AEye, Inc.

Previous wording

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“Risk Factors”* herein 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.*

Current wording

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.*

Previous wording

This overview provides a high-level discussion of our operating results and some of the trends that affect our business. We believe that an understanding of these trends is important to understanding our financial results for the six months ended June 30, 2025, 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.

Current wording

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 nine months ended September 30, 2025, 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.

Previous wording

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 risk factors described in the “Risk Factors” section of this Quarterly Report on Form 10-Q.

Current wording

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”.

Previous wording

We anticipate growing demand for our Intelligent Sensing 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, 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 markets for lidar are projected to see significant growth in both the near and long-term.

Current wording

We anticipate growing demand for our Intelligent Sensing 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 markets for lidar are projected to see significant growth in both the near and long-term.

Previous wording

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. In large part, we plan to unify our supply chain for the Automotive and Non-Automotive markets and leverage our Tier 1 automotive suppliers to produce products for our resale in 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. During 2023, as part of our effort to reduce fixed operating costs, focus operations, simplify supply chains, and streamline manufacturing, we wound down support for our legacy Non-Automotive product. Since the launch of our new product, Apollo, in 2024, we have seen renewed interest from Non-Automotive customers across a broad range of sectors and are actively engaged on multiple opportunities.

Current wording

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. In large part, we plan to unify our supply chain for the Automotive and Non-Automotive markets and 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. During 2023, as part of our effort to reduce fixed operating costs, focus operations, simplify supply chains, and streamline manufacturing, we wound down support for our legacy Non-Automotive product. Since the launch of our new product, Apollo, in 2024, we have seen renewed interest from Non-Automotive customers across a broad range of sectors and are actively engaged on multiple opportunities.

Previous wording

In early 2024, we engaged LITEON as our Tier 1 automotive supplier and are actively working with them to bring our product to market. We recently announced the successful production of the first Apollo units by LITEON, which we believe demonstrates an ability to produce units at scale. This partnership has enabled us to leverage LITEON’s manufacturing expertise to produce high-quality samples 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 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.

Current wording

In early 2024, we engaged LITEON as our Tier 1 automotive supplier and are actively working with them to bring our product to market. We recently announced an expansion of this relationship and an investment from a leading global institutional investor to fund a dedicated production line for Apollo, with capacity to produce up to 60,000 units annually. We are seeing an inflection point in customer demand, and this expansion ensures we can meet that growth head-on. 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.

Previous wording

We have also made substantial progress in our collaboration efforts with Nvidia. Most recently, we announced the integration of our lidar technology into Nvidia’s DRIVE AGX Orin platform, which we believe represents a significant milestone in expanding our reach within the automotive ecosystem. This integration is expected to open new opportunities to engage with global automotive OEMs and Tier 1 suppliers as they adopt Nvidia’s autonomous driving solutions. In addition, we continue to demonstrate significant advances in the high-speed and long-range detection performance of our lidar systems, which we believe positions us well for future integration with Nvidia’s Hyperion platform. Given these engagements are relatively recent, there is no guarantee that these endeavors will be successful.

Current wording

In July 2025, we announced the integration of our lidar technology into Nvidia’s DRIVE AGX Orin platform, which we believe represents a significant milestone in expanding our reach within the automotive ecosystem. This integration is expected to open new opportunities to engage with global automotive OEMs and Tier 1 suppliers as they adopt Nvidia’s autonomous driving solutions. In addition, we continue to demonstrate significant advances in the high-speed and long-range detection performance of our lidar systems, which we believe positions us well for future integration with Nvidia’s Hyperion platform. Given these engagements are relatively recent, there is no guarantee that these endeavors will be successful.

Previous wording

In July 2025, we announced the launch of OPTISTM, a complete physical AI solution designed to enhance legacy infrastructure and deliver actionable intelligence across a wide range of industries. OPTISTM combines our software-defined Apollo lidar technology with advanced computing to bridge the gap between perception and action in real time. This solution is intended to not only address critical needs in transportation, safety, and security, but also opens our platform to third-party partners and developers, creating an ecosystem for innovation and growth beyond automotive applications.

