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What changed in NLIGHT, INC.'s 10-K — 2024 vs 2025

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Paragraph-level year-over-year comparison of NLIGHT, INC.'s 2024 and 2025 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2025 report.

+228 added−196 removedSource: 10-K (2026-02-27) vs 10-K (2025-02-28)

Top changes in NLIGHT, INC.'s 2025 10-K

228 paragraphs added · 196 removed · 163 edited across 7 sections

Item 1. Business

Business — how the company describes what it does

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Biggest changeWe believe that our vertically-integrated business model, technology innovation, engineering capabilities, functionality, quality and customer service enable us to compete successfully in the markets we serve, taken as a whole. Manufacturing We manufacture, package, and test the critical elements of our high-power semiconductor and fiber lasers, including semiconductor laser chips and optical fiber in-house.
Biggest changeMoreover, certain of our customers have internal laser technologies, which may present additional competitive pressure. 4 Table of Contents We believe that our vertically-integrated business model, technology innovation, engineering capabilities, functionality, quality and customer service enable us to compete successfully in the markets we serve, taken as a whole.
Industrial The productivity, efficiency and versatility offered by programmable fiber lasers have been critical in making them a key part of the evolution of the industrial ecosystem. Material processing applications, such as cutting, welding, additive manufacturing, cladding, and heat treating, comprise most of the industrial laser market.
Industrial The productivity, efficiency and versatility offered by programmable fiber lasers have been critical in making them a key part of the evolution of the industrial manufacturing ecosystem. Material processing applications, such as cutting, welding, additive manufacturing, cladding, and heat treating, comprise most of the industrial laser market.
Our programmable fiber lasers use a proprietary solution that allows our customers to program laser beam strength and shape and real-time pulse timing to optimize the performance of their solution for specific commercial and defense applications. We work closely with customers to develop products to meet customer application and performance needs, making our research and development efforts more efficient.
Our programmable fiber lasers use a proprietary solution that allows our customers to program laser beam strength and shape and real-time pulse timing to optimize the performance of their solution for specific commercial and defense applications. We work closely with customers to develop products that meet customer-specific application and performance needs, making our research and development efforts more efficient.
Sales and Marketing In the Aerospace and Defense market, we sell our products and services directly to end customers, including the U.S. Government, prime defense contractors, and defense subcontractors, through our dedicated sales, marketing and engineering teams located in the United States.
Sales and Marketing In the Aerospace and Defense market, we sell our products and services directly to end customers, including the U.S. Government, prime contractors, and defense subcontractors, through our dedicated sales, marketing and engineering teams located in the United States.
Aerospace and Defense Lasers are used today in a variety of aerospace and defense applications, such as range finding, imaging, communications, and directed energy defense systems. Pulsed laser technologies are also increasingly being used for a wide range of sensing applications including long range precision targeting, remote sensing, counter-sensor, communications, and intelligence, surveillance and reconnaissance (ISR) applications.
Aerospace and Defense Lasers are used today in a variety of aerospace and defense applications, such as range finding, imaging, communications, and directed energy weapon systems. Pulsed laser technologies are also increasingly being used for a wide range of sensing applications including long-range precision targeting, remote sensing, counter-sensor, communications, and intelligence, surveillance and reconnaissance (ISR) applications.
Additive manufacturing is chosen for fabrication as it enables the manufacturing of designs not feasible with traditional technologies such as casting, forging or machining. Additive manufacturing can be integrated into existing production lines and mitigate long lead-time issues and enhance performance in critical sub-systems.
Additive manufacturing is chosen for fabrication as it enables the manufacturing of designs not feasible with traditional technologies such as casting, forging or machining. Additive manufacturing can be integrated into existing production lines and help mitigate long lead-time issues and enhance performance in critical sub-systems.
Our product innovation, community involvement and the overall success of our business are driven by continued engagement and motivation of our employees. Over the past twenty years we have developed and refined our core values that underpin our corporate culture.
Our product innovation, community involvement and the overall success of our business are driven by continued engagement and motivation of our employees. Over the past twenty-five years we have developed and refined our core values that underpin our corporate culture.
We also make high energy 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.
We also make high energy pulsed fiber lasers, fiber amplifiers, and beam combination and control systems for use in high-energy laser systems for directed energy and laser sensing systems used in a wide range of defense applications.
Directed energy defense systems utilize concentrated electrical or optical energy rather than chemical or kinetic force to incapacitate, damage, disable or destroy a wide range of threats. Compared to conventional weapons, directed energy weapons using high-power fiber lasers offer ultra-precise targeting, low cost per use and a nearly unlimited magazine.
Directed energy defense systems utilize concentrated electrical or optical energy rather than chemical or kinetic force to incapacitate, damage, disable or destroy a wide range of threats. Compared to conventional weapons, directed energy weapons using high-power fiber lasers offer ultra-precise targeting, low cost per shot and a nearly unlimited magazine.
Fiber Amplifiers We design, manufacture and sell high-performance fiber amplifiers, offering high efficiency, compact design, and superior beam quality for a wide range of aerospace and defense, and industrial applications. These components amplify optical signals directly within optical fibers, eliminating the need for bulky free-space optics.
Fiber Amplifiers We design, manufacture and sell high-performance fiber amplifiers, offering high efficiency, compact design, and superior beam quality for a wide range of aerospace and defense, and industrial applications. These products amplify optical signals directly within optical fibers, eliminating the need for bulky free-space optics.
Of our total full-time employees, approximately 650 were based in the United States. In Austria, employees have the legal capacity to make collective agreements, and in Finland, certain employees belong to labor unions for their specialty. There are no labor unions to which our employees belong in any other location.
Of our total full-time employees, approximately 700 were based in the United States. In Austria, employees have the legal capacity to make collective agreements, and in Finland, certain employees belong to labor unions for their specialty. There are no labor unions to which our employees belong in any other location.
All of the backlog as of December 31, 2024 is expected to be filled within the next 24 months. Our backlog is not necessarily indicative of revenues for any specific future period due to possible order cancellations or deferrals, and shipping or acceptance delays.
All of the backlog as of December 31, 2025 is expected to be filled within the next 24 months. Our backlog is not necessarily indicative of revenues for any specific future period due to possible order cancellations or deferrals, and shipping or acceptance delays.
The need for larger more productive machines has driven a trend towards multi-laser systems that are increasingly demanded by additive manufacturing customers. Overall, the trend towards an increased number of lasers in additive manufacturing machines is driving strong growth in the laser market.
The need for larger, more productive machines has driven a trend towards multi-laser and programmable laser systems that are increasingly demanded by additive manufacturing customers. Overall, the trend towards an increased number of lasers in additive manufacturing machines is driving strong growth in the laser market.
By leveraging doped fiber cores, our fiber amplifiers deliver high power outputs with excellent thermal management, making them ideal for demanding aerospace and defense markets. We believe our latest generation of fiber lasers are best-in-class in delivering the highest power while minimizing size and weight, which are critical decision criteria for our laser sensing and directed energy applications.
By leveraging doped fiber cores, our fiber amplifiers deliver high power outputs with excellent thermal management, making them ideal for demanding aerospace and defense markets. We believe our latest generation of fiber lasers are best-in-class in delivering the highest power and brightness while minimizing size and weight, which are critical decision criteria for our laser sensing and directed energy customers.
Programmable fiber lasers continue to replace CO2 lasers and other non-laser techniques for sheet metal cutting, due to their significantly faster speed, higher quality and lower cost when used across a wide range of metals.
Programmable fiber lasers continue to displace CO2 lasers and other non-laser techniques for sheet metal cutting, due to their significantly faster speed, higher quality and lower cost when used across a wide range of metals.
We make available free of charge through our investor relations website, https://investors.nlight.net, our annual reports, quarterly reports, current reports, proxy statements and all amendments to those reports as soon as reasonably practicable after such material is electronically filed or furnished with the United State Securities and Exchange Commission, or SEC.
We make available, free of charge through our investor relations website, https://investors.nlight.net, our annual reports, quarterly reports, current reports, proxy statements and all amendments to those reports as soon as reasonably practicable after such material is electronically filed or 5 Table of Contents furnished with the United State Securities and Exchange Commission, or SEC.
Our advanced development programs focus on research, design, and prototyping of next-generation laser technologies, leveraging our expertise in high-power laser technology 1 Table of Contents development, beam control, and advanced optics. Structured to foster collaboration between engineering, research, and product development teams, our advanced development programs combine dedicated resources and facilities with deep technical expertise to deliver cutting edge solutions.
Our advanced development programs focus 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. Structured to foster collaboration between engineering, research, and product development teams, our advanced development programs combine dedicated resources and facilities with deep technical expertise to deliver cutting edge solutions.
Fiber lasers provide the power needed to melt metal powders or wire to form functional products for use in industries such as aerospace, defense, automotive, medical, and energy. Advancements in laser technology are critical in enabling manufacturers to produce ever-larger parts with more complex geometries at faster speeds and lower costs.
Fiber lasers provide the power needed to melt metal powders or wire to form functional 2 Table of Contents products for use in industries such as aerospace, defense, automotive, medical, and energy. Advancements in laser technology are critical in enabling manufacturers to produce ever-larger parts with more complex geometries at faster speeds and lower costs.
At nLIGHT we both recruit and review people based on three criteria we categorize in terms of Skill, Will , and Fit . We encourage collaboration, critical thinking, and respect and foster a workplace where each employee is contributing to the long-term success of the company. As of December 31, 2024 we had nearly 800 full-time employees worldwide.
At nLIGHT we both recruit and review people based on three criteria we categorize in terms of Skill, Will , and Fit . We encourage collaboration, critical thinking, and respect and foster a workplace where each employee is contributing to the long-term success of the company. As of December 31, 2025, we had over 800 full-time employees worldwide.
By aligning our innovation efforts with strategic growth and defense initiatives – directed energy and laser sensing, in particular – our Advanced Development segment plays a critical role in maintaining our competitive edge and driving long-term value creation. Markets We sell our products into three primary end markets: Aerospace and Defense, Industrial, and Microfabrication.
By aligning our innovation efforts with strategic growth and defense initiatives – directed energy and laser sensing, in particular – our Advanced Development segment plays a critical role in maintaining our competitive edge, driving long-term value creation, and protecting our nation’s most critical assets. Markets We sell our products into three primary end markets: Aerospace and Defense, Microfabrication, and Industrial.
In addition, many of our independent representatives and distributors have service teams who have been certified by us to provide regional field service and support. We work closely with customers to service equipment and train customers to use and repair our products and explore additional applications for our technologies.
In addition, many of our independent representatives and distributors have service teams who have been certified by us to provide regional field service and support. We work closely with customers to service equipment and train customers to use and repair our products and explore additional applications for our technologies. Customers We sell to and support over 300 customers worldwide.
Our sales and marketing efforts are conducted through an integrated process that involves our direct sales and marketing teams, engineering teams, customer service representatives and our senior management team. We maintain customer support and field service staff in our major markets around the world.
Our sales and marketing efforts are conducted through an integrated process that involves our direct 3 Table of Contents sales and marketing teams, engineering teams, customer service representatives and our senior management team. We maintain customer support and field service staff in our major markets around the world.
Backlog Backlog represents firm orders that have been received for products, the remaining funded value of research and development contracts, and other services for which a contractual agreement is in place and delivery or performance is expected to occur. Backlog totaled $167.0 million and $108.4 million as of December 31, 2024 and 2023, respectively.
Backlog Backlog represents firm orders that have been received for products, the remaining funded value of research and development contracts, and other services for which a contractual agreement is in place and delivery or performance is expected to occur. Backlog totaled $161.6 million and $167.0 million as of December 31, 2025 and 2024, respectively.
We compete with companies that offer semiconductor lasers, fiber lasers, fiber amplifiers and other laser products such as IPG Photonics Corporation, Coherent, BWT Ltd., II-VI Incorporated, Raycus Fiber Laser Technologies, and Trumpf GmbH + Co. KG.
We compete with companies that offer semiconductor lasers, fiber lasers, fiber amplifiers and other laser products such as IPG Photonics, Coherent, BWT Ltd., Raycus Fiber Laser Technologies, and Trumpf GmbH + Co. KG.
Research and Development 2 Table of Contents Our research and development activities include innovation of improvements to existing products that enhance performance at reduced cost, and the design of new products that address select market opportunities. While we seek to improve our products on all operating characteristics, we believe we lead the market in terms of semiconductor laser chip brilliance.
Research and Development Our research and development activities include the design of new products that address key market opportunities and improvements to existing products that enhance performance at reduced cost. While we seek to improve our products on all operating characteristics, we believe we lead the market in terms of semiconductor laser chip brilliance.
Our vertical integration enables us to develop products that leverage the same underlying technology, thereby enabling us to offer innovative and reliable products to customers in each of our end markets. Semiconductor Lasers We sell high-power semiconductor lasers with a broad range of power levels, wavelengths, and output fiber sizes.
Our vertical integration enables us to develop products that leverage the same underlying technology, allowing us to offer innovative and reliable products to customers in each of our end markets. Semiconductor Lasers We design, manufacture and sell semiconductor lasers with a broad range of power levels, wavelengths, and output fiber sizes.
We were incorporated under the name nLight Corporation in Washington in June 2000. We reincorporated in Delaware under the name nLight Photonics Corporation in August 2000 and changed our name to nLIGHT, Inc. in January 2016. 5 Table of Contents
We were incorporated under the name nLight Corporation in Washington in June 2000. We reincorporated in Delaware under the name nLight Photonics Corporation in August 2000 and changed our name to nLIGHT, Inc. in January 2016.
Our fiber amplifier technology remains central to our commitment to delivering cutting-edge laser solutions for our diverse set of customers. Advanced Development Overview Our Advanced Development segment is dedicated to driving innovation and expanding our technological leadership in the field of directed energy and laser sensing.
Our fiber amplifier technology remains central to our commitment to delivering cutting-edge laser solutions for our diverse set of customers. 1 Table of Contents Advanced Development Our Advanced Development segment is dedicated to driving innovation and expanding our technological leadership in the fields of directed energy and laser sensing.
As of December 31, 2024, the unfunded value of our government contracts totaled $231.5 million. Seasonality Our quarterly revenues can fluctuate with general economic trends, holidays in foreign countries such as Chinese New Year in the first quarter of our fiscal year, the U.S. government fiscal year end, the timing of capital expenditures by our customers, and general economic trends.
As of December 31, 2025, the unfunded value of our government contracts totaled $184.4 million. Seasonality Our quarterly revenues can fluctuate with general economic trends, holidays in foreign countries, the U.S. government fiscal year end, the timing of capital expenditures by our customers, and general economic trends.
Laser Products Overview We design, manufacture, and sell a range of high-power semiconductor lasers and fiber lasers that are typically integrated into laser systems or manufacturing tools built by our customers.
We operate in two reportable segments, consisting of the Laser Products segment and the Advanced Development segment. Laser Products We design, manufacture, and sell a range of high-power semiconductor lasers and fiber lasers that are typically integrated into laser systems or manufacturing tools built by our customers.
In the aggregate, our top ten customers accounted for approximately 72%, 66% and 63% of our revenues in 2024, 2023 and 2022, respectively. Our global customers include BAE Systems, KORD Technologies, Mazak, MKS Instruments, Northrop Grumman, Raytheon Technologies, and the U.S. Government.
A limited number of customers drive a significant portion of our revenues. In the aggregate, our top ten customers accounted for approximately 75%, 72% and 66% of our revenues in 2025, 2024 and 2023, respectively. Our top customers include BAE Systems, KORD Technologies, Mazak, Northrop Grumman, QinetiQ Limited, Raytheon Technologies, and the U.S. Government.
Certain competitors also have higher sales volume than we do, which can enable them to lower the prices of their products. Moreover, certain of our customers have internal laser technologies, which may present additional competitive pressure.
Certain competitors also have higher sales volume than we do, which can enable them to lower the prices of their products.
Over the past decade, directed energy technologies have improved steadily, culminating in a series of successful demonstrations of significantly higher power, multi-kilowatt systems. We announced several Department of Defense sponsored programs and awards which have been tasked with delivering proprietary components, high-power lasers and advanced optics to various entities in support of next-generation defense systems.
Over the past decade, directed energy technologies have improved steadily, culminating in a series of successful demonstrations of significantly higher power, including multi-hundred-kilowatt systems. We have announced several Department of War sponsored programs that are focused on leveraging high-power lasers and advanced optics to develop and deploy next-generation defense systems.
We purchase certain raw materials and components used to manufacture our products and other components, such as semiconductor wafer substrates, fiber laser chip packages, optics, and other materials, from single or limited-source suppliers. We typically purchase our materials through purchase orders or agreed-upon terms and conditions, and we do not have guaranteed supply arrangements with many of these suppliers.
In many cases, components are custom manufactured for us based on our proprietary specifications. We purchase certain raw materials and components used to manufacture our products and other components, such as semiconductor wafer substrates, fiber laser chip packages, optics, and other materials, from single or limited-source suppliers.
We’ve invested in highly automated semiconductor packaging lines in our Camas, WA facility, which we believe is critical to serve the Directed Energy market. 4 Table of Contents We also use a third-party contract manufacturer, located in Thailand, to package certain of our semiconductor lasers used in commercial applications.
We also use a third-party contract manufacturer, located in Thailand, to package certain of our semiconductor lasers used in commercial applications.
To mitigate raw material supply risks, we take a variety of actions such as second source qualification, accumulation of safety stock and vendor surveillance. Our primary manufacturing facilities are located in Vancouver, Washington; Camas, Washington; Hillsboro, Oregon and Lohja, Finland.
We typically purchase our materials through purchase orders or agreed-upon terms and conditions, and we do not have guaranteed supply arrangements with many of these suppliers. To mitigate raw material supply risks, we take a variety of actions such as second source qualification, accumulation of safety stock and vendor surveillance.
ITEM 1. BUSINESS Overview nLIGHT, Inc., headquartered in Camas, Washington, is a leading provider of high‑power semiconductor and fiber lasers for aerospace and defense, industrial, and microfabrication applications. We operate in two reportable segments, consisting of the Laser Products segment and the Advanced Development segment.
ITEM 1. BUSINESS Overview nLIGHT, Inc. is a leading provider of high‑power lasers for mission-critical directed energy, optical sensing, and advanced manufacturing applications. We design, manufacture, and sell a range of high-power semiconductor lasers and fiber lasers that are typically integrated into laser systems or manufacturing tools built by our customers.
Removed
Over time we expect to expand our support and field service footprint, particularly in locations where business volume requires local service capabilities. Customers 3 Table of Contents We sell to and support over 300 customers worldwide. A few customers drive a significant portion of our revenues.
Added
Our vertical integration enables us to develop products that leverage the same underlying technology, thereby enabling us to offer innovative and reliable products to customers in each of our end markets. We sell our products into three primary end markets: Aerospace and Defense, Industrial, and Microfabrication.
Removed
Our vertically integrated business model enables us to control and protect our proprietary technologies and manufacturing processes.
Added
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.
Removed
In many cases, components are custom manufactured for us based on our proprietary specifications. During 2024, we ceased all manufacturing activities in China and transferred those products and capabilities either to our contract manufacturer in Thailand or to our automated production line in Camas, WA.
Added
Manufacturing We manufacture, package, and test the critical elements of our high-power semiconductor and fiber lasers, including semiconductor laser chips and optical fiber in-house. Our primary manufacturing facilities are located in Camas, Washington; Vancouver, Washington; Hillsboro, Oregon; Longmont, Colorado; and Lohja, Finland.
Added
Vertical integration enables us to control and protect our proprietary technologies and manufacturing processes, and we have invested in highly automated semiconductor packaging lines in our Camas, WA facility, which we believe is critical to serve the Directed Energy and Laser Sensing defense markets.

Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

70 edited+34 added−18 removed126 unchanged
Biggest changeFactors that could cause fluctuations in the trading price of our common stock include the following: • price and volume fluctuations in the overall stock market from time to time; • changes in operating performance, stock market valuations and volatility in the market prices of other technology companies generally, or those in our industry in particular; • actual or anticipated quarterly variations in our results of operations or those of our competitors; • actual or anticipated changes in our growth rate relative to our competitors; • announcements by us or our competitors of acquisitions, new products, significant contracts, commercial relationships or capital commitments; • manufacturing, labor or supply interruptions; • developments with respect to intellectual property rights; • our ability to develop and market new and enhanced products on a timely basis; • commencement of, or our involvement in, litigation; • major changes in our Board of Directors, management or key personnel; • changes in governmental regulations or in the status of our regulatory approvals; • actual or perceived privacy, data protection or cybersecurity breaches or incidents; • the trading volume of our stock; • any future sales or repurchases of our common stock or other securities, or the perception that these sales or repurchases could occur; • failure of financial analysts to maintain coverage of us, changes in financial estimates by any analysts who follow our company or our failure to meet these estimates or the expectations of investors; • spending on defense-related projects by the U.S. government; • the impact of public health crises, geopolitical events and macroeconomic conditions on our business, results of operations and financial condition; • fluctuations in the values of companies perceived by investors to be comparable to us; • the financial projections we may provide to the public, any changes in these projections or our failure to meet these projections; and • general economic conditions and slow or negative growth of related markets. 18 Table of Contents The stock market in general, and market prices for the securities of technology companies like ours in particular, have from time to time experienced volatility that often has been unrelated to the operating performance of the underlying companies.
Biggest changeFactors that could cause fluctuations in the trading price of our common stock include the following: • price and volume fluctuations in the overall stock market from time to time, and the trading volume of our stock; • changes in operating performance, stock market valuations and volatility in the market prices of other technology companies generally, or those in our industry in particular; • actual or anticipated quarterly variations in our results of operations or growth rate or those of our competitors; • announcements by us or our competitors of acquisitions, new products, significant contracts, commercial relationships or capital commitments; • manufacturing, labor or supply interruptions; • developments with respect to intellectual property rights; • our ability to obtain regulatory approvals or develop and market new and enhanced products on a timely basis; • commencement of, or our involvement in, litigation; • major changes in our board of directors, management or key personnel; • changes in governmental regulations or defense-related spending and budgets; • actual or perceived privacy, data protection or cybersecurity breaches or incidents; • actual or perceived future sales or repurchases of our common stock or other securities; • failure of financial analysts to maintain coverage of us, changes in financial estimates by any analysts who follow our company or our failure to meet these estimates or the expectations of investors; • public health crises, geopolitical events and macroeconomic conditions; • fluctuations in the values of companies perceived by investors to be comparable to us; • the financial projections we may provide to the public, any changes in or failure to meet these projections; and • general economic conditions and slow or negative growth of related markets.
Among other things, our certificate of incorporation and bylaws: • permit the Board of Directors to issue up to five million shares of preferred stock, with any rights, preferences and privileges as they may designate; • provide that the authorized number of directors may be changed only by resolution of the Board of Directors; • provide that all vacancies on our Board of Directors may only be filled by our Board of Directors and not by stockholders; • divide the Board of Directors into three classes; • provide that a director may only be removed from the Board of Directors by the stockholders for cause; • require that any action to be taken by our stockholders must be effected at a duly called annual or special meeting of stockholders and may not be taken by written consent; • provide that stockholders seeking to present proposals before a meeting of stockholders or to nominate candidates for election as directors at a meeting of stockholders must provide notice in writing in a timely manner and meet specific requirements as to the form and content of a stockholder's notice; • prohibit cumulative voting; • provide that special meetings of our stockholders may be called only by the chairman of the board, our chief executive officer (or president, in the absence of a chief executive officer) or by the Board of Directors; and • provide that stockholders will be permitted to amend our certificate of incorporation and our bylaws only upon receiving at least two-thirds of the total votes entitled to be cast by holders of all outstanding shares then entitled to vote generally in the election of directors, voting together as a single class.
Among other things, our certificate of incorporation and bylaws: • permit our board of directors to issue up to five million shares of preferred stock, with any rights, preferences and privileges as they may designate; • provide that the authorized number of directors may be changed only by resolution of our board of directors; • provide that all vacancies on our board of directors may only be filled by our board of directors and not by stockholders; • divide our board of directors into three classes; • provide that a director may only be removed from our board of directors by the stockholders for cause; • require that any action to be taken by our stockholders must be effected at a duly called annual or special meeting of stockholders and may not be taken by written consent; • provide that stockholders seeking to present proposals before a meeting of stockholders or to nominate candidates for election as directors at a meeting of stockholders must provide notice in writing in a timely manner and meet specific requirements as to the form and content of a stockholder’s notice; • prohibit cumulative voting; • provide that special meetings of our stockholders may be called only by the chairman of our board of directors, our chief executive officer (or president, in the absence of a chief executive officer) or by our board of directors; and • provide that stockholders will be permitted to amend our certificate of incorporation and our bylaws only upon receiving at least two-thirds of the total votes entitled to be cast by holders of all outstanding shares then entitled to vote generally in the election of directors, voting together as a single class.
If we detect misappropriation and decide to enforce such contractual obligations and pursue litigation to assert our intellectual property rights, an adverse decision in any legal action could limit our ability to assert our intellectual property rights, limit the value of our technology or otherwise materially adversely affect our business, financial condition or results of operations.
If we detect misappropriation and enforce such contractual obligations and pursue litigation to assert our intellectual property rights, an adverse decision in any legal action could limit our ability to assert our intellectual property rights, limit the value of our technology or otherwise materially adversely affect our business, financial condition or results of operations.
Our bylaws provide that, unless we consent in writing to the selection of an alternative forum, the sole and exclusive forum for (1) any derivative action or proceeding brought on our behalf, (2) any action asserting a claim of breach of a fiduciary duty owed by any of our directors, stockholders, officers or other employees to us or our stockholders, (3) any action arising pursuant to any provision of the Delaware General Corporation Law, our certificate of incorporation or our bylaws or (4) any other action asserting a claim that is governed by the internal affairs doctrine shall be the Court of Chancery of the State of Delaware (or, if the Court of Chancery does not have jurisdiction, another State court in Delaware or the federal district court for the District of Delaware), except for any claim as to which such court determines that there is an indispensable party not subject to the jurisdiction of such court (and the indispensable party does not consent to the personal jurisdiction of such court within ten days following such determination), which is vested in the exclusive jurisdiction of a court or forum other than such court or for which 19 Table of Contents such court does not have subject matter jurisdiction.
Our bylaws provide that, unless we consent in writing to the selection of an alternative forum, the sole and exclusive forum for (1) any derivative action or proceeding brought on our behalf, (2) any action asserting a claim of breach of a fiduciary duty owed by any of our directors, stockholders, officers or other employees to us or our stockholders, (3) any action arising pursuant to any provision of the Delaware General Corporation Law, our certificate of incorporation or our bylaws or (4) any other action asserting a claim that is governed by the internal affairs doctrine shall be the Court of Chancery of the State of Delaware (or, if the Court of Chancery does not have jurisdiction, another State court in Delaware or the federal district court for the District of Delaware), except for any claim as to which such court determines that there is an indispensable party not subject to the jurisdiction of such court (and the indispensable party does not consent to the personal jurisdiction of such court within ten days following such determination), which is vested in the exclusive jurisdiction of a court or forum other than such court or for which such court does not have subject matter jurisdiction.
A security breach or other security incident impacting us or our third-party service providers could require a substantial level of financial resources to rectify and otherwise respond to, may be difficult to identify or address in a timely manner, and could result in claims, investigations, and inquires by private parties or governmental entities that may divert management’s attention and require the expenditure of significant time and resources, and which may cause us to incur substantial fines, penalties, or other liability and related legal and other costs.
A security breach or other security incident impacting us or our third-party service providers could require a substantial level of financial resources to rectify and otherwise respond to, may be difficult to identify or address in a timely manner, and could result in claims, investigations, and inquires by private parties or governmental entities 11 Table of Contents that may divert management’s attention and require the expenditure of significant time and resources, and which may cause us to incur substantial fines, penalties, or other liability and related legal and other costs.
The consequences of such loss, possible misuse of our proprietary and confidential information, or operational disruptions could include, among other things, unfavorable publicity, damage to our reputation, difficulty marketing our products, customer allegations of breach-of-contract, claims and litigation by affected parties, investigations by and other proceedings involving governmental authorities and possible financial liabilities for damages, any of which could materially adversely affect 10 Table of Contents our business, financial condition, reputation and relationships with customers and partners.
The consequences of such loss, possible misuse of our proprietary and confidential information, or operational disruptions could include, among other things, unfavorable publicity, damage to our reputation, difficulty marketing our products, customer allegations of breach-of-contract, claims and litigation by affected parties, investigations by and other proceedings involving governmental authorities and possible financial liabilities for damages, any of which could materially adversely affect our business, financial condition, reputation and relationships with customers and partners.
In addition, we are governed by the provisions of Section 203 of the Delaware General Corporation Law, which generally prohibits a Delaware corporation from engaging in any of a broad range of business combinations with any "interested" stockholder for a period of three years following the date on which the stockholder became an "interested" stockholder.
In addition, we are governed by the provisions of Section 203 of the Delaware General Corporation Law, which generally prohibits a Delaware corporation from engaging in any of a broad range of business combinations with any “interested” stockholder for a period of three years following the date on which the stockholder became an “interested” stockholder.
We participate in markets that are subject to rapid technological change and require significant research and development expenses to develop and maintain products that can achieve market acceptance. 6 Table of Contents The markets for our products are characterized by rapid technological change, frequent product introductions, substantial capital investment, volatility of product supply and demand, changing customer requirements and evolving industry standards.
We participate in markets that are subject to rapid technological change and require significant research and development expenses to develop and maintain products that can achieve market acceptance. The markets for our products are characterized by rapid technological change, frequent product introductions, substantial capital investment, volatility of product supply and demand, changing customer requirements and evolving industry standards.
Ramping of production capacity also entails risks of delays which can limit our ability to realize the full benefit of the new product introduction. We cannot assure you that we will be able to identify, develop, manufacture, market or support new or enhanced products successfully. Additionally, our product offerings may become obsolete given the frequent introduction of alternative technologies.
Ramping of production capacity also entails risks of delays which can limit our ability to realize the full benefit of the new product introduction. We cannot assure you that we will be able to identify, develop, manufacture, market or support new or enhanced products successfully. Additionally, our product offerings may become obsolete with the introduction of alternative technologies.
Our patents do not cover all of our technologies, systems, products and product components and our competitors or others may design around our patented technologies. We cannot guarantee we have entered into appropriate agreements with all parties that have had access to our trade secrets, know-how or other proprietary information to adequately protect all such information.
Our patents do not cover all of our technologies, systems, products and product components and our competitors or others may design around our patented technologies. We cannot guarantee we have entered into appropriate agreements with all parties that have had 16 Table of Contents access to our trade secrets, know-how or other proprietary information to adequately protect all such information.
Privacy and data security concerns, and data collection and transfer restrictions and related domestic or foreign regulations may limit the use and adoption of our solutions and adversely affect our business. 15 Table of Contents Personal privacy, information security and data protection are significant issues in the United States, Europe, and many other jurisdictions where we have operations or offer our products.
Privacy and data security concerns, and data collection and transfer restrictions and related domestic or foreign regulations may limit the use and adoption of our solutions and adversely affect our business. Personal privacy, information security and data protection are significant issues in the United States, Europe, and many other jurisdictions where we have operations or offer our products.
Also, we purchase certain raw materials and components, which are key elements to manufacture our products and other components, such as semiconductor wafer substrates, fiber laser chip packages, optics, and other materials, from single- or limited-source suppliers. We generally do not have guaranteed supply arrangements with our suppliers.
Also, we purchase certain raw materials and components, which are key elements to manufacture our products and other components, such as semiconductor wafer substrates, fiber laser chip packages, optics, and other materials, from single- or limited-source suppliers for which alternative options are limited. We generally do not have guaranteed supply arrangements with our suppliers.
Accordingly, variations in timing of sales, particularly for our higher priced, higher margin products, can cause significant fluctuations in quarterly results of operations. Due to these and other factors, particularly varying product mix from quarter to quarter, we believe that quarter-to-quarter and year-to-year comparisons of our historical results of operations may not be meaningful.
Accordingly, variations in timing of sales, particularly for our higher priced, higher margin products, can cause significant fluctuations in quarterly results of operations. Due to these and other factors, particularly varying product mix from quarter to quarter, we believe that quarter-to-quarter and year-to-year comparisons of our 12 Table of Contents historical results of operations may not be meaningful.
Any failure to adequately comply with these laws could result in civil fines or suspension or loss of our export privileges, as well as substantial expense and diversion of management resources and attention, any of which could materially adversely affect our business, financial condition, results of operations and growth prospects.
Any failure by us or any of our customers to adequately comply with these laws could result in civil fines or suspension or loss of our export privileges, as well as substantial expense and diversion of management resources and attention, any of which could materially adversely affect our business, financial condition, results of operations and growth prospects.
Further, our competitors may seek to vertically integrate by buying suppliers that also supply products or components to us, which could enable them to further reduce prices, or could increase our costs. Moreover, our OEM customers' internal production of laser technologies presents additional competitive pressure.
Further, our competitors may seek to vertically integrate by buying suppliers that also supply products or components to us, which could enable them to further reduce prices, or could increase our costs. Moreover, our Original Equipment Manufacturer (OEM) customers’ internal production of laser technologies presents additional competitive pressure.
We also rely on a number of third-party service providers to host, store or otherwise process information for us, or to provide other facilities or infrastructure that we make use of, including "cloud-based" providers of corporate infrastructure services relating to, among other things, human resources, electronic communication services and some financial functions, and we are therefore dependent on the security systems of these providers.
We also rely on a number of third-party service providers to host, store or otherwise process information for us, or to provide other facilities or infrastructure that we make use of, including “cloud-based” providers of corporate infrastructure services relating to, among other things, human resources, electronic communication services and some financial functions, and we are therefore dependent on the security systems of these providers.
