AEye, Inc. 10-Q

Item 1. Financial statements (Unaudited) AEYE, INC. CONDENSED CONSOLIDATED BALANCE SHEETS (In thousands, except share amounts and par value data) June 30, 2026 December 31, 2025 (Unaudited) ASSETS CURRENT ASSETS: Cash and cash equivalents $ 11,210 $ 43,356 Marketable securities 60,293 43,104 Accounts receivable, net 216 77 Inventories, net 1,003 1,015 Prepaid and other current assets 1,601 2,081 Total current assets 74,323 89,633 Right-of-use assets 1,281 441 Property and equipment, net 783 577 Other noncurrent assets 189 242 Total assets $ 76,576 $ 90,893 LIABILITIES AND STOCKHOLDERS’ EQUITY CURRENT LIABILITIES: Accounts payable $ 3,765 $ 3,615 Accrued expenses and other current liabilities 3,099 4,957 Total current liabilities 6,864 8,572 Operating lease liabilities, noncurrent 803 235 Convertible note, noncurrent 146 146 Other noncurrent liabilities 449 598 Total liabilities 8,262 9,551 COMMITMENTS AND CONTINGENCIES (Note 16) STOCKHOLDERS’ EQUITY: Preferred stock—$ 0.0001 par value: 1,000,000 shares authorized; no shares issued and outstanding — — Common stock—$ 0.0001 par value: 600,000,000 shares authorized; 46,488,312 and 45,169,913 shares issued and outstanding at June 30, 2026 and December 31, 2025 5 4 Additional paid-in capital 493,827 488,361 Accumulated other comprehensive (loss) income ( 98 ) 30 Accumulated deficit ( 425,420 ) ( 407,053 ) Total stockholders’ equity 68,314 81,342 Total liabilities and stockholders’ equity $ 76,576 $ 90,893 The accompanying notes are an integral part of these condensed consolidated financial statements. 4 Table of Contents AEYE, INC. CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS (In thousands, except share amounts and per share data) (Unaudited) ​ ​ Three months ended June 30, ​ ​ Six months ended June 30, ​ ​ ​ 2026 ​ ​ 2025 ​ ​ 2026 ​ ​ 2025 ​ Revenue ​ $ 202 ​ ​ $ 22 ​ ​ $ 303 ​ ​ $ 86 ​ Cost of revenue ​ ​ 363 ​ ​ ​ 108 ​ ​ ​ 564 ​ ​ ​ 204 ​ Gross loss ​ ​ ( 161 ) ​ ​ ( 86 ) ​ ​ ( 261 ) ​ ​ ( 118 ) OPERATING EXPENSES: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Research and development ​ ​ 4,743 ​ ​ ​ 3,670 ​ ​ ​ 8,508 ​ ​ ​ 7,160 ​ Sales and marketing ​ ​ 1,147 ​ ​ ​ 601 ​ ​ ​ 2,133 ​ ​ ​ 984 ​ General and administrative ​ ​ 4,704 ​ ​ ​ 4,348 ​ ​ ​ 8,882 ​ ​ ​ 7,243 ​ Total operating expenses ​ ​ 10,594 ​ ​ ​ 8,619 ​ ​ ​ 19,523 ​ ​ ​ 15,387 ​ LOSS FROM OPERATIONS ​ ​ ( 10,755 ) ​ ​ ( 8,705 ) ​ ​ ( 19,784 ) ​ ​ ( 15,505 ) OTHER INCOME (EXPENSE): ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Change in fair value of convertible note and warrant liabilities ​ ​ 130 ​ ​ ​ ( 593 ) ​ ​ 149 ​ ​ ​ 87 ​ Interest income and other ​ ​ 591 ​ ​ ​ 393 ​ ​ ​ 1,236 ​ ​ ​ 607 ​ Interest expense and other ​ ​ 12 ​ ​ ​ ( 365 ) ​ ​ 34 ​ ​ ​ ( 2,473 ) Total other income (expense), net ​ ​ 733 ​ ​ ​ ( 565 ) ​ ​ 1,419 ​ ​ ​ ( 1,779 ) Loss before income tax ​ ​ ( 10,022 ) ​ ​ ( 9,270 ) ​ ​ ( 18,365 ) ​ ​ ( 17,284 ) Provision for income tax ​ ​ — ​ ​ ​ — ​ ​ ​ 2 ​ ​ ​ 2 ​ Net loss ​ $ ( 10,022 ) ​ $ ( 9,270 ) ​ $ ( 18,367 ) ​ $ ( 17,286 ) Change in net unrealized gain (loss) on available-for-sale securities, net of tax ​ ​ ( 57 ) ​ ​ ( 6 ) ​ ​ ( 128 ) ​ ​ ( 5 ) Comprehensive loss ​ $ ( 10,079 ) ​ $ ( 9,276 ) ​ $ ( 18,495 ) ​ $ ( 17,291 ) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ PER SHARE DATA ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Net loss per common share (basic and diluted) ​ $ ( 0.22 ) ​ $ ( 0.48 ) ​ $ ( 0.40 ) ​ $ ( 0.95 ) Weighted average common shares outstanding (basic and diluted) ​ ​ 45,915,091 ​ ​ ​ 19,125,970 ​ ​ ​ 45,414,113 ​ ​ ​ 18,137,050 ​ The accompanying notes are an integral part of these condensed consolidated financial statements. 5 Table of Contents AEYE, INC. CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS ’ EQUITY For the six months ended June 30, 2026 and 2025 (In thousands, except share amounts) (Unaudited) ​ ​ ​ ​ Additional Accumulated Other ​ Total Preferred Stock Common Stock Paid-in Comprehensive Accumulated Stockholders’ Shares Amount Shares Amount Capital Income (Loss) Deficit Equity BALANCE—December 31, 2025 — $ — 45,169,913 $ 4 $ 488,361 $ 30 $ ( 407,053 ) $ 81,342 Stock-based compensation — — — — 1,542 — — 1,542 Issuance of common stock upon vesting of restricted stock units — — 327,896 — — — — — Taxes related to net share settlement of equity awards — — ( 151,890 ) — ( 252 ) — — ( 252 ) Other comprehensive loss, net of tax — — — — — ( 71 ) — ( 71 ) Net loss — — — — — — ( 8,345 ) ( 8,345 ) BALANCE—March 31, 2026 — $ — 45,345,919 $ 4 $ 489,651 $ ( 41 ) $ ( 415,398 ) $ 74,216 Stock-based compensation — — — — 2,419 — — 2,419 Issuance of common stock upon vesting of restricted stock units — — 315,141 — — — — — Taxes related to net share settlement of equity awards — — ( 141,649 ) — ( 267 ) — — ( 267 ) Issuance of common stock under the Common Stock Purchase Agreement — — 849,757 1 1,976 — — 1,977 Transaction costs related to the Common Stock Purchase Agreement — — — — ( 61 ) — — ( 61 ) Issuance of common stock through Employee Stock Purchase Plan — — 119,144 — 109 — — 109 Other comprehensive loss, net of tax — — — — — ( 57 ) — ( 57 ) Net loss — — — — — — ( 10,022 ) ( 10,022 ) BALANCE—June 30, 2026 — $ — 46,488,312 $ 5 $ 493,827 $ ( 98 ) $ ( 425,420 ) $ 68,314 6 Table of Contents ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Additional ​ ​ Accumulated Other ​ ​ ​ ​ ​ ​ Total ​ ​ ​ Preferred Stock ​ ​ Common Stock ​ ​ Paid-in ​ ​ Comprehensive ​ ​ Accumulated ​ ​ Stockholders’ ​ ​ ​ Shares ​ ​ Amount ​ ​ Shares ​ ​ Amount ​ ​ Capital ​ ​ Income (Loss) ​ ​ Deficit ​ ​ Equity ​ BALANCE—December 31, 2024 ​ ​ — ​ ​ $ — ​ ​ ​ 13,734,160 ​ ​ $ 1 ​ ​ $ 388,213 ​ ​ $ 5 ​ ​ $ ( 373,095 ) ​ $ 15,124 ​ Stock-based compensation ​ ​ — ​ ​ ​ — ​ ​ ​ — ​ ​ ​ — ​ ​ ​ 2,501 ​ ​ ​ — ​ ​ ​ — ​ ​ ​ 2,501 ​ Issuance of common stock upon vesting of restricted stock units ​ ​ — ​ ​ ​ — ​ ​ ​ 838,656 ​ ​ ​ — ​ ​ ​ — ​ ​ ​ — ​ ​ ​ — ​ ​ ​ — ​ Taxes related to net share settlement of equity awards ​ ​ — ​ ​ ​ — ​ ​ ​ ( 396,662 ) ​ ​ — ​ ​ ​ ( 333 ) ​ ​ — ​ ​ ​ — ​ ​ ​ ( 333 ) Issuance of common stock under the Common Stock Purchase Agreement ​ ​ — ​ ​ ​ — ​ ​ ​ 4,514,023 ​ ​ ​ 1 ​ ​ ​ 7,815 ​ ​ ​ — ​ ​ ​ — ​ ​ ​ 7,816 ​ Transaction costs related to the Common Stock Purchase Agreements ​ ​ — ​ ​ ​ — ​ ​ ​ — ​ ​ ​ — ​ ​ ​ ( 95 ) ​ ​ — ​ ​ ​ — ​ ​ ​ ( 95 ) Other comprehensive income, net of tax ​ ​ — ​ ​ ​ — ​ ​ ​ — ​ ​ ​ — ​ ​ ​ — ​ ​ ​ 1 ​ ​ ​ — ​ ​ ​ 1 ​ Net loss ​ ​ — ​ ​ ​ — ​ ​ ​ — ​ ​ ​ — ​ ​ ​ — ​ ​ ​ — ​ ​ ​ ( 8,016 ) ​ ​ ( 8,016 ) BALANCE—March 31, 2025 ​ ​ — ​ ​ $ — ​ ​ ​ 18,690,177 ​ ​ $ 2 ​ ​ $ 398,101 ​ ​ $ 6 ​ ​ $ ( 381,111 ) ​ $ 16,998 ​ Stock-based compensation ​ ​ — ​ ​ ​ — ​ ​ ​ — ​ ​ ​ — ​ ​ ​ 1,160 ​ ​ ​ — ​ ​ ​ — ​ ​ ​ 1,160 ​ Issuance of common stock upon vesting of restricted stock units ​ ​ — ​ ​ ​ — ​ ​ ​ 126,766 ​ ​ ​ — ​ ​ ​ — ​ ​ ​ — ​ ​ ​ — ​ ​ ​ — ​ Taxes related to net share settlement of equity awards ​ ​ — ​ ​ ​ — ​ ​ ​ ( 44,536 ) ​ ​ — ​ ​ ​ ( 31 ) ​ ​ — ​ ​ ​ — ​ ​ ​ ( 31 ) Issuance of common stock under the Common Stock Purchase Agreements ​ ​ — ​ ​ ​ — ​ ​ ​ 508,003 ​ ​ ​ — ​ ​ ​ 581 ​ ​ ​ — ​ ​ ​ — ​ ​ ​ 581 ​ Transaction costs related to Common Stock Purchase Agreements ​ ​ — ​ ​ ​ — ​ ​ ​ — ​ ​ ​ — ​ ​ ​ ( 18 ) ​ ​ — ​ ​ ​ — ​ ​ ​ ( 18 ) Conversions of convertible note into common stock ​ ​ — ​ ​ ​ — ​ ​ ​ 1,184,549 ​ ​ ​ — ​ ​ ​ 716 ​ ​ ​ — ​ ​ ​ — ​ ​ ​ 716 ​ Issuance of common stock through Employee Stock Purchase Plan ​ ​ — ​ ​ ​ — ​ ​ ​ 85,307 ​ ​ ​ — ​ ​ ​ 52 ​ ​ ​ — ​ ​ ​ — ​ ​ ​ 52 ​ Other comprehensive loss, net of tax ​ ​ — ​ ​ ​ — ​ ​ ​ — ​ ​ ​ — ​ ​ ​ — ​ ​ ​ ( 6 ) ​ ​ — ​ ​ ​ ( 6 ) Net loss ​ ​ — ​ ​ ​ — ​ ​ ​ — ​ ​ ​ — ​ ​ ​ — ​ ​ ​ — ​ ​ ​ ( 9,270 ) ​ ​ ( 9,270 ) BALANCE—June 30, 2025 ​ ​ — ​ ​ $ — ​ ​ ​ 20,550,266 ​ ​ $ 2 ​ ​ $ 400,561 ​ ​ $ — ​ ​ $ ( 390,381 ) ​ $ 10,182 ​ The accompanying notes are an integral part of these condensed consolidated financial statements. 7 Table of Contents AEYE, INC. CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (In thousands) (Unaudited) ​ ​ Six months ended June 30, ​ ​ ​ 2026 ​ ​ 2025 ​ CASH FLOWS FROM OPERATING ACTIVITIES: ​ ​ ​ ​ ​ ​ ​ ​ Net loss ​ $ ( 18,367 ) ​ $ ( 17,286 ) Adjustments to reconcile net loss to net cash used in operating activities: ​ ​ ​ ​ ​ ​ ​ ​ Depreciation and amortization ​ ​ 95 ​ ​ ​ 75 ​ Noncash lease expense relating to operating lease right-of-use assets ​ ​ 193 ​ ​ ​ 103 ​ Gain on termination of operating lease, net ​ ​ — ​ ​ ​ ( 1,612 ) Common stock purchase agreement costs ​ ​ 233 ​ ​ ​ 306 ​ Debt issuance costs ​ ​ — ​ ​ ​ 2,020 ​ Inventory write-downs, net of scrapped inventory ​ ​ — ​ ​ ​ 24 ​ Change in fair value of convertible note and warrant liabilities ​ ​ ( 149 ) ​ ​ ( 87 ) Stock-based compensation ​ ​ 3,961 ​ ​ ​ 3,661 ​ Amortization of premiums and accretion of discounts on marketable securities, net of change in accrued interest ​ ​ ( 106 ) ​ ​ ( 157 ) Expected credit losses, net of write-off ​ ​ — ​ ​ ​ 2 ​ Changes in operating assets and liabilities: ​ ​ ​ ​ ​ ​ ​ ​ Accounts receivable, net ​ ​ ( 139 ) ​ ​ ( 18 ) Inventories, current and noncurrent, net ​ ​ 12 ​ ​ ​ ( 114 ) Prepaid and other current assets ​ ​ 480 ​ ​ ​ 84 ​ Other noncurrent assets ​ ​ 53 ​ ​ ​ 134 ​ Accounts payable ​ ​ 147 ​ ​ ​ 1,761 ​ Accrued expenses and other current liabilities ​ ​ ( 2,054 ) ​ ​ ( 1,522 ) Operating lease liabilities ​ ​ ( 201 ) ​ ​ ( 1,532 ) Net cash used in operating activities ​ ​ ( 15,842 ) ​ ​ ( 14,158 ) CASH FLOWS FROM INVESTING ACTIVITIES: ​ ​ ​ ​ ​ ​ ​ ​ Purchases of property and equipment ​ ​ ( 319 ) ​ ​ ( 14 ) Purchases of marketable securities ​ ​ ( 31,411 ) ​ ​ ( 14,303 ) Proceeds from redemptions and maturities of marketable securities ​ ​ 14,200 ​ ​ ​ 9,631 ​ Net cash used in investing activities ​ ​ ( 17,530 ) ​ ​ ( 4,686 ) CASH FLOWS FROM FINANCING ACTIVITIES: ​ ​ ​ ​ ​ ​ ​ ​ Proceeds from issuance of convertible note ​ ​ — ​ ​ ​ 2,950 ​ Payments for convertible note redemptions ​ ​ — ​ ​ ​ ( 750 ) Transaction costs related to issuance of convertible note ​ ​ — ​ ​ ​ ( 608 ) Proceeds from issuance of common stock under Common Stock Purchase Agreements ​ ​ 1,977 ​ ​ ​ 10,076 ​ Stock issuance costs related to Common Stock Purchase Agreements ​ ​ ( 341 ) ​ ​ ( 404 ) Taxes paid related to the net share settlement of equity awards ​ ​ ( 519 ) ​ ​ ( 364 ) Proceeds from issuance of common stock through the Employee Stock Purchase Plan ​ ​ 109 ​ ​ ​ 52 ​ Net cash provided by financing activities ​ ​ 1,226 ​ ​ ​ 10,952 ​ NET DECREASE IN CASH AND CASH EQUIVALENTS ​ ​ ( 32,146 ) ​ ​ ( 7,892 ) CASH AND CASH EQUIVALENTS—Beginning of period ​ ​ 43,356 ​ ​ ​ 10,266 ​ CASH AND CASH EQUIVALENTS—End of period ​ $ 11,210 ​ ​ $ 2,374 ​ SUPPLEMENTAL CASH FLOW INFORMATION: ​ ​ ​ ​ ​ ​ ​ ​ Cash paid for income taxes, net of refund ​ $ 2 ​ ​ $ 21 ​ SUPPLEMENTAL DISCLOSURE OF NONCASH INVESTING AND FINANCING ACTIVITIES: ​ ​ ​ ​ ​ ​ ​ ​ Noncash debt issuance costs ​ $ — ​ ​ $ 1,362 ​ Debt issuance costs included in accounts payable and accrued liabilities ​ ​ — ​ ​ ​ 50 ​ Stock issuance costs included in accounts payable and accrued liabilities ​ ​ 62 ​ ​ ​ 213 ​ Purchases of property and equipment included in accounts payable and accrued liabilities ​ ​ — ​ ​ ​ 5 ​ Modification of operating lease liabilities and right-of-use asset ​ ​ 1,033 ​ ​ ​ — ​ The accompanying notes are an integral part of these condensed consolidated financial statements. 8 Table of Contents AEYE, INC. NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (in thousands, except share and per share data or otherwise stated) 1. ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AEye, Inc. and its wholly owned subsidiaries (the “Company” or “AEye”) is a provider of physical AI sensing solutions built on high-performance, active lidar systems for vehicle autonomy, advanced driver-assistance systems, or ADAS, robotic vision applications and a range of Non-Automotive applications. Our approach to supporting the developing physical AI infrastructure combines software‑defined sensing with adaptive perception capabilities that enable machines to interpret and respond to complex physical environments in real time. Our proprietary Intelligent Sensing Platform incorporates a nearly solid state, software‑definable active lidar sensor; an adaptive SmartScan architecture that dynamically adjusts scan patterns for different scenes and targets; and a signal processing pipeline designed to deliver precise measurements and imaging for safety critical use cases. This platform is designed to support a broad set of markets beyond passenger vehicles, including rail, aerospace and defense, smart infrastructure, and security, where long‑range performance, environmental robustness, and software‑based configurability are key requirements. AEye, formerly known as CF Finance Acquisition Corp. III, (“CF III”), was originally incorporated in Delaware on March 15, 2016 under the name CF SPAC Re Inc. On February 17, 2021, AEye Technologies, Inc., then known as AEye, Inc., entered into an Agreement and Plan of Merger with CF III. Based on CF III’s business activities, it was a “shell company” as defined under the Securities Exchange Act of 1934, as amended. On August 16, 2021, the business combination contemplated by the Agreement and Plan of Merger was closed and CF III changed its name to AEye, Inc. The Company’s common stock and public warrants are listed on the Nasdaq Stock Market LLC (“Nasdaq”) under the symbols “LIDR” and “LIDRW”, respectively. Unless otherwise specified, “we,” “us,” “our,” “AEye,” and the “Company” refers to AEye, Inc. and its wholly owned subsidiaries. Unaudited Condensed Consolidated Financial Statements The accompanying condensed consolidated financial statements are unaudited and have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) for interim financial statements and pursuant to the rules and regulations of the Securities and Exchange Commission. Accordingly, they do not include all of the information and footnotes required by GAAP for complete financial statements. In the opinion of management, all adjustments considered necessary for fair presentation have been included. The accompanying interim unaudited condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements and related notes thereto included in the Company's Annual Report on Form 10 -K for the year ended December 31, 2025 . Reclassification of Prior Period Presentation Certain prior year amounts have been reclassified for consistency with the current year presentation. Use of Estimates The preparation of condensed consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the condensed consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Significant items subject to such estimates and assumptions include write-downs of inventory to the lower of cost or net realizable value, investments, embedded derivative and warrant liabilities, stock-based compensation, and convertible notes. Principle of Consolidation and Liquidity The accompanying condensed consolidated financial statements include the accounts of AEye, Inc. and its wholly owned subsidiaries. All intercompany balances and transactions have been eliminated in consolidation. 9 Table of Contents The Company has funded its operations primarily through the issuances of common stock. Since its inception, the Company has incurred net losses and negative cash flows from operations and expects to incur additional operating losses and negative operating cash flows as management continues to focus on achieving commercialization of its lidar solutions and execute on its strategic initiatives. As of 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. Concentration of Credit Risk Financial instruments which potentially subject the Company to concentration of credit risk consist primarily of cash, cash equivalents, and marketable securities, and accounts receivable, net. The Company places its cash and cash equivalents with major financial institutions, which management assesses to be of high credit quality, to limit the exposure of each investment. The Company’s marketable securities have investment grade ratings when purchased which mitigates risk. The Company’s accounts receivable, net are derived from customers located in North America, Europe, the Middle East, Africa (EMEA), and the Asia-Pacific (APAC) region. The Company mitigates its credit risks by performing ongoing credit evaluations of its customers’ financial conditions. The Company generally does not require collateral. Recent Accounting Pronouncements In November 2024, the FASB issued ASU 2024 - 03, Disaggregation of Income Statement Expenses , which requires annual and interim disclosure of disaggregated disclosures of certain costs and expenses on the income statement. The standard is effective for fiscal years beginning after December 15, 2026, and interim periods within fiscal years beginning after December 15, 2027, with early adoption permitted. Amendments are applied on a prospective basis with retrospective application permitted. The Company is currently evaluating the impact of this guidance. 2. FAIR VALUE MEASUREMENTS The fair value of the Company’s financial assets and liabilities is determined in accordance with the fair value hierarchy established in FASB ASC Topic 820, Fair Value Measurements and Disclosures (“ASC 820” ). ASC 820 defines fair value as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. The fair value hierarchy of ASC 820 requires an entity to maximize the use of observable inputs when measuring fair value and classifies those inputs into three levels: Level 1 —Observable inputs, such as quoted prices in active markets for identical assets or liabilities. Level 2 —Observable inputs, other than Level 1 inputs, which are observable either directly or indirectly or can be corroborated by observable market data using quoted prices for similar assets or liabilities. Level 3 —Unobservable inputs in which there is little or no market data, which require the reporting entity to develop its own assumptions. The Company's financial instruments that are not remeasured at fair value include accounts receivable, prepaid and other current assets, accounts payable, accrued expenses, other current and noncurrent liabilities, and the noncurrent convertible note. The carrying values of these financial instruments approximate their fair values. 