Current wording

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 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. Recent additions to our partner network include Black Sesame Technologies, BlueBand, and Flasheye.

Previous wording

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 in the past, 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 move to other markets.

Current wording

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.

Previous wording

To date, our revenue has primarily been generated through development contracts with OEMs and Tier 1 suppliers, as well as unit sales of our products to Non-Automotive customers. These development 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 particular perception capabilities to meet specific customer needs. In general, development contracts that require more complex configurations have higher prices. We expect development contracts to remain a significant part of our business in the near term, but represent a smaller share of our total revenue over time as we increase our focus on technology licensing in the Automotive market and leverage these economies of scale to expand into the Non-Automotive market.

Current wording

To date, we have primarily generated revenue through development contracts with OEMs and Tier 1 suppliers, as well as sales of our products to Non-Automotive customers. These contracts primarily focus on customization of our product's capabilities to our customers’ applications, typically involving software implementation to assist with sensor connection and control, customization of scan patterns, and enhancement of particular perception capabilities to meet specific customer needs. In general, contracts that require more complex configurations have higher prices.

Previous wording

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.

Current wording

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 the bill of materials, or BOM, 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.

Previous wording

Our prototype sales revenue primarily related to unit sales of our lidar products. Revenue from prototype sales is typically recognized at a point in time when the control of goods is transferred to the customer, generally upon delivery or shipment to the customer. Revenue from development and/or collaboration arrangement 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.

Current wording

Our prototype sales revenue primarily relates to unit sales of our lidar products. Revenue from prototype 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. 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.

Previous wording

Cost of revenue includes the costs directly associated with the production of prototypes and certain costs associated with development contracts. Such costs for prototypes include direct materials, direct labor, indirect labor, inventory write downs, losses on purchase commitments, warranty expense, and allocation of overhead. Costs associated with development contracts include the direct costs and allocation of overhead costs involved in the execution of the contracts.

Current wording

Cost of revenue includes the costs directly associated with the production of prototypes and certain costs associated with development contracts. Such costs for prototypes include direct materials, costs of the contract manufacturer, direct labor, indirect labor, inventory write downs, losses on purchase commitments, warranty expense, and allocation of overhead. Costs associated with development contracts include the direct costs and allocation of overhead costs involved in the execution of the contracts.

Previous wording

Our research and development, or 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:

Current wording

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:

Previous wording

R&D costs are expensed as they are incurred. We expect our R&D costs to increase from 2024 as we continue to invest in the development and commercialization of our products.

Current wording

R&D costs are expensed as they are incurred. We expect our R&D costs to increase as we continue to invest in the development and commercialization of our products.

Previous wording

Our sales and marketing, or 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:

Current wording

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:

Previous wording

We expect our S&M expenses to increase from 2024 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.

Current wording

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.

Previous wording

Our general and administrative, or G&A, spending supports all business functions. G&A expenses include:

Current wording

Our general and administrative ("G&A"), spending supports all business functions. G&A expenses include:

Previous wording

We expect our G&A expenses to decrease slightly from 2024 with reduced facility costs, while continuing to incur expenses to support other departments as we continue to develop and commercialize our products.

Current wording

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.

Previous wording

The changes in fair value of the 2025 Note and warrant liabilities are the result of the change in fair value at each reporting date. The 2025 Note and warrant liabilities are recorded at fair value for each reporting period, and the changes in fair value are reported within other income (expense), net during the period. We also elected to record interest expense on the 2025 Note as changes in fair value. We expect the change in fair value of warrant liability to decrease given that subsequent to June 30, 2025, the warrants associated with the 2022 convertible note were cancelled and the warrants associated with the 2025 convertible note were exercised in full.

Current wording

The changes in fair value of the 2025 Note and warrant liabilities are the result of the change in fair value at each reporting date. The 2025 Note and warrant liabilities are recorded at fair value for each reporting period, and the changes in fair value are reported within other income (expense), net during the period. We also elected to record interest expense on the 2025 Note as changes in fair value. We expect the change in fair value of the convertible note to decrease in future periods, reflecting the lower outstanding balance as of September 30, 2025. In addition, we expect the change in fair value of warrant liabilities to decrease as the warrants associated with the 2022 Note were cancelled and the warrants associated with the 2025 Note were exercised in full.