If any pending or future intellectual property-related litigation proceedings result in an adverse outcome, then we could be required to: • cease the manufacture, use or sale of the infringing products, processes, or technology; • pay substantial damages for infringement; • expend significant resources to develop non-infringing products, processes, or technology; • license technology from the party claiming infringement, which license may not be available on commercially reasonable terms, or at all; • cross-license our technology to a competitor or commit to covenant-not-to-sue to resolve an infringement claim, which could weaken our ability to compete with that competitor; or • pay substantial damages to our direct or indirect customers to cause our end users to discontinue their use of, or replace, infringing products with non-infringing products.
If any pending or future intellectual property-related litigation proceedings result in an adverse outcome, then we could be required to: • cease the manufacture, use or sale of the infringing products, processes, or technology; • pay substantial damages for infringement; • expend significant resources to develop non-infringing products, processes, or technology or license technology from the party claiming infringement, which license may not be available; • cross-license our technology to a competitor or commit to covenant-not-to-sue to resolve an infringement claim, which could weaken our ability to compete with that competitor; or • pay substantial damages to our direct or indirect customers to cause our end users to discontinue their use of, or replace, infringing products with non-infringing products.
Many of our target markets have historically been slow to adopt new technologies and these markets often require long testing and qualification periods or lengthy government approval processes before admitting new suppliers or adopting new technologies.
Many of our target markets have historically been slow to adopt new technologies and these markets 9 Table of Contents often require long testing and qualification periods or lengthy government approval processes before admitting new suppliers or adopting new technologies.
Our operations and sales in China, India, Brazil, and the Middle East in particular, as well as other countries, increases our risks under these laws. These laws also require that we keep accurate books and records and maintain internal controls and compliance procedures designed to prevent any such actions.
Our operations and sales in China, India, Brazil, and the Middle East in particular, as well as other countries, increases our risks under these laws. 14 Table of Contents These laws also require that we keep accurate books and records and maintain internal controls and compliance procedures designed to prevent any such actions.
The U.S. government contracting party may require us to increase or decrease production of certain solutions sold to the U.S. government, or to prioritize deliveries to the U.S. government due to changes in U.S. national security strategy and/or priorities or other reasons, which could adversely impact production and delivery of other products or sales to other customers.
The U.S. government contracting party may require modifications to technical specifications or to increase or decrease production of certain solutions sold to the U.S. government, or to prioritize deliveries to the U.S. government due to changes in U.S. national security strategy and/or priorities or other reasons, which could adversely impact production and delivery of other products or sales to other customers.
Political, economic and monetary instability and changes in governmental regulations or policies, including trade tariffs and protectionism, could materially adversely affect both our ability to effectively operate our foreign offices and the ability of our foreign suppliers to supply us with required materials or services.
Political, economic and monetary instability and changes in governmental regulations or policies, 13 Table of Contents including trade barriers, tariffs and protectionism, could materially adversely affect both our ability to effectively operate our foreign offices and the ability of our foreign suppliers to supply us with required materials or services.
In several recent situations when the market price of a stock has been volatile, holders of that stock have instituted securities class action litigation against the company that issued the stock.
In several recent situations when the 18 Table of Contents market price of a stock has been volatile, holders of that stock have instituted securities class action litigation against the company that issued the stock.
Likewise, because our principal executive offices are located in Washington, the anti-takeover provisions of the Washington Business Corporation Act may apply to us under certain circumstances now or in the future.
Likewise, because our principal executive offices are located in Washington, the anti-takeover provisions of the Washington Business Corporation Act may apply to us under certain circumstances.
Further, many foreign countries and governmental bodies, including the European Union (EU) and China, have laws and regulations concerning the collection and use of personal data obtained from their residents or by businesses operating within their jurisdiction, or relating to cybersecurity. These laws and regulations often are more restrictive than those in the United States.
Further, many foreign countries and governmental bodies have laws and regulations concerning the collection and use of personal data obtained from their residents or by businesses operating within their jurisdiction, or relating to cybersecurity. These laws and regulations often are more restrictive than those in the United States.
These provisions prohibit a "target corporation" from engaging in any of a broad range of business combinations with any stockholder constituting an "acquiring person" for a period of five years following the date on which the stockholder became an "acquiring person." The exclusive forum provisions of our bylaws could limit our stockholders’ ability to choose the judicial forum for disputes with us or our directors, officers, stockholders or employees.
These provisions prohibit a “target corporation” from engaging in any of a broad range of business combinations with any stockholder constituting an “acquiring person” for a period of five years following the date on which the stockholder became an “acquiring person.” The exclusive forum provisions of our bylaws could limit our stockholders’ ability to choose the judicial forum for disputes with us or our directors, officers, stockholders or employees.
While we maintain insurance that may cover certain liabilities in connection with a security breach or incident, we cannot be certain that our insurance coverage will be adequate for data handling or information security liabilities actually incurred, that insurance will continue to be available to us on economically reasonable terms, or at all, or that any insurer will not deny coverage as to any future claim.
While we maintain insurance that may cover certain liabilities in connection with a security breach or incident, we cannot be certain that our insurance coverage will be adequate, that insurance will continue to be available to us on reasonable terms, or at all, or that any insurer will not deny coverage as to any future claim.
We cannot assure you that our expenditures for research and development will result in the introduction of new products or, if such products are introduced, that those products will achieve sufficient market acceptance or generate revenues to offset the cost of development.
We cannot assure you that our expenditures for research and development will result in the introduction of new products or that any new products will achieve sufficient market acceptance or generate revenues to offset the cost of development.
Factors which have had or may in the future have an influence on our results of operations in a particular quarter include: • the increase, decrease, cancellation or rescheduling of significant customer orders; • declines in selling prices for our products; • delays in our product-shipment timing, obtaining licenses or other import/export approvals, customer or end user sales or deployment cycles, or work performed under development contracts; • seasonality attributable to different purchasing patterns and levels of activity throughout the year in the areas where we operate; • the impact of new acquisitions and the success of our integration efforts; 11 Table of Contents • the timing of revenue recognition based on the installation or acceptance of certain products shipped to our customers; • the timing and execution of government development projects; • timing variability in product introductions, enhancements, services and technologies by us and our competitors and market acceptance of these new or enhanced products, services and technologies; • different capital expenditure and budget cycles for our customers, which affect the timing of their spending; • our ability to obtain export licenses for our products on a timely basis or at all; • changes in tariffs imposed by the U.S., China and other foreign governments; • the rate at which our present and future customers and end users adopt our technologies; • the gain or loss of a key customer; • product or customer mix; • competitive pricing pressures and new market entrants; • our ability to manage our inventory levels and any write-downs for excess or obsolete inventory; • our ability to collect outstanding accounts receivable balances; • changes in the amount and timing of our operating costs; • impairment of values for goodwill, intangibles and other long-lived assets; • foreign currency fluctuations; • the impact of public health crises, geopolitical events and macroeconomic conditions on our business, results of operations and financial condition; • changes in jurisdictional income mix and tax rules and regulations in countries where we operate; and • economic and market conditions in a particular geography or country.
Factors which have had or may in the future have an influence on our results of operations in a particular quarter include: • changes in significant or key customer orders, or the gain or loss of a key customer; • competitive pricing pressures and new market entrants; • delays in our product-shipment timing, obtaining licenses or other import/export approvals, customer or end user sales or deployment cycles, or work performed under development contracts; • seasonality attributable to purchasing patterns and levels of activity through the year in the areas where we operate; • the impact of new acquisitions and the success of our integration efforts; • the timing of revenue recognition based on the installation or acceptance of our products; • the timing and execution of government development projects; • timing variability in product introductions, enhancements, services and technologies by us and our competitors; • different capital expenditure and budget cycles for our customers, which affect the timing of their spending; • our ability to obtain export licenses for our products on a timely basis or at all; • the rate at which our present and future customers and end users adopt our technologies; • product or customer mix; • our ability to manage our inventory levels and any write-downs for excess or obsolete inventory; • our ability to collect outstanding accounts receivable balances; • changes in the amount and timing of our operating costs; • impairment of values for goodwill, intangibles and other long-lived assets; • public health crises, geopolitical events and macroeconomic conditions; and • changes in jurisdictional income mix, tax rules, tariffs and regulations in countries where we operate.
Some of the NOLs and U.S. 17 Table of Contents federal research and development credit carryforwards began expiring in 2022. Insufficient future taxable income and income taxes payable will adversely affect our ability to use these NOLs and credit carryforwards to reduce future taxable income or income taxes due.
Some of the NOLs and U.S. federal research and development credit carryforwards begin expiring in 2026. Insufficient future taxable income and income taxes payable will adversely affect our ability to use these NOLs and credit carryforwards to reduce future taxable income or income taxes due.
In addition, the U.S. government retains rights to intellectual property developed in connection with a government contract. The U.S. government could exercise these rights in certain circumstances in the future, which could have the effect of decreasing the benefit we are able to realize commercially from such intellectual property.
The U.S. government could exercise these rights in certain circumstances in the future, which could have the effect of decreasing the benefit we are able to realize commercially from such intellectual property.
The semiconductor equipment market has historically been characterized by sudden and severe cyclical variations in product supply and demand, which have often severely affected the demand for manufacturing equipment, including laser-based tools and systems, which limits our ability to predict our business prospects and financial results in this market.
The semiconductor equipment market has historically been 6 Table of Contents characterized by sudden and severe cyclical variations in product supply and demand, which have often severely affected the demand for manufacturing equipment, which limits our ability to predict our business prospects and financial results in this market.
Furthermore, any changes in, or unexpected interpretations of, the trade secret and other intellectual property laws in any country in which we operate may materially adversely affect our ability to enforce our trade secret and intellectual property positions. In the past, certain of our employees have been hired by our competitors.
Furthermore, any changes in, or unexpected interpretations of, the trade secret and other intellectual property laws in any country in which we operate may materially adversely affect our ability to enforce our trade secret and intellectual property positions.
While these former employees are contractually prohibited from misappropriating our proprietary rights, we cannot be certain that such contractual obligations will be honored.
While our former employees are contractually prohibited from misappropriating our proprietary rights, we cannot be certain that such contractual obligations will be honored if they are hired by our competitors.
Moreover, any litigation in connection with unauthorized use of our intellectual property could be time consuming, and we could be forced to incur significant costs and divert our attention and the efforts of our employees, which could, in turn, result in lower revenues and higher expenses, and we may not be successful in enforcing our intellectual property rights.
Moreover, any litigation in connection with such unauthorized use could be time consuming, costly and could divert our attention and the efforts of our employees, which could, in turn, result in lower revenues and higher expenses, and we may not be successful in enforcing our intellectual property rights. Intellectual property claims could result in costly litigation and harm our business.
We rely on a small number of customers for a significant portion of our revenues, and if we lose any of these customers or they significantly curtail their purchases of our products, our results of operations could be materially adversely affected. 7 Table of Contents We rely on a small number of customers for a significant portion of our revenues, and we expect this customer concentration will continue in the future.
We rely on a small number of customers for a significant portion of our revenues, and if we lose any of these customers or they significantly curtail their purchases of our products, our results of operations could be materially adversely affected.
Product development delays may result from numerous factors, including: • changing product specifications and customer requirements; • unanticipated engineering complexities; • expense reduction measures we have implemented, and others we may implement, to conserve our cash and attempt to sustain profitability; • difficulties in hiring and retaining necessary technical personnel; • difficulties in reallocating engineering resources and overcoming resource limitations; and • changing market or competitive product requirements.
Product development delays may result from numerous factors, including changing product specifications and customer requirements, unanticipated engineering complexities, expense reduction measures, difficulties in hiring and retaining technical personnel, difficulties in reallocating engineering resources and overcoming resource limitations, and changing market or competitive product requirements.
Even after this evaluation process, a potential customer may decide not to purchase our products. As a result, these long sales cycles may cause us to incur significant expenses without receiving revenues to offset such expenses soon thereafter or at all. This, in turn, can materially adversely affect our business, financial condition, results of operations and growth prospects.
As a result, these long sales cycles may cause us to incur significant expenses without receiving revenues to offset such expenses. This, in turn, can materially adversely affect our business, financial condition, results of operations and growth prospects.
To prevent having to litigate claims in multiple jurisdictions and the threat of inconsistent or contrary rulings by different courts, among other considerations, our bylaws also provide that, unless we consent in writing to the selection of an alternative forum, the federal district courts of the United States are the sole and exclusive forum for resolving any complaint asserting a cause of action arising under the Securities Act.
To prevent having to litigate claims in multiple jurisdictions and the threat of inconsistent or contrary rulings by different courts, among other considerations, our bylaws also provide that, unless we consent in writing to the selection of an alternative forum, the federal district courts of the United States are the sole and exclusive forum for resolving any complaint asserting a cause of action arising under the Securities Act. 19 Table of Contents Any person or entity purchasing or otherwise acquiring or holding or owning (or continuing to hold or own) any interest in any of our securities shall be deemed to have notice of and consented to the foregoing bylaw provisions.
Our U.S. federal NOLs arising in tax years beginning before January 1, 2018 began expiring in 2023, with the remainder expiring by 2042. Our U.S. federal NOLs arising in tax years beginning after December 31, 2017 are not subject to expiration. Our state NOLs began expiring in 2023, with the remainder expiring by 2042.
Our U.S. federal NOLs arising in tax years beginning before January 1, 2018 will expire by 2037. Our U.S. federal NOLs arising in tax years beginning after December 31, 2017 are not subject to expiration. Our state NOLs will expire by 2045.
Significant fluctuations in exchange rates between the U.S. dollar and foreign currencies may adversely affect our revenues and earnings. 13 Table of Contents Risks Related to Litigation, Taxation and Regulatory Compliance We are subject to governmental export and import controls that could subject us to liability, impair our ability to compete and otherwise adversely affect our business, financial condition, results of operations and growth prospects.
Risks Related to Litigation, Taxation and Regulatory Compliance We are subject to governmental export and import controls that could subject us to liability, impair our ability to compete and otherwise adversely affect our business, financial condition, results of operations and growth prospects.
We have unaudited and unsettled incurred cost claims related to past years, which places risk on our ability to issue final billings on contracts for which authorized and appropriated funds may be expiring.
Additionally, any costs found to be misclassified may be subject to repayment, and allegations of impropriety can result in significant reputational damage. We have unaudited and unsettled incurred cost claims related to past years, which places risk on our ability to issue final billings on contracts for which authorized and appropriated funds may be expiring.
The results of an audit or litigation could have a material adverse effect on our operating results or cash flows in the period or periods for which that determination is made. Our intercompany relationships are subject to complex transfer pricing regulations administered by taxing authorities in various jurisdictions.
The results of an audit or litigation could have a material adverse effect on our operating results or cash flows in the period or periods for which that determination is made.
