Quarterly Report for Quarter Ending March 31, 2026 (Form 10-Q)

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

This Management's Discussion and Analysis of Financial Condition and Results of Operations contains forward-looking statements that are based on current expectations, estimates, assumptions, and projections about our industry, business, and future financial results. Our actual results and the timing of events may differ materially from those described in or implied by these forward-looking statements due to a number of factors, including those discussed below and those set forth under in Part II, Item 1A, of this Quarterly Report under the heading "Risk Factors" and other filings we make with the SEC from time to time. Unless the context otherwise requires, references in this Management's Discussion and Analysis of Financial Condition and Results of Operations to "we," "our," "us," and "AEye," refer to the business and operations of AEye, Inc.

Overview

This overview provides a high-level discussion of our operating results and some of the trends that affect our business. We believe that an understanding of these trends is important to understanding our financial results for the three months ended March 31, 2026, as well as our future prospects. This summary is not intended to be exhaustive, nor is it intended to be a substitute for the detailed discussion and analysis provided elsewhere in this Quarterly Report, including our condensed consolidated financial statements and accompanying notes.

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

Key Factors Affecting Our Operating Results

We believe that our future performance and success depends, to a substantial extent, on our ability to capitalize on the opportunities described herein, which in turn are subject to significant risks and challenges, including those discussed below and the information described in Part II, Item 1A, of this Quarterly Report under the heading "Risk Factors".

We are subject to those risks common in the technology industry and also those risks common to early stage companies including, but not limited to:

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

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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

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

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

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

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

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

Market Trends and Uncertainties

We anticipate growing demand for our Apollo^TM platform across our two major markets, Automotive and Non-Automotive, and we believe this expected growth will enable us to capture market share across both the Automotive and Non-Automotive markets. We plan to pursue opportunities in advanced driver-assistance systems, or ADAS, autonomous driving, and commercial trucking, while also exploring opportunities in the Non-Automotive market, such as in the railway, airport safety and security, perimeter monitoring, aerospace and defense, transportation logistics, and intelligent transportation systems, or ITS, segments. 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.

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 announced an expansion of this relationship and the creation of a dedicated production line for Apollo^TM, with capacity to produce up to 60,000 units annually. We are starting to see an inflection point in customer demand, and this expansion ensures we can meet that growth if it develops. This partnership enables us to leverage LITEON's manufacturing expertise to produce high-quality products that meet stringent performance standards, which is a critical step towards scaling production and delivering our advanced lidar solutions to the market.

In May 2024, we announced a strategic partnership with Accelight Technologies, Inc. ("ATI") and LighTekton Co., Ltd to manufacture and distribute our products in China. This collaboration provides us with access to a potential $2.5 billion market opportunity. By leveraging ATI's and LighTekton's extensive networks and manufacturing capabilities, we aim to accelerate our market penetration and deliver our advanced lidar solutions to a broader audience.

In July 2025, we announced the validation of our lidar technology on the NVIDIA DRIVE AGX Orin^TM platform. We have since expanded our collaboration and demonstrated our lidar with NVIDIA's next-generation DRIVE AGX Thor^TM platform, enabling our sensors to interface directly with NVIDIA's autonomous driving compute architecture and development toolchain. These integrations are intended to support alignment with NVIDIA's Hyperion reference architecture and may provide opportunities to engage with global automotive OEMs and Tier 1 suppliers that adopt NVIDIA-based ADAS and automated driving systems. We continue to demonstrate advances in the high-speed and long-range performance of our lidar systems, which we believe further strengthen the technical basis for these integrations. Because these engagements are relatively recent, there can be no guarantee that they will result in commercial adoption.

In July 2025, we launched OPTIS™, a complete physical AI solution designed to modernize legacy infrastructure and deliver actionable intelligence across diverse industries. OPTIS™ integrates our software-defined Apollo^TM lidar technology with advanced computing to bridge the gap between perception and real-time action. Beyond addressing critical needs in transportation, safety, and security, OPTIS™ opens our platform to third-party partners and developers, creating an ecosystem for innovation and growth beyond automotive applications. Since launch, we've transitioned OPTIS™ from concept to a structured offering, with initial deployments already completed. Our flagship OPTIS™ deployment in California is live at an active intersection and provides the potential for a complete traffic management solution that integrates our lidar, perception, and actuation in conjunction with our partners Flasheye and Blue-Band, with several additional deployments planned. Recent additions to our partner network include Black Sesame Technologies and Vueron.