10 Table of Contents The Company’s financial assets and liabilities measured at fair value on a recurring basis and the level of inputs used for such measurements were as follows (in thousands): ​ ​ Fair Value Measured as of June 30, 2026 Using: ​ ​ ​ Adjusted Cost ​ ​ Unrealized Losses ​ ​ Fair Value ​ ​ Cash and Cash Equivalents ​ ​ Marketable Securities ​ Assets ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Level 1 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Money market funds ​ $ 9,064 ​ ​ $ — ​ ​ $ 9,064 ​ ​ $ 9,064 ​ ​ $ — ​ Level 2 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Corporate bonds ​ ​ 22,519 ​ ​ ​ ( 33 ) ​ ​ 22,486 ​ ​ ​ — ​ ​ ​ 22,486 ​ Commercial paper ​ ​ 5,923 ​ ​ ​ ( 2 ) ​ ​ 5,921 ​ ​ ​ 1,499 ​ ​ ​ 4,422 ​ U.S. Government securities ​ ​ 25,574 ​ ​ ​ ( 46 ) ​ ​ 25,528 ​ ​ ​ — ​ ​ ​ 25,528 ​ Agency bonds ​ ​ 2,018 ​ ​ ​ ( 9 ) ​ ​ 2,009 ​ ​ ​ — ​ ​ $ 2,009 ​ Asset-backed securities ​ ​ 5,856 ​ ​ ​ ( 8 ) ​ ​ 5,848 ​ ​ ​ — ​ ​ $ 5,848 ​ Total financial assets ​ $ 70,954 ​ ​ $ ( 98 ) ​ $ 70,856 ​ ​ $ 10,563 ​ ​ $ 60,293 ​ Liabilities ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Level 2 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Private placement warrant liability ​ $ — ​ ​ $ — ​ ​ $ — ​ ​ $ — ​ ​ $ — ​ Level 3 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Derivative warrant liability ​ ​ — ​ ​ ​ — ​ ​ ​ 411 ​ ​ ​ — ​ ​ ​ — ​ Total financial liabilities ​ $ — ​ ​ $ — ​ ​ $ 411 ​ ​ $ — ​ ​ $ — ​ Fair Value Measured as of December 31, 2025 Using: Adjusted Cost Unrealized Gains Fair Value Cash and Cash Equivalents Marketable Securities Assets Level 1 Money market funds $ 42,718 $ — $ 42,718 $ 42,718 $ — Level 2 Corporate bonds 19,620 13 19,633 — 19,633 Commercial paper 7,531 3 7,534 — 7,534 U.S. Government securities 8,003 9 8,012 — 8,012 Agency bonds 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 Liabilities Level 2 Private placement warrant liability $ — $ — $ — $ — $ — Level 3 Derivative warrant liability — — 560 — — Total financial liabilities $ — $ — $ 560 $ — $ — The Company’s financial assets and liabilities subject to fair value procedures were comprised of the following: Money Market Funds: The Company holds financial assets consisting of money market funds. These securities are valued using observable inputs, such as quoted prices in active markets for identical assets or liabilities. 11 Table of Contents Marketable Securities : The Company holds financial assets consisting of fixed-income U.S. government securities, corporate bonds, commercial paper, agency bonds, and asset-backed securities. The securities are valued using prices from independent pricing services based on quoted prices of identical instruments in less active or inactive markets. Additionally, quoted prices of similar instruments in active market or industry models using data inputs such as interest rates and prices that can be directly observed or corroborated in active markets are used to value marketable securities. Derivative Warrant Liabilities: On September 15, 2022 , the Company entered into a convertible note agreement with a face value of $ 10,500 (the "2022 Note"). The Company issued warrants as part of the 2022 Note. The warrants were recorded on the condensed consolidated balance sheets at fair value. The fair value is based on unobservable inputs, which represent Level 3 measurements within the fair value hierarchy. The fair value estimate of the warrants was based on a Monte-Carlo simulation model. Inherent in a Monte-Carlo simulation model are assumptions related to price, volatility, risk-free interest rate, term to expiration, and dividend yield. Changes in fair value were recognized in other income (expense) for each reporting period. Derivative Warrant Liability was included within other noncurrent liabilities on the condensed consolidated balance sheets. These warrants were cancelled on July 28, 2025. In January 2025, the Company entered into a convertible note agreement with a face value of $ 3,000 (the "2025 Note"). The Company issued a warrant to purchase up to 805,263 shares of the Company’s common stock. The warrant was recorded on the accompanying consolidated balance sheet at fair value. The fair value was based on unobservable inputs, which represent Level 3 measurements within the fair value hierarchy. The fair value estimate of the warrants was based on a Black-Scholes model. Inherent in a Black-Scholes model are assumptions related to price, volatility, risk-free interest rate, term to expiration, and dividend yield. Changes in fair value were recognized in other income (expense) for each reporting period. Derivative Warrant Liability was included within other noncurrent liabilities on the condensed consolidated balance sheets. These warrants were exercised in full on July 28, 2025. In August 2025, in connection with the lease settlement (see Note 5 for details of the settlement), the Company issued warrants, which are recorded on the accompanying condensed consolidated balance sheets at fair value. The fair value is based on unobservable inputs, which represent Level 3 measurements within the fair value hierarchy. The fair value estimate of the warrants was based on a Black-Scholes model. Inherent in a Black-Scholes model are assumptions related to price, volatility, risk-free interest rate, term to expiration, and dividend yield. Changes in fair value are recognized in other income (expense) for each reporting period. Derivative Warrant Liability is included within other noncurrent liabilities on the condensed consolidated balance sheets. 12 Table of Contents Private Placement Warrant Liability : 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. Any changes in the fair value of the liability are reflected in other income (expense), net, on the condensed consolidated statements of operations and comprehensive loss. Private Placement Warrant liability is included within other noncurrent liabilities on the condensed consolidated balance sheets. For the 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 Balance at December 31, 2025 $ 560 Change in fair value included in other income (expense), net ( 149 ) Balance at June 30, 2026 $ 411 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) 4.2 Expected volatility 137.0 % Risk-free interest rate 4.2 % Dividend yield — % Exercise price $ 2.22 If factors or assumptions change, the estimated fair values could be materially different. The value of the Company’s derivative warrant liabilities would increase if a higher risk-free interest rate was used and would decrease if a lower risk-free interest rate was used. Similarly, a higher volatility assumption would increase the value of the liabilities, and a lower volatility assumption would decrease the value of the liabilities. 13 Table of Contents 3. INVENTORIES 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 (unaudited) Raw materials $ 715 $ 826 Work in-process 110 78 Finished goods 178 111 Total inventory, net $ 1,003 $ 1,015 4. PREPAID AND OTHER CURRENT ASSETS 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 (unaudited) Prepaid expenses $ 1,388 $ 2,022 Other 213 $ 59 Total prepaid and other current assets $ 1,601 $ 2,081 5. LEASES The Company leases office facilities in Northern California under non-cancelable operating leases. In July 2024, the Company entered into two new long-term leases, one of which the Company uses as its headquarters. In February 2026, the Company entered into an agreement with the landlord to amend the existing operating lease at its corporate headquarters. The amendment added additional square footage, extended the lease term to February 28, 2029, and included an option to renew with renewal terms that, if exercised by the Company, extends the lease term for an additional five years. The Company determined that the amendment represents a lease modification and remeasured its right-of-use asset and operating lease liability using an updated incremental borrowing rate as of the modification date. The Company recognized a $ 1,033 increase in its right-of-use asset and operating lease liability and no gain or loss was recognized as a result of the modification. In August 2024 , one of the Company's existing leases, originally set to expire on November 30, 2026 , was terminated early. On April 28, 2025, the Company and the former landlord entered into a settlement agreement to resolve all outstanding disputes related to the early termination of the lease. Under the terms of the agreement, the Company paid $ 1,400 in cash and 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 $ 1,612 during the six months ended June 30, 2025 . All liabilities were settled in 2025. 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, 2026 2025 2026 2025 Operating lease cost $ 134 $ 70 $ 228 $ 141 Variable lease cost 4 4 8 8 Total operating lease cost $ 138 $ 74 $ 236 $ 149 14 Table of Contents Maturities of lease liabilities are as follows (in thousands): Operating leases Years ending - December 31: (unaudited) 2026 (remaining six months) $ 273 2027 545 2028 519 2029 87 Total lease payments 1,424 Less amount to discount to present value ( 82 ) Present value of lease liabilities $ 1,342 6. ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES 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 (unaudited) Accrued payroll $ 572 $ 553 Operating lease liabilities 539 275 Accrued bonuses 1,324 3,605 Accrued other 664 524 Total accrued expenses and other current liabilities $ 3,099 $ 4,957 7. CONVERTIBLE NOTES 2024 Promissory Note On May 10, 2024 , the Company entered into a Securities Purchase Agreement with an investor for the sale and issuance of 330,823 shares of common stock and a 5 -year promissory note with a principal balance of $ 146 ( “May 2024 Note”) for total gross cash proceeds of $ 1,000 . The May 2024 Note bears interest at an annual rate equal to the Secured Overnight Financing Rate plus 1.0 %, which is compounded quarterly in arrears, and has a maturity date of June 4, 2029 . At maturity, the principal balance and accrued, unpaid and uncapitalized interest can be settled in cash, shares of common stock based on the closing price of the common stock as of the immediately preceding trading day, or any combination of the foregoing at the option of the investor.  2025 Convertible Note In January 2025, the Company entered into a Securities Purchase Agreement with a certain institutional investor and issued (i) 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. The interest may be settled in cash or shares at the option of the Company and is payable together with monthly redemptions of the outstanding principal amount of the 2025 Note. The 2025 Note was convertible into Common Stock, at a per share conversion price equal to $ 2.22 , subject to adjustments noted in the 2025 Note. Monthly redemptions began in April 2025 and were due on the first of each subsequent month (each a "Monthly Redemption Date" or an "Installment Date"). The Company was required to redeem the Monthly Redemption Amount until the 2025 Note was fully redeemed, paid in cash or, so long as certain equity conditions are met, shares of our common stock. The investor was permitted to accelerate up to one Monthly Installment Amount, between Installment Dates. 15 Table of Contents The Company elected to apply the fair value option to the measurement of the 2025 Note. As a result of adopting the fair value option, no embedded derivatives are bifurcated from the 2025 Note. The Company classified the 2025 Note as a liability at fair value and remeasured the 2025 Note to fair value at each reporting period. The total proceeds received from the investor of $ 3,000 was allocated between the 2025 Note and the related warrants issued using the relative fair value method at issuance date. This resulted in an initial fair value of $ 3,266 being allocated to the 2025 Note, and $ 1,046 allocated to the associated warrants. The Company recorded a non-cash issuance cost of $ 1,312 , representing the difference between the fair value and proceeds received, within Interest expense and other on the condensed consolidated statement of operations. The fair value measurement included the assumption of accrued interest and expense and thus a separate amount was not reflected on the condensed consolidated statement of operations. During the year ended December 31, 2025 , the Company made cash payments of $ 989 . Additionally, $ 2,591 in aggregate principal and interest were converted into 2,405,573 shares of common stock. As of December 31, 2025, the 2025 Note was fully repaid and all associated warrants were fully exercised. 8. INTEREST EXPENSE AND OTHER 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, 2026 2025 2026 2025 Common stock purchase agreements costs $ 97 $ 195 $ 233 $ 306 Debt issuance costs — 36 — $ 2,020 Amortization of premiums (accretion of discounts) on marketable securities, net ( 103 ) ( 90 ) ( 194 ) ( 181 ) Expected credit losses — 2 — 2 Foreign exchange gains (losses) ( 9 ) 221 ( 79 ) 323 Other 3 1 6 3 Interest expense and other $ ( 12 ) $ 365 $ ( 34 ) $ 2,473 9. STOCKHOLDERS' EQUITY New Circle Principal Investments LLC ( “ New Circle ” ) Common Stock Purchase Agreement (the “ CSPA ” ) On July 25, 2024 , the Company entered into a CSPA and a Registration Rights Agreement with New Circle. Under the terms and subject to the conditions of the CSPA, the Company 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. In all instances, the Company could not sell shares of its common stock to New Circle under the CSPA if doing so would result in New Circle beneficially owning more than 4.99 % of the Company's common stock. The purchase price per share to be purchased by New Circle would equal either (i) the lowest volume-weighted average price for common stock either over a one -day trading period or 15 minutes after the number of intraday shares traded exceeds 500% of the shares included in the purchase notice or one hour after the receipt of the purchase notice, or (ii) the volume-weighted average price for common stock for the three consecutive trading days commencing on the purchase notice date multiplied by 97.5 %. The maximum number of shares the Company could sell to New Circle on any single business day was the lesser of (i) the number of shares equal to 100% of the average daily trading volume of the common stock of the Company during the five trading days immediately preceding the purchase notice, and (ii) 400,000 shares of common stock. In connection with the CSPA, the Company issued to New Circle 225,563 shares of common stock in the Company as commitment shares for the facility. 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 . 16 Table of Contents 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 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. the Company’s common stock having an aggregate value offering price of up to $ 2,600 ("Placement Shares") from time to time through an "at-the-market" equity offering program. The Company has sole discretion to initiate such sales of common stock over a period of 36 months. Under the terms and subject to the conditions of the ATM Agreement, the Company will set the parameters for the sale of shares, including the number or dollar amount of Placement Shares to be issued, the time period during which sales are requested to be made, any limitation on the number or dollar amount of Placement Shares that may be sold in any one trading day and any minimum price below which sales may not be made. The Company will pay a cash commission rate of up to 3.0 % of the gross proceeds from the sale of Placement Shares sold pursuant to the ATM Agreement. In December 2025, the Company increased the amount of the Company's common stock that it may issue and sell through A.G.P. under the ATM Agreement to a new aggregate value offering of up to $ 125,000 , following multiple prior increases since the original agreement. The Company has sold 24,070,541 shares through A.G.P. 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 . 10. ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS) 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 Balance at December 31, 2025 $ 30 Other comprehensive income (loss), net of tax ( 71 ) Balance at March 31, 2026 $ ( 41 ) Other comprehensive income (loss), net of tax ( 57 ) Balance at June 30, 2026 $ ( 98 ) Unrealized gains (losses) on available-for-sale securities Balance at December 31, 2024 $ 5 Other comprehensive income (loss), net of tax 1 Balance at March 31, 2025 $ 6 Other comprehensive income (loss), net of tax ( 6 ) Balance at June 30, 2025 $ — 17 Table of Contents 11. NET LOSS PER SHARE The following table sets forth the basic and diluted net loss per share attributable to common stockholders for the periods presented (in thousands, except share amounts and per share data): Three months ended June 30, Six months ended June 30, 2026 2025 2026 2025 Numerator: Net loss attributable to common stockholders $ ( 10,022 ) $ ( 9,270 ) $ ( 18,367 ) $ ( 17,286 ) Denominator: Weighted average common shares outstanding - Basic 45,915,091 19,125,970 45,414,113 18,137,050 Weighted average common shares outstanding - Diluted 45,915,091 19,125,970 45,414,113 18,137,050 Net loss per share attributable to common stockholders - Basic and Diluted $ ( 0.22 ) $ ( 0.48 ) $ ( 0.40 ) $ ( 0.95 ) 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: Six months ended June 30, 2026 2025 Common stock options issued and outstanding 118,363 131,142 Unvested restricted stock units 5,138,846 747,470 Warrants 611,110 1,124,706 Common Stock Purchase Agreements 37,908,218 27,572,156 Conversion of convertible note 113,932 1,790,955 ESPP 48,743 18,513 Total 43,939,212 31,384,942 12. STOCK-BASED COMPENSATION 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) 4.6 - 4.9 Expected volatility 140.0 % Risk-free interest rate 3.7 % - 4.2 % Dividend yield — % 18 Table of Contents 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 and six months ended June 30, 2026 and 2025 (in thousands): Three months ended June 30, Six months ended June 30, 2026 2025 2026 2025 Research and development $ 304 $ 316 $ 515 $ 1,011 Sales and marketing 167 126 251 255 General and administrative 1,948 718 3,195 2,395 Total stock-based compensation $ 2,419 $ 1,160 $ 3,961 $ 3,661 13. SEGMENT INFORMATION The Company has one reportable segment managed on a consolidated basis by the Chief Executive Officer who is the chief operating decision maker (“CODM”). In identifying one reportable segment, the Company considered the basis of organization for the design and development of high-performance, active lidar systems and applications. The accounting policies of the segment are the same as those described in the summary of significant accounting policies. The CODM assesses performance and decides how to allocate resources based on consolidated net loss as reported in the consolidated statements of operations and comprehensive loss. There are no other expense categories regularly provided to the CODM that are not already included in the consolidated statements of operations and comprehensive loss. The measure of segment assets is reported on the balance sheet as cash, cash equivalents, and marketable securities. 