While we have policies and procedures to address compliance with these laws, we cannot assure you that our employees, agents, representatives, business partners and third-parties intermediaries will not take actions that violate our policies or applicable law, for which we may ultimately be held liable. 14 Table of Contents Any allegations or violation of the FCPA or other applicable anti-bribery and anti-corruption laws and anti-money laundering laws could result in whistleblower complaints, sanctions, settlements, prosecution, enforcement actions, fines, damages, adverse media coverage, investigations, loss of export privileges, severe criminal or civil sanctions, or suspension or debarment from government contracts, all of which may have an adverse effect on our business, reputation, financial condition, results of operations and growth prospects.
Any allegations or violation of the FCPA or other applicable anti-bribery and anti-corruption laws and anti-money laundering laws could result in whistleblower complaints, sanctions, settlements, prosecution, enforcement actions, fines, damages, adverse media coverage, investigations, loss of export privileges, severe criminal or civil sanctions, or suspension or debarment from government contracts, all of which may have an adverse effect on our business, reputation, financial condition, results of operations and growth prospects.
We may not be able to adjust our production levels or fixed costs quickly enough or sufficiently to adapt to rapidly changing market conditions. Gross profit, in absolute dollars and as a percentage of revenues, is impacted by our volumes, product sales mix, the corresponding absorption of fixed manufacturing overhead expenses, production costs and manufacturing yields.
Gross profit, in absolute dollars and as a percentage of revenues, is impacted by our volumes, product sales mix, the corresponding absorption of fixed manufacturing overhead expenses, production costs and manufacturing yields.
These controls may impact our ability to export certain products and technology to China and other destinations and restrict our ability to use certain ICs in our products. It is also possible that the Chinese government will retaliate in ways that could impact our business.
These controls may impact our ability to export certain products and technology to China and other destinations and restrict our ability to use certain ICs in our products. It is also possible that foreign governments will retaliate in ways that could impact our business, for example by imposing new export control regime placing export license requirements on certain materials.
In addition, many of our suppliers have recently experienced shortages of many of the components and raw materials that we require, and in some cases, have significantly increased their prices.
In addition, suppliers may experience shortages of many of the components and raw materials that we require, and may significantly increase their prices.
Changes in the markets we serve could materially adversely affect our revenues and profitability. Our results of operations may vary based on the impact of changes in the markets we serve or in the global economy.
Changes in the markets we serve could materially adversely affect our revenues and profitability. Our results of operations may vary based on the impact of changes in the markets we serve or in the global economy. The Aerospace and Defense market is largely dependent on government budgets, in particular defense budgets, which are driven by numerous factors.
Competition for qualified resources is intense and other companies may have greater resources available to provide substantial inducements to lure key personnel away from us or to offer more competitive compensation packages to individuals we are trying to hire. Fluctuations in our quarterly results of operations may be difficult to predict.
Competition for qualified resources is intense and other companies may have greater resources available to provide substantial inducements to our key personnel. Fluctuations in our quarterly results of operations may be difficult to predict. We have experienced, and expect to continue to experience, fluctuations in our quarterly results of operations.
As of December 31, 2024, we had estimated U.S. federal and state net operating loss carryforwards (NOLs) of $169.6 million and $52.9 million, respectively, and federal research and development credit carryforwards of $9.9 million, which we may use to reduce future taxable income or income taxes due.
Our ability to use our net operating loss carryforwards and research and development credit carryforwards to offset future taxable income and income taxes may be limited. 17 Table of Contents As of December 31, 2025, we had estimated U.S. federal and state net operating loss carryforwards (NOLs) of $205.5 million and $60.1 million, respectively, and federal research and development credit carryforwards of $11.0 million, which we may use to reduce future taxable income or income taxes due.
Intellectual property claims could result in costly litigation and harm our business. There has been significant litigation involving intellectual property rights in many technology-driven industries, including our own.
T here has been significant litigation involving intellectual property rights in many technology-driven industries, including our own.
The long sales cycles for our products may cause us to incur significant expenses without offsetting revenues. Our products represent a large investment for our customers and they typically expend significant effort in evaluating, testing and qualifying our products before making a decision to purchase them, resulting in a lengthy initial sales cycle.
Our products represent a large investment for our customers and they typically expend significant effort in evaluating, testing and qualifying our products before making a decision to purchase them, resulting in a lengthy initial sales cycle. Even after this evaluation process, a potential customer may decide not to purchase our products.
We are subject to a variety of federal, state, local and foreign environmental regulations relating to the use, storage, discharge and disposal of hazardous chemicals used during our manufacturing process or requiring design changes or recycling of products we manufacture.
We are subject to various environmental laws and regulations that could impose substantial costs upon us and may materially adversely affect our business, financial condition, results of operations and growth prospects. 15 Table of Contents We are subject to a variety of federal, state, local and foreign environmental regulations relating to the use, storage, discharge and disposal of hazardous chemicals used during our manufacturing process or requiring design changes or recycling of products we manufacture.
We have high levels of fixed costs and inventory levels that may materially adversely affect our gross profits and results of operations if demand for our products declines or we maintain excess inventory levels. We conduct our own manufacturing operations and have a high fixed cost base, including significant costs for the employees in our manufacturing operations.
As a result, investors have less insight into our classified business and our business overall. We have high levels of fixed costs and inventory levels that may materially adversely affect our gross profits and results of operations if demand for our products declines or we maintain excess inventory levels.
In general, we may potentially use these NOLs to offset taxable income for U.S. federal and state income tax purposes. Furthermore, U.S. federal NOLs arising in tax years beginning after December 31, 2017 may only be used to offset 80% of our current year taxable income.
Furthermore, U.S. federal NOLs arising in tax years beginning after December 31, 2017 may only be used to offset 80% of our current year taxable income. This may require us to pay U.S. federal income taxes in future years despite generating a loss for U.S. federal income tax purposes in prior years. Limitations under state law may differ.
A number of factors may adversely affect the labor force available to us in one or more of our geographies, including high employment levels, increasing market wages and other compensation costs, federal unemployment subsidies, and other government regulations, which include laws and regulations related to workers’ health and safety, wage and hour practices and immigration.
A number of factors may adversely affect the labor force available to us in one or more of our geographies, including high employment levels, increasing market wages and other compensation costs, federal unemployment subsidies, and other government regulations. These factors along with increased turnover rates within our employee base can decrease our efficiency and impact our cost of labor.
Responding to any investigation or action relating to government contracts could result in a significant diversion of management’s attention and resources and significant defense costs and other professional fees. Our inability to manage risks associated with our international customers and operations could materially adversely affect our business.
Responding to any investigation or action relating to government contracts could result in a significant diversion of management’s attention and resources and significant defense costs and other professional fees. We have classified contracts with the U.S. government, which limits investor insight into portions of our business.
If we are unable to develop new products, applications and end-markets and increase our market share in existing applications, our business, financial condition, results of operations and growth prospects may be materially adversely affected. 8 Table of Contents Our future success will depend in part on our ability to continue to generate sales in new and developing markets and applications for lasers such as additive manufacturing within the industrial market, and directed energy within the aerospace and defense market.
Our future success will depend in part on our ability to continue to generate sales in new and developing markets and applications for lasers such as additive manufacturing within the industrial market, and directed energy within the aerospace and defense market.
For certain long lead-time supplies or in order to lock in pricing, we may be obligated to place purchase orders which are not cancellable or otherwise assume liability for a large amount of the ordered supplies, which limits our ability to adjust down our inventory liability in the event of market downturns or other customer cancellations or rescheduling of their purchase orders for our products.
In addition, if quality issues arise with these outsourced materials and go undetected by us, the use of such defective materials in our products could compromise their quality and harm our reputation. 10 Table of Contents For certain long lead-time supplies or in order to lock in pricing, we may be obligated to place purchase orders which are not cancellable or otherwise assume liability for a large amount of the ordered supplies, which limits our ability to adjust our inventory liability .
In economic downturns, we must effectively manage our spending and operations to ensure that our competitive position during the downturn, as well as our future opportunities when the economy improves, remains intact. The failure to effectively manage our spending and operations could disrupt our business and materially adversely affect our results of operations.
In economic downturns, we must effectively manage our spending and operations to ensure that our competitive position remains intact. The failure to effectively manage our spending and operations could disrupt our business and materially adversely affect our results of operations. The long sales cycles for our products may cause us to incur significant expenses without offsetting revenues.
These laws and regulations impose terms or rights that are often more favorable to the government than those typically available to commercial parties in negotiated transactions. For example, the U.S. government may terminate any of our government contracts and, in general, subcontracts, at their convenience, as well as for default.
We must also comply with and are affected by laws and regulations relating to the award, administration and performance of U.S. government contracts. These laws and regulations impose terms or rights that are often more favorable to the government than those typically available to commercial parties in negotiated transactions.
We must export our products in compliance with U.S. export controls, and we may not always be successful in obtaining necessary export licenses. Denials of export licenses or limitations imposed by these laws on our ability to export or sell our products, may harm our international and domestic revenues.
These restrictions could impact the cost of components or inputs used to produce our products. We must export our products in compliance with U.S. export controls, and we may not always be successful in obtaining necessary export licenses.
Effective intellectual property protection may be unavailable or more limited in foreign jurisdictions in 16 Table of Contents which we operate, such as China, relative to those protections available in the United States.
We have significant international operations and we are subject to foreign laws which differ in many respects from U.S. laws. Effective intellectual property protection may be unavailable or more limited in foreign jurisdictions in which we operate, relative to those protections available in the United States.
The United States and various foreign governments have imposed controls, export license requirements and restrictions on the import or export of certain products, technologies, and software. For example, the U.S. government has continued to expand controls restricting the ability to send certain products and technology related to lasers, semiconductors, semiconductor manufacturing and supercomputing to and within China and additional destinations.
For example, the U.S. government expanded controls further restricting the ability to send certain products and technology related to lasers, semiconductors, semiconductor manufacturing and supercomputing to and within China and additional destinations and is expected to further expand these controls.
U.S. government agencies routinely audit and investigate government contractors and can decrease or withhold certain payments when it deems systems subject to its review to be inadequate. Additionally, any costs found to be misclassified may be subject to repayment.
U.S. government agencies routinely audit and investigate government contractors to evaluate performance, cost structures and compliance, as well as the adequacy of business systems and processes, and such agencies can impose fines, penalties, sanctions, damages or decrease or withhold certain payments when it deems systems subject to its review to be inadequate.
There can be no assurance that our effective tax rates or tax payments will not be adversely affected by these or other developments or changes in law. We are subject to various environmental laws and regulations that could impose substantial costs upon us and may materially adversely affect our business, financial condition, results of operations and growth prospects.
Any of these developments or changes in U.S. federal, state, or international tax laws or tax rulings could adversely affect our effective tax rate and our operating results. There can be no assurance that our effective tax rates or tax payments will not be adversely affected by these or other developments or changes in law.
We also cannot assure you that those agreements will provide meaningful protection for our trade secrets, know-how or other proprietary information in the event of any unauthorized use or disclosure.
We also cannot assure you that those agreements will provide meaningful protection for such information in the event of any unauthorized use or disclosure. Such information could be obtained by third parties as a result of breaches of our physical or electronic security systems or our suppliers, employees or consultants could assert rights to our intellectual property.
If any of our principal customers discontinues its relationship with us, develops its own products instead of using ours, replaces us as a vendor for certain products or suffers downturns in its business resulting in a cancellation of orders or an inability to place new orders from us, then our business, financial condition, results of operations and growth prospects could be materially adversely affected.
Our business is characterized by short-term purchase orders issued by our customers, which are likely to be favorable to those customers. If any of our principal customers discontinues its relationship with us for any reason, then our business, financial condition, results of operations and growth prospects could be materially adversely affected.
Furthermore, noncompliance with these laws could have negative consequences, including government investigations, penalties and reputational harm.
Denials of export licenses or limitations imposed by these laws on our ability to export or sell our products, may harm our international and domestic revenues. Furthermore, noncompliance by us or any of our customers with these laws could have negative consequences, including government investigations, penalties and reputational harm.
Certain of our components, such as our semiconductor lasers, which are manufactured at our Camas and Vancouver, Washington facilities, and our active fibers, which are manufactured at our Lohja, Finland facility, rely on processes and equipment that cannot be easily moved or 9 Table of Contents replaced.
Certain of our components that we manufacture rely on processes and equipment that cannot be easily moved or replaced.
This may require us to pay U.S. federal income taxes in future years despite generating a loss for U.S. federal income tax purposes in prior years. Limitations under state law may differ. We have established a valuation allowance against the carrying value of these deferred tax assets.
We have established a valuation allowance against the carrying value of these deferred tax assets.
Removed
The Aerospace and Defense market is largely dependent on government budgets, in particular defense budgets, which are driven by numerous factors, including geopolitical events, macroeconomic conditions and the ability of the U.S. government to enact relevant legislation.
Added
We rely on a small number of customers for a significant portion of our revenues, and we expect this customer concentration will continue in the future. We generally do not enter into long-term purchase agreements with our 7 Table of Contents customers that obligate them to purchase our products.
Removed
We generally do not enter into long-term purchase agreements with our customers that obligate them to purchase our products. Our business is characterized by short-term purchase orders issued by our customers, which are likely to be favorable to those customers.
Added
Our business prospects depend significantly on our ability to secure new U.S. government awards and design wins, the timing and availability of government funding and our ability to successfully execute and deliver on our government contracts..
Removed
Furthermore, other than our current suppliers, there may be a limited number of entities from which we could obtain these supplies. In addition, if quality issues arise with these outsourced materials and go undetected by us, the use of such defective materials in our products could compromise their quality and harm our reputation.
Added
A substantial portion of our business prospects and future growth depend on obtaining new U.S. government contract awards, many of which are subject to competitive procurement processes, lengthy evaluation periods and uncertainty as to timing and outcome. Even after we are awarded with a U.S. government contract, the realization of revenue is subject to significant uncertainty.
Removed
These factors along with increased turnover rates within our employee base can decrease our efficiency and impact our cost of labor.
Added
U.S. government spending may be reduced as a result of changes in policy, and other factors affecting the U.S. government such as national security focus areas, budget deficits and the national debt. If we are successful in being awarded a government contract, such award may be subject to appeals, disputes or litigation, including bid protests by unsuccessful bidders.
Removed
We have experienced, and expect to continue to experience, fluctuations in our quarterly results of operations including restructuring charges in the fourth quarter of 2023 and 2024.
Added
Government demand and payment for our solutions may be impacted by public sector budgetary cycles and funding authorizations, with funding reductions or delays adversely affecting public sector demand for our solutions. Delays, reductions or cancellations in funding could delay or reduce anticipated work under existing or expected contracts and adversely affect our financial condition.

