MVIS 10-K & 10-Q changes, risk factors and insider trading

The likelihood of our success must be considered in light of the expenses, difficulties and delays frequently encountered by companies formed formed to develop and commercialize new technologies. In particular, our operations to date have focused primarily on research and development, development initially of our Laser Beam Scanning, or LBS, technology system, including products built around that technologytechnology, suchand more asrecently of other core technologies around which our automotive lidar sensors, andsensors developmentare of demonstration units.built. We are unable to accurately estimate future revenues and operating expenses based upon historical performance.

We are currently focused on developing and commercializing our perceptionlidar softwaresensors and sensorperception solutions. This involves introducing new technologies into an emerging market which creates significant uncertainty about our ability to accurately project the amounts and timing of revenue, costs, and cash flows. Our capital requirements will depend on many factors, including, but not limited to, the commercial success of our technologies, the rate at which OEMs and other customers introduce systems incorporating our solutions and technologies and the market acceptance and competitive position of such systems. Our expenses have increased significantly as a result of the recent asset acquisitions, including Ibeo in January 20232023, IbeoScantinel acquisitionPhotonics in January 2026, and Luminar Technologies in February 2026, and related headcount increase,increases thoughwith ineach 2024 we effectuated meaningful headcount reductions.acquisition. If revenues revenues continue to be less than we anticipate, if the mix of revenues and the associated margins vary from anticipated amounts, or if if expenses exceed the amounts budgeted, we may require additional capital earlier than expected to fund our operations. In addition, addition, our operating plan provides for the development of strategic relationships with suppliers of components, products and systems, and equipment manufacturers that may require additional investmentsinvestment by us.

For the year ended December 31, 2025, a leading manufacturer of agricultural equipment accounted for $0.5 million in revenue, an automotive supplier accounted for $0.2 million in revenue, an automotive manufacturer accounted for $0.2 million in revenue, and an automotive driving solutions provider accounted for $0.1 million in revenue. This represents 42%, 19%, 15%, and 12% of our total revenue, respectively. For the year ended December 31, 2024, a leading manufacturer of agricultural equipment accounted for $2.8 million in revenue, a major major global trucking OEM accounted for $0.6 million in revenue, and an automotive supplier accounted for $0.5 million in revenue. This represents represents 60%, 13%, and 10% of our total revenue, respectively. For the year ended December 31, 2023, two commercial customers accounted for $4.6 and $0.8 million in revenue, respectively, representing 63% and 11% of our total revenue, respectively. Our revenue has been negatively effectedaffected by the loss of certain of these customers and could continue to be if not replaced with new, materially equivalent customer wins.

In theWe second quarter of 2021, we identified a material weaknesshave in the controlspast thatand supportmay our determination ofin the grant date of equity awards. If wefuture identify further material weaknesses in our internal controls, ouror failurefail to establish and maintain effective disclosure controls and procedures and internal control over financial reportingreporting, either of which could result in material misstatements in our financial statements and a failure to meet our reporting obligations. Any such failure could cause investors to lose confidence in the accuracy of our financial reports, harm our reputation, and adversely affect the market price of our common stock.

Our internal controls over financial reporting forbeginning in fiscal year 2024 include controls of our subsidiary, MicroVision GmbH, which became a significant subsidiary upon the closing of our acquisition of assets from Ibeo in 2023. Given the added complexity stemming from the inclusion of our German subsidiary within our control environment, the risk of a material weakness in internal controls will be higher than it has been to date.

Our stock price has fluctuated significantly in the past, has recently been volatile, and may be volatile in the future. Over the 52-week period ending MarchFebruary 20,26, 2025,2026, our common stock has traded at a low of $0.80$0.65 and a high of $1.95.$1.73. We may continue to experience sustained sustained depression or substantial volatility in our stock price in the foreseeable future unrelated to our operating performance or prospects. prospects. For the fiscal year ended December 31, 2024,2025, we incurred a loss per share of $0.46.$0.35.

OurAs common stock is listed on The Nasdaq Global Market. To maintain our listing on this market, we must meet Nasdaq’s listing maintenance standards. As a result of recent declines and volatility in our stock price, there is a significant risk that we could fail to maintainregain compliance compliance with the minimum bid price requirement of $1.00 per share for continued listing on The Nasdaq Global Market.requirement. If we are unable to regain compliance within the 180-day period and then continue to meet Nasdaq’s listing maintenance standards for any reason, such as our minimum bid price falling below $1 for 30 consecutive consecutive trading days, our common stock could be delisted from The Nasdaq Global Market. If our common stock were delisted, we may seek to list our common stock on The Nasdaq Capital Market, the NYSE American or on a regional stock exchange or, if one or more broker-dealer broker-dealer market makers comply with applicable requirements, the over-the-counter, or OTC, market. Listing on such other market or exchange could reduce the liquidity of our common stock. If our common stock were to trade in the OTC market, an investor would find it more difficult to dispose of, or to obtain accurate quotations for the price of, the common stock.

On March 20,February 2025,26, 2026, the closing price of our common stock was $1.36$0.78 per share.

We are generally not restricted from issuing additional common stock, including any securities that are convertible into or exchangeable exchangeable for, or that represent the right to receive, common stock. If we issue additional common stock, or securities convertible into or exchangeable or exercisable for common stock (includingsuch additional convertible notes toas the holderrecent of the convertible note issuedissuance by us in October 2024 pursuant to the securities purchase purchaseand exchange agreement dated OctoberFebruary 14,23, 20242026), our stockholders could experience additional dilution, and any such issuances may result in downward pressure on the price of our common stock.