14. REVENUE Product revenue 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. D evelopment Contracts 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 $ 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. 19 Table of Contents Disaggregation of Revenue The Company recognized the following revenues by geographic area based on the primary billing address of the customer and by the timing of the transfer of goods or services to customers (point in time or over time), as it believes such criteria best depict how the nature, amount, timing, and uncertainty of its revenue and cash flows are affected by economic factors. Total revenue based on the disaggregation criteria described above is as follows (in thousands): Three months ended June 30, Six months ended June 30, 2026 2025 2026 2025 Revenue by primary geographical market: North America $ 177 $ 5 $ 252 $ 5 EMEA — 1 26 65 Asia-Pacific 25 16 25 16 Total $ 202 $ 22 $ 303 $ 86 Revenue by timing of recognition: Recognized at a point in time $ 172 $ 22 $ 273 $ 22 Recognized over time 30 — 30 64 Total $ 202 $ 22 $ 303 $ 86 Contract Liabilities The Company had no contract liabilities as of six months ended June 30, 2026 and 2025 . Remaining Performance Obligations Revenue allocated to remaining performance obligations represents the transaction price allocated to the performance obligations that are unsatisfied, or partially unsatisfied. It includes unearned revenue and amounts that will be invoiced and recognized as revenue in future periods and does not include contracts where the customer is not committed. The customer is not considered committed where they are able to terminate for convenience without payment of a substantive penalty under the contract. 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. 15. INCOME TAXES 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. The Company computes its quarterly income tax provision by using a forecasted annual effective tax rate and adjusts for any discrete items arising during the quarter. 16. COMMITMENTS AND CONTINGENCIES Legal matters The Company may be subject to legal proceedings and claims that arise in the ordinary course of business. Litigation can be expensive and disruptive to normal business operations. Moreover, the results of complex legal proceedings are difficult to predict and the Company’s view of these matters may change in the future as the litigation and events related thereto unfold. The Company expenses legal fees as incurred. The Company records a provision for contingent losses when it is both probable that a liability has been incurred and the amount of the loss can be reasonably estimated. 20 Table of Contents In 2025, the Company was notified by a former vendor that it intended to pursue a claim against the Company’s wholly owned subsidiary, AEye Technologies, Inc., arising out of an agreement entered into in May 2020 , in which the former vendor alleges that AEye Technologies, Inc. failed to pay approximately $3,300 plus interest from the date the former vendor alleges such payments were due. In February 2026, the former vendor initiated a binding arbitration proceeding against AEye Technologies, Inc. pursuant to the underlying purchase agreement. AEye Technologies, Inc. has 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. Item 2. Management ’ s Discussion and Analysis of Financial Condition and Results of Operations This Management ’ s Discussion and Analysis of Financial Condition and Results of Operations contains forward-looking statements that are based on current expectations, estimates, assumptions, and projections about our industry, business, and future financial results. Our actual results and the timing of events may differ materially from those described in or implied by these forward-looking statements due to a number of factors. 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. Overview This overview provides a high-level discussion of our operating results and some of the trends that affect our business. We believe that an understanding of these trends is important to understanding our financial results for the 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 share amounts, per share amounts, and unless otherwise specified. Key Factors Affecting Our Operating Results We believe that our future performance and success depends, to a substantial extent, on our ability to capitalize on the opportunities described herein, which in turn are subject to significant risks and challenges, including those discussed below and the information described in Part II, Item 1A, of this Quarterly Report under the heading “Risk Factors”. We are subject to those risks common in the technology industry and also those risks common to early stage companies including, but not limited to: • developing, commercializing, and scaling our products and technology, including meeting performance, reliability, and cost objectives; • maintaining and expanding our relationships with Tier 1 automotive suppliers to facilitate design wins with automotive OEMs; • maintaining and protecting our intellectual property, including patents, trade secrets, and proprietary software; • navigating changes in international trade policies, including the imposition or modification of tariffs, increasing trade tensions, and the introduction of new trade restrictions • complying with existing and new laws and regulations applicable to our operations, products, and markets; • maintaining and enhancing our reputation and brand in competitive and emerging markets; • hiring, integrating, and retaining qualified personnel at all levels of the organization as we grow; • developing and delivering new products and solutions successfully, and ensuring our products meet customer expectations and provide value; and • significant competition from companies, including several based in China, that manufacture lower‑cost lidar solutions and may be able to offer aggressive pricing, faster volume production, or vertically integrated supply chains that could place downward pressure on market pricing or reduce our ability to compete in certain segments. 21 Table of Contents Market Trends and Uncertainties 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, 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. However, as our customers continue their R&D projects to commercialize solutions that rely on lidar technology, it is difficult to estimate the timing of ultimate end market demand and customer adoption. In the Automotive market for example, our growth and financial performance will be heavily influenced by our ability to successfully integrate into OEM programs that require years of development, testing, and validation. Because of the size and complexity of these OEM programs, having Tier 1 partnerships should provide a substantial competitive advantage over our competitors given their large scale, mass-production capabilities, and existing OEM relationships held by our Tier 1 partners. If we fail to remain engaged with one or more Tier 1 automotive suppliers, it may have an adverse effect on our business. The Automotive market for lidar is projected to see significant growth in the mid- and long-term. We anticipate that Non‑Automotive applications will be a more significant driver of our near‑term revenue given the generally shorter sales cycles and development timelines in these markets. We are beginning to see adoption across a diverse group of sectors. Our typical engagement model begins with proof‑of‑concept evaluations, which allow customers to validate performance in their operational environments; however, there is no guarantee that these evaluations will ultimately result in a commercial deployment, and timelines may extend significantly, due to many factors, including, competing customer priorities or broader program changes. In many Non‑Automotive opportunities, we work through third‑party systems integrators or solution providers who deliver complete solutions to the end customer, and in those situations our visibility into, and ability to influence, the final customer decision process may be limited. 