Innoviz Technologies (NASDAQ: INVZ) 2025 annual report highlights risk profile
Filing Impact
Filing Sentiment
Form Type
20-F
Rhea-AI Filing Summary
Innoviz Technologies Ltd. files its 2025 annual report as a foreign private issuer on Form 20‑F, detailing its LiDAR-focused automotive and non‑automotive business and extensive risk factors. As of December 31, 2025, the company had 214,090,980 ordinary shares outstanding.
The report emphasizes a limited operating history, dependence on a small number of major automotive customers such as BMW, Volkswagen (via Cariad), Mobileye and Daimler Truck, and significant execution risk in moving from development to mass production of its InnovizOne, InnovizTwo and InnovizThree LiDAR products.
Innoviz highlights substantial ongoing R&D investment of $56.5 million, $73.8 million and $92.7 million in 2025, 2024 and 2023 and notes it does not expect near‑term profitability. It also discloses an at‑the‑market equity program of up to $75 million launched in August 2025 to support its funding needs.
Positive
- None.
Negative
- None.
Insights
Innoviz’s 20‑F stresses funding needs, customer concentration and execution risk, but no single transformative event.
Innoviz outlines an early-stage business profile: heavy R&D, long automotive design cycles, and reliance on a few large OEM programs for future revenue. It explicitly states it does not expect to achieve profitability over the near term, underscoring a prolonged investment phase.
The filing highlights key operational risks: transitioning InnovizTwo to contract manufacturers, ramping to mass production after first series shipments in July 2025, potential delays or cancellations of design wins, and quality or liability exposure as vehicles using its LiDAR reach end users.
On the balance-sheet side, Innoviz discloses an at‑the‑market offering facility of up to
UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
Washington,
D.C. 20549
FORM 20-F
(Mark
One)
OR
For
the fiscal year ended December
31 , 2025
OR
For
the transition period from to
OR
Date
of event requiring this shell company report
Commission
file number 001-40310
(Exact
name of Registrant as specified in its charter)
Not
Applicable
(Translation of Registrant’s name into English)
(Translation of Registrant’s name into English)
State
of Israel
(Jurisdiction of incorporation or organization)
(Jurisdiction of incorporation or organization)
Innoviz
Technologies Campus
(Address
of principal executive offices)
Chief Financial Officer
Innoviz Technologies Campus
+972 -74-700-3692
(Name, Telephone, E-mail and/or Facsimile number and Address of Company Contact Person)
(Name, Telephone, E-mail and/or Facsimile number and Address of Company Contact Person)
Securities
registered or to be registered, pursuant to Section 12(b) of the Act
|
Title
of each class |
Trading
Symbol(s) |
Name
of each exchange on which registered |
|
|
|
The |
|
|
|
The |
Securities
registered or to be registered pursuant to Section 12(g) of the Act: None
Securities
for which there is a reporting obligation pursuant to Section 15(d) of the Act: None
As
of December 31, 2025, the issuer had 214,090,980 ordinary
shares outstanding.
Indicate
by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.
Yes
☐ No ☒
If
this report is an annual or transition report, indicate by check mark if the registrant is not required to file reports pursuant to Section
13 or 15(d) of the Securities Exchange Act of 1934.
Yes
☐ No ☒
Note—Checking
the box above will not relieve any registrant required to file reports pursuant to Section 13 or 15(d) of the Securities Exchange Act
of 1934 from their obligations under those Sections.
Indicate
by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange
Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2)
has been subject to such filing requirements for the past 90 days.
Indicate
by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule
405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant
was required to submit such files).
Indicate
by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or an emerging growth
company. See the definitions of “large accelerated filer,” “accelerated filer,” and “emerging growth company”
in Rule 12b-2 of the Exchange Act.
|
☐ Large
accelerated filer |
☐ Accelerated
filer |
☒ |
|
If
an emerging growth company that prepares its financial statements in accordance with U.S. GAAP, indicate by check mark if the registrant
has elected not to use the extended transition period for complying with any new or revised financial accounting standards† provided
pursuant to Section 13(a) of the Exchange Act. ☐
†
The term “new or revised financial accounting standard” refers to any update issued by the Financial Accounting Standards
Board to its Accounting Standards Codification after April 5, 2012.
Indicate
by check mark whether the registrant has filed a report on and attestation to its management’s assessment of the effectiveness of
its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public
accounting firm that prepared or issued its audit report. ☐
If
securities are registered pursuant to Section 12(b) of the Act, indicate by check mark whether the financial statements of the registrant
included in the filing reflect the correction of an error to previously issued financial statements. ☐
Indicate
by check mark whether any of those error corrections are restatements that required a recovery analysis of incentive based compensation
received by any of the registrant’s executive officers during the relevant recovery period pursuant to §240.10D-1(b). ☐
Indicate
by check mark which basis of accounting the registrant has used to prepare the financial statements included in this filing:
|
☒ |
☐ International
Financial Reporting Standards as issued by the International Accounting Standards Board |
☐ Other
|
If
“Other” has been checked in response to the previous question indicate by check mark which financial statement item the registrant
has elected to follow.
Item
17 ☐ Item 18 ☐
If
this is an annual report, indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).
Yes
☐ No ☒
CONTENTS
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Page | |
|
ABOUT THIS ANNUAL REPORT |
1 |
|
INDUSTRY AND MARKET DATA |
1 |
|
TRADEMARKS, TRADE NAMES AND SERVICE MARKS |
1 |
|
CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS
|
1 |
|
PART I |
3 |
|
ITEM 1. IDENTITY OF DIRECTORS, SENIOR MANAGEMENT AND ADVISERS
|
3 |
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ITEM 2. OFFER STATISTICS AND EXPECTED TIMETABLE |
3 |
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ITEM 3. KEY INFORMATION |
3 |
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A. [Reserved] |
3 |
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B. Capitalization and Indebtedness
|
3 |
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C. Reasons for the Offer and Use of Proceeds
|
3 |
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D. Risk Factors
|
3 |
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ITEM 4. INFORMATION ON THE COMPANY |
35 |
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A. History and Development of the Company
|
35 |
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B. Business Overview
|
35 |
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C. Organizational Structure
|
42 |
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D. Property, Plant and Equipment
|
43 |
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ITEM 4A. UNRESOLVED STAFF COMMENTS |
43 |
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ITEM 5. OPERATING AND FINANCIAL REVIEW AND PROSPECTS |
43 |
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A. Operating Results
|
47 |
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B. Liquidity and Capital Resources
|
50 |
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C. Research and Development, Patents and Licenses, etc.
|
52 |
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D. Trend Information
|
52 |
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E. Critical Accounting Estimates
|
52 |
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ITEM 6. DIRECTORS, SENIOR MANAGEMENT AND EMPLOYEES |
53 |
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A. Directors and Senior Management
|
53 |
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B. Compensation |
56 |
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C. Board Practices
|
59 |
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D. Employees |
68 |
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E. Share Ownership
|
68 |
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F. Disclosure of a registrant’s action to recover erroneously awarded compensation
|
68 |
i
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ITEM 7. MAJOR SHAREHOLDERS AND RELATED PARTY TRANSACTIONS
|
69 |
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A. Major Shareholders
|
69 |
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B. Related Party Transactions
|
70 |
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C. Interests of Experts and Counsel
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71 |
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ITEM 8. FINANCIAL INFORMATION |
71 |
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A. Consolidated Statements and Other Financial Information
|
71 |
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B. Significant Changes
|
71 |
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ITEM 9. THE OFFER AND LISTING |
72 |
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A. Offer and Listing Details
|
72 |
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B. Plan of Distribution
|
72 |
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C. Markets |
72 |
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D. Selling Shareholders
|
72 |
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E. Dilution |
72 |
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F. Expenses of the Issue
|
72 |
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ITEM 10. ADDITIONAL INFORMATION |
72 |
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A. Share Capital
|
72 |
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B. Memorandum and Articles of Association
|
72 |
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C. Material Contracts
|
73 |
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D. Exchange Controls
|
75 |
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E. Taxation |
75 |
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F. Dividends and Paying Agents
|
85 |
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G. Statement by Experts
|
86 |
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H. Documents on Display
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86 |
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I. Subsidiary Information
|
86 |
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J. Annual Report to Security Holders
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86 |
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ITEM 11. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
|
86 |
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ITEM 12. DESCRIPTION OF SECURITIES OTHER THAN EQUITY SECURITIES
|
86 |
ii
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PART II |
87 |
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ITEM 13. DEFAULTS, DIVIDEND ARREARAGES AND DELINQUENCIES
|
87 |
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ITEM 14. MATERIAL MODIFICATIONS TO THE RIGHTS OF SECURITY HOLDERS
AND USE OF PROCEEDS |
87 |
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ITEM 15. CONTROLS AND PROCEDURES |
87 |
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ITEM 16. [RESERVED] |
87 |
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ITEM 16A. AUDIT COMMITTEE FINANCIAL EXPERT |
87 |
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ITEM 16B. CODE OF ETHICS |
87 |
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ITEM 16C. PRINCIPAL ACCOUNTANT FEES AND SERVICES |
88 |
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ITEM 16D. EXEMPTIONS FROM THE LISTING STANDARDS FOR AUDIT COMMITTEES
|
88 |
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ITEM 16E. PURCHASES OF EQUITY SECURITIES BY THE ISSUER AND AFFILIATED
PURCHASERS |
88 |
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ITEM 16F. CHANGE IN REGISTRANT’S CERTIFYING ACCOUNTANT
|
88 |
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ITEM 16G. CORPORATE GOVERNANCE |
89 |
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ITEM 16H. MINE SAFETY DISCLOSURE |
89 |
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ITEM 16I. DISCLOSURE REGARDING FOREIGN JURISDICTIONS THAT PREVENT
INSPECTIONS |
89 |
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ITEM 16J. INSIDER TRADING POLICIES |
90 |
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ITEM 16K. CYBERSECURITY |
90 |
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PART III |
91 |
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ITEM 17. FINANCIAL STATEMENTS |
91 |
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ITEM 18. FINANCIAL STATEMENTS |
91 |
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ITEM 19. EXHIBITS |
92 |
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SIGNATURES |
94 |
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INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
|
F-1 |
iii
ABOUT THIS ANNUAL REPORT
Except where the context otherwise requires or where otherwise
indicated in this annual report (this “Annual Report”), the terms “Innoviz,” the “Company,” or the
“company,” “we,” “us,” “our,” “our company” and “our business”
refer to Innoviz Technologies Ltd., together with its consolidated subsidiaries as a consolidated entity.
All references in this Annual Report to “Israeli currency”
and “ILS” refer to Israeli New Shekels, the terms “dollar,” “USD” or “$” refer to U.S.
dollars and the terms “€” or “euro” refer to the currency introduced at the start of the third stage of
European economic and monetary union pursuant to the treaty establishing the European Community, as amended.
INDUSTRY AND
MARKET DATA
Unless otherwise indicated, information contained in this Annual
Report concerning Innoviz’s industry and the regions in which it operates, including Innoviz’s general expectations and market
position, market opportunity, market share and other management estimates, is based on information obtained from various independent publicly
available sources and other industry publications, surveys and forecasts. Innoviz has not independently verified the accuracy or completeness
of any third-party information. Similarly, internal surveys, industry forecasts and market research, which Innoviz believes to be reliable
based upon its management’s knowledge of the industry, have not been independently verified.
TRADEMARKS,
TRADE NAMES AND SERVICE MARKS
This document contains references to trademarks, trade names
and service marks belonging to other entities. Solely for convenience, trademarks, trade names and service marks referred to in this Annual
Report may appear without the ® or TM symbols, but
such references are not intended to indicate, in any way, that the applicable licensor will not assert, to the fullest extent under applicable
law, its rights to these trademarks and trade names. We do not intend our use or display of other companies’ trade names, trademarks
or service marks to imply a relationship with, or endorsement or sponsorship of us by, any other companies.
CAUTIONARY
STATEMENT REGARDING FORWARD-LOOKING STATEMENTS
Certain statements in this Annual Report may constitute “forward-looking
statements” for purposes of the federal securities laws, including statements regarding the services offered by Innoviz, the anticipated
technological capability of Innoviz’s products, the markets in which Innoviz operates and Innoviz’s projected future results.
In some cases, these forward-looking statements can be identified by words or phrases such as “may,” “might,”
“will,” “could,” “would,” “should,” “expect,” “plan,” “anticipate,”
“intend,” “strategy”, “seek,” “believe,” “estimate,” “predict,”
“potential,” “continue,” “will be,” “will continue,” “is likely,” “will
likely result,” “contemplate,” “possible,” or similar words. Statements regarding our future results of
operations and financial position, growth strategy and plans and objectives of management for future operations, including, among others,
expansion in new and existing markets, are forward-looking statements.
Our forward-looking statements are mainly based on our current
expectations and estimates of future events and trends which affect or may affect our business, operations and industry. Although we believe
that these estimates and forward-looking statements are based upon reasonable assumptions, they are subject to numerous risks and uncertainties,
including without limitation those described under the sections in this Annual Report entitled Item 3.D. “Key
Information—Risk Factors” and Item 5. “Operating and Financial Review and Prospects”
and elsewhere in this Annual Report.
Forward-looking statements may be influenced by factors including
the following:
| • |
Our limited operating history and evolving business model make evaluating our business and future prospects difficult and may increase
the risk of your investment. |
| • |
Continued pricing pressures, automotive original equipment manufacturers (“OEMs”) cost reduction initiatives and the
ability of automotive OEMs to re-source or cancel vehicle or technology programs may result in lower than anticipated margins, or in incremental
losses, which may adversely affect our business. |
| • |
Failure to successfully develop non-automotive markets could limit revenue diversification and affect revenue growth. |
| • |
We are creating innovative technologies by designing and developing unique components. The high price of, or low yield in these components,
may affect our ability to sell at competitive prices or may lead to losses. |
| • |
There are significant risks to providing our products as a direct supplier to automotive customers, including additional operating
costs, increased liabilities, and additional indemnification responsibilities. |
1
| • |
We expect to invest substantially in research and development for the purpose of developing and commercializing new products. These
investments could significantly reduce our profitability or increase our losses and may not generate revenue for us. |
| • |
We will likely need to obtain additional funds in the future in order to execute our business plan and these funds may not be available
to us when we need them, which could negatively affect our business, prospects, financial condition and operating results. |
| • |
We may experience significant delays in the design, production and launch of our LiDAR products, which could harm our business, prospects,
financial condition and operating results. |
| • |
We are substantially dependent on a limited number of customers. The automotive industry is comprised of a relatively small number
of players, which makes each design win material for us. While we have expanded our customer base to include significant programs with
multiple customers, our business could be materially and adversely affected if certain customers terminate our programs or significantly
alter or delay them. |
| • |
Designing and manufacturing LiDARs on a mass-production scale requires meeting stringent quality requirements and we may face significant
challenges and complexities in this process. |
| • |
Our transition to production with contract manufacturers and our ramp-up towards mass production may encounter significant challenges,
which could delay commercialization and increase costs. |
| • |
The period of time from a design win to implementation varies significantly across different markets and we are subject to the risks
of cancellation or postponement of contracts, or failure to successfully meet customers’ requirements for start of production (“SOP”)
or deployment. |
| • |
We target many customers that are large companies with substantial negotiating power, exacting product standards and potentially
competitive internal solutions. If we are unable to sell our products to these customers, our prospects and results of operations will
be adversely affected. |
| • |
We continue to implement strategic initiatives designed to grow our business inside and outside the automotive market. These initiatives
may prove more costly than we currently anticipate, and we may not succeed in increasing our revenues by an amount sufficient to offset
the costs of these initiatives and to achieve and maintain profitability. |
| • |
The first vehicles deploying our LiDAR technology and complementary software stack became commercially available to end users in
2024. Additional vehicles deploying the next generation of our technology
are expected to become commercially available in the coming year. If any vehicles deploying our LiDAR technology and complementary software
stacks are involved in traffic accidents or collisions actually or allegedly resulting from undetected defects, errors, or bugs in our
products, or if our products actually or allegedly fail to perform as expected, we may be exposed to product liability, warranty and other
claims, in addition to a decline in the market adoption of our products, damage to our reputation with current or prospective customers,
or increased regulatory scrutiny of our solutions which would adversely affect our operating costs, business and prospects. |
| • |
Certain of our strategic, development and supply arrangements could be terminated or may not materialize into long-term contract
partnership arrangements. |
| • |
Our failure to maintain compliance with Nasdaq’s continued listing requirements could result in the delisting of our ordinary
shares. |
| • |
We operate in a highly competitive market against a large number of both established competitors and new market entrants, and some
market participants have substantially greater resources than we do. |
| • |
We may be subject to securities litigation, class action and derivative lawsuits, which could result in substantial costs and could
divert management attention away from other business concerns. |
| • |
The other matters described in the section entitled Item 3.D. “Key Information—Risk
Factors” beginning on page 3. |
Many important factors, in addition to the factors described
above and in other sections of this Annual Report, could adversely impact our business and financial performance. Moreover, we operate
in an evolving environment. New risks and uncertainties emerge from time to time, and it is not possible for our management to predict
all risks and uncertainties, nor can we assess the impact of all factors on our business or the extent to which any factor, or combination
of factors, may cause actual results to differ materially from estimates or forward-looking statements. We qualify all our estimates and
forward-looking statements by these cautionary statements.
The estimates and forward-looking statements contained in this
Annual Report speak only as of the date of this Annual Report. Except as required by applicable law, we undertake no obligation to publicly
update or revise any estimates or forward-looking statements whether as a result of new information, future events or otherwise, or to
reflect the occurrence of unanticipated events.
2
PART I
| Item 1. |
Identity of Directors, Senior Management and Advisers |
Not applicable.
| Item 2. |
Offer Statistics and Expected Timetable |
Not applicable.
| Item 3. |
Key Information |
A. [Reserved]
B. Capitalization and Indebtedness
Not applicable.
C. Reasons for the Offer and Use of Proceeds
Not applicable.
D. Risk Factors
You should carefully consider the risks described
below before making an investment decision. Additional risks not presently known to us or that we currently deem immaterial may also impair
our business operations. Our business, financial condition or results of operations could be materially and adversely affected by any
of these risks. The trading price and value of our ordinary shares could decline due to any of these risks, and you may lose all or part
of your investment. This Annual Report also contains forward-looking statements that involve risks and uncertainties. Our actual results
could differ materially from those anticipated in these forward-looking statements as a result of certain factors, including the risks
faced by us described below and elsewhere in this Annual Report.
Summary of Risk Factors
The following is a summary of certain, but not all, of the risks
that could adversely affect our business, operations and financial results. If any of the risks actually occur, our business could be
materially impaired, the trading price of our ordinary shares and warrants could decline, and you could lose all or part of your investment.
| • |
Our limited operating history and evolving business model make evaluating our business and future prospects difficult and may increase
the risk of your investment. |
| • |
Continued pricing pressures, automotive OEMs cost reduction initiatives and the ability of automotive OEMs to re-source or cancel
vehicle or technology programs may result in lower than anticipated margins, or in incremental losses, which may adversely affect our
business. |
| • |
Failure to successfully develop non-automotive markets could limit revenue diversification and affect revenue growth. |
| • |
We are creating innovative technologies by designing and developing unique components. The high price of, or low yield in these components,
may affect our ability to sell at competitive prices or may lead to losses. |
| • |
There are significant risks to providing our products as a direct supplier to automotive customers, including additional operating
costs, increased liabilities, and additional indemnification responsibilities. |
| • |
We expect to invest substantially in research and development for the purpose of developing and commercializing new products. These
investments could significantly reduce our profitability or increase our losses and may not generate revenue for us. |
| • |
We will likely need to obtain additional funds in the future in order to execute our business plan and these funds may not be available
to us when we need them, which could negatively affect our business, prospects, financial condition and operating results. |
| • |
We may experience significant delays in the design, production and launch of our LiDAR products, which could harm our business, prospects,
financial condition and operating results. |
3
| • |
We are substantially dependent on a limited number of customers. The automotive industry is comprised of a relatively small number
of players, which makes each design win material for us. While we have expanded our customer base to include significant programs with
multiple customers, our business could be materially and adversely affected if certain customers terminate our programs or significantly
alter or delay them. |
| • |
Designing and manufacturing LiDARs on a mass-production scale requires meeting stringent quality requirements and we may face significant
challenges and complexities in this process. |
| • |
Our transition to production with contract manufacturers and our ramp-up towards mass production may encounter significant challenges,
which could delay commercialization and increase costs. |
| • |
The period of time from a design win to implementation varies significantly across different markets and we are subject to the risks
of cancellation or postponement of contracts, or failure to successfully meet customers’ requirements for SOP or deployment.
|
| • |
If market adoption of LiDAR for autonomous vehicles does not continue to develop, or develops more slowly than we expect, or if we
fail to successfully diversify into non-automotive markets, our business will be adversely affected. |
| • |
We target many customers that are large companies with substantial negotiating power, exacting product standards and potentially
competitive internal solutions. If we are unable to sell our products to these customers, our prospects and results of operations will
be adversely affected. |
| • |
We continue to implement strategic initiatives designed to grow our business inside and outside the automotive market. These initiatives
may prove more costly than we currently anticipate, and we may not succeed in increasing our revenues by an amount sufficient to offset
the costs of these initiatives and to achieve and maintain profitability. |
| • |
The markets in which we compete are characterized by rapid technological change, which requires us to continue to develop new products
and product innovations and could adversely affect market adoption of our products. |
| • |
Entry into non-automotive applications requires addressing distinct regulatory and operational considerations that may delay commercialization
and adversely affect our business and prospects. |
| • |
The first vehicles deploying our LiDAR technology and complementary software stack became commercially available to end users in
2024. Additional vehicles deploying the next generation of our technology
are expected to become commercially available in the coming year. If any vehicles deploying our LiDAR technology and complementary software
stacks are involved in traffic accidents or collisions actually or allegedly resulting from undetected defects, errors, or bugs in our
products, or if our products actually or allegedly fail to perform as expected, we may be exposed to product liability, warranty and other
claims, in addition to a decline in the market adoption of our products, damage to our reputation with current or prospective customers,
or increased regulatory scrutiny of our solutions which would adversely affect our operating costs, business and prospects. |
| • |
Certain of our strategic, development and supply arrangements could be terminated or may not materialize into long-term contract
partnership arrangements. |
| • |
We operate in a highly competitive market against a large number of both established competitors and new market entrants, and some
market participants have substantially greater resources than we do. |
| • |
We rely on third-party suppliers and are susceptible to supply shortages, long lead times for components and supply changes, any
of which could disrupt our supply chain and could delay deliveries of our products to customers. |
| • |
Our business may be adversely affected by changes in automotive safety regulations or concerns that drive further regulation of the
automobile safety market. |
| • |
As a result of being a public company, we are obliged to develop and maintain proper and effective internal controls over financial
reporting, and any failure to maintain the adequacy of these internal controls may adversely affect investor confidence in our company
and, as a result, the value of our ordinary shares. |
| • |
Our failure to maintain compliance with Nasdaq’s continued listing requirements could result in the delisting of our ordinary
shares. |
| • |
The market price and trading volume of our ordinary shares and warrants may be volatile and could decline significantly. |
| • |
We expect our results of operations to fluctuate on a quarterly and annual basis, which could cause the price of our ordinary shares
and warrants to fluctuate or decline. |
| • |
We may be subject to securities litigation, class action and derivative lawsuits, which could result in substantial costs and could
divert management attention away from other business concerns. |
| • |
As we are a “foreign private issuer” and follow certain home country corporate governance practices, our shareholders
may not have the same protections afforded to shareholders of companies that are subject to all corporate governance requirements of the
Nasdaq Stock Market LLC (“Nasdaq”). |
| • |
Political, economic, security and other conditions in Israel could materially and adversely affect our business. |
| • |
The tax benefits that are available to us require that we continue to meet various conditions and may be terminated or reduced in
the future, which could increase our costs and taxes. |
| • |
The rights and responsibilities of our shareholders are governed by Israeli law, which may differ in some respects from the rights
and responsibilities of shareholders of U.S. corporations. |
The other matters described in this section titled “Risk
Factors”.
4
Risks Related to Our Business
Our limited operating
history and evolving business model make evaluating our business and future prospects difficult and may increase the risk of your investment.
Our company has been focused on developing LiDAR products, components,
and complementary software stacks for autonomous driving systems since our inception in 2016. This relatively limited operating history
makes it difficult to evaluate our future prospects and the risks and challenges we may encounter. Further, because we have relatively
limited historical financial data and we operate in rapidly evolving markets, including certain markets that we began operating in recently
and therefore are subject to additional uncertainty, any predictions about our future revenue and expenses may not be as accurate as they
would be if we had a longer operating history or operated in more predictable markets. In addition, our business model may evolve, which
could render our historical operating history and financial data less useful in assessing our prospects.
If we fail to address the risks and difficulties that we face,
including those described elsewhere in this “Risk Factors” section, our business,
financial condition and results of operations could be adversely affected. We have encountered in the past, and we will encounter in the
future, risks and uncertainties frequently experienced by growing companies with limited operating histories in rapidly changing industries.
If our assumptions regarding these risks and uncertainties, which we use to plan and operate our business, are incorrect or change, or
if we do not address these risks successfully, our results of operations could differ materially from our expectations and our business,
financial condition and results of operations could be adversely affected.
In addition, our revenue may be adversely affected for a number
of reasons, including the development and/or market acceptance of new technology that competes with our LiDAR products, changes by OEMs
or other market participants to their autonomous vehicle technology, failure of our customers to commercialize autonomous systems that
include our LiDAR solutions, our inability to effectively manage our inventory or manufacture products at scale, our failure to enter
new markets in the automotive and non-automotive industries or to attract new customers or expand orders from existing customers, or due
to increasing competition. Furthermore, it is difficult to predict the size and growth rate of our target markets, customer demand for
our products, commercialization timelines, developments in autonomous sensing and related technology, developments in non-automotive markets
and the need for LiDAR related technologies, the success of existing competitive products and services, or the entry of new competitive
companies and products. Accordingly, we do not expect to achieve profitability over the near term. If our revenue does not grow over the
long term, our ability to achieve and maintain profitability may be adversely affected, and the value of our business may significantly
decrease.
5
Continued pricing pressures,
automotive OEMs cost reduction initiatives and the ability of automotive OEMs to re-source or cancel vehicle or technology programs may
result in lower than anticipated margins, or in incremental losses, which may adversely affect our business.
Cost-cutting initiatives adopted by our customers often result
in increased downward pressure on pricing. We expect that our agreements with automotive OEMs may require step-downs in pricing over the
term of the agreements or, if commercialized, over the periods of production. In addition, our automotive OEM customers often reserve
the right to terminate their supply contracts for convenience, which enhances their ability to obtain price reductions. Automotive OEMs
possess significant leverage over their suppliers, including us, because the automotive component supply industry is highly competitive,
serves a limited number of customers and has a high fixed cost base. Accordingly, we expect to be subject to substantial continuing pressure
from automotive OEMs to reduce the price of our products. It is possible that pricing pressures beyond our expectations could intensify
as our customers pursue restructuring, consolidation and cost-cutting initiatives. If we are unable to generate sufficient production
cost savings in the future to offset price reductions, our gross margin and profitability would be adversely affected.
Failure to successfully
develop non-automotive markets could limit revenue diversification and affect revenue growth.
While automotive applications remain a core focus of our business,
we are increasingly pursuing revenue opportunities in non-automotive markets, including intelligent transportation systems, perimeter
security, industrial, robotics, construction, smart cities and infrastructure, and other applications. Our ability to diversify our revenue
base and achieve our gross margin and revenue growth depends in part on successfully commercializing our products in these emerging market
segments. Developing non-automotive markets requires significant investment in product development, sales infrastructure, and customer
support tailored to different industry verticals and use cases, regulatory environments and distribution channels.
There can be no assurance that our products will achieve market
acceptance or commercially viable production volumes in non-automotive applications within the timeframes or at the cost levels we anticipate,
or at all. If we fail to successfully scale non-automotive revenue streams, we may remain overly and significantly dependent on automotive
OEM customers and may not achieve our expected gross margins and revenue growth, which would adversely affect our business, results of
operations and financial condition.
We are creating innovative
technologies by designing and developing unique components. The high price of, or low yield in these components, may affect our ability
to sell at competitive prices or may lead to losses.
Part of our technological approach to providing cost-efficient
LiDAR-based autonomous driving solutions featuring superior performance involves using a multi-disciplinary approach to design some of
our components. Many of these components are complex and contain multiple sophisticated elements. Volume production of these elements
may require extreme precision and present challenges to their manufacturers. This can lead to increased costs of production of the components
which the manufacturers may pass on to us, or a production run may yield fewer usable components than desired or anticipated. Any such
increased components cost or suboptimal yield in the production of our components may significantly increase our production costs and
thereby decrease our margins and potentially cause us losses.
There are significant
risks to providing our products as a direct supplier to automotive customers, including additional operating costs, increased liabilities,
and additional indemnification responsibilities.
We are leveraging our in-house knowledge developed via our engagement
and development history, to approach and to supply the automotive OEMs directly. This approach means entering into direct agreements with
automotive OEMs and not having a Tier-1 “middleman” to take on some of the risks involved in such long-term engagements. These
risks include the responsibilities associated with interacting directly with automotive OEMs on complex tasks such as full design validation,
direct customer support and vehicle integration. Each of these responsibilities includes additional operating costs, increased liabilities,
and additional indemnification responsibilities. Furthermore, as a Tier-1 supplier we are competing directly with more-established Tier-1s
that have existing agreements and relationships with the automotive OEMs, which may provide them certain advantages as compared to us.
6
We expect to invest substantially
in research and development for the purpose of developing and commercializing new products. These investments could significantly reduce
our profitability or increase our losses and may not generate revenue for us.
Our future growth depends on maintaining our technological leadership
in order to introduce new products that penetrate new markets and achieve market acceptance. We therefore plan to incur substantial research
and development costs as part of our efforts to design, develop, manufacture, and commercialize new products and enhance existing products.
Our research and development expenses were approximately $56.5 million, $73.8 million and $92.7 million during the years ended December
31, 2025, 2024 and 2023, respectively. Our future research and development expenses may adversely affect the future results of our operations.
In addition, our research and development program may not produce successful results, and even if it does successfully produce new products,
those products may not achieve market acceptance, create additional revenue or become profitable.
We will likely need to
obtain additional funds in the future in order to execute our business plan and these funds may not be available to us when we need them,
which could negatively affect our business, prospects, financial condition and operating results.
We will likely require additional capital in the future in order
to fund our growth strategy or to respond to technological advancements, competitive dynamics or technologies, customer demands, business
opportunities, challenges, acquisitions or unforeseen circumstances. We may also determine to raise equity or debt financing for other
reasons. For example, in order to further enhance business relationships with current or potential customers or partners, we may issue
equity or equity-linked securities to such current or potential customers or partners.
In August 2025, we launched an at-the-market program (the “ATM
Program”) with Jefferies LLC (the “Sales Agent”), pursuant to which we may offer and sell, from time to time, to or
through the Sales Agent, ordinary shares having an aggregate offering price of up to $75 million. However, our ability to sell ordinary
shares through the ATM program is subject to significant limitations and uncertainties. We can only conduct offerings during periods in
which we are permitted to access the capital markets, including open trading windows, which may not coincide with our capital needs or
favorable market conditions. In addition, the amount of capital that we are able to raise under the ATM program depends on a number of
factors, including the market price of our ordinary shares, trading volume, overall market conditions and investor demand. If our share
price declines or market conditions are unfavorable, we may be unable to raise meaningful proceeds under the ATM program, or at all. Accordingly,
the ATM program may not be available when we require financing, and we cannot rely on it as a dependable source of capital.
Beyond the ATM program, we may not be able to timely secure additional
financing (which may be in form of debt or equity and may be a strategic investment) on favorable terms, or at all. If we raise additional
funds through the issuance of equity or convertible debt or other equity-linked securities, our existing shareholders could experience
significant dilution. Any debt financing obtained by us in the future, whether in the form of a credit facility or otherwise, could involve
restrictive covenants relating to our capital raising activities and ability to pursue other business opportunities.
If we are unable to obtain adequate financing or to obtain financing
on terms satisfactory to us when we require it, our ability to continue to grow, to support our business and to respond to business challenges
could be significantly limited. Because our decision to issue debt or equity in the future will depend on market conditions and other
factors beyond our control, we cannot predict or estimate the amount, timing, nature or success of our future capital raising efforts.
We may experience significant
delays in the design, production and launch of our LiDAR products, which could harm our business, prospects, financial condition and operating
results.
Some of our products, such as the recently launched InnovizThree,
are still in the development phase. Any delay in the design, production and commercial release of our current products or of any other
future products could materially damage our brand, business, prospects, financial condition and operating results. There are often delays
in the design, production and commercial release of new products. To the extent we delay the launch of any future product, our growth
prospects could be adversely affected as we may fail to increase our market share.
Moreover, our products are technologically complex and require
high standards to manufacture. In addition, our products require extensive and lengthy testing and validation cycles, particularly in
connection with our LiDAR sensors and complementary software stacks, to ensure safety of the autonomous systems prior to commercial deployment.
We have experienced in the past and will likely experience in the future, defects, errors or bugs at various stages of development and
manufacturing. We may be unable to timely release new products, manufacture existing products, correct problems that have arisen or correct
such problems to our customers’ satisfaction. Such delays could damage our relationships with customers and lead them to seek alternative
sources of supply. In addition, we could face material legal claims for breach of contract or tort as a result of such delays. Defending
a lawsuit, regardless of its merit, could be costly and may divert management’s attention and adversely affect the market’s
perception of us and our ability to deliver and our reliability. Further, our business liability insurance coverage could prove inadequate
with respect to a claim, and future coverage may be unavailable, on acceptable terms or at all.
7
We are substantially dependent
on a limited number of customers. The automotive industry is comprised of a relatively small number of players, which makes each design
win material for us. While we have expanded our customer base to include significant programs with multiple customers, our business could
be materially and adversely affected if certain customers terminate our programs or significantly alter or delay them.
Historically, our business was substantially dependent on our
design win with BMW. Our business is now substantially dependent on our design wins with Cariad SE for the Volkswagen brands (“Volkswagen”),
as well as programs through our partnership with Mobileye Vision Technologies Ltd. (“Mobileye”) and our recently announced
program with Daimler Truck North America LLC (“Daimler Truck”). Each of these customers represent a significant portion of
our current and projected revenues.
There can be no assurance that we will be able to maintain our
relationship with our customers and secure orders from them or that our design wins will result in increased revenues or profitability.
If any of our major customers terminate or significantly alter or delay our programs with them and/or alter their respective relationships
with us in an adverse manner, our business would be materially and adversely affected.
Designing and manufacturing
LiDARs on a mass-production scale requires meeting stringent quality requirements and we may face significant challenges and complexities
in this process.