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Item 1C. Cybersecurity

Cybersecurity — threats and controls disclosure

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Biggest changeOur Chief Operating Officer and Senior Director of 20 Table of Contents IT and Information Security provide periodic briefings about our cybersecurity risk management to the Information Technology and Security Committee.
Biggest changeOur Chief Operating Officer and Senior Director of IT and Information Security provide periodic briefings about our cybersecurity risk management to the Information Technology and Security Committee.

Item 2. Properties

Properties — owned and leased real estate

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Biggest changePROPERTIES Our principal facilities are owned or leased and include the following: Location Lease Expiration Approximate Size (sq. ft.) Primary Functions Segment(s) Camas, Washington Owned 164,600 Corporate headquarters, manufacturing and distribution, product design, research and development, sales, marketing and administration Laser Products, Advanced Development Vancouver, Washington November 30, 2024 - May 31, 2035 92,400 Manufacturing and distribution, product design, research and development, service and repair, and administration Laser Products, Advanced Development Hillsboro, Oregon January 31, 2033 30,200 Manufacturing and distribution, and product design Laser Products Longmont, Colorado July 31, 2028 - February 28, 2029 62,600 Research and development Advanced Development Lohja, Finland March 31, 2025 31,800 Manufacturing and distribution, product design, research and development and administration Laser Products Shanghai, China January 31, 2025 ‑ November 30, 2025 66,500 Sales and administration, service and repair, product design, research and development Laser Products
Biggest changePROPERTIES Our principal facilities are owned or leased and include the following: 20 Table of Contents Location Lease Expiration Approximate Size (sq. ft.) Primary Functions Segment(s) Camas, Washington Owned 164,600 Corporate headquarters, manufacturing and distribution, service and repair, product design, research and development, sales, marketing and administration Laser Products, Advanced Development Vancouver, Washington July 31, 2026 - May 31, 2035 92,400 Manufacturing and distribution, product design, research and development, and administration Laser Products, Advanced Development Hillsboro, Oregon January 31, 2033 30,200 Manufacturing and distribution, and product design Laser Products Longmont, Colorado July 31, 2028 - February 28, 2029 113,700 Manufacturing, product design, research and development, and administration Advanced Development Lohja, Finland March 31, 2028 31,800 Manufacturing and distribution, product design, research and development and administration Laser Products Shanghai, China January 31, 2027 27,700 Sales and administration, service and repair, and product design Laser Products

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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Biggest changeThe graph covers the period from December 31, 2019 through December 31, 2024. No cash dividends have been declared on shares of our common stock. This graph assumes that the value of the investment in our common stock and each index (including reinvestment of dividends) was $100 on December 31, 2019.
Biggest changeThe graph covers the period from December 31, 2020 through December 31, 2025. No cash dividends have been declared on shares of our common stock. This graph assumes that the value of the investment in our common stock and each index (including reinvestment of dividends) was $100 on December 31, 2020.
During the year ended December 31, 2024, we did not repurchase any shares and, as of December 31, 2024, $10 million remained available for future repurchases. 22 Table of Contents Stock Performance Graph The following graph compares the cumulative total stockholder return on our common stock with the Nasdaq Composite Index, the Russell 2000 Index, and the S&P 600 Technology Hardware & Equipment Industry Group Index.
During the year ended December 31, 2025, we did not repurchase any shares and, as of December 31, 2025, $10 million remained available for future repurchases. 22 Table of Contents Stock Performance Graph The following graph compares the cumulative total stockholder return on our common stock with the Nasdaq Composite Index, the Russell 2000 Index, and the S&P 600 Technology Hardware & Equipment Industry Group Index.
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES Information About Our Common Stock Our common stock is listed on the Nasdaq Global Select Market under the symbol "LASR." As of February 26, 2025, there were 87 registered holders of record of our common stock.
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES Information About Our Common Stock Our common stock is listed on the Nasdaq Global Select Market under the symbol "LASR." As of February 25, 2026, there were 63 registered holders of record of our common stock.

