Financial Analysis

Commitments and Contingencies Leases See Note 13. Legal Matters From time to time, we may be subject to various other legal proceedings and claims in the ordinary course of business. As of December 31, 2025, we believe these matters will not have a material adverse effect on our consolidated financial statements.

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Line of Credit We have a $40.0 million revolving line of credit (LOC) with Banc of California dated September 24, 2018, which is secured by our assets and matures on September 24, 2027. The LOC agreement contains restrictive and financial covenants and bears an unused credit fee of 0.25% on an annualized basis. The interest rate of 5.75% on the LOC at December 31, 2025 is based on the Prime Rate, minus a margin based on our liquidity levels. During the first quarter of 2025, we drew $20.0 million under the LOC to support working capital and general corporate purposes. We did not make any additional draws or repayments during the year ended December 31, 2025. Interest expense on the LOC was $1.1 million for the year ended December 31, 2025. As of December 31, 2025, $20.0 million was outstanding on the LOC and we were in compliance with all covenants. The remaining $20.0 million unused portion of the LOC is available for borrowing.

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Sales by Timing of Revenue Year Ended December 31, 2025 2024 2023 Point in time $ 178,940 $ 136,723 $ 155,258 Over time 82,390 61,825 54,663 $ 261,330 $ 198,548 $ 209,921

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Fair Value of Financial Instruments The carrying amounts of certain of our financial instruments, including cash equivalents, accounts receivable, prepaid expenses and other current assets, accounts payable and accrued liabilities are shown at cost which approximates fair value due to the short-term nature of these instruments. The fair value of our term and revolving loans approximates the carrying value due to the variable market rate used to calculate interest payments. Fair value is defined 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. Valuation techniques used to measure fair value must maximize the use of observable inputs and minimize the use of unobservable inputs. The standard describes a fair value hierarchy based on three levels of inputs, of which the first two are considered observable and the last unobservable, that may be used to measure fair value which are the following: Level 1 Inputs: Observable inputs, such as quoted prices (unadjusted) in active markets for identical assets or liabilities at the measurement date. Level 2 Inputs: Observable inputs, other than Level 1 prices, such as quoted prices in active markets for similar assets and liabilities, quoted prices in markets that are not active, or other inputs that are observable or can be corrobora …

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Intangible Assets and Goodwill Intangible Assets The details of definite lived intangible assets were as follows (in thousands): Estimated useful life (in years) As of December 31, 2025 2024 Development programs 2 - 4 7,200 Developed technology 4 2,959 2,959 2,959 10,159 Accumulated amortization (2,959) (9,326) $ $ 833 Amortization related to intangible assets was as follows (in thousands): Year Ended December 31, 2025 2024 2023 Amortization expense $ 833 $ 820 $ 2,410 Goodwill The carrying amount of goodwill by segment was as follows (in thousands): Laser Products Advanced Development Totals Balance, December 31, 2023 $ 2,151 $ 10,248 $ 12,399 Currency exchange rate adjustment (45) (45) Balance, December 31, 2024 $ 2,106 $ 10,248 $ 12,354 Currency exchange rate adjustment 94 94 Balance, December 31, 2025 $ 2,200 $ 10,248 $ 12,448 …

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"Income Taxes Loss before income taxes was as follows (in thousands): Year Ended December 31, 2025 2024 2023 Domestic $ (24,874) $ (62,368) $ (46,602) Foreign 2,106 1,500 3,954 Loss before income taxes $ (22,768) $ (60,868) $ (42,648) Income tax expense (benefit) was as follows (in thousands): Year Ended December 31, 2025 2024 2023 Current tax expense (benefit): US state and local $ 23 $ (7) $ 53 Foreign 460 557 (985) Total current tax expense (benefit) 483 550 (932) Deferred tax expense (benefit): Foreign $ 216 $ (626) $ (46) Total deferred tax expense (benefit): 216 (626) (46) Total income tax expense (benefit): US state and local 23 (7) 53 Foreign 676 (69) (1,031) Total Income tax expense (benefit) $ 699 $ (76) $ (978) The income tax expense (benefit) differs from the amount computed by applying the statutory federal income tax rate of 21% to the loss before income taxes as a result of the following differences (in thousands): Year Ended December 31, 2025 2024 2023 Amount Rate Amount Rate Amount Rate Tax computed at federal statutory rate $ (4,781) 21.0% $ (12,782) 21.0% $ (8,956) 21.0% State and local tax, net of federal tax benefit (1) 19 (0.1) (5) 42 (0.1) Research and development tax credits (1,078) 4.7 (718) 1.2 (1,370) 3.2 Change in valuation allowance 5,448 (23.9) 9,967 (16.4) 7,382 (17.3) Worldwide changes in unrecognized tax benefits 211 (0.9) (1,215) 2.0 (1,167) 2.7 Effects of cross-border tax laws: Global intangible low-taxed income 295 (1.3) Nontaxable/nondeduc …

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Leases We lease real estate space under non-cancelable operating lease agreements for commercial and industrial space. Facilities-related operating leases have remaining terms of 0.3 to 9.4 years, and some leases include options to extend up to 10 years. Other leases for automobiles, manufacturing and office and computer equipment have remaining lease terms of 0.3 to 3.0 years. These leases are primarily operating leases; financing leases are not material. We did not include any renewal options in our lease terms for calculating the lease liabilities as we are not reasonably certain we will exercise the options at this time. The weighted-average remaining lease term for the lease obligations was 6 years as of December 31, 2025, and the weighted-average discount rate was 5.1%. The components of lease expense related to operating leases were as follows (in thousands): Year Ended December 31, 2025 2024 2023 Lease expense: Operating lease expense $ 3,103 $ 3,695 $ 3,671 Short-term lease expense 323 404 472 Variable and other lease expense 1,092 1,055 1,020 $ 4,518 $ 5,154 $ 5,163 Future minimum payments under our non-cancelable lease obligations were as follows as of December 31, 2025 (in thousands): 2026 $ 3,526 2027 3,291 2028 2,795 2029 1,919 2030 1,960 Thereafter 5,608 Total minimum lease payments 19,099 Less: interest (2,892) Present value of net minimum lease payments 16,207 Less: current portion of lease liabilities (2,776) Total long-term lease liabilities $ 13,431