Sales of shares of our common stock by the holder of the OctoberFebruary 20242026 convertible note may cause our stock price to decline.

Sales of substantial amounts of our shares of common stock in the public market by the holder of the convertible note issued by us in October 2024,February 2026, or the perception that those sales may occur, could cause the market price of shares of our common stock to decline and impair our ability to raise capital through the sale of additional shares of our common stock.

There are risks associated with our outstanding convertible note, and any additional convertible notes that may be issued under the October 2024 securities purchase agreement,note that could adversely affect our business and financial condition.

TheOn February 23, 2026, we issued two senior secured convertible notenotes providesin the aggregate principal amount of $43.0 million pursuant to the securities purchase and exchange agreement dated February 23, 2026. The convertible notes provide for certain events of default, such as our failing to make timely payments under the note and failing to timely comply with the reporting requirements of the Exchange Act. The OctoberFebruary 20242026 securities purchase and exchange agreement and the convertible notenotes also contain customary affirmative and negative covenants, including limitations on incurring additional indebtedness, the creation of additional liens on our assets, and entering into investments, as well as a minimum liquidity requirement.

Our ability to remain in compliance with the covenants under the convertible notenotes depends on, among other things, our operating performance, performance, competitive developments, financial market conditions and stock exchange listing of our common stock, all of which are significantly significantly affected by financial, business, economic and other factors. We are not able to control many of these factors. Accordingly, our cash flow may not be sufficient to allow us to pay principal on the note and any additional convertible notes issued under the securities purchase agreement or meet our other obligations thereunder. Our level of indebtedness under the securities purchase and exchange agreement could have other important consequences, including the following:

Our obligations to the holder pursuant to the OctoberFebruary 20242026 convertible note, and any additional convertible notes,notes are secured by a security interest interest in all of our bank and securities accounts, now owned and hereafter created or acquired, and if we default on those obligations, the the holder could foreclose on our bank and securities accounts.

Our obligations under the convertible note, and any additional convertible notes issued pursuant to the October 2024 securities purchase agreement, and the related transaction documents, are secured by a security interest in all of our bank and securities accounts, now owned and hereafter created or acquired. As a result, if we default on our obligations under the convertible note, or any additional convertible notes,note the collateral agent on behalf of the holder could foreclose on the security interests and liquidate some or all of our bank and securities accounts, which would harm our business, financial condition and results of operations and could require us to reduce or cease operations and investors may lose all or part of your investment.

We could face lawsuits related to our use of LBSour technology or othercore technologies, which would be costly, and any adverse outcome could limit our ability to commercialize our technologies or products.

We are aware of several patents held by third parties that relate to certain aspects of light scanning displays, 3D sensing products, and and other technologies that are core to our sensor hardware. These patents could be used as a basis to challenge the validity, limit the the scope or limit our ability to obtain additional or broader patent rights of our patents. A successful challenge to the validity of our patents could limit our ability to commercialize our technology or products incorporating ourthe LBSrelevant or other technologytechnologies and, consequently, consequently, materially reduce our ability to generate revenues. Moreover, we cannot be certain that patent holders or other third parties will not claim infringement by us with respect to current and future technology. Because U.S. patent applications are held and examined in secrecy, it is also possible that presently pending U.S. applications could eventually be issued with claims that could be infringed by our products or our technology.

Our ability to successfully offer products and solutions incorporating our technologies and implement our business plan in a rapidly evolving market requires an effective planning and management process. TheIn particular following our recent asset acquisitions, the growth in business and relationships with customers and other third parties has placed, and will continue to place, a significant strain on our management systems and resources. We will need to continue to improve our financial and managerial controls, reporting systems and procedures, and will need to continue to train and manage our workforce. We continue to strengthen our compliance programs, including our compliance programs related to product certifications (in particular, certifications applicable to the automotive market), export controls, privacy, cybersecurity, and anti-corruption. We may not be able to implement improvements in an efficient or timely manner and may discover deficiencies in existing controls, programs, systems and procedures, which could have an adverse effect on our business, reputation and financial results.

Our potential customers, including industrial and automotive OEMs, are large, multinational companies with substantial negotiating power relative to us and, in some instances, may have internal solutions that are competitive to our products. These large, multinational companies also have significant resources, which may allow them to acquire or develop competitive technologies either independently or in partnership with others. Accordingly, even after investing significant resources to develop a product, we may not secure a series production award or, even after securing a series production award, may not be able to commercialize a product on profitable terms terms.or scale. If our products are not selected by these large companies or if these companies develop or acquire competitive technology or negotiate terms that are disadvantageous to us, it will have an adverse effect on our business prospects.

At various times in our history, including currently and in the recent past, general worldwide economic conditions have experienced downturns due instability in global tariffs, to slower economic activity, concerns about inflation, increased energy costs, decreased consumer confidence, reduced corporate profits and capital spending, and adverse business conditions. Any continuation or worsening of global economic and financial conditions could materially adversely affect: (i) our ability to raise, or the cost of, needed capital, (ii) demand for our current and future products, and (iii) our ability to commercialize products. Additionally, the outbreak of wars or infectious diseases, as recentlyexperienced experienced,currently and in the recent past, may cause an unexpected deterioration in economic conditions. We cannot predict the timing, strength, or duration of any economic slowdown or subsequent economic recovery, worldwide, regionally or in inautomotive, the industrial, automotive or technologysecurity & defense sectors.