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

46 edited+27 added−9 removed35 unchanged
Biggest changeIn addition, as is typical in our industry, we tend to recognize a larger percentage of our quarterly revenues in the last month of the quarter, which may impact our working capital trends. 25 Table of Contents Results of Operations The following table sets forth our operating results as a percentage of revenues for the periods indicated (which may not add up due to rounding): Year Ended December 31, 2024 2023 2022 Revenue: Products 68.8 % 74.6 % 79.6 % Development 31.2 25.4 20.4 Total revenue 100.0 100.0 100.0 Cost of revenue: Products 54.4 54.4 60.0 Development 29.0 23.6 19.0 Total cost of revenue 83.4 78.0 79.0 Gross profit 16.6 22.0 21.0 Operating expenses: Research and development 22.7 22.0 22.2 Sales, general and administrative 24.8 21.8 19.9 Restructuring 2.2 0.4 1.6 Total operating expenses 49.7 44.2 43.8 Loss from operations (33.1) (22.2) (22.8) Other income (expense): Interest income, net 0.9 0.5 0.2 Other income, net 1.6 1.3 0.1 Loss before income taxes (30.6) (20.4) (22.4) Income tax (benefit) expense — (0.5) 0.1 Net loss (30.6) % (19.9) % (22.5) % Revenues by End Market Our revenues by end market were as follows (dollars in thousands): Year Ended December 31, Change 2024 % of Revenue 2023 % of Revenue Amount % Industrial $ 45,615 23.0 % $ 71,044 33.8 % $ (25,429) (35.8) % Microfabrication 43,393 21.8 47,483 22.6 (4,090) (8.6) Aerospace and Defense 109,540 55.2 91,394 43.6 18,146 19.9 $ 198,548 100.0 % $ 209,921 100.0 % $ (11,373) (5.4) % Year Ended December 31, Change 2023 % of Revenue 2022 % of Revenue Amount % Industrial $ 71,044 33.8 % $ 91,098 37.6 % $ (20,054) (22.0) % Microfabrication 47,483 22.6 62,769 25.9 (15,286) (24.4) Aerospace and Defense 91,394 43.6 88,191 36.4 3,203 3.6 $ 209,921 100.0 % $ 242,058 100.0 % $ (32,137) (13.3) % The decrease in Industrial market revenue for 2024 compared to 2023 was primarily the result of decreased unit sales across all regions due to deteriorating market conditions and lower customer demand in cutting and additive 26 Table of Contents manufacturing.
Biggest changeHowever, if current trends continue or intensify, we may experience increased cost volatility, operational complexity, and broader economic pressures on our customer base that could have a negative impact on revenue and profitability in the future. 25 Table of Contents Results of Operations The following table sets forth our operating results as a percentage of revenues for the periods indicated (which may not add up due to rounding): Year Ended December 31, 2025 2024 2023 Revenue: Products 68.6 % 68.8 % 74.6 % Development 31.4 31.2 25.4 Total revenue 100.0 100.0 100.0 Cost of revenue: Products 42.6 54.4 54.4 Development 27.6 29.0 23.6 Total cost of revenue 70.2 83.4 78.0 Gross profit 29.8 16.6 22.0 Operating expenses: Research and development 18.4 22.7 22.0 Sales, general and administrative 20.7 24.8 21.8 Restructuring 0.9 2.2 0.4 Total operating expenses 40.0 49.7 44.2 Loss from operations (10.2) (33.1) (22.2) Other income (expense): Interest income 1.9 0.9 0.5 Interest expense (0.4) — — Other income, net — 1.6 1.3 Loss before income taxes (8.7) (30.6) (20.4) Income tax expense (benefit) 0.3 — (0.5) Net loss (9.0) % (30.6) % (19.9) % Revenues by End Market Our revenues by end market were as follows (dollars in thousands): Year Ended December 31, Change 2025 % of Revenue 2024 % of Revenue Amount % Aerospace and Defense $ 175,253 67.0 % $ 109,540 55.2 % $ 65,713 60.0 % Microfabrication 47,230 18.1 43,393 21.8 3,837 8.8 Industrial 38,847 14.9 45,615 23.0 (6,768) (14.8) $ 261,330 100.0 % $ 198,548 100.0 % $ 62,782 31.6 % Year Ended December 31, Change 2024 % of Revenue 2023 % of Revenue Amount % Aerospace and Defense $ 109,540 55.2 % $ 91,394 43.6 % $ 18,146 19.9 % Microfabrication 43,393 21.8 47,483 22.6 (4,090) (8.6) Industrial 45,615 23.0 71,044 33.8 (25,429) (35.8) $ 198,548 100.0 % $ 209,921 100.0 % $ (11,373) (5.4) % 26 Table of Contents The increase in revenue from the Aerospace and Defense market for 2025 compared to 2024 was driven by increased unit sales of directed energy laser products and progress on existing development contracts.
The increase in Aerospace and Defense market revenue for 2024 compared to 2023 was the result of increased unit sales of products due to higher demand, an increase in ASPs, and increased development revenue from development contracts awarded primarily in the second half of 2023.
The increase in revenue from the Aerospace and Defense market for 2024 compared to 2023 was the result of increased unit sales of products due to higher demand, an increase in ASPs, and increased development revenue from development contracts awarded primarily in the second half of 2023.
Net Cash Used in Financing Activities During the year ended December 31, 2024, net cash used in financing activities was $1.3 million, which was primarily driven by $4.5 million of withholding tax payments related to the vesting of stock awards, partially offset by $3.2 million of proceeds from stock options exercises and employee stock plan purchases.
During the year ended December 31, 2024 , net cash used in financing activities was $1.3 million, which was primarily driven by $4.5 million of withholding tax payments related to the vesting of stock awards, partially offset by $3.2 million of proceeds from stock options exercises and employee stock plan purchases.
Net Cash Provided by (Used in) Investing Activities During the year ended December 31, 2024, net cash provided by investing activities was $16.7 million, including the net sale of $24.6 million of marketable securities, partially offset by $7.9 million of capital expenditures related to investments in directed energy, manufacturing equipment and facilities.
During the year ended December 31, 2024 , net cash provided by investing activities was $16.7 million, including the net sale of $24.6 million of marketable securities, partially offset by $7.9 million of capital expenditures related to investments in directed energy, manufacturing equipment and facilities.
The increase in Advanced Development gross margin for 2024 compared to 2023 was not significant and was primarily the result of changes in the composition of research and development contracts.
The increase in Advanced Development gross margin for 2024 compared to 2023 was not significant and was primarily the result of changes in the composition of development contracts.
The decrease in Microfabrication market revenue for 2024 compared to 2023 was primarily attributable to decreased unit sales of semiconductor lasers in EMEA (1) and Asia Pacific, offset partially by increased unit sales in North America.
The decrease in revenue from the Microfabrication market for 2024 compared to 2023 was primarily attributable to decreased unit sales of semiconductor lasers in EMEA and Asia Pacific, offset partially by increased unit sales in North America.
Due to the uncertainty with respect to their ultimate realizability, we continue to maintain a full valuation allowance on deferred tax assets in the United States, and a partial valuation allowance in China as of December 31, 2024.
Due to the uncertainty with respect to their ultimate realizability, we continue to maintain a full valuation allowance on deferred tax assets in the United States, and a partial valuation allowance in China as of December 31, 2025.
We may also negotiate discounted selling prices from time to time with certain customers that purchase higher volumes, or to penetrate new markets or applications. 24 Table of Contents Technology and New Product Development We invest heavily in the development of our semiconductor, fiber laser, directed energy, and laser-sensing technologies to provide solutions to our current and future customers.
We may also negotiate discounted selling prices from time to time with certain customers that purchase higher volumes, or to penetrate new markets or applications. Technology and New Product Development We invest heavily in the development of our semiconductor, fiber laser, directed energy, and laser-sensing technologies to provide solutions to our current and future customers.
On a quarterly basis, we review inventory quantities on hand in comparison to our past consumption, recent purchases, and other factors to determine what inventory quantities, if 33 Table of Contents any, may not be sellable. Based on this analysis, we write down the affected inventory value for estimated excess and obsolescence charges.
On a quarterly basis, we review inventory quantities on hand in comparison to our past consumption, recent purchases, and other factors to determine what inventory quantities, if any, may not be sellable. Based on this analysis, we write down the affected inventory value for estimated excess and obsolescence charges.
Demand for our products also fluctuates based on market cycles, continuously evolving industry supply chains, trade and tariff terms, as well as evolving competitive dynamics in each of our end-markets. Erosion of average selling prices, or ASPs, of established products is typical in our industry, and the ASPs of our products generally decrease as our products mature.
Demand for our products also fluctuates based on market cycles, continuously evolving industry supply chains, trade and tariff terms, as well as evolving competitive dynamics in each of our end-markets. Erosion of ASPs of established products is typical in our industry, and the ASPs of our products generally decrease as our products mature.
The decrease in overall income tax benefit for 2024 compared to 2023, and decrease in expense for 2023 compared to 2022, was driven by a discrete tax benefit related to expiring statutes of limitations of unrecognized tax positions recorded in the second quarter of 2023.
The decrease in overall income tax benefit for 2024 compared to 2023, was driven by a discrete tax benefit related to expiring statutes of limitations of unrecognized tax positions recorded in the second quarter of 2023.
In the Aerospace and Defense market, our business also depends in large part on continued investment in laser technology by the U.S. government and its allies, and our ability to continue to successfully develop leading technology in this area and commercialize that technology in the future.
In the Aerospace and Defense market, our business also depends in large part on continued investment in laser technology by the U.S. government and its 24 Table of Contents allies, and our ability to continue to successfully develop leading technology in this area and commercialize that technology in the future.
We generated a net loss of $60.8 million for the year ended December 31, 2024 compared to a net loss of $41.7 million in 2023. Factors Affecting Our Performance Demand for our Products and Solutions Our revenue depends largely on market conditions, competitive pressure, and achievement of design wins.
We generated a net loss of $23.5 million for the year ended December 31, 2025 compared to a net loss of $60.8 million in 2024. Factors Affecting Our Performance Demand for our Products and Solutions Our revenue depends largely on market conditions, competitive pressure, and achievement of design wins.
Forward-looking statements include, but are not limited to, statements about: our business model and strategic plans; our expectations regarding manufacturing; our future financial performance; demand for our semiconductor and fiber laser solutions; our ability to develop innovative products; our expectations regarding product volumes and the introduction of new products; our technology and new product research and development activities; the impact of new import and export controls; the impact of inflation; the impact of seasonality; the effect on our business of litigation to which we are or may become a party; and the sufficiency of our existing liquidity sources to meet our cash needs.
Forward-looking statements include, but are not limited to, statements about: our business model and strategic plans; our expectations regarding manufacturing; our future financial performance; demand for our semiconductor and fiber laser solutions; our ability to develop innovative products; our expectations regarding product volumes and the introduction of new products; our technology and new product research and development activities; the impact of new import and export controls; the impact of changes in regulations and customs, tariffs and trade barriers, or the perception that any of them could occur; the impact of inflation; the impact of seasonality; the effect on our business of litigation to which we are or may become a party; and the sufficiency of our existing liquidity sources to meet our cash needs.
We believe our existing sources of liquidity, including sales to customers and our line of credit, will be sufficient to meet our working capital and capital expenditure needs for at least the next 12 months.
We believe our existing sources of liquidity will be sufficient to meet our working capital and capital expenditure needs for at least the next 12 months.
During the year ended December 31, 2023, net cash used in investing activities was $14.1 million, including the net purchase of $8.8 million of marketable securities and $5.3 million of capital expenditures related to investments in directed energy, manufacturing equipment and facilities.
Net Cash (Used In) Provided By Investing Activities During the year ended December 31, 2025, net cash used in investing activities was $8.8 million, including the net purchase of $0.3 million of marketable securities and $8.5 million of capital expenditures related to investments in directed energy, manufacturing equipment and facilities.
From time to time, we may explore additional financing sources which could include equity, equity‑linked and debt financing arrangements. 31 Table of Contents The following table summarizes our cash flows for the periods presented (in thousands): Year Ended December 31, 2024 2023 2022 Net cash (used in) provided by operating activities $ (2,359) $ 10,091 $ (14,542) Net cash provided by (used in) investing activities 16,690 (14,100) (72,381) Net cash used in financing activities (1,303) (859) (1,306) Effect of exchange rate changes on cash (406) 256 (477) Net increase (decrease) in cash and cash equivalents and restricted cash $ 12,622 $ (4,612) $ (88,706) Net Cash (Used in) Provided by Operating Activities During the year ended December 31, 2024, net cash used in operating activities was $2.4 million, which was the result of a $60.8 million net loss, offset by cash provided by working capital of $11.9 million and non‑cash expenses totaling $46.5 million related primarily to depreciation, amortization, and stock-based compensation.
From time to time, we may explore additional financing sources which could include equity, equity‑linked and debt financing arrangements. 32 Table of Contents The following table summarizes our cash flows for the periods presented (in thousands): Year Ended December 31, 2025 2024 2023 Net cash provided by (used in) operating activities $ 21,330 $ (2,359) $ 10,091 Net cash (used in) provided by investing activities (8,771) 16,690 (14,100) Net cash provided by (used in) financing activities 20,110 (1,303) (859) Effect of exchange rate changes on cash 264 (406) 256 Net increase (decrease) in cash and cash equivalents and restricted cash $ 32,933 $ 12,622 $ (4,612) Net Cash Provided By (Used In) Operating Activities During the year ended December 31, 2025, net cash provided by operating activities was $21.3 million, which was the result of a $23.5 million net loss, offset by cash provided by working capital of $1.1 million and non‑cash expenses totaling $43.7 million related primarily to depreciation, amortization, and stock-based compensation.
During the year ended December 31, 2023, net cash used in financing activities was $0.9 million, which was primarily driven by $4.0 million of withholding tax payments related to the vesting of stock awards, partially offset by $3.1 million of proceeds from stock options exercises and employee stock plan purchases.
Net Cash Provided By (Used In) Financing Activities During the year ended December 31, 2025, net cash provided by financing activities was $20.1 million, which was primarily driven by $20 million of proceeds from our line of credit and $3.2 million of proceeds from stock options exercises and employee stock plan purchases, partially offset by $3.1 million of withholding tax payments related to the vesting of stock awards.
At the point of loss recognition, a new, lower-cost basis for that inventory is established, and subsequent changes in facts and circumstances do not result in the restoration or increase in that newly established cost basis.
At the point of loss recognition, a new, lower-cost basis for that inventory is established, and subsequent changes in facts and circumstances do not result in the restoration or increase in that newly established cost basis. Recent Accounting Pronouncements See Note 1 of Notes to Consolidated Financial Statements.
Income Tax Expense (Benefit) Year Ended December 31, Change 2024 2023 Amount % Income tax benefit $ (76) $ (978) $ 902 92.2 Year Ended December 31, Change 2023 2022 Amount % Income tax expense (benefit) $ (978) $ 344 $ (1,322) (384.3) We record income tax expense for taxes in our foreign jurisdictions including Finland, Italy, Austria, and South Korea.
Income Tax Expense (Benefit) Year Ended December 31, Change 2025 2024 Amount % Income tax expense (benefit) $ 699 $ (76) $ 775 NM* 31 Table of Contents Year Ended December 31, Change 2024 2023 Amount % Income tax expense (benefit) $ (76) $ (978) $ 902 (92.2) % We record income tax expense for taxes in our foreign jurisdictions including Finland, Italy, Austria, China and South Korea.
Operating Expenses Our operating expenses were as follows (dollars in thousands): Research and Development Year Ended December 31, Change 2024 2023 Amount % Research and development $ 45,107 $ 46,163 $ (1,056) (2.3) Year Ended December 31, Change 2023 2022 Amount % Research and development $ 46,163 $ 53,773 $ (7,610) (14.2) The decrease in research and development expense for 2024 compared to 2023 was driven by a decrease in stock-based compensation of $2.4 million, offset partially by increases in other employee compensation costs and project-related spending.
Operating Expenses Our operating expenses were as follows (dollars in thousands): Research and Development Year Ended December 31, Change 2025 2024 Amount % Research and development $ 47,972 $ 45,107 $ 2,865 6.4 % Year Ended December 31, Change 2024 2023 Amount % Research and development $ 45,107 $ 46,163 $ (1,056) (2.3) % The increase in research and development expense for 2025 compared to 2024 was driven by an increase in stock-based compensation of $1.8 million, and increases in incentive compensation and indirect project-related spending that were partially offset by a decrease in outside services.
The decrease in EMEA revenue for 2024 compared to 2023 was the result of decreased revenue from the Industrial and Microfabrication markets, offset partially by increased revenue from the Aerospace and Defense market.
The increases in Asia Pacific and EMEA revenues for 2025 compared to 2024 were the result of increased revenue from the Aerospace and Defense market and Microfabrication market, partially offset by decreased revenue from the Industrial market.
During the year ended December 31, 2023, net cash provided by operating activities was $10.1 million, which was the result of a $41.7 million net loss, offset by cash provided by working capital of $8.1 million and non‑cash expenses totaling $43.7 million related primarily to depreciation, amortization, and stock-based compensation.
During the year ended December 31, 2024, net cash used in operating activities was $2.4 million, which was the result of a $60.8 million net loss, offset by cash provided by working capital of $11.9 million and non‑cash expenses totaling $46.5 million related primarily to depreciation, amortization, and stock-based compensation.
We undertake no obligation to publicly update any forward-looking statements, whether as a result of new information, future events or otherwise, except as required by law. Overview nLIGHT, Inc., headquartered in Camas, Washington, is a leading provider of high‑power semiconductor and fiber lasers for industrial, microfabrication, and aerospace and defense applications.
We undertake no obligation to publicly update any forward-looking statements, whether as a result of new information, future events or otherwise, except as required by law. Overview nLIGHT, Inc. is a leading provider of high‑power lasers for mission-critical directed energy, optical sensing, and advanced manufacturing applications.
The decrease in Asia Pacific and EMEA revenue for 2023 compared to 2022 was driven by decreases in revenue from the Industrial and Microfabrication markets as discussed above. Cost of Revenues and Gross Margin Cost of Laser Products revenue consists primarily of manufacturing materials, labor, shipping and handling costs, tariffs and manufacturing-related overhead.
The decrease in EMEA revenue for 2024 compared to 2023 was the result of decreased revenue from the Industrial and Microfabrication markets, offset partially by increased revenue from the Aerospace and Defense market. Cost of Revenues and Gross Margin Cost of Laser Products revenue consists primarily of manufacturing materials, labor, shipping and handling costs, tariffs and manufacturing-related overhead.
Revenues by Segment Our revenues by segment were as follows (dollars in thousands): Year Ended December 31, Change 2024 % of Revenue 2023 % of Revenue Amount % Laser Products $ 136,659 68.8 % $ 156,666 74.6 % $ (20,007) (12.8) % Advanced Development 61,889 31.2 53,255 25.4 8,634 16.2 $ 198,548 100.0 % $ 209,921 100.0 % $ (11,373) (5.4) % Year Ended December 31, Change 2023 % of Revenue 2022 % of Revenue Amount % Laser Products $ 156,666 74.6 % $ 192,658 79.6 % $ (35,992) (18.7) % Advanced Development 53,255 25.4 49,400 20.4 3,855 7.8 $ 209,921 100.0 % $ 242,058 100.0 % $ (32,137) (13.3) % The decrease in Laser Products revenue for 2024 compared to 2023 was driven by decreased sales to both the Industrial and Microfabrication markets as discussed above, offset partially by increased sales to the Aerospace and Defense market.
Revenues by Segment Our revenues by segment were as follows (dollars in thousands): Year Ended December 31, Change 2025 % of Revenue 2024 % of Revenue Amount % Laser Products $ 179,236 68.6 % $ 136,659 68.8 % $ 42,577 31.2 % Advanced Development 82,094 31.4 61,889 31.2 20,205 32.6 $ 261,330 100.0 % $ 198,548 100.0 % $ 62,782 31.6 % Year Ended December 31, Change 2024 % of Revenue 2023 % of Revenue Amount % Laser Products $ 136,659 68.8 % $ 156,666 74.6 % $ (20,007) (12.8) % Advanced Development 61,889 31.2 53,255 25.4 8,634 16.2 $ 198,548 100.0 % $ 209,921 100.0 % $ (11,373) (5.4) % The increase in Laser Products revenue for 2025 compared to 2024 was the result of increased revenue from the Aerospace and Defense market and Microfabrication market as discussed above, partially offset by decreased revenue from the Industrial market.
Revenues by Geographic Region Our revenues by geographic region were as follows (dollars in thousands): Year Ended December 31, Change 2024 % of Revenue 2023 % of Revenue Amount % North America $ 132,812 66.9 % $ 129,311 61.6 % $ 3,501 2.7 % Asia Pacific 38,137 19.2 45,765 21.8 (7,628) (16.7) EMEA (1) 27,599 13.9 34,845 16.6 (7,246) (20.8) $ 198,548 100.0 % $ 209,921 100.0 % $ (11,373) (5.4) % (1) EMEA consists of Europe, the Middle East, and Africa. 27 Table of Contents Year Ended December 31, Change 2023 % of Revenue 2022 % of Revenue Amount % North America $ 129,311 61.6 % $ 137,454 56.8 % $ (8,143) (5.9) % Asia Pacific 45,765 21.8 67,315 27.8 (21,550) (32.0) EMEA 34,845 16.6 37,289 15.4 (2,444) (6.6) $ 209,921 100.0 % $ 242,058 100.0 % $ (32,137) (13.3) % Geographic revenue information is based on the location to which we deliver our products and services.
Year Ended December 31, Change 2024 % of Revenue 2023 % of Revenue Amount % North America $ 132,812 66.9 % $ 129,311 61.6 % $ 3,501 2.7 % Asia Pacific 38,137 19.2 45,765 21.8 (7,628) (16.7) EMEA (1) 27,599 13.9 34,845 16.6 (7,246) (20.8) $ 198,548 100.0 % $ 209,921 100.0 % $ (11,373) (5.4) % (1) EMEA consists of Europe, the Middle East, and Africa.
Credit Facilities We have a $40.0 million revolving line of credit, or LOC, with Banc of California dated September 24, 2018, which is secured by our assets. On September 24, 2024, we amended the LOC to extend the maturity date to September 24, 2027, updated financial covenants, and amended the unused line fee and interest rate applicable to revolving loans.