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New Accounting Pronouncements ASU 2023-09 In December 2023, the FASB issued ASU 2023-09, Improvements to Income Tax Disclosures. This ASU requires enhanced jurisdictional and other disaggregated disclosures for the effective tax rate reconciliation and income taxes paid and is effective for fiscal years beginning after December 15, 2024. We adopted the new requirements in our annual reporting for 2025 on a retrospective basis (note 15) . ASU 2024-03 In November 2024, the FASB issued ASU 2024-03 related to the disaggregation of certain income statement expenses. The amendments in this update require public entities to disclose incremental information related to purchases of inventory, team member compensation and depreciation, which will provide investors the ability to better understand entity expenses and make their own judgments about entity performance. The amendments in this update are effective for fiscal years beginning after December 15, 2026. We plan to adopt this pronouncement and make the necessary updates to our disclosures for the year ending December 31, 2027, and, aside from these disclosure changes, we do not expect the amendments to have a material effect on our financial position, results of operations or cash flows.

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401(k) Plan We have a 401(k) Profit Sharing Plan and Trust (the Plan). Participation in the Plan is voluntary and is available to all employees. We may make discretionary matching contributions to the Plan. The match is recorded within the Cost of revenue and Operating expenses in the Consolidated Statements of Operations and was as follows (in thousands): Year Ended December 31, 2025 2024 2023 401(k) match $ 1,720 $ 1,282 $ 1,268

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Restructuring We implemented restructuring plans which included headcount reduction in Austria, Germany, China, Finland, and the U.S., and the write-down of in-process capital equipment projects related to production capacity that had not been placed into service or redundant capital equipment we intend to sell. Restructuring charges were as follows (in thousands): Year Ended December 31, 2025 2024 2023 Employee termination costs $ 1,141 $ 4,228 $ 737 Write-down of long-lived assets 1,207 Other 63 79 Total restructuring charges $ 2,348 $ 4,291 $ 817 Restructuring accruals and payments were as follows (in thousands): Accrued restructuring charges at December 31, 2023 $ Restructuring charges 4,291 Cash payments (3,107) Non-cash settlements (63) Accrual at December 31, 2024 1,122 Restructuring charges 2,348 Cash payments (2,045) Non-cash settlements (1,207) Accrual at December 31, 2025 $ 218 The restructuring accrual was included as a component of Accrued Liabilities on our Consolidated Balance Sheets. All of the restructuring charges recorded in 2025 were attributable to the Laser Products segment. …

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Revenue We recognize revenue upon transferring control of products and services and the amounts recognized reflect the consideration we expect to be entitled to receive in exchange for these products and services. We consider customer purchase orders, which in some cases are governed by master sales agreements, to be the contracts with a customer. As part of our consideration of the contract, we evaluate certain factors, including the customer's ability to pay (or credit risk). For each contract, we consider the promise to transfer products, each of which is distinct, as the identified performance obligations. We allocate the transaction price to each distinct product based on its relative standalone selling price. Master sales agreements or purchase orders from customers could include a single product or multiple products. Regardless, the contracted price with the customer is agreed to at the individual product level outlined in the customer contract or purchase order. We do not bundle prices; however, we do negotiate with customers on pricing for the same products based on a variety of factors (e.g., level of contractual volume). We have concluded that the prices negotiated with each individual customer are representative of the stand-alone selling price of the product. We often receive orders with multiple delivery dates that may extend across several reporting periods. We allocate the transaction price of the contract to each delivery based on the product standalone selli …

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Segment Information Overview We operate in two reportable segments consisting of the Laser Products segment and the Advanced Development segment. We organize our business segments based on the nature of products and services offered. Laser Products This segment includes high-power semiconductor lasers and fiber lasers that are typically integrated into laser systems or manufacturing tools built by our customers. We also make high energy continuous wave (CW) and pulsed fiber lasers, fiber amplifiers, and beam combination and control systems for use in high-energy laser (HEL) systems for directed energy and laser sensing systems used in a wide range of defense applications. Advanced Development This segment focuses on research, design, and prototyping of advanced and next-generation laser technologies, leveraging our expertise in high-power laser technology development, beam control, and advanced optics for the defense industry. This segment capabilities include the development of custom high-power fiber lasers and advanced beam combining technologies. Selected Financial Data by Business Segment Our Chief Executive Officer serves as the chief operating decision maker (CODM) and is responsible for reviewing segment performance and making decisions regarding resource allocation. Our CODM uses metrics such as revenue, gross profit, and gross margin to evaluate each segment's performance by comparing the metrics to historical results and previously forecasted financial information. …

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Subsequent EventIn February 2026, we completed an underwritten public offering in which we issued and sold 4.6 million shares of our common stock, resulting in gross proceeds of $201.3million. The aggregate number of shares of common stock offered in the offering included 0.6 million shares of common stock sold pursuant to the full exercise of the underwriters option to purchase additional shares. Net proceeds after the underwriting discount were $192.2million. …

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