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MICROVISION, INC. (MVIS)

CIK: 0000065770. SIC: 3679 Electronic Components, NEC. Latest 10-K as of: 2026-03-04.

SIC breadcrumb: Manufacturing > Electronic And Other Electrical Equipment And Components, Except Computer Equipment > SIC 3679 Electronic Components, NEC

SEC company page: https://www.sec.gov/edgar/browse/?CIK=65770. Latest filing source: 0001493152-26-008898.

Selected Fundamentals

MetricValueUnitFYFiled
Revenue1,208,000USD20252026-03-04
Net income-94,981,000USD20252026-03-04
Assets103,119,000USD20252026-03-04

Financials

Annual standardized facts from SEC companyfacts as of latest extracted filing date 2026-03-04. Source: https://data.sec.gov/api/xbrl/companyfacts/CIK0000065770.json. Derived margins, ratios, and free cash flow are computed from the extracted annual SEC facts.

Flow metrics use full-year FY periods from 10-K/10-K/A filings; balance-sheet metrics use FY-end instants. Free cash flow = operating cash flow - capital expenditures. Missing metrics are omitted rather than fabricated.

Metric2016201720182019202020212022202320242025
Revenue9,634,00017,607,0008,886,0003,090,0002,500,000664,0007,259,0004,696,0001,208,000
Net income-16,472,000-25,486,000-27,250,000-26,483,000-13,634,000-43,200,000-53,091,000-82,842,000-96,915,000-94,981,000
Operating income-16,458,000-25,480,000-27,220,000-26,472,000-13,615,000-43,869,000-53,890,000-88,875,000-85,519,000-82,828,000
Gross profit4,387,000-228,0006,969,000322,0001,692,0002,498,000564,0004,487,000-2,834,000-17,340,000
Diluted EPS-0.10-0.27-0.32-0.45-0.46-0.35
Operating cash flow-14,821,000-15,479,000-22,572,000-24,043,000-16,075,000-29,404,000-38,019,000-67,090,000-68,540,000-58,720,000
Capital expenditures745,000402,0002,493,0004,359,0001,935,000374,000679,000
Assets20,106,00029,767,00023,033,00011,836,00021,006,000130,225,000114,996,000129,635,000121,161,000103,119,000
Liabilities12,632,00019,681,00018,916,00015,813,00011,997,00017,471,00025,255,00033,831,00072,392,00047,571,000
Stockholders' equity13,937,00010,086,0004,117,000-3,977,0009,009,000112,754,00089,741,00095,804,00048,769,00055,548,000
Cash and cash equivalents15,139,00016,966,00013,766,0005,837,00016,862,00082,647,00020,536,00045,167,00054,486,00032,363,000
Free cash flow-24,788,000-16,477,000-31,897,000-42,378,000-69,025,000-68,914,000-59,399,000

Ratios

ROE and ROA use period-end equity/assets. Liabilities / equity uses total liabilities divided by stockholders' equity. Current ratio uses current assets divided by current liabilities when both are reported.

Metric2016201720182019202020212022202320242025
Return on equity-118.19%-252.69%-151.34%-38.31%-59.16%-86.47%-198.72%-170.99%
Return on assets-81.93%-85.62%-118.31%-64.91%-33.17%-46.17%-63.90%-79.99%-92.11%
Liabilities / equity0.911.954.591.330.150.280.351.480.86
Current ratio2.391.220.970.541.759.587.964.231.792.69

Financial Charts

Quarterly

Quarterly standardized facts from SEC companyfacts as of latest extracted filing date 2026-05-15. Source: https://data.sec.gov/api/xbrl/companyfacts/CIK0000065770.json.

Flow metrics use discrete quarter-length periods from 10-Q/10-Q/A filings. Q4 revenue and net income are derived only when annual FY and nine-month YTD facts exist for the same fiscal year; derived Q4 values are labeled. EPS Q4 is not derived.