In 2023, Magna Electronics Inc. (“Magna”) began the
series-production manufacturing of our InnovizOne LiDARs in connection with the BMW L3 Program. In 2025, we began manufacturing our InnovizTwo
LiDARs in connection with our other design programs with our contract manufacturing partners. The design and manufacturing of LiDARs on
a mass-production scale requires us to meet stringent quality requirements and obtain various certifications. To date, we have not manufactured
LiDARs on a mass-production scale in connection with any of our programs, and we expect to face significant challenges and complexities
which we will need to resolve expeditiously while continuing to develop new products. For example, since manufacturing LiDARs requires
investing significant capital expense in complex and unique machinery, unexpected malfunctions of such machinery could affect our operational
efficiency and may result in loss of production equipment. In addition, we may face various unexpected operational risks such as damage
to production facilities, delays, environmental damage, and potential legal liabilities. As a result of these challenges and risks, we
may not be able to manufacture LiDARs on a mass-production scale without delays or unexpected costs, among other factors, which could
adversely affect our business.
Our transition to production
with contract manufacturers and our ramp-up towards mass production may encounter significant challenges, which could delay commercialization
and increase costs.
We are transitioning from producing our InnovizTwo samples in-house
to manufacturing series-production units with our contract manufacturers as we prepare for mass production, with our first shipment of
units taking place in July 2025. This transition presents several risks, including the need to validate production lines and achieve consistent
quality and yield at scale. Significant delays or inefficiencies in this process could impact our ability to meet customer requirements,
including timelines. The production of LiDAR sensors requires stringent quality control and manufacturing expertise. If our contract manufacturer
encounters difficulties, we may experience quality issues, increased scrap rates, or delays in meeting our customers’ milestones
and requirements. Additionally, as we continue to ramp-up towards mass production, we may face unforeseen technical challenges, supply
chain constraints, yield issues, or manufacturing process refinements that could extend the timeline to achieving stable, high-yield production.
Reaching full manufacturing maturity where production is optimized for cost efficiency, reliability, and scalability can take longer than
anticipated. If we are unable to transition effectively to mass production, or if we encounter prolonged challenges in achieving manufacturing
maturity, our ability to fulfill customer demand, meet revenue targets, and establish a competitive cost structure could be adversely
affected. Any disruption in this transition could delay commercialization, increase our costs, and could negatively impact our business,
financial condition, and market position.
8
The period of time from
a design win to implementation varies significantly across different markets and we are subject to the risks of cancellation or postponement
of contracts, or failure to successfully meet customers’ requirements for SOP or deployment.
Prospective customers, including, but not limited to, those in
the automotive industry, generally must make significant commitments of resources to test and validate our products and confirm that they
can integrate with other technologies before including them in any particular system, product or model. The development and implementation
cycles of our products with new customers varies widely depending on the application, market, customer and the complexity of the product.
In the automotive market, for example, this development cycle can be four to five years or more. We spend significant time and resources
to have our products selected by automotive OEMs and their suppliers for use in a particular vehicle model, which is known as a design
win or nomination. If we do not achieve a design win with respect to a particular vehicle model, we may not have an opportunity to supply
our products to the automotive OEM for that vehicle model for a period of many years. If our products are not selected by an automotive
OEM or its suppliers for one vehicle model or if our products are not successful in that vehicle model, it is unlikely that our products
will be deployed in other vehicle models of that automotive OEM. In non-automotive applications, by contrast, deployment timelines may
be shorter and less dependent on lengthy design validation cycles, since our automotive-grade products can sometimes be deployed with
limited customization. However, non-automotive customers may still require validation, integration testing, and regulatory or operational
approval processes that can extend implementation timelines depending on the application.
We are subject to the risk that customers, both in the automotive
and non-automotive industry, might cancel or postpone either the entire program or the implementation of our technology, as well as the
risk that we will not be able to integrate our hardware and software technologies successfully into a larger system with other sensing
modalities or operational requirements. If we fail to win a significant number of vehicle model programs from automotive OEMs or their
suppliers, or if we are unable to successfully implement non-automotive applications, or if our customers cancel or postpone implementation,
our business, results of operations and financial condition may be materially and adversely affected.
If market adoption of
LiDAR for autonomous vehicles does not continue to develop, or develops more slowly than we expect, or if we fail to successfully diversify
into non-automotive markets, our business will be adversely affected.
While our primary focus remains on automotive applications, including
advanced driver assistance systems (“ADAS”) and autonomous driving, we are increasingly pursuing LiDAR applications in non-automotive
markets such as industrial, robotics, perimeter security, intelligent transportation systems, traffic management and more. Our long-term
growth strategy depends on the success in both the automotive sector and the development of these emerging non-automotive applications.
Despite considerable industry effort to research and test LiDAR products for ADAS and autonomous driving, there is no guarantee that the
automotive industry will continue to introduce LiDAR products in commercially available vehicles in the near future. Additionally, LiDAR
adoption in non-automotive markets remains in early stages, and we face uncertainty regarding market acceptance, technical requirements,
competitive dynamics, and adoption timelines in these verticals.
Other sensor technologies based on new or existing technology
or a combination of technologies, may achieve acceptance or leadership in ADAS, autonomous driving, or non-automotive applications. Even
if LiDAR is designed into initial generations of such technology, there is no guarantee it will be included in subsequent generations.
The speed of market growth for ADAS, autonomous vehicles, and non-automotive LiDAR applications is difficult to predict, and may be affected
by economic conditions, changes in inflation and interest rates in the U.S., geopolitical factors, and regulatory developments. If commercialization
of LiDAR products is not successful, or not as successful as we expect, if other sensing modalities are to be preferred by either developers,
OEMs, regulators, safety organizations or other market participants, or if we fail to achieve substantial penetration in non-automotive
markets, our business, results of operations and financial condition will be materially and adversely affected.
We target many customers
that are large companies with substantial negotiating power, exacting product standards and potentially competitive internal solutions.
If we are unable to sell our products to these customers, our prospects and results of operations will be adversely affected.
Many of our customers and potential customers are large, multinational
companies with substantial negotiating power relative to us and, in some instances, they may even have internal solutions that are competitive
to our products. These large, multinational companies also have significant resources, which may allow them to acquire or develop competitive
technologies either independently or in partnership with others. Accordingly, even after investing significant resources to develop a
product, we may not secure a design win or may not be able to commercialize a product on profitable terms because, among other things,
these companies have extremely strong negotiation positions to demand terms that are beneficial for them, including reduced prices. If
our products are not selected by these companies or if these companies develop or acquire competitive technology or negotiate terms that
are disadvantageous to us, it will have an adverse effect on our business.
9
We continue to implement
strategic initiatives designed to grow our business inside and outside the automotive market. These initiatives may prove more costly
than we currently anticipate, and we may not succeed in increasing our revenues by an amount sufficient to offset the costs of these initiatives
and to achieve and maintain profitability.
We continue to make investments and implement initiatives designed
to grow our business, including:
| • |
investing in research and development; |
| • |
attracting and retaining talent to develop, support and promote our business across different functions and geographies, further
enhancing our manufacturing processes and partnerships; and |
| • |
investing in legal, accounting and other administrative functions necessary to support our operations as a public company.
|
These initiatives may prove more expensive than we currently
anticipate, and we may not succeed in increasing our revenue, if at all, in an amount sufficient to offset these higher expenses and to
achieve and maintain profitability. The market opportunities we are pursuing are at an early stage of development, and it may be many
years before the markets we expect to serve generate significant demand for our products, if at all.
The markets in which we
compete are characterized by rapid technological change, which requires us to continue to develop new products and product innovations
and could adversely affect market adoption of our products.
While we intend to invest substantial resources in research and
development, continuing technological changes in sensing technology, as well as changes in the applicable industries, including autonomous
driving, perimeter security, intelligent transportation systems, could adversely affect adoption of LiDAR and/or our products. Our future
success will depend on our ability to develop and introduce a variety of new capabilities and innovations to our existing product offerings,
as well as introduce new products addressing the changing market needs. We cannot guarantee that our new products will be released in
a timely manner, or at all, or achieve market acceptance. In addition, we may in the future need to make strategic decisions to account
for low market acceptance. These actions and any similar future actions may materially and adversely affect our business and results of
operations. Delays in delivering new products that meet customer requirements could damage our relationships with customers and lead them
to seek alternative sources of supply.
If we are unable to devote adequate resources to develop and
improve our products or cannot otherwise successfully develop products or system configurations that meet customer requirements, including
pricing, on a timely basis or that remain competitive with other technological alternatives, our products could lose market share, our
revenue will decline, we may experience operating losses and our business and prospects will be adversely affected.
Entry into non-automotive
applications requires addressing distinct regulatory and operational considerations that may delay commercialization and adversely affect
our business and prospects.
We are investing in and pursuing market opportunities beyond
automotive, including non-automotive applications such as perimeter security, smart infrastructure, mobility, aerial, robotics and traffic
intelligence. While our automotive-grade products can be deployed across various adjacent automotive segments with similar deployment
approaches, non-automotive applications present distinct regulatory, operational and deployment considerations that differ materially
from automotive markets.
Non-automotive applications involve distinct considerations beyond
those in automotive markets. For example, smart city deployments may require compliance with local regulations and data protection requirements
that vary by jurisdiction, necessitating adaptation of software configurations, cybersecurity and privacy controls for different regions.
Government procurement processes for infrastructure projects typically involve evaluation cycles and formal tendering procedures which
are materially different than private sector automotive OEM procurement procedures, which may affect commercialization timelines. Aviation
and airport applications require coordination with aviation authorities and airport operators regarding safety protocols and operational
integration. Security and autonomous systems operating in continuous or extended-duty environments may require optimization of power management
and thermal design for continuous operation, differing from intermittent automotive use. Addressing these diverse market-specific requirements
while still leveraging our automotive-grade product foundation may require increased regulatory and compliance
investment compared to automotive markets.
investment compared to automotive markets.
Successful commercialization in non-automotive applications will
depend on numerous factors, including: whether we can efficiently adapt our products to address regulatory and operational requirements
across different markets and geographies; whether customers will adopt LiDAR-based solutions for these applications; whether government
agencies and infrastructure operators will support our deployment in their systems; and whether these markets develop according to our
expectations. If we are unable to address market-specific requirements, if regulatory or operational considerations create unexpected
challenges, or if these markets develop more slowly than anticipated, our business, results of operations and financial condition may
be adversely affected.
10
Adverse conditions in
the automotive industry or the global economy more generally could have adverse effects on our results of operations.
Our business is directly affected by and significantly dependent
on business cycles and other factors affecting the global automotive industry and global economy in general. Automotive production and
sales are highly cyclical and depend on general economic conditions and other factors, including consumer spending and preferences, changes
in interest rates and credit availability, consumer confidence, fuel costs, fuel availability, environmental impact, governmental incentives,
regulatory requirements and political volatility, especially in energy-producing countries and growth markets. In addition, automotive
production and sales can be affected by our automotive OEM customers’ ability to continue operating in response to challenging economic
conditions and in response to regulatory requirements and other factors. The volume of automotive production in North America, Europe,
Asia and the rest of the world has fluctuated, sometimes significantly, from year to year, and we expect any such fluctuations to give
rise to fluctuations in the demand for our products. Any significant adverse change in any of these factors may result in a reduction
in automotive sales and production by our automotive OEM customers and could have a material adverse effect on our business, results of
operations and financial condition.
We may experience difficulties
in expanding our operations.
Our ability to manage our operations and future growth will require
us to continue to improve our operational, financial and management controls, compliance programs and reporting systems. We continue to
strengthen our compliance programs, including our compliance programs related to export controls, privacy and cybersecurity and anti-corruption.
We may not be able to implement improvements in an efficient or timely manner and may discover deficiencies in existing controls, programs,
systems and procedures, which could have an adverse effect on our business, reputation and financial results.
As part of growing our
business, we may in the future make acquisitions. If we fail to successfully select, execute or integrate our acquisitions, then our business,
results of operations and financial condition could be materially and adversely affected and the price of our ordinary shares and warrants
could decline.
From time to time, we may in the future undertake acquisitions
to add new products and technologies, acquire talent, gain new sales channels or enter into new markets or sales territories. Acquisitions
involve numerous risks and challenges, including relating to the successful integration of the acquired business and its key personnel,
entering into new territories or markets with which we have limited or no prior experience, establishing or maintaining business relationships
with new customers, channel partners, vendors and suppliers, as well as unexpected liabilities and potential post-closing disputes. In
addition, acquisitions may require a significant commitment of management time, capital investment and other resources.
To date, we have not grown our business through acquisitions
and we do not have a history of integrating acquired technology and personnel. However, failure to successfully identify, complete, manage
and integrate any future acquisitions could materially and adversely affect our business, financial condition and results of operations
and could cause the price of our ordinary shares and warrants to decline.
The first vehicles deploying
our LiDAR technology and complementary software stack became commercially available to end users in 2024. Additional vehicles deploying
the next generation of our technology are expected to become commercially available in the coming year. If any vehicles deploying our
LiDAR technology and complementary software stacks are involved in traffic accidents or collisions actually or allegedly resulting from
undetected defects, errors, or bugs in our products, or if our products actually or allegedly fail to perform as expected, we may be exposed
to product liability, warranty and other claims, in addition to a decline in the market adoption of our products, damage to our reputation
with current or prospective customers, or increased regulatory scrutiny of our solutions which would adversely affect our operating costs,
business and prospects.
Our products are technologically complex and require high standards
to manufacture and may, from time to time, have, or could be alleged to have, undetected errors or defects. As the first vehicles deploying
our LiDAR technology and complementary software stack became commercially available to end users in 2024, and additional vehicles deploying
the next generation of our technology are expected to become commercially available in the coming year, some errors or defects in our
products could be, despite rigorous testing and stringent manufacturing standards, initially undetected and discovered only after they
have commercialized and deployed by customers, which could result in serious injury, including fatalities, to the end users or those in
the surrounding area; our customers not being able to commercialize technology incorporating our products; litigation against us; negative
publicity; and other consequences. These risks are particularly prevalent in the highly competitive autonomous driving and ADAS markets.
In accordance with customary practice in the automotive industry, we provide our customers with a time-limited warranty for our products.
Currently, no such errors or defects have been detected, however, if such errors or defects occur in the future and within the respective
warranty period, we may incur significant additional development costs, repair or replacement costs. Such problems may also result in
claims against us, including class actions, by our customers or by third parties, and in some cases, may even lead to product recall and
additional costs associated with such processes. Our reputation or brand may be damaged as a result of these problems and customers may
be reluctant to buy our products, which could adversely affect our ability to retain existing customers and attract new customers and
could adversely affect our financial results.
11
In addition, we could face material legal claims for breach of
contract, product liability, tort or breach of warranty as a result of these problems. Defending a lawsuit, regardless of its merit, could
be costly and may divert management’s attention and adversely affect the market’s perception of us and our products. In addition,
our business liability insurance coverage could prove inadequate with respect to a claim and future coverage may be unavailable on acceptable
terms or at all. These product-related issues could result in claims against us and our business could be adversely affected.
Moreover, enhanced publicity surrounding such claims may also
increase the regulatory scrutiny of ADAS and autonomous driving solutions in general, and our products in particular, which could have
a material adverse effect on our ability to achieve our business plans. Further, legislation and regulations may be adopted or changed
over time to increase our liability associated with the use of our products, which may make our liability insurance coverage inadequate
to fully mitigate such risks or rather make it significantly more costly, which could adversely affect our operating results and financial
condition.
Certain of our strategic,
development and supply arrangements could be terminated or may not materialize into long-term contract partnership arrangements.
We have arrangements with strategic, development and supply partners
and collaborators. Some of these arrangements are evidenced by memorandums of understandings, term sheets, letters of intent, early-stage
agreements that are used for design and development purposes that will require renegotiation at later stages of development or replacement
by production or master agreements under separately negotiated statements of work, each of which could be terminated or may not materialize
into next-stage contracts or long-term contract partnership arrangements. If these arrangements are terminated or if we are unable to
enter into next-stage contracts or long-term operational contracts, our business, prospects, financial condition and operating results
may be materially and adversely affected.
We operate in a highly
competitive market against a large number of both established competitors and new market entrants, and some market participants have substantially
greater resources than we do.
The markets for sensing technology applicable to autonomous solutions
across numerous industries are highly competitive. Our future success will depend on our ability to lead by continuing to develop and
protect from infringement advanced LiDAR technology in a timely manner, and to stay ahead of existing and new competitors. Our competitors
are numerous and they compete with us directly by offering LiDAR products, and indirectly by attempting to solve some of the same challenges
with different technology. We face competition from other developers of LiDAR products, Tier-1 suppliers and other technology and automotive
supply companies, some of which have significantly greater resources than we do. Our competitors include, among others: Valeo SA, Hesai,
Aeva, Robosense, Seyond (ex-Innovusion) and Ouster. In the automotive market, some of our competitors have commercialized non-LiDAR-based
ADAS technology which has achieved market adoption, strong brand recognition and may continue to improve these and additional technologies,
further enhancing their brand recognition and standing. Other competitors are working towards commercializing autonomous driving technology
and either by themselves, or with a publicly announced partner, have substantial financial, marketing, research and development and other
resources. Some of our customers in the autonomous vehicle and ADAS markets have announced development efforts or made acquisitions directed
at creating their own LiDAR-based or other sensing technologies, which would compete with our solutions. We do not know how close these
competitors are to commercializing autonomous driving systems or novel ADAS applications. Additionally, increased competition may result
in pricing pressure and reduced margins and may impede our ability to increase the sales of our products or may cause us to lose market
share, either of which will adversely affect our business, results of operations and financial condition.
12
Changes in tax laws or
exposure to additional income tax liabilities could affect our future profitability.
Factors that could materially affect our future effective tax
rates include but are not limited to:
| • |
changes in tax laws or the regulatory environment; |
| • |
changes in accounting and tax standards or practices; |
| • |
changes in the composition of operating income by tax jurisdiction; and |
| • |
our operating results before taxes. |
Because we do not have a long history of operating at our present
scale, our effective tax rate may fluctuate in the future. Future effective tax rates could be affected by operating losses in jurisdictions
where no tax benefit can be recorded under U.S. GAAP, changes in the composition of earnings in countries with differing tax rates, changes
in deferred tax assets and liabilities, or changes in tax laws.
Changes in our product
mix may impact our financial performance.
Our financial performance can be affected by the mix of products
we sell during a given period. If our sales include more of our lower gross margin products, our results of operations and financial condition
may be adversely affected. There can be no guarantee that we will be able to successfully alter our product mix. If actual results vary
from this projected product mix of sales, our results of operations and financial condition could be adversely affected.
We are dependent on the
services of Omer Keilaf, our Founder, Chief Executive Officer and Director.
Our success depends to a significant degree upon the continued
contributions of Omer Keilaf, our Founder, Chief Executive Officer and director. Mr. Keilaf has been our Chief Executive Officer since
the founding of the company in 2016, remains deeply involved in all aspects of our business, and is the name and face that customers,
suppliers and investors associate with Innoviz. The loss of Mr. Keilaf would adversely affect our business, since his loss could make
it more difficult to, among other things, compete with other market participants and retain existing customers or cultivate new ones.
Further, such a loss could be negatively perceived in the marketplace and may make it more difficult to retain existing employees and
members of management.
Our business depends on
our ability to attract and retain highly skilled personnel and senior management. In addition, we are highly dependent on our skilled
personnel to manage and meet deadlines for our products and programs.
We compete in a market marked by rapidly changing technologies
and an evolving competitive landscape. In order for us to successfully compete and grow, we must attract, recruit, retain and develop
personnel with requisite qualifications to provide expertise across the entire spectrum of our intellectual capital and business needs.
On February 4, 2025, we announced an optimization of our operations
to extend our cash runway and accelerate progress towards profitability and free cash flow generation, which included a reduction in the
company’s headcount by approximately 9% during the first quarter of 2025.
Our primary research and development activities as well as significant
elements of our operations, general and administrative activities are conducted at our headquarters in Israel, where we compete for talent
against major global technology companies that maintain significant operations in the country. Many of these companies have substantially
greater financial resources and more robust compensation mechanisms than we do, which they use to attract and retain skilled employees.
As a result, we may not succeed in recruiting additional experienced or professional personnel, in retaining personnel or in effectively
replacing such current personnel who may depart with qualified or effective successors. Our efforts to attract, retain and develop personnel
may also result in significant additional expenses, which could adversely affect our profitability. Furthermore, in making employment
decisions, particularly in the high-technology industry, job candidates often consider the value of the equity they are to receive in
connection with their employment. Employees may be more likely to leave us if the shares they own or the shares underlying their equity
incentive awards have significantly decreased in value.
While we utilize non-competition agreements with our employees
as a means of preventing competitors from leveraging our intellectual property and proprietary expertise, those agreements may not be
effective in achieving that objective. These agreements prohibit our employees, if they cease working for us, from competing directly
with us or working for our competitors for a limited period. We may be unable to enforce these agreements under Israeli or other applicable
law, and it may be difficult for us to restrict our competitors from benefiting from the expertise of our former employees developed while
working for us.
13
In addition, we rely on our skilled personnel, including our
engineers, to meet deadlines associated with our numerous products and programs. Our programs often require significant development and
delivery efforts, and as we obtain additional customers and the number of our programs increases, including the potential addition of
multiple new programs simultaneously, we may need to recruit and integrate qualified personnel quickly to accommodate the increased workload.
Recruiting and onboarding skilled employees, particularly engineers with expertise in LiDAR and related technologies, may take longer
than anticipated, especially in our competitive ecosystem, and we may not be able to scale our workforce at the pace required to support
our commitments. In the interim, our existing personnel may be required to support an increasing number of products and programs simultaneously,
which could strain our resources and make it more difficult for us to meet the development and commercialization targets we set internally
and with our partners.
Considering the foregoing, there can be no assurance that qualified
employees will remain in our employ or that we will be able to attract and retain highly skilled personnel and senior management in the
future. Failure to retain or attract highly skilled personnel and senior management could have a material adverse effect on our business,
financial condition and results of operations. Human resource changes could affect our internal knowledge and expertise, strategic relationships
and future growth prospects.
Currency exchange rate
fluctuations affect our results of operations, as reported in our financial statements.
We report our financial results in U.S. dollars. We collect our
revenue primarily in U.S. dollars. A portion of the cost of revenue, research and development, sales and marketing and general and administrative
expenses of our Israeli operations are incurred in ILS. As a result, we are exposed to exchange rate risks that may materially and adversely
affect our financial results. If ILS appreciates against the USD or if the value of ILS declines against the USD at a time when the rate
of inflation in the cost of Israeli goods and services exceeds the rate of decline in the relative value of ILS, then the USD cost of
our operations in Israel would increase and our results of operations could be materially and adversely affected. Our Israeli operations
also could be materially and adversely affected if we are unable to effectively hedge against currency fluctuations in the future. We
cannot predict any future trends in the rate of inflation in Israel or the rate of appreciation (if any) of ILS against the USD. The Israeli
annual rate of inflation amounted to 2.6%, 3.2%, and 3.0% for the years ended December 31, 2025, 2024 and 2023, respectively. The value
of the USD devaluated against the value of the ILS for the year ended December 31, 2025 by 12.5%, and appreciated against the value of
the ILS by approximately 0.6% and 3.1% in 2024 and 2023, respectively.
We rely on third-party
suppliers and are susceptible to supply shortages, long lead times for components and supply changes, any of which could disrupt our supply
chain and could delay deliveries of our products to customers.
Some of the components that go into the manufacture of our solutions
are sourced from third-party suppliers, with some of the key components coming from limited or single source suppliers. We are therefore
subject to the risk of shortages and long lead times in the supply of these components and the risks that our suppliers discontinue or
modify components used in our products. Other global events, including political events and trade-related trends may also disrupt our
supply chain and operations. For example, the Houthi movement, a terrorist group in Yemen that has been limiting the movement of marine
vessels traversing the Red Sea, has led to delays in shipping and to increased shipping and transport costs. These or other events may
delay our future production, including our ability to timely set up a production line in Asia, which may require us to find alternative
location for our production line due to such instabilities. In addition, our products depend on external semi-conductor foundries.
Export controls, geopolitical tensions, and other regulatory
obligations applicable to our suppliers may also restrict their ability to supply us with necessary components, further impacting the
continuity of our supply chain. For example, during 2025, changes in export control regulations affected our access to specialized components
from certain suppliers, requiring us to identify alternative sources and incur additional mitigation costs. We may face similar challenges
in the future as regulatory environments continue to evolve. Specifically, the United States and European Union have implemented or may
further implement regulations that restrict or prohibit the use of Chinese-sourced components in certain applications, particularly those
related to national security or critical infrastructure, or to specific types of customers. These potentially conflicting regulatory requirements
may force us to restructure our supply chain, limit our market access, increase costs, or otherwise adversely impact our operations. Any
such supply chain restructuring could also disrupt our operations and delay our ability to fulfill customer orders.
Any disruptions to those foundries could materially and adversely
affect our ability to manufacture our solutions. In addition, the lead times associated with certain components are lengthy and preclude
rapid changes in quantities and delivery schedules. We have in the past experienced and may in the future experience component shortages
and price fluctuations of certain key components and materials, and the predictability of the availability and pricing of these components
may be limited. In the event of a component shortage, supply interruption or material pricing change from suppliers of these components,
we may not be able to develop alternate sources in a timely manner or at all in the case of sole or limited sources. Any interruption
or delay in the supply of any of these parts or components, or the inability to obtain these parts or components from alternate sources
at acceptable prices and within a reasonable amount of time, could adversely affect our relationships with our customers and could cause
delays in shipment of our products and adversely affect our operating results. In addition, increased component costs could result in
lower gross margins. Even where we are able to pass increased component costs along to our customers, there may be a lapse of time before
we are able to do so, such that we must absorb the increased cost. If we are unable to buy these components in quantities sufficient to
meet our requirements on a timely basis, we will not be able to deliver products to our customers, which may result in loss of revenues,
or such customers using competitors’ products instead of ours.
14
Our sales and operations
in international markets expose us to operational, financial and regulatory risks.
International sales comprise a significant amount of our overall
revenue. Sales to international customers accounted for approximately 95.3%, 91.2% and 99.6% of our revenue in the years ended December
31, 2025, 2024 and 2023, respectively. We are committed to growing our international sales and, while we have committed resources to expanding
our international operations and sales channels, these efforts may not be successful. International operations are subject to a number
of other risks, including:
| • |
exchange rate fluctuations; |
| • |
political and economic instability, international terrorism and anti-Israeli sentiment, such as the conflict and hostilities between
Israel, Hamas, Hezbollah, the Houthi movement and Iran; |
| • |
global or regional health crises; |
| • |
potential for violations of anti-corruption laws and regulations, such as those related to bribery and fraud; |
| • |
preference for locally branded products, and laws and business practices favoring local competition; |
| • |
regulatory complexities including government mandates subject to unprecedented change and volatile export control laws that may restrict
the export of components, materials, and technologies from China; |
| • |
increased difficulty in managing inventory; |
| • |
delayed revenue recognition; |
| • |
less effective protection of intellectual property; |
| • |
stringent regulations in many jurisdictions applicable to autonomous and other systems or products using our products, as well as
stringent consumer protection and product compliance regulations, related to safety and environment, including but not limited to: Directive
(EU) 2011/65 - the Restriction of Hazardous Substances Directive (RoHS), Regulation (EC) 1907/2006 - Registration, Evaluation, Authorisation
and Restriction of Chemicals (REACH), Regulation (EU) 2023/988 - General Product Safety Regulation (GPSR), the U.S. 21 CFR Part 1040 -
Performance Standards For Light-Emitting Products, as well as applicable environmental, health and safety regulations governing smart
applications in various jurisdictions. Additionally, we are subject to laws and regulations applicable to the general conduct of the company,
such as without limitation, Regulation (EU) 2016/679 - General Data Protection Regulation (GDPR), and applicable competition laws, that
are costly to comply with, and may vary from country to country; |
| • |
difficulties and costs of staffing and managing foreign operations; |
| • |
import and export laws and the impact of tariffs; and |
| • |
changes in local tax and customs duty laws, or changes in the enforcement, application or interpretation of such laws. |
The occurrence of any of these risks could negatively affect
our international business and consequently our business, operating results and financial condition.
15
Unforeseen eye safety
issues could result in injuries to people which could result in adverse effects on our business and reputation.
Our LiDAR utilizes lasers for performing 3D sensing. While our
LiDAR products are classified as Class 1 laser products, which are safe to use, and we have developed system components designed to prevent
our LiDAR lasers from harming human eyes, in the event that an unforeseen issue arises that results in serious injury, our reputation
or brand may be damaged and we could face material legal claims for breach of contract, product liability, tort or breach of warranty
as a result of these problems. Defending a lawsuit, regardless of its merit, could be costly and may divert management’s attention
and adversely affect the market’s perception of us and our products. In addition, our business liability insurance coverage could
prove inadequate with respect to a claim and future coverage may be unavailable on acceptable terms or at all.
Our business is subject
to the risks of earthquakes, fire, floods and other natural catastrophic events, including events resulting from climate change, as well
as global pandemics, and interruptions by man-made problems, such as network security breaches, computer viruses, terrorism and war. Material
disruptions of our business or information systems resulting from these events could adversely affect our operating results.
A significant natural disaster, such as an earthquake, fire,
flood or significant power outage or other similar events, such as infectious disease outbreaks or pandemic events, could have an adverse
effect on our business and operating results. There are inherent physical climate-related risks wherever our business is conducted. Various
meteorological phenomena and extreme weather events (including, but not limited to, storms, flooding, drought, wildfire, and extreme temperatures)
may disrupt our operations or those of our suppliers and business partners, and may therefore require us to incur additional operating
or capital expenditures, or otherwise adversely impact our business, financial condition, or results of operations. Climate change may
impact the frequency and/or intensity of such events. Mitigating our business risks associated with climate change may require us to incur
substantial costs and may not be successful, due to, among other things, the uncertainty associated with the longer-term projections associated
with managing climate risks.
In addition, despite the implementation of network security measures,
our networks and LiDAR products also may be vulnerable to computer viruses, break-ins and similar disruptions from unauthorized tampering
with our solutions. In addition, natural disasters, acts of terrorism or war, could cause disruptions in our manufacturing operations,
our customers’, suppliers’ or channel partners’ businesses, or the economy as a whole. We also rely on information technology
systems to communicate among our workforce and with third parties. Any disruption to our communications, whether caused by a natural disaster
or by manmade problems, such as power disruptions, could adversely affect our business. We have completed formalizing our disaster recovery
plan. Nevertheless, to the extent that any such disruptions result in delays or cancellations of orders or impede our suppliers’
ability to timely deliver product components, or the deployment of our products, our business, operating results and financial condition
would be adversely affected.
Risks Related to Our Intellectual Property
We may not be able to
adequately protect or enforce our intellectual property rights or prevent unauthorized parties from copying or reverse engineering our
solutions. Our efforts to protect and enforce our intellectual property rights and prevent third parties from violating our rights may
be costly.
The success of our products and our business depends in part
on our ability to obtain patents and other intellectual property rights and maintain adequate legal protection for our products in the
United States and other international jurisdictions. We rely on a combination of patent, copyright, service mark, trademark and trade
secret laws, as well as confidentiality procedures and contractual restrictions, to establish and protect our proprietary rights, all
of which provide only limited protection. We cannot assure you that any patents will be issued with respect to our currently pending patent
applications or that any trademarks will be registered with respect to our currently pending trademark applications in a manner that gives
us adequate defensive protection or competitive advantages, if at all, or that any patents issued to us or any trademarks registered by
it will not be challenged, invalidated or circumvented. We have filed for patents and trademarks in the United States and in certain international
jurisdictions, but such protections may not be available in all countries in which we operate or in which we seek to enforce our intellectual
property rights, or may be difficult to enforce in practice, particularly with respect to software patents, where infringement is significantly
harder to prove, we are less likely to successfully assert our patents. Our currently issued patents and trademarks and any patents and
trademarks that may be issued or registered, as applicable, in the future with respect to pending or future applications may not provide
sufficiently broad protection or may not prove to be enforceable in actions against alleged infringers. We cannot be certain that the
steps we have taken will prevent unauthorized use of our technology or the reverse engineering of our technology. Moreover, others may
independently develop technologies that are competitive to ours or infringe our intellectual property.
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Protecting against the unauthorized use of our intellectual property,
products and other proprietary rights is expensive and difficult, particularly internationally. We believe that our patents are foundational,
and we intend to leverage and enforce our intellectual property portfolio where appropriate to protect our competitive advantage. Unauthorized
parties may attempt to copy or reverse engineer our solutions or certain aspects of our solutions that we consider proprietary. Litigation
may be necessary in the future to enforce or defend our intellectual property rights, to prevent unauthorized parties from copying or
reverse engineering our solutions, to determine the validity and scope of the proprietary rights of others or to block the importation
of infringing products from one patent jurisdiction into another jurisdiction.
Effective patent, trademark, service mark, copyright and trade
secret protection may not be available in every country in which our products are available, and competitors based in other countries
may sell infringing products in one or more markets. An inability to adequately protect and enforce our intellectual property and other
proprietary rights or an inability to prevent authorized parties from copying or reverse engineering our LiDAR solutions or certain aspects
of our solutions that we consider proprietary could seriously adversely affect our business, operating results, financial condition and
prospects.
In addition to patented
technology, we rely on our unpatented proprietary technology, processes and know-how.
We rely on proprietary information (such as trade secrets, know-how
and confidential information) to protect intellectual property that may not be patentable or subject to copyright, trademark, trade dress
or service mark protection, or that we believe is best protected by means that do not require public disclosure.
We generally seek to protect this proprietary information by
entering into confidentiality agreements or consulting, services or employment agreements that contain non-disclosure and non-use provisions
with our employees, consultants, contractors and third parties. However, we may fail to enter into the necessary agreements, and even
if entered into, these agreements may be breached or may otherwise fail to prevent disclosure, third-party infringement or misappropriation
of our proprietary information, may be limited as to their term and may not provide an adequate remedy in the event of unauthorized disclosure
or use of proprietary information. In addition, our proprietary information may otherwise become known or be independently developed by
our competitors or other third parties. To the extent that our employees, consultants, contractors, advisors and other third parties use
intellectual property owned by others in their work for us, disputes may arise as to the rights in related or resulting know-how and inventions.
Costly and time-consuming litigation could be necessary to enforce and determine the scope of our proprietary rights, and failure to obtain
or maintain protection for our proprietary information could adversely affect our competitive business position.
We also rely on our trade secret policy, related employee training,
and on physical and electronic security measures to protect our proprietary information, but we cannot provide assurance that these security
measures will not be breached or provide adequate protection for our property. There is a risk that third parties may obtain and improperly
utilize our proprietary information to our competitive disadvantage. We may not be able to detect or prevent the unauthorized use of such
information or take appropriate and timely steps to enforce our intellectual property rights.
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Third-party claims that
we are infringing or misappropriating intellectual property, whether successful or not, could result in costly and time-consuming litigation
or expensive licenses, and our business could be adversely affected.
Although we hold patents related to our products, a number of
companies, both inside and outside of the LiDAR industry, hold other patents covering aspects of LiDAR products or related components
and software. In addition to these patents, participants in this industry typically also protect their technology, especially embedded
software, through copyrights and trade secrets. As a result, there is frequent litigation based on allegations of infringement, misappropriation
or other violations of intellectual property rights. We may receive in the future inquiries from other intellectual property holders and
may become subject to claims that we infringed or misappropriate their intellectual property rights, particularly as we expand our presence
in the market.
