AEye, Inc.

AEYE,** INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(in thousands, except share and per share data or otherwise stated)

AEye, Inc. and its wholly owned subsidiaries (the “Company” or “AEye”) is a provider of physical AI sensing solutions built on high-performance, active lidar systems for vehicle autonomy, advanced driver-assistance systems, or ADAS, robotic vision applications and a range of Non-Automotive applications. The Company's approach to supporting the developing physical AI infrastructure combines software‑defined sensing with adaptive perception capabilities that enable machines to interpret and respond to complex physical environments in real time. The Company's proprietary Intelligent Sensing Platform incorporates a nearly solid state, software‑definable active lidar sensor; an adaptive SmartScan architecture that dynamically adjusts scan patterns for different scenes and targets; and a signal processing pipeline designed to deliver precise measurements and imaging for safety critical use cases. This platform is designed to support a broad set of markets beyond passenger vehicles, including rail, aerospace and defense, smart infrastructure, and security, where long‑range performance, environmental robustness, and software‑based configurability are key requirements.

AEye, formerly known as CF Finance Acquisition Corp. III, (“CF III”), was originally incorporated in Delaware on* March 15, 2016under the name CF SPAC Re Inc. On February 17, 2021,AEye Technologies, Inc., then known as AEye, Inc., entered into an Agreement and Plan of Merger with CF III. Based on CF III’s business activities, it was a “shell company” as defined under the Securities Exchange Act of1934,* as amended. On* August 16, 2021,*the business combination contemplated by the Agreement and Plan of Merger was closed and CF III changed its name to AEye, Inc.

The Company’s common stock is listed on the Nasdaq Stock Market LLC (“Nasdaq”) under the symbol “LIDR”. Unless otherwise specified, “we,” “us,” “our,” “AEye,” and the “Company” refer to AEye, Inc. and its wholly owned subsidiaries.

Unaudited Condensed Consolidated Financial Statements

The accompanying condensed consolidated financial statements are unaudited and have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) for interim financial statements and pursuant to the rules and regulations of the Securities and Exchange Commission. Accordingly, they donot include all of the information and footnotes required by GAAP for complete financial statements. In the opinion of management, all adjustments considered necessary for fair presentation have been included. The accompanying interim unaudited condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements and related notes thereto included in the Company's Annual Report on Form10-K for the year ended* December 31, 2025*.

Reclassification of Prior Period Presentation

Certain prior year amounts have been reclassified for consistency with the current year presentation.

Use of Estimates

The preparation of condensed consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the condensed consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Significant items subject to such estimates and assumptions include revenue recognized over time, including estimates of total contract costs, write-downs of inventory to the lower of cost or net realizable value, investments, embedded derivative and warrant liabilities, stock-based compensation, and convertible notes.

Principle of Consolidation and Liquidity

The accompanying condensed consolidated financial statements include the accounts of AEye, Inc. and its wholly owned subsidiaries. All intercompany balances and transactions have been eliminated in consolidation.

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The Company has funded its operations primarily through the issuances of common stock. Since its inception, the Company has incurred net losses and negative cash flows from operations and expects to incur additional operating losses and negative operating cash flows as management continues to focus on achieving commercialization of its lidar solutions and executing on its strategic initiatives. As of* September 30, 2026*, the Company’s existing sources of liquidity included cash, cash equivalents, and marketable securities of $63,098. Management believes that the Company has sufficient financial resources to fund operations and meet its capital requirements and anticipated obligations as they come due in the nexttwelve months from the date of issuance of these condensed consolidated financial statements.

Concentration of Credit Risk

Financial instruments which potentially subject the Company to concentration of credit risk consist primarily of cash, cash equivalents, marketable securities, and accounts receivable, net. The Company places its cash and cash equivalents with major financial institutions, which management assesses to be of high credit quality, to limit the exposure of each investment. The Company’s marketable securities have investment grade ratings when purchased, which mitigates risk.