QuarterEnd DateRevenueNet IncomeDiluted EPSMethod
2022-Q22022-06-30-0.08reported discrete quarter
2022-Q32022-09-30-0.08reported discrete quarter
2023-Q12023-03-31-0.11reported discrete quarter
2023-Q22023-06-30329,000-20,609,000-0.12reported discrete quarter
2023-Q32023-09-301,047,000-23,469,000-0.12reported discrete quarter
2023-Q42023-12-315,101,000-19,737,000derived Q4 = FY annual - nine-month YTD
2024-Q12024-03-31956,000-26,313,000-0.13reported discrete quarter
2024-Q22024-06-301,900,000-23,930,000-0.11reported discrete quarter
2024-Q32024-09-30190,000-15,517,000-0.07reported discrete quarter
2024-Q42024-12-311,650,000-31,155,000derived Q4 = FY annual - nine-month YTD
2025-Q12025-03-31589,000-28,779,000-0.12reported discrete quarter
2025-Q22025-06-30155,000-14,229,000-0.06reported discrete quarter
2025-Q32025-09-30241,000-14,217,000-0.05reported discrete quarter
2025-Q42025-12-31223,000-37,756,000derived Q4 = FY annual - nine-month YTD
2026-Q12026-03-31935,000-25,294,000-0.08reported discrete quarter

Quarterly Charts

Macro Cross-References

Latest quarter (10-Q)

Latest 10-Q source: 0001493152-26-023667.

Extracted from Part I Item 2 to the first post-MD&A boundary after HTML sanitization. Confidence: high. Filing date: 2026-05-15. Report date: 2026-03-31.

ITEM
2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Forward-looking
statements

The
information set forth in this report in Item 2, “Management’s Discussion and Analysis of Financial Condition and Results of Operations,”
and Item 3, “Quantitative and Qualitative Disclosures about Market Risk,” includes “Forward-Looking Statements”
within the meaning of Section 27A of the Securities Act of 1933, as amended (the “Securities Act”), and Section 21E of the
Securities Exchange Act of 1934, as amended (the “Exchange Act”), and is subject to the safe harbor created by those sections.
Such statements may include, but are not limited to, projections of revenues and expenses, and measures of income or loss, status of
product development and performance, market opportunity and future demand, partner and customer engagement, cooperative arrangements,
strategic plans, future operations, financing needs or plans of MicroVision, Inc. (“we,” “our,” or “us”),
as well as assumptions relating to the foregoing. The words “anticipate,” “could,” “believe,” “estimate,”
“expect,” “goal,” “may,” “plan,” “will” and similar expressions identify
forward-looking statements. Factors that could cause actual results to differ materially from those projected in our forward-looking
statements include risk factors identified below in Item 1A.

Overview

MicroVision,
Inc. is defining the next generation of lidar-based perception solutions for automotive, industrial, and security & defense markets.
We deliver integrated hardware and software solutions designed for real-world performance, automotive-grade reliability, and economic
scalability. Our diverse portfolio of lidar sensors, with both short- and long-range lidar solutions, feature solid-state sensors with
varying wavelengths, advanced sensor architectures, design-to-cost engineering, and open software solutions.

Our
solutions enable advanced driver assistance systems, or ADAS, and autonomy features for customers in a wide range of markets, including
automotive, industrial, and security & defense. Target industrial sectors include robotics, automated warehouse, agriculture, and
mining. Our integrated hardware and software solutions enable intelligent autonomous, active safety, and automation systems which depend
on secure, cost-effective, and energy-efficient solutions. Our software has been developed in close collaboration with automotive customers
and also has broad application in industrial, defense, and commercial vehicle sectors.

24

We
have incurred substantial losses since inception and expect to incur significant losses in the near term. 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 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 – 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 I, Item 1, Note 7. Notes Payable and Derivative Liability
for additional discussion.

There
can be no assurance that 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.

Our
discussion and analysis of our financial condition and results of operations are based upon our condensed consolidated financial statements,
which have been prepared in accordance with accounting principles generally accepted in the United States. The preparation of these financial
statements requires us to make estimates and judgments that materially affect the reported amounts of assets, liabilities, revenues and
expenses, and related disclosure of contingent liabilities. We evaluate our estimates on a continuous basis. We base our estimates on
historical data, terms of existing contracts, our evaluation of trends in the industries relevant to our strategic plan, information
provided by our current and prospective customers and strategic partners, information available from other outside sources and on various
other assumptions we believe to be reasonable under the circumstances. The results form the basis for making judgments regarding the
carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates
under different assumptions or conditions. There have been no significant changes to our critical accounting judgments, policies, and
estimates as described in our Annual Report on Form 10-K for the year ended December 31, 2025.