Previous wording

Interest income and other consists primarily of interest earned on our cash, cash equivalents, and marketable securities. These amounts will vary based on our cash and cash equivalents 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, and amortization of premiums and accretion of discounts on marketable securities, net. We expect interest income will increase due to funds raised subsequent to June 30, 2025.

Current wording

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, and amortization of premiums and accretion of discounts on marketable securities, net. We expect interest income will increase due to higher cash, cash equivalents, and marketable securities balances.

Previous wording

Revenues decreased by $10, or 31%, to $22 for the three months ended June 30, 2025, from $32 for the three months ended June 30, 2024. This decrease is primarily due to lower contract development revenues, partially offset by an increase in the number of prototype unit sales in the current quarter.

Current wording

Revenues decreased by $54, or 52%, to $50 for the three months ended September 30, 2025, from $104 for the three months ended September 30, 2024. This decrease is primarily due to lower contract development revenues in the current quarter and also due to higher unit sales of our legacy product in the three months ended September 30, 2024.

Previous wording

Cost of revenue decreased by $52, or 33%, to $108 for the three months ended June 30, 2025, from $160 for the three months ended June 30, 2024. This decrease was primarily due to lower contract development costs in the current quarter and inventory write-downs recorded in the three months ended June 30, 2024.

Current wording

Cost of revenue decreased by $203, or 66%, to $103 for the three months ended September 30, 2025, from $306 for the three months ended September 30, 2024. This decrease was primarily due to lower contract development costs in the current quarter; the decrease is also due to higher unit sales of our legacy product and inventory write-downs recorded in the three months ended September 30, 2024 related to certain legacy Non-Automotive components.

Previous wording

Research and development expenses decreased by $168, or 4%, to $3,670 for the three months ended June 30, 2025, from $3,838 for the three months ended June 30, 2024. This decrease was primarily driven by decreases in stock-based compensation expense of $189 and information technology and facilities expense of $431. The decreases were offset by a $361 increase in fees paid to third parties for development work and personnel costs, net of allocations, of $120.

Current wording

Research and development expenses decreased by $706, or 19%, to $3,061 for the three months ended September 30, 2025, from $3,767 for the three months ended September 30, 2024. This decrease was primarily driven by decreases in stock-based compensation expense of $715 and allocated information technology and facilities expense of $225. The decreases were partially offset by an increase in personnel costs, net of allocations, of $262.

Previous wording

Sales and marketing expenses increased by $534, or 797%, to $601 for the three months ended June 30, 2025, from $67 for the three months ended June 30, 2024. This increase was primarily driven by increases in allocated personnel costs and stock-based compensation of $484 and marketing and consulting costs of $60 as we pursue Non-Automotive opportunities.

Current wording

Sales and marketing expenses increased by $557, to $631 for the three months ended September 30, 2025, from $74 for the three months ended September 30, 2024. This increase was primarily driven by increases in personnel costs, including allocations, of $484 and marketing spend of $86.

Previous wording

Change in fair value of convertible note and warrant liabilities increased by $578 to $593 for the three months ended June 30, 2025, from $15 for the three months ended June 30, 2024. This increase was primarily due to the change in fair value of the 2025 Note and related warrants, which were newly issued in 2025.

Current wording

Change in fair value of convertible note and warrant liabilities increased by $2,219 to an expense of $2,210 for the three months ended September 30, 2025, from a gain of $9 for the three months ended September 30, 2024. This increase was primarily due to the change in fair value of the 2025 Note and related warrants, which were newly issued in 2025, and also due to higher stock prices in the current quarter, resulting in a higher valuation of the warrant associated with the 2022 Note through the cancellation date in the current quarter.

Previous wording

Interest expense and other increased by $421, or 752%, to a net expense of $365 for the three months ended June 30, 2025, from a net income of $56 for the three months ended June 30, 2024. This increase was primarily due to an increase in costs related to financing arrangements of $231 and foreign exchange losses.