On DecemberIn 1,January 2022,2023, January 2026, and February 2026, we enteredcompleted intoacquisitions an Asset Purchase Agreement to acquireof certain assets from Ibeo Automotive Systems GmbH.GmbH, WeScantinel Photonics GmbH, and Luminar Technologies, Inc., respectively. For each of these acquisitions, we expended significant management time and effort, as well as capital, identifying, evaluating, negotiating, and executing thisthese transaction and,transactions. since the closing of the acquisition on January 31, 2023, weWe have investedalso additionalinvested, and continue to invest, time and capital working to integrate our new Hamburg- and Detroit-based teamsemployees and operations.operations from each of these acquisitions into our global organization. We cannot guarantee that these integration efforts will be successful, that the goals of the acquisitions acquisition will be realized, or that the increase to our operating expenses or cash requirements will be manageable. During the first half of 2024, we downsized our Germany operations.

In the future, we may again undertake acquisitions to add new products and technologies, acquire talent, gain new sales channels or enter enter into new markets or sales territories. In addition to possible stockholder approval, we may need approvals and licenses from relevant relevant government authorities for the acquisitions and to comply with any applicable laws and regulations, which could result in increased delay and costs, and may disrupt our business strategy if we fail to do so. Furthermore, acquisitions and the subsequent integration of new assets, businesses, key personnel, customers, vendors and suppliers require significant attention from our management and could result in a diversion of resources from our existing business, which in turn could have an adverse effect on our operations. Acquired assets or businesses may not generate the financial results we expect. Acquisitions could result in the use of substantial amounts of cash, potentially dilutive issuances of equity securities, the occurrence of significant goodwill and other acquired-asset impairment charges, amortization expenses for other intangible assets, and exposure to potential unknown liabilities of the acquired business. Moreover, the costs of identifying and consummating acquisitions may be significant.

Our success depends on our executive officers and other key personnel and on our ability to attract and retain qualified new personnel. Achievement Achievement of our business objectives will require substantial additional expertise in the areas of sales and marketing, engineering, researchproject andmanagement, productoperations, development and manufacturing. Competition for qualified personnel in these fields is intense, and the inability to attract and retain additional highly skilled personnel, or the loss of key personnel, could hinder our ability to compete effectively in the automotive or technology markets and adversely affect our business strategy execution and results of operations.

Risks Related to Development for theour Industrial and AutomotiveTarget Markets

We are pursuing opportunities in rapidly evolving markets, including technological and regulatory changes, and it is difficult to predict the timing and size of the opportunities. For example, lidar-based ADAS solutions require complex technology and because these automotive systems depend on technology from many companies, commercialization of ADAS products could be delayed or impaired on account of certain technological components of ours or others not being ready to be deployed in vehicles. In addition, the selling prices we are able to ultimately charge in the future for the products we are currently developing may be less than what we currently project. OurWe futureexpect to financial performancebe willsubject dependto onsubstantial pressure from automotive OEMs and Tier 1 suppliers to reduce the price of our abilityproducts. It is possible that pricing pressures beyond our expectations could intensify as automotive OEMs pursue restructuring, consolidation, and cost-cutting initiatives. If we are unable to makegenerate timelysufficient investmentsproduction cost savings in the correctfuture marketto opportunities.offset Ifprice one or more of these markets experience a shift in prospective customer demand,reductions, our productsgross may not compete as effectively, if at all,margin and they may not be designedprofitability into commercialized products. Given the evolving nature of the markets in which we operate, it is difficult to predict customer demand or adoption rates for our products, selling prices or the future growth of our target markets. If demand does not develop or if we cannot accurately forecast it, the size of our markets, inventory requirements or future financial results willwould be adversely affected.

Because perception solutions involving lidar are new in the markets we are seeking to enter, ouropportunities in those market and related forecasts may not materialize as anticipated.

We have incurred substantial losses since inception and expect to incur a significant loss during the fiscal year ending December 31, 2025. We have funded operations to date primarily through the sale of common stock, convertible preferred stock, warrants, the issuance of convertible debt and, to a lesser extent, from development contract revenues, product sales and licensing activities. In October 2024, we entered into a securities purchase agreement with an institutional investor for the purchase of senior secured convertible notes of up to $75.0 million. See Part II, Item 8, Note 7. Notes Payable and Derivative Liability. In February 2025, we entered into another securities purchase agreement with the same institutional investor for the issuance and sale of $8.0 million in shares of common stock, plus warrants to purchase additional shares of common stock for approximately $9.0 million. See Part II, Item 8, Note 16.8. Warrant Liability. In February 2026, we entered into a securities purchase and exchange agreement with the same investor, pursuant to which we issued two senior secured convertible notes due March 2028 – one for approximately $20.6 million in exchange for the previously existing senior secured convertible note due March 2026 and the other for approximately $22.4 million. See Part II, Item 8, Note 17. Subsequent Events. There can be no assurance thatEvents for additional capital will be available or that, if available, it will be available on terms acceptable to us on a timely basis. We cannot be certain that we will succeed in commercializing our technology or products.discussion.