The Company’s accounts receivable, net are derived from customers located in North America, Europe, the Middle East, Africa (EMEA), and the Asia-Pacific (APAC) region. The Company mitigates its credit risks by performing ongoing credit evaluations of its customers’ financial conditions. The Company generally doesnot require collateral.

Recent Accounting Pronouncements

In* September 2025,the FASB issued Accounting Standards Update ("ASU")2025-06, Intangibles-Goodwill and Other-Internal-Use Software (Subtopic350-40) Targeted Improvements to the Accounting for Internal-Use Software (ASU2025-06), which is intended to simplify the capitalization guidance for internal-use software by removing references to project stages and clarifying when the capitalizing of eligible costs is required. The new guidance is effective for annual periods beginning after December 15, 2027,and interim periods within those fiscal years, with early adoption permitted. ASU2025*-06 * may*be applied retrospectively or prospectively. The Company is currently evaluating the impact of this guidance.

In* July 2025,the FASB issued ASU2025*-05, Measurement of Credit Losses for Accounts Receivable and Contract Assets. This standard introduces a practical expedient that companies can choose to apply when determining allowances for credit losses. Specifically, it permits companies to assume that the current conditions as of the balance sheet date remain unchanged throughout the remaining life of the assets. The Company adopted ASU2025-05 in2026 and the adoption hadno material impact on its unaudited condensed consolidated financial statements.

In* November 2024,the FASB issued ASU2024*-03, Disaggregation of Income Statement Expenses, which requires annual and interim disaggregated disclosures of certain costs and expenses on the income statement. The standard is effective for fiscal years beginning after* December 15, 2026,and interim periods within fiscal years beginning after December 15, 2027,*with early adoption permitted. Amendments are applied on a prospective basis with retrospective application permitted. The Company is currently evaluating the impact of this guidance.

The fair value of the Company’s financial assets and liabilities is determined in accordance with the fair value hierarchy established in FASB ASC Topic820, Fair Value Measurements and Disclosures (“ASC820”). ASC820 defines fair value as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. The fair value hierarchy of ASC820 requires an entity to maximize the use of observable inputs when measuring fair value and classifies those inputs intothree levels:

Level 1—Observable inputs, such as quoted prices in active markets for identical assets or liabilities.

Level 2—Observable inputs, other than Level1 inputs, which are observable either directly or indirectly or can be corroborated by observable market data using quoted prices for similar assets or liabilities.

Level 3—Unobservable inputs in which there is little orno market data, which require the reporting entity to develop its own assumptions.

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The Company's financial instruments that arenot remeasured at fair value include accounts receivable, prepaid and other current assets, accounts payable, accrued expenses, other current and noncurrent liabilities, and the noncurrent convertible note. The carrying values of these financial instruments approximate their fair values.

The Company’s financial assets and liabilities measured at fair value on a recurring basis and the level of inputs used for such measurements were as follows (in thousands):

The Company’s financial assets and liabilities subject to fair value procedures were comprised of the following:

*Money Market Funds:*The Company holds financial assets consisting of money market funds. These securities are valued using observable inputs, such as quoted prices in active markets for identical assets or liabilities.

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Marketable Securities: The Company holds financial assets consisting of fixed-income U.S. government securities, corporate bonds, commercial paper, agency bonds, and asset-backed securities. The securities are valued using prices from independent pricing services based on quoted prices of identical instruments in less active or inactive markets. Additionally, quoted prices of similar instruments in active market or industry models using data inputs such as interest rates and prices that can be directly observed or corroborated in active markets are used to value marketable securities.

