What changed in this filing

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Item 1A. Risk Factors

2026-08-06 compared with 2026-05-14 · 110 added, 14 removed, 926 unchanged (12% of the section changed)

19 unchanged sentences

If market adoption of lidar does not continue to develop, or adoption is deferred, or otherwise develops more slowly than we expect, our business will be adversely affected.

We have begun to pursue, and expect to continue to pursue, opportunities in new and adjacent markets, in which we have limited or no prior experience.

Entering new markets requires additional investment, subjects us to new risks and compliance requirements, and may not be successful.

Our growing defense and government-related business subjects us to procurement, compliance, and funding risks that differ from those applicable to our commercial business, including risks relating to government appropriations, terminations for convenience, and audits.

The complexity of our products could result in unforeseen delays or expenses from undetected defects, errors, or reliability issues in our hardware or software which could reduce the market adoption of our products, damage our reputation with current or prospective customers, and expose us to product liability and other claims, thereby adversely affecting our operating costs.

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We have incurred net losses in each year since our inception.

In the three months ended March 31, 2026 and 2025, we incurred net losses of approximately $8.3 million and $8.0 million, respectively.

In the six months ended June 30, 2026 and 2025, we incurred net losses of approximately $18.4 million and $17.3 million, respectively.

We expect that we will continue to incur significant losses through at least the next few years as we:

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maintain a level of general and administrative spending to meet the requirements of operating as a public company.

As of March 31, 2026, we had an accumulated deficit of approximately $415.4 million.

As of June 30, 2026, we had an accumulated deficit of approximately $425.4 million.

Even if we are able to increase sales or licensing of our products, there can be no assurance that we will be commercially successful.

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If we are unable to obtain adequate financing or financing on terms satisfactory to us, when we require it, our ability to continue to support our business and to respond to business challenges could be significantly limited.

In the recent past, we have been subject to the “baby shelf” rules and we may become subject to such rules again.

In the event we again become subject to the “baby shelf” rules, it would limit our ability to raise additional capital to one-third of our public float in any twelve-month period.

Our existing shelf registration statement expires in September 2026, and if our replacement shelf registration statement is not declared effective in a timely manner, or if we become subject to “baby shelf” limitations, our ability to access the capital markets and fund our operations could be materially impaired.

Our ability to raise capital efficiently depends substantially on maintaining an effective shelf registration statement on Form S-3.

Our existing shelf registration statement is scheduled to expire on September 26, 2026, upon the third anniversary of its effective date.

On May 19, 2026, we filed a replacement registration statement on Form S-3 registering up to $200.0 million of securities.

Because we filed the replacement registration statement before the expiration of our existing registration statement, we believe that, under Rule 415(a)(5) under the Securities Act, we may continue to offer and sell securities under the existing registration statement until the earlier of the effective date of the replacement registration statement and 180 days after the third anniversary of the effective date of the existing registration statement.

On May 27, 2026, the staff of the SEC’s Division of Corporation Finance advised us that it had not reviewed, and did not intend to review, the replacement registration statement.

The replacement registration statement will not become effective, however, until we request acceleration of its effective date in accordance with Rules 460 and 461 under the Securities Act and the SEC declares it effective.

As of the date of this Quarterly Report, we had not yet requested acceleration of the effective date of the replacement registration statement and it had not been declared effective.

Until the replacement registration statement is declared effective, we cannot sell securities under it, including under any new at-the-market equity offering program we may seek to establish thereunder, and our ability to raise capital may be limited until such effectiveness.

Although we expect to request acceleration of the effective date of the replacement registration statement before our ability to use the existing registration statement lapses, we cannot assure you that the replacement registration statement will be declared effective on the timeline we anticipate, or at all.

The SEC staff’s decision not to review the registration statement does not preclude the staff from subsequently reviewing or commenting on the registration statement or on the documents incorporated by reference therein, which could delay effectiveness or require us to amend the registration statement.

We and our management remain responsible for the accuracy and adequacy of all disclosures contained therein and incorporated by reference.

In addition, intervening events, including any failure by us to continue to satisfy the eligibility requirements for the use of Form S-3, could delay effectiveness or limit our ability to use the registration statement.