Our business combination is accounted for under the acquisition method. We allocate the fair value of purchase consideration to the tangible and intangible assets acquired and liabilities assumed based on their estimated fair values at the acquisition date. The excess of the fair value of the underlying net assets acquired and liabilities assumed over the purchase consideration is included in bargain purchase gain in the Consolidatedconsolidated Statementstatements of Operations.operations. Such valuations require management to make significant estimates and assumptions, especially especially with respect to intangible assets.

Our intangible assets consist of acquired technology from the January 2023 Ibeo asset purchase and purchased patents. The estimated fair value of acquired technology was calculated through the income approach using the multi-period excess earnings and relief from royalty methodologies. The intangible assets are amortized using the straight-line method over their estimated period of benefit, ranging from one to seventeen years. Intangible assets are reviewed for impairment whenever events or changes in circumstances indicate the carrying value may not be recoverable. Recoverability of these assets is measured by comparison of their carrying values to the projected undiscounted net cash flows associated with the related intangible assets or group of assets over their remaining lives. Measurement of an impairment loss for our intangible assets is based on the difference between the fair value of the asset and its carrying value. During 2025 and 2024, we recorded a non-cash impairment chargecharges of $10.1 million and $4.2 million primarily related to our Referenceperception software.software and reference software, respectively. See Part II, Item 8, Note 8.9. Financial Statement Components – Intangible Assets.

The decrease in revenue for the year ended December 31, 20242025 compared to the same period in 20232024 was primarily due a lower sales to revenuea associatedleading with the Microsoft contract partially offset by the salemanufacturer of sensorsagriculture toequipment, anas existingwell industrialas customerlower for agricultural equipment and service parts, an increase in shipmentssales of MOVIA L sensors as part of RFQ evaluation processes to an industrial customer and to Daimler Truck North America and affiliates as part of their RFQ evaluation process, and increased sales to a second industrial customer.affiliates.

Cost of revenue can fluctuate significantly from period to period, depending on the product mix and volume, the level of overhead expense and the volume of direct material purchased. The increase in cost of revenue for the year ended December 31, 20242025 compared to the same same period in 20232024 was primarily due to $9.9 million of obsolete inventory write-downs primarily associated with older configurations of short-range MOVIA L sensors and $3.2 million of adverse purchase commitments related to the production of select MOVIA L sensors.sensor inventory. See Part II, Item 8, Note 9. Financial Statement Components for additional discussion.

Research and development expense consists of compensation related costs of employees and contractors engaged in internal research and product development activities, direct materialmaterials to support development programs, laboratory operations, outsourced development and processing work, and other operating expenses. We assign our research and development resources based on the business opportunity of the available projects, the skill mix of the resources available and the contractual commitments we have made to our customers. We believe that a substantial level of continuing research and development expenses will be required to further develop our scanning technology.

The decrease in research and development expense during the year ended December 31, 20242025 compared to the same period in 20232024 was primarily primarily due to a reduced workforce resulting in lower salary and benefits expense and non-cash compensation of $11.2 million as a result of 2024 restructuring events (see Part II, Item 8, Note 14. Restructuring Charges), lower depreciation expense of $0.8$7.9 million, lower freight costs of $0.2 million, lower direct materials and equipment costs of $0.2 million, and lower travel expenses of $0.2 million. These decreases were partially offset by restructuring charges of $5.4 million, lower purchased services of $2.1 million, and higherlower IT and software costs of $0.5$1.1 million. These decreases were partially offset by higher building expenses of $0.9 million.

The decrease in sales, marketing, general and administrative expense during the year ended December 31, 20242025 as compared to the same period period in 20232024 was primarily due to lower non-cash share based compensation expense of $7.6 million from the reversal of previously recognized expense related to the forfeiture of awards in connection with the executive separations that occurred during the year ended December 31, 2025, lower salary and benefits expense and non-cash compensation of $4.6 million as a result of 2024 restructuring events (see Part II, Item 8, Note 14. Restructuring Charges), lower professional fees of $1.8 million primarily related to legal and audit fees associated with the acquisition of Ibeo in 2023, lower subcontractor fees of $0.7$1.5 million, lower business insurance fees of $0.6 million due to favorable rates obtained, and lower advertising costs of $0.3 million. These decreases were partially offset by restructuring charges of $0.6 million, and lower trade show expense of $0.4 million. These decreases were partially offset by higher ITrecruiting andexpenses softwareof costs$0.6 million, higher building expenses of $0.4 million, higher trade showpurchased expenseservices fees of $0.2$0.3 million, and higher buildingadvertising expensescosts of $0.2$0.3 million.

ImpairmentDuring lossthe onyear intangibleended assetsDecember includes31, 2025, management identified impairment chargesindicators onrelated intangibleto assets.perception software, which resulted in a $10.1 million non-cash impairment charge. During the year ended December 31, 2024, management identified impairment indicators related to MOSAIK software. We performed an assessment of projected future cash flows and determined the software was fully impaired, which resulted in a $4.2 million non-cash impairment charge. See Part II, Item 8, Note 8.9. Financial Statement Components Components for additional discussion.

The increase in interest expense during the year ended December 31, 20242025 compared to the same period in 20232024 relates to $4.4$7.3 million of non-cash interest expense representing the discount on notesthe payable2025 thatPurchase originatedAgreement infor Octoberwarrants 2024.and Seeshares of common stock (see Part II, Item 8, Note 8. Warrant Liability), $9.1 million of non-cash interest expense related to amortization of the debt discount and issuance costs on notes payable, and $2.1 million of non-cash interest expense related to the modification of notes payable (see Part II, Item 8, Note 7. Notes Payable and Derivative Liability for additional discussion.).