Current wording

Interest expense and other decreased by $1,157, to a net income of $55 for the three months ended September 30, 2025, from a net expense of $1,102 for the three months ended September 30, 2024. This decrease was primarily due to a decrease in costs related to financing arrangements of $1,117 and lower foreign exchange losses of $110, partially offset by lower accretion of discount on marketable securities, net of $69.

Previous wording

Net loss increased by $1,283, or 16%, to $9,270 for the three months ended June 30, 2025, from $7,987 for the three months ended June 30, 2024. This increase was primarily due to increased personnel costs, investments in the development of Apollo and changes in fair value of convertible note and warrants, partially offset by decreases in stock-based compensation and facilities expenses.

Current wording

Net loss increased by $624, or 7%, to $9,330 for the three months ended September 30, 2025, from $8,706 for the three months ended September 30, 2024. This increase was primarily due to increased personnel costs and changes in fair value of convertible note and warrants, partially offset by decreases in stock-based compensation and facilities expenses.

Previous wording

The results of operations presented below should be reviewed in conjunction with the condensed consolidated financial statements and notes included elsewhere in this report. The following table sets forth our consolidated results of operations data for the six months ended June 30, 2025 and 2024 (in thousands, except for percentages):

Current wording

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 nine months ended September 30, 2025 and 2024 (in thousands, except for percentages):

Previous wording

Cost of revenue decreased by $219, or 52%, to $204 for the six months ended June 30, 2025, from $423 for the six months ended June 30, 2024. This decrease was primarily due to inventory write-downs and losses on purchase commitments recorded in the six months ended June 30, 2024, resulting from implementation of our strategic plan to wind down support for our legacy Non-Automotive product.

Current wording

Cost of revenue decreased by $422, or 58%, to $307 for the nine months ended September 30, 2025, from $729 for the nine months ended September 30, 2024. This decrease was primarily due to inventory write-downs and losses on purchase commitments recorded in the nine months ended September 30, 2024, resulting from implementation of our strategic plan to wind down support for our legacy Non-Automotive product.

Previous wording

Research and development expenses decreased by $1,210, or 14% to $7,160 for the six months ended June 30, 2025, from $8,370 for the six months ended June 30, 2024. This decrease was primarily driven by decreases in stock-based compensation expense and personnel costs, net of allocation, of $869, and information technology and facilities expense of $893. The decreases were offset by a $711 increase in fees paid to third parties for development work.

Current wording

Research and development expenses decreased by $1,916, or 16% to $10,221 for the nine months ended September 30, 2025, from $12,137 for the nine months ended September 30, 2024. This decrease was primarily driven by decreases in stock-based compensation expense of $1,381, and allocated information technology and facilities expense of $1,118. The decreases were offset by a $400 increase in fees paid to third parties for development work and engineering parts and lab equipment expenses.

Previous wording

Sales and marketing expenses increased by $576, or 141% to $984 for the six months ended June 30, 2025, from $408 for the six months ended June 30, 2024. This increase was primarily driven by increases in allocated personnel and stock-based compensation costs of $778 and marketing and consultant spend of $85 as we pursue Non-Automotive opportunities.

Current wording

Sales and marketing expenses increased by $1,133, or 235% to $1,615 for the nine months ended September 30, 2025, from $482 for the nine months ended September 30, 2024. This increase was primarily driven by increases in allocated personnel of $1,262 and marketing and consultant spend of $171 as we pursue Non-Automotive opportunities. These increases were partially offset by a $329 decrease in stock-based compensation and allocated information technology and facilities expense.

Previous wording

General and administrative expenses decreased by $2,595, or 26%, to $7,243 for the six months ended June 30, 2025, from $9,838 for the six months ended June 30, 2024. This decrease was primarily driven by a favorable adjustment of $1,612 upon settlement of a lease dispute, decreases in stock-based compensation and personnel cost, net of allocations, of $1,202. These decreases were partially offset by an increase in accounting, legal, and professional fees of $579.