Results
of Operations

Revenue

(in thousands)

2026

2025

$ change

% change

Three Months Ended March 31,

$

935

$

589

$

346

58.7

Revenues
are recognized when control of the promised goods or services are transferred to our customers, in an amount that reflects the consideration
that we expect to receive in exchange for those goods or services. We recognize revenue either at a point in time, or over time, depending
upon the characteristics of the individual contract. If control of the deliverable(s) occurs over time, the revenue is recognized in
proportion to the transfer of control. If control passes to the customer only upon completion and transfer of the asset, revenue is recognized
at the completion of the contract.

The
increase in revenue for the three months ended March 31, 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

% of

% of

% 

(in thousands)

2026

Revenue

2025

Revenue

$ change

change

Three Months Ended March 31,

$

572

61.2

$

550

93.4

$

22

4.0

Cost
of revenue includes both direct and allocated indirect costs of products and services sold to customers. Direct costs include labor,
materials, reserves for estimated warranty expenses, and other costs incurred directly, or charged to us by our contract manufacturers,
in the manufacture of these products. Indirect costs include labor, overhead, and other costs associated with operating our manufacturing
capabilities and our research and development department. Overhead includes the costs of procuring, inspecting and storing material,
facility and other costs, and is allocated to cost of revenue based on the proportion of indirect labor which supported revenue activities.

25

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.

Research
and development expense

(in thousands)

2026

2025

$ change

% change

Three Months Ended March 31,

$

14,445

$

7,403

$

7,042

95.1

Research
and development expense consists of compensation related costs of employees and contractors engaged in internal research and product
development activities, direct material 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 expense will be required to further develop our scanning technology.

The
increase in research and development expense during the three months ended March 31, 2026 compared to the same period in 2025 was
primarily due to higher salary and benefits expense of $3.7 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 million, higher direct materials and equipment costs of
$0.5 million, and higher IT and software costs of $0.3 million. These increases were partially offset by lower share-based
compensation expense of $0.3 million.

Sales,
marketing, general and administrative expense

(in
thousands)

2026

2025

$
change

%
change

Three
Months Ended March 31,

$

9,511

$

6,676

$

2,835

42.5

Sales,
marketing, general and administrative expense includes compensation and support costs for marketing, sales, management and administrative
staff, and for other general and administrative costs, including legal and accounting services, consultants and other operating expenses.

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

Interest
expense

(in thousands)

2026

2025

$ change

% change

Three Months Ended March 31,

$

(2,753

)

$

(12,903

)

$

10,150

(78.7

)

The
decrease in interest expense during the three months ended March 31, 2026 compared to the same period in 2025 primarily relates to $7.3
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 modification of notes
payable during the three months ended March 31, 2025 (see Part I, Item 1, Note 7. Notes Payable and Derivative Liability).

Unrealized
gain on derivative liability

(in thousands)

2026

2025

$ change

% change

Three Months Ended March 31,

$

3,380

$

842

$

2,538

301.4

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

26

Unrealized
gain on warrant liability

(in thousands)

2026

2025

$ change

% change

Three Months Ended March 31,

$

604

$

1,761

$

(1,157

)

(65.7

)

Unrealized
gain on warrant liability reflects the revaluation of our warrant liability as of March 31, 2026. Due to the decrease in the fair
value of the warrant liability as of March 31, 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.

Realized
loss on debt extinguishment

(in thousands)

2026

2025

$

[Excerpt truncated for page length; source filing is linked above.]

Latest 10-K MD&A

Extracted from Item 7 to the first post-MD&A boundary after HTML sanitization. Confidence: high. Filing date: 2026-03-04. Report date: 2025-12-31.