Unrealized gain (loss) on derivative liability

Unrealized gain (loss) on derivative liability reflects the revaluation of our derivative liability associated with notes payable as of December 31, 2025 and 2024. Due to the decrease in the fair value of the derivative liability as of December 31, 2024.2025 relative to December 31, 2024, we recognized an unrealized gain during 2025. Due to the increase in the fair value of the derivative liability as of December 31, 2024 relative to its initial measurement on October 23, 2024, we recognized an unrealized loss during 2024. See Part II, Item 8, Note 7. Notes Payable and Derivative Liability for additional discussion.

During the years ended December 31, 20242025 and 2023,2024, we recognized a tax expensebenefit of $0.5$0.1 million and $1.1tax expense $0.5 million, respectively, mainly related related to income in foreign jurisdictions offset,jurisdictions, partially offset by a deferred income tax benefit generated by the reduction to a deferred2025 loss provision on our taxHamburg, liabilityGermany createdoffice as a result of the acquisition of Ibeo in Q2 2023. The change in income tax expense during the year ended December 31, 2024 was largely the result of lower profitability in foreign jurisdictions.lease. As of December 31, 2024,2025, we had net operating loss carryforwards of approximately $498.0$549.4 million for federal income tax reporting purposes. In addition, we have research and development tax credits of $11.1$11.2 million. During 2024,2025, $28.2$16.0 million federal net operating losses and $0.2$0.3 million general business credits expired unused. A majority of the net operating loss carryforwards and research and development credits available to offset future taxable income, if any, will expire in varying amounts from 20252026 to 2044, if not previously used.

We have incurred significant losses since inception. We have funded operations to date primarily through the sale of common stock, convertible convertible preferred stock, warrants, the issuance of convertible debt and, to a lesser extent, from development contract revenues, product sales, and licensing activities. As of December 31, 2024,2025, the Company had $54.5$32.3 million in cash and cash equivalents and $20.2 $42.5 million in short-term investment securities, or $74.7$74.8 million total. In February 2025,2026, we raised net proceeds of $7.8$20.9 million from the exchange and issuance through sale of commonsenior stocksecured convertible notes to an existing investor. In addition to cash and cash equivalents, the Company also has potential availability of $143.6$42.0 million comprisedleft on our existing $150.0 million ATM facility that was put in place in the first quarter of the2024, following:subject to certain limitations.

In consideration of the above, after factoring in the $33.2 million purchase price of the Luminar asset acquisition in February 2026 (see Part II, Item 8, Note 17. Subsequent Events), the Company has total liquidity of $226.1$104.5 million. Pursuant to terms of the Note,securities purchase and exchange agreement entered into in February 2026, we will maintain minimum cash liquidity of $30.0the lesser of $21.5 million or 110% of the then outstanding balance of the Note for the remaining duration of the Note term, subject to decreases beginning on May 1, 2025.term. Based on our current operating plan, we anticipate that we have sufficient cash and cash equivalents to fund our operations for at least the next 12 months.

Cash used in operating activities totaled $68.5$58.7 million during 2024,2025, compared to $67.1$68.5 million in 2023.2024. During the years ended December 31, 20242025 and 2023,2024, we made payments of $1.9$7.7 million and $3.1$1.9 million, respectively, to our contract manufacturing partner in connection with the buildup of MOVIA sensor inventory for direct sales to both automotive and non-automotive customers. Moreover,As of December 31, 2025, we expect had open purchase commitments of $3.2 million related to makethe additionalproduction minimumof paymentsMOVIA toL thissensor partnerinventory. totalingWe approximatelyhave determined $6.3that millioncertain duringof 2025the sensors are obsolete and 2026an inadverse linepurchase withcommitment for the entire balance of open purchase agreed-uponcommitments deliveries.has been recorded as of December 31, 2025.

During the year ended December 31, 2024,2025, cash used in investing activities was $24.6 million compared to cash provided by investinginvestment activities was of $2.7 million compared to $21.8 million during the same period in 2023.2024. During the year ended December 31, 2025, we purchased short-term investment securities totaling $51.9 million and sold short-term investment securities totaling $30.1 million, compared to purchases of $26.1 million and sales of $35.4 million in the same period of 2024. During the year ended December 31, 2024, we purchasedmade short-termadvances investmentof securities totaling $26.1$2.2 million and sold short-term investment securities totaling $35.4 million, comparedrelated to purchasesthe acquisition of $41.7Scantinel millionassets and(see salesPart ofII, $76.7Item million8. inNote the17, sameSubsequent period of 2023.Events). During the year ended December 31, 2024, we purchased property and equipment totaling $0.4 million compared to $2.0 million in the same period in 2023. During the year ended December 31, 2024, we made payments totaling $6.3 million related to the acquisition of Ibeo assets compared to $11.2 million in the same period in 2023.assets.

Net cash provided by financing activities totaled $72.9$60.9 million during the year ended December 31, 2024,2025, compared to $72.4$72.9 million during the same period of 2023. Proceeds received from stock option exercises totaled $0.1 million during the year ended December 31, 2024, compared to $0.3 million during the same period in 2023.2024. Net proceeds from issuance of common stock and warrants were $34.7$77.4 million during the year ended December 31, 2024, 2025, compared to $72.3$34.7 million during the same period in 2023.2024. In 2025, we made scheduled principal repayments of $16.5 million associated with our senior secured convertible notes. In 2024, we received approximately $38.1 million in net proceeds, inclusive of debt issuance costs, from the issuance of $45.0 million senior secured convertible notes. See Part II, Item 8. Note 7, Notes Payable and Derivative Liabilities.