Credit Facilities 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 increase in Laser Products gross margin for 2023 compared to 2022 was driven by a decrease in direct labor and other variable manufacturing costs, and a decrease in manufacturing variances, partially offset by the impact of lower production volumes on fixed manufacturing costs due to the decrease in customer demand.
The decrease in Laser Products gross margin for 2024 compared to 2023 was driven by the impact of lower sales and production volumes on fixed manufacturing costs due to the decrease in overall customer demand and inventory charges related to products for the Industrial market in the fourth quarter of 2024, offset partially by positive changes in sales mix.
We had cash and cash equivalents and restricted cash of $66.1 million and $53.5 million as of December 31, 2024 and 2023, respectively, and marketable securities of $34.9 million and $59.7 million as of December 31, 2024 and 2023, respectively.
Liquidity and Capital Resources We had cash and cash equivalents and restricted cash of $99.0 million and $66.1 million as of December 31, 2025 and December 31, 2024, respectively. In addition, we had marketable securities of $34.9 million and $34.9 million at December 31, 2025 and December 31, 2024, respectively.
We operate in two reportable segments consisting of the Laser Products segment and the Advanced Development segment. Revenues decreased to $198.5 million in the year ended December 31, 2024 compared to $209.9 million in 2023 due to a decrease in sales in the Laser Products segment that was partially offset by an increase in sales in the Advanced Development segment.
We operate in two reportable segments consisting of the Laser Products segment and the Advanced Development segment. Revenues increased to $261.3 million in the year ended December 31, 2025 compared to $198.5 million in 2024 due to higher sales volumes in the Laser Products segment and continued growth in the Advanced Development segment.
The decreases in Industrial and Microfabrication market revenue for 2023 compared to 2022 were the result of decreased unit sales across all regions due primarily to lower customer demand and deteriorating market conditions. The increase in Aerospace and Defense market revenue in 2023 compared to 2022 was driven by new development contracts, offset partially by a decrease in product sales.
The decrease in revenue from the Industrial market for 2024 compared to 2023 was primarily the result of decreased unit sales across all regions due to deteriorating market conditions and lower customer demand in cutting and additive manufacturing.
Further, the Company recognizes over time revenue as per ASC 606-10-55-18 (invoice practical expedient) for its cost plus contracts and, accordingly, elects not to disclose information related to those performance obligations under ASC 606-10-50-14b. Rights of return generally are not included in customer contracts. Accordingly, product revenue is recognized upon transfer of control at shipment or delivery, as applicable.
Further, the Company recognizes over time revenue as per ASC 606-10-55-18 (invoice practical expedient) for its cost plus contracts and, accordingly, elects not to disclose information related to those performance obligations under ASC 606-10-50-14b. We have elected, per ASC 606-10-25-18B (shipping and handling practical expedient), to recognize shipping and handling services performed after control transfer as fulfillment costs.
The decrease in North America revenue for 2023 compared to 2022 was the result of decreased revenue from the Industrial and Microfabrication markets, partially offset by an increase in revenue from the Aerospace and Defense market.
Geographic revenue information is based on the location to which we deliver our products and services. The increase in North America revenue for 2025 compared to 2024 was the result of increased revenue from the Aerospace and Defense market, partially offset by decreased revenue from the Microfabrication and Industrial markets.
The decrease in Laser Products revenue for 2023 compared to 2022 was primarily due to decreased units sales to the Industrial and Microfabrication markets as discussed above. The increase in Advanced Development revenue was driven by new development contracts.
The increase in Advanced Development revenue for 2025 compared to 2024 was driven by progress on existing research and development contracts. The decrease in Laser Products revenue for 2024 compared to 2023 was driven by decreased revenue from both the Industrial and Microfabrication markets as discussed above, offset partially by increased revenue from the Aerospace and Defense market.
No amounts were outstanding under the LOC at December 31, 2024 or 2023 and we were in compliance with all covenants. 32 Table of Contents Contractual Obligations The following table sets forth a summary of our significant contractual obligations to make future payments in cash as of December 31, 2024 (in thousands): Payments Due by Year 2025 2026 2027 2028 2029 Thereafter Total Purchase commitments $ 64,628 $ — $ — $ — $ — $ — $ 64,628 Lease obligations 2,786 2,087 2,005 1,699 1,028 4,417 14,022 Total $ 67,414 $ 2,087 $ 2,005 $ 1,699 $ 1,028 $ 4,417 $ 78,650 Critical Accounting Policies and Significant 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 generally accepted accounting principles in the United States of America (GAAP).
The remaining $20.0 million unused portion of the LOC is available for borrowing. 33 Table of Contents Contractual Obligations The following table sets forth a summary of our significant contractual obligations to make future payments in cash as of December 31, 2025 (in thousands): Payments Due by Year 2026 2027 2028 2029 2030 Thereafter Total Purchase commitments $ 55,692 $ 55,692 Lease obligations 3,526 3,291 2,795 1,919 1,960 5,608 19,099 Total $ 59,218 $ 3,291 $ 2,795 $ 1,919 $ 1,960 $ 5,608 $ 74,791 Critical Accounting Policies and Significant 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 generally accepted accounting principles in the United States of America (GAAP).
Sales, General and Administrative Year Ended December 31, Change 2024 2023 Amount % Sales, general, and administrative $ 49,257 $ 45,899 $ 3,358 7.3 Year Ended December 31, Change 2023 2022 Amount % Sales, general, and administrative $ 45,899 $ 48,258 $ (2,359) (4.9) The increase in sales, general and administrative expense for 2024 compared to 2023 was primarily due to increases in bad debt expense of $2.3 million and stock-based compensation of $1.5 million.
Sales, General and Administrative Year Ended December 31, Change 2025 2024 Amount % Sales, general, and administrative $ 54,193 $ 49,257 $ 4,936 10.0 % 29 Table of Contents Year Ended December 31, Change 2024 2023 Amount % Sales, general, and administrative $ 49,257 $ 45,899 $ 3,358 7.3 % The increase in sales, general and administrative expense for 2025 compared to 2024 was primarily due to increases in stock-based compensation of $6.6 million and increases in employee and incentive compensation, partially offset by decreases in bad debt expense, increases in bad debt recoveries, and a higher allocation of costs from sales, general and administrative to development projects.
A higher allocation of costs from sales, general and administrative to development projects partially offset the overall increase in sales, general and administrative expense.
The increase in sales, general and administrative expense for 2024 compared to 2023 was primarily due to increases in bad debt expense of $2.3 million and stock-based compensation of $1.5 million. A higher allocation of costs from sales, general and administrative to development projects partially offset the overall increase in sales, general and administrative expense.
Changes in working capital were driven by a $14.9 million decrease in inventory, partially offset by a $4.5 million decrease in accounts payable.
Changes in working capital were driven by a $14.7 million increase in accounts receivable,$4.1 million increase in inventory, offset by a $12 million increase in accounts payable and accrued expenses, $3.9 million increase in lease liabilities, and a $2.1 million decrease in deferred revenue.
Our gross profit and gross margin were as follows (dollars in thousands): Year Ended December 31, 2024 Laser Products Advanced Development Corporate and Other Total Gross profit $ 31,094 $ 4,363 $ (2,438) $ 33,019 Gross margin 22.8 % 7.0 % NM* 16.6 % Year Ended December 31, 2023 Laser Products Advanced Development Corporate and Other Total Gross profit $ 44,891 $ 3,628 $ (2,406) $ 46,113 Gross margin 28.7 % 6.8 % NM* 22.0 % Year Ended December 31, 2022 Laser Products Advanced Development Corporate and Other Total Gross profit $ 50,063 $ 3,435 $ (2,677) $ 50,821 Gross margin 26.0 % 7.0 % NM* 21.0 % *NM - Not meaningful . 28 Table of Contents The decrease in Laser Products gross margin for 2024 compared to 2023 was driven by the impact of lower sales and production volumes on fixed manufacturing costs due to the decrease in overall customer demand and inventory charges related to products for the Industrial market in the fourth quarter of 2024, offset partially by positive changes in sales mix.
Our gross profit and gross margin were as follows (dollars in thousands): Year Ended December 31, 2025 Laser Products Advanced Development Corporate and Other Total Gross profit $ 70,252 $ 10,181 $ (2,470) $ 77,963 Gross margin 39.2 % 12.4 % NM* 29.8 % Year Ended December 31, 2024 Laser Products Advanced Development Corporate and Other Total Gross profit $ 31,094 $ 4,363 $ (2,438) $ 33,019 Gross margin 22.8 % 7.0 % NM* 16.6 % 28 Table of Contents Year Ended December 31, 2023 Laser Products Advanced Development Corporate and Other Total Gross profit $ 44,891 $ 3,628 $ (2,406) $ 46,113 Gross margin 28.7 % 6.8 % NM* 22.0 % *NM - Not meaningful .
Seasonality Our quarterly revenues can fluctuate with general economic trends, the timing of capital expenditures by our customers, holidays, and general economic trends.
Seasonality Our quarterly revenues can fluctuate with general economic trends, the timing of capital expenditures by our customers, holidays, and general economic trends. In addition, as is typical in our industry, we tend to recognize a larger percentage of our quarterly revenues in the last month of the quarter, which may impact our working capital trends.
The decrease in research and development expense for 2023 compared to 2022 was due primarily to decreases in salary costs and project-related expenses, an increase in costs allocated from research and development to development projects, and a decrease in stock-based compensation of $1.8 million.
The decrease in research and development expense for 2024 compared to 2023 was driven by a decrease in stock-based compensation of $2.4 million, offset partially by increases in other employee compensation costs and project-related spending.
Rights of return are evaluated as they occur. Revenues recognized at a point in time consist of sales of semiconductor lasers, fiber lasers, and certain defense and other products. Revenues recognized over time generally consist of development arrangements that are structured based on our costs incurred.
Rights of return generally are not included in customer contracts. Accordingly, product revenue is recognized upon transfer of control at shipment or delivery, as applicable. Rights of return are evaluated as they occur. Revenues recognized at a point in time consist of sales of semiconductor lasers, fiber amplifiers, fiber lasers and other related products.
The decrease in sales, general and administrative expense for 2023 compared to 2022 was primarily due to a decrease in salary costs and incentive compensation, and an increase in administrative costs allocated from sales, general and administrative to development projects, partially offset by an increase in stock-based compensation of $1.2 million. 29 Table of Contents Restructuring Restructuring included the following (in thousands): Year Ended December 31, Change 2024 2023 Amount % Employee termination costs $ 4,228 $ 737 $ 3,491 473.7 Other 63 79 (16) (20) % $ 4,291 $ 817 $ 3,474 425.2 % Year Ended December 31, Change 2023 2022 Amount % Employee termination costs $ 737 $ 1,271 $ (534) (42.0) % Write-off of long-lived assets — 2,566 (2,566) (100.0) Other 79 55 24 43.6 $ 817 $ 3,892 $ (3,075) (79.0) % We implemented restructuring plans in the fourth quarters of 2024 and 2023 which resulted in reductions of headcount primarily in China, including the discontinuation of all manufacturing in China during the fourth quarter of 2024.
Restructuring Restructuring included the following (in thousands): Year Ended December 31, Change 2025 2024 $ % Employee termination costs $ 1,141 $ 4,228 $ (3,087) (73.0)% Write-off of long-lived assets 1,207 — 1,207 NM* Other — 63 (63) (100.0) $ 2,348 $ 4,291 $ 4,291 $ (1,943) (45.3)% Year Ended December 31, Change 2024 2023 $ % Employee termination costs $ 4,228 $ 737 $ 3,491 473.7% Other 63 79 (16) (20.0) $ 4,291 $ 817 $ 817 $ 3,474 425.2% During the third and fourth quarters of 2025, we implemented restructuring plans which included headcount reductions in China, Austria, Germany, and Finland, 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.
Other Income, net Year Ended December 31, Change 2024 2023 Amount % Other income, net $ 3,100 $ 2,776 $ 324 11.7 30 Table of Contents Year Ended December 31, Change 2023 2022 Amount % Other income, net $ 2,776 $ 338 $ 2,438 721.3 The increases in other income, net, in 2024 compared to 2023 and in 2023 compared to 2022 were driven by realized gains on the sale of marketable securities.
Other Income (Expense), net Year Ended December 31, Change 2025 2024 Amount % Other income (expense), net $ (40) $ 3,100 $ (3,140) (101.3) % Year Ended December 31, Change 2024 2023 Amount % Other income, net $ 3,100 $ 2,776 $ 324 11.7 % The decrease in other income, net, in 2025 compared to 2024 was primarily attributable to changes in net realized and unrealized foreign exchange transactions resulting from currency rate fluctuations.
Interest Income, net Interest income, net was as follows (in thousands): Year Ended December 31, Change 2024 2023 Amount % Interest income, net $ 1,668 $ 1,342 $ 326 24.3 Year Ended December 31, Change 2023 2022 Amount % Interest income, net $ 1,342 $ 529 $ 813 153.7 The increases in interest income, net for 2024 compared to 2023 and 2023 compared to 2022 were driven by increases in interest rates and the average cash and cash equivalents held in interest-bearing accounts.
This change in presentation more accurately reflects the nature of the income and has no impact on total net income. The increase in interest income for 2024 compared to 2023 were driven by an increase in interest rates and the average cash and cash equivalents held in interest-bearing accounts.
Removed
Most of our Advanced Development revenue in 2023 was generated from cost plus fixed fee development contracts, and all Advanced Development revenue is included in the Aerospace and Defense market.
Added
We design, manufacture, and sell a range of high-power semiconductor lasers and fiber lasers that are typically integrated into laser systems or manufacturing tools built by our customers.
Removed
Manufacturing variances in 2022 included inventory charges related to business restructuring and the discontinuation of certain product lines in the fourth quarter of 2022. The decrease in Advanced Development gross margin for 2023 compared to 2022 was not significant and was primarily the result of changes in the composition of research and development contracts.
Added
We also make high energy pulsed fiber lasers, fiber amplifiers, and beam combination and control systems for use in high-energy laser systems for directed energy and laser sensing systems used in a wide range of defense applications.
Removed
During the fourth quarter of 2022, we implemented a restructuring plan which included headcount reductions in both the U.S. and China, and the write-down of certain in-process capital equipment projects related to production capacity that were never completed or placed into service.
Added
Our vertical integration enables us to develop products that leverage the same underlying technology, thereby enabling us to offer innovative and reliable products to customers in each of our end markets. We sell our products into three primary end markets: Aerospace and Defense, Industrial, and Microfabrication.
Removed
Liquidity and Capital Resources Total cash and cash equivalents, restricted cash and marketable securities were $101.0 million and $113.2 million as of December 31, 2024 and 2023, respectively.
Added
Global Economic Conditions We continue to monitor macroeconomic trends, global inflationary pressures, and uncertainties related to international trade policy, including tariff actions and regulatory shifts. The U.S. government implemented a new series of tariffs on imported goods during 2025, prompting retaliatory tariffs by other countries.
Removed
For the year ended December 31, 2024, our principal uses of liquidity were to fund operating activities, acquire plant and equipment and make tax payments related to stock award issuances. The primary sources of cash were collections from customers and net proceeds from the sale of marketable securities.
Added
A portion of our sales are generated from products manufactured outside the United States and we sell our products globally. Changing trade dynamics, including newly imposed or proposed tariffs and export controls, could disrupt our supply chain and increase input costs. These trade policy developments did not have a material impact on our financial results in 2025.
Removed
The LOC agreement contains restrictive and financial covenants and bears an unused credit fee of 0.25% on an annualized basis. The interest rate on the LOC is based on the Prime Rate, minus a margin based on our liquidity levels.
Added
The increase in revenue from the Microfabrication market for 2025 compared to 2024 was primarily attributable to increased unit sales of semiconductor lasers in EMEA and Asia Pacific, partially offset by decreased unit sales in North America.
Removed
Because control transfers over time, revenue is recognized based on the extent of progress towards completion of the performance obligation. We generally use the cost-to-cost measure of progress for our contracts because it best depicts the transfer of control to the customer. Billing under these arrangements generally occurs within one month after the work is completed.
Added
The decrease in revenue from the Industrial market for 2025 compared to 2024 was primarily the result of decreased unit sales of industrial fiber lasers for cutting and welding due to lower customer demand and deteriorating market conditions across all regions.
Removed
Inflation We do not believe that inflation had a material effect on our business, financial condition or results of operations during the year ended December 31, 2024. If our costs become subject to significant inflationary pressures, we may not be able to fully offset such higher costs through price increases.
Added
Revenues by Geographic Region Our revenues by geographic region were as follows (dollars in thousands): 27 Table of Contents Year Ended December 31, Change 2025 % of Revenue 2024 % of Revenue Amount % North America $ 185,620 71.0 % $ 132,812 66.9 % $ 52,808 39.8 % Asia Pacific 38,422 14.7 38,137 19.2 285 0.7 EMEA (1) 37,288 14.3 27,599 13.9 9,689 35.1 $ 261,330 100.0 % $ 198,548 100.0 % $ 62,782 31.6 % (1) EMEA consists of Europe, the Middle East, and Africa.
Removed
Our inability or failure to do so could materially adversely affect our business, financial condition and results of operations. Recent Accounting Pronouncements See Note 1 of Notes to Consolidated Financial Statements.
Added
The increase in Laser Products gross margin for 2025 compared to 2024 was driven by primarily by changes in sales mix, which included increased sales of directed energy laser products, the impact of increased production volumes on fixed manufacturing costs due to the overall increase in sales as previously discussed, and an increase in duty reclaim and manufacturing yields.
Added
In addition, Laser Products gross margin in 2024 was negatively impacted by inventory charges related to products for the Industrial market in the fourth quarter of 2024.
Added
The increase in Advanced Development gross margin for 2025 compared to 2024 was primarily the result of an increase in revenue from fixed priced contracts that carried higher average gross margins than cost-plus fixed fee contracts.
Added
We implemented restructuring plans in the fourth quarters of 2024 and 2023 which resulted in reductions of headcount primarily in China, including the discontinuation of all manufacturing activities in China during the fourth quarter of 2024.
Added
Interest Income Year Ended December 31, Change 2025 2024 Amount % Interest income $ 4,906 $ 1,773 $ 3,133 176.7 % 30 Table of Contents Year Ended December 31, Change 2024 2023 Amount % Interest income $ 1,773 $ 1,409 $ 364 25.8 % The increase in interest income for 2025 compared to 2024, was driven primarily by an increase in income earned from marketable securities and imputed interest on a long-term customer receivable.
Added
Interest income is primarily earned from our marketable securities (U.S. treasuries), recognized using the effective yield method, and cash equivalents (money market securities). Beginning with the three months ended March 31, 2025, income earned from marketable securities is classified within interest income, net, rather than other income, net.
Added
Interest expense Year Ended December 31, Change 2025 2024 Amount % Interest expense $ (1,084) $ (105) $ (979) 932.4 % Year Ended December 31, Change 2024 2023 Amount % Interest expense $ (105) $ (67) $ (38) 56.7 % The increases in interest expense for 2025 compared to 2024, and 2024 compared to 2023, were driven by interest on the outstanding line of credit.
Added
The change in classification of income earned from marketable securities referenced above is the primary factor contributing to the year-over-year variance for other income, net from the same period in 2024. The increases in other income, net in 2024 compared to 2023 were driven by realized gains on sale of marketable securities.
Added
On July 4, 2025, the OBBBA was signed into law.
Added
Some of the tax related provisions of the OBBBA affecting corporations include but are not limited to expensing of domestic research expenses, increasing the limit of the deduction of interest expense deduction to thirty percent of EBITDA, and one hundred percent bonus depreciation on eligible property acquired after January 19, 2025.
Added
We evaluated the impact of the OBBBA on our financial condition and results of operations in future periods, and we do not anticipate a material change to our effective income tax rate or net deferred federal income tax assets as we maintain a full valuation allowance for all U.S. deferred tax assets.
Added
Income tax expense in 2025 primarily relates to operations in China and Finland, partially offset by income tax reserve reversals. The increase in overall income tax expense for 2025 compared to 2024 was the result of a partial valuation allowance release in China during the fourth quarter of 2024, offset partially by income tax expense from other foreign tax jurisdictions.
Added
Our total balance of cash, cash equivalents, restricted cash and marketable securities increased by $33.0 million from December 31, 2024 to December 31, 2025. For the year ended December 31, 2025, our principal sources of liquidity included the draw of $20 million on our line of credit and cash collected from customers.
Added
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 year ended December 31, 2025, we drew $20.0 million under the LOC to support working capital and general corporate purposes.
Added
There was $20.0 million and $0.0 million outstanding under the LOC at December 31, 2025 and 2024, respectfully, and we were in compliance with all covenants.
Added
Revenues recognized over time generally consist of development arrangements that are structured based on our costs incurred. For long-term contracts, we estimate the total expected costs to complete the contract and recognize revenue based on the percentage of costs incurred at period end.
Added
Typically, revenue is recognized over time using costs incurred to date relative to total estimated costs at completion to measure progress toward satisfying our performance obligations. Incurred costs represent work performed, which corresponds with, and thereby best depicts, the transfer of control to the customer.