ITEM
7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The
following discussion of our financial condition and results of operations should be read in conjunction with our audited consolidated
financial statements and the related notes included in Part II, Item 8 of this Form 10-K. The following discussion focuses on the results
of our operations for the year ended December 31, 2025 compared to the year ended December 31, 2024. Similar discussion of the results
of our operations for the year ended December 31, 2024 compared to the year ended December 31, 2023 can be found in “Management’s
Discussion and Analysis of Financial Condition and Results of Operations” in Part II, Item 7 of our Annual Report on Form 10-K
for the year ended December 31, 2024.

Overview

MicroVision, Inc. is defining the next generation of lidar-based perception solutions for automotive, industrial,
and security & defense markets. We deliver integrated hardware and software solutions designed for real-world performance, automotive-grade
reliability, and economic scalability. Our diverse portfolio of lidar sensors, with both short- and long-range lidar solutions, feature
solid-state sensors with varying wavelengths, advanced sensor architectures, design-to-cost engineering, and open software solutions.

Our solutions enable advanced driver assistance systems, or ADAS, and autonomy features for customers in a wide range
of markets, including automotive, industrial, and security & defense. Target industrial sectors include robotics, automated warehouse,
agriculture, and mining. Our integrated hardware and software solutions enable intelligent autonomous, active safety, and automation systems
which depend on secure, cost-effective, and energy-efficient solutions. Our software has been developed in close collaboration with automotive
customers and also has broad application in industrial, defense, and commercial vehicle sectors.

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 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
for additional discussion.

25

There
can be no assurance that 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.

Critical
Accounting Policies and Estimates

Our
discussion and analysis of our financial condition and results of operations are based upon our consolidated financial statements, which
have been prepared in accordance with accounting principles generally accepted in the United States. The preparation of these financial
statements requires us to make estimates and judgments that materially affect the reported amounts of assets, liabilities, revenues and
expenses, and related disclosure of contingent liabilities. We evaluate our estimates on a continuous basis. We base our estimates on
historical data, terms of existing contracts, our evaluation of trends in the consumer display and 3D sensing industries, information
provided by our current and prospective customers and strategic partners, information available from other outside sources and on various
other assumptions we believe to be reasonable under the circumstances. The results form the basis for making judgments regarding the
carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates
under different assumptions or conditions.

We
believe the following key accounting policies require significant judgments and estimates used in the preparation of our consolidated
financial statements.

Business
Combination

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 consolidated statements of operations. Such valuations require management to make significant estimates and assumptions,
especially with respect to intangible assets.

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 non-cash impairment charges of $10.1 million and $4.2 million primarily related to our perception software and reference
software, respectively. See Part II, Item 8, Note 9. Financial Statement Components – Intangible Assets.

Share-Based
Compensation

We
issue share-based compensation to employees in the form of stock options, restricted stock units (RSUs), and performance stock units
(PSUs). We account for the share-based awards by recognizing the fair value of share-based compensation expense on a straight-line basis
over the service period of the award, net of estimated forfeitures. The fair value of stock options is estimated on the grant date using
the Black-Scholes option pricing model. The fair value of RSUs and non-executive PSUs is determined by the closing price of our common
stock on the grant date or the period end date for the awards that are being measured by the service inception date. For performance-based
awards, expense is recognized when it is probable the performance criteria will be achieved. If the likelihood becomes improbable that
the performance criteria will be achieved, the expense is reversed. The fair value of RSUs and PSUs (other than certain executive PSUs)
is determined by the closing price of our common stock on the grant date or the period end date for the awards that are being measured
by the service inception date. Executive PSUs issued in 2022 were valued using a Monte Carlo simulation model using the following inputs:
stock price, volatility, and risk-free interest rates. Changes in estimated inputs or using other option valuation methods may result
in materially different option values and share-based compensation expense.

26

Leases

Significant
judgment may be required when determining whether a contract contains a lease, the length of the lease term, the allocation of the consideration
in a contract between lease and non-lease components, and the determination of the discount rate included in our office lease. We review
the underlying objective of each contract, the terms of the contract, and consider our current and future business conditions when making
these judgments.