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 Our technology is designed to be a key enabler in certain Automotive and Non-Automotive market applications. Because our technology must be integrated into a broader solution by our customers, it is critical that we achieve design wins with these customers. The time to achieve a design win varies based on the market and application. We consider design wins to be critical to our future success, although the revenue that may be generated by each design win and the time necessary to achieve such a design win can vary significantly, making it difficult to predict our financial performance. We have unified our supply chain for the Automotive and Non-Automotive markets and plan to leverage our Tier 1 automotive suppliers to produce products for us to sell into our Non-Automotive markets, whereas in the Automotive markets, we anticipate licensing our technology to our Tier 1 suppliers in exchange for a royalty. The unified supply chain should allow us to leverage the scale, efficiencies, and volume associated with supplying the Automotive market to benefit our Non-Automotive market customers. In 2023, as part of our effort to reduce fixed operating costs, simplify our supply chain, and focus resources on our next‑generation architecture, we wound down support for our legacy Non‑Automotive product. Since launching Apollo TM in 2024, we have seen renewed interest from Non‑Automotive customers across a broad range of sectors and are now actively engaged on multiple opportunities. In early 2024, we engaged LITEON as our Tier 1 automotive supplier and are actively working with LITEON to bring our product to market. We 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 ("LighTekton") to manufacture and distribute our products in China. This collaboration provides us with access to a potential $2.5 billion market opportunity. By leveraging ATI's and LighTekton's extensive networks and manufacturing capabilities, we aim to accelerate our market penetration and deliver our advanced lidar solutions to a broader audience. 22 Table of Contents 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 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. We continue to demonstrate advances in the high‑speed and long‑range performance of our lidar systems, which we believe further strengthen the technical basis for these integrations. Because these engagements are relatively recent, there can be no guarantee that they will result in commercial adoption. In July 2025, we launched OPTIS™, a complete physical AI solution designed to modernize legacy infrastructure and deliver actionable intelligence across diverse industries. OPTIS™ integrates our software-defined Apollo TM lidar technology with advanced computing to bridge the gap between perception and real-time action. Beyond addressing critical needs in transportation, safety, and security, OPTIS™ opens our platform to third-party partners and developers, creating an ecosystem for innovation and growth beyond automotive applications. Since launch, we’ve transitioned OPTIS™ from concept to a structured offering. 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. STRATOS™ is based on the same underlying software‑defined Apollo TM architecture but delivers an extended detection range of up to approximately 1.5 kilometers and roughly twice the angular resolution. STRATOS™ is designed for applications requiring enhanced long‑distance performance, including sensing requirements in certain automotive, infrastructure, aviation, industrial, and defense use cases. In March 2026, we joined the NVIDIA Halos AI Systems Inspection Lab, the world’s first ANAB-accredited AI systems inspection lab, which we believe further reinforces our positioning within the NVIDIA ecosystem and may support our engagement with global automotive OEMs and Tier 1 suppliers. Also, during the first quarter of 2026, we entered into a commercial relationship with SynTech, a global defense systems company with established ties to leading defense primes, under which SynTech began promoting Apollo™ to its customers and we have commenced initial shipments. We believe this relationship could expand our addressable market into international defense and aviation; however, there can be no assurance that this relationship, or the integrations described above, will result in commercial sales for us. 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. We believe our revenue and profitability will also be dependent upon our success in licensing our technology to Tier 1 automotive suppliers, such as our current Tier 1 partner, LITEON, and these partners securing program awards from OEMs and scaling to high volume production of our lidar sensors. Delays in autonomy programs by OEMs that we are currently or plan to be working with through our Tier 1 partners could result in us being unable to achieve our revenue and profitability targets in the time frame we anticipate, or at all. 23 Table of Contents Geographic Opportunities While our commercial activities remain primarily focused in North America, we are also actively engaging with customers in EMEA and APAC. Our APAC strategy has begun to evolve through business development activities in Korea, where we have established on-the-ground support and have engaged with multiple customers across the ITS, rail, and mobility sectors. In China, we have multiple customer evaluations in progress, supported by our existing partnerships with ATI and LighTekton. Additional proof-of-concept activity is underway in other geographies, including Australia and Thailand. There can be no assurance that any of these international engagements will result in commercial sales for us. Gross Margin Our gross margins will depend on numerous factors, including, among others, the selling price of our products, pricing of our development contracts with customers, royalty rates on licenses we grant to our customers, unit volumes, product mix, component costs, personnel costs, contract manufacturing costs, overhead costs, and product features. Our gross margins have and may continue to be negatively impacted by inventory write-downs. In the future, we expect to generate attractive gross margins from licensing our lidar technology and software to our Tier 1 partners in the Automotive market. We also anticipate being able to leverage 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. These engagements often involve customization of our product’s capabilities to address application‑specific needs, including software‑based configuration of scan patterns, region‑of‑interest tuning, advanced perception features, and other enhancements. In many cases, customers require more complex configurations or software‑enabled feature additions, which allows us greater latitude to price these solutions at a premium. As a result, customized Non‑Automotive deployments generally reflect higher contractual pricing and may contribute more favorably to gross margin relative to standard Automotive configurations. Investment and Innovation Our proprietary adaptive intelligent lidar technology delivers industry-leading performance, addressing the toughest challenges in achieving partial or full autonomy. Unlike traditional sensing systems that passively collect data, our active Intelligent Sensing Platform employs principles from automated targeting systems and biomimicry to actively scan the environment, intelligently focusing on critical elements to enable safer, smarter, and faster decisions in complex scenarios. Our next‑generation lidar portfolio is built on our Intelligent Sensing Platform, a modular and software‑defined architecture that allows us to create differentiated product offerings with limited incremental hardware changes. By maintaining a common core design and enabling performance enhancements through software—such as configurable scan patterns, range distribution, and perception features—we are able to address diverse application requirements while minimizing the operational complexity typically associated with managing a large product portfolio. This platform‑based approach also allows us to introduce new products efficiently. For example, STRATOS™, launched in January 2026, is derived from the Apollo's TM architecture but offers extended range and higher angular resolution to support long‑distance and higher‑performance applications. In June 2024, we introduced Apollo TM , our next generation lidar sensor. Apollo TM offers best-in-class range and resolution in a compact, power-efficient, and cost-effective form factor, making it ideal for both automotive and non-automotive applications. Apollo TM can be integrated behind the windshield, on the roof, or in the grille, allowing OEMs to implement essential safety features with minimal impact on vehicle design. This innovative sensor leverages our Intelligent Sensing Platform, providing a highly programmable and customizable lidar solution that can be continually enhanced via software updates. With a horizontal field of view up to 120° and long-range detection capabilities of up to one kilometer, Apollo TM is poised to be a key player in advancing vehicle safety and autonomy, as well as smart infrastructure and logistics applications. 