Derivative Warrant Liabilities: On* September 15, 2022*, the Company entered into a convertible note agreement with a face value of $10,500 (the*"2022* Note"). The Company issued warrants as part of the2022 Note. The warrants were recorded on the condensed consolidated balance sheets at fair value. The fair value is based on unobservable inputs, which represent Level3 measurements within the fair value hierarchy. The fair value estimate of the warrants was based on a Monte-Carlo simulation model. Inherent in a Monte-Carlo simulation model are assumptions related to price, volatility, risk-free interest rate, term to expiration, and dividend yield. Changes in fair value were recognized in other income (expense) for each reporting period. Derivative Warrant Liability was included within other noncurrent liabilities on the condensed consolidated balance sheets. These warrants were cancelled on* July 28, 2025.*

In* January**2025,* the Company entered into a convertible note agreement with a face value of $3,000 (the*"2025* Note"). The Company issued a warrant to purchase up to 805,263 shares of the Company’s common stock. The warrant was recorded on the accompanying consolidated balance sheet at fair value. The fair value was based on unobservable inputs, which represent Level3 measurements within the fair value hierarchy. The fair value estimate of the warrants was based on a Black-Scholes model. Inherent in a Black-Scholes model are assumptions related to price, volatility, risk-free interest rate, term to expiration, and dividend yield. Changes in fair value were recognized in other income (expense) for each reporting period. Derivative Warrant Liability was included within other noncurrent liabilities on the condensed consolidated balance sheets. These warrants were exercised in full on* July 28, 2025.*

In* August**2025,* in connection with the lease settlement (see Note5 for details of the settlement), the Company issued warrants, which are recorded on the accompanying condensed consolidated balance sheets at fair value. The fair value is based on unobservable inputs, which represent Level3 measurements within the fair value hierarchy. The fair value estimate of the warrants was based on a Black-Scholes model. Inherent in a Black-Scholes model are assumptions related to price, volatility, risk-free interest rate, term to expiration, and dividend yield. Changes in fair value are recognized in other income (expense) for each reporting period. Derivative Warrant Liability is included within other noncurrent liabilities on the condensed consolidated balance sheets.

Private Placement Warrant Liability: The warrants originally issued in connection with the initial public offering of CF Finance Acquisition Corp. III (the “Private Placement Warrants”) were recorded on the condensed consolidated balance sheets at fair value. The fair value was based on observable Level2 inputs, specifically, the observable input of the Company's public warrants, as terms of both warrants were substantially similar. Any changes in the fair value of the liability were reflected in other income (expense), net, on the condensed consolidated statements of operations and comprehensive loss. Private Placement Warrant liability was included within other noncurrent liabilities on the condensed consolidated balance sheets. These warrants expired on* August 18, 2026.*

For thenine months ended* September 30, 2026*, there wereno transfers between Level1 and Level2 inputs.

The following table presents a summary of the changes in fair value of the Company’s Level3 financial instruments for thenine months ended* September 30, 2026* (in thousands):

The key inputs into the Black-Scholes model for the derivative warrant issued as a result of the lease settlement valued at* September 30, 2026* are as follows:

If factors or assumptions change, the estimated fair values could be materially different. The value of the Company’s derivative warrant liability would increase if a higher risk-free interest rate was used and would decrease if a lower risk-free interest rate was used. Similarly, a higher volatility assumption would increase the value of the liability and a lower volatility assumption would decrease the value of the liability.

Inventory, net of write-downs, as of* September 30, 2026* and* December 31, 2025* were as follows (in thousands):

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Prepaid and other current assets as of* September 30, 2026* and* December 31, 2025* were as follows (in thousands):

The Company leases office facilities in Northern California under non-cancelable operating leases. In* July 2024,the Company entered intotwo new long-term leases, one of which the Company uses as its headquarters. In February 2026,the Company entered into an agreement with the landlord to amend the existing operating lease at its corporate headquarters. The amendment added additional square footage, extended the lease term to February 28, 2029,*and included an option to renew with renewal terms that, if exercised by the Company, would extend the lease term for an additional five years. The Company determined that the amendment represents a lease modification and remeasured its right-of-use asset and operating lease liability using an updated incremental borrowing rate as of the modification date. The Company recognized a $1,033 increase in its right-of-use asset and operating lease liability andno gain or loss was recognized as a result of the modification.