In January 2026, we introduced STRATOS™, the next product in our lidar family. STRATOS™ is based on the same underlying software-defined Apollo^TM architecture but delivers an extended detection range of up to approximately 1.5 kilometers and roughly twice the angular resolution. STRATOS™ is designed for applications requiring enhanced long-distance performance, including sensing requirements in certain automotive, infrastructure, aviation, industrial, and defense use cases.

In March 2026, we joined the NVIDIA Halos AI Systems Inspection Lab, the world's first ANAB-accredited AI systems inspection lab, which we believe further reinforces our positioning within the NVIDIA ecosystem and may support our engagement with global automotive OEMs and Tier 1 suppliers. Also, during the first quarter of 2026, we entered into a commercial relationship with SynTech, a global defense systems company with established ties to leading defense primes, under which SynTech began promoting Apollo™ to its customers and we have commenced initial shipments. We believe this relationship could expand our addressable market into international defense and aviation; however, there can be no assurance that this relationship, or the integrations described above, will result in commercial sales for us.

In aerospace and defense, our customer engagements continued to ramp during the first quarter of 2026, with multiple repeat orders from existing customers and active development across multiple programs with certain customers. We are evaluating expanded use cases for our products with these customers, and we expect to receive additional requests for quotation in the near term. While we are encouraged by the trajectory of these engagements, there can be no assurance that they will translate into commercial sales for us.

We believe our revenue and profitability will also be dependent upon our success in licensing our technology to Tier 1 automotive suppliers, such as our current Tier 1 partner, LITEON, and these partners securing program awards from OEMs and scaling to high volume production of our lidar sensors. Delays in autonomy programs by OEMs that we are currently or plan to be working with through our Tier 1 partners could result in us being unable to achieve our revenue and profitability targets in the time frame we anticipate, or at all.

Geographic Opportunities

While our commercial activities remain primarily focused in North America, we are also actively engaging with customers in EMEA and APAC. Our APAC strategy has begun to evolve through business development activities in Korea, where we have established on-the-ground support and have engaged with multiple customers across the ITS, rail, and mobility sectors. In China, we have multiple customer evaluations in progress, supported by our existing partnerships with ATI and LighTekton. Additional proof-of-concept activity is underway in other geographies, including Australia and Thailand. There can be no assurance that any of these international engagements will result in commercial sales for us.

Gross Margin

Our gross margins will depend on numerous factors, including, among others, the selling price of our products, pricing of our development contracts with customers, royalty rates on licenses we grant to our customers, unit volumes, product mix, component costs, personnel costs, contract manufacturing costs, overhead costs, and product features. Our gross margins have and may continue to be negatively impacted by inventory write-downs. In the future, we expect to generate attractive gross margins from licensing our lidar technology and software to our Tier 1 partners in the Automotive market. We also anticipate being able to leverage on our foundation in the Automotive market to be more cost competitive in other markets.

To date, we have primarily generated revenue through sales of our products to Non-Automotive customers and through development contracts with OEMs and Tier 1 suppliers. Non-Automotive applications typically command higher average selling prices and may carry higher gross margins than Automotive programs due to lower volume sensitivity, more specialized operating requirements, and greater willingness by customers to pay for performance differentiation. These engagements often involve customization of our product's capabilities to address application-specific needs, including software-based configuration of scan patterns, region-of-interest tuning, advanced perception features, and other enhancements. In many cases, customers require more complex configurations or software-enabled feature additions, which allows us greater latitude to price these solutions at a premium. As a result, customized Non-Automotive deployments generally reflect higher contractual pricing and may contribute more favorably to gross margin relative to standard Automotive configurations.

Investment and Innovation

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.

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 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 and Tier 1 suppliers. These contracts primarily focus on customization of our product's capabilities to our customers' applications, typically involving software implementation to assist with sensor connection and control, customization of scan patterns, and enhancement of perception capabilities to meet specific customer needs. Revenue from development contracts is recognized when we satisfy performance obligations in the contract, which can result in recognition at either a point in time or over time. This assessment is made at the outset of the arrangement for each performance obligation.

We are seeing strong 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.

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:

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

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

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lab equipment;

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engineering parts and test units;

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new hardware and software expenses; and

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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:

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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

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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:

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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;

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

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

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allocated personnel and overhead expenses, net.

We expect our G&A expenses to increase to support growth as we pursue Non-Automotive opportunities and as we continue to develop and commercialize our products.

Change in Fair Value of Convertible Note and Warrant Liabilities

The changes in fair value of the convertible note and warrant liabilities are the result of the change in fair value at each reporting date. The convertible note and warrant liabilities were recorded at fair value for each reporting period, and the changes in fair value were reported within other income (expense), net during the period. We also elected to record interest expense on the convertible note as changes in fair value. We have fully repaid the 2025 convertible note and will not have a change in fair value of the convertible note in future periods. In addition, we expect the change in fair value of warrant liabilities to decrease as the warrant associated with the 2022 convertible note was cancelled and the warrant associated with the 2025 convertible note was exercised in full.