24 Table of Contents Building on this foundation, we launched OPTIS™ in July 2025, a complete physical AI solution that extends our capabilities beyond automotive. OPTIS™ combines Apollo’s TM software-defined lidar with advanced computing to deliver actionable intelligence for modernizing legacy infrastructure. This platform not only addresses critical needs in transportation, safety, and security but also opens our ecosystem to third-party partners and developers, fostering innovation across industries. Since launch, OPTIS™ has moved from concept to structured offering, with initial deployments completed and new partners such as Black Sesame Technologies, BlueBand, Flasheye, and Vueron joining our network. In addition, in January 2026, we announced STRATOS™, the next product in this family. STRATOS™ is based on the same underlying architecture as Apollo™ but offers extended detection range of up to approximately 1.5 kilometers and roughly twice the angular resolution. STRATOS™ is intended for applications that require enhanced long‑distance performance or operate at higher speeds, including certain automotive, infrastructure, defense, and industrial sensing environments. Like Apollo™, STRATOS™ leverages our software‑defined sensing approach, enabling performance updates without a hardware redesign. We believe 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. This is further dependent on the investments we make in research and development and our ability to commercialize our products. We believe price is becoming a critical differentiator in the marketplace and OEMs are favoring companies that have the infrastructure to build lower cost products at higher volumes. It is essential that we continually identify and respond to rapidly evolving customer requirements, develop and introduce innovative new products, enhance and service existing products, lower bill of materials, or BOM costs, industrialize the manufacturing process, and generate strong market demand for our products. If we fail to do this, our market position and revenue may be adversely affected, and our investments in that area will not be recovered. Basis of Presentation We currently conduct our business through one operating segment. Components of Results of Operations Revenues Our product revenue primarily relates to unit sales of our lidar units, software, and support. Revenue from these sales is typically recognized at a point in time when the control of the goods is transferred to the customer, generally upon delivery of or shipment to the customer, or when services have been provided. Revenue from development and/or collaboration contracts are earned from R&D activities and collaboration with OEMs, 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. Revenue from development contracts is recognized when we satisfy performance obligations in the contract, which can result in recognition at either a point in time or over time. This assessment is made at the outset of the arrangement for each performance obligation. We are seeing strong interest in Apollo TM from Non-Automotive customers across multiple industries and are actively advancing these opportunities. Proof-of-concept deployments are validating our technology in real-world scenarios, creating a solid foundation for future growth. While customer evaluation and testing cycles are typically extended, these engagements position us well for gradual revenue contributions and set the stage for meaningful expansion through higher volume programs. We view this as the first step in a disciplined growth roadmap designed to unlock adoption and scale with confidence. Several partners are also exploring new platforms based on our Apollo TM architecture and have initiated discussions on development work, which we expect will increase over time. 25 Table of Contents Cost of Revenue Cost of revenue includes costs directly associated with the production of lidar units, cost of software and support, and certain costs associated with development contracts. Such costs for the products include direct materials, direct labor, indirect labor, inventory write downs, losses on purchase commitments, warranty expense, and allocation of overhead. As we increase the volume of Apollo TM units that are manufactured, we expect the bill of material costs to decrease over time. Costs associated with development contracts include the direct costs and allocation of overhead costs involved in the execution of the contracts. Operating Expenses Research and Development Our research and development ("R&D") efforts are focused primarily on hardware, software, and system engineering related to the design and development of our advanced lidar solutions. R&D expenses include: • personnel-related expenses, including salaries, benefits, bonuses, and stock-based compensation expense; • field application engineering and software development costs associated with customer‑driven bug fixes, feature enhancements, and improvements to reduce deployment complexity as we incorporate insights gained from customer evaluations into our product roadmap; • third-party engineering and contractor costs; • lab equipment; • engineering parts and test units; • new hardware and software expenses; and • allocated personnel and overhead expenses. R&D costs are expensed as incurred. We expect our R&D costs to increase as we continue to invest in product development, expanded product variations, and commercialization efforts; however, we anticipate these increases will occur at a more moderate pace relative to our investment in sales and marketing as we prioritize execution and near‑term commercial opportunities. Sales and Marketing Our sales and marketing ("S&M") efforts are focused primarily on sales, business development, and marketing programs in pursuit of revenue contracts from potential and existing customers. S&M expenses include: • personnel-related expenses, including salaries, benefits, bonuses, and stock-based compensation expense; • third party contractor costs; • demonstration equipment; • system and tooling costs to support our sales and marketing organization, including CRM systems, marketing‑automation and lead‑generation tools, data‑analytics platforms, and other software required to manage customer pipelines and enable our go‑to‑market strategy; • trade shows expenses, advertising, promotion costs, website development, branding, and other public relations services; and • allocated personnel and overhead expenses, net. We expect our S&M expenses to increase as we pursue Non-Automotive opportunities to accelerate profitability while continuing to leverage our Tier 1 partners to commercialize our products and manage relationships with the OEMs in the Automotive market. General and Administrative Our general and administrative ("G&A") spending supports all business functions. G&A expenses include: • personnel-related costs, including salaries, benefits, bonuses, and stock-based compensation expense for executive, finance, legal, operations, human resources, technical support, and other administrative personnel; • consulting, accounting, audit, legal, and other professional fees; • insurance premiums, software and computer equipment costs, general office expenses; and • allocated personnel and overhead expenses, net. 26 Table of Contents We expect our G&A expenses to increase to support growth as we pursue Non-Automotive opportunities and as we continue to develop and commercialize our products. Change in Fair Value of Convertible Note and Warrant Liabilities The changes in fair value of the convertible note and warrant liabilities are the result of the change in fair value at each reporting date. The convertible note and warrant liabilities were recorded at fair value for each reporting period, and the changes in fair value were reported within other income (expense), net during the period. We also elected to record interest expense on the convertible note as changes in fair value. We have fully repaid the 2025 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 Interest income and other consists primarily of interest and investment income earned on our cash, cash equivalents, and marketable securities. These amounts will vary based on our cash, cash equivalents, and marketable securities balances and market rates. Interest income and other also includes gains on sale of property and equipment. Interest expense and other consists primarily of financing costs, amortization of premiums and accretion of discounts on marketable securities, net, and foreign exchange gains and losses. Results of Operations 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 June 30, 2026 and 2025 (in thousands, except for percentages): ​ ​ Three months ended June 30, ​ ​ Change ​ ​ Change ​ ​ ​ 2026 ​ ​ 2025 ​ ​ $ ​ ​ % ​ Revenue ​ $ 202 ​ ​ $ 22 ​ ​ $ 180 ​ ​ ​ 818 % Cost of revenue ​ ​ 363 ​ ​ ​ 108 ​ ​ ​ 255 ​ ​ ​ 236 % Gross loss ​ ​ (161 ) ​ ​ (86 ) ​ ​ (75 ) ​ ​ 87 % Research and development ​ ​ 4,743 ​ ​ ​ 3,670 ​ ​ ​ 1,073 ​ ​ ​ 29 % Sales and marketing ​ ​ 1,147 ​ ​ ​ 601 ​ ​ ​ 546 ​ ​ ​ 91 % General and administrative ​ ​ 4,704 ​ ​ ​ 4,348 ​ ​ ​ 356 ​ ​ ​ 8 % Total operating expenses ​ ​ 10,594 ​ ​ ​ 8,619 ​ ​ ​ 1,975 ​ ​ ​ 23 % Loss from operations ​ ​ (10,755 ) ​ ​ (8,705 ) ​ ​ (2,050 ) ​ ​ 24 % Change in fair value of convertible note and warrant liabilities ​ ​ 130 ​ ​ ​ (593 ) ​ ​ 723 ​ ​ ​ (122 )% Interest income and other ​ ​ 591 ​ ​ ​ 393 ​ ​ ​ 198 ​ ​ ​ 50 % Interest expense and other ​ ​ 12 ​ ​ ​ (365 ) ​ ​ 377 ​ ​ ​ (103 )% Total other income (expense), net ​ ​ 733 ​ ​ ​ (565 ) ​ ​ 1,298 ​ ​ ​ (230 )% Loss before income tax ​ ​ (10,022 ) ​ ​ (9,270 ) ​ ​ (752 ) ​ ​ (8 )% Provision for income tax ​ ​ — ​ ​ ​ — ​ ​ ​ — ​ ​ ​ — % Net loss ​ $ (10,022 ) ​ $ (9,270 ) ​ $ (752 ) ​ ​ (8 )% Revenue 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. 27 Table of Contents Cost of Revenue 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 $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 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. 