If the replacement shelf registration statement is not declared effective before our ability to offer and sell securities under the existing registration statement lapses, if we are required to register securities on Form S-1, or if we become subject to the limitations commonly known as the “baby shelf” rules because our public float falls below $75.0 million, which would limit the amount of securities we may sell under a shelf registration statement to one-third of our public float in any twelve-month period, we may be unable to raise capital on a timely basis or on acceptable terms, may be required to use more costly or dilutive alternatives, and may need to delay or curtail planned investments.

Any of these outcomes could have a material adverse effect on our business, results of operations, financial condition, and prospects.

Any restructuring actions and cost reduction initiatives that we undertook, or may undertake in the future, may not deliver the results we expect, and these actions may adversely affect our business.

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We expect to continue to incur R&D costs as part of our efforts to design, develop, manufacture, and commercialize new products and enhance existing products.

Our R&D expenses were approximately $3.8 million and $3.5 million during the three months ended March 31, 2026 and 2025, respectively, and may increase in the future.

Our R&D expenses were approximately $8.5 million and $7.2 million during the six months ended June 30, 2026 and 2025, respectively, and may increase in the future.

Because we account for R&D as an operating expense, these expenditures will adversely affect our results of operations in the future.

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Our inability to secure OEM program wins through our partnerships, or to successfully build and expand the OPTIS™ ecosystem, could materially and adversely affect our business, financial condition, results of operations, and prospects.

We have begun to pursue, and expect to continue to pursue, opportunities in new and adjacent markets in which we have limited or no prior experience, and these efforts require significant investment, subject us to new regulatory and compliance requirements, may divert resources from our existing business, and may not be successful.

As part of our strategy to expand within Non-Automotive markets, we have begun pursuing, and expect to continue to pursue, opportunities in new and adjacent markets.

We have limited or no prior experience designing, qualifying, marketing, selling, or supporting products for these markets.

Each new market presents distinct technical requirements, performance and environmental specifications, customer expectations, procurement practices, sales cycles, and competitive dynamics, and addressing these requirements can be time-consuming and costly.

Pursuing these opportunities requires significant investment of management attention and financial, engineering, and other resources, which may divert resources from our Automotive and other Non-Automotive markets.

These investments may prove more costly than we currently anticipate and may never generate revenue sufficient to offset their costs.

New markets may also subject us to legal, regulatory, contractual, and other compliance requirements with which we have limited experience.

Some new markets may require our products to be qualified or certified for use in demanding operating environments, may subject us to government contracting and procurement requirements, including requirements that flow down from prime contracts relating to intellectual property and data rights, cybersecurity, and the safeguarding of sensitive information, or may implicate additional or more restrictive export control requirements applicable to certain products and related technology.

Complying with these requirements may be lengthy, costly, and uncertain, and may require substantial modifications to our products, supply chain, manufacturing operations, compliance programs, or contractual arrangements with our partners.

There is no assurance that we will be able to achieve or maintain compliance in all respects, and any failure to do so could limit our opportunities in such market or subject us to liability.

Because these markets are new to us, and because in some cases the use of lidar in these markets is itself new and unproven, it is difficult to predict the level of customer demand, adoption rates, sales cycles, or the size and timing of the market opportunities.

Prospective customers in new markets may be in testing, development, or demonstration phases and may never place commercial orders.

There can be no assurance that our pursuit of any new market will be successful, that we will secure design wins, contract awards, or commercial orders, or that any revenue generated from new markets will justify the investments we make.

If we are unable to successfully enter new markets, or if we do so on a delayed basis or at greater cost than we anticipate, our business, results of operations, financial condition, and prospects could be materially and adversely affected.

Our growing defense and government-related business subjects us to procurement, compliance, and funding risks that differ from those applicable to our commercial business.

The defense and aerospace market has become our most active market vertical, and we expect sales into defense and other government-related programs to represent a growing share of our revenue.

Sales into these programs, whether made directly or through prime contractors, integrators, or distribution partners, subject us to requirements that do not apply to our commercial business and with which we have limited operating experience.

These include the Federal Acquisition Regulation and the Defense Federal Acquisition Regulation Supplement and the flow-down provisions our partners may impose on us;

domestic-content, supply-chain, and sourcing restrictions, including those arising under the National Defense Authorization Act and related procurement rules;

cybersecurity and information-safeguarding obligations, including the Cybersecurity Maturity Model Certification framework;

facility and personnel security requirements;

and specialized quality, testing, and qualification standards.