The likelihood of our success must be considered in light of the expenses, difficulties and delays frequently encountered by companies formed to develop and commercialize new technologies. In particular, our operations to date have focused primarily on research and development, initially of our Laser Beam Scanning, or LBS, technology system, including products built around that technology, and more recently of other core technologies around which our automotiveportfolio of lidar sensors are built. We are unable to accurately estimate future revenues and operating expenses based upon historical performance.

We cannot be certain that we will succeed in obtainingsecuring additionalsustained developmentlevels of revenue or commercializing our technology or products at scale. In light of these factors, we expect to continue to incur significant losses and negative cash flow through the remainder of 2026 and the foreseeable future. There is significant risk that we will not achieve positive cash flow at any time in the future.

We will require additional capital to fund our operations at the level necessary to implement our business plan. Raising additional capital will dilute the value of current shareholders’ investment in us. Additionally, we may be unable to raise capital at the level we expectexpect, within the timeframe needed, or on terms acceptable to us.

Additional capital may not be available to us or, if available, may not be available at a level or on terms acceptable to us or on a timely basis. Raising additional capital maywill involve issuing securities with rights and preferences that are senior to our common stock and maywill dilute the value of our current shareholders’ investment in us. Moreover, raising capital through the sale of our equity securities is dependent upon the availability of the requisite shares of authorized stock, which is driven by the market price of our stock and the approval of our stockholders. If adequate capital resources are not available on a timely basis, we may consider limiting our operations substantially and we may be unable to continue as a going concern. This limitation of operations could include reducing investments in our research and development projects, staff, operating costs, and capital expenditures which could jeopardize our ability to achieve our business goals or satisfy our customer requirements.

For the threesix months ended MarchJune 31,30, 2026, a top-ten global automotive OEM accounted for $0.5$0.6 million, or 54%,25%, of total revenue,revenue was derived from Iris sensor sales to a leading global manufacturer of construction manufacturerand accountedmining forequipment, $0.2$0.5 million, or 22%, of total revenue,revenue andwas derived from Movia L sensors sales to an EU-based autonomousrobotics company roboticsdelivering developerautonomy accounted forsystems $0.2in the Security & Defense sector, and $0.5 million, or 17%,21%, ofwas totalderived revenue.from a top-ten global automotive OEM customer. For the threesame monthsperiod ended March 31,in 2025, a leading manufacturer of agricultural equipment accounted for $0.5 million in revenue and an automotive supplier accounted for $0.1$0.5 million inand $0.2 million of total revenue, respectively, representing 80%66% and 14%22% of our total revenue, respectively. Our revenue has been negatively affected by the loss of certain of these customers and could continue to be if not retained or replaced with new, materially equivalent customer wins.

Our stock price has fluctuated significantly in the past, has recently been volatile, and may be volatile in the future. OverAdjusting for the 1-for-15 reverse stock split that became effective on August 1, 2026, over the 52-week period ending MayAugust 6,3, 2026, our common stock has traded at a low of $0.51$3.45 and a high of $1.73.$23.10. We may continue to experience sustained sustained depression or substantial volatility in our stock price in the foreseeable future unrelated to our operating performance or prospects. For the threesix months ended MarchJune 31,30, 2026, we incurred a loss per share of $0.08.$2.90 (as adjusted to reflect the 1-for-15 reverse stock split).

On●sales May 6, 2026, the closing price of our common stock wasby $0.66us peror share.our stockholders;

Our lack of significant financial resources may limit our ability to achieve target revenues, potential profits, overall market share, or value.

OurIn addition, our products and solutions compete with other pureplay lidar developers, most of which have raised and exhausted significant capital in their development and production efforts. We also face competition from OEMs and Tier 1 suppliers that have internally developed lidar sensors. All of these OEMS and Tier 1s are significantly larger, more well-resourced, have long operating histories and enjoy relevant brand recognition. With greater resources over the past several years, our pureplay lidar competitors have in the past developed and commercialized products more quickly than us and may now have access to more entrenched sales channels. This historical imbalance in financial resources and access could result for us in reducedan inability to achieve target revenues, lowerlower-than-anticipated marginsmargins, or lossthe offailure to attain sufficient market share, any of which could reduce the value of our business. Additionally, for a variety of reasons, customers may choose to purchase from suppliers that have substantially greater financial or other resources than we have.

Risks Related to Fundraising Transactions and the Convertible NoteNotes

Sales of shares of our common stock by the holder of the February 2026 convertible notenotes may cause our stock price to decline.

Sales of substantial amounts of our shares of common stock in the public market by the holder of the convertible notenotes issued by us in February 2026, or the perception that those sales may occur, could cause the market price of shares of our common stock to decline and impair our ability to raise capital through the sale of additional shares of our common stock.

There are risks associated with our outstanding convertible notenotes that could adversely affect our business and financial condition.