28 Table of Contents 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, Change Change 2026 2025 $ % Total revenue $ 303 $ 86 $ 217 252 % Cost of revenue 564 204 360 176 % Gross loss (261 ) (118 ) (143 ) 121 % Research and development 8,508 7,160 1,348 19 % Sales and marketing 2,133 984 1,149 117 % General and administrative 8,882 7,243 1,639 23 % Total operating expenses 19,523 15,387 4,136 27 % Loss from operations (19,784 ) (15,505 ) (4,279 ) (28 )% Change in fair value of convertible note and warrant liabilities 149 87 62 71 % Interest income and other 1,236 607 629 104 % Interest expense and other 34 (2,473 ) 2,507 101 % Total other income (expense), net 1,419 (1,779 ) 3,198 (180 )% Loss before income tax (18,365 ) (17,284 ) (1,081 ) 6 % Provision for income tax 2 2 — — % Net loss $ (18,367 ) $ (17,286 ) $ (1,081 ) 6 % Revenue 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 $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. 29 Table of Contents General and Administrative 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 $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 $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 $2,507, 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 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 Sources of Liquidity Our capital requirements will depend on many factors, including, but not exclusively, sales volume and timing of revenue, our efforts to establish and maintain a relationship with one or more Tier 1 automotive suppliers and the timing of any OEM design wins, our ability to effectively and efficiently manage our expenses, the timing and extent of spending to support R&D efforts, how quickly we can commercialize our products, and the market adoption of new and enhanced products and features. To date, our principal sources of liquidity have been the proceeds received from the issuance of equity and convertible notes. Shelf Registration On September 26, 2023, the U.S. Securities and Exchange Commission declared our Registration Statement on Form S-3 effective (the "Shelf"), which allows us to raise up to $200,000 in capital over the following three years. The use of the Shelf was subject to a limitation of one-third of our public float in any rolling twelve-month period, when our public float was below $75,000, which is commonly referred to as the “baby shelf" rules. Since July 28, 2025, we have not been subject to the "baby shelf" rules. Since the Shelf was established, we have used the Shelf to register the shares sold in the May 29, 2024 Registered Direct Offering and the September 12, 2024 A.G.P. Transaction, both of which are further described below. The Shelf is scheduled to expire in September 2026, and 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. 30 Table of Contents Dowslake Transaction On May 10, 2024, we entered into a Securities Purchase Agreement with Dowslake Microsystems Corporation, or Dowslake, pursuant to which Dowslake agreed to purchase 330,823 shares of common stock for a purchase price of $854, which represents a per share purchase price of $2.58, and an unsecured promissory note in the principal amount of $146 for an aggregate purchase price of $1,000. New Circle Transaction On July 25, 2024, we entered into a Stock Purchase Agreement with New Circle Principal Investments LLC, or New Circle, pursuant to which we have the right, but not the obligation, to sell to New Circle, and New Circle is obligated to purchase, up to $50,000 of our common stock. Such sales of common stock by us, if any, may occur from time to time at our sole discretion, over a 36-month period. In December 2025, we terminated the agreement with New Circle. The termination was part of our broader effort to simplify our capital structure and reduce the number of outstanding financing instruments, while consolidating our equity financing capacity under our existing at‑the‑market facility, which we believe provides more operational flexibility and alignment with our long‑term capital strategy. In total, we issued 8,980,713 shares of our common stock to New Circle under the agreement for gross proceeds totaling $27,754. A.G.P. Transaction On September 12, 2024, we entered into an At Market Issuance Sales Agreement with Alliance Global Partners, or A.G.P., pursuant to which we may issue and sell through A.G.P., up to $2,600 of our common stock from time to time through an "at-the-market" equity offering program. In December 2025, we increased the aggregate amount available under the ATM program to $125,000, following multiple prior increases since the original agreement was entered into. Such sales of common stock by us, if any, may occur from time to time at our sole discretion, over a 36-month period. As of 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 In January 2025, we entered into a Securities Purchase Agreement to finance an aggregate principal amount of up to $3,240 with a certain institutional investor and issued (i) a senior unsecured convertible promissory note (the "2025 Note") for an aggregate purchase price of $3,000 and (ii) a warrant to purchase up to 805,263 shares of our 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 7.0% per annum. The 2025 Note was convertible into Common Stock, at a per share conversion price equal to $2.22, subject to adjustments noted in the 2025 Note. The Warrant had an exercise price of $2.22 and was exercisable after the six month and one day anniversary of its issuance (the “Initial Exercisability Date”) until for four years following the Initial Exercisability Date. These warrants were exercised in full on July 28, 2025. During the year ended December 31, 2025, the Company made cash payments of $989. Additionally, $2,591 in aggregate principal and interest were converted into 2,405,573 shares of common stock. The 2025 Note was fully paid in 2025. Until we are able to generate sufficient revenue from the sale of our products to cover operating expenses, working capital, and capital expenditures, we expect the funds raised in the transactions described earlier, and other potential sources of capital, are sufficient to fund our near-term cash needs. If we are required to raise additional funds by issuing equity securities, dilution of stockholders will result. Any debt securities issued may also have rights, preferences, and privileges senior to those of holders of our common stock. The terms of debt securities or borrowings could impose significant restrictions on our operations. We may also be unable to raise additional capital through the sale of securities and debt financing, or to do so on terms that are favorable to us, particularly given the current capital market and overall macroeconomic conditions. 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. We believe we currently have sufficient financial resources to fund our operating expenses, working capital, and capital expenditure requirements for a period of at least twelve months from the date of this Quarterly Report on Form 10-Q. Our plans for the use of cash in the long term (beyond twelve months from this Quarterly Report on Form 10-Q) are primarily related to funding operating expenses to support the continued development and commercialization of our products. For additional information regarding our cash requirements from contractual obligations, see Note 16 to the Condensed Consolidated Financial Statements in Item 1of Part I of this Quarterly Report on Form 10-Q. 31 Table of Contents Cash Flow Summary ​ ​ Six months ended June 30, ​ ​ ​ 2026 ​ ​ 2025 ​ ​ ​ (in thousands) ​ Net cash provided by (used in): ​ ​ ​ ​ ​ ​ ​ ​ Operating activities ​ $ (15,842 ) ​ $ (14,158 ) Investing activities ​ $ (17,530 ) ​ $ (4,686 ) Financing activities ​ $ 1,226 ​ ​ $ 10,952 ​ Operating Activities 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 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. Within operating activities, the net changes in operating assets and liabilities were cash used of $1,207, primarily driven by decreases in accrued expenses and other liabilities and operating lease liabilities of $1,522 and $1,532, respectively. Cash used was offset by cash provided by decreases in prepaid and other current assets and other noncurrent assets of $84 and $134, respectively, and an increase in accounts payable of $1,761. Investing Activities 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 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. 32 Table of Contents Critical Accounting Estimates Our condensed consolidated financial statements are in accordance with GAAP. We are required to make estimates and assumptions that affect the reported amounts of assets and liabilities as of the date of the condensed consolidated financial statements, the reported amounts of revenues and expenses during the reporting periods, fair value measures, and the related disclosures in the condensed consolidated financial statements. Our actual results may differ significantly from these estimates due to changes in judgments, assumptions and conditions as a result of unforeseen events or otherwise, which could have a material impact on our financial position and results of operations. We believe our critical accounting estimates involve the greatest degree of judgment and complexity and have the greatest potential impact on our condensed consolidated financial statements. During the 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 See Note 1 to our condensed consolidated financial statements included elsewhere in this Quarterly Report on Form 10-Q for recently adopted accounting pronouncements as of the date of this Quarterly Report on Form 10-Q.