Market diversification into new applications introduces increased
intellectual property enforcement risks from non-automotive competitors operating in specialized technology sectors and from non-practicing
entities. Additionally, our geographical intellectual property footprint, currently optimized for automotive applications, may not provide
adequate coverage in the specific territories relevant to these new applications. Consequently, the specific territories relevant to these
new markets may lack registered intellectual property protection. Moving into new territories without a corresponding increase in filings
may leave us vulnerable to competitors who have already secured local rights.
If such a claim were to prevail, we could incur high cost
and time-consuming litigation and licensing fees. Alternatively, we may incur costly development of alternative technological solutions
to work-around such patent-protected solutions. In addition, parties may claim that the names and branding of our products infringe their
trademark rights in certain countries or territories. If such a claim were to prevail, we may have to change the names and branding of
our products in the affected territories and it could incur other costs.
We currently have a number of agreements in effect pursuant to
which we have agreed to defend, indemnify and hold harmless our customers, suppliers and partners from damages and costs which may arise
from the infringement or misappropriation by our products of third-party patents or other intellectual property rights. The scope of these
indemnity obligations varies, but may, in some instances, include indemnification for damages and expenses, including attorneys’
fees. Our insurance may not cover all intellectual property infringement claims. A claim that our products infringe a third party’s
intellectual property rights, even if untrue, could adversely affect our relationships with our customers, may deter future customers
from purchasing our products and could expose us to costly litigation and settlement expenses. Even if we are not a party to any litigation
between a customer and a third party relating to infringement by our products, an adverse outcome in any such litigation could make it
more difficult for us to defend our products against intellectual property infringement claims in any subsequent litigation in which we
are a named party. Any of these results could adversely affect our brand and operating results.
Our defenses of intellectual property rights claims brought against
us or our customers, suppliers and channel partners, with or without merit, could be time-consuming, expensive to litigate or settle,
divert management resources and attention and force us to acquire intellectual property rights and licenses, which may involve substantial
royalty or other payments and may not be available on acceptable terms or at all. Further, a party making such a claim, if successful,
could secure a judgment that requires us to pay substantial damages or obtain an injunction. An adverse determination could invalidate
our intellectual property rights and adversely affect our ability to offer our products to our customers and may require that we procure
or develop substitute products that do not infringe, which could require significant effort and expense. Any of these events could adversely
affect our business, operating results, financial condition and prospects.
Our use of third-party artificial intelligence
(“AI”) tools presents operational, data security, and intellectual property risks
We have adopted a policy governing our personnel’s use
of third-party artificial intelligence and machine learning tools (“AI Tool”) that includes an approval process, restrictions
on the types of information that may be shared with such tools, and validation requirements for AI-generated outputs. However, such policy
may not be sufficient to eliminate all risks associated with AI Tool usage, and we cannot guarantee that all personnel, including contractors
and external consultants, will comply with it in all cases. The AI landscape is evolving rapidly, and our policies and safeguards may
not keep pace with emerging risks, new tool capabilities, or changes in the regulatory environment.
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Material risks associated with AI Tool usage remain. Data uploaded
to third-party AI Tools could be disclosed or used to train algorithms, compromising our trade secrets or confidential information of
our customers or suppliers or resulting in unauthorized access, data leakage, or loss of intellectual property protection. AI Tool usage
may also involve the inadvertent processing of personal data in a manner that is inconsistent with applicable data protection laws, which
could result in regulatory scrutiny or claims. We also rely on third-party AI providers’ own security practices, data handling policies,
and terms of service, which may change without notice or prove inadequate. AI-generated content may infringe intellectual property rights
of others, contain errors or security vulnerabilities, or trigger open-source licensing obligations, including copyleft requirements,
that could affect the proprietary nature of our software. The regulatory environment governing AI use remains uncertain, and new regulations
could impose additional compliance obligations, reporting requirements, audit standards, or restrictions on the use of certain AI models
or datasets.
If these risks materialize, we could experience data breaches,
loss of intellectual property protection, infringement claims, regulatory penalties, or operational disruptions, which could adversely
affect our business, results of operations and financial condition.
Legal and Regulatory Risks Related to Our Business
We are subject to, and
must remain in compliance with, numerous laws and governmental regulations concerning the manufacturing, use, distribution and sale of
our products. Some of our customers also require that we comply with their own unique requirements relating to these matters.
We manufacture and sell products that contain electronic components,
and such components may contain materials that are subject to government regulation in both the locations where we manufacture and assemble
our products, as well as the locations where we sell our products. For example, in the United States, laser-emitting products, including
our LiDAR systems, are subject to regulation by the U.S. Food and Drug Administration (the “FDA”), under the Electronic Product
Radiation Control Provisions of the Federal Food, Drug, and Cosmetic Act and its implementing regulations. Among other things, these laws
and regulations require the submission of annual reports to the FDA certifying that such products comply with applicable performance standards,
the maintenance of manufacturing, testing, and distribution records, and the reporting of certain product defects to the FDA and/or consumers.
If our products fail to comply with applicable FDA regulations, we and/or our products could be subjected to a variety of enforcement
actions or sanctions, such as product recalls, repairs or replacements, warning letters, untitled letters, safety alerts, injunctions,
import alerts, administrative product detentions or seizures or civil penalties. The occurrence of any of the foregoing could harm our
business, results of operations and financial condition.
Since we operate on a global basis, we must continually monitor
applicable laws and regulations and engage in an ongoing compliance process to ensure that we and our suppliers comply in all material
respects with the applicable laws and regulations. If there is an unanticipated or onerous new legislation or regulation that significantly
impacts our use or marketing of various components or requires more expensive components, such legislation or regulation could materially
and adversely affect our business, results of operations and financial condition.
Our products are also used for autonomous driving and ADAS applications,
which are subject to complicated and rapidly evolving laws and regulatory schemes that vary from jurisdiction to jurisdiction at the state,
federal and international levels, including requirements related to safety, data privacy and security, and product liability, among other
areas. These are rapidly evolving areas in which new or changed requirements could impose limitations on the use of LiDAR generally or
our products specifically. If we fail to adhere to these new laws and regulations or fail to continually monitor emerging developments,
we may be subject to litigation, loss of customers or negative publicity and our business, and our results of operations and financial
condition will be adversely affected.
As we expand our business beyond automotive applications into
other fields such as industrial, smart-cities, robotics, machinery, and security applications, we face additional regulatory and compliance
risks as each of these sectors is subject to its own distinct set of regulations, industry standards, and certification requirements,
which may increase our compliance burden and costs.
Concerns over environmental pollution and climate change have produced significant
legislative and regulatory efforts on a global basis, and we believe this will continue both in scope and in the number of countries participating.
These changes could directly increase the cost, of or access to, energy or water, which may have an effect on the way we manufacture products
or utilizes energy or water to produce our products. In addition, any new regulations or laws in the environmental area might increase
the cost of raw materials or key components we use in our products. Environmental regulations require us to reduce product energy or water
usage, monitor and exclude an expanding list of restricted substances and to participate in required recovery and recycling of its products.
In addition, reporting expectations from customers, capital providers and regulators regarding climate-related risks and sustainability
are increasing, which may require us to incur significant additional compliance costs, implement new internal controls and processes,
and impose increased oversight obligations on our management and board of directors. These risks may also impact our suppliers, business
partners or customers, which may indirectly impact our business, financial condition, or results of operations.
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Our business may be adversely
affected by changes in automotive safety regulations or concerns that drive further regulation of the automobile safety market.
Government vehicle safety regulations in many jurisdictions are
an important factor for our business. While certain regulations, such as those promulgated by the United Nations Economic Commission for
Europe (UNECE), apply broadly across UN member countries, individual countries and regions maintain their own regulatory frameworks that
may differ significantly, with some jurisdictions imposing more stringent standards and others imposing additional or alternative requirements.
Historically, these regulations have imposed ever-more stringent safety regulations for vehicles. These safety regulations often require,
or customers demand that, vehicles have more safety features per vehicle and more advanced safety products. Some of the regulations may
apply directly to us, and some may apply only to our customers, for example for certifying the completed vehicle and obtaining the relevant
type-approvals. Even where automotive regulations do not apply directly to us, they impact our business indirectly through our customers'
contractual obligations to comply with specific customer requirements and industry standards, requiring us to adapt our products and operations
to meet not only direct regulatory requirements but also the varied standards our customers must satisfy. Moreover, as advanced driver
assistance systems and automated driving technologies continue to evolve, regulatory frameworks governing these technologies are changing
rapidly and remain in flux as regulators gather more real-world data and safety information, creating ongoing uncertainty regarding future
compliance requirements.
Although we believe increasing automotive safety standards will
present a market opportunity for our products, government safety regulations are subject to change based on a number of factors that are
not within our control, including but not limited to, new scientific or technological data, public concerns regarding alleged safety risks
of ADAS or autonomous driving, adverse publicity generated by government safety investigations, industry recalls or accidents, domestic
and foreign political developments or considerations, and litigation relating to our products and our competitors’ products. Changes
in government regulations, as well as changes or evolution in court doctrines in interpreting those regulations, especially in the ADAS
and autonomous driving industries, could adversely affect our business. If government priorities shift and we are unable to adapt to changing
regulations or to court interpretations of those regulations, our business may be materially and adversely affected.
In the United States, regulation of ADAS and autonomous driving
falls primarily within the purview of the National Highway Traffic Safety Administration (“NHTSA”) of the U.S. Department
of Transportation, although other federal agencies are also involved to a more limited extent. Both federal and state authorities in the
U.S. have been actively engaged in regulatory scrutiny of ADAS and autonomous driving solutions, and such authorities may impose more
stringent compliance and reporting requirements in response to product recalls and safety issues in the automotive industry.
For any of our products incorporated into vehicles, we are a
vehicle equipment manufacturer subject to existing requirements under the National Traffic and Motor Vehicle Safety Act of 1966 (“Vehicle
Safety Act”) and the Federal Motor Vehicle Safety Standards (FMVSS) and other regulations promulgated by the NHTSA pursuant thereto.
Any applicable FMVSS, which may be amended from time to time, must be considered in a self-certification process before a vehicle may
be released into the U.S. market. Additional requirements include a duty to report, subject to strict timing requirements, any defect
with our products that is related to motor vehicle safety. The Vehicle Safety Act imposes potentially significant civil penalties for
violations, including for failure to report such defects. We are also subject to the Transportation Recall Enhancement, Accountability
and Documentation Act (“TREAD”) and NHTSA’s implementing regulations and must comply with “Early Warning”
requirements by reporting a wide range of information (e.g., consumer complaints, warranty claims,
etc.) that could indicate a potential safety defect. TREAD imposes criminal liability for violating such requirements if a defect is confirmed
subsequently and has caused death or bodily injury. In addition, the Vehicle Safety Act authorizes NHTSA to require a manufacturer to
recall and repair vehicles with any safety defect or that fail to comply with any FMVSS, and this obligation would apply in the event
our products had a safety defect and prompted such a recall and repair action. Our distribution into foreign countries may be subject
to similar regulations. If we cannot rapidly address any safety concerns or defects with our products, our business may be adversely affected.
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NHTSA has taken a number of actions in recent years specific
to ADAS and autonomous driving, including imposing crash reporting requirements on manufacturers and operators of vehicles equipped with
automated driving systems, and updating FMVSS to address vehicles with automated driving systems and non-conventional designs. In 2016,
NHTSA secured a voluntary commitment from 20 automakers representing over 99% of U.S. market share to equip future vehicles with automatic
emergency braking (“AEB”) systems. AEB systems would become standard on substantially all light-duty cars and trucks with
a gross vehicle weight of 8,500 pounds or less beginning no later than September 1, 2022 and on substantially all trucks with gross vehicle
weight between 8,501 pounds and 10,000 pounds beginning no later than September 1, 2025. In May 2024, NHTSA finalized a rule that requires
AEB systems, including pedestrian AEB systems, on all passenger cars and light trucks by September 2029. Although in January 2025, NHTSA
delayed the rule’s effective date to March 2025, the September 2029 deadline remains in place. In 2020, NHTSA updated guidelines
for the testing and deployment of automated driving systems, providing unified guidance across federal government sectors for the development
and integration of automated vehicles, with a focus on safety, innovation and regulatory consistency. Prior to President Trump taking
office in January 2025, NHTSA proposed a voluntary national framework called AV STEP that would remove existing caps on driverless vehicles
but impose additional data reporting requirements. The program has not been adopted yet by the Trump Administration, but in April 2025,
the Administration announced a new NHTSA AV Framework as part of the Department of Transportation’s agenda to promote domestic innovation.
NHTSA’s AV Framework includes three key principles: 1) prioritize the safety of ongoing AV operations on public roads; 2) unleash
innovation by removing unnecessary regulatory barriers; and 3) enable commercial deployment of AVs to enhance safety and mobility for
the American public. While the announcement indicated that NHTSA will explore further avenues to accelerate the domestic development of
AVs, it identified two initial actions that NHTSA will take under this Framework: (i) the issuance of the Third Amended Standing General
Order 2021-01 and (ii) the expansion of the Automated Vehicle Exemption Program to include domestically produced vehicles. In September
2025, pursuant to the Framework, NHTSA announced three proposed rulemakings, which would update FMVSS 102 (“Transmission shift position
sequence, starter interlock and transmission braking effect”), FMVSS 103 (“Windshield defrosting and defogging systems”),
FMVSS 104 (“Windshield wiping and washing systems”), and FMVSS 108 (“Lamps, reflective devices and associated equipment”),
to address standards for vehicles with automated driving systems and no manual controls. Proposed rules to amend these FMVSSs are expected
to be released for public comment in April 2026. These and future regulatory developments may impose additional compliance obligations
on us or our customers and could adversely affect our business.
In addition to federal regulatory developments, many U.S. states
have imposed their own requirements on autonomous vehicle development and testing, including operational, registration and financial assurance
requirements. As of early 2026, 29 states and the District of Columbia have enacted laws to regulate autonomous vehicles, primarily through
testing, safety, permitting and reporting mechanisms, while many other states have utilized executive orders to govern these areas. For
example, California has regulated autonomous vehicles in various forms since 2012 and in December 2022 introduced legislation that would
prohibit certain full self-driving marketing claims. While state-level restrictions may ease as the data and experience supporting the
safety of autonomous functionality grows, we cannot predict when or whether that might happen, and state-level regulatory fragmentation
could increase compliance costs or limit the markets in which our customers can deploy vehicles equipped with our products.
Outside the United States, foreign markets in which our customers
operate or intend to deploy vehicles equipped with our products are also developing their own regulatory frameworks for autonomous driving,
which may differ materially from U.S. requirements. In the European Union, emerging regulatory and legislative activity around autonomous
vehicles has focused significantly on data privacy and security, given the volume and types of data collected, stored and transmitted
by autonomous vehicles. The EU’s emerging AV strategy includes the creation of a common European mobility data space as part of
its “Smart and Sustainable Transport Strategy.” In China, the government has undertaken efforts to promote autonomous vehicle
development, including the release in February 2020 of the Strategies for Innovation and Development of Autonomous Vehicles by China’s
National Development and Reform Commission, which sets forth a framework for technical innovation, industrial ecology, infrastructure,
regulations and standards in the AV market. Other jurisdictions, including Japan and Korea, are similarly developing autonomous vehicle
regulatory frameworks. While we expect workable regulatory paths forward in these markets in the near term, these international frameworks
remain in early stages of development, and divergent or restrictive regulatory requirements across jurisdictions could increase compliance
burdens for us and our customers, delay the deployment of autonomous vehicles using our products, or limit our addressable market. There
can be no assurance that these international regulatory developments will be favorable to our products or technology.
To the extent such additional obligations apply to our products,
our compliance obligations may increase, and to the extent such additional obligations require changes in the design, testing, or operation
of our products, we could suffer adverse business consequences.
21
Failures, or perceived
failures, to comply with privacy, data protection, and information security requirements in the variety of jurisdictions in which we operate
may adversely impact our business, and such legal requirements are evolving, uncertain and may require improvements in, or changes to,
our policies and operations.
Our current and potential future operations and sales involve
the processing of information that relates to individuals and/or constitutes “personal data,” “personal information,”
“personally identifiable information,” or similar terms under applicable data privacy laws (collectively, “Personal
Information”) and thus subject us, and may subject our customers and vendors, to a variety of federal, state, and foreign data privacy
laws, rules, industry standards, regulations, and other requirements addressing privacy and the collection, use, storage, processing,
disclosure, transfer and protection of a variety of types of Personal Information. These requirements, and their application, interpretation
and amendment are constantly evolving and developing. For example, the UK and EU General Data Protection Regulations are directly applicable
across the UK and European Economic Area; China has adopted a stringent data privacy and security framework; Japan has amended its regime,
California has enacted the California Consumer Privacy Act (which has prompted a wave of similar laws in other states); and the IL Protection
of Privacy law, 5741-1981 has been significantly amended (effective as of August 2025). Each of these regimes provide for potentially
material penalties for non-compliance and may, among other things, impose data security requirements, disclosure and contracting requirements,
and restrictions on data collection, uses, transfers and sharing that may impact our operations and the development of our business. While,
generally, we do not have access to, neither do we collect, store, process, or share Personal Information collected by our solutions in
the course of their use by our end users or customers, unless our customers choose to proactively provide such Personal Information to
us, our products may evolve both to address potential customer requirements or to add new features and functionality. Therefore, the full
impact of these privacy regimes on our business is rapidly evolving across jurisdictions and remains uncertain at this time.
These privacy and data security regimes are evolving, uncertain
and complex, and we may need to update or enhance our compliance measures as our products, markets and customer demands develop, which
may require significant implementation costs. We are also subject to our customers’ privacy and data security requirements and audits.
The compliance measures we adopt may prove ineffective. Any failure, or perceived failure, by us to comply with applicable requirements
could result in significant proceedings, fines, damages, reputational harm, loss of proprietary data, disruption to our business and diminished
ability to attract or retain customers. If any of these events were to occur, they could have an adverse effect on our financial condition,
results of operations, reputation, and business.
We are subject to cybersecurity
risks to operational systems, security systems, infrastructure, firmware and software in our LiDAR and customer data and other information
processed by us or third-party vendors or suppliers, and any material failure, weakness, interruption, cyber event, or incident, or breach
of security could prevent us from effectively operating our business.
We rely on computer systems, hardware, software, technology infrastructure
and online sites and networks for both internal and external operations that are critical to our business (collectively, “IT Systems”).
We own and manage some of these IT Systems but also rely on third parties for a range of IT Systems and related products and services.
We and certain of our third-party providers store, handle, transmit and otherwise process data that includes Personal Information as well
as proprietary information such as trade secrets (collectively, “Confidential Information”).
We are subject to evolving laws on cybersecurity and face numerous
and evolving cyber risks that threaten the confidentiality, integrity and availability of our IT Systems and Confidential Information,
including from diverse threat actors, such as insiders (through inadvertence or with malicious intent) or malicious third parties (including
nation-states or nation-state supported actors), as well as through diverse attack vectors, such as social engineering/phishing, malware
(including ransomware), malfeasance by insiders, human or technological error, and as a result of malicious code embedded in open-source
software, or misconfigurations, bugs or other vulnerabilities in commercial software that is integrated into our (or our suppliers’
or service providers’) IT Systems, products or services. Threat actors are becoming increasingly sophisticated in using techniques
and tools, including artificial intelligence, that circumvent any infrastructure we use to protect our network, evade detection and remove
forensic evidence. As a result, we may be unable to detect, investigate, remediate or recover from future attacks or incidents, or to
avoid a material adverse impact to our IT Systems, Confidential Information or business. Such cyber incidents could materially disrupt
operational systems and cause disruption to our business; result in loss of Confidential Information; jeopardize the security of our facilities;
impact our financial results; or affect the performance of in-product technology and the integrated software in our LiDAR solutions. In
addition, we rely on third-party service providers to host or otherwise process our Confidential Information, and any failure by a third
party, or any other entity in our collective supply chain, to prevent or mitigate data security breaches or improper access to, or use,
acquisition, disclosure, alteration, or destruction of, such Confidential Information could have similar adverse consequences for us.
22
For instance, cyber criminals or insiders may target us or third
parties with which we have business relationships in an effort to obtain Confidential Information, or in a manner that disrupts our operations
or our development tools or compromises our products or IT Systems into which our products are integrated. Cyber criminals could also
target accessing our IT Systems in a manner which could impact our sensor data or the development process. Remote and hybrid working arrangements
at our company (and at many third-party providers) also increase cybersecurity risks due to the challenges associated with managing and
controlling remote computing assets and security vulnerabilities that are present in many non-corporate and home network devices. Additionally,
any integration of artificial intelligence in our or any service providers’ operations, products or services is expected to pose
new or unknown cybersecurity risks and challenges. The techniques used by cyber attackers change frequently and may be difficult to detect
for long periods of time. We have experienced and expect to continue to experience actual and attempted cyber-attacks of our IT networks,
such as through phishing scams and ransomware. Although, to our knowledge, none of these actual or attempted cyber-attacks have had a
material adverse impact on our operations or financial condition, we cannot guarantee that any such incidents will not have such an impact
in the future. We are also at risk for cyber incidents resulting from interruptions, outages and breaches of: operational systems, including
business, corporate, human resources, financial, accounting, product development, data processing or production processes, owned by us
or our third-party vendors or suppliers; facility security systems, owned by us or our third-party vendors or suppliers; in-product technology
owned by us or our third-party vendors or suppliers; the integrated software in our LiDAR solutions or development tools; or customer
or driver data that we process or our third-party vendors or suppliers process on our behalf.
We maintain information technology measures designed to protect
our IT Systems and Confidential Information. However, such measures and frameworks, while substantial, require continuous updates and
improvements, and we cannot guarantee that such measures, including our policies, controls or procedures, will be fully implemented, complied
with or effective in detecting, preventing or mitigating cyber incidents. Furthermore, given the nature of complex systems, software and
services like ours, and the scanning tools that we deploy across our networks and products, we regularly identify and track security vulnerabilities.
We are unable to comprehensively apply patches or confirm that measures are in place to mitigate all such vulnerabilities, or that patches
will be applied before vulnerabilities are exploited by a threat actor. The implementation, maintenance, segregation and ongoing improvement
of our IT Systems requires significant management time, support and cost. Moreover, there are inherent risks associated with developing,
improving, expanding and updating current IT Systems, including the disruption of our data management, procurement, production execution,
finance, supply chain and sales and service processes. These risks may affect our ability to manage our data and inventory, procure parts
or supplies or produce, sell, deliver and service our solutions, adequately protect our Confidential Information or achieve and maintain
compliance with, or realize available benefits under, applicable laws, regulations and contracts. If we do not successfully implement,
maintain or expand these IT Systems as planned, our operations may be disrupted, our ability to accurately and timely report our financial
results could be impaired, and deficiencies may arise in our internal control over financial reporting, which may impact our ability to
certify our financial results. Further, our Confidential Information could be compromised or misappropriated, and our reputation may be
adversely affected. If these IT Systems do not operate as we expect them to, we may be required to expend significant resources to make
corrections or find alternative sources for performing these functions.
Any adverse impact to the availability, integrity or confidentiality
of our IT Systems or Confidential Information could impact production capability and our ongoing operations, harm our reputation, cause
us to breach our contracts with other parties or subject us to regulatory investigations, enforcement actions, fines and penalties, litigation
(including class actions), negative reputational impacts that may cause us to lose existing or future customers, and/or significant incident
response, system restoration or remediation and future compliance costs. Any or all of the foregoing could materially affect our business,
prospects, financial condition and operating results. Any problems with our third-party cloud hosting providers, whether due to cyber
security failures or other causes, could result in lengthy interruptions in our business. Finally, we cannot guarantee that any costs
and liabilities incurred in relation to a cybersecurity attack or incident will be covered by our existing insurance policies or that
applicable insurance will be available to us in the future on economically reasonable terms or at all.
We are subject to the
U.S. Foreign Corrupt Practices Act and other U.S. and foreign anti-corruption anti-money laundering, export control, sanctions, and other
trade laws and regulations, and any determination that we violated these laws could have a material adverse effect on our business.
We are subject to export control and import laws and regulations,
including the U.S. Export Administration Regulations, U.S. Customs regulations, and various economic and trade sanctions regulations administered
by the U.S. Treasury Department’s Office of Foreign Assets Control. We are also subject to the U.S. Foreign Corrupt Practices Act
of 1977, as amended (the “FCPA”), the U.S. domestic bribery statute contained in 18 U.S.C. § 201, the U.S. Travel Act,
the USA PATRIOT Act, the United Kingdom Bribery Act 2010, the Proceeds of Crime Act 2002, and possibly other anti-bribery and anti-money
laundering laws in countries outside of the United States in which we conduct our activities. Anti-corruption laws are interpreted broadly
and prohibit companies and their employees and third-party intermediaries from authorizing, promising, offering, providing, soliciting,
or accepting, directly or indirectly, improper payments or benefits to or from any person whether in the public or private sector. Our
activities may create the risk of unauthorized payments or offers of payments by employees, consultants, sales agents or distributors,
even though they may not always be subject to our control. It is our policy to prohibit these practices by our employees, consultants,
sales agents and distributors. However, we cannot guarantee our policies and controls will prevent all violations by our employees, consultants,
sales agents, or distributors who may engage in conduct for which we might be held responsible, even if we do not explicitly authorize
such activities.
23
Noncompliance with anti-corruption, anti-money laundering, export
control, sanctions, and other trade laws could subject us to whistleblower complaints, investigations, sanctions, settlements, prosecution,
other enforcement actions, disgorgement of profits, significant fines, damages, other civil and criminal penalties or injunctions, suspension
and/or debarment from contracting with certain persons, the loss of export privileges, reputational harm, adverse media coverage and other
collateral consequences. If any subpoenas or investigations are launched, or governmental or other sanctions are imposed, or if we do
not prevail in any possible civil or criminal litigation, our business, results of operations and financial condition could be materially
harmed. Responding to any action will likely result in a materially significant diversion of management’s attention and resources
and significant defense and compliance costs and other professional fees. As a general matter, enforcement actions and sanctions could
harm our business, results of operations, and financial condition.
Regulations related to
conflict minerals may cause us to incur additional expenses and could limit the supply and increase the costs of certain metals used in
the manufacturing of our products.
We are subject to the requirements under the Dodd-Frank Wall
Street Reform and Consumer Protection Act of 2010, or the Dodd-Frank Act, that requires us to determine, disclose and report whether our
products contain tin, tantalum, tungsten and gold, referred to as conflict minerals. The implementation of these requirements could adversely
affect the sourcing, availability and pricing of the materials used in the manufacture of components used in our products. In addition,
we will incur additional costs to comply with the disclosure requirements, including costs related to conducting diligence procedures
to determine the sources of conflict minerals that may be used in or necessary to the production of our products and, if applicable, potential
changes to products, processes or sources of supply as a consequence of such verification activities. It is also possible that our reputation
may be adversely affected if we determine that certain of our products contain minerals not determined to be conflict-free as defined
in the Dodd-Frank Act or if we are unable to alter our products, processes or sources of supply to avoid use of such materials.
Increasing attention to,
and evolving expectations regarding, environmental, social and sustainability matters may impact our business and reputation.
Evolving and increased expectations regarding environmental,
social and sustainability initiatives and disclosures may result in increased costs, enhanced compliance or disclosure obligations, or
other impacts to our business, financial condition, or results of operations. Moreover, our environmental, social and sustainability initiatives
may be costly and may not have the desired effect, or we may ultimately be unable to complete certain initiatives or targets, either on
the timelines initially announced or at all, due to technological, legal, cost, or other constraints, which may be within or outside of
our control. Moreover, actions or statements that we may take based on expectations, assumptions, or third-party information that we currently
believe to be reasonable may subsequently be determined to be erroneous or be subject to misinterpretation. If we fail to, or are perceived
to fail to, comply with or advance certain environmental, social or sustainability initiatives, we may be subject to various adverse impacts,
including reputational damage, activism and potential stakeholder engagement and/or litigation. Additionally, many of our customers, business
partners, and suppliers may be subject to similar expectations, which may augment or create additional risks, including risks that may
not be known to us.
24
As a result of being a
public company, we are obliged to develop and maintain proper and effective internal controls over financial reporting, and any failure
to maintain the adequacy of these internal controls may adversely affect investor confidence in our company and, as a result, the value
of our ordinary shares.
Our business is subject to the reporting requirements of the
Securities Act of 1933 (the “Securities Act”), the Securities Exchange Act of 1934, as amended (the “Exchange Act”),
the Sarbanes-Oxley Act of 2002 (the “Sarbanes-Oxley Act”) and the rules and regulations of Nasdaq. We expect that the requirements
of these rules and regulations will continue to increase our legal, accounting and financial compliance costs, make some activities more
difficult, time-consuming and costly, and place significant strain on our personnel, systems and resources.
The Sarbanes-Oxley Act requires, among other things, that we
maintain effective disclosure controls and procedures and internal control over financial reporting. We are continuing to develop and
refine our disclosure controls and other procedures that are designed to ensure that information required to be disclosed by us in the
reports that we will file with the U.S. Securities and Exchange Commission (the “SEC”) is recorded, processed, summarized
and reported within the time periods specified in SEC rules and forms, and that information required to be disclosed in reports under
the Exchange Act is accumulated and communicated to our principal executive and financial officers. We are also continuing to improve
our internal control over financial reporting.
Our current controls and any new controls that we develop may
become inadequate because of changes in conditions in our business. Further, weaknesses in our internal controls may be discovered in
the future. Any failure to develop or maintain effective controls, or any difficulties encountered in their implementation or improvement,
could adversely affect our operating results or cause us to fail to meet our reporting obligations and may result in a restatement of
our financial statements for prior periods. Any failure to implement and maintain effective internal controls also could adversely affect
the results of periodic management evaluations and annual independent registered public accounting firm attestation reports regarding
the effectiveness of our internal control over financial reporting that it is required to include in our periodic reports we will file
with the SEC under Section 404 of the Sarbanes-Oxley Act. Ineffective disclosure controls and procedures and internal control over financial
reporting could also cause investors to lose confidence in our reported financial and other information.
In order to maintain and improve the effectiveness of our disclosure
controls and procedures and internal control over financial reporting, we have expended and anticipate that we will continue to expend
significant resources, including accounting-related costs, and provide significant management oversight. Any failure to maintain the adequacy
of our internal controls, or consequent inability to produce accurate financial statements on a timely basis, could increase our operating
costs and could materially and adversely affect our ability to operate our business. In the event that our internal controls are perceived
as inadequate or that we are unable to produce timely or accurate financial statements, investors may lose confidence in our operating
results and the price of our ordinary shares and warrants could decline. In addition, if we are unable to continue to meet these requirements,
we may not be able to maintain our listing on Nasdaq.
Our independent registered public accounting firm is not required
to attest to the effectiveness of our internal control over financial reporting until after we are no longer an emerging growth company,
which we expect to occur during 2026. At such time, our independent registered public accounting firm may issue a report that is adverse
in the event it is not satisfied with the level at which our controls are documented, designed or operating. Any failure to maintain effective
disclosure controls and internal control over financial reporting could have a material and adverse effect on our business and operating
results.
Risks Related to Ownership of Our Ordinary Shares and Warrants
Our amended and restated
articles of association (the “Articles”) and Israeli law could prevent a takeover that shareholders consider favorable and
could also reduce the market price of our ordinary shares and warrants.
Certain provisions of Israeli law and our Articles could have
the effect of delaying or preventing a change in control and may make it more difficult for a third party to acquire us or for our shareholders
to elect different individuals to our board of directors, even if doing so would be beneficial to our shareholders and warrantholders,
and may limit the price that investors may be willing to pay in the future for our ordinary shares and warrants. For example, the Israeli
Companies Law, 5759-1999 (the “Companies Law”) regulates mergers, requires that a tender offer be effected when certain thresholds
of percentage ownership of voting power in a company are exceeded (subject to certain conditions) and establishes a high ownership threshold
to squeeze out minority shareholders in a full tender offer. Further, Israeli tax considerations may make potential transactions undesirable
to us or to some of our shareholders whose country of residence does not have a tax treaty with Israel granting tax relief to such shareholders
from Israeli tax. See Item 10.E. “Taxation – Taxation and Government Programs – Israeli
Tax Considerations and Government Programs”.
25
Our private placement
warrants are accounted for as liabilities, and the changes in value of our private placement warrants could impact our financial results.
On April 12, 2021, the Staff of the SEC issued a statement regarding
the accounting and reporting considerations for warrants issued by special purpose acquisition companies titled “Staff Statement
on Accounting and Reporting Considerations for Warrants Issued by Special Purpose Acquisition Companies (“SPACs”)” (the
“SEC Statement”).
The SEC Statement focused on certain settlement terms and provisions
related to certain tender offers following a business combination. The terms described in the SEC Statement are common in SPACs and are
similar to the terms contained in the Warrant Agreement dated as of April 30, 2020, between Continental Stock Transfer & Trust Company
and Collective Growth Corporation (the “Warrant Agreement”) governing our warrants. Following the SEC Statement, we examined
the accounting treatment of our public warrants and private placement warrants, and determined to classify the private placement warrants
as derivative liabilities measured at fair value, with changes in fair value each period reported in earnings, while the public warrants
are classified as equity.
As a result, included on our balance sheet as of December 31,
2025 contained elsewhere in this Annual Report are private placement warrants. Accounting Standards Codification 815, Derivatives and
Hedging (“ASC 815”), provides for the re-measurement of the fair value of such derivatives at each balance sheet date, with
a resulting non-cash gain or loss related to the change in the fair value being recognized in earnings in the statement of operations.
As a result of the recurring fair value measurement, our financial statements and results of operations may fluctuate quarterly based
on factors which are outside of our control. Due to the recurring fair value measurement, we expect that we will recognize non-cash gains
or losses on our private placement warrants each reporting period and that the amount of such gains or losses could be material.
A market for our securities
may not be sustained, which would adversely affect the liquidity and price of our securities.
An active trading market for our securities may not be sustained.
In addition, the price of our securities can vary due to general economic conditions and forecasts, interest rates, our general conditions
and the release of our financial reports. Additionally, if our securities become delisted from Nasdaq and are quoted on the OTC Bulletin
Board (an inter-dealer automated quotation system for equity securities that is not a national securities exchange), the liquidity and
price of our securities may be more limited than if we were quoted or listed on the NYSE, Nasdaq or another national securities exchange.
You may be unable to sell your securities unless a market can be established or sustained.
26
We do not intend to pay
dividends in the foreseeable future.
We have never declared or paid any cash dividends on our ordinary
shares, and we currently intend to retain all available funds and any future earnings for use in the operation of our business and do
not anticipate paying any dividends on our ordinary shares in the foreseeable future. Any future determination to pay dividends on our
ordinary shares will be at the discretion of our board of directors, subject to applicable law, and would depend on our financial condition,
results of operations, capital requirements, general business conditions, and other factors that our board of directors may deem relevant.
Consequently, you may be unable to realize a gain on your investment except by selling our ordinary shares after price appreciation, which
may never occur.
Our board of directors has sole discretion whether to pay dividends.