On February 23, 2026, we issued two senior secured convertible notes in the aggregate principal amount of $43.0 million pursuant to the securities purchase and exchange agreement dated February 23, 2026.The convertible notes provide for certain events of default, such as our failing to make timely payments under the notenotes and failing to timely comply with the reporting requirements of the Exchange Act. The February 2026 securities purchase and exchange agreement and the convertible notes also contain customary affirmative and negative covenants, including limitations on incurring additional indebtedness, the creation of additional liens on our assets, and entering into investments, as well as a minimum liquidity requirement.

Our obligations under the convertible notes and the related transaction documents, are secured by a security interest in all of our bank and securities accounts, now owned and hereafter created or acquired. As a result, if we default on our obligations under the convertible notenotes the collateral agent on behalf of the holder could foreclose on the security interests and liquidate some or all of our bank and securities accounts, which would harm our business, financial condition and results of operations and could require us to reduce or cease operations and investors may lose all or part of your investment.

Our ability to successfully offer products and solutions incorporating our technologies and implement our business plan in a rapidly evolving market requires an effective planning and management process. In particular following our recent asset acquisitions, the growth in business and relationships with customers and other third parties has placed, and will continue to place, a significant strain on our management systems and resources. We will need to continue to improve our financial and managerial controls, reporting systems and procedures, and will need to continue to train and manage our workforce. We continue to strengthen our compliance programs, including our compliance programs related to product certifications (in particular, certifications applicable to the automotive marketand defense markets), export controls, privacy, cybersecurity, and anti-corruption. We may not be able to implement improvements in an efficient or timely manner and may discover deficiencies in existing controls, programs, systems and procedures, which could have an adverse effect on our business, reputation and financial results.

At various times in our history, including currently and in the recent past, general worldwide economic conditions have experienced downturns downturns due to instability in global tariffs, to slower economic activity, concerns about inflation, increased energy costs, decreased consumer confidence, reduced corporate profits and capital spending, and adverse business conditions. Any continuation or worsening of global economic and financial conditions could materially adversely affect: (i) our ability to raise, or the cost of, needed capital, (ii) demand for our current and future products, and (iii) our ability to commercialize products. Additionally, prolonged military confrontations, or the outbreak of wars or infectious diseases, as experienced currently and in the recent past, may cause an unexpected deterioration in economic conditions. We cannot predict the timing, strength, or duration of any economic slowdown or subsequent economic recovery, worldwide, regionally or in automotive, industrial, or security & defense sectors.

DuringIn 2021, we established an office in Germany and on January 31, 2023, we completed our acquisition of certain assets of Ibeo, with the result result that we now have more employees and operations in Germany than in the U.S. In addition, we currently use foreign suppliers and partners and plan to continue to do so to manufacture current and future components and products, where appropriate. These international operations are subject to inherent risks, which may adversely affect us, including, but not limited to:

We have incurred substantial losses since inception and expect to incur significant losses in the near term. We have funded operations to to date primarily through the sale of common stock, convertible preferred stock, warrants, the issuance of convertible debt and, to a lesser extent, from development contract revenues, product sales and licensing activities. In October 2024, we entered into a securities purchase agreement with an institutional investor for the purchase of senior secured convertible notes due March 2026 of up to $75.0 million.million (the “Prior Note”). See Part I, Item 1, Note 7. Notes Payable and Derivative Liability. In February 2025, we entered into another securities purchase agreement with the same institutional investor for the issuance and sale of $8.0 million in shares of common stock, plus warrants to purchase additional shares of common stock for approximately $9.0 million. See Part I, Item 1, Note 8. Warrant Liability. In February 2026, we entered into a securities purchase and exchange agreement with the same investor, pursuant to which we issued two senior secured convertible notes due March 2028 (the “2026 Notes Financing”) – one for approximately $20.6 million in exchange for the previouslyPrior existing senior secured convertible note due March 2026Note and the other for approximately $22.4 million. See Part I, Item 1, Note 7. Notes Payable and Derivative Liability for additional discussion.

The increase in revenue for the three and six months ended MarchJune 31,30, 2026 compared to the same period in 2025 was primarily due to shipments of our long-range IRIS sensors to automotive and industrial customers and shipments of our short-range MOVIA L sensors to a security and defense customer, among others.

Cost of revenue can fluctuate significantly from period to period, depending on the product mix and volume, the level of overhead expense and the volume of direct material purchased. For the first three and six months of 2026, cost of revenue was positively impacted by sensor sales out of acquired IRIS and existing MOVIA L inventories.

The increase in research and development expense during the three months ended MarchJune 31,30, 2026 compared to the same period in 2025 was primarily primarily due to higher salary and benefits expense of $3.7$3.3 million due to increased headcount from acquisitions (see Part I, Item 1, Note 4. Business Combinations), higher one-time employee-related restructuring charges of $1.0 million stemming from the Luminar acquisition and Consolidation Plan, higher building expenses of $0.7$1.0 million, higher purchased services of $0.9 million, higher direct materials and equipment costs of $0.5 $0.4 million, and higher IT and software costs of $0.3 million. TheseIn increasesconnection with the Consolidation Plan, the Redmond-based reductions were partiallysubstantially offsetcomplete by lower share-based compensation expenseas of $0.3July million.3, 2026; accordingly, the upward trend in research and development expense seen in the first half of 2026 is not expected to continue.