In* August 2024*, one of the Company's existing leases, originally set to expire on* November 30, 2026*, was terminated early. On* April 28, 2025,the Company and the former landlord entered into a settlement agreement to resolve all outstanding disputes related to the early termination of the lease. Under the terms of the agreement, the Company paid $1,400 in cash and issued a warrant to purchase up to 350,000 shares of the Company's common stock at an exercise price of $2.22 per share which had a fair value of $899 on the date of issuance in August 2025.The Company recorded a net gain on termination of operating lease of $1,014 during thenine* months ended* September 30, 2025*. All liabilities were settled in2025.

The components of operating lease expenses, excluding the gain (loss) on early termination of operating lease, for thethree andnine months ended* September 30, 2026and2025*, are as follows (in thousands):

Maturities of lease liabilities are as follows (in thousands):

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Accrued expenses and other current liabilities as of* September 30, 2026* and* December 31, 2025* are as follows (in thousands):

2024 Promissory Note

On* May 10, 2024*, the Company entered into a Securities Purchase Agreement with an investor for the sale and issuance of 330,823 shares of common stock and a 5-year promissory note with a principal balance of $146 (* “May 2024Note”) for total gross cash proceeds of $1,000. The May 2024Note bears interest at an annual rate equal to the Secured Overnight Financing Rate plus 1.0%, which is compounded quarterly in arrears, and has a maturity date of June 4, 2029*. At maturity, the principal balance and accrued, unpaid and uncapitalized interest can be settled in cash, shares of common stock based on the closing price of the common stock as of the immediately preceding trading day, or any combination of the foregoing at the option of the investor. 

2025 Convertible Note

In* January**2025,* the Company entered into a Securities Purchase Agreement with a certain institutional investor and issued (i) the2025 Note for an aggregate principal amount of $3,240 for an aggregate purchase price of $3,000 and (ii) a warrant to purchase up to 805,263 shares of the Company’s common stock. The2025 Note, subject to an original issue discount of 7.4%, had a term ofeighteen months and accrued interest at the rate of 7% per annum. The interest* maybe settled in cash or shares at the option of the Company and is payable together with monthly redemptions of the outstanding principal amount of the2025* Note. The2025 Note was convertible into Common Stock, at a per share conversion price equal to $2.22, subject to adjustments noted in the2025 Note.

Monthly redemptions began in* April 2025and were due on thefirst* of each subsequent month (each a "Monthly Redemption Date" or an "Installment Date"). The Company was required to redeem the monthly redemption amount until the2025 Note was fully redeemed, paid in cash or, so long as certain equity conditions are met, shares of the Company's common stock. The investor was permitted to accelerate up toone monthly installment amount, between Installment Dates.

The Company elected to apply the fair value option to the measurement of the2025 Note. As a result of adopting the fair value option,no embedded derivatives are bifurcated from the2025 Note. The Company classified the2025 Note as a liability at fair value and remeasured the2025 Note to fair value at each reporting period. The total proceeds received from the investor of $3,000 was allocated between the2025 Note and the related warrants issued using the relative fair value method at issuance date. This resulted in an initial fair value of $3,266 being allocated to the2025 Note, and $1,046 allocated to the associated warrants. The Company recorded a non-cash issuance cost of $1,312, representing the difference between the fair value and proceeds received, within Interest expense and other on the condensed consolidated statement of operations. The fair value measurement included the assumption of accrued interest and expense and thus a separate amount wasnot reflected on the condensed consolidated statement of operations.

During the year ended* December 31, 2025*, the Company made cash payments of $989. Additionally, $2,591 in aggregate principal and interest was converted into 2,405,573 shares of common stock. As of* December 31, 2025,the2025* Note was fully repaid and all associated warrants were fully exercised.