If our board of directors decides to pay dividends, the form, frequency, and amount will depend upon our future operations and earnings,
capital requirements and surplus, general financial condition, contractual restrictions and other factors that our directors may deem
relevant. The Companies Law imposes restrictions on our ability to declare and pay dividends. See the section titled “Description
of our Ordinary Shares—Dividend and Liquidation Rights” in Exhibit 2.1 of this Annual Report for additional information.
Payment of dividends may also be subject to Israeli withholding taxes. See Item 10.E. “Taxation
– Taxation and Government Programs – Israeli Tax Considerations and Government Programs” for additional information.
Our failure to maintain
compliance with Nasdaq’s continued listing requirements could result in the delisting of our ordinary shares.
Our ordinary shares are currently listed for trading on Nasdaq.
We must satisfy Nasdaq’s continued listing requirements, including, among other things, a minimum bid price requirement of $1.00
per ordinary share or risk delisting.
On March 28, 2025, we received a letter from the Listing Qualifications
Department indicating that for the thirty consecutive business days prior, the bid price for the ordinary shares had closed below the
minimum $1.00 per ordinary share requirement for continued listing on Nasdaq under Nasdaq Listing Rule 5550(a)(2). In accordance with
Nasdaq Listing Rule 5810(c)(3)(A), we were provided an initial period of 180 calendar days, or until September 22, 2025, to regain compliance.
The letter stated that the Listing Qualifications Department staff will provide written notification that we have achieved compliance
with Rule 5550(a)(2) if at any time before September 22, 2025, the bid price of the ordinary shares closed at $1.00 per ordinary share
or more for a minimum of ten consecutive business days.
On July 3, 2025, we announced that we received formal written
confirmation from Nasdaq confirming that the Company regained compliance with Nasdaq’s minimum bid price requirement. The closing
bid price of the ordinary shares was at $1.00 per share or greater for 10 consecutive business days from June 17, 2025, to July 1, 2025.
Accordingly, Nasdaq Listing Qualifications Staff notified the Company that it determined that the Company regained compliance with Nasdaq
Listing Rule 5550(a)(2), and that the matter was closed.
No assurance can be given that the price of the ordinary shares
will not again be in violation of Nasdaq’s minimum bid price requirement in the future. Our failure to meet this or other requirements
may result in our securities being delisted from Nasdaq. A delisting could substantially decrease trading in the ordinary shares, adversely
affect the market liquidity of the ordinary shares as a result of the loss of market efficiencies associated with Nasdaq and the loss
of federal pre-emption of state securities laws, adversely affect our ability to obtain financing on acceptable terms, if at all, and
may result in the potential loss of confidence by investors, suppliers, customers and employees and fewer business development opportunities.
Additionally, the market price of the ordinary shares may decline further, and shareholders may lose some or all of their investment.
Our ordinary shares and
warrants may not continue to be listed on a national securities exchange, which could limit investors’ ability to make transactions
in such securities and subject us to additional trading restrictions.
We may be unable to maintain the listing of our ordinary shares
and warrants on Nasdaq in the future. If we fail to meet the listing requirements and Nasdaq does not list our ordinary shares and warrants,
we could face significant material adverse consequences, including:
| • |
a limited availability of market quotations for our ordinary shares and warrants; |
| • |
a reduced level of trading activity in the secondary trading market for our ordinary shares and warrants; |
| • |
a limited amount of news and analyst coverage for us; |
| • |
a decreased ability to issue additional securities or obtain additional financing in the future; and |
| • |
our securities would not be “covered securities” under the National Securities Markets Improvement Act of 1996, which
is a federal statute that prevents or pre-empts the states from regulating the sale of certain securities, including securities listed
on Nasdaq, in which case our securities would be subject to regulation in each state where we offer and sell securities. |
27
The market price and trading
volume of our ordinary shares and warrants may be volatile and could decline significantly.
Nasdaq, the stock market on which our ordinary shares and warrants
are listed under the symbols “INVZ,” and “INVZW,” respectively, have from time to time experienced significant
price and volume fluctuations. Even if an active, liquid and orderly trading market is sustained for our ordinary shares and warrants,
the market price of our ordinary shares and warrants may be volatile and could decline significantly. In addition, the trading volume
in our ordinary shares and warrants may fluctuate and cause significant price variations to occur. We cannot assure you that the market
price of our ordinary shares and warrants will not fluctuate widely or decline significantly in the future in response to a number of
factors, including, among others, the following:
| • |
the realization of any of the risk factors presented in this Annual Report; |
| • |
actual or anticipated differences in our estimates, or in the estimates of analysts, for our revenues, results of operations, level
of indebtedness, liquidity or financial condition; |
| • |
announcement of any material business development; |
| • |
announcements by competitors or perceived competitors regarding their products, technology development, customer wins, partnerships
or market position, as well as announcements by our partners or perceived partners regarding their strategic direction, technology initiatives
or business relationships, which may affect investor perception of our competitive position and market opportunity; |
| • |
availability of capital to fund our contracts and our growth; |
| • |
additions and departures of key personnel; |
| • |
failure to comply with the requirements of Nasdaq (including the continued listing requirements); |
| • |
failure to comply with the Sarbanes-Oxley Act or other laws or regulations; |
| • |
future issuances, sales, resales or repurchases or anticipated issuances, sales, resales or repurchases, of our securities including
due to the expiration of contractual lock-up agreements or exercise of warrants; |
| • |
publication of research reports about us; |
| • |
the performance and market valuations of other similar companies; |
| • |
failure of securities analysts to initiate or maintain coverage of our company, changes in financial estimates by any securities
analysts who follow us or our failure to meet these estimates or the expectations of investors; |
| • |
new laws, regulations, subsidies, or credits or new interpretations of existing laws applicable to us; |
| • |
commencement of, or involvement in, litigation involving us or any parties indemnified by us; |
| • |
broad disruptions in the financial markets, including sudden disruptions in the credit markets; |
| • |
speculation in the press or investment community; |
| • |
actual, potential or perceived control, accounting or reporting problems; |
| • |
changes in accounting principles, policies and guidelines; and |
| • |
other events or factors, including those resulting from infectious diseases, health epidemics and pandemics, natural disasters, war,
acts of terrorism (such as the war and hostilities between Israel and Hamas, Hezbollah, the Houthi movement and Iran) or responses to
these events. |
In the past, securities class-action litigation has often been
instituted against companies following periods of volatility in the market price of their shares. This type of litigation could result
in substantial costs and divert our management’s attention and resources, which could have a material adverse effect on us.
28
We expect our results
of operations to fluctuate on a quarterly and annual basis, which could cause the price of our ordinary shares and warrants to fluctuate
or decline.
Our quarterly and annual results of operations have fluctuated
in the past and may vary significantly in the future. As such, historical comparisons of our operating results may not be meaningful.
In the past, our sales were primarily to customers making purchases for research and development projects. Following our strategic transition
to become a Tier-1 automotive supplier, non-recurring engineering or application engineering services (“NRE”) became another
incremental source of revenue during the pre-production phase of the programs. Additionally, in connection with our BMW L3 Program, we
sold components to Magna at lower average production sales prices. Therefore, our revenues from
sales and NRE in any given quarter can fluctuate based on the timing and success of our customers’ programs and the stage of the
program. Accordingly, the results of any one quarter should not be relied upon as an indication of future performance. Our quarterly financial
results may fluctuate as a result of a variety of factors, many of which are outside of our control, and may not fully reflect the underlying
performance of our business. These fluctuations could adversely affect our ability to meet our expectations or those of securities analysts
or investors. If we do not meet these expectations for any period, the value of our business and our securities could decline significantly.
Factors that may cause these quarterly or annual fluctuations include, without limitation, those listed below:
| • |
the timing and magnitude of orders and shipments of our products in any quarter; |
| • |
the timing and magnitude of any NREs; |
| • |
pricing changes we may adopt to drive market adoption or in response to competitive pressure; |
| • |
our ability to attract and retain talent to develop, support, and promote our business across different functions and geographies;
|
| • |
our ability to retain our existing customers and attract new customers; |
| • |
our ability to develop, introduce, manufacture and ship in a timely manner products that meet customer requirements; |
| • |
disruptions in our sales channels or termination of our relationship with important channel partners; |
| • |
delays in customers’ purchasing cycles or deferments of customers’ purchases in anticipation of new products or updates
from us or our competitors; |
| • |
fluctuations in demand pressures for our products; |
| • |
the timing and rate of broader market adoption of autonomous systems utilizing our solutions across the automotive and other market
sectors; |
| • |
market acceptance of LiDAR and further technological advancements by our competitors and other market participants; |
| • |
the ability of our customers to commercialize systems that incorporate our products; |
| • |
any change in the competitive dynamics of our markets, including consolidation of competitors, regulatory developments and new market
entrants; |
| • |
our ability to effectively manage our inventory; |
| • |
changes in the source, cost, availability of and regulations pertaining to materials we use; |
| • |
adverse litigation, judgments, settlements or other litigation-related costs, or claims that may give rise to such costs; and
|
| • |
general economic, industry and market conditions, including trade disputes. |
29
We may be subject to securities
litigation, class action and derivative lawsuits, which could result in substantial costs and could divert management attention away from
other business concerns.
The market price of our securities may be volatile and, in the
past, companies that have experienced volatility in the market price of their securities have been subject to securities class action
litigation. We have been in the past and may be in the future the target of this type of litigation. Additionally, securities class action
lawsuits and derivative lawsuits are often brought against public companies that have entered into merger agreements. Even if the lawsuits
are without merit, defending against these claims can result in substantial costs and divert management time and resources from other
business concerns, which could seriously harm our business. An adverse judgment could result in monetary damages, which could have a negative
impact on our liquidity and financial condition. For example, on March 28, 2024, Sheadrick Richards, a purported stockholder of Collective
Growth Corporation, a Delaware corporation (“Collective Growth”), filed a lawsuit against Collective Growth’s directors
and affiliates in the Court of Chancery for the State of Delaware (the “Lawsuit”). The lawsuit alleged that Collective Growth’s
disclosures in connection with its Business Combination (defined herein) with Innoviz (completed in April 2021) were materially incomplete
and misleading, and that the directors breached their fiduciary duties. See Note 9 of our consolidated financial statements included elsewhere
in this Annual Report for additional information regarding the Lawsuit.
We have entered into indemnification agreements with each of
our current and former directors, certain of our current and former officers and certain third parties, and, in connection with the Business
Combination, agreed to indemnify certain former directors and officers of Collective Growth. Although we maintain insurance and run-off
coverages in amounts and with deductibles that we believe are appropriate for our operations, and our insurance and run-off coverages
may not cover all claims that have been or may be brought against us, and insurance coverage may not continue to be available to us at
a reasonable cost. As a result, we may be exposed to substantial uninsured liabilities, including pursuant to our indemnification obligations,
which could result in substantial costs and could divert management attention away from other business concerns.
If securities or industry
analysts cease publishing research or reports about us, our business, or our market, or if they change their recommendations regarding
our ordinary shares and warrants adversely, or if we fail to meet, or significantly exceed, the financial guidance we publicly announce
on a periodic basis, then the price and trading volume of our ordinary shares and warrants could decline.
The trading market for our ordinary shares and warrants is influenced
by the research and reports that industry or financial analysts publish about us or our business. We do not control these analysts, or
the content and opinions included in their reports. As a relatively new public company, analysts who publish information about our ordinary
shares and warrants will have had relatively little experience with us, which could affect their ability to accurately forecast our results
and could make it more likely that we fail to meet their estimates. If any of the analysts who cover us issues an inaccurate or unfavorable
opinion regarding us, the price of our ordinary shares and warrants could decline.
In addition, the share prices of many companies in the technology
industry have declined significantly after those companies have failed to meet, or significantly exceed, the financial guidance publicly
announced by the companies or the expectations of analysts. If our financial results fail to meet, or significantly exceed, our announced
guidance or the expectations of analysts or public investors, analysts could downgrade our ordinary shares and warrants or publish unfavorable
research about us and our securities. If one or more of these analysts cease coverage of us or fail to publish reports on us regularly,
our visibility in the financial markets could decrease, which in turn could cause the price of our ordinary shares and warrants or trading
volume to decline.
We qualify as an emerging
growth company within the meaning of the Securities Act, and if we take advantage of certain exemptions from disclosure requirements available
to emerging growth companies, this could make our securities less attractive to investors and may make it more difficult to compare our
performance with other public companies.
We are eligible to be treated as an emerging growth company,
as defined in Section 2(a) of the Securities Act, as modified by the Jumpstart Our Business Startups Act of 2012 (the “JOBS Act”).
Under the JOBS Act, emerging growth companies can delay adopting new or revised financial accounting standards until such time as those
standards apply to private companies. We intend to take advantage of this extended transition period under the JOBS Act for adopting new
or revised financial accounting standards.
For as long as we continue to be an emerging growth company,
we may also take advantage of certain exemptions from various reporting requirements that are applicable to other public companies that
are not emerging growth companies and not being required to comply with the auditor attestation requirements of Section 404 of the Sarbanes-Oxley
Act. As a result, our shareholders may not have access to certain information that they may deem important. We could be an emerging growth
company for up to five years from the consummation of the Business Combination, although circumstances could cause us to lose that status
earlier, including if our total annual gross revenue exceeds $1.235 billion, if we issue more than $1.0 billion in non-convertible debt
securities during any three-year period, or if before that time we are a “large accelerated filer” under U.S. securities laws.
We cannot predict if investors will find our ordinary shares
and warrants less attractive because we may rely on these exemptions. If some investors find our ordinary shares and warrants less attractive
as a result, there may be a less active trading market for our ordinary shares and warrants and the price for our ordinary shares and
warrants may be more volatile. Further, there is no guarantee that the exemptions available to us under the JOBS Act will result in significant
savings. To the extent that we choose not to use exemptions from various reporting requirements under the JOBS Act, we will incur additional
compliance costs, which may impact our financial condition.
We are a foreign private
issuer and, as a result, we are not subject to U.S. proxy rules and are subject to Exchange Act reporting obligations that, to some extent,
are more lenient and less frequent than those of a U.S. domestic public company.
We report under the Exchange Act as a non-U.S. company with foreign
private issuer status. Because we qualify as a foreign private issuer under the Exchange Act, we are exempt from certain provisions of
the Exchange Act that are applicable to U.S. domestic public companies, including (1) the sections of the Exchange Act regulating the
solicitation of proxies, consents or authorizations in respect of a security registered under the Exchange Act, and (2) the rules under
the Exchange Act requiring the filing with the SEC of quarterly reports on Form 10-Q containing unaudited financial and other specified
information, although we are subject to Israeli laws and regulations with regard to notice of shareholder meetings and intend to furnish
comparable quarterly financial information and proxy statements on Form 6-K. In addition, foreign private issuers are not required to
file their annual report on Form 20-F until 120 days after the end of each fiscal year, while U.S. domestic issuers that are accelerated
filers are required to file their annual report on Form 10-K within 75 days after the end of each fiscal year and U.S. domestic issuers
that are large accelerated filers are required to file their annual report on Form 10-K within 60 days after the end of each fiscal year.
Foreign private issuers are also exempt from Regulation FD, which is intended to prevent issuers from making selective disclosures of
material information. As a result of all of the above, our shareholders may not have the same protections afforded to shareholders of
a company that is not a foreign private issuer.
30
We may lose our “foreign
private issuer” status in the future, which could result in significant additional costs and expenses.
We are a foreign private issuer, and therefore we are not required
to comply with all of the periodic disclosure and current reporting requirements of the Exchange Act. The determination of foreign private
issuer status is made annually on the last business day of an issuer’s most recently completed second fiscal quarter, and, accordingly,
the next determination will be made with respect to us on June 30, 2026. In the future, we would lose our foreign private issuer status
if (1) more than 50% of our outstanding voting securities are owned by U.S. residents, (2) the sections of the Exchange Act requiring
insiders to file public reports of their share ownership and trading activities and liability for insiders who profit from trades made
in a short period of time and (3) a majority of our directors or executive officers are U.S. citizens or residents, or we fail to meet
additional requirements necessary to avoid loss of foreign private issuer status; however, following a recent amendment to Section 16(a)
of the Exchange Act, our directors and certain officers (as such term is defined under Rule 16a-1(f) of the Exchange Act) will no longer
be exempt from the reporting requirements under Section 16(a), effective March 18, 2026. If we lose our foreign private issuer status,
we will be required to file with the SEC periodic reports and registration statements on U.S. domestic issuer forms, which are more detailed
and extensive than the forms available to a foreign private issuer. We would also have to mandatorily comply with U.S. federal proxy requirements.
In addition, we would lose our ability to rely upon exemptions from certain corporate governance requirements under the listing rules
of Nasdaq. As a U.S. listed public company that is not a foreign private issuer, we would incur significant additional legal, accounting
and other expenses that we will not incur as a foreign private issuer.
As we are a “foreign
private issuer” and follow certain home country corporate governance practices, our shareholders may not have the same protections
afforded to shareholders of companies that are subject to all Nasdaq corporate governance requirements.
As a foreign private issuer, we have the option to follow certain
home country corporate governance practices rather than those of Nasdaq, provided that we disclose the requirements we are not following
and describe the home country practice we are following. We rely on this “foreign private issuer exemption”, among others,
with respect to the Nasdaq rules for shareholder meeting quorums, the establishment or amendment of equity-based compensation plans and
arrangements, and Nasdaq rules requiring shareholder approval for certain corporate actions. We may in the future elect to follow home
country practices with regard to other matters. As a result, our shareholders may not have the same protections afforded to shareholders
of companies that are subject to all Nasdaq corporate governance requirements.
Risks Related to Our Incorporation and Location in Israel
Political, economic, security
and other conditions in Israel could materially and adversely affect our business.
Most of our employees, including our executives, operate from
our offices in Rosh HaAin, Israel, and most of our officers and directors are residents of Israel. Accordingly, our business and operations
are directly affected by political, geopolitical, economic, security, and military conditions in Israel and the surrounding region.
Since October 7, 2023, Israel has been engaged in military conflicts
in multiple fronts. Following attacks by Hamas on Israeli communities and civilian and military targets in Southern Israel, Israel declared
war against Hamas and launched a prolonged military campaign in the Gaza Strip. A ceasefire agreement between Israel and Hamas took effect
on October 9, 2025, as part of a U.S.-proposed peace framework. In January 2026, the parties commenced an additional phase of that framework,
which contemplates disarmament steps, further Israeli military withdrawals and the deployment of international stabilization forces. The
implementation, timing and outcome of these arrangements remain uncertain.
Israel has also been involved in military conflict with Hezbollah
in Lebanon, including ground operations and extensive strikes on Hezbollah targets, leading to ceasefire agreement in November 2024. Nonetheless,
Israeli military activity in Lebanon has continued from time to time at varying levels of intensity, including during recent weeks.
In addition, instability in Syria following changes in its political
leadership has resulted in limited Israeli military operations targeting military assets and infrastructure, and continued volatility
in Syria may further destabilize the region.
31
In June 2025, Israel launched a military operation against Iranian
military and nuclear facilities. Iran retaliated with missile and drone attacks on targets in Israel. The United States also conducted
strikes against Iranian nuclear facilities before a ceasefire took effect. On February 28, 2026, Israel and the United States launched
a joint operation against targets in Iran. In response, Iran launched ballistic missiles and drones against targets in Israel and in other
countries in the region, including the United Arab Emirates, Bahrain and Kuwait, as well as at U.S. military assets in the Middle East.
As of the date hereof, certain military activities relating to this operation are ongoing, and their outcome and potential implications
remain uncertain.
The Houthi movement in Yemen has also carried out attacks against
Israel and maritime vessels in the Red Sea, resulting in disruptions to regional shipping routes and supply chains. Such attacks have
occurred intermittently and may resume or intensify depending on future developments, including regional hostilities, which could further
increase instability in the region.
Although ceasefire agreements have been reached on several fronts,
there can be no assurance that these agreements will be sustained. The security situation remains volatile, with potential for renewed
escalation, including into a broader regional conflict, and the probability, intensity and duration of any future hostilities are difficult
to predict.
These developments have had, and may continue to have, certain
macroeconomic consequences, including credit rating actions relating to Israel by Moody’s, S&P and Fitch. Regional hostilities,
including the temporary closures of the Strait of Hormuz during the June 2025 and February 2026 conflicts and disruptions in Red Sea shipping
routes, have affected international trade routes to and from Israel. Although our business has not been materially affected by such disruptions
to date, a prolonged or broader escalation could result in delays in supplier deliveries, extended lead times and increased costs for
freight, insurance and materials. Furthermore, during the June 2025 and February 2026 conflicts with Iran, Israeli airspace was closed
and commercial flights to and from Israel were suspended for extended periods. More broadly, regional security conditions have led to
repeated disruptions in international air travel to and from Israel, including flight cancellations and suspensions of service by international
carriers. While not material to date, these disruptions have caused certain delays in product deliveries, business travel and customer
engagement, and any recurrence causing prolonged or expanded suspension of air travel could further disrupt our operations and adversely
affect our ability to conduct business internationally. In addition, during the June 2025 and February 2026 conflicts, Iranian missiles
have struck civilian areas within Israel. While our facilities have not sustained any damage to date, future hostilities could directly
affect our facilities, employees and infrastructure.
Many Israeli citizens are obligated by law to perform military
reserve duty. During the recent conflicts, the Israeli military has called up hundreds of thousands of reservists, many of them for prolonged
periods, and a number of our executive and non-executive employees and their family members have been called as well. While these call-ups
have not resulted in material disruption to our operations to date, extended reserve duty obligations are expected to continue in the
coming years, and significant increase in the scope or duration of such service could disrupt our operations and adversely affect our
business.
Our commercial insurance does not cover losses that may occur
as a result of events associated with war and terrorism. Although the Israeli government currently covers the reinstatement value of direct
damages caused by terrorist attacks or acts of war, we cannot assure you that this government coverage will be maintained or that it will
sufficiently cover our potential damages.
The State of Israel and Israeli companies have been subjected
to economic boycotts, and several countries restrict business with the State of Israel and with Israeli companies. International actions
and legal proceedings have, from time to time, been accompanied by calls for sanctions or other restrictive measures involving Israel
or Israeli companies. There is a growing movement among countries, activists and organizations to boycott Israeli goods, services and
academic research or to restrict business with Israel. If these efforts become more widespread, they could negatively impact our business
operations, customer relationships and ability to expand into new markets and/or engage with potential customers.
Finally, since 2023, the Israeli government has pursued, and
has recently renewed its efforts to effect, certain reforms to Israel’s judicial system. Certain financial, legal and commercial
organizations have voiced concerns that such changes, if adopted, could adversely affect the macroeconomic condition in which we operate
and may lead to political instability. At this stage, the proposed legislation has not become effective, and its final scope has not been
fully determined. We cannot assess the potential impacts of these changes on our business, prospects, financial condition, and results
of operations.
32
We may become subject
to claims for remuneration or royalties for assigned service invention rights by our employees, which could result in litigation and adversely
affect our business.
A significant portion of our intellectual property has been developed
by our employees in the course of their employment by us. Under the Israeli Patent Law, 5727-1967 (the “Patent Law”), inventions
conceived by an employee in the course and as a result of his or her employment with a company are regarded as “service inventions,”
which belong to the employer, absent a specific agreement between the employee and employer giving the employee service invention rights.
The Patent Law also provides that if there is no such agreement between an employer and an employee, the Israeli Compensation and Royalties
Committee (the “Royalties Committee”), a body constituted under the Patent Law, shall determine whether the employee is entitled
to remuneration for his or her inventions. Case law clarifies that the right to receive consideration for “service inventions”
can be waived by the employee and that in certain circumstances, such waiver does not necessarily have to be explicit. The Royalties Committee
will examine, on a case-by-case basis, the general contractual framework between the parties, using interpretation rules of the general
Israeli contract laws. Further, the Royalties Committee has not yet determined one specific formula for calculating this remuneration,
but rather uses the criteria specified in the Patent Law. Although we generally enter into assignment-of-invention agreements with our
employees pursuant to which such individuals assign to us all rights to any inventions created in the scope of their employment or engagement
with us, we may face claims demanding remuneration in consideration for assigned inventions. As a consequence of such claims, we could
be required to pay additional remuneration or royalties to our current and/or former employees, or be forced to litigate such claims,
which could negatively affect our business.
The tax benefits that
are available to us require that we continue to meet various conditions and may be terminated or reduced in the future, which could increase
our costs and taxes.
We may be eligible for certain tax benefits provided to “Preferred
Technology Enterprises” under the Israeli Law for the Encouragement of Capital Investments, 1959 (the “Investment Law”).
In order to remain eligible for the tax benefits for “Preferred Technology Enterprises” we must continue to meet certain conditions
stipulated in the Investment Law and applicable regulations, as amended. If these tax benefits are reduced, cancelled or discontinued,
our Israeli taxable income from the approved enterprise would be subject to regular Israeli corporate tax rates. The standard corporate
tax rate for Israeli companies since 2018 is 23%. Additionally, if we increase our activities outside of Israel through acquisitions,
for example, our expanded activities might not be eligible for inclusion in future Israeli tax benefit programs. See Item 10.E. “Taxation
– Taxation and Government Programs – Israeli Tax Considerations and Government Programs”.
It may be difficult to
enforce a U.S. judgment against us, our officers and directors and the Israeli experts named in this Annual Report in Israel or the United
States, or to assert U.S. securities laws claims in Israel or serve process on our officers and directors and these experts.
Most of our directors or officers are not residents of the United
States and most of their and our assets are located outside the United States. Service of process upon us or our non-U.S. resident directors
and officers and enforcement of judgments obtained in the United States against us or our non-U.S. directors and executive officers may
be difficult to obtain within the United States. It may be difficult to assert claims under U.S. securities laws in original actions instituted
in Israel or obtain a judgment based on the civil liability provisions of U.S. federal securities laws. Israeli courts may refuse to hear
a claim based on a violation of U.S. securities laws against us or our non-U.S. officers and directors because Israel may not be the most
appropriate forum to bring such a claim. In addition, even if an Israeli court agrees to hear a claim, it may determine that Israeli law
and not U.S. law is applicable to the claim. If U.S. law is found to be applicable, the content of applicable U.S. law must be proved
as a fact, which can be a time-consuming and costly process. Certain matters of procedure will also be governed by Israeli law. There
is little binding case law in Israel addressing the matters described above. Israeli courts might not enforce judgments rendered outside
Israel, which may make it difficult to collect on judgments rendered against us or our non-U.S. officers and directors. In addition, there
is no bilateral treaty between Israel and the United States for the enforcement of civil judgments.
Moreover, among other reasons, including but not limited to,
fraud or absence of due process, or the existence of a judgment which is at variance with another judgment that was given in the same
matter or if a suit in the same matter between the same parties was pending before a court or tribunal in Israel, an Israeli court will
not enforce a non-Israeli judgment if it was given in a state whose laws do not provide for the enforcement of judgments of Israeli courts
(subject to exceptional cases) or if our enforcement is likely to prejudice the sovereignty or security of the State of Israel.
The rights and responsibilities
of our shareholders are governed by Israeli law, which may differ in some respects from the rights and responsibilities of shareholders
of U.S. corporations.
We are incorporated under Israeli law. The rights and responsibilities
of holders of our ordinary shares are governed by our Articles and the Companies Law. These rights and responsibilities differ in some
respects from the rights and responsibilities of shareholders in typical U.S. corporations. In particular, pursuant to the Companies Law
each shareholder of an Israeli company has to act in good faith in exercising his or her rights and fulfilling his or her obligations
toward the company and other shareholders and to refrain from abusing his or her power in the company, including, among other things,
in voting at the general meeting of shareholders and class meetings, on amendments to a company’s articles of association, increases
in a company’s authorized share capital, mergers, and transactions requiring shareholders’ approval under the Companies Law.
In addition, a controlling shareholder of an Israeli company or a shareholder who knows that it possesses the power to determine the outcome
of a shareholder vote or who has the power to appoint or prevent the appointment of a director or officer in the company or has other
powers toward the company has a duty of fairness toward the company. However, Israeli law does not define the substance of this duty of
fairness. There is limited case law available to assist in understanding the implications of these provisions that govern shareholder
behavior.
33
U.S. holders of our ordinary
shares and/or warrants may suffer adverse tax consequences if we are treated as a passive foreign investment company.
A non-U.S. corporation generally will be treated as a “passive
foreign investment company” (“PFIC”) for U.S. federal income tax purposes, in any taxable year if either (1) at least
75% of its gross income for such year is passive income (such as interest income) or (2) at least 50% of the value of its assets (based
on an average of the quarterly values of the assets) during such year is attributable to assets that produce or are held for the production
of passive income. We believe we were not a PFIC for our taxable year ending December 31, 2025. However, as discussed below, whether we
were a PFIC for any given taxable year is based on a complex and factual determination and there is no assurance that the Internal Revenue
Service (“IRS”) will agree with our determination. Based on the current and anticipated composition of the income, assets
and operations of our company and our subsidiaries, we cannot be sure as to whether we will be a PFIC for U.S. federal income tax purposes
for our taxable year ending December 31, 2026 or in future taxable years. Moreover, because PFIC status is based on our income, assets
and activities for the entire taxable year, it is not possible to determine whether we will be characterized as a PFIC for our current
taxable year or future taxable years until after the close of the applicable taxable year. This is an annual factual determination that
depends on, among other things, the composition of our income (including the relative size of our gross operating loss and our passive
income) and assets, and the market value of our shares and assets (including unbooked goodwill), including the composition of income and
assets of our subsidiaries, from time to time, and thus a determination can only be made annually after the close of each taxable year.
Moreover, the value of our assets (including unbooked goodwill) for purposes of the PFIC determination may be determined by reference
to the trading value of our ordinary shares, which could fluctuate significantly. If we are a PFIC for any taxable year, a U.S. Holder
(as defined below under “Taxation – United States Federal Income Taxation”)
of our ordinary shares or warrants may be subject to adverse tax consequences and may incur certain information reporting obligations,
even if we cease to be a PFIC in the subsequent years. Under the generally applicable PFIC rules, a U.S. Holder generally would be subject
to U.S. federal income tax at the then prevailing maximum rates on ordinary income and possibly an “interest” charge, in respect
of “excess distributions” and upon any gain from the disposition of our ordinary shares or warrants, as applicable, as if
the excess distribution or gain had been recognized rateably over such U.S. Holder’s holding period of our ordinary shares or warrants,
as applicable. Certain elections (including a qualified electing fund or a mark-to-market election) may be available to U.S. Holders of
our ordinary shares to mitigate some of the adverse tax consequences resulting from PFIC treatment, however, are not available with respect
to the warrants.
As previously disclosed in our Annual Report filed on Form 20-F
on March 12, 2024 and our Annual Report filed on March 12, 2025, we believe we were a PFIC for our taxable years ending December 31, 2023
and December 31, 2024, respectively. U.S. Holders that held our ordinary shares and/or warrants during any taxable year in which we were
a PFIC may be subject to adverse consequences under the PFIC rules as discussed further under “Taxation—United
States Federal Income Taxation—Passive Foreign Investment Company Considerations.”
For a further discussion, see “Taxation—United
States Federal Income Taxation—Passive Foreign Investment Company Considerations.”
U.S. Holders of our ordinary shares and/or warrants are strongly
encouraged to consult their own tax advisors regarding the potential application of these rules to us and the ownership of our ordinary
shares and/or our warrants.
If a United States person
is treated as owning at least 10% of our shares, such person may be subject to adverse U.S. federal income tax consequences.
A United States person that owns (directly, indirectly or constructively)
at least 10% of the total combined voting power or value of all classes of stock of a non-U.S. corporation that is a controlled foreign
corporation for U.S. federal income tax purposes (a “United States shareholder”) may be required to report annually and include
in its U.S. taxable income its pro rata share of the controlled foreign corporation’s “Subpart F income,” “global
intangible low-taxed income” (renamed “net CFC tested income” for taxable years beginning after December 31, 2025, pursuant
to the One Big Beautiful Bill Act of 2025 (the “OBBBA”)), and investments in U.S. property by the controlled foreign corporation
regardless of whether such controlled foreign corporation makes any distributions. A foreign corporation for U.S. federal income tax purposes
generally is considered a controlled foreign corporation if United States shareholders own (directly, indirectly or constructively), in
the aggregate, more than 50% of the total combined voting power of all classes of voting stock of that foreign corporation or more than
50% of the total value of all stock of that foreign corporation. Regardless of whether we are treated as a controlled foreign corporation,
for taxable years beginning before January 1, 2026, certain of our non-U.S. subsidiaries will be treated as controlled foreign corporations
because our U.S. subsidiaries are treated as constructively owning the stock of our non-U.S. subsidiaries (so-called “downward attribution”),
and a U.S. Holder owning (directly, indirectly or constructively) at least 10% of the value or voting power of our shares may be treated
as a United States shareholder with respect to such non-U.S. subsidiaries that are treated as controlled foreign corporations. However,
for taxable years beginning after December 31, 2025, as a result of the restoration of Section 958(b)(4) of the Internal Revenue Code
by the OBBBA, thereby adding a limitation on certain downward attribution, our non-U.S. subsidiaries generally will not be treated as
controlled foreign corporations and no U.S. Holder will be treated as a United States shareholder with respect to such non-U.S. subsidiaries
solely by reason of the inclusion of one or more U.S. subsidiaries within our group.
U.S. Holders of our ordinary shares and/or warrants are strongly
encouraged to consult their own tax advisors regarding the potential application of these rules to us and the ownership of our ordinary
shares and/or warrants.
34
| Item 4. |
Information on the Company. |
A. History and Development of the Company
We were incorporated in Israel on January 18, 2016 under the
Companies Law, and our principal executive office is located at 5 Uri Ariav St., Building C, Rosh HaAin 4809202, Israel. Our legal and
commercial name is Innoviz Technologies Ltd. We are registered with the Israeli Registrar of Companies. Our registration number is 51-538242-2.
Our website address is https://innoviz.tech, and our telephone number is +972-74-700-3692. Information
contained on, or that can be accessed through, our website does not constitute a part of this Annual Report and is not incorporated by
reference herein. We have included our website address in this Annual Report solely for informational purposes. The SEC maintains an Internet
site that contains reports, proxy and information statements, and other information regarding issuers, such as Innoviz, that file electronically,
with the SEC at www.sec.gov. Our agent for service of process in the United States is Cogency Global Inc., 122 East 42nd Street, 18th
Floor, New York, NY 10168.
On December 10, 2020, we entered into that certain Business Combination
Agreement (the “Business Combination Agreement”) by and among Collective Growth, Perception Capital Partners, LLC, a Delaware
limited liability company (“Perception”), Antara Capital LP, a Delaware limited partnership and investment manager acting
on behalf of certain funds it manages and/or designees (“Antara Capital”), and Hatzata Merger Sub, Inc., a Delaware corporation
and wholly owned subsidiary of Innoviz (“Merger Sub”). Pursuant to the Business Combination Agreement, on April 5, 2021, Merger
Sub merged with and into Collective Growth, with Collective Growth surviving the merger as a wholly owned subsidiary of us (the “Business
Combination”).
For a description of our principal capital expenditures and divestitures
for the three years ended December 31, 2025, 2024 and 2023, see Item 5. “Operating and Financial
Review and Prospects.”