The increase in sales, marketing, general and administrative expense during the three months ended MarchJune 31,30, 2026 compared to the same period in 2025 was primarily due to higher salaryprofessional and benefits expense of approximately $1.4 million due to increased headcount from acquisitions, higher professional and purchased service fees of $2.6$2.3 million primarily related to acquisitions (see Part I, Item 1, Note 4. Business Combinations), and higher employee-relatedsalary restructuringand chargesbenefits expense of $0.1approximately million.$1.2 million due to increased headcount from acquisitions. These increases were partially offset by lower share-based compensation expense of $0.7 million and lower building expenses of $0.3 $0.9 million.

The decreaseincrease in interest expense during the three months ended MarchJune 31,30, 2026 compared to the same period in 2025 primarily relates to $7.3accelerated million of non-cash interest expense representing the discount on the 2025 Purchase Agreement for warrants and shares of common stock (see Part I, Item 1, Note 8. Warrant Liability) and $2.1 million of non-cash interest expense related to the modificationconversions of notes payable during the three months ended MarchJune 31,30, 20252026 (see Part I, Item 1, Note 7. Notes Payable and Derivative Liability).

Unrealized gain (loss) on derivative liability

Unrealized gain (loss) on derivative liability reflects the revaluation of our derivative liability associated with notes payable as of MarchJune 30, 31, 2026. Due to the decrease in the fair value of the derivative liability as of MarchJune 31,30, 2026 driven primarily by the decreasevalue inof equity our stock price,conversions, we recognized an unrealized gain.loss. See Part I, Item 1, Note 7. Notes Payable and Derivative Liability for additional discussion.

Unrealized gain on warrant liability reflects the revaluation of our warrant liability as of MarchJune 31,30, 2026. Due to the decrease in the fair value value of the warrant liability as of MarchJune 31,30, 2026 driven primarily by the decrease in our stock price, we recognized an unrealized gain. See Part I, Item 1, Note 8. Warrant Liability for additional discussion.

As a result of the debt exchange during the threesix months ended MarchJune 31,30, 2026 and the debt modification during the threesix months ended MarchJune 30, 31, 2025, we recognized losses on the extinguishment of notes payable. See Part I, Item 1, Note 7. Notes Payable and Derivative Liability for additional discussion.

We have incurred significant losses since inception. We have funded operations to date primarily through the sale of common stock, convertible preferred stock, warrants, the issuance of convertible debt and, to a lesser extent, from development contract revenues, product sales, and licensing activities. As of MarchJune 31,30, 2026, the Companywe had $46.1$27.2 million in cash and cash equivalents. In addition to cash and cash equivalents, the Companywe also hashave potential availability of $42.0$41.2 million left on our existing $150.0 million ATM facility that was put in in place in the first quarter of 2024, subject to certain limitations, including ongoing listing on The Nasdaq Global Market.conditions.

In consideration of the $46.1$27.2 million in cash and cash equivalents and $42.0$41.2 million available capacity on our existing ATM, thewe Company hashave potential total liquidity of $88.1$68.4 million. Pursuant to terms of the securities purchase and exchange agreement entered into in February 2026, as amended, we willare required to maintain minimum cash liquidity of the lesser of $21.5$17.5 million or 110% of the then outstanding outstanding balance of the NoteNotes for theso remaininglong duration ofas the NoteNotes term.remain Based on our current operating plan, including expected financing activities, we anticipate that we have sufficient cash and cash equivalents to fund our operations for at least the next 12 months.outstanding.

Cash used in operating activities totaled $16.4$35.6 million during the threesix months ended MarchJune 31,30, 2026 compared to cash used in operating activities of $14.1$26.8 million during the same period in 2025. Cash used in operating activities resulted primarily from cash used to fund our net loss, after adjusting for non-cash charges such as interest expense, share-based compensation, depreciation and amortization charges, unrealized and realized gains and losses, and changes in operating assets and liabilities. The changesoverall increase in cash used in operating activities activities werefor the first half of 2026 compared to the same period of the prior year is primarily attributedattributable to increased operating expenses related to personnel and operations following the acquisitions closed in January 2026, as well as separation costs stemming from the Redmond-based workforce reduction; see Part I, Item 1, Note 4. Business Combinations.

During the threesix months ended MarchJune 31,30, 2026, net cash provided by investing activities was $9.2$8.9 million compared to net cash provided by investing activities of $3.1$2.8 million during the threesame monthsperiod ended March 31,in 2025. During the threesix months ended MarchJune 31,30, 2026, we sold short-term investment securities totaling $42.5 million to,million, in part, to fund the $33.2 million purchase price to acquire from Luminar Technology, Inc. (“Luminar”) certain assets related to Luminar’s worldwide lidar sensor business (see Part I, Item 1, Note 4. Business Combinations). During the threesix months ended MarchJune 31,30, 2025, we purchased short-term investment securities totaling $10.3$19.3 million and sold short-term investment securities totaling $13.5$22.4 million.

CashNet cash provided by financing activities totaled $21.0$21.4 million during the threesix months ended MarchJune 31,30, 2026, compared to net cash provided by by financing activities of $8.2$43.3 million during the same period of 2025. During the threesix months ended MarchJune 31,30, 2026, we received approximately $20.7 million in net proceeds, inclusive of certain debt issuance costs, from the issuance of a $22.4 million senior secured convertible note (see Part I, Item 1, Note 7. Notes Payable and Derivative Liability). Net proceeds from issuance of common stock and warrants were $0.3$0.8 million during the threesix months ended MarchJune 31,30, 2026 compared to $8.2$43.3 million during the threesame monthsperiod ended March 31,of 2025.