ended June 30, 2025.

This increase was primarily due to the higher volume of product sales in the current quarter.

Operating Expenses

Research and Development

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.

Research and development expenses increased by $1,073, or 29%, to $4,743 for the three months ended June 30, 2026, from $3,670 for the three months ended June 30, 2025.

This increase was primarily driven by an increase in personnel costs, net of allocations, of $307, increased fees paid to third party development work of $314, allocated information technology and facilities expense of $135, engineering parts and lab equipment and other research and development expenses of $271.

Sales and Marketing

Sales and marketing expenses increased by $546, or 91%, to $1,147 for the three months ended June 30, 2026, from $601 for the three months ended June 30, 2025.

This increase was primarily driven by increases in personnel costs, including allocations, of $159 and marketing, trade show and consultant expenses of $277 as we continue to invest in sales and marketing activities to build brand awareness and expand our commercial pipeline.

General and Administrative

General and administrative expenses increased by $356, or 8%, to $4,704 for the three months ended June 30, 2026, from $4,348 for the three months ended June 30, 2025.

This increase was primarily driven by higher stock-based compensation of $1,230, partially offset by decreased personnel costs, net of allocations, of $448, and decreases in professional fees and stock related costs of $216.

Change in Fair Value of Convertible Note and Warrant Liabilities

Change in fair value of convertible note and warrant liabilities decreased by $723 to $130 for the three months ended June 30, 2026, from $593 for the three months ended June 30, 2025.

This decrease was primarily due to the change in fair value of the 2025 Note and warrants related to the 2025 Note and 2022 Note, which were fully settled or cancelled in 2025.

Interest Income and Other

Interest income and other increased by $198, or 50%, to $591 for the three months ended June 30, 2026, from $393 for the three months ended June 30, 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 decreased by $377, to a net income of $12 for the three months ended June 30, 2026, from a net expense of $365 for the three months ended June 30, 2025.

This decrease was primarily due to a decrease in costs related to financing arrangements of $134 and lower foreign exchange losses (gains), net, of $230.

Net loss increased by $752, or 8%, to $10,022 for the three months ended June 30, 2026, from $9,270 for the three months ended June 30, 2025.

This increase was primarily due to higher stock-based compensation and increased engineering spend, partially offset by lower changes in fair value of convertible note and warrants.

Comparison of the six months ended June 30, 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 six months ended June 30, 2026 and 2025 (in thousands, except for percentages):

Six months ended June 30,

Total revenue

Cost of revenue

Research and development

Sales and marketing

General and administrative

Total operating expenses

Loss from operations

Change in fair value of convertible note and warrant liabilities

Interest income and other

Interest expense and other

Total other income (expense), net

Loss before income tax

Provision for income tax

Revenues increased by $217, or 252%, to $303 for the six months ended June 30, 2026, from $86 for the six months ended June 30, 2025.

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

Cost of Revenue

Cost of revenue increased by $360, or 176%, to $564 for the six months ended June 30, 2026, from $204 for the six months ended June 30, 2025.

This increase was primarily due to higher volumes of product sales during the year.

Operating Expenses

Research and Development

Research and development expenses increased by $1,348, or 19%, to $8,508 for the six months ended June 30, 2026, from $7,160 for the six months ended June 30, 2025.

This increase was primarily driven by an increase in personnel costs, net of allocations, of $844.

The increase was also related to increased fees paid to third party development work of $347, engineering parts and lab equipment of $194, other research and development expenses of $279, and allocated information technology and facilities expense of $145.

These increases were partially offset by a decrease in stock-based compensation expense of $496.

Sales and Marketing

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.

Sales and marketing expenses increased by $1,149, or 117% to $2,133 for the six months ended June 30, 2026, from $984 for the six months ended June 30, 2025.

This increase was primarily driven by increases in personnel costs, net of allocations, of $519, and increased travel, marketing, trade show and consultant expenses of $510, as we continue to invest in sales and marketing activities to build brand awareness and expand our commercial pipeline.

General and Administrative

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.

General and administrative expenses increased by $1,639, or 23%, to $8,882 for the six months ended June 30, 2026, from $7,243 for the six months ended June 30, 2025.

This increase was primarily driven by a favorable adjustment of $1,612 upon settlement of a lease dispute during the six months ended June 30, 2025.

The increase was also due to higher stock-based compensation of $800, partially offset by decreases in personnel costs, net of allocations, of $198, professional fees and stock related costs of $409, and insurance expense of $92.