B. Business Overview
Company Overview
We are a leading Tier-1 direct supplier of high-performance,
automotive-grade LiDAR sensor platforms and complementary software stacks. Our solutions are designed to bring enhanced vision and superior
performance to enable Physical AI through safe autonomous driving and other perception-focused applications at a mass scale.
We provide complete LiDAR based solutions for OEMs and Tier-1
partners developing autonomous driving vehicles for the passenger car, robotaxi, shuttle, delivery vehicle and truck markets. We also
leverage our proven automotive-grade LiDAR technology to offer solutions for non-automotive markets, including smart infrastructure, perimeter
security, traffic management and robotics through our InnovizSMART product line, which is designed for, among other applications, Physical
AI smart applications.
We were founded in 2016, and our culture has been built on solving
sophisticated technological problems through creativity and agile thinking. We created a new type of LiDAR sensor from the chip-level
up, including a suite of powerful and sophisticated software applications. In 2018, we achieved our first design win to power BMW’s
Level 3 autonomous platform, a program that reached maturity during 2024 with vehicles beginning to be sold with our LiDARs and complementary
software stacks.
35
In 2022, we made the strategic decision to become a Tier-1 direct
supplier enabling direct technical engagement with OEMs and improved pricing, which has played a significant role in our subsequent major
OEM program wins. That same year, following more than two years of extensive diligence and qualification, Volkswagen selected us as its
direct LiDAR supplier for automated vehicles across several Volkswagen brands using our InnovizTwo platform. In 2023, we announced that
Volkswagen aims to expand its use of InnovizTwo LiDAR to its I.D Buzz light commercial vehicle program. In 2024, we announced that Mobileye
will use the InnovizTwo Long-Range and InnovizTwo Short- to Mid-Range LiDARs for the Mobileye Drive™ platform. In September 2025,
Daimler Truck selected us as a future series production supplier of advanced LiDAR units for SAE Level 4 autonomous class-8 semi-trucks.
We are currently expanding our third-party manufacturing capacity
through contract manufacturers to meet anticipated demand. As part of this effort, we have entered into arrangements with contract manufacturing
partners with automotive-grade facilities, and we expect these collaborations to enable volume production as customer demand increases.
In June 2025, we announced the launch of InnovizSMART, a high-performance
LiDAR sensor based on the InnovizTwo platform, designed for a range of applications, including security, mobility, aerial, robotics, and
intelligent traffic management, which we believe are well-suited for Physical AI deployments. With the maturation of our InnovizTwo LiDAR
platform and expanding production capabilities, we are broadening our scope to focus on additional markets seeking affordable, high-performing
LiDAR solutions.
Recent Developments
Launch of InnovizThree
On December 23, 2025, we announced the launch of our third-generation
LiDAR sensor, InnovizThree, first demonstrated at CES in January 2026. Designed with slimmer dimensions, lower power consumption and higher
performance at a significantly reduced cost compared to InnovizTwo, InnovizThree is intended to enable seamless integration behind the
windshield or on the rooftop, providing OEMs with extended design flexibility. On January 6, 2026, we also announced the first fully colored
long-range LiDAR camera, a compact sensor-fusion module designed to help reduce OEM integration complexity.
Integration of InnovizSMARTer LiDAR with NVIDIA
Jetson Orin Nano
On January 6, 2026, we announced the integration of our InnovizSMARTer
LiDAR with NVIDIA Jetson Orin Nano, a physical AI solution designed to perform real-time 3D perception processing and data compression
locally at the sensor through edge computing, which is intended to enable wireless deployment in bandwidth-constrained environments while
reducing centralized processing costs.
ATM Program
In August 2025, we launched an ATM Program with Jefferies LLC,
pursuant to which we may offer and sell, from time to time, to or through the Sales Agent, ordinary shares having an aggregate offering
price of up to $75 million. During the year ended December 31, 2025, we issued and sold 9,252,639 ordinary shares under the ATM Program
for net proceeds to the Company of approximately $13.3 million.
Market Outlook
After transforming digital workflows, AI is moving into the physical
world to power machines, vehicles, infrastructure, and systems that must perceive, reason, and act under real-world constraints. This
transition is commonly referred to as Physical AI. At the foundation of Physical AI lies perception, and high-resolution LiDAR has emerged
as the most reliable methods for digitizing the physical world into accurate, real-time 3D representations that can drive decision-making.
We believe we are uniquely positioned at this inflection point, providing automotive-grade high-resolution LiDAR systems designed to enable
Physical AI to scale safely, securely, and globally.
In the automotive industry, sophisticated technologies are increasingly
being harnessed to develop autonomous driving vehicles. Significant investment is driven by the imperative to assure human safety and
the potential for drivers to recapture time. Technologies for autonomous driving require long development and validation cycles and must
ensure safety prior to commercial deployment.
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Levels of Autonomous Driving
The Society of Automotive Engineers (“SAE”) defines
six levels of driving automation (Levels 0 through 5), adopted by the U.S. Department of Transportation. Levels 0 through 2 are driver-assistance
systems where the driver retains primary responsibility. The industry also recognizes “Level 2+,” which bridges the gap between
driver-assist and autonomy by offering enhanced ADAS functionality such as hands-free highway driving. In Levels 3 through 5, the vehicle
assumes increasing responsibility for driving functions, with the OEM becoming the legal driver. This shift in liability requires compliance
with the highest functional safety standards (ISO26262 ASIL D), which necessitates robust sensor suites including high-performance LiDAR.
The ADAS+/Level 2+ segment is expected to grow significantly
in the near term. Level 3 through Level 5 systems require a comprehensive Physical AI-supported sensing suite, and we believe our products
are well-positioned to achieve widespread deployment given our reliability, automotive-grade assurance and competitive pricing. High-performance
LiDAR sensors were initially at price points not suitable for mass market applications. However, successive generations of our products
have achieved meaningful cost reductions that we believe may position our products for broad deployment.
Automotive Applications
Our LiDAR solutions address three primary automotive categories:
Consumer Applications for Passenger Vehicles
Consumer ADAS vehicles (Level
2+ through Level 3). Our LiDAR technology is designed to provide high-performance environmental
perception capabilities that we believe are essential for enabling advanced autonomous-driving features. Our solution is designed to be
suited for Level 2+, Level 3 and higher level of automation in passenger vehicles at an affordable price point, which we believe may position
us to capture market share as OEMs prioritize LiDAR supported autonomous features.
Level 4 Automotive Commercial Application
Autonomous trucks. Autonomous
trucks require long-range sensing capabilities to support safe operation at highway speeds, given their significant weight and extended
stopping distances. We believe our selection by Daimler Truck for SAE Level 4 autonomous Class 8 trucks validates our capabilities in
this segment.
Shuttles and robotaxis. These
platforms require 360-degree surround perception in complex urban environments. By deploying a suite of our Long-Range and Short- to Mid-Range
LiDAR sensors around the vehicle perimeter, designers can achieve comprehensive coverage without occlusion or blind spots.
Non-Automotive Applications
Beyond automotive, our LiDAR technology is designed to enable
functionality across smart infrastructure applications including perimeter security, intelligent traffic management, robotics, aerial
and mobility solutions. These non-automotive markets may complement our automotive business by offering different risk and revenue profiles:
smaller order quantities, shorter sales cycles and higher per-unit price points, which could enable near-term revenue while our automotive
programs scale. Our InnovizSMART platform, launched in June 2025, features automotive-grade performance with native Power over Ethernet
(“PoE”) support, long-range detection, blockage resilience, uniform resolution across the field of view (“FoV”),
and privacy-conscious design that captures spatial data rather than personal characteristics.
Our Technological Differentiation
The Role of LiDAR in Autonomous Sensing
Camera-based ADAS systems provide 2D data requiring perception
algorithms to estimate 3D depth, with limited accuracy and degraded performance in low-light and adverse weather conditions. Radar offers
limited angular resolution, making it difficult to differentiate between closely spaced objects or determine object shape and size. LiDAR
provides a direct, high-resolution 3D measurement of the driving scene, enabling the perception system to determine the existence of objects
in the vehicle’s path without requiring object classification (which we believe is a critical safety advantage). A system complying
with the highest level of functional safety (ISO26262 ASIL D) requires redundancy of critical elements, not by multiplying the same sensors,
but instead by adding different types of sensors to ensure that in any given challenging condition, other sensors are designed to perform
well. We believe LiDAR is essential to achieving this smart redundancy alongside cameras and radar.
905nm Time-of-Flight Architecture
We employ a direct-detection Time-of-Flight (“ToF”)
architecture utilizing ~905nm wavelength lasers. This deliberate architectural choice reflects our focus on cost efficiency, energy efficiency
and scalability for high-volume automotive production.
905nm vs. 1550nm
wavelength. Most LiDAR lasers operate at either ~905nm or ~1550nm wavelengths. While
~1550nm systems can send stronger light pulses within eye-safety limits, they generally require more expensive laser sources and indium
gallium arsenide (“InGaAs”) detectors (as silicon detectors cannot efficiently detect ~1550nm light), consume more electrical
power, generate more heat, and result in larger form factors. These characteristics may present challenges for integration into production
vehicles, particularly electric vehicles where power budget and thermal management are critical. Our ~905nm approach uses mature, automotive-qualified
silicon detector components at what we believe are significantly lower cost, with lower power consumption and a compact form factor. InnovizThree,
optimized for behind-the-windshield mounting, is designed to further demonstrate our ability to address automotive design constraints
while maintaining cost and energy efficiency.
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ToF vs. FMCW.
We believe our ToF architecture offers meaningful advantages over frequency-modulated continuous-wave (“FMCW”) alternatives
for automotive-grade deployment. ToF uses direct detection rather than coherent detection, which we believe significantly reduces system
complexity. It leverages mature semiconductor components and established supply chains, which we believe enables cost-effective high-volume
production with lower integration risk. FMCW systems require highly precise frequency control, coherent detection and complex signal processing,
increasing both development and production risk, and we believe they remain less mature for automotive-grade, high-volume deployment.
Third-Generation Product Maturity
InnovizThree represents our third-generation LiDAR platform,
reflecting multiple full development cycles and real-world automotive integration experience. The platform incorporates lessons learned
across optics, application-specific integrated circuit (“ASIC”) design, thermal management and system architecture from InnovizOne
and InnovizTwo, and is designed from inception for automotive-grade reliability, cost efficiency and series production. Each generation
has delivered meaningful cost reductions and performance improvements, which we believe reduces technical and execution risk for OEM partners.
Proprietary Signal Processing ASIC
We have developed a custom signal processing ASIC specifically
optimized for our LiDAR architecture, which we believe achieves industry-leading point-cloud quality. This ASIC is designed to deliver
real-time, low-latency processing with an enhanced signal-to-noise ratio and lower power consumption compared to FPGA-based designs, while
providing strong intellectual property differentiation and reducing reliance on external processing hardware.
All-Weather Performance and Blockage Resilience
Our LiDAR systems are engineered for robust operation in challenging
environmental conditions, including rain, fog, snow and dust, utilizing advanced filtering and signal processing designed to mitigate
environmental noise. The systems are designed to maintain operational integrity under partial obstruction from mud, dirt or snow, with
intelligent blockage identification and system response capabilities. These features are intended to support functional safety and long-term
field reliability requirements across both automotive and non-automotive deployments.
Software Stack
Our proprietary complementary software stack turns raw point cloud
data into perception ready outputs that are designed to serve as standalone, functionally safe software to be integrated into a vehicle’s
existing autonomous driving platform stack to support various sensor fusion architectures. The software leverages data from our LiDAR
products, coupled with our proprietary AI-based algorithms, to deliver an automotive-grade ASIL B(D) solution. Software-controlled features
such as Region of Interest, variable vertical FoV and selectable frame rate enable dynamic system optimization based on real-time driving
conditions. Our system design allows dynamic configuration of laser power, scanning pattern and frame rate, enabling multiple product
configurations from the same hardware with only software modification.
Competitive Strengths
We believe the following strengths differentiate us from our competitors
and are designed to enable us to compete effectively in our target markets.
Scalable, Cost-Effective Architecture.
Our ~905nm wavelength, ToF-based architecture is designed to offer high performance, low power consumption and a compact form factor at
a competitive price point. Each generation of our products has delivered cost reductions, with InnovizThree designed to deliver higher
performance at further reduced cost. We believe this architecture avoids the more expensive materials, higher power requirements and larger
form factors generally associated with ~1550nm systems, and the system complexity and maturity risks we believe are associated with FMCW
approaches.
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Comprehensive Automotive-Grade
Certifications. We have achieved compliance with ISO26262 (functional safety), IATF 16949 (quality management), ISO/SAE 21434 (automotive
cybersecurity), ASPICE CL1 (software development maturity), ISO/IEC 17025:2017 (testing laboratory competence), and ISO/IEC 27001:2022
(information security). We believe these certifications, validated through extensive product-safety auditing by major OEM partners, provide
a significant advantage over competitors that may require years of automotive-grade certification before entering the market.
Validated OEM Partnerships.
We believe our partnerships with BMW, Volkswagen, Daimler Truck and Mobileye demonstrate product maturity and automotive-grade readiness.
These relationships position us to compete for additional OEM RFQs, particularly as numerous designs for mass-production Level 2+, Level
3 and Level 4 programs planned for 2028 and beyond are expected to be decided during 2026. We believe companies without comparable market
credentials may face barriers to inclusion in RFQ tenders.
Cross-Market Leverage and Flexible
Go-to-Market Model. We believe our automotive-grade development process and manufacturing standards provide a competitive advantage
in non-automotive markets where customers increasingly demand reliability, safety validation and durability. Our ability to amortize R&D
investments across automotive and non-automotive customer bases is intended to support competitive pricing and faster innovation cycles.
Our multi-faceted customer engagement approach, as both Tier-1 (direct to OEM) and Tier-2 (through Tier-1 partners), is designed to allow
us to cover a wide range of customers while offering customization and competitive commercial terms.
As of December 31, 2025, we owned 81 issued patents and had 124
pending patent applications covering LiDAR systems, lasers, scanners, receivers, optical devices and perception technology across multiple
jurisdictions. Our multi-disciplinary in-house component design we believe creates significant barriers for competitors seeking to develop
comparable solutions.
Growth Strategy
Drive adoption through lower
cost, higher-performance products. Each generation of our products has featured meaningful cost reductions and performance improvements.
InnovizThree is designed to deliver higher performance at reduced cost, and InnovizSMART extends this cost-efficient approach to non-automotive
markets.
Expand OEM partnerships.
We believe our existing partnerships and adherence to industry-leading safety and manufacturing standards can be leveraged to penetrate
additional OEMs. Numerous designs for mass-production Level 2+, Level 3 and Level 4 programs planned for 2028 and onwards are expected
to be decided during 2026.
Develop a comprehensive automotive
portfolio. Our product portfolio—InnovizTwo Long-Range, InnovizTwo Short- to Mid-Range and InnovizThree—is designed
to provide solutions across the automotive market. As Level 4 commercial use systems mature, we expect increasing demand for multiple
LiDAR units per vehicle to achieve full surround sensing.
Expand into non-automotive markets.
Non-automotive applications may offer shorter sales cycles and higher per-unit price points, which could enable near-term revenue
while automotive programs scale. We intend to continue investing in InnovizSMART to capture share across smart infrastructure, security,
robotics and aerial segments.
Penetrate Level 2+ ADAS.
We believe that InnovizTwo provides a compelling Level 2+ solution from both a cost and performance perspective. Our LiDAR is designed
to be upgradable from Level 2+ to Level 3 through a vehicle software update without changes.
Invest in software capabilities. We
intend to continue developing our software stack, for improved AI algorithms, and an edge-processing ECU for point cloud processing.
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Products
|
InnovizOne |
InnovizTwo Long-Range |
InnovizTwo Short- to Mid-Range |
InnovizThree |
 |
 |
 |
 |
| * |
Product size may differ according to specifications |
Our product portfolio encompasses LiDAR sensor hardware and complementary software stack
designed to improve existing vehicle features and enable new levels of automation for passenger car, commercial vehicle and non-automotive
applications.
Our product offerings include:
| • |
InnovizOne - Our solid-state LiDAR sensor designed for automakers and robotaxi, shuttle, truck and delivery companies requiring an
automotive-grade, mass-producible solution. Purpose-built to be rugged, affordable, reliable, low-power, lightweight and designed for
seamless integration into Level 2+ through 5 autonomous vehicles. Classified as laser class 1 under IEC 60825-1. |
| • |
InnovizTwo Long-Range - Our second-generation high-performance automotive-grade LiDAR sensor offers a fully featured solution designed
for all levels of autonomous driving. It also features significant cost reduction and improved range performance compared to InnovizOne.
|
| • |
InnovizTwo Short- to Mid-Range - Our second-generation automotive-grade LiDAR sensor provides wide FoV coverage from 0.2m to 100m,
and is designed for Level 3 consumer vehicles and Level 4 commercial applications. Based on InnovizTwo platform technology, leveraging
its industrialization maturity. |
| • |
InnovizThree- Our third-generation LiDAR platform, announced in December 2025, is designed to deliver long-range detection with expected
greater cost efficiency and installation flexibility compared to InnovizTwo. It features a compact, lightweight design for behind-the-windshield,
rooftop or front grille integration, and is designed to deliver a high pixel rate with contiguous scanning patterns and resilience to
sunlight, adverse weather and window blockage. InnovizThree is currently in development with engineering samples produced. |
| • |
Complementary Software – Our proprietary software that turns raw point cloud data into perception ready outputs is designed
to serve as standalone, functionally safe software to be integrated into a vehicle’s existing autonomous driving platform stack.
Our software delivers automotive-grade ASIL B(D) performance. We are also developing an edge-processing electronic control unit (ECU)
for point cloud processing. |
Commercial Traction
Our early engagement with BMW’s Level 3 series production
program resulted in deep proficiency in ISO26262 compliance and functional safety adherence. Recognizing the long path to volume ramp
in the automotive industry, we have taken a broad-based approach to LiDAR market opportunities:
Automotive.
We focus significant management attention on automotive opportunities, tailoring our LiDAR platforms and software to OEM needs
for high-volume series production programs. We are working closely with leading OEMs in Europe, Asia and North America on Level 2+, Level
3 and Level 4 programs, and are in discussions with robotaxi, shuttle, truck and delivery platform customers.
Non-Automotive.
We leverage our products to win business across numerous non-automotive segments through both direct and channel relationships
with potential customers globally.
Sales and Marketing
We market and sell through a direct sales organization and distribution
channels. Our technology focus since inception on the automotive OEM opportunity has guided our commercial activities, with our sales
team acting as a bridge between our research and development team and OEMs and other partners. For non-automotive markets, we work through
channel partners that support our potential clients during the sales process, integration and post-sale support.
Research and Development
We have invested significant time and resources into research
and development of LiDAR-based technologies. Our research and development team is the largest department in the company and, as of December
31, 2025, was comprised of 283 employees. Creating an automotive-grade, eye-safe and cost efficient ~905nm wavelength LiDAR solution and
the complementary software stack requires a multi-disciplinary team with expertise spanning optics, lasers, mechanical engineering, micro-electronics,
chip design, complex IC packaging, algorithms, neural networks, systems engineering and software architecture. Our research and development
activities are largely conducted at our headquarters in Rosh HaAin, Israel.
Intellectual Property
Our success and competitive advantage depend in part upon our
ability to develop and protect our core technology and intellectual property. As of December 31, 2025, we owned 81 issued patents and
had 124 pending patent applications. The portfolio includes U.S. and foreign patent applications filed in U.S., Israel, Europe (including
Germany, France and the United Kingdom), China, Japan and Korea. Our portfolio covers a broad range of system-level and component-level
aspects of our technology including LiDAR systems, laser, scanner, receivers, optical devices, and perception technology. We also rely
on trade secrets, design and manufacturing know-how, continuing technological innovations and licensing and opportunities, and protect
our proprietary rights through agreements with our commercial partners, supply-chain vendors, employees, and consultants.
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Competition
The market for sensing solutions that enable autonomous driving
and other autonomous applications is an emerging one with many potential applications in the development stage. Our competitors are numerous
and compete with us directly by offering LiDAR products, and indirectly by attempting to solve some of the same challenges with different
technologies. We face competition from other developers of LiDAR products, Tier-1 suppliers and other technology and automotive supply
companies, some of which have significantly greater resources than we do. Within the LiDAR segment, where competition is based significantly
on performance, cost and energy efficiency, we face competition from companies utilizing a variety of laser wavelengths (~905nm and ~1550nm),
detection methods (ToF and FMCW) and steering mechanisms (MEMS, mechanical, optical phased array and flash). We believe that it may take
new, smaller companies a substantial period of time to gain the recognition and trust of top-tier automotive OEMs and Tier-1 suppliers.
Many of our competitors offer more limited solutions for niche
applications or lower-performance ADAS markets. In the passenger car ADAS market, a number of competitors have already achieved substantial
market share using camera and radar-based sensing solutions. Some of our customers in the autonomous vehicle and ADAS markets have announced
development efforts or made acquisitions directed at creating their own LiDAR-based or other sensing technologies, which would compete
with our solutions. Our LiDAR products enable higher-performance ADAS at price points that we believe can displace current solutions.
Our engagement with premium OEMs and Tier-1 partners also differentiates us from other LiDAR makers.
Beyond automotive markets, we compete in non-automotive applications
including smart infrastructure, security, robotics and aerial solutions. In these segments, we compete against both established LiDAR
companies and newer entrants focused exclusively on non-automotive applications. Our automotive-grade development process and manufacturing
standards provide what we believe is a competitive advantage, as customers in these markets increasingly demand reliability, safety validation
and durability. Our ability to leverage R&D investments across both automotive and non-automotive customer bases supports competitive
pricing and faster innovation cycles relative to competitors developing solutions for non-automotive applications alone.
While LiDAR competitors will continue to emerge and recede, we
believe that our high-performance LiDARs, strong intellectual property portfolio, complementary software stack and design wins with leading
OEMs have established barriers to those who follow. We expect that our technology and continuing innovation, our longstanding cooperation
with leading OEMs, our expanding presence in non-automotive markets and our collaboration with Mobileye, a leader in ADAS and autonomous
driving technology, will support our position as a leader in advancing LiDAR technology.
Manufacturing
Our proprietary LiDAR architecture focuses on developing a full
LiDAR solution critical components designed in-house rather than using off-the-shelf commodity components. We have utilized automotive-grade
contract manufacturers and vendors from an early stage, which has added to our manufacturing know-how and instilled discipline and quality
in our development process.
InnovizTwo units are manufactured at our headquarters and at the
facilities of our contract manufacturing partners. We have entered into arrangements with contract manufacturers with automotive-grade
facilities to support volume production as customer demand increases. InnovizThree sample units are currently manufactured at our headquarters.
Our operations and quality assurance teams manage sourcing, calibration, testing and quality control across all production sites. We source
components from a variety of third-party manufacturers; prices and availability may be impacted by changes in supply and demand and other
market factors.
Environmental, Social and Governance (ESG) Practices
We are a global company focused on creating a positive social impact
by promoting the future of mobility and increasing road-traffic safety and welfare, all through the values of excellence, education, creation
and innovation. In July 2025, we published our second Impact Report, which covers the company’s initiatives and activities for 2024,
in accordance with the Global Reporting Initiative, or GRI, framework. Our operations and day-to-day business activities take place under
the supervision of our dedicated nominating, environmental, social and governance committee of the board of directors, and with the assistance
of a reputable independent ESG consulting firm.
We are committed to operating in an ethical and sustainable manner.
Our corporate governance is guided by a Code of Conduct and Ethics, supplemented by employee training programs and a whistleblower mechanism
to report concerns. On the environmental side, we monitor and report our Scope 1 and Scope 2 emissions and are working to reduce our energy
consumption and greenhouse gas emissions over time. We endeavor to respect, value, and empower our employees and the communities in which
we operate, and we invest in employee development, diversity, and inclusion initiatives. We extend these values to how we engage with
local communities, including through educational outreach programs that connect young people with careers in technology and innovation.
Our Impact Report is available on our website at https://innoviz.tech/esg.
Neither the Impact Report nor the content of our website are incorporated by reference into this Annual Report.
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Regulation
Autonomous Vehicle Regulation
Autonomous vehicles are subject to evolving regulatory frameworks
in the United States, Europe, China and other markets. In the United States, NHTSA, which is part of the U.S. Department of Transportation,
provides the principal regulatory framework for vehicle safety, including requirements under the National Traffic and Motor Vehicle Safety
Act, the TREAD Act, and Federal Motor Vehicle Safety Standards (“FMVSS”). NHTSA has generally supported AV technology development
while actively updating FMVSS to address autonomous driving systems. Many U.S. states have also enacted autonomous vehicle regulations,
primarily focused on safety and permitting. Foreign markets, including the EU and China, continue to develop their own deployment requirements
for higher levels of autonomy. As legal frameworks continue to develop, we may become subject to additional regulatory requirements. Although
we do not anticipate near-term impediments to our technology and products, the regulatory landscape remains an evolving one with uncertainties
beyond our control.
Laser Safety
As a LiDAR technology company, we are subject to the Electronic
Product Radiation Control Provisions of the Federal Food, Drug, and Cosmetic Act and related FDA regulations. These requirements govern
laser products and are intended to protect individuals from hazardous or unnecessary exposure. Manufacturers are required to certify in
product labeling and reports to the FDA that their products comply with applicable performance standards and maintain manufacturing, testing
and distribution records.
Trade and Export Controls
Our products and operations are subject to U.S. and foreign trade
and customs product classifications, including U.S. Export Administration Regulations, customs regulations and economic and trade sanctions
administered by the U.S. Treasury Department’s Office of Foreign Assets Controls. We are also subject to hazard labeling, sourcing
regulations and other product compliance requirements.
Environmental, Employment and Other Regulations
Our operations are subject to various federal, state and local
environmental laws and regulations pertaining to emissions, chemical substances, hazardous waste and remediation of contamination. In
recent years, these laws and regulations have been focused increasingly on emerging chemicals of concern, such as, for example, per-and
polyfluoroalkyl substances, and may require us to adjust our supply chain to find alternatives to such chemicals. We are also subject
to laws governing occupational health and safety and wage regulations, and to evolving environmental, social and governance rules, such
as climate-related and sustainability rules that may impose significant compliance costs
Legal Proceedings
From time to time, we may become involved in actions, claims,
suits, and other legal proceedings arising in the ordinary course of our business, including assertions by third parties relating to intellectual
property infringement, breaches of contract or warranties or employment-related matters. We are currently not a party to any material
actions, claims, suits or other legal proceedings, the outcome of which, if determined adversely to it, would individually or in the aggregate
have a material adverse effect on our business, financial condition, and results of operations. See Note 9 of our consolidated financial
statements included elsewhere in this Annual Report, which is incorporated by reference in this Item 4.B., for additional information
regarding the Lawsuit.
C. Organizational Structure
The legal name of our company is Innoviz Technologies Ltd. and
we are organized under the laws of the State of Israel. We have four wholly owned subsidiaries: Innoviz Technologies Inc., which is incorporated
in the United States; Innoviz Technologies GmbH, which is incorporated under the laws of Germany; Innoviz Software Centre Bucharest S.R.L,
which is incorporated under the laws of Romania; and Innoviz Technologies Trading Shanghai Co., Ltd., which is incorporated under the
laws of the People’s Republic of China (“Innoviz China”).
During 2025, we ceased the business activity of Innoviz China.
We have not had employees in China since the first quarter of 2025, and we have recently initiated the process of liquidating Innoviz
China.
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D. Property, Plant and Equipment
Our corporate headquarters are located in Rosh HaAin, Israel,
where we currently lease an office with approximately 16,350 square meters pursuant to a lease agreement dated November 1, 2021 (the “Lease
Agreement”) (incorporated by reference as Exhibit 4.14 to the Company’s Annual Report on Form 20-F for the Year Ended December
31, 2021 filed with the SEC on March 30, 2022). This facility contains engineering, research and development, testing, product, sales
and administrative functions. The initial term under the Lease Agreement is for 67 months and expires on January 31, 2028. We have an
option under the Lease Agreement to renew the lease for additional 60 months, which will be exercised automatically unless we inform the
lessor in advance. In April 2025, an addendum to the Lease Agreement was executed, under which the Company will continue to operate the
premises pursuant to the terms specified in the addendum.
We also lease a small office space in Santa Clara, California,
pursuant to a lease agreement that is in effect until July 31, 2026, and a small office in Munich, Germany, pursuant to a lease agreement
that is in effect until November 15, 2027, with an option to extend the lease term for an additional five (5) year term.
Unless otherwise stated, all our facilities are utilized. We
believe that our offices and facilities (as currently conducted and in accordance with future plans) are adequate for our current needs
and that suitable additional or substitute space will be available when needed.
| Item 4A. | Unresolved Staff Comments |
None.
| Item 5. | Operating and Financial Review and Prospects |
You should read the following discussion
and analysis of our financial condition and results of operations together with the audited annual consolidated financial statements and
the related notes included elsewhere in this Annual Report. Some of the information contained in this discussion and analysis or set forth
elsewhere in this Annual Report, including information with respect to our plans and strategy for our business and related financing,
includes forward-looking statements that involve risks and uncertainties. As a result of many factors, including those factors set forth
in the section entitled Item 3.D. “Key Information—Risk Factors” of this Annual Report, our actual results could differ
materially from the results described in or implied by the forward-looking statements contained in the following discussion and analysis.
Company Overview
We are a leading Tier-1 direct supplier of high-performance,
automotive-grade LiDAR sensor platforms and complementary software stacks. Our solutions are designed to bring enhanced vision and superior
performance to enable Physical AI through safe autonomous driving and other perception-focused applications at a mass scale.
We provide complete LiDAR based solutions for OEMs and Tier-1
partners developing autonomous driving vehicles for the passenger car, robotaxi, shuttle, delivery vehicle and truck markets. We also
leverage our proven automotive-grade LiDAR technology to offer solutions for non-automotive markets, including smart infrastructure, perimeter
security, traffic management and robotics through our InnovizSMART product line, which is designed for, among other applications, Physical
AI smart applications.
We were founded in 2016, and our culture has been built on solving
sophisticated technological problems through creativity and agile thinking. We created a new type of LiDAR sensor from the chip-level
up, including a suite of powerful and sophisticated software applications. In 2018, we achieved our first design win to power BMW’s
Level 3 autonomous platform, a program that reached maturity during 2024 with vehicles beginning to be sold with our LiDARs and complementary
software stacks.
In 2022, we made the strategic decision to become a Tier-1 direct
supplier enabling direct technical engagement with OEMs and improved pricing, which has played a significant role in our subsequent major
OEM program wins. That same year, following more than two years of extensive diligence and qualification, Volkswagen selected us as its
direct LiDAR supplier for automated vehicles across several Volkswagen brands using our InnovizTwo platform. In 2023, we announced that
Volkswagen aims to expand its use of InnovizTwo LiDAR to its I.D Buzz light commercial vehicle program. In 2024, we announced that Mobileye
will use the InnovizTwo Long-Range and InnovizTwo Short- to Mid-Range LiDARs for the Mobileye Drive™ platform. In September 2025,
Daimler Truck selected us as a future series production supplier of advanced LiDAR units for SAE Level 4 autonomous class-8 semi-trucks.
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We are currently expanding our third-party manufacturing
capacity through contract manufacturers to meet anticipated demand. As part of this effort, we have entered into arrangements with contract
manufacturing partners with automotive-grade facilities, and we expect these collaborations to enable volume production as customer demand
increases.
In June 2025, we announced the launch of InnovizSMART, a high-performance
LiDAR sensor based on the InnovizTwo platform, designed for a range of applications, including security, mobility, aerial, robotics, and
intelligent traffic management, which we believe are well-suited for Physical AI deployments. With the maturation of our InnovizTwo LiDAR
platform and expanding production capabilities, we are broadening our scope to focus on additional markets seeking affordable, high-performing
LiDAR solutions.
Recent Developments
Launch of InnovizThree
On December 23, 2025, we announced the launch of our third-generation
LiDAR sensor, InnovizThree, first demonstrated at CES in January 2026. Designed with slimmer dimensions, lower power consumption and higher
performance at a significantly reduced cost compared to InnovizTwo, InnovizThree is intended to enable seamless integration behind the
windshield or on the rooftop, providing OEMs with extended design flexibility. On January 6, 2026, we also announced the first fully colored
long-range LiDAR camera, a compact sensor-fusion module designed to help reduce OEM integration complexity.
Integration of InnovizSMARTer LiDAR with NVIDIA
Jetson Orin Nano
On January 6, 2026, we announced the integration of our InnovizSMARTer
LiDAR with NVIDIA Jetson Orin Nano, a physical AI solution designed to perform real-time 3D perception processing and data compression
locally at the sensor through edge computing, which is intended to enable wireless deployment in bandwidth-constrained environments while
reducing centralized processing costs.
ATM Program
In August 2025, we launched an ATM Program with Jefferies LLC,
pursuant to which we may offer and sell, from time to time, to or through the Sales Agent, ordinary shares having an aggregate offering
price of up to $75 million. During the year ended December 31, 2025, we issued and sold 9,252,639 ordinary shares under the ATM Program
for net proceeds to the Company of approximately $13.3 million.
Key Factors Affecting Innoviz’s Operating Results
We believe that our future performance and success depends to
a substantial extent on the following factors, each of which is in turn subject to significant risks and challenges, including those discussed
below and in the section of this Annual Report entitled Item 3.D. “Key Information—Risk Factors.”
Market Adoption
As AI extends from digital workflows into the physical world,
a transition commonly referred to as Physical AI, high-resolution LiDAR is emerging as a foundational sensing technology for systems that
must perceive, reason, and act under real-world constraints. We believe that widespread adoption of LiDAR across Physical AI applications
for autonomy is approaching and that we are well-positioned in both automotive and non-automotive markets to take advantage of this opportunity.
Nevertheless, automotive OEMs and their suppliers have commenced the commercialization of autonomous systems that rely on LiDAR technology.
Accordingly, we expect the rate of actual adoption and commercialization of LiDAR-based solutions by automotive OEMs and their suppliers
to impact our results of operations, including revenue and gross margins, for the foreseeable future. Given the focus of the consumer
automotive market on Level 2+, Level 3 and Level 4 segments, we expect these verticals to continue to grow over the short to medium term,
we are aligning our focus and efforts on these segments, specifically via our InnovizTwo product.
We believe that InnovizTwo will drive significant revenue growth
in the near to medium term. We also believe that market penetration of InnovizTwo will drive revenues in the Level 2+, Level 3 and Level
4 segments of the market. This is because the architecture of our products, which feature agile configuration of multiple components,
allow us to offer different product configurations based on the same hardware with only software modification. Accordingly, we can address
multiple market needs and niches without the need to develop multiple hardware configurations.
We also target Level 4 commercial automotive markets such as
robotaxis, shuttles, delivery vehicles and trucks, as well as non-automotive applications including smart infrastructure, security, robotics
and aerial solutions. While these non-automotive markets are at an earlier stage of commercialization relative to consumer automotive,
we commenced initial commercial sales in certain of these segments during 2025. Our future success depends in part on customers in these
markets adopting and scaling LiDAR-based solutions.
44
Design Wins
Our solutions are designed to be key enabling technologies for
OEMs in automotive and other applications. Because our solutions must be integrated into a broader platform by the OEM, it is critical
that we achieve design wins with these customers. The time necessary to achieve design wins varies based on the market and application.