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Interest expense and other for thethree andnine months ended* September 30, 2026and2025* consisted of the following (in thousands):

New Circle Principal Investments LLC (“New Circle”) Common Stock Purchase Agreement

On* July 25, 2024*, the Company entered into a Common Stock Purchase Agreement and a Registration Rights Agreement with New Circle (the “Common Stock Purchase Agreement”). Under the terms and subject to the conditions of the CSPA, the Company had the right, butnot the obligation, to sell to New Circle, and New Circle was obligated to purchase from the Company, up to the lesser of (i) $50,000 of the Company’s common stock, or (ii) the Exchange Cap equal to 1,721,755 shares of the Company's common stock, unless the Company’s stockholders approved the issuance of shares in excess of the Exchange Cap, or the average price of all applicable sales of common stock to New Circle equals or exceeds$1.41 per share. The Company had sole discretion to initiate such sales of common stock over a period of 36 months. In all instances, the Company couldnot sell shares of its common stock to New Circle under the Common Stock Purchase Agreement if doing so would result in New Circle beneficially owning more than 4.99% of the Company's common stock.

The purchase price per share to be purchased by New Circle would equal either (i) the lowest volume-weighted average price for common stock either over aone-day trading period or 15 minutes after the number of intraday shares traded exceeds500% of the shares included in the purchase notice orone hour after the receipt of the purchase notice, or (ii) the volume-weighted average price for common stock for thethree consecutive trading days commencing on the purchase notice date multiplied by 97.5%. The maximum number of shares the Company could sell to New Circle on any single business day was the lesser of (i) the number of shares equal to100% of the average daily trading volume of the common stock of the Company during thefive trading days immediately preceding the purchase notice, and (ii)400,000 shares of common stock.

In connection with the Common Stock Purchase Agreement, the Company issued to New Circle 225,563 shares of common stock in the Company as commitment shares for the facility. The Company determined that the right to sell additional shares represented a freestanding put option under ASC815, Derivatives and Hedging, and as such, the financial instrument was classified as a derivative asset with a fair value ofzero at inception of the Common Stock Purchase Agreement on* July 25, 2024*.

The Common Stock Purchase Agreement was terminated in* December 2025.*Prior to its termination, the Company issued 8,980,713 shares of its common stock, including commitment shares, for gross proceeds totaling $27,754, pursuant to the Common Stock Purchase Agreement.

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Alliance Global Partners (“A.G.P.”) At Market Issuance Sales Agreements

On* September 12, 2024*, the Company entered into an ATM Agreement with A.G.P. (the “Prior ATM Agreement”). Under the terms and subject to the conditions of the Prior ATM Agreement, the Company* mayissue and sell through A.G.P. the Company’s common stock having an aggregate value offering price of up to $2,600 ("Placement Shares") from time to time through an "at-the-market" equity offering program. The Company has sole discretion to initiate such sales of common stock over a period of 36 months. Under the terms and subject to the conditions of the Prior ATM Agreement, the Company will set the parameters for the sale of shares, including the number or dollar amount of Placement Shares to be issued, the time period during which sales are requested to be made, any limitation on the number or dollar amount of Placement Shares that maybe sold in anyone* trading day and any minimum price below which sales* may**not* be made. The Company will pay a cash commission rate of up to 3.0% of the gross proceeds from the sale of Placement Shares sold pursuant to the Prior ATM Agreement. In* December 2025,the Company increased the amount of the Company's common stock that it mayissue and sell through A.G.P. under the Prior ATM Agreement to a new aggregate value offering of up to $125,000, following multiple prior increases since the original agreement. The Prior ATM Agreement was terminated simultaneously with entry into the2026* ATM Agreement (as defined below) on* September 15, 2026.*Prior to its termination, the Company sold 24,070,541 shares for gross proceeds totaling $70,412.