Change in Fair Value of Convertible Note and Warrant Liabilities

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.

Change in fair value of convertible note and warrant liabilities decreased by $62 to a favorable change of $149 for the six months ended June 30, 2026, from a favorable change of $87 for the six months ended June 30, 2025.

This decrease was primarily due to the change in fair value of the 2025 Note and warrants related to the 2025 Note and 2022 Note, which were fully settled or cancelled in 2025.

Interest Income and Other

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.

Interest income and other increased by $629, or 104%, to $1,236 for the six months ended June 30, 2026, from $607 for the six months ended June 30, 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 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.

Interest expense and other decreased by $2,507, to a net income of $34 for the six months ended June 30, 2026, from a net expense of $2,473 for the six months ended June 30, 2025.

This decrease was primarily due to a decrease in costs related to financing arrangements of $2,020 and lower foreign exchange losses (gains), net, of $402.

Net loss increased by $1,081, or 6%, to $18,367 for the six months ended June 30, 2026, from $17,286 for the six months ended June 30, 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.

The increase is also due higher personnel costs and stock-based compensation, increased engineering spend and increased business development and marketing activities, partially offset by decreased financing costs.

Liquidity and Capital Resources

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

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

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

Shelf Registration

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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.

The Shelf is scheduled to expire in September 2026, and on May 19, 2026, we filed a replacement registration statement on Form S-3 (the “2026 Shelf”) to maintain our capacity to raise capital.

The 2026 Shelf registers the offering and sale, from time to time, of up to $200,000 of our common stock, preferred stock, debt securities, warrants, rights, and units, in one or more offerings.

The 2026 Shelf had not been declared effective by the SEC as of the date of this Quarterly Report.

Dowslake 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 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.

As of June 30, 2026, we have sold 24,070,541 shares under the ATM Agreement for gross proceeds totaling $70,412 and have remaining availability of $54,588.

2025 Convertible Note

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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.

For the six months ended June 30, 2026 and 2025, we had a net loss of $18,367 and $17,286, 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.

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Cash Flow Summary

Three months ended March 31,

Six months ended June 30,

(in thousands)

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Operating Activities

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.

For the six months ended June 30, 2026, net cash used in operating activities was $15,842.

Factors affecting operating cash flows during this period were net loss of $18,367, partially offset by stock-based compensation of $3,961 common stock purchase agreement costs of $233 and noncash lease expense relating to operating lease right-of-use assets of $193.

Within operating activities, the net changes in operating assets and liabilities were cash used of $1,702, primarily driven by an increase in accounts receivable, net, of $139, and decreases in accrued expenses and other liabilities, and operating lease liabilities of $2,054, and $201, respectively.

Cash used was offset by cash provided by a decrease in prepaid and other current assets of $480 and an increase in accounts payable of $147.

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

For the six months ended June 30, 2025, net cash used in operating activities was $14,158.

Factors affecting operating cash flows during this period were a net loss of $17,286, a gain on termination of an operating lease, net, of $1,612, and change in fair value of convertible notes and warrant liabilities of $87, partially offset by stock-based compensation of $3,661, debt issuance costs of $2,020, and common stock purchase agreement costs of $306.

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Investing Activities

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.

For the six months ended June 30, 2026, net cash used in investing activities was $17,530.

The primary factors affecting net cash used in investing activities during this period were purchases of marketable securities of $31,411 and property and equipment of $319.

The cash outflow was partially offset by proceeds from the redemptions and maturities of marketable securities of $14,200.

For the six months ended June 30, 2025, net cash used in investing activities was $4,686.

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 $9,631.

Financing Activities

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.

For the six months ended June 30, 2026, net provided by financing activities was $1,226.

The primary factors affecting financing cash flows during this period were proceeds from the issuance of common stock under the common stock purchase agreement of $1,977 and through the Employee Stock Purchase Plan of $109, partially offset by taxes paid on net settlement of equity awards of $519 and payments of stock issuance costs related to common stock purchase agreement of $341.

For the six months ended June 30, 2025, net cash provided by financing activities was $10,952.

The primary factors affecting financing cash flows during this period were proceeds from common stock purchase agreement of $10,076 and from the issuance of a convertible note of $2,950, partially offset by payments on convertible note of $750, payments of debt issuance costs of $608, taxes paid on net settlement of equity awards of $364 and payments of stock issuance costs related to common stock purchase agreements of $404.

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 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.

During the six months ended June 30, 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