The design cycle in the automotive market tends to be substantially longer and more onerous than in other markets. Even within the automotive
market, achieving a design win with an automotive OEM takes considerably longer than a design cycle for an aftermarket application. We
consider design wins to be critical to our future success, although the revenue generated by each design win and the time necessary to
achieve such a win can vary significantly making it difficult to predict our financial performance.
Product Cost and Margins
Our results of operations will depend on our ability to leverage
the fixed costs involved in production of our current products and our ability to improve gross margins on the basis of volume and manufacturing
efficiencies.
InnovizTwo platform is based on an improved design, which allows:
(i) lower bill of materials, and (ii) more efficient manufacturing process, which together may allow for a significant cost reduction
and improved gross margins.
Continued Investment and Innovation
Our unique LiDAR and perception solutions feature technological
breakthroughs across core components and allow us to act as one of the leading suppliers in a competitive market. We believe that our
financial performance is significantly dependent on our ability to maintain this position. This in turn will depend on our future research
and development investments and our ability to attract and retain highly qualified and experienced research and development personnel.
These are necessary to both continue the work required on our current products and future products to full commercialization, and to identify
and respond to rapidly evolving customer requirements, develop and introduce innovative new products and enhance and service existing
products. Failure to do this could adversely affect our market position and our revenue, and our research and development investments
may not be recovered. We also intend to continue developing our proprietary software stack to enhance the value of our LiDAR solutions
and support the growing demand for Physical AI-supported sensing suites.
Components of Results of Operations
Revenues
Our revenues derive primarily from sales of LiDAR sensors and
NRE to customers.
Revenues from LiDAR sensors are recognized at a point in time
when the control of the goods is transferred to the customer, generally upon delivery.
NRE to certain customers may require substantive customer acceptance
due to performance acceptance criteria that is considered more than a formality. For these services, revenues are recognized at a point
in time upon customer acceptance.
Cost of Revenues
Cost of revenues include the manufacturing cost of LiDAR sensors,
which primarily consists of components costs, sub-assembly costs and personnel-related costs, and amounts paid to third-party contract
manufacturers and vendors. Cost of revenues also includes depreciation, costs of providing NRE, an allocated portion of overhead, warranty
costs, excess and obsolete inventory and shipping costs. We expect cost of revenue to increase in absolute dollars in future periods to
the extent revenue increases, however we expect our products’ unit cost to decrease as sales increase thereby leveraging economies
of scale achievable due to our business model and higher production efficiencies.
45
Operating Expenses
Research and Development
Our research and development efforts are focused on enhancing
and developing cost efficient LiDAR solutions and the accompanying software suite.
Research and development expenses include:
| • |
personnel-related expenses, including salaries, benefits, and stock-based compensation expense for personnel in research and engineering
functions; |
| • |
expenses related to materials, software licenses, depreciation, supplies and third-party services; |
| • |
prototype expenses; and |
| • |
an allocated portion of facility and IT costs. |
We expense research and development costs as incurred until the
point that technological feasibility is reached, which for our software products is generally shortly before the products are released
to production. We expect that our research and development expenses will continue to be significant for the foreseeable future as we invest
in research and development activities to improve and enhance our product portfolio.
Sales and Marketing
Sales and marketing expenses include:
| • |
personnel-related expenses, including salaries, benefits, and stock-based compensation expense for personnel in sales and marketing;
|
| • |
sales and marketing activities, including the cost of sales commissions, marketing programs, trade shows, consulting services, promotional
materials and demonstration equipment, among other costs; and |
| • |
an allocated portion of facility and IT costs. |
We expect our sales and marketing expenses to be similar in future
periods as we focus our marketing activities in the automotive market.
General and Administrative
General and administrative expenses include:
| • |
personnel-related expenses, including salaries, benefits, and stock-based compensation expense for personnel in corporate, executive,
finance and other administrative functions; |
| • |
general and administration activities, including expenses relating to outside professional services, including legal, investors relations
and audit and accounting services; and |
| • |
the relevant portion of expenses for facilities, depreciation and IT costs that was not allocated to other operating expenses.
|
We expect our general and administrative expenses to be similar
in future periods.
Financial Income, Net
Financial income, net consists primarily of interest on cash
and cash equivalents deposited in our bank account, exchange rate differences arising from our ILS denominated lease liabilities under
ASC 842, marketable securities remeasurement and private placement warrants remeasurement. The deposits will vary based on cash and cash
equivalents, and with market rates. Our marketable securities have an average credit rating of “A” and a maturity of up to
three years. We do not intend to invest more than 5% of our investment portfolio in a single security at time of purchase. In addition,
financial income, net includes the fluctuation in value due to foreign exchange differences between cash and cash equivalent and monetary
assets and liabilities denominated in foreign currency, mainly in ILS and EUR.
46
Recent Accounting Pronouncements
See Note 2 to our consolidated financial statements included
elsewhere in this Annual Report for recently adopted accounting pronouncements and recently issued accounting pronouncements not yet adopted
as of the date of this Annual Report.
A. Operating Results
For a discussion of our results of operations for the year ended
December 31, 2023, including a year-to-year comparison between the years ended December 31, 2024 and December 31, 2023, as well as a discussion
of our liquidity and capital resources for the year ended December 31, 2023, refer to Item 5. “Operating
and Financial Review and Prospects” in our Annual Report on Form 20-F for the year ended December 31, 2024, filed with the
SEC on March 12, 2025.
The results of operations presented below should be reviewed in
conjunction with the consolidated financial statements and notes included elsewhere in this Annual Report. The following table sets forth
our consolidated results of operations data for the periods presented:
|
Year ended December 31, |
||||||||
|
2025 |
2024 |
|||||||
|
(In thousands, except share and per share data) |
||||||||
|
Revenues
|
$ |
55,089 |
$ |
24,268 |
||||
|
Cost of revenues
|
(42,184 |
) |
(25,429 |
) | ||||
|
Gross profit (loss)
|
12,905 |
(1,161 |
) | |||||
|
Operating expenses: |
||||||||
|
Research and development
|
56,478 |
73,817 |
||||||
|
Sales and marketing
|
5,751 |
7,474 |
||||||
|
General and administrative
|
18,409 |
19,466 |
||||||
|
Total operating expenses
|
80,638 |
100,757 |
||||||
|
Operating loss
|
(67,733 |
) |
(101,918 |
) | ||||
|
Financial income, net
|
109 |
7,328 |
||||||
|
Loss before taxes on income
|
(67,624 |
) |
(94,590 |
) | ||||
|
Taxes on income
|
(171 |
) |
(167 |
) | ||||
|
Net loss
|
$ |
(67,795 |
) |
$ |
(94,757 |
) | ||
|
Basic and diluted net loss per ordinary share
|
$ |
(0.34 |
) |
$ |
(0.57 |
) | ||
|
Weighted average number of ordinary shares used in computing
basic and diluted net loss per ordinary share |
199,895,238 |
167,216,070 |
||||||
47
Comparison of the Years Ended December 31, 2025 and 2024
Revenues
|
Year ended December 31, |
Change |
Change |
||||||||||||||
|
2025 |
2024 |
$ |
% |
|||||||||||||
|
(In thousands) |
(In thousands) |
(In thousands) |
||||||||||||||
|
Revenues |
$ |
55,089 |
$ |
24,268 |
$ |
30,821 |
127 |
% | ||||||||
Revenues increased by approximately $30.8 million, or 127%, to
approximately $55.1 million for the year ended December 31, 2025, from approximately $24.3 million for the year ended December 31,
2024.
The increase in revenues was primarily due to increased sales of
NRE, which contributed approximately $37.2 million in revenues during the year ended December 31, 2025 compared to approximately
$18.0 million in revenues during the year ended December 31, 2024, the sale of machinery to a customer of approximately $8.4 during the
year ended December 31, 2025, as well as increased sales of LiDAR sensors.
Cost of Revenues and Gross Margin
|
Year ended December 31, |
Change |
Change |
||||||||||||||
|
2025 |
2024 |
$ |
% |
|||||||||||||
|
(In thousands except percentages) |
(In thousands) |
|||||||||||||||
|
Cost of revenues |
$ |
42,184 |
$ |
25,429 |
$ |
16,755 |
66 |
% | ||||||||
|
Gross margin |
23 |
% |
(5 |
)% |
||||||||||||
Cost of revenues increased by approximately $16.8 million, or 66%,
to approximately $42.2 million for the year ended December 31, 2025, from approximately $25.4 million for the year ended December
31, 2024.
The increase in cost of revenues was primarily due to an increase
in costs related to sales of NRE, costs related to the sale of machinery to a customer and costs related to sales of LiDAR sensors, partially
offset by decreased production inefficiencies of InnovizOne and decreased excess and obsolete inventory. Gross margin increased to approximately
23% for the year ended December 31, 2025 from approximately (5)% for the year ended December 31, 2024, primarily due to increased
sales of NRE, the sale of machinery to a customer, decreased production inefficiencies of InnovizOne and decreased excess and obsolete
inventory.
Operating Expenses
|
Year ended December 31, |
Change |
Change |
||||||||||||||
|
2025 |
2024 |
$ |
% |
|||||||||||||
|
(In thousands) |
(In thousands) |
(In thousands) |
||||||||||||||
|
Research and development |
$ |
56,478 |
$ |
73,817 |
$ |
(17,339 |
) |
(23 |
)% | |||||||
|
Sales and marketing |
5,751 |
7,474 |
(1,723 |
) |
(23 |
)% | ||||||||||
|
General and administrative |
18,409 |
19,466 |
(1,057 |
) |
(5 |
)% | ||||||||||
|
Total operating expenses
|
$ |
80,638 |
$ |
100,757 |
$ |
(20,119 |
) |
(20 |
)% | |||||||
48
Research and Development
Research and development expenses decreased by approximately $17.3
million, or 23%, to approximately $56.5 million for the year ended December 31, 2025 from approximately $73.8 million for the year ended
December 31, 2024.
The decrease was primarily attributable to decreased payroll of
approximately $10.7 million (primarily related to allocation of direct costs related to sales of NRE and to a decrease in headcount,
partially offset by foreign currency exchange differences due to devaluation of the USD against the ILS), decreased stock-based compensation
of approximately $5.0 million and decreased third-party consulting services and software expenses of approximately $2.2 million, partially
offset by increased travel expenses of approximately $0.4 million.
Sales and Marketing
Sales and marketing expenses decreased by approximately $1.7 million,
or 23%, to approximately $5.8 million for the year ended December 31, 2025 from approximately $7.5 million for the year ended December
31, 2024.
The decrease was primarily attributable to decreased payroll of
approximately $0.8 million (primarily attributed to a decrease in headcount), decreased stock-based compensation of approximately $0.4
million and decreased consulting services expenses of approximately $0.3 million.
General and Administrative
General and administrative expenses decreased by $1.1 million,
or 5% to approximately $18.4 million for the year ended December 31, 2025 from approximately $19.5 million for the year ended December
31, 2024.
The decrease was primarily related to decreased legal consulting
services of approximately $1.0 million and decreased stock-based compensation of approximately $0.8 million, partially offset by increased
payroll of approximately $0.7 million (primarily attributed to foreign currency exchange differences due to devaluation of the USD against
the ILS).
Financial Income, net
|
Year ended December 31 |
Change |
Change |
|||||||||||||
|
2025 |
2024 |
$ |
% |
||||||||||||
|
(In thousands) |
(In thousands) |
(In thousands) |
|||||||||||||
|
Financial income, net
|
$ |
109 |
$ |
7,328 |
$ |
(7,219 |
) |
(99 |
)% | ||||||
Financial income, net was approximately $0.1 million for the year
ended December 31, 2025, compared to financial income, net of approximately $7.3 million for the year ended December 31, 2024.
The decrease was primarily related to foreign currency exchange
differences of approximately $5.0 million (out of which approximately $4.9 million is due to differences arising from our ILS denominated
lease liabilities under ASC 842), decreased bank deposit interest income of approximately $1.8 million and decreased net gain related
to marketable securities of approximately $0.4 million.
Quantitative and Qualitative Disclosures About Market Risk
We are exposed to a variety of risks, including foreign currency
exchange fluctuations, changes in interest rates and inflation. We regularly assess currency, interest rate and inflation risks to minimize
any adverse effects on our business as a result of those factors.
Foreign Currency Risk
Our financial results are reported in USD, and changes in the exchange
rate between USD and local currencies in the countries in which we operate (primarily ILS) may affect the results of our operations. In
the year ended December 31, 2025, substantially all of our revenues were denominated in USD. The USD cost of our operations in countries
other than the United States may be negatively influenced by devaluation of the USD against other currencies.
During the year ended December 31, 2025, the value of the USD devaluated against
the value of the ILS by approximately 12.5%. Our most significant foreign currency exposures are related to our operations in Israel.
We hedge our anticipated exposure by exchanging USD into ILS in amounts sufficient to fund up to three months of operations and monitoring
foreign currency exchange rates over time.
49
Interest Rate Risk
Our investment strategy is to achieve a return that will allow
us to preserve capital and meet our liquidity requirements. We invest in bank deposits and marketable securities, primarily in USD.
Our cash and cash equivalents are exposed to market risk related
to changes in interest rates, which is affected by changes in the general level of the Bank of Israel interest rates and United States Federal
Reserve interest rates. Due to the short-term nature and the low-risk profile of our interest-bearing accounts, an
immediate 10% change in interest rates would not have a material effect on the fair market value of our cash and cash equivalents, bank
deposits and restricted deposits or on our financial position or results of operations.
Our investments in marketable securities are primarily in securities
with an average credit rating of “A” and a maturity of up to three years. We do not intend to invest more than 5% of our investment
portfolio in a single security at time of purchase.
Other Market Risks
We do not believe that inflation had a material effect on our business,
financial conditions or results of operations during the years ended December 31, 2025 and 2024.
B. Liquidity and Capital Resources
Sources of Liquidity
During the years ended December 31, 2025 and 2024, we funded our
operations primarily from the approximately $370 million in proceeds we received in connection with the Business Combination (completed
in April 2021), the approximately $61.4 million in net proceeds we received from our August 2023 underwritten equity offering, the approximately
$37.3 million in net proceeds we received from our February 2025 registered direct offering, the approximately $13.3 million in net proceeds
we received from the ATM Program during 2025, and the revenues generated from the sale of goods and services.
As of December 31, 2025, we had approximately $72.1 million
in cash and cash equivalents, short term bank deposits, short term restricted cash and marketable securities. Cash equivalents and marketable
securities are invested in accordance with our investment policy.
Cash Flows Summary
The following table summarizes our cash flows for the periods presented:
|
Year ended December 31, |
||||||||
|
2025 |
2024 |
|||||||
|
(In thousands) |
(In thousands) |
|||||||
|
Net cash used in operating activities
|
$ |
(47,918 |
) |
$ |
(76,955 |
) | ||
|
Net cash provided by (used in) investing activities
|
(21,394 |
) |
75,468 |
|||||
|
Net cash provided by financing activities
|
51,465 |
224 |
||||||
|
Effect of exchange rate changes on cash, cash equivalents and restricted cash |
1,120 |
308 |
||||||
|
Net decrease in cash, cash equivalents and restricted cash
|
$ |
(16,727 |
) |
$ |
(955 |
) | ||
Operating Activities
During the year ended December 31, 2025, operating activities used
approximately $47.9 million. The primary factors affecting operating cash flows during the year ended December 31, 2025 were the
net loss of approximately $67.8 million, impacted by non-cash charges of approximately $19.9 million consisting of stock-based
compensation of approximately $16.0 million, depreciation and amortization of approximately $5.9 million, remeasurement of private
warrants of approximately $(0.1) million and an increase in working capital of approximately $(1.9) million.
During the year ended December 31, 2024, operating activities used
approximately $77.0 million. The primary factors affecting operating cash flows during the year ended December 31, 2024, were the net
loss of approximately $94.8 million, impacted by non-cash charges of approximately $17.8 million consisting of stock-based compensation
of approximately $19.7 million, depreciation and amortization of approximately $7.8 million, remeasurement of private warrants
of approximately $(0.2) million and an increase in working capital of approximately $(9.5)
million.
50
Investing Activities
During the year ended December 31, 2025, cash used in investing
activities was approximately $21.4 million, which primarily resulted from investment in bank deposits of approximately $99.8 million,
investment in marketable securities of approximately $37.6 million and purchase of property and equipment of approximately $4.3 million,
partially offset by withdrawal of bank deposits of approximately $77.2 million, proceeds from sales and maturities of marketable securities
of approximately $40.3 million and proceeds from the sale of machinery to a customer of approximately $2.9 million.
During the year ended December 31, 2024, cash provided by investing
activities was approximately $75.5 million, which primarily resulted from the withdrawal of bank deposits of approximately $127.3
million and proceeds from sales and maturities of marketable securities of approximately $62.2 million, partially offset by investment
in marketable securities of approximately $55.5 million, investment in bank deposits of approximately $54.1 million and purchases
of property and equipment of approximately $4.4 million.
Financing Activities
During the year ended December 31, 2025, cash provided by financing
activities was approximately $51.5 million resulting from approximately $37.3 million in proceeds from our registered direct offering,
net of issuance costs, approximately $13.3 million in proceeds from the sale of our ordinary shares under the ATM Program, net of paid
issuance costs, and approximately $0.8 million from the exercise of employee stock options.
During the year ended December 31, 2024, cash provided by financing
activities was approximately $0.2 million resulting from the exercise of employee stock options.
Funding Requirements
We expect to continue to invest substantially in our research and
development activities and incur commercialization expenses related to product sales, marketing, manufacturing and distribution. As we
achieve further commercial success, we may need to obtain additional funding to support our continuing operations. In addition, our financial
stability is reviewed by existing and potential customers from time to time and we believe that a stronger cash position provides us additional
time to execute our growth strategy and is perceived positively by existing and potential customers and may also provide us with higher
grading in such customers’ diligence processes. If we are unable to obtain capital when and if needed or on attractive terms, we
could be forced to delay, reduce or eliminate some of our research and development programs or future commercialization efforts.
As of December 31, 2025, we had cash and cash equivalents, short
term bank deposits, short term restricted cash and marketable securities of approximately $72.1 million. We expect those funds to be sufficient
to continue to execute our business plan for at least the next 12 months.
Additionally, we intend to fund our operations from revenues generated
from the sale of goods and services, together with funds received under the registered direct offering and proceeds from the sale of our
ordinary shares from time to time under the ATM Program.
We also expect our losses to be similar in future periods
as we:
| • |
anticipate additional inflows of NRE payments from various programs to balance some of our losses; |
| • |
expand production capabilities to produce our LiDAR solutions, and accordingly incur costs associated with outsourcing the production
of our LiDAR solutions; |
| • |
expand our design, development, installation and servicing capabilities; |
| • |
continue to invest in research and development; |
| • |
increase our test and validation activities as part of our Tier-1 responsibilities; |
| • |
produce an inventory of our LiDAR solutions; and |
| • |
continue to invest in sales and marketing activities, including diversification of our target markets, and develop our distribution
infrastructure. |
Because we will incur costs and expenses from these efforts before
we receive incremental revenues with respect thereto, losses in future periods will be significant. In addition, we may find that these
efforts are more expensive than we currently anticipate or that these efforts may not result in revenues, which would further increase
our losses.
51
Off-Balance Sheet Arrangements
Our remaining performance obligations are comprised of application
engineering services not yet rendered. As of December 31, 2025, the aggregate amount of the transaction price allocated to remaining performance
obligations was approximately $7.6 million, which we expect to recognize as revenues within the next 12 months.
Other than as set forth above, we have not entered into any off-balance sheet
arrangements and do not have any holdings in variable interest entities.
C. Research and Development, Patents and Licenses, etc.
Research and Development
We have invested a significant amount of time and expense into
research and development of LiDAR-based technologies. Our research and development team is the largest department in the company and,
as of December 31, 2025, was comprised of 283 employees. Our ability to maintain a leadership position in the industry depends to a great
degree on our ongoing research and development activities. Our research and development team includes engineers and researchers with a
diverse range of expertise and diverse levels of experience and academic backgrounds, including holders of B.Sc., M.Sc. and PhD degrees
from leading academic institutions. Our research and development activities are largely conducted at our headquarters in Rosh HaAin, Israel.
Creating an automotive-grade, eye-safe and cost efficient
~905nm wavelength LiDAR solution and the complementary software stack requires a multi-disciplinary team with expertise spanning optics,
lasers, mechanical engineering, micro-electronics, chip design, complex IC packaging, algorithms, neural networks, systems engineering
and software architecture.
Intellectual Property
Our success and competitive advantage depend in part upon our ability
to develop and protect our core technology and intellectual property. We own a portfolio of intellectual property, including registered
patents, registered trademarks, registered designs, confidential technical information, and expertise in the development of LiDAR technology
and software for, among others, autonomous vehicles.
We have filed patent and trademark applications in order to further
secure these rights and strengthen our ability to defend against third parties who may infringe on our rights. We also rely on design
and manufacturing know-how, continuing technological innovations, and licensing and exclusivity opportunities to maintain and
improve our competitive position. Additionally, we protect our proprietary rights through agreements with our commercial partners, supply-chain
vendors, employees, and consultants, as well as close monitoring of developments and products in our industry.
D. Trend Information
Supply Chain
We currently have sufficient component inventory in order to meet
the demands of our customers in the near-term. In addition, we are in the process of procuring additional component stock to keep in inventory
on a go-forward basis to minimize the effect of supply chain strain on our business in the future.
E. Critical Accounting Estimates
Our management’s discussion and analysis of financial condition
and results of operations is based on our consolidated financial statements, which have been prepared in accordance with U.S. GAAP. The
preparation of these financial statements requires us to make estimates and judgments that affect the reported amounts of assets, liabilities
and expenses and the disclosure of contingent assets and liabilities in our consolidated financial statements during the reporting periods.
These items are monitored and analyzed by us for changes in facts and circumstances, and material changes in these estimates could occur
in the future. We base our estimates on historical experience, known trends and events, and on various other factors that we believe are
reasonable under the circumstances, the results of which form the basis for making judgments about the carrying value of assets and liabilities
that are not readily apparent from other sources. Changes in estimates are reflected in reported results for the period in which they
become known. Actual results may differ materially from these estimates under different assumptions or conditions.
While our significant accounting policies are described in more
detail in the notes to our consolidated financial statements appearing elsewhere in this Annual Report, we believe the following accounting
policies used in the preparation of our consolidated financial statements require the most significant judgments and estimates. Please
see Note 2 to our consolidated financial statements appearing elsewhere in this Annual Report for additional information.
52
Revenue Recognition
We follow the provisions of ASC Topic 606, Revenue from Contracts
with Customers (“ASC 606”), which applies to all contracts with customers. Under ASC 606, revenue is recognized upon transfer
of control of promised products and services to customers in an amount that reflects the consideration that we expect to receive in exchange
for those products and services.
When we enter into a contract, once the contract is determined
to be within the scope of ASC 606, we assess the goods or services promised within the contract and determine those that are performance
obligations and assess whether each promised good or service is distinct.
We evaluate each performance obligation to determine if it is satisfied
at a point in time or over time.
Inventory Reserves
Our inventory is stated at the lower of cost or estimated net realizable
value. Cost of inventory is determined as follows:
| • |
Raw materials and work in process - based on weighted average cost. |
| • |
Finished goods - based mainly on weighted average standard cost method. |
We charge cost of revenue for write-downs of inventory which are
obsolete or in excess of anticipated demand based on a consideration of marketability and product life cycle stage, product development
plans, component cost trends, demand forecasts, historical revenue, and assumptions about future demand and market conditions.
Losses expected to arise from firm non-cancellable commitments
for future purchases of inventory are charged to cost of revenues unless the losses are recoverable through firm sales contracts or other
means.
Useful Lives of Property, Plant, and Equipment
Property and equipment are stated at cost, net of accumulated depreciation
and impairment. The estimated useful lives of property and equipment are determined when those assets are initially recognized and are
routinely reviewed for the remaining estimated useful lives. When useful life is reassessed for an asset, the remaining carrying amount
of the asset is accounted for prospectively and depreciated over the revised estimated useful life.
| Item 6. |
Directors, Senior Management and Employees |
A. Directors and Senior Management
The following table provides information about our directors and
executive officers as of March 1, 2026. The address for each of the directors and executive officers is 5 Uri Ariav Street, Building C,
Rosh HaAin, Israel 4809202.
|
Name |
|
Age |
|
Position(s) |
|
Omer Keilaf |
|
46 |
|
Chief Executive Officer, Co-Founder and Director |
|
Eldar Cegla |
|
56 |
|
Chief Financial Officer |
|
Avishay Moscovici
|
|
58 |
|
Chief Research & Development Officer |
|
Elad Hofstetter
|
|
44 |
|
Chief Business Officer |
|
Ido Luski |
|
51 |
|
Chief Operating Officer |
|
Amichai Steimberg
|
|
63 |
|
Chairperson of the Board of Directors |
|
Aharon Aharon |
|
71 |
|
Director |
|
Dan Falk |
|
81 |
|
Director |
|
Stefan Jacoby |
|
67 |
|
Director |
|
Ronit Maor |
|
55 |
|
Director |
|
James Sheridan |
|
58 |
|
Director |
|
Orit Stav |
|
55 |
|
Director |
|
Alexander von Witzleben
|
|
62 |
|
Director |
53
Executive Officers
Omer David Keilaf, Chief Executive Officer,
Co-Founder and Director
Omer Keilaf is the Founder of
our company and has served as our Chief Executive Officer and a member of the board of directors since January 2016. Prior to founding
Innoviz, Mr. Keilaf held senior leadership roles at Consumer Physics, Inc., STMicroelectronics N.V. (NYSE: STM), and in an elite
technological unit of the Intelligence Corps of the Israel Defense Forces, where he served as the System and Product Team Manager, R&D
Manager, and Project Manager and System Architecture Manager, respectively. Mr. Keilaf holds a BSc and MSc in Electrical Engineering
and an MBA, all from Tel Aviv University, Israel.
Eldar Cegla, Chief Financial Officer
Eldar Cegla has served
as the Chief Financial Officer of our company since June 2017. Prior to joining Innoviz, Mr. Cegla served as the VP Finance of ConsumerPhysics,
Inc from 2014 to 2015, as the Chief Financial Officer of Metrolight Ltd. from 2010 to 2014 and as the Chief Operations Officer of Mantis-Vision
Ltd. from 2007 to 2010. Mr. Cegla was a Co-Founder of Browzwear International Ltd. and served as its Chief Financial Officer
from 2000 to 2006. Mr. Cegla holds a BSc in Chemistry from Tel Aviv University, Israel.
Avishay Moscovici, Chief Research & Development
Officer
Avishay Moscovici has
served as our Chief Research & Development Officer since February 2024. He previously served as our VP Software Engineering from 2019
to 2024 and as our Director of Software Engineering from 2017 to 2019. Prior to joining Innoviz, Mr. Moscovici served as VP of Research
& Development at Rachip Ltd. from 2016 to 2017. Before joining Rachip Ltd., Mr. Moscovici served in a number of roles in Motorola
Semiconductor/Freescale Semiconductor/NXP Israel from 1993-2016, including Software Department Manager, overseeing its software and hardware
activities. Mr. Moscovici holds a BSc and an MSc in Electronic Engineering, and an MBA in Information Systems from Tel-Aviv University,
Israel, all Magna Cum Laude.
Elad Hofstetter, Chief Business Officer
Elad Hofstetter has
served as our Chief Business Officer since September 2023. He previously served as our VP Product Management from 2021 to 2023 and as
our Product and Program Manager from 2018 to 2021. Prior to joining Innoviz, Mr. Hofstetter served in a number of roles at LifeBEAM Technologies
Ltd., including Engineering Manager from 2017-2018. Before joining LifeBEAM Technologies Ltd., Mr. Hofstetter was a QA investigator
in Teva Pharmaceutical Industries Ltd., and a commander and medic in the Israel Defense Forces Commando Unit. Mr. Hofstetter holds a BSc
and an MSc in Bio-Medical Engineering from Tel Aviv University, Israel.
Ido Luski, Chief Operating Officer
Ido Luski has served
as our Chief Operating Officer since July 2025, following a short transition period of serving as Co-Chief Operating Officer (aside Mr.
Udy Gal-On). He previously served as our VP Delivery from 2021 to 2025, and as our Director of Project Management from 2019 to 2021. Prior
to joining Innoviz, Mr. Luski served as Director of System Engineering at Intel Corporation’s (Nasdaq: INTC) RealSense group and
managed system engineering groups at Elbit Systems Ltd. (TASE: ESLT). Mr. Luski holds a BSc in Software Engineering from the Academic
College of Tel Aviv-Yaffo, Israel, and an MBA from Tel-Aviv University, Israel.
54
Directors
Amichai Steimberg, Chairperson of the Board
of Directors
Amichai Steimberg has
served on our board of directors since April 2021 and currently serves as the chairperson of the board of directors. Mr. Steimberg
previously served as Chief Financial Officer of Orbotech Ltd. from 2000 to 2009, as Chief Operating Officer and Deputy CEO of Orbotech
Ltd. from 2009 to 2013, as President and Chief Operating Officer of Orbotech Ltd. from 2013 to 2019, and as Chief Executive Officer of
Orbotech Ltd. from 2019 to 2020 following Orbotech’s acquisition by KLA Corporation (NYSE: KLAC). Mr. Steimberg serves as a board
member and chairperson for several private companies and non-profit organizations. Mr. Steimberg holds a BSc in Agricultural Economics
and Business Administration from the Hebrew University in Jerusalem, Israel and completed the Advanced Management Program at Harvard University.
Aharon Aharon, Director
Aharon Aharon has
served on our board of directors since April 2021. Since 2021, Mr. Aharon has run and operated C-Perto, a consulting service that
he cofounded. He also currently serves on the board of directors and several committees of The Tel Aviv Stock Exchange Ltd. as an independent
director and is a member of Israel’s National Council for Civilian Research and Development. From 2017 to 2021, Mr. Aharon
served as the Chief Executive Officer of the Israel Innovation Authority (the “IIA”), an independent public entity that operates
for the benefit of the Israeli innovation ecosystem and Israeli economy as a whole. Prior to joining the IIA, Mr. Aharon served as
the Corporate Vice President of Hardware Technologies and General Manager of Apple Israel from 2011 to 2017. Prior to his time at Apple,
Mr. Aharon served as the chief executive officer of Camero, a leading provider of UWB imaging radars, from 2004 to 2010 (when the
company was acquired). In addition, Mr. Aharon served as chairperson of the board of directors of Discretix Technologies from 2003
to 2010 (Discretix was acquired by ARM in 2014). From 2001 to 2003, Mr. Aharon was the chief executive officer of Seabridge. Prior
to joining Seabridge, Mr. Aharon was the Chief Operating Officer of Zoran, a Silicon Valley-based, leading provider of digital solutions
in the digital entertainment and digital imaging market. Mr. Aharon started his professional career at IBM Research and has a BSc
in Computer Engineering and a MSc in Electrical Engineering from the Technion-Israel Institute of Technology.
Dan Falk, Director
Dan Falk has served
on our board of directors since April 2021. Mr. Falk currently serves as a member of the board of directors of the following companies:
Nice Ltd. (Nasdaq: NICE) since 2001 and Evogene (Nasdaq: EVGN) since 2021. From 1999 to 2001, Mr. Falk was President and Chief Operating
Officer of Sapiens International Corporation N.V. From 1985 to 1999, Mr. Falk served in various positions in Orbotech Ltd. (acquired
by KLA Corporation (NYSE: KLAC)), the last of which were Chief Financial Officer and Executive Vice President. From 1973 to 1985, he served
in several executive positions in the Israel Discount Bank. Mr. Falk holds a B.A. degree in Economics and Political Science and an
MBA, both from the Hebrew University of Jerusalem.
Stefan Jacoby, Director
Stefan Jacoby has
served on our board of directors since January 2024. Mr. Jacoby currently serves as chairperson of the board of directors of
Sion Power Corporation and as a member of the board of directors of Openlane Inc. (NYSE:KAR). Mr. Jacoby also serves as a chairperson
of the nomination and governance committee of Openlane Inc. and as a member of the compensation committee of Sion Power Corporation. His
prior experience includes roles as executive vice-president of General Motors Company, Global Chief Executive Officer and President of
Volvo Car Corporation, Sweden and Chief Executive Officer and President of Volkswagen Group of America. Mr. Jacoby also holds a degree
in Business Administration from the University of Cologne, Germany.
55
Ronit Maor, Director
Ronit Maor has served
on our board of directors since April 2021. Since 2017, Ms. Maor has served as the Chief Financial Officer of Earnix Inc., a leading
SaaS company providing an AI-driven pricing, rating and product personalization for insurance and banking customers. Prior to joining
Earnix Inc., Ms. Maor was Chief Financial Officer at Pontis, a leading digital customer engagement company, from 2012 until its acquisition
by Amdocs in 2016. Prior to her time at Pontis, Ms. Maor was VP Corporate Development at Modu, an Israeli start-up designing unique
cellular phones, from 2007 to 2011. Ms. Maor also served as Chief Financial Officer of msystems Ltd., a Nasdaq-listed company, from
1997 until the company was sold to SanDisk in 2006. Ms. Maor has a BSc in Industrial Engineering and Management, Magna Cum Laude,
from Tel Aviv University, Israel.
James Sheridan, Director
James Sheridan has
served on our board of directors since April 2021. Mr. Sheridan is a senior operating executive with over 25 years of experience
and deep experience in the automotive industry. Since July 2025, Mr. Sheridan has served as Managing Partner of Foundational Capital Partners
and since 2020 as President of Perception Capital Partners. From 2005 to 2017, Mr. Sheridan co-led the North American Procurement Practice
at McKinsey & Company, where he served as Senior Expert. Previously, he served as Chief Procurement Officer at Forterra Inc. and Champion
Enterprises and held various purchasing roles at Ford Motor Company from 1995 to 2003. Mr. Sheridan holds a B.A. in Economics from the
College of the Holy Cross and MBA in Finance from Carnegie Mellon University’s Tepper School of Business. Mr. Sheridan was
appointed by Perception, which is entitled to appoint one director for so long as it beneficially owns at least 50% of the total number
of ordinary shares it beneficially owned at the date of the closing of the Business Combination.
Orit Stav, Director
Orit Stav has served
on our board of directors since April 2021. Ms. Stav is a seasoned investment manager with 20 years of experience in the technology,
venture capital, and private equity sectors. Ms. Stav currently serves as a member of the board of directors of Menora Mivtachim Holdings
Ltd., Camtek Ltd., Doral Renewable Energy Resources Ltd., and Effi Capital Nadlan Ltd. Ms. Stav also serves as a board member for several
private companies. Since 2015, Ms. Stav has served as a Managing Partner at Israel Innovation Partners. Prior to that, she represented
Siemens Venture Capital in Israel and led investments in technology startups. Ms. Stav holds an MBA from Hertfordshire University,
UK.