On* September 15, 2026,the Company entered into a new ATM Agreement with A.G.P. (the“2026* ATM Agreement”). The terms of the2026 ATM Agreement are similar to the Prior ATM Agreement, where the Company has sole discretion to initiate sales of common stock with an aggregate value offering of up to $50,000 over a period of 36 months, and will pay a cash commission rate of up to 3.0% of gross proceeds from the sale of Placement Shares sold pursuant to the2026 ATM Agreement. No sales were made under the2026 ATM Agreement through* September 30, 2026.*

The Common Stock Purchase Agreement, Prior ATM Agreement, and the2026 ATM Agreement are collectively referred to herein as the “Common Stock Purchase Agreements.”

The changes in accumulated other comprehensive income (loss) by component for thethree andnine months ended* September 30, 2026and2025* are as follows (in thousands):

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The following table sets forth the basic and diluted net loss per share attributable to common stockholders for the periods presented (in thousands, except share amounts and per share data):

Due to net losses for thethree andnine months ended* September 30, 2026and2025*, basic and diluted net loss per share were the same, as the effect of all potentially dilutive securities would have been anti-dilutive. The following table sets forth the anti-dilutive common share equivalents for the periods listed:

Market-Based Restricted Stock Units

In* February 2026,the Board of Directors (the “Board”) approved grants totaling 1,248,426 market-based RSUs to certain executive officers of the Company that vest based on the achievement of specified market conditions and continued service (the “February 2026PSU Awards”). In June 2026,the Board approved additional grants totaling 1,800,000 market-based RSUs with the same vesting conditions (the “June 2026PSU Awards”). Vesting occurs in increments ofone*-third of the total grant when the closing price of the Company's common stock, as reported by Nasdaq, (i) meets or exceeds an average of $3.00 per share for anyfive (5) consecutive trading days, (ii) meets or exceeds an average of $4.00 per share for anyfive (5) consecutive trading days, and (iii) meets or exceeds an average of $5.00 per share for anyfive (5) consecutive trading days, in each case prior to* December 31, 2030.The February 2026PSU Awards will be settled in common stock on a prorated basis to the extent shares are available under the2021* Equity Incentive Plan (the “Plan”); otherwise, vested awards will be settled in cash based on the fair market value of the Company’s common stock on the settlement date, defined as thefive-day trailing average closing price as reported by Nasdaq. The* June 2026PSU Awards donot* provide a cash-settlement alternative and will be settled in common stock upon vesting.

The Company estimated the initial grant date fair value of these awards using the Monte Carlo simulation model with the following assumptions:

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The Company classified these awards as equity at the initial grant date and at* September 30, 2026.If, in a future period, the Company doesnot* have sufficient shares available under the Plan to settle the* February 2026PSU Awards upon vesting, some or all of the February 2026PSU Awards may*be reclassified to liability and remeasured to fair value.

Stock-Based Compensation

The following table summarizes stock-based compensation expense recorded in each financial statement line item in the Company’s condensed consolidated statements of operations and comprehensive loss for thethree andnine months ended* September 30, 2026and2025* (in thousands):

The Company hasone reportable segment managed on a consolidated basis by the Chief Executive Officer who is the chief operating decision maker (“CODM”). In identifyingone reportable segment, the Company considered the basis of organization for the design and development of high-performance, active lidar systems and applications.

The accounting policies of the segment are the same as those described in the summary of significant accounting policies. The CODM assesses performance and decides how to allocate resources based on consolidated net loss as reported in the consolidated statements of operations and comprehensive loss. There areno other expense categories regularly provided to the CODM that arenot already included in the consolidated statements of operations and comprehensive loss. The measure of segment assets is reported on the balance sheet as cash, cash equivalents, and marketable securities.

The Company recognizes revenue from sales of standard products at a point in time when control transfers to the customer, generally upon shipment or delivery. The Company recorded revenue for standard product sales of $228 and $501 in thethree andnine months ended* September 30, 2026and $41 and $63 in thethree* andnine months ended* September 30, 2025,respectively. The Company doesnot* incur significant contract costs in fulfilling or obtaining its contracts with customers.