Interest Income, Interest Expense and Other

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 March 31, 2026 and 2025

The results of operations presented below should be reviewed in conjunction with the condensed consolidated financial statements and notes included elsewhere in this report. The following table sets forth our consolidated results of operations data for the three months ended March 31, 2026 and 2025 (in thousands, except for percentages):

		Three months ended March 31,								Change				Change
		2026				2025				$				%
Revenue		$	101			$	64			$	37				58	%
Cost of revenue			201				96				105				109	%
Gross loss			(100	)			(32	)			(68	)			213	%
Research and development			3,765				3,490				275				8	%
Sales and marketing			986				383				603				157	%
General and administrative			4,178				2,895				1,283				44	%
Total operating expenses			8,929				6,768				2,161				32	%
Loss from operations			(9,029	)			(6,800	)			(2,229	)			33	%
Change in fair value of convertible note and warrant liabilities			19				680				(661	)			(97	)%
Interest income and other			645				214				431				201	%
Interest expense and other			22				(2,108	)			2,130				(101	)%
Total other income (expense), net			686				(1,214	)			1,900				(157	)%
Loss before income tax			(8,343	)			(8,014	)			(329	)			(4	)%
Provision for income tax			2				2				-				-	%
Net loss		$	(8,345	)		$	(8,016	)		$	(329	)			(4	)%

Revenue

Revenues increased by $37, or 58%, to $101 for the three months ended March 31, 2026, from $64 for the three months ended March 31, 2025. This increase is primarily due to sales of our Apollo^TM lidar units, partially offset by lower contract development revenues.

Cost of Revenue

Cost of revenue increased by $105, or 109%, to $201 for the three months ended March 31, 2026, from $96 for the three months ended March 31, 2025. This increase was primarily due to higher costs of product sales in the current quarter, partially offset by lower inventory provisions.

Operating Expenses

Research and Development

Research and development expenses increased by $275, or 8%, to $3,765 for the three months ended March 31, 2026, from $3,490 for the three months ended March 31, 2025. This increase was primarily driven by an increase in personnel costs, net of allocations, of $537, and increased fees paid to third party development work, engineering parts and lab equipment, and other research and development expenses of $235. These increases were partially offset by a decrease in stock-based compensation expense of $484.

Sales and Marketing

Sales and marketing expenses increased by $603, to $986 for the three months ended March 31, 2026, from $383 for the three months ended March 31, 2025. This increase was primarily driven by increases in personnel costs, including allocations, of $438 and marketing, trade show and consultant expenses of $189.

General and Administrative

General and administrative expenses increased by $1,283, or 44%, to $4,178 for the three months ended March 31, 2026, from $2,895 for the three months ended March 31, 2025. This increase was primarily driven by a favorable adjustment of $1,685 upon settlement of a lease dispute during the three months ended March 31, 2025. The increase was also due to higher personnel costs, net of allocations, of $250, partially offset by decreases in stock-based compensation of $430, and legal fees and consulting expenses of $225.

Change in Fair Value of Convertible Note and Warrant Liabilities

Change in fair value of convertible note and warrant liabilities decreased by $661 to $19 for the three months ended March 31, 2026, from $680 for the three months ended March 31, 2025. This decrease was primarily due to the change in fair value of the 2025 Note and warrants, which were fully settled or cancelled in 2025.

Interest Income and Other

Interest income and other increased by $431, or 201%, to $645 for the three months ended March 31, 2026, from $214 for the three months ended March 31, 2025. This increase was primarily due to higher interest earned on our cash, cash equivalents, and marketable securities in the current period.

Interest Expense and Other

Interest expense and other decreased by $2,130, to a net income of $22 for the three months ended March 31, 2026, from a net expense of $2,108 for the three months ended March 31, 2025. This decrease was primarily due to a decrease in costs related to financing arrangements of $1,959 and higher foreign exchange gains (losses), net of $172.

Net Loss

Net loss increased by $329, or 4%, to $8,345 for the three months ended March 31, 2026, from $8,016 for the three months ended March 31, 2025. This increase was primarily due to increased facilities costs as a result of the favorable adjustment from the settlement of a lease dispute in the prior year's quarter and increased personnel costs, partially offset by decreased stock-based compensation, lower changes in fair value of convertible note and warrants, and decreased financing costs.

Liquidity and Capital Resources

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.