Alexander Von Witzleben, Director
Alexander von
Witzleben has served on our board of directors since December 2023. Mr. von Witzleben currently serves as non-executive chairperson
of the board of directors of Arbonia AG and is a member of its nomination and remuneration committee and audit committees. He served as
chief executive officer of Arbonia AG from 2015 to 2022. In addition, Mr. von Witzleben currently serves as the chairperson of the supervisory
board of VERBIO Vereinigte BioEnergie AG. Mr. von Witzleben holds a degree in economics and business administration from the University
of Passau, Germany.
B. Compensation
The table below reflects the Company’s compensation costs
related to the employment of our five most highly compensated office holders (as defined in Israel’s Companies Law) with respect
to the year ended December 31, 2025. We refer to the five individuals for whom disclosure is provided herein as our “Covered Executives.”
For purposes of the table below, “compensation” includes amounts accrued or paid in connection with salary, bonuses, equity-based
compensation, retirement or termination payments, benefits and perquisites (such as car and phone), social benefits and any undertaking
to provide such compensation. All amounts reported in the table are in terms of cost to the Company (in USD), as recognized in our financial
statements for the year ended December 31, 2025, including compensation paid to such Covered Executives following the end of the year
in respect of services provided during the year. Each of the Covered Executives was covered by our directors’ and officers’
liability insurance policy in accordance with applicable law and our Articles.
|
Name and Principal Position(1)
|
Salary and benefits(2)
|
Bonus |
Equity-Based Compensation(3)
|
Total |
|||||||||
|
Omer Keilaf (Chief Executive
Officer) |
$ |
498,387 |
$ |
0 |
$ |
794,695 |
$ |
1,293,082 |
|||||
|
Eldar Cegla (Chief Financial
Officer) |
$ |
339,206 |
$ |
0 |
$ |
243,404 |
$ |
582,610 |
|||||
|
Avishay Moscovici (Chief Research
& Development Officer) |
$ |
316,111 |
$ |
0 |
$ |
196,053 |
$ |
512,164 |
|||||
|
Elad Hofstetter (Chief Business
Officer) |
$ |
265,038 |
$ |
30,134 |
$ |
192,991 |
$ |
488,164 |
|||||
|
Ido Luski (Chief Operating
Officer) |
$ |
297,540 |
$ |
0 |
$ |
169,912 |
$ |
467,452 |
|||||
| (1) |
All Covered Executives were employed on a full time (100%) basis during 2025. |
| (2) |
Includes the Covered Executive’s gross salary and benefits and perquisites, including those mandated by applicable law. Such
benefits and perquisites may include, to the extent applicable to the Covered Executives, payments, contributions and/or allocations for
savings funds (e.g., Managers’ Life Insurance Policy), education funds (referred to in Hebrew as “keren hishtalmut”),
pension, severance, vacation, car or car allowance, medical insurances and benefits, risk insurance (e.g., life, disability, accident),
telephone, convalescence pay, payments for social security, tax gross-up payments and other benefits and perquisites consistent with the
Company’s policies. |
| (3) |
Represents the equity-based compensation expenses recorded in the Company’s consolidated financial statements for the year
ended December 31, 2025, based on the equity fair value on the grant date, calculated in accordance with accounting guidance for equity-based
compensation. For a discussion on the assumptions used in reaching this valuation, see Note 11 to our consolidated financial statements
included in this Annual Report. |
56
Directors
Under the Companies Law, the compensation of a public company’s
directors requires the approval of its compensation committee, the subsequent approval of its board of directors and, unless exempted
under regulations promulgated under the Companies Law, the approval of its shareholders at a general meeting. If the compensation of a
public company’s directors is inconsistent with its stated compensation policy, then those provisions that must be included in the
compensation policy according to the Companies Law must have been considered by the compensation committee and board of directors, and
the shareholder approval will require a special majority under which:
| • |
at least a majority of the shares held by all shareholders who are not controlling shareholders and do not have a personal interest
in such matter, present and voting at such meeting, are voted in favor of the compensation package, excluding abstentions; or |
| • |
the total number of shares of non-controlling shareholders and shareholders who do not have a personal interest in such
matter voting against the compensation package does not exceed 2% of the aggregate voting rights in the company. |
We do not have any written agreement with any director providing
for benefits upon the termination of such director’s relationship with our Company.
Executive Officers other than the Chief Executive
Officer
The Companies Law requires the approval of the compensation of
a public company’s executive officers (other than the chief executive officer) in the following order: (i) the compensation
committee, (ii) the company’s board of directors, and (iii) if such compensation arrangement is inconsistent with the
company’s stated compensation policy, the company’s shareholders (by a special majority vote as discussed above with respect
to the approval of director compensation). However, if the shareholders of the company do not approve a compensation arrangement with
an executive officer that is inconsistent with the company’s stated compensation policy, the compensation committee and board of
directors may override the shareholders’ decision if each of the compensation committee and the board of directors provide detailed
reasons for their decision.
Chief Executive Officer
Under the Companies Law, the compensation of a public company’s
chief executive officer is required to be approved by: (i) the company’s compensation committee; (ii) the company’s
board of directors, and (iii) the company’s shareholders (by a special majority vote as discussed above with respect to the
approval of director compensation). However, if the shareholders of the company do not approve the compensation arrangement with the chief
executive officer, the compensation committee and board of directors may override the shareholders’ decision if each of the compensation
committee and the board of directors provide detailed reasons for their decision. The approval of each of the compensation committee and
the board of directors should be in accordance with the company’s stated compensation policy; however, in special circumstances,
they may approve compensation terms of a chief executive officer that are inconsistent with such policy provided that they have considered
those provisions that must be included in the compensation policy according to the Companies Law and that shareholder approval was obtained
(by a special majority vote as discussed above with respect to the approval of director compensation). In addition, the compensation committee
may waive the shareholder approval requirement with regard to the approval of the engagement terms of a candidate for the chief executive
officer position if they determine that the compensation arrangement is consistent with the company’s stated compensation policy,
that the chief executive officer did not have a prior business relationship with the company or a controlling shareholder of the company
and that subjecting the approval of the engagement to a shareholder vote would impede the company’s ability to engage the chief
executive officer candidate.
57
Aggregate Compensation of Office Holders
The aggregate compensation, including stock-based compensation,
paid by our company to its executive officers and directors as a group for the year ended December 31, 2025, was approximately $5.1
million (including Mr. Gal-On who resigned from his position as Chief Operating Officer during the year ended December 31, 2025). Such
amount includes approximately $0.3 million paid for pension, severance, retirement or similar benefits or expenses, but does not include
business travel, relocation, professional and business association dues and expenses reimbursed to office holders, and other benefit costs
commonly reimbursed or paid by companies in Israel.
As of December 31, 2025, options to purchase 3,777,830 of
our ordinary shares granted to our executive officers and directors as a group were outstanding under our equity incentive plans at a
weighted average exercise price of $7.45 per ordinary share.
In addition, 9,443,126 RSUs granted to our executive officers and
directors, were outstanding under our equity incentive plans as of December 31, 2025.
We pay to each of our non-employee directors an annual
cash retainer as follows: chairperson of the board of directors: $77,500; chairperson of the audit committee, compensation committee and
nominating, environmental, social and governance committee: $50,000, $45,000 and $42,500, respectively; members of the audit committee,
compensation committee and nominating, environmental, social and governance committee: $42,500, $40,000 and $38,750, respectively; and
each other non-employee director: $35,000. Such compensation is not cumulative and the non-employee directors receive the highest level
of compensation to which they are entitled. Additionally, according to our compensation policy, we are entitled to grant the chairperson
of the board of directors an annual equity grant of up to $300,000, and each of our non-employee directors an annual equity grant of up
to $100,000 each. We also reimburse them for expenses arising from their board membership.
On December 16, 2025, following the approval of the Compensation
Committee, the Board and the shareholders, we granted Omer Keilaf, our Chief Executive Officer, 6,256,265 Performance Share Units (“PSUs”)
pursuant to Innoviz’s 2021 Share Incentive Plan, as amended on December 2025 (the “2021 Plan”).
The vesting of all the PSUs is subject to both (i) compliance with
certain long-term ordinary share price performance criteria and (ii) Mr. Keilaf’s continued employment by Innoviz on each applicable
vesting date.
Share Option Plans
2016 Share Incentive Plan
Our 2016 Share Incentive Plan (the “2016 Plan”) was
adopted by our board of directors on May 23, 2016. The Plan provides for the grant of options to employees, directors, office holders,
service providers and consultants of our company and its subsidiaries.
We no longer grant any awards under the 2016 Plan as it was superseded
by our 2021 Share Incentive Plan, although outstanding options previously granted under the 2016 Plan remain governed by the 2016 Plan.
As of December 31, 2025, a total of 3,402,467 options to purchase ordinary shares were outstanding under the 2016 Plan, with a weighted
average exercise price of $0.88 per ordinary share. Our board of directors, or a duly authorized committee of our board of directors,
administers the 2016 Plan.
2021 Share Incentive Plan
In 2021, we adopted our 2021 Plan and in December 2025 we amended
such plan, under which we may grant equity-based incentive awards to attract, motivate and retain the talent for which we compete. Following
the consummation of the Business Combination and the adoption of the 2021 Plan, we ceased to grant any awards under the 2016 Plan, though
previously granted options under the 2016 Plan remain outstanding and governed by the 2016 Plan. As of December 31, 2025, options to purchase
6,143,229 of our ordinary shares and 25,424,436 RSUs were outstanding under the 2021 Plan.
The maximum number of our ordinary shares available for issuance
under the 2021 Plan is equal to the sum of (i) 19,510,820 shares (together with any shares subject to awards under the 2016 Plan
that expire or become un-exercisable without having been exercised), and (ii) an annual increase on the first day of each year beginning
in 2022 and ending in and including 2031, equal to the lesser of (A) 5% of the outstanding shares on the last day of the immediately preceding
calendar year and (B) such amount as determined by our board of directors if so determined prior to January 1 of a calendar
year; provided, however, that no more than 14,000,000 shares in total may be issued upon the exercise of incentive stock options under
the 2021 Plan. If permitted by us, ordinary shares tendered to pay the exercise price or withholding tax obligations with respect to an
award granted under the 2021 Plan or the 2016 Plan may again be available for issuance under the 2021 Plan. Our board of directors may
also reduce the number of ordinary shares reserved and available for issuance under the 2021 Plan in its discretion. On January 5, 2026,
the number of ordinary shares reserved for the 2021 Plan increased by 16,960,814 ordinary shares. The total number of ordinary shares
reserved and available for future equity grants under the 2021 Plan, as of February 10, 2026 was 11,450,400.
58
Our board of directors, or a duly authorized committee of our board
of directors, administers the 2021 Plan. Under the 2021 Plan, the administrator has the authority, subject to applicable law, to interpret
the terms of the 2021 Plan and any award agreements or awards granted thereunder, designate recipients of awards, determine and amend
the terms of awards, including the exercise price of an option award, the fair market value of an ordinary share, the time and vesting
schedule applicable to an award or the method of payment for an award, accelerate or amend the vesting schedule applicable to an award,
prescribe the forms of agreement for use under the 2021 Plan and take all other actions and make all other determinations necessary for
the administration of the 2021 Plan.
The administrator also has the authority to amend and rescind rules
and regulations relating to the 2021 Plan or terminate the 2021 Plan at any time before the date of expiration of its ten-year term.
The 2021 Plan provides for granting awards under various tax regimes,
including, without limitation, for awards granted to our Israeli employees or service providers, in compliance with Section 102 of
the Israeli Income Tax Ordinance (New Version), 1961 (the “Ordinance”) or Section 3(i) of the Ordinance and for awards
granted to our United States employees or service providers, including those who are deemed to be residents of the United States for tax
purposes, Section 422 of the Code and Section 409A of the Code.
Section 102 of the Ordinance allows employees, directors and
officers who are not “controlling shareholders” (as used under the Ordinance) and are considered Israeli residents to receive
favorable tax treatment for compensation in the form of shares or options. Our non-employee service providers and controlling shareholders
may only be granted options under section 3(i) of the Ordinance, which does not provide for similar tax benefits.
The 2021 Plan provides for the grant of stock options (including
incentive stock options and nonqualified stock options), ordinary shares, restricted shares, restricted share units, performance restricted
share units and other stock-based awards. Options granted under the 2021 Plan to our employees who are U.S. residents may qualify as “incentive
stock options” within the meaning of Section 422 of the Code or may be non-qualified stock options.
Clawback Policy
In 2023, we adopted a Clawback Policy in compliance with the SEC
rules and Nasdaq listing standards to recover any excess incentive-based compensation from current and former executive officers after
an accounting restatement. A copy of the Clawback Policy is incorporated by reference to Exhibit 97 to the company’s Annual Report
on Form 20-F filed with the SEC on March 12, 2024.
C. Board Practices
Board of Directors
Under the Companies Law and our Articles, our business and affairs
are managed under the direction of our board of directors. Our board of directors may exercise all powers and may take all actions that
are not specifically granted to our shareholders or to executive management. Our Chief Executive Officer (referred to as a “general
manager” under the Companies Law) is responsible for our day-to-day management. Our Chief Executive Officer is appointed by, and
serves at the discretion of, our board of directors. All other executive officers are appointed by the Chief Executive Officer and are
subject to the terms of any applicable employment or consulting agreements that we may enter into with them.
Under our Articles, our directors are divided into three classes
with staggered three-year terms. Each class of directors consists, as nearly as possible, of one-third of the total number of directors
constituting the entire board of directors. At each annual general meeting of our shareholders, the election or re-election of directors
following the expiration of the term of office of the directors of that class of directors will be for a term of office that expires on
the third annual general meeting following such election or re-election, such that each year the term of office of only one class of directors
will expire.
Further, our Articles include a provision which provides that Perception
has the right to appoint one director to our board of directors (the “Perception Director”) for so long as it beneficially
owns at least 50% of the total number of ordinary shares it beneficially owned at the date of the closing of the Business Combination.
Mr. Sheridan was appointed as the Perception Director.
Our directors, other than the Perception Director, are divided
among the three classes as follows:
| • |
the Class I directors are Orit Stav, Aharon Aharon and Stefan Jacoby and their terms expire at our annual general meeting to
be held in 2027; |
| • |
the Class II directors are Dan Falk and Ronit Maor and their terms expire at our annual general meeting to be held in 2028;
and |
| • |
the Class III directors are Amichai Steimberg, Omer Keilaf and Alexander von Witzleben and their terms expire at our annual
general meeting to be held in 2026. |
59
Director Independence
As an Israeli company, our company is subject to various corporate
governance requirements under the Companies Law. However, pursuant to regulations promulgated under the Companies Law, companies with
shares traded on certain U.S. stock exchanges, including Nasdaq, may, subject to certain conditions, opt out from the Companies Law requirements
to appoint external directors and related Companies Law rules concerning the composition of the audit committee, compensation committee
and nominating, environmental, social and governance committee of the board of directors (other than the gender diversification rule under
the Companies Law, which requires the appointment of a director from the other gender if at the time a director is appointed all members
of the board of directors are of the same gender). In accordance with these regulations, we have elected to opt out of those requirements
of the Companies Law. These exemptions will continue to be available to our company so long as: (i) we do not have a “controlling
shareholder” as used under the Companies Law, (ii) our shares are traded on certain U.S. stock exchanges, including Nasdaq,
and (iii) we comply with the director independence requirements and the audit committee, compensation committee and nominating, environmental,
social and governance committee composition requirements under U.S. laws (including applicable Nasdaq rules) applicable to U.S. domestic
issuers.
The term “controlling shareholder” as used in the Companies
Law for purposes related to external directors and for the requirements related to appointment to the audit committee, compensation committee
or nominating, environmental, social and governance committee, as described below, means a shareholder with the ability to direct the
activities of the company, other than by virtue of being an office holder. A shareholder is presumed to be a controlling shareholder if
the shareholder holds 50% or more of the voting rights in a company or has the right to appoint the majority of the directors of the company
or its general manager. With respect to certain matters (including various related party transactions), a controlling shareholder is deemed
to include a shareholder that holds 25% or more of the voting rights in a public company if no other shareholder holds more than 50% of
the voting rights in the company, but excludes a shareholder whose power derives solely from his or her position as a director of the
company or from any other position with the company.
Accordingly, we comply with Nasdaq rule 5605(b)(1), which requires
that the board of directors be comprised of a majority of independent directors. A majority of our board of directors is composed of directors
who are “independent” as defined by the rules of Nasdaq and all of the non-management directors qualify as “independent”
under these standards. The board of directors has established categorical standards to assist it in making its determination of director
independence. We use the definition of “independence” of Nasdaq to make this determination. Nasdaq Listing Rule 5605(a)(2)
provides that an “independent director” is a person other than an officer or employee of our company or any other individual
having a relationship which, in the opinion of our board of directors, would interfere with the exercise of independent judgment in carrying
out the responsibilities of a director. The Nasdaq rules provide that a director cannot be considered independent if:
| • |
the director is, or at any time during the past three years was, an employee of our company; |
| • |
the director or a family member of the director accepted any compensation from our company in excess of $120,000 during any period
of 12 consecutive months within the three years preceding the independence determination (subject to certain exclusions, including, among
other things, compensation for board or board committee service); |
| • |
a family member of the director is, or at any time during the past three years was, an executive officer of our company; |
| • |
the director or a family member of the director is a partner in, controlling shareholder of, or an executive officer of an entity
to which our company made, or from which our company received, payments in the current or any of the past three fiscal years that exceed
5% of the recipient’s consolidated gross revenue for that year or $200,000, whichever is greater (subject to certain exclusions);
|
| • |
the director or a family member of the director is employed as an executive officer of an entity where, at any time during the past
three years, any of the executive officers of our company served on the compensation committee of such other entity; or |
| • |
the director or a family member of the director is a current partner of our outside auditor, or at any time during the past three
years was a partner or employee of our outside auditor, and who worked on our audit. |
Under the following three Nasdaq director independence rules a
director is not considered independent: (a) Nasdaq Rule 5605(a)(2)(A), a director is not considered to be independent if he or she
also is an executive officer or employee of our company, (b) Nasdaq Rule 5605(a)(2)(B), a director is not considered independent
if he or she accepted any compensation from our company in excess of $120,000 during any period of twelve consecutive months within the
three years preceding the determination of independence, and (c) Nasdaq Rule 5605(a)(2)(D), a director is not considered to be independent
if he or she is a partner in, or a controlling shareholder or an executive officer of, any organization to which our company made, or
from which our company received, payments for property or services in the current or any of the past three fiscal years that exceed 5%
of the recipient’s consolidated gross revenues for that year, or $200,000. Under such definitions, we have seven independent directors.
The board of directors assesses on a regular basis, and at least
annually, the independence of directors and makes a determination as to which members are independent. References to “our company”
above include any subsidiary in a consolidated group with our company. The terms “immediate family member” and “executive
officer” above have the same meanings specified for such terms in the Nasdaq listing standards.
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Corporate Governance
We are a “foreign private issuer” (as such term is
defined in Rule 3b-4 under the Exchange Act) and our ordinary shares are listed on Nasdaq. We believe the following to be the significant
differences between our corporate governance practices and those applicable to U.S. companies under the Nasdaq listing standards. Under
the Nasdaq rules, listed companies that are foreign private issuers are permitted to follow home country practice in lieu of the corporate
governance provisions specified by the Nasdaq with limited exceptions. We rely on this “home country practice exemption” with
respect to (a) the quorum requirement for shareholder meetings, (b) the establishment or amendment of equity based compensation plans
and arrangements and (c) obtaining shareholder approval for certain corporation actions.
As permitted under the Companies Law, pursuant to our Articles,
the quorum required for an ordinary meeting of shareholders consists of at least two shareholders present in person, by proxy or by other
voting instrument in accordance with the Companies Law, who hold at least 25% of the voting power of our shares (and in an adjourned meeting,
with some exceptions, any number of shareholders), instead of 33 1/3% of the issued share capital required under the Nasdaq corporate
governance rules.
We will seek shareholder approval for all corporate actions requiring
such approval under the requirements of the Companies Law, rather than seeking approval for corporate actions in accordance with Nasdaq
Listing Rule 5635. In particular, under the Nasdaq Listing Rule, shareholder approval is generally required for: (i) an acquisition of
shares/assets of another company that involves the issuance of 20% or more of the acquirer’s shares or voting rights or if a director,
officer or 5% shareholder has greater than a 5% interest (or such persons collectively have a 10% or greater interest) in the target company
or the assets to be acquired or the consideration to be received and the present or potential issuance of ordinary shares, or securities
convertible into or exercisable for ordinary shares, could result in an increase in outstanding common shares or voting power of 5% or
more; (ii) the issuance of shares leading to a change of control; (iii) adoption/amendment of a stock option or purchase plan or other
equity compensation arrangements, pursuant to which stock may be acquired by officers, directors, employees or consultants (with certain
limited exception); and (iv) issuances of 20% or more of the shares or voting rights (including securities convertible into, or exercisable
for, equity) of a listed company via a private placement (and/or via sales by directors/officers/5% shareholders) if such equity is issued
(or sold) at below the greater of the book or market value of shares. We will seek shareholder approval for all actions requiring such
under the Companies Law. Under the Companies Law, the adoption of, and material changes to, equity-based compensation plans generally
require the approval of the board of directors.
We otherwise comply with and intend to continue to comply with
the rules generally applicable to U.S. domestic companies listed on the Nasdaq. We may in the future, however, decide to use other
foreign private issuer exemptions with respect to some or all the other Nasdaq listing rules. Following our home country governance practices
may provide less protection than is accorded to investors under the Nasdaq listing rules applicable to domestic issuers.
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Chairperson of the Board
Our Articles provide that the chairperson of the board of directors
is appointed by the members of the board of directors and serves as chairperson of the board of directors throughout his or her term as
a director, unless resolved otherwise by the board of directors. Under the Companies Law, the chief executive officer (or any relative
of the chief executive officer) may not serve as the chairperson of the board of directors, and the chairperson (or any relative of the
chairperson) may not be vested with authorities of the chief executive officer without shareholder approval, for periods of up to three
years each, consisting of a majority vote of the shares present and voting at a shareholders meeting, provided that
either:
| • |
at least a majority of the shares of non-controlling shareholders or shareholders that do not have a personal interest
in the approval voted at the meeting are voted in favor (disregarding abstentions); or |
| • |
the total number of shares of non-controlling shareholders and shareholders who do not have a personal interest in such
appointment voting against such appointment does not exceed 2% of the aggregate voting rights in the Company. |
In addition, a person subordinated, directly or indirectly, to
the chief executive officer may not serve as the chairperson of the board of directors; the chairperson of the board of directors may
not be vested with authorities that are granted to those subordinated to the chief executive officer; and the chairperson of the board
of directors may not serve in any other position in the Company or a controlled company, but he may serve as a director or chairperson
of a subsidiary.
External Directors
Under the Companies Law, companies incorporated under the laws
of the State of Israel that are public companies, including companies with shares listed on Nasdaq, are required to appoint at least two
external directors who must meet heightened independence requirements. Pursuant to regulations promulgated under the Companies Law, companies
with shares traded on certain U.S. stock exchanges, including Nasdaq, may, subject to certain conditions, opt out from the Companies Law
requirements to appoint external directors and related Companies Law rules concerning the composition of the audit committee, compensation
committee and nominating, environmental, social and governance committee of the board of directors. In accordance with these regulations,
we elected to opt out from these Companies Law requirements. Instead, we must comply with the director independence requirements, the
audit committee, the compensation committee and the nominating, environmental, social and governance committee composition requirements
under U.S. laws (including applicable Nasdaq rules) applicable to U.S. domestic issuers.
Committees of the Board of Directors
Our board of directors has the following standing committees: an
audit committee, a compensation committee and a nominating, environmental, social and governance committee.
Audit Committee
The audit committee is responsible, among its other duties and
responsibilities, for overseeing our accounting and financial reporting processes, audits of financial statements, qualifications and
independence of the independent registered public accounting firm, the effectiveness of internal control over financial reporting and
the performance of the internal audit function and independent registered public accounting firm. The audit committee reviews and assesses
the qualitative aspects of our financial reporting, processes to manage business and financial risks, and compliance with significant
applicable legal, ethical and regulatory requirements. The audit committee is directly responsible for the appointment, compensation,
retention and oversight of the independent registered public accounting firm. In addition, the audit committee is responsible for the
following additional matters pursuant to the Companies Law:
| • |
recommending to the board of directors the retention and termination of the internal auditor, and the internal auditor’s engagement
fees and terms, in accordance with the Companies Law as well as approving the yearly or periodic work plan proposed by the internal auditor;
|
| • |
reviewing with our general counsel and/or external counsel, as deemed necessary, legal and regulatory matters that could have a material
impact on the financial statements; |
| • |
identifying irregularities in our business administration, including by consulting with the internal auditor or with the independent
auditor, and suggesting corrective measures to the board of directors; |
| • |
reviewing policies and procedures with respect to transactions (other than transactions related to the compensation or terms of services)
between the company and officers and directors, or affiliates of officers or directors, or transactions that are not in the ordinary course
of the company’s business and deciding whether to approve such acts and transactions if so required under the Companies Law;
|
| • |
establishing procedures for the handling of employees’ complaints as to the management of our business and the protection to
be provided to such employees; and |
| • |
reviewing and receiving updates from management and the DPO and CISO on the company’s risks related to cybersecurity, information
technology and information security, including data protection and data privacy, and the steps that management is taking to monitor and
control such risks, including the status of the company’s compliance plan. |
The charter of the audit committee is available without charge
at https://ir.innoviz.tech.
The members of the audit committee are Dan Falk, Ronit Maor and
Orit Stav. Dan Falk serves as the chairperson of the audit committee. The board of directors has designated Dan Falk as an “audit
committee financial expert” and determined that each member is “financially literate” under the Nasdaq rules. The board
of directors has also determined that each member of the audit committee is “independent” as defined under the Nasdaq rules
and Exchange Act rules and regulations.
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Compensation Committee
The compensation committee is responsible, among its other duties
and responsibilities, for reviewing and approving all forms of compensation to be provided to, and employment agreements with, our executive
officers and directors, establishing the general compensation policies of our company and its subsidiaries and reviewing, approving and
overseeing the administration of the employee benefits plans of our company and its subsidiaries. The compensation committee is also responsible
for:
| • |
recommending to the board of directors with respect to the approval of the compensation policy for “office holders” (a
term used under the Companies Law, which means, in effect, directors and executive officers) and, once every three years, regarding any
extensions to a compensation policy that has been in effect for a period of more than three years; |
| • |
reviewing the implementation of the compensation policy and periodically recommending to the board of directors with respect to any
amendments or updates of the compensation plan; |
| • |
resolving whether or not to approve arrangements with respect to the terms of office and employment of office holders; and
|
| • |
exempting, under certain circumstances, from the requirement of approval by the general meeting of shareholders, transactions with
the chief executive officer of our company. |
The charter of the compensation committee is available without
charge at https://ir.innoviz.tech.
The members of the compensation committee are Ronit Maor and Dan
Falk. Ronit Maor serves as the chairperson of the compensation committee. The board of directors has determined that each member of the
compensation committee is “independent” as defined under the Nasdaq listing standards. The compensation committee has the
authority to retain compensation consultants, outside counsel and other advisers.
Compensation Policy under the Companies Law
In general, under the Companies Law, a public company must have
a compensation policy approved by the board of directors after receiving and considering the recommendations of the compensation committee.
In addition, a compensation policy must be approved at least once every three years, first, by the public company’s board of directors,
upon recommendation of its compensation committee, and second, by a simple majority of the ordinary shares present, in person or by proxy,
and voting at a shareholders meeting, provided that either:
| • |
such majority includes at least a majority of the shares held by shareholders who are not controlling shareholders and do not have
a personal interest in such compensation policy and who are present and voting (excluding abstentions); or |
| • |
the total number of shares of non-controlling shareholders and shareholders who do not have a personal interest in the
compensation policy and who vote against the policy, does not exceed 2% of the company’s aggregate voting rights. |
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In the event that the shareholders fail to approve the compensation
policy in a duly convened meeting, the board of directors may nevertheless override that decision, provided that the compensation committee
and then the board of directors decide, on the basis of detailed reasons and after further review of the compensation policy, that approval
of the compensation policy is for the benefit of the company despite the failure of the shareholders to approve the policy.
The compensation policy must serve as the basis for decisions concerning
the financial terms of employment or engagement of office holders, including exculpation, insurance, indemnification or any monetary payment
or obligation of payment in respect of employment or engagement. The compensation policy must relate to certain factors, including advancement
of the company’s objectives, business plan and long-term strategy, and creation of appropriate incentives for office holders. It
must also consider, among other things, the company’s risk management, size and the nature of its operations. The compensation policy
must furthermore consider the following additional factors:
| • |
the education, skills, experience, expertise and accomplishments of the relevant office holder; |
| • |
the office holder’s position, responsibilities and prior compensation agreements with him or her; |
| • |
the ratio between the cost of the terms of employment of an office holder and the cost of the employment of other employees of the
company, including employees employed through contractors who provide services to the company, in particular the ratio between such cost,
the average and median salary of the employees of the company, as well as the impact of such disparities on the work relationships in
the company; |
| • |
if the terms of employment include variable components - the possibility of reducing variable components at the discretion of the
board of directors and the possibility of setting a limit on the value of non-cash variable equity-based components; and
|
| • |
if the terms of employment include severance compensation - the term of employment or office of the office holder, the terms of his
or her compensation during such period, the company’s performance during such period, his or her individual contribution to the
achievement of the company goals and the maximization of its profits and the circumstances under which he or she is leaving the company.
|
The compensation policy must also include, among other things:
| • |
with regard to variable components of compensation: |
| • |
with the exception of office holders who report directly to the chief executive officer, provisions determining the variable components
on the basis of long-term performance and on measurable criteria; however, the company may determine that an immaterial part of the variable
components of the compensation package of an office holder shall be awarded based on non-measurable criteria, if such amount
is not higher than three monthly salaries per annum, while taking into account such office holder’s contribution to the company;
and |
| • |
the ratio between variable and fixed components, as well as the limit on the values of variable components at the time of their grant.
|
| • |
a condition under which the office holder will return to the company, according to conditions to be set forth in the compensation
policy, any amounts paid as part of his or her terms of employment, if such amounts were paid based on information later to be discovered
to be wrong, and such information was restated in the company’s financial statements; |
| • |
the minimum holding or vesting period of variable equity-based components to be set in the terms of office or employment, as applicable,
while taking into consideration long-term incentives; and |
| • |
a limit on retirement grants. |
Our compensation policy, which was last amended in December 2025,
is designed to promote retention and motivation of directors and executive officers, incentivize superior individual excellence, align
the interests of our directors and executive officers with our long-term performance and provide a risk management tool. To that end,
a portion of an executive officer compensation package is targeted to reflect our short and long-term goals, as well as the executive
officer’s individual performance. On the other hand, our compensation policy includes measures designed to reduce an executive officer’s
incentives to take excessive risks that may harm us in the long-term, such as limits on the value of cash bonuses and equity-based compensation,
limitations on the ratio between the variable and the total compensation of an executive officer and minimum vesting periods for equity-based
compensation.
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The compensation policy also addresses our executive officers’
individual characteristics (such as their respective positions, education, scope of responsibilities and contribution to the attainment
of its goals) as the basis for compensation variation among our executive officers and considers the internal ratios between compensation
of our executive officers and directors and other employees. Pursuant to our compensation policy, the compensation that may be granted
to an executive officer may include: base salary, annual bonuses and other cash bonuses (such as a signing bonus and special bonuses with
respect to any special achievements, such as outstanding personal achievement, outstanding personal effort or outstanding company performance),
equity-based compensation, benefits and retirement and termination of service arrangements. All cash bonuses are limited to a maximum
amount linked to the executive officer’s base salary. In addition, the total variable compensation components (cash bonuses and
equity-based compensation) may not exceed 95% of each executive officer’s total compensation package with respect to any given calendar
year.
An annual cash bonus may be awarded to executive officers upon
the attainment of pre-set periodic objectives and individual targets. The annual cash bonus that may be granted to our executive
officers other than our Chief Executive Officer will be based on performance objectives and a discretionary evaluation of the executive
officer’s overall performance by the Chief Executive Officer and subject to minimum thresholds. The annual cash bonus that may be
granted to executive officers other than our Chief Executive Officer may be based entirely on a discretionary evaluation. Furthermore,
our Chief Executive Officer is entitled to recommend performance objectives, and such performance objectives will be approved by the compensation
committee (and, if required by law, by our board of directors).
The measurable performance objectives of our Chief Executive Officer
may be determined annually by our compensation committee and board of directors and include the weight to be assigned to each achievement
in the overall evaluation. A less significant portion of the Chief Executive Officer’s annual cash bonus may be based on a discretionary
evaluation of the Chief Executive Officer’s overall performance by the compensation committee and the board of directors based on
quantitative and qualitative criteria.
The equity-based compensation under the compensation policy for
our executive officers is designed in a manner consistent with the underlying objectives in determining the base salary and the annual
cash bonus. Primary objectives include enhancing the alignment between the executive officers’ interests and our long-term interests
and those of our shareholders and strengthening the retention and the motivation of executive officers in the long term. Our compensation
policy provides for executive officer compensation in the form of share options or other equity-based awards, such as restricted shares,
restricted share units and performance share units, in accordance with our share incentive plan then in place. All equity-based incentives
granted to executive officers are subject to vesting periods and/or performance milestones in order to promote long-term retention of
the awarded executive officers. Equity-based compensation shall be granted from time to time and be individually determined and awarded
according to the performance, educational background, prior business experience, qualifications, role and the personal responsibilities
of the executive officer.
In addition, the compensation policy contains compensation recovery
provisions which allows us under certain conditions to recover bonuses paid in excess, enables our Chief Executive Officer to approve
immaterial changes in the terms of employment of an executive officer (provided that the changes of the terms of employment are in accordance
our compensation policy) and allows us to exculpate, indemnify and insure our executive officers and directors subject to certain limitations
as set forth therein.
The compensation policy also provides for compensation to the members
of our board of directors either (i) in accordance with the amounts provided in the Companies Regulations (Rules Regarding the Compensation
and Expenses of an External Director) of 2000, as amended by the Companies Regulations (Relief for Public Companies Traded in Stock Exchange
Outside of Israel) of 2000, as such regulations may be amended from time to time, or (ii) in accordance with the amounts determined
in the compensation policy.
Our compensation policy, as recommended by the Compensation Committee
and the Board, was last approved by our shareholders in December 2025.
65
Nominating, Environmental, Social and Governance
Committee
The members of the nominating, environmental, social and governance
committee are Orit Stav and Aharon Aharon. Orit Stav serves as the chairperson of the nominating, environmental, social and governance
committee. The nominating, environmental, social and governance committee is responsible, among other things, for:
| • |
identify, review and evaluate candidates to serve as members of our board of directors, recommend to our board of directors nominees
for election as directors of the company, and review and evaluate incumbent members of the board of directors; |
| • |
make recommendations to our board of directors regarding corporate governance guidelines and matters; |
| • |
oversee all aspects of the company’s corporate governance functions and ethical conduct; and |
| • |
oversee the company’s programs and strategies related to environmental, social and governance matters. |
The charter of the nominating, environmental, social and governance
committee is available without charge at https://ir.innoviz.tech.