Compliance with these requirements may require us to make investments in systems, personnel, and processes that we have not historically maintained, and we may not be able to satisfy these requirements on the timelines our customers require, or at all.

Government-related programs are also subject to funding and procurement risks outside of our control.

Program funding depends on appropriations that may be reduced, delayed, or eliminated, including as a result of shifting policy priorities, continuing resolutions, or a lapse in appropriations.

Contracts and subcontracts may permit termination for convenience, in which case we may recover only limited costs, and may be modified, descoped, or recompeted.

In addition, we and our partners may be subject to audits, reviews, and investigations relating to pricing, cost accounting, quality, or compliance, which can result in contract adjustments, withheld payments, penalties, or suspension or debarment from future government business.

Because our defense and government-related engagements are concentrated among a small number of customers and programs, an adverse outcome affecting any one of them could disproportionately affect our results.

Any of the foregoing could have a material adverse effect on our business, results of operations, financial condition, and prospects.

Although we believe that lidar is an essential technology for autonomous vehicles and other emerging applications, market adoption of lidar is uncertain.

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If our artificial intelligence investments do not produce the intended benefits, or if competitors deploy more advanced or cost-effective artificial intelligence capabilities than we are able to deploy, our competitive position, results of operations, and prospects could be materially and adversely affected.

Increasing legislative and regulatory focus on artificial intelligence, including scrutiny of AI-driven safety systems, could subject us or our customers to new compliance obligations, delay the adoption of systems that incorporate our products, and adversely affect our business.

Legislators and regulators in the United States and other jurisdictions are increasingly focused on the development, deployment, and use of artificial intelligence, and the legal and regulatory landscape governing artificial intelligence is evolving rapidly and remains uncertain.

For example, the European Union’s Artificial Intelligence Act imposes obligations on providers and users of certain artificial intelligence systems, including systems that function as safety components of regulated products, and various U.S.

federal and state legislative and regulatory initiatives target artificial intelligence systems, including those used in safety-critical applications such as automated driving.

Because our sensing system is driven by deterministic artificial intelligence, and because our customers may incorporate our products into ADAS, autonomous driving, and other safety-related systems that rely on artificial intelligence and machine learning, these developments could subject us or our customers to new compliance, testing, certification, transparency, data governance, human oversight, documentation, or risk-management obligations.

Compliance with these requirements, and with any additional requirements our customers impose in order to satisfy their own obligations under these frameworks, could increase our development and compliance costs, require modifications to our products or development processes, extend qualification timelines, delay or complicate our customers’ development and commercialization programs, or delay regulatory approval or market adoption of AI-driven safety systems that incorporate our products.

Regulatory uncertainty may also cause customers to delay or forgo deployments of systems that incorporate our products.

Regulators may also increase their scrutiny of AI-driven safety systems in response to accidents or other safety events involving such systems generally, which could result in new restrictions, reporting obligations, recalls, or deployment delays even where our products perform as intended.

In addition, evolving regulatory frameworks may not distinguish among different artificial intelligence architectures, and our deterministic approach may become subject to requirements designed for other types of artificial intelligence systems.

If we or our customers are unable to comply, or are perceived as unable to comply, with evolving artificial intelligence laws and regulations in a timely and cost-effective manner, or if such laws and regulations delay or reduce the adoption of systems that incorporate our products, our business, results of operations, financial condition, and prospects could be materially and adversely affected.

We depend on third-party platforms and ecosystems, including the NVIDIA DRIVE AGX platform, and changes to those platforms, the loss of compatibility or support, or changes in the strategies of platform providers could materially and adversely affect our business.

The commercialization of our lidar solutions depends in part on their integration with, and continued compatibility with, third-party platforms and ecosystems, including the NVIDIA DRIVE AGX platform in the Automotive market and the third-party perception, analytics, and other software integrated into our OPTIS™ platform in Non-Automotive markets.

We do not control the design, development roadmaps, release schedules, technical requirements, certification processes, or commercial strategies of these third-party platforms.

Platform providers may modify their platforms in ways that require us to expend significant engineering resources to maintain compatibility, may deprecate features or interfaces on which our integrations rely, may decline to support current or future versions of our products, may prioritize or favor competing lidar sensors or alternative sensing modalities, may develop competing solutions of their own, or may discontinue their platforms or exit the relevant markets entirely.