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 we expect to file a replacement registration statement on Form S-3 in May 2026 to maintain capacity to raise capital under our existing financing programs. There can be no assurance that we will be able to raise additional capital under any such replacement registration statement, in the amounts anticipated, or at all.

Dowslake Transaction

On May 10, 2024, we entered into a Securities Purchase Agreement with Dowslake Microsystems Corporation, or Dowslake, pursuant to which Dowslake agreed to purchase 330,823 shares of common stock for a purchase price of $854, which represents a per share purchase price of $2.58, and an unsecured promissory note in the principal amount of $146 for an aggregate purchase price of $1,000.

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

2025 Convertible Note

In January 2025, we entered into a Securities Purchase Agreement to finance an aggregate principal amount of up to $3,240 with a certain institutional investor and issued (i) a senior unsecured convertible promissory note (the "2025 Note") for an aggregate purchase price of $3,000 and (ii) a warrant to purchase up to 805,263 shares of 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 three months ended March 31, 2026 and 2025, we had a net loss of $8,345 and $8,016, respectively. We expect that our expenses will continue to exceed our operating income and, as a result, we may need additional capital resources to fund our operations. We believe we currently have sufficient financial resources to fund our operating expenses, working capital, and capital expenditure requirements for a period of at least twelve months from the date of this Quarterly Report on Form 10-Q. Our plans for the use of cash in the long term (beyond twelve months from this Quarterly Report on Form 10-Q) are primarily related to funding operating expenses to support the continued development and commercialization of our products. For additional information regarding our cash requirements from contractual obligations, see Note 16 to the Condensed Consolidated Financial Statements in Item 1of Part I of this Quarterly Report on Form 10-Q.

Cash Flow Summary

		Three months ended March 31,
		2026				2025
		(in thousands)
Net cash provided by (used in):
Operating activities		$	(8,555	)		$	(7,803	)
Investing activities		$	10,713			$	(8,578	)
Financing activities		$	(352	)		$	11,382

Operating Activities

For the three months ended March 31, 2026, net cash used in operating activities was $8,555. Factors affecting operating cash flows during this period were net loss of $8,345, partially offset by stock-based compensation of $1,542 and common stock purchase agreement costs of $136. Within operating activities, the net changes in operating assets and liabilities were cash used of $2,041, primarily driven by decreases in accrued expenses and other liabilities and operating lease liabilities of $2,895 and $121, respectively. Cash used was offset by cash provided by a decrease in prepaid and other current assets of $684 and an increase in accounts payable of $205.

For the three months ended March 31, 2025, net cash used in operating activities was $7,803. Factors affecting operating cash flows during this period were a net loss of $8,016, a gain on termination of an operating lease, net, of $1,685, and change in fair value of convertible notes and warrant liabilities of $680, partially offset by stock-based compensation of $2,501, debt issuance costs of $1,984, and common stock purchase agreement costs of $111. Within operating activities, the net changes in operating assets and liabilities were cash used of $2,056, primarily driven by decreases in accrued expenses and other liabilities and operating lease liabilities of $2,408 and $57, respectively. Cash used was offset by cash provided by decreases in prepaid and other current assets and other noncurrent assets of $98 and $80, respectively, and an increase in accounts payable of $222.

Investing Activities

For the three months ended March 31, 2026, net cash provided by investing activities was $10,713. The primary factors affecting net cash provided by investing activities during this period were proceeds from the redemptions and maturities of marketable securities of $10,900 partially offset by purchases of property and equipment of $187.

For the three months ended March 31, 2025, net cash used in investing activities was $8,578. The primary factors affecting net cash used in investing activities during the period were the purchases of marketable securities of $14,303 partially offset by redemptions and maturities of marketable securities of $5,731.

Financing Activities

For the three months ended March 31, 2026, net cash used in financing activities was $352. The primary factors affecting financing cash flows during this period were taxes paid on net settlement of equity awards of $252, and payments of stock issuance costs related to common stock purchase agreements of $100.

For the three months ended March 31, 2025, net cash provided by financing activities was $11,382. The primary factors affecting financing cash flows during this period were proceeds from common stock purchase agreement of $9,495 and from the issuance of a convertible note of $2,950, partially offset by debt issuance costs of $578, taxes paid on net settlement of equity awards of $333 and stock issuance costs related to common stock purchase agreements of $152.

Critical Accounting Estimates

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 three months ended March 31, 2026, there were no significant changes in our critical accounting estimates as compared to those previously disclosed in "Critical Accounting Policies and Estimates" in "Management's Discussion and Analysis of Financial Condition and Results of Operations" included in our 2025 Annual Report on Form 10-K.

Recent Accounting Pronouncements

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.