Derivative
Liability

We
evaluate our financial instruments, specifically, our notes payable, to determine if such instruments are derivatives or contain features
that qualify as embedded derivatives in accordance with ASC 815, “Derivatives and Hedging”. For derivative financial instruments
that are accounted for as liabilities, the derivative instrument is initially recorded at its fair value on the issuance date and is
then re-valued at each reporting date, with changes in the fair value reported as an unrealized gain or loss in earnings on the consolidated
statements of operations.

Warrant
Liability

We
account for warrants as either equity-classified or liability-classified instruments based on an assessment of the warrant’s specific
terms and applicable authoritative guidance included in ASC 480, “Distinguishing Liabilities from Equity”, and ASC 815. The
assessment considers whether the warrants are freestanding financial instruments pursuant to ASC 480, whether the warrants meet the definition
of a liability pursuant to ASC 480, and whether the warrants meet all of the requirements for equity classification under ASC 815. This
assessment, which requires the use of professional judgment, is conducted at the time of warrant issuance and as of each subsequent reporting
period end date while the warrants are outstanding.

Warrants
that meet all of the criteria for equity classification are required to be recorded as a component of additional paid-in capital at the
time of issuance, or when the conditions for equity classification are met, and are not remeasured. Warrants that do not meet the required
criteria for equity classification are classified as liabilities. We adjust such warrants to fair value at each reporting period until
the warrants are exercised or expire. Changes in fair value are recognized in our consolidated statements of operations.

Results
of Operations

Revenue

2025

2024

$ change

% change

(In thousands)

Revenue

$

1,208

$

4,696

(3,488

)

(74.3

)

Revenues
are recognized when control of the promised goods or services are transferred to our customers, in an amount that reflects the consideration
that we expect to receive in exchange for those goods or services. We recognize revenue either at a point in time, or over time, depending
upon the characteristics of the individual contract. If control of the deliverable(s) transfers over time, the revenue is recognized
in proportion to the transfer of control. If control passes to the customer only upon completion and transfer of the asset, revenue is
recognized at the completion of the contract.

The
decrease in revenue for the year ended December 31, 2025 compared to the same period in 2024 was primarily due a lower sales to a leading
manufacturer of agriculture equipment, as well as lower sales of MOVIA L sensors as part of RFQ evaluation processes to an industrial
customer and to Daimler Truck North America and affiliates.

27

Cost
of revenue

2025

% of

revenue

2024

% of

revenue

$ change

% change

(In thousands)

Cost of revenue

$

18,548

1,535.4

$

7,530

160.3

$

11,018

146.3

Cost
of revenue includes the direct and allocated indirect costs of products and services sold to customers. Direct costs include labor, materials,
reserves for estimated warranty expenses, and other costs incurred directly, or charged to us by our contract manufacturers, in the manufacture
of these products. Indirect costs include labor, overhead, and other costs associated with operating our manufacturing capabilities.
Overhead includes the costs of procuring, inspecting and storing material, facility and other costs, and is allocated to cost of revenue
based on the proportion of indirect labor which supported revenue activities.

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, 2025 compared to the
same period in 2024 was primarily due to $9.9 million of obsolete inventory 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 sensor inventory. See Part
II, Item 8, Note 9. Financial Statement Components for additional discussion.

Research
and development expense

2025

2024

$ change

% change

(In thousands)

Research and development expense

$

31,720

$

49,015

$

(17,295

)

(35.3

)

Research
and development expense consists of compensation related costs of employees and contractors engaged in internal research and product
development activities, direct materials 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, 2025 compared to the same period in 2024 was primarily
due to a reduced workforce resulting in lower salary and benefits expense of $7.9 million, lower restructuring charges of $5.4 million,
lower purchased services of $2.1 million, and lower IT and software costs of $1.1 million. These decreases were partially offset by higher
building expenses of $0.9 million.

Sales,
marketing, general and administrative expense

2025

2024

$ change

% change

(In thousands)

Sales, marketing, general and administrative expense

$

20,325

$

29,346

$

(9,021

)

(30.7

)

Sales,
marketing, general and administrative expense includes compensation and support costs for marketing, sales, management and administrative
staff, and for other general and administrative costs, including legal and accounting services, consultants and other operating expenses.