Current wording

General and administrative expenses decreased by $2,318, or 17%, to $11,323 for the nine months ended September 30, 2025, from $13,641 for the nine months ended September 30, 2024. This decrease was primarily due to a decrease in rent expense of $1,730, primarily due to the net gain recorded for the lease settlement in the nine months ended September 30, 2025 and reduced rent expense as a result of leasing smaller facilities. The decrease is also due to lower stock-based compensation and personnel cost, net of allocations, of $2,016. These decreases were partially offset by an increase in accounting, legal, and professional fees of $681 and lower facilities and IT allocations of $1,137.

Previous wording

Change in fair value of convertible note and warrant liabilities increased by $100 to $87 for the six months ended June 30, 2025, from a net gain $13 for the six months ended June 30, 2024. This increase was primarily due to the change in fair value of the 2025 Note and related warrants, which were newly issued in 2025.

Current wording

Change in fair value of convertible note and warrant liabilities increased by $2,119 to a $2,123 expense for the nine months ended September 30, 2025, from a net gain of $4 for the nine months ended September 30, 2024. This increase was primarily due to the change in fair value of the 2025 Note and related warrants, which were newly issued in 2025.

Previous wording

Interest income and other increased by $165, or 72%, to $393 for the three months ended June 30, 2025, from $228 for the three months ended June 30, 2024. This increase was primarily due to insurance proceeds received of $250, partially offset by lower interest earned on our cash equivalents and marketable securities in the current period.

Current wording

Interest income and other increased by $601 or 92%, to $1,257 for the nine months ended September 30, 2025, from $656 for the nine months ended September 30, 2024. This increase was primarily due to insurance proceeds received of $250 and higher interest earned on cash, cash equivalents, and marketable securities in the current period.

Previous wording

Interest expense and other increased by $2,846, or 763%, to a net expense of $2,473 for the six months ended June 30, 2025, from a net income of $373 for the six months ended June 30, 2024. This increase was primarily due to an increase in costs related to financing arrangements in the current period and a decrease in amortization of premiums on marketable securities, net.

Current wording

Interest expense and other increased by $1,689, or 232%, to $2,418 for the nine months ended September 30, 2025, from $729 for the nine months ended September 30, 2024. This increase was primarily due to an increase in costs related to financing arrangements in the current period and a decrease in accretion of discounts on marketable securities, net.

Previous wording

Provision for income tax expenses remained constant at $2 for the six months ended June 30, 2025 and June 30, 2024.

Current wording

Provision for income tax expenses remained constant at $2 for the nine months ended September 30, 2025 and September 30, 2024.

Previous wording

Net loss decreased by $920, or 5% to $17,286 for the six months ended June 30, 2025, from $18,206 for the six months ended June 30, 2024. This decrease was primarily due to decreases in stock-based compensation, personnel and facilities expenses, partially offset by the increase in the change in fair value of convertible note and warrants, and investments in the development of Apollo.

Current wording

Net loss decreased by $296, or 1% to $26,616 for the nine months ended September 30, 2025, from $26,912 for the nine months ended September 30, 2024. This decrease was primarily due to decreases in stock-based compensation, personnel and facilities expenses, partially offset by the increase in the change in fair value of convertible note and warrants, and investments in the development of Apollo.

Previous wording

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. As of June 30, 2025, our cash, cash equivalents, and marketable securities totaled $19,210. Subsequent to June 30, 2025, we successfully raised additional capital of $68,844 on the issuance of shares from our common stock purchase agreements and the exercise of certain warrants. For the six months ended June 30, 2025 and 2024, we had a net loss of $17,286 and $18,206, respectively. We anticipate that we will continue to incur losses for at least the next several years.

Current wording

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.

Previous wording

On September 26, 2023, the U.S. Securities and Exchange Commission declared our registration statement on Form S-3 to be effective, which allows us to raise up to $200,000 in capital over the next three years subject to a limitation of one-third of our public float over a rolling twelve-month period, when our public float is below $75 million, which is referred to as the “baby shelf" rules. As of July 28, 2025, we were no longer subject to the "baby shelf" rules.

Current wording

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 is subject to a limitation of one-third of our public float in any rolling twelve-month period, when our public float is below $75 million, which is referred to as the “baby shelf" rules. As of 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.