For certain arrangements to develop and deliver products designed to meet customer requirements, revenue is recognized over time using a cost-to-cost measure of progress as the Company believes this depicts the transfer of control of the goods or services to the customer. These contracts* mayinclude engineering, system integration and software development services, together with delivery of the finished units, and any embedded software or license to intellectual property developed under the contract. As these services are integrated into the delivered product, they are accounted for together as a single performance obligation. The Company recognized revenue related to these over-time contracts of $278 and $308 for thethree* andnine months ended* September 30, 2026*, respectively, and $9 and $73 in thethree andnine months ended* September 30, 2025*, in the condensed consolidated statements of operations and comprehensive loss.

The Company measures progress on these contracts using a cost-to-cost input method, based on costs incurred to date relative to estimated total costs at completion. Estimating total costs requires significant judgment, including assumptions about the engineering effort, materials and schedule needed to complete the work. Changes in estimated total costs are recognized on a cumulative catch-up basis in the period identified. Any expected loss on a contract is recognized in full when the loss becomes evident.

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Disaggregation of Revenue

The Company recognized the following revenues by geographic area based on the primary billing address of the customer and by the timing of the transfer of goods or services to customers (point in time or over time), as it believes such criteria best depict how the nature, amount, timing, and uncertainty of its revenue and cash flows are affected by economic factors. Total revenue based on the disaggregation criteria described above is as follows (in thousands):

Contract Liabilities

Contract assets represent revenue recognized in excess of amounts billed, and contract liabilities represent amounts billed in excess of revenue recognized. For contracts recognized over time, these balances result from differences between the timing of billings and the Company’s progress toward completion, and they* mayfluctuate from period to period. Contract liabilities were $426 as of September 30, 2026*. There wereno contract liabilities as of* December 31, 2025.*

Remaining Performance Obligations

Revenue allocated to remaining performance obligations represents the transaction price allocated to the performance obligations that are unsatisfied, or partially unsatisfied. The Company applies the practical expedient in ASC606-10-50-14 and doesnot disclose the value of unsatisfied performance obligations for contracts with an original expected duration ofone year or less.

For thenine months ended* September 30, 2026and2025*, the Company recognized $2 and $2 provision for income taxes, respectively. The income tax rates vary from the federal and state statutory rates due to the valuation allowances on the Company’s net operating losses and foreign tax rate differences. The Company computes its quarterly income tax provision by using a forecasted annual effective tax rate and adjusts for any discrete items arising during the quarter.

Legal matters

The Company* maybe subject to legal proceedings and claims that arise in the ordinary course of business. Litigation can be expensive and disruptive to normal business operations. Moreover, the results of complex legal proceedings are difficult to predict and the Company’s view of these matters may*change in the future as the litigation and events related thereto unfold. The Company expenses legal fees as incurred. The Company records a provision for contingent losses when it is both probable that a liability has been incurred and the amount of the loss can be reasonably estimated.

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In 2025, the Company was notified by a former vendor that it intended to pursue a claim against the Company’s wholly owned subsidiary, AEye Technologies, Inc., arising out of an agreement entered into in May 2020*,* in which the former vendor alleges that AEye Technologies, Inc. failed to pay approximately $3,300 plus interest from the date the former vendor alleges such payments were due. In February 2026, the former vendor initiated a binding arbitration proceeding against AEye Technologies, Inc. pursuant to the underlying purchase agreement. AEye Technologies, Inc. disputed the total amount owed based, in part, on the claim that the products supplied by the former vendor were largely defective and that the former vendor was repeatedly made aware of the existence of such defects. AEye Technologies, Inc. also asserted counterclaims in the arbitration. On August 31, 2026, the arbitrator issued a final award that ordered AEye Technologies, Inc. to pay the former vendor the total amount of unpaid invoices, costs of the arbitration, and interest, and dismissed additional counterclaims asserted by AEye Technologies, Inc. The total award and accrued interest is $3,605 as of September 30, 2026 and is recorded in accounts payable and accrued expenses and other current liabilities in the condensed consolidated balance sheet.