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

5 edited+0 added−3 removed1 unchanged
Biggest changeAt December 31, 2024, our foreign currency exposure was related to our net investment in our foreign subsidiaries. The potential loss in fair value resulting from a hypothetical 10% adverse change in foreign exchange rates would be approximately $0.6 million.
Biggest changeA 10% increase in the interest rate would increase our interest expense by $115,000 given the $20.0 million outstanding at December 31, 2025. Foreign Currency Risk At December 31, 2025, our foreign currency exposure was related to our net investment in our foreign subsidiaries.
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK Interest Rate Risk As of December 31, 2024, we had cash and cash equivalents of $65.8 million and investments in marketable securities of $34.9 million with maturities of less than one year. The goals of our investment policy are liquidity and capital preservation.
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK Interest Rate Risk As of December 31, 2025, we had cash and cash equivalents of $98.7 million and investments in marketable securities of $34.9 million with maturities of less than one year. The goals of our investment policy are liquidity and capital preservation.
Borrowings under the Revolving Credit Facility bear interest at a per annum rate, depending on certain liquidity thresholds, ranging from the Prime Rate to the Prime Rate minus 1.00%.
Borrowings under the revolving loan facility bear interest at a per annum rate, depending on certain liquidity thresholds, ranging from the Prime Rate to the Prime Rate minus 1.00%. The interest rate at December 31, 2025 was 5.75%.
We are subject to interest rate risk in connection with the borrowings under our loan facility. We have a $40.0 million revolving credit facility. As of December 31, 2024, we had no outstanding principal amount under the revolving loan facility.
We are subject to interest rate risk in connection with the borrowings under our $40.0 million revolving loan facility. As of December 31, 2025, there was $20.0 million outstanding on the revolving loan facility.
Foreign exchange rate gains or losses on foreign investments as of December 31, 2024 are reflected as a cumulative translation adjustment, net of tax, and do not affect our results of operations. 34 Table of Contents
The potential loss in fair value resulting from a hypothetical 10% adverse change in foreign exchange rates would be approximately $0.8 million. Foreign exchange rate gains or losses on foreign investments as of December 31, 2025 are reflected as a cumulative translation adjustment, net of tax, and do not affect our results of operations.
Removed
Foreign Currency Risk Due to our international operations, a significant portion of our revenues, cost of revenues and operating expenses are denominated in currencies other than the USD, principally the Chinese RMB and the Euro.
Removed
As a result, our international operations give rise to transactional market risk associated with exchange rate movements of the USD, the Chinese RMB and the Euro. We attempt to minimize these exposures by partially or fully offsetting foreign currency denominated assets and liabilities at our subsidiaries that operate in different functional currencies.
Removed
The effectiveness of this strategy can be limited by the volume of underlying transactions at various subsidiaries and by our ability to accelerate or delay intercompany cash settlements. As a result, we are unable to completely offset the foreign currency denominated assets and liabilities.

Other LASR 10-K year-over-year comparisons