If we are unable to achieve or maintain integration with these platforms on a timely and cost-effective basis, or at all, or if platform providers change their strategies in ways that are adverse to us, our ability to support customers that have adopted those platforms would be impaired, and those customers may select competing products that are better supported on such platforms.

In addition, our reliance on third-party platforms means that problems affecting those platforms, including defects, security vulnerabilities, performance issues, or reputational harm, could adversely affect the larger systems into which our products are integrated, and therefore demand for our products, even where our products perform as intended.

Any of the foregoing could materially and adversely affect our business, results of operations, financial condition, and prospects.

Our outsourced manufacturing business model for the Non-Automotive market may not be successful, which could harm our ability to deliver products and recognize revenue in the Non-Automotive market.

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Our sales and operations in international markets expose us to associated operational, financial, and regulatory risks.

Sales to international customers accounted for 26% and 100% of our revenue during the three months ended March 31, 2026 and 2025, respectively.

Sales to international customers accounted for 17% and 94% of our revenue during the six months ended June 30, 2026 and 2025, respectively.

In May 2024, we announced that we have partnered with Accelight Technologies, Inc.

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We are highly dependent on the services of our executive officers.

We are highly dependent on our executive officers, in particular, Matthew Fisch, our Chief Executive Officer, and Conor B.

Tierney, our Chief Financial Officer.

We are highly dependent on our executive officers, in particular, Matthew Fisch, our Chief Executive Officer, Conor B.

Tierney, our Chief Financial Officer, and Erica Allen, our Chief People Officer.

The loss of any of our executive officers or other senior executives could adversely affect our business because the loss could make it more difficult to, among other things, compete with other market participants, continue to develop innovative product designs, and retain existing customers or cultivate new ones.

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In 2025, a group of dissident stockholders initiated a proxy contest and, among other things, opposed company proposals that provided for the replenishment of our employee equity incentive plan.

The opposition was successful and has significantly impaired our ability to offer competitive equity-based compensation, which is a key component of our strategy to attract, retain, and motivate employees.

We may experience proxy contests in the future and the uncertainty surrounding the outcome of any proxy contest may also create internal disruption, reduce employee morale, and make it more difficult to recruit new talent.

The opposition was successful and had significantly impaired our ability to offer competitive equity-based compensation, which is a key component of our strategy to attract, retain, and motivate employees.

We may experience similar proxy contests in the future and the uncertainty surrounding the outcome of any proxy contest may also create internal disruption, reduce employee morale, and make it more difficult to recruit new talent.

Any loss of key personnel or inability to attract and retain qualified employees could materially and adversely affect our business, product development efforts, and long-term growth prospects.

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These matters may include disputes with our suppliers and customers, intellectual property claims, stockholder litigation, government investigations, class action lawsuits, personal injury claims, environmental issues, customs and value-added tax disputes, and employment and tax issues.

In 2025, we were notified by a former vendor that it intended to pursue a claim against our subsidiary, AEye Technologies, Inc., arising out of an agreement entered into in May 2020, in which the former vendor alleges that our subsidiary failed to pay approximately $3.3 million, 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 our subsidiary pursuant to the underlying purchase agreement.

Our subsidiary has, 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, we are unable to estimate the possible loss or range of loss that could result from an unfavorable outcome in this legal proceeding

In 2025, we were notified by a former vendor that it intended to pursue a claim against the Company's wholly owned subsidiary, AEye Technologies, Inc., arising out of an agreement entered into in May 2020, in which the former vendor alleges that AEye Technologies, Inc.

failed to pay approximately $3.3 million, 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.

Our subsidiary 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.

In 2024, we were purportedly served with a complaint that alleged we were in breach of a lease for office space in Dublin, California, entered into by our subsidiary, AEye Technologies, Inc.

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If we fail to comply with these laws and regulations, we and certain of our employees could be subject to substantial civil or criminal penalties, including the possible loss of export or import privileges, and fines, which may be imposed on us and the employees or officers responsible to prohibit such shipments and, in extreme cases, the incarceration of the employees or officers responsible.

Our pursuit of opportunities in China and other international markets exposes us to evolving export control, sanctions, and other geopolitical risks, and sudden changes in U.S.

or foreign trade regulations could restrict our ability to sell our products or transfer our technology.