The
decrease in sales, marketing, general and administrative expense during the year ended December 31, 2025 as compared to the same period
in 2024 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 $1.5 million, lower restructuring charges of $0.6 million, and
lower trade show expense of $0.4 million. These decreases were partially offset by higher recruiting expenses of $0.6 million, higher
building expenses of $0.4 million, higher purchased services fees of $0.3 million, and higher advertising costs of $0.3 million.

28

Impairment
loss on intangible assets

2025

2024

$ change

% change

(In thousands)

Impairment loss on intangible assets

$

10,057

$

4,181

$

5,876

140.5

During
the year ended December 31, 2025, management identified impairment indicators related to 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 9. Financial Statement
Components for additional discussion.

Impairment
loss on operating lease right-of-use assets

2025

2024

$ change

% change

(In thousands)

Impairment loss on operating lease right-of-use assets

$

1,201

$

-

$

1,201

-

Impairment
loss on operating lease right-of-use assets includes non-cash charges during the year ended December 31, 2025 related to our
Hamburg office space lease. See Part II, Item 8, Note 10. Leases for additional discussion.

Impairment
loss on property and equipment, net

2025

2024

$ change

% change

(In thousands)

Impairment loss on property and equipment, net

$

2,185

$

-

$

2,185

-

Impairment
loss on property and equipment, net includes non-cash charges during the year ended December 31, 2025 related to abandoned
production equipment for prior designs of our long-range MAVIN sensors. See Part II, Item 8, Note 9. Financial Statement Components
for additional discussion.

Interest
expense

2025

2024

$ change

% change

(In thousands)

Interest expense

$

(18,531

)

$

(4,457

)

$

(14,074

)

315.8

The
increase in interest expense during the year ended December 31, 2025 compared to the same period in 2024 relates to $7.3 million of non-cash
interest expense representing the discount on the 2025 Purchase Agreement for warrants and shares 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).

Unrealized
gain (loss) on derivative liability

2025

2024

$ change

% change

(In thousands)

Unrealized gain (loss) on derivative liability

$

5,709

$

(8,866

)

$

14,575

(164.4

)

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, 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.

29

Unrealized
gain on warrant liability

2025

2024

$ change

% change

(In thousands)

Unrealized gain on warrant liability

$

4,422

$

-

$

4,422

-

Unrealized
gain on warrant liability reflects the revaluation of our warrant liability as of December 31, 2025. Due to the decrease in the fair
value of the warrant liability during the period, we recognized an unrealized gain during 2025. See Part II, Item 8, Note 8. Warrant
Liability for additional discussion of warrants issued during 2025.

Realized
loss on debt extinguishment

2025

2024

$ change

% change

(In thousands)

Realized loss on debt extinguishment

$

(4,654

)

$

-

$

(4,654

)

-

As
a result of the debt modification during the year ended December 31, 2025, we recognized a loss on extinguishment of notes payable. See
Part II, Item 8, Note 7. Notes Payable and Derivative Liability for additional discussion.

Income
Taxes

During
the years ended December 31, 2025 and 2024, we recognized a tax benefit of $0.1 million and tax expense $0.5 million, respectively, mainly
related to income in foreign jurisdictions, partially offset by a deferred income tax benefit generated by a 2025 loss provision on our
Hamburg, Germany office lease. As of December 31, 2025, we had net operating loss carryforwards of approximately $549.4 million for federal
income tax reporting purposes. In addition, we have research and development tax credits of $11.2 million. During 2025, $16.0 million
federal net operating losses and $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 2026 to 2044,
if not previously used.

In
certain circumstances, as specified in the Internal Revenue Code, a 50% or more ownership change by certain combinations of our shareholders
during any three-year period would result in a limitation on our ability to use a portion of our net operating loss carryforwards.

We
recognize interest accrued and penalties related to unrecognized tax benefits in tax expense. We did not have any unrecognized tax benefits
at December 31, 2025 or at December 31, 2024.