Our products, software, and technology are subject to U.S.

export control and economic sanctions laws and regulations, including the Export Administration Regulations administered by the U.S.

Department of Commerce’s Bureau of Industry and Security and the sanctions programs administered by the U.S.

Treasury Department’s Office of Foreign Assets Control.

These regimes are subject to rapid and unpredictable change, particularly with respect to China and other jurisdictions that are the focus of U.S.

national security and trade policy.

government could, with little or no advance notice, expand the scope of controls applicable to lidar, sensing, or artificial intelligence technologies, impose new license requirements on exports, reexports, or transfers of our products or technology, add current or prospective customers, partners, or suppliers to restricted party lists, or impose end-use or end-user restrictions that limit the markets we may serve.

Any such changes could require us to obtain licenses that may be delayed or denied, prevent or restrict sales to particular customers or markets, require redesign of our products or supply chain, or strand investments we have made in particular markets or relationships.

These risks are heightened by our engagement of partners based in China to pursue the China lidar market.

Changes in U.S.

law or policy, including regulations restricting certain hardware and software with a nexus to China or other countries of concern from incorporation into connected vehicles, as well as Chinese laws and regulations, including China’s export control regime (which includes controls on rare earth elements and other critical minerals relevant to our supply chain), data security and localization requirements, anti-foreign sanctions law, and unreliable entity list, could restrict, condition, or penalize our ability to sell to, purchase from, manufacture with, or otherwise collaborate with counterparties in China.

Retaliatory measures between the U.S.

and China, or between the U.S.

and other trading partners, could be adopted quickly and unpredictably.

In addition, U.S.

“deemed export” rules may constrain our ability to share controlled technology with certain foreign national employees or contractors, which could affect our hiring, staffing, and product development.

If any of these risks materialize, we may be unable to realize the anticipated benefits of our international strategy, and our business, results of operations, financial condition, and prospects could be materially and adversely affected.

We are subject to, and must remain in compliance with, numerous laws and governmental regulations concerning the manufacturing, use, distribution, and sale of our products.

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Alternatively, if a court were to find the choice of forum provision contained in our Charter to be inapplicable or unenforceable in an action, we may incur additional costs associated with resolving such action in another jurisdiction, which could harm our business, financial condition, and results of operations.

Sales of a substantial number of shares of our common stock, including under our at-the-market equity offering program and the issuance of shares upon vesting of equity awards, have diluted and may continue to dilute our existing stockholders, adversely affect the market price of our common stock, and impair our ability to raise capital in the future.

We have financed a significant portion of our operations through sales of our common stock, including through our at-the-market equity offering program, and we expect to continue to do so for the foreseeable future.

Through June 30, 2026, we had sold 24,070,541 shares under our at-the-market equity offering program with A.G.P.

for aggregate gross proceeds of approximately $70.4 million, and approximately $54.6 million of capacity remained available under that program.

Our weighted average shares outstanding increased from 19,125,970 for the three months ended June 30, 2025 to 45,915,091 for the three months ended June 30, 2026, representing dilution to stockholders who held shares prior to those sales.

We may continue to sell shares under an at-the-market program or in other offerings at prices and in amounts we determine at the time of sale, which may be at prices below the then-current market price or below the price you paid for your shares.

We may not be required to give advance notice of, or obtain stockholder approval for, such sales, and investors may have no opportunity to limit or avoid the dilutive impact of such sales.

Because sales under an at-the-market program are made into the trading market at prevailing prices, the price at which we sell may be substantially below the price paid by existing stockholders, and sales may occur at times when our stock price is depressed.

Sales of substantial amounts of our common stock, or the perception that such sales could occur, could cause the market price of our common stock to decline significantly and could impair our ability to raise capital on acceptable terms.

In addition, shares issuable upon vesting of outstanding equity awards, including the additional 6,750,000 shares reserved for issuance under our equity incentive plan as approved by our stockholders at our 2026 annual meeting, and upon exercise of outstanding warrants, may further dilute existing stockholders.

We may also issue additional shares in connection with future acquisitions, strategic transactions, or other corporate purposes, which would result in additional dilution.

We cannot predict the effect, if any, that future sales or issuances of shares of our common stock, or the ability of shares for future sale or issuance, will have on the market price of our common stock.

We do not expect to declare any dividends in the foreseeable future.

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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 1A. Risk Factors