Liquidity
and Capital Resources

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 December 31, 2025, the Company had $32.3 million in cash and cash equivalents and $42.5 million in short-term
investment securities, or $74.8 million total. In February 2026, we raised net proceeds of $20.9 million from the exchange and issuance
of senior secured convertible notes to an existing investor. In addition to cash and cash equivalents, the Company also has potential
availability of $42.0 million left on our existing $150.0 million ATM facility that was put in place in the first quarter of 2024, 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 $104.5 million. Pursuant to terms of the securities
purchase and exchange agreement entered into in February 2026, we will maintain minimum cash liquidity of the lesser of $21.5 million
or 110% of the then outstanding balance of the Note for the remaining duration of the Note 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.

30

Operating
activities

Cash
used in operating activities totaled $58.7 million during 2025, compared to $68.5 million in 2024. During the years ended December
31, 2025 and 2024, we made payments of $7.7 million and $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. As of
December 31, 2025, we had open purchase commitments of $3.2 million related to the production of MOVIA L sensor inventory. We have
determined that certain of the sensors are obsolete and an adverse purchase commitment for the entire balance of open purchase
commitments has been recorded as of December 31, 2025.

Investing
activities

During
the year ended December 31, 2025, cash used in investing activities was $24.6 million compared to cash provided by investment activities
of $2.7 million during the same period in 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 made advances of $2.2 million related to the acquisition of Scantinel assets (see Part II, Item 8. Note
17, Subsequent Events). During the same period in 2024, we made payments totaling $6.3 million related
to the acquisition of Ibeo assets.

Financing
activities

Net
cash provided by financing activities totaled $60.9 million during the year ended December 31, 2025, compared to $72.9 million during
the same period of 2024. Net proceeds from issuance of common stock and warrants were $77.4 million during the year ended December 31,
2025, compared to $34.7 million during the same period in 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
following is a list of our financing activities during 2025 and 2024.

●

In February 2026, we entered into a securities purchase and exchange agreement
with an institutional 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 for additional discussion.

●

In
February 2025, we entered into a securities purchase agreement for the purchase of 5,750,225
shares of our common stock and warrants to purchase 5,750,225 shares of our common stock
for $1.57 per share. We received proceeds, net of all costs, of $7.8 million.

●

In
October 2024, we entered into a Securities Purchase Agreement (the “Purchase Agreement”)
for the purchase of senior secured convertible notes (the “Note”) with an institutional
investor (the “Holder”). The principal amount for the initial note was $45.0 million. We received proceeds,
net of all costs, of $38.1 million.

●

In
March 2024, we entered into a $150.0 million ATM equity offering agreement with Deutsche
Bank Securities, Inc., Mizuho Securities USA LLC and Craig-Hallum Capital Group LLC (collectively,
the “Agents”). Under the agreement, we are able, at our discretion, to offer
and sell shares of our common stock having an aggregate value of up to $150.0 million through
or directly to the Agents. As of December 2025, we completed sales under such sales agreement
of 80.6 million shares for net proceeds of $104.0 million. As of December 31, 2025, we have
approximately $42.0 million available under this sales agreement.

31

Our
capital requirements will depend on many factors, including, but not limited to, the rate at which OEMs and other potential customers
introduce products incorporating our technology and the market acceptance and competitive position of such products. Our ability to raise
capital will depend on numerous factors, including the following:

●

Perceptions
of our ability to continue as a going concern;

●

Market
acceptance of products incorporating our technology;

●

Changes
in evaluations and recommendations by any securities analysts following our stock or our
industry generally;

●

Announcements
by other companies in our industry;

●

Changes
in business or regulatory conditions;

●

Announcements
or implementation by our competitors of technological innovations or new products;

●

The
status of particular development programs and the timing of performance under specific development
agreements;

●

Economic
and stock market conditions;

●

The
cost of filing, prosecuting, defending and enforcing any patent claims and other intellectual
property rights;

●

Our
ability to establish cooperative development or licensing arrangements;

●

Our
authorized shares available for sale; or

●

Other
factors unrelated to our company or industry.

If
we are successful in establishing OEM co-development arrangements, we may receive full or partial funding for certain non-recurring engineering
costs for technology development and/or product development. Nevertheless, we expect our capital requirements to remain high as we expand
our activities and operations with the objective of commercializing our technology.

Recent
Accounting Pronouncements

See
Note 2, “Summary of significant accounting policies,” in the notes to the consolidated financial statements found in Part
II, Item 8 of this Form 10-K.