Exculpation, Insurance and Indemnification
of Office Holders
Under the Companies Law, a company may not exculpate an office
holder from liability for a breach of the duty of loyalty. An Israeli company may exculpate an office holder in advance from liability,
in whole or in part, for damages caused as a result of a breach of duty of care but only if a provision authorizing such exculpation is
included in its articles of association. Our Articles include such a provision. An Israeli company may not exculpate a director from liability
arising out of a prohibited dividend or distribution to shareholders.
An Israeli company may indemnify an office holder in respect of
the following liabilities and expenses incurred for acts performed as an office holder, either in advance of an event or following an
event, provided a provision authorizing such indemnification is contained in its articles of association:
| • |
a financial liability imposed on him or her in favor of another person pursuant to a judgment, including a settlement or arbitrator’s
award approved by a court. However, if an undertaking to indemnify an office holder with respect to such liability is provided in advance,
then such an undertaking must be limited to events which, in the opinion of the board of directors, can be foreseen based on the company’s
activities when the undertaking to indemnify is given, and to an amount or according to criteria determined by the board of directors
as reasonable under the circumstances, and such undertaking shall detail the abovementioned events and amount or criteria; |
| • |
reasonable litigation expenses, including legal fees, incurred by the office holder (1) as a result of an investigation or proceeding
instituted against him or her by an authority authorized to conduct such investigation or proceeding, provided that
(i) no indictment was filed against such office holder as a result of such investigation or proceeding; and (ii) no financial
liability, such as a criminal penalty, was imposed upon him or her as a substitute for the criminal proceeding as a result of such investigation
or proceeding or, if such financial liability was imposed, it was imposed with respect to an offense that does not require proof of criminal
intent; and (2) in connection with a monetary sanction; |
| • |
reasonable litigation expenses, including legal fees, incurred by the office holder or imposed by a court in proceedings instituted
against him or her by the company, on its behalf or by a third-party or in connection with criminal proceedings in which the
office holder was acquitted or as a result of a conviction for an offense that does not require proof of criminal intent; and |
| • |
expenses, including reasonable litigation expenses and legal fees, incurred by an office holder in relation to an administrative
proceeding instituted against such office holder, or certain compensation payments made to an injured party imposed on an office holder
by an administrative proceeding, pursuant to certain provisions of the Israeli Securities Law, 1968 (the “Israeli Securities Law”).
|
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An Israeli company may insure an office holder against the following
liabilities incurred for acts performed as an office holder if and to the extent provided in the company’s articles of association:
| • |
a breach of the duty of loyalty to the company, to the extent that the office holder acted in good faith and had a reasonable basis
to believe that the act would not prejudice the company; |
| • |
a breach of the duty of care to the company or to a third-party, including a breach arising out of the negligent conduct
of the office holder; |
| • |
a financial liability imposed on the office holder in favor of a third-party; |
| • |
a financial liability imposed on the office holder in favor of a third-party harmed by a breach in an administrative proceeding;
and |
| • |
expenses, including reasonable litigation expenses and legal fees, incurred by the office holder as a result of an administrative
proceeding instituted against him or her, pursuant to certain provisions of the Israeli Securities Law. |
An Israeli company may not indemnify or insure an office holder
against any of the following:
| • |
a breach of the duty of loyalty, except to the extent that the office holder acted in good faith and had a reasonable basis to believe
that the act would not prejudice the company; |
| • |
a breach of the duty of care committed intentionally or recklessly, excluding a breach arising out of the negligent conduct of the
office holder; |
| • |
an act or omission committed with intent to derive illegal personal benefit; or |
| • |
a fine, monetary sanction or forfeit levied against the office holder. |
Under the Companies Law, exculpation, indemnification and insurance
of office holders must be approved by the compensation committee and the board of directors (and, with respect to directors and the chief
executive officer, by the shareholders). However, under regulations promulgated under the Companies Law, the insurance of office holders
does not require shareholder approval and may be approved by only the compensation committee, if the engagement terms are determined in
accordance with the company’s compensation policy, which was approved by the shareholders by the same special majority required
to approve a compensation policy, provided that the insurance policy is on market terms and the insurance policy is not likely to materially
impact the company’s profitability, assets or obligations.
Our Articles allow us to exculpate, indemnify and insure our office
holders for any liability imposed on them as a consequence of an act (including any omission) which was performed by virtue of being an
office holder to the fullest extent permitted under applicable law. Our office holders are currently covered by a directors and officers’
liability insurance policy.
We have entered into agreements with certain of our directors and
executive officers exculpating them in advance from liability to us for damages caused to us as a result of a breach of duty of care and
undertaking to indemnify them to the fullest extent permitted by law. This indemnification is limited to events determined as foreseeable
by the board of directors based on our activities, and to an amount or according to criteria determined by the board of directors as reasonable
under the circumstances.
The maximum indemnification amount set forth in such agreements
is limited to an amount equal to the higher of $40,000,000 and 25% of our total shareholders’ equity on a consolidated basis as
reflected in our most recent consolidated financial statements prior to the date on which the indemnity payment is made (other than indemnification
for an offering of securities to the public, including by a shareholder in a secondary offering, in which case the maximum indemnification
amount is limited to the gross proceeds raised by us and/or any selling shareholder in such public offering). The maximum amount set forth
in such agreements is in addition to any amount paid (if paid) under insurance and/or by a third-party pursuant to an indemnification
arrangement.
In the opinion of the SEC, indemnification of directors and office
holders for liabilities arising under the Securities Act, however, is against public policy and therefore unenforceable.
There is no pending litigation or proceeding against any of our
office holders as to which indemnification is being sought, nor are we aware of any pending or threatened litigation that may result in
claims for indemnification by any office holder. Notwithstanding the foregoing, in connection with the consummation of the Business Combination,
we agreed to indemnify certain former directors and officers of Collective Growth. On March 28, 2024, Sheadrick Richards, a purported
stockholder of Collective Growth, filed the Lawsuit. The Lawsuit alleges that Collective Growth’s disclosures in connection
with the Business Combination (completed in April 2021) were materially incomplete and misleading, and that the directors breached their
fiduciary duties. Although we maintain insurance and run-off coverages in amounts and with deductibles that we believe are appropriate
for our operations, our insurance and run-off coverages may not cover all claims that have been or may be brought against us, and insurance
coverage may not continue to be available to us at a reasonable cost.
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Internal Auditor
Under the Companies Law, the board of directors of a public company
must appoint an internal auditor based on the recommendation of the audit committee. Under the Companies Law, the internal auditor may
be our employee, but cannot be an interested party or an office holder or a relative of an interested party or an office holder, nor may
the internal auditor be the company’s independent auditor or its representative. An “interested party” is defined in
the Companies Law as: (i) a holder of 5% or more of the issued share capital or voting power in a company, (ii) any person or
entity who has the right to designate one or more directors or to designate the chief executive officer of the company, or (iii) any
person who serves as a director or as a chief executive officer of the company. The role of the internal auditor is to examine, among
other things, whether our activities comply with applicable law and orderly business procedure. Mr. Oren Grupi of KPMG Somekh Chaikin,
Israel, has been our internal auditor for the year ended December 31, 2025.
D. Employees
We believe that our corporate culture and our relationship with
our employees contribute to our success. Our employees are continuously innovating, and our structure rewards productivity. As of December 31,
2025, we had 372 employees globally, of which 344 are located in Israel and the rest are located abroad, with 283 of our employees working
in research and development.
On January 31, 2024, we announced a strategic realignment of our
operations to expand our cash runway and optimize our path towards profitability and free cash flow generation, which included a reduction
in the company’s headcount by approximately 13% during the first quarter of 2024.
In addition, on February 4, 2025, we announced an optimization
of our operations to extend our cash runway and accelerate progress towards profitability and free cash flow generation, which included
a reduction in our employee headcount by approximately 9% during the first quarter of 2025.
In regard to our Israeli employees, Israeli labor laws govern the
length of the workday, minimum wages for employees, procedures for hiring and dismissing employees, determination of severance pay, annual
leave, sick days, advance notice of termination of employment, equal opportunity and anti-discrimination laws and other conditions of
employment. Subject to certain exceptions, Israeli law generally requires severance pay upon the retirement, death or dismissal of an
employee, and requires us and our employees to make payments to the National Insurance Institute, which is similar to the U.S. Social
Security Administration. Our employees have pension plans that comply with applicable Israeli legal requirements, and we make monthly
contributions to severance pay funds for all employees, which cover potential severance pay obligations.
None of our employees work under any collective bargaining agreements.
Extension orders issued by the Israeli government apply to us and affect matters such as cost of living adjustments to salaries, length
of working hours and week, recuperation pay, travel expenses and pension rights.
We have never experienced labor-related work stoppages or strikes
and believe that our relations with our employees are satisfactory.
E. Share Ownership
For information regarding the share ownership of directors and
officers, see Item 7.A. “Major Shareholders and Related Party Transactions—Major Shareholders.”
For information as to our equity incentive plans, see Item 6.B. “Directors, Senior Management and
Employees—Compensation —Share Option Plans.”
F. Disclosure of a Registrant’s Action to Recover Erroneously
Awarded Compensation
None.
68
| Item 7. |
Major Shareholders and Related Party Transactions |
A. Major Shareholders
The following table sets forth information with respect to the
beneficial ownership of our shares as of February 16, 2026, by:
| • |
each person or entity known by us to own beneficially more than 5% of our outstanding shares; |
| • |
each of our directors and executive officers individually; and |
| • |
all of our executive officers and directors as a group. |
The beneficial ownership of ordinary shares is determined in accordance
with the SEC rules and generally includes any ordinary shares over which a person exercises sole or shared voting or investment power.
For purposes of the table below, we deem shares subject to options that are currently exercisable or exercisable within 60 days of February
16, 2026, and restricted share units that shall vest within 60 days of February 16, 2026, to be outstanding and to be beneficially owned
by the person holding the options or restricted share units for the purposes of computing the percentage ownership of that person but
we do not treat them as outstanding for the purpose of computing the percentage ownership of any other person. The percentage of shares
beneficially owned is based on 214,523,561 ordinary shares outstanding as of February 16, 2026.
All of our shareholders, including the shareholders listed below,
have the same voting rights attached to their ordinary shares. Unless otherwise noted below, each shareholder’s address is 5 Uri
Ariav Street, Building C, Rosh HaAin 4809202, Israel.
A description of any material relationship that our principal shareholders
have had with us or any of our affiliates since January 1, 2025, is included under Item 7.B. “Major
Shareholders and Related Party Transactions—Related Party Transactions.”
|
Name of Beneficial Owner |
Number |
% |
||||||
|
Five Percent or More Holders |
||||||||
|
CVI Investments, Inc. (1) |
11,510,791 |
5.4 |
||||||
|
Directors and Executive Officers |
||||||||
|
Omer Keilaf (2)
|
5,063,206
|
2.3 |
||||||
|
Eldar Cegla (3)
|
640,480
|
*
|
||||||
|
Elad Hofstetter (4)
|
246,978
|
*
|
||||||
|
Avishay Moscovici (5)
|
417,625
|
*
|
||||||
|
Ido Luski (6)
|
331,290
|
*
|
||||||
|
Amichai Steimberg (7)
|
723,734
|
*
|
||||||
|
Aharon Aharon (8)
|
234,329
|
*
|
||||||
|
Dan Falk (8)
|
234,329
|
*
|
||||||
|
Ronit Maor (8)
|
234,329
|
*
|
||||||
|
Orit Stav (8)
|
234,329
|
*
|
||||||
|
James Sheridan (9)
|
2,826,463
|
1.3
|
||||||
|
Alexander von Witzleben (10)
|
186,100
|
*
|
||||||
|
Stefan Jacoby (11)
|
181,326
|
*
|
||||||
|
All executive officers and directors as a
group (13 persons) |
11,554,518
|
5.2
|
||||||
| * |
less than 1% |
| (1) |
Based on information reported on Schedule 13G filed with the SEC on May 12, 2025, each of CVI Investments, Inc., and Heights Capital
Management, Inc., has the shared power to vote or direct to vote 11,510,791 ordinary shares and the shared power to dispose or to direct
the disposition of 11,510,791 ordinary shares. The address of the principal business office of CVI Investments, Inc. is P.O. Box 309GT,
Ugland House, South Church Street, George Town, Grand Cayman, KY1-1104, Cayman Islands, and the address of the principal business office
of Heights Capital Management, Inc. is 101 California Street, Suite 3250 San Francisco, California 94111. |
| (2) |
Consists of 3,041,391 ordinary shares and 2,021,815 ordinary shares issuable upon vesting of RSUs or exercise of options or
warrants that are exercisable as of or within 60 days of February 16, 2026. |
| (3) |
Consists of 263,504 ordinary shares and 376,976 ordinary shares issuable upon vesting of RSUs or exercise of options that are
exercisable as of or within 60 days of February 16, 2026. |
| (4) |
Consists of 79,937 ordinary shares and 167,041 ordinary shares issuable upon vesting of RSUs or exercise of options that are
exercisable as of or within 60 days of February 16, 2026. |
| (5) |
Consists of 148,400 ordinary shares and 269,225 ordinary shares issuable upon vesting of RSUs or exercise of options that are
exercisable as of or within 60 days of February 16, 2026. |
| (6) |
Consists of 121,403 ordinary shares and 209,887 ordinary shares issuable upon vesting of RSUs or exercise of options that are
exercisable as of or within 60 days of February 16, 2026. |
| (7) |
Consists of 402,484 ordinary shares and 321,250 ordinary shares issuable upon vesting of RSUs that vest within 60 days of February 16,
2026. |
| (8) |
Consists of 127,246 ordinary shares and 107,083 ordinary shares issuable upon vesting of RSUs that vest within 60 days
of February 16, 2026. |
| (9) |
Consists of 127,246 ordinary shares and 107,083 ordinary shares issuable upon vesting of RSUs that vest within 60 days
of February 16, 2026. In addition, Perception Capital Partners, LLC directly holds 82,400 ordinary shares and 2,509,734 warrants to purchase
ordinary shares at a price of $11.50 per share. Mr. Sheridan is the Perception Director and may be deemed to be the beneficial owner of
the securities held by Perception Capital Partners, LLC. |
| (10) |
Consists of 79,017 ordinary shares and 107,083 ordinary shares issuable upon vesting of RSUs that vest within 60 days of
February 16, 2026. |
| (11) |
Consists of 74,243 ordinary shares and 107,083 ordinary shares issuable upon vesting of RSUs that vest within 60 days of
February 16, 2026. |
To our knowledge, other than as disclosed in the table above, our
other filings with the SEC and this Annual Report, there has been no significant change in the percentage ownership held by any major
shareholder since January 1, 2023. The major shareholders listed above do not have voting rights with respect to their ordinary shares
that are different from the voting rights of other holders of our ordinary shares.
As substantially all our shares are held in book-entry form, we
are not aware of the identity of all of our shareholders. As of February 16, 2026, we had 75,705 ordinary shares held by 5 U.S. resident
shareholders of record.
69
B. Related Party Transactions
The following is a description of our related party transactions
in effect since January 1, 2025.
Registration Rights Agreement
In December 2020, Innoviz, certain equityholders of Innoviz, certain
equityholders of Collective Growth, Perception and Antara entered into a registration rights agreement (the “Registration Rights
Agreement”), pursuant to which Innoviz agreed to file a shelf registration statement with respect to the registrable securities
defined therein within 60 days of the closing of the Business Combination. Certain holders of registrable securities under the Registration
Rights Agreement may request to sell all or any portion of their registrable securities in an underwritten offering up to twice in any
12-month period so long as the total offering price is reasonably expected to exceed $75.0 million. Innoviz also agreed to provide customary
“piggyback” registration rights. The Registration Rights Agreement also provides that Innoviz will pay certain expenses relating
to such registrations and indemnify the shareholders against certain liabilities. The Registration Rights Agreement does not contemplate
the payment of penalties or liquidated damages to the equityholders party thereto as a result of a failure to register, or delays with
respect to the registration of, the registrable securities.
Put Option Agreement
In December 2020, Innoviz and Antara entered into the Put Option
Agreement (the “Put Option Agreement”), pursuant to which Innoviz caused Antara to subscribe for a number of Innoviz ordinary
shares in the PIPE with an aggregate equity value equal to $70,000,000. In consideration for entering into the Put Option Agreement, at
the Effective Time (as defined in the Put Option Agreement), Innoviz issued to an affiliate of Antara 3,784,753 warrants and 3,002,674
ordinary shares. In addition, Innoviz agreed to issue to an affiliate of Antara 312,296 ordinary shares in the event that earnout shares
are issued to Perception Capital Partners, LLC (“Perception”).
70
Agreements with Directors and Officers
Options, restricted share units
and performance share units. Since our inception, we have granted restricted share units, performance share units and options to
purchase our ordinary shares to our executive officers. We describe our option plans under Item 6. “Directors,
Senior Management and Employees.”
Exculpation, indemnification and
insurance. Our Articles permit us to exculpate, indemnify and insure our office holders to the fullest extent permitted by the
Companies Law. We have entered into agreements with certain of our office holders, exculpating them from a breach of their duty of care
to us to the fullest extent permitted by law and undertaking to indemnify them to the fullest extent permitted by law, subject to certain
exceptions, including with respect to liabilities resulting from our initial public offering to the extent that these liabilities are
not covered by insurance. See Item 6.C. “Directors, Senior Management and Employees—Board
Practices—Exculpation, Insurance and Indemnification of Office Holders.”
Rights of Appointment.
Our Articles include a provision which provides that Perception has the right to appoint, replace and remove one director to our board
of directors so long as it beneficially holds, together with any permitted transferee, in the aggregate at least 1,513,874 of our ordinary
shares, which is equal to fifty percent (50%) of the total number of our ordinary shares Perception beneficially owned as of the date
of the adoption of our Articles.
Related Party Transaction Policy
Our board of directors has adopted a written related party transaction
policy to set forth the policies and procedures for identifying related party transactions.
C. Interests of Experts and Counsel
Not applicable.
| Item 8. |
Financial Information |
A. Consolidated Statements and Other Financial Information
Consolidated Financial Statements
See Item 18. “Financial
Statements.”
Legal and Arbitration Proceedings
From time to time, we may become involved in actions, claims suits,
and other legal proceedings arising in the ordinary course of our business, including assertions by third parties relating to intellectual
property infringement, breaches of contract or warranties or employment-related matters. We are not currently a party to any material
actions, claims, suits or other legal proceedings the outcome of which, if determined adversely to it, would individually or in the aggregate
have a material adverse effect on our business, financial condition, and results of operations. See Note 9 of our consolidated financial
statements included elsewhere in this Annual Report, which is incorporated by reference in this Item 8.A, for additional information regarding
the Lawsuit.
Dividend Policy
We have never declared or paid any dividends on our ordinary shares.
We do not anticipate paying any dividends in the foreseeable future. We currently intend to retain future earnings, if any, to finance
operations and expand our business. Our board of directors has sole discretion whether to pay dividends. If our board of directors decides
to pay dividends, the form, frequency and amount will depend upon our future operations and earnings, capital requirements and surplus,
general financial condition, contractual restrictions and other factors that our directors may deem relevant.
The Companies Law imposes restrictions on our ability to declare
and pay dividends. See Item 5. “Operating and Financial Review and Prospects.”
Payment of dividends may be subject to Israeli withholding taxes.
See Item 10.E. “Taxation—Taxation and Government Programs—Israeli Tax Considerations
and Government Programs” for additional information.
B. Significant Changes
None.
71
| Item 9. |
The Offer and Listing |
A. Offer and Listing Details
Our ordinary shares and warrants commenced trading on Nasdaq on
April 6, 2021, under the trading symbols “INVZ” and “INVZW,” respectively. Prior to this, no public market
existed for our ordinary shares or warrants.
B. Plan of Distribution
Not applicable.
C. Markets
Our ordinary shares and warrants commenced trading on Nasdaq on
April 6, 2021, under the trading symbols “INVZ” and “INVZW,” respectively. Prior to this, no public market existed
for our ordinary shares or warrants.
D. Selling Shareholders
Not applicable.
E. Dilution
Not applicable.
F. Expenses of the Issue
Not applicable.
| Item 10. |
Additional Information |
A. Share Capital
Not applicable.
B. Memorandum and Articles of Association
A copy of our Articles is incorporated by reference to Exhibit
3.1 to the Company’s Registration Statement on Form F-3 (File No. 333-265170) filed with the SEC on May 24, 2022. Other than as
set forth below, the information called for by this Item is set forth in Exhibit 2.1 to this Annual Report and is incorporated by reference
herein.
Share Capital
As of December 31, 2025, we had 214,090,980 ordinary shares outstanding,
16,231,141 warrants outstanding (each entitling its holder to purchase one ordinary share at an initial exercise price equal to $11.50
per share) and 23,021,582 warrants outstanding (each entitling its holder to purchase one ordinary share at an initial exercise price
equal to $1.69 per share).
Exchange Controls
There are currently no Israeli currency control restrictions on
remittances of dividends on our ordinary shares, proceeds from the sale of the ordinary shares or interest or other payments to non-residents
of Israel, except for shareholders who are subjects of countries that are, or have been, in a state of war with Israel.
72
Shareholder Meetings
Under Israeli law, we are required to hold an annual general meeting
of our shareholders once every calendar year that must be held no later than 15 months after the date of the previous annual general
meeting. All meetings other than the annual general meeting of shareholders are referred to in our Articles as “special general
meetings”. Our board of directors may call special general meetings whenever it sees fit, at such time and place, within or outside
of Israel, as it may determine. In addition, the Companies Law provides that our board of directors is required to convene a special general
meeting upon the written request of (i) any two or more of our directors or one-quarter or more of the serving members of our board
of directors or (ii) one or more shareholders holding, in the aggregate, either (a) 5% or more of our outstanding issued shares
and 1% or more of our outstanding voting power or (b) 5% or more of our outstanding voting power.
Subject to the provisions of the Companies Law and the regulations
promulgated thereunder, shareholders entitled to participate and vote at general meetings are the shareholders of record on a date to
be decided by the board of directors, which, as a company listed on an exchange outside Israel, may be between four and 40 days prior
to the date of the meeting. Furthermore, the Companies Law requires that resolutions regarding the following matters must be passed at
a general meeting of our shareholders:
| • |
amendments to our articles of association; |
| • |
appointment, termination or the terms of service of our auditors; |
| • |
appointment of external directors (if applicable); |
| • |
approval of certain related party transactions; |
| • |
increases or reductions of our authorized share capital; |
| • |
mergers; and |
| • |
the exercise of our board of director’s powers by a general meeting, if our board of directors is unable to exercise its powers
and the exercise of any of its powers is required for our proper management. |
The Companies Law requires that a notice of any annual general
meeting or special general meeting be provided to shareholders at least 21 days prior to the meeting and if the agenda of the meeting
includes, among other things, the appointment or removal of directors, the approval of transactions with office holders or interested
or related parties or the approval of a merger, notice must be provided at least 35 days prior to the meeting. Under the Companies
Law, shareholders are not permitted to take action by way of written consent in lieu of a meeting.
C. Material Contracts
The following is a summary of each material contract, other than
material contracts entered into in the ordinary course of business, to which we are or have been a party, for the two years immediately
preceding the date of this Annual Report:
| • |
Form of Indemnification Agreement (incorporated by reference to Exhibit 10.12 to the Company’s Registration Statement on Form
F-4/A (File No. 333-252023) filed with the SEC on February 12, 2021). See Item 6. ”Directors,
Senior Management and Employees” for more information about this agreement. |
| • |
Compensation Policy for Directors and Officers (as amended) (incorporated by reference to Exhibit 99.1 to the Company’s Form
6-K filed with the SEC on November 6, 2025). See Item 6. ”Directors,
Senior Management and Employees” for more information about this agreement. |
| • |
2016 Share Incentive Plan of Innoviz Technologies Ltd. (incorporated by reference to Exhibit 10.10 to the Company’s Registration
Statement on Form F-4/A (File No. 333-252023) filed with the SEC on February 12, 2021). See Item 6. ”Directors,
Senior Management and Employees” for more information about this agreement. |
| • |
2021 Share Incentive Plan of Innoviz Technologies Ltd. (as amended) (incorporated by reference to (i) Exhibit 4.4 to the Company’s
Annual Report on Form 20-F filed with the SEC on March 30, 2022, and (ii) Exhibit 99.2 to the Company’s Registration Statement on
Form S-8 (File No. 333-292573) filed with the SEC on January 5, 2026). See Item 6. ”Directors,
Senior Management and Employees” for more information about this agreement. |
| • |
Warrant Agreement, dated as of April 30, 2020, between Continental Stock Transfer & Trust Company and Collective Growth (incorporated
by reference to Exhibit 4.4 to the Company’s Registration Statement on Form F-4 (File No. 333-252023) filed with the SEC on
January 11, 2021). See Exhibit 2.1 for more information about this agreement. |
| • |
Assignment, Assumption and Amendment Agreement, by and among Innoviz Technologies Ltd., Collective Growth, American Stock Transfer
& Trust Company and Continental Stock Transfer & Trust Company (incorporated by reference to Exhibit 4.11 to the Company’s
Annual Report on Form 20-F filed with the SEC on April 21, 2021). See Exhibit 2.1 for more information about this agreement. |
73
| • |
Registration Rights Agreement, dated as of December 10, 2020, by and among Innoviz, certain equityholders of Innoviz, certain equityholders
of Collective Growth, Perception and Antara Capital (incorporated by reference to Exhibit 4.8 to the Company’s Registration Statement
on Form F-4 (File No. 333-252023) filed with the SEC on January 11, 2021). See Item 7.B. “Major
Shareholders and Related Party Transactions—Related Party Transactions” for more information about this agreement.
|
| • |
Put Option Agreement, dated as of December 10, 2020, by and between Innoviz and Antara Capital (incorporated by reference to Exhibit
10.7 to the Company’s Registration Statement on Form F-4 (File No. 333-252023) filed with the SEC on January 11, 2021). See
Item 7.B. “Major Shareholders and Related Party Transactions—Related Party Transactions”
for more information about this agreement. |
| • |
Magna Joint Development and Master Supply Agreement |
In December 2017, we entered into a Joint Development and Master
Supply Agreement (“JDMSA”) with Magna incorporated by reference to Exhibit 10.15 to the Company’s Registration Statement
on Form F-4 (File No. 333-252023) filed with the SEC on January 11, 2021) pursuant to which the parties agreed to work together to jointly
develop and commercialize various LiDAR-related technologies. This agreement provides the framework for the collaboration between Magna
as a leading Tier-1 partner and our company as a leading LiDAR company. The initial term of this agreement is eight years with automatic
renewals of 1-year periods thereafter, subject in each case to mutual termination rights in the event of material breach, insolvency or
bankruptcy.
| • |
BMW SOW |
In connection with the JDMSA, in February 2018, we entered into
the BMW SOW with Magna Electronics Europe GmbH & Co. OHG (incorporated by reference to Exhibit 10.16 to the Company’s Registration
Statement on Form F-4 (File No. 333-252023) filed with the SEC on January 11, 2021) describing the services to be performed and deliverables
to be provided to BMW, to equip Innoviz LiDAR products into BMW’s Level 3 vehicle platform.
The parties have mutual termination rights, including in the event
of a material breach by the other party. Serial production volumes will ultimately be highly dependent on numerous factors and therefore
are binding only upon issuance of a purchase order.
In 2019, the parties signed an amendment to the BMW SOW (incorporated
by reference to Exhibit 10.17 to the Company’s Registration Statement on Form F-4 (File No. 333-252023) filed with the SEC on January
11, 2021), under which BMW advanced certain payments due under the BMW SOW in consideration for development activities and delivery of
early samples to Magna Electronics Europe by the end of August 2019.
| • |
Lease Agreement |
Our corporate headquarters are located in Rosh HaAin, Israel, where
we currently lease an office with approximately 16,350 square meters pursuant to the Lease Agreement (incorporated by reference to Exhibit
4.14 to the Company’s Annual Report on Form 20-F filed with the SEC on March 30, 2022). This facility contains engineering, research
and development, testing, product, sales and administrative functions. The initial term under the Lease Agreement is for 67 months and
expires on January 31, 2028. We have an option under the Lease Agreement to renew the lease for additional 60 months, which will be exercised
automatically unless we inform the lessor in advance.
| • |
Electronic Nomination Agreement with Cariad SE (a Volkswagen group company) |
In December 2022, Innoviz and Cariad SE executed an electronic
nomination agreement (the “eNA”) (incorporated by reference to Exhibit 4.15 to the Company’s Annual Report on Form 20-F
filed with the SEC on March 9, 2023) pursuant to which Cariad commissioned Innoviz to develop, manufacture and deliver InnovizTwo LiDARs.
Cariad has the right to terminate the eNA under certain circumstances,
including (a) if Innoviz does not meet the prerequisites for series production of the products that are the subject matter of the eNA,
and (b) if Innoviz enters into insolvency proceedings.
| • |
Agreement with Magna regarding Manufacturing of InnovizOne for the BMW Program
|
In December 2023, Innoviz signed an agreement with Magna Electronics
Technology, Inc., and Magna Electronics Europe GmbH & Co. OHG (the “Magna Agreement”), addressing the high-volume manufacturing
of Innoviz LiDARs at Magna’s automotive grade facility in Holly, Michigan, for the BMW program.
74
| • |
Term Sheet with Mobileye |
In 2024, Innoviz signed a term sheet with Mobileye Vision Technologies
Ltd., for the supply of Innoviz LiDARs for Mobileye programs (the “Mobileye TS”).
| • |
Letter of Intent with existing customer |
In December 2024, Innoviz signed a letter of intent with existing
customer with respect to fees to be paid to Innoviz as NRE payments for certain projects (the “LOI”). This LOI includes detailed
milestones.
| • |
Ordinary Share Warrant Agreement, dated as of February 12, 2025 (incorporated
by reference to Exhibit 4.1 to the Company’s Form 6-K filed with the SEC on February 12, 2025). |
| • |
Agreement with Fabrinet regarding Manufacturing and Supply of InnovizTwo |
In March 2025, Innoviz signed an agreement with Fabrinet (the “Fabrinet
Agreement”), addressing the high-volume manufacturing of InnovizTwo LiDARs at Fabrinet’s qualified facility in Chonburi, Thailand.
| • |
Long Term Agreement with Daimler Truck |
Supply agreement made and entered into effect as of September 1,
2025, by Innoviz and Daimler Truck North America LLC, for the supply of Innoviz LiDARs for Daimler’s autonomous Cascadia.
D. Exchange Controls
There are currently no Israeli currency control restrictions on
remittances of dividends on our ordinary shares, proceeds from the sale of the ordinary shares or interest or other payments to non-residents
of Israel, except for shareholders who are subjects of countries that are, or have been, in a state of war with Israel.
E. Taxation
Taxation and Government Programs
The following description is not intended to constitute a complete
analysis of all tax consequences relating to the acquisition, ownership and disposition of our ordinary shares and warrants. You should
consult your own tax advisor concerning the tax consequences of your particular situation, as well as any tax consequences that may arise
under the laws of any state, local, foreign or other taxing jurisdiction.
Material Israeli Tax Considerations
The following is a brief summary of the material Israeli tax laws
applicable to us, and certain Israeli Government programs that benefit us. This section also contains a discussion of material Israeli
tax consequences concerning the purchase, ownership and disposition of our ordinary shares. This summary does not discuss all the aspects
of Israeli tax law that may be relevant to a particular investor in light of his or her personal investment circumstances or to some types
of investors subject to special treatment under Israeli law. Examples of such investors include residents of Israel or traders in securities
who are subject to special tax regimes not covered in this discussion. To the extent that the discussion is based on tax legislation that
has not yet been subject to judicial or administrative interpretation, we cannot assure you that the appropriate tax authorities or the
courts will accept the views expressed in this discussion. The discussion below is subject to change, including due to amendments under
Israeli law or changes to the applicable judicial or administrative interpretations of Israeli law, which change could affect the tax
consequences described below.
General corporate tax structure
in Israel. Israeli companies are generally subject to corporate income tax. In December 2016, the Israeli Parliament approved
the Economic Efficiency Law (Legislative Amendments for Applying the Economic Policy for the 2017 and 2018 Budget Years) which reduces
the corporate income tax rate from 25% to 24% effective from January 1, 2017, and to 23% effective from January 1, 2018, onwards.
However, the effective tax rate payable by a company that derives income from an Approved Enterprise, a Preferred Enterprise, a Special
Preferred Enterprise, a Benefited Enterprise, a Preferred Technological Enterprise or Special Preferred Technological Enterprise (as discussed
below) may be considerably less. Capital gains derived by an Israeli company are generally subject to the corporate income tax rate.
75
Law for the Encouragement of Industry
(Taxes), 5729-1969. The Law for the Encouragement of Industry (Taxes), 5729-1969, generally referred to as the Industry Encouragement
Law, provides several tax benefits for “Industrial Companies.” We believe that we currently qualify as an Industrial Company
within the meaning of the Industry Encouragement Law.
The Industry Encouragement Law and the regulations promulgated
thereunder provide that an “Industrial Company” is an Israeli resident-company, of which 90% or more of its income in any
tax year, other than income from certain government loans, capital gains, dividends and interest and linkage differentials, is derived
from an “Industrial Enterprise” owned by it and located in Israel or in the “Area”, in accordance with the definition
under section 3A of the Ordinance. An “Industrial Enterprise” is defined as an enterprise whose principal activity in
a given tax year is industrial production.
Following are the main tax benefits available to Industrial Companies:
| • |
Amortization of the cost of purchased patents, rights to use a patent, and know-how, which are used for the development
or advancement of the Industrial Enterprise, over an eight-year period, commencing on the year in which the Industrial Company began to
use them; |
| • |
Under limited conditions, an election to file consolidated tax returns with controlled Israeli Industrial Companies; and |
| • |
Expenses related to a public offering are deductible in equal amounts over three years commencing on the year of the offering.
|
Eligibility for benefits under the Industry Encouragement Law is
not contingent upon approval of any governmental authority.
Tax benefits and grants for research
and development. Israeli tax law allows, under certain conditions, a tax deduction for expenditures, including capital expenditures,
for the year in which they are incurred. Expenditures are deemed related to scientific research and development projects, if:
| • |
The expenditures are approved by the relevant Israeli government ministry, determined by the field of research; |
| • |
The research and development must be for the promotion of the company; and |
| • |
The research and development is carried out by or on behalf of the company seeking such tax deduction. |
The amount of such deductible expenses is reduced by the sum of
any funds received through government grants for the finance of such scientific research and development projects. No deduction under
these research and development deduction rules is allowed if such deduction is related to an expense invested in an asset depreciable
under the general depreciation rules of the Ordinance. Expenditures that are unqualified under the conditions above are deductible in
equal amounts over three years commencing in the year of the payment of such expenses.
From time to time we may apply to the IIA for approval to allow
a tax deduction for all or most of research and development expenses during the year incurred. There can be no assurance that such application
will be accepted. If we will not be able to deduct research and development expenses during the year of the payment, we will be able to
deduct research and development expenses during a period of three years commencing in the year of the payment of such expenses.
Law for the Encouragement of Capital
Investments, 5719-1959. The Law for the Encouragement of Capital Investments, 5719-1959, generally referred to as the Investment
Law, provides certain incentives for capital investments in production facilities (or other eligible assets).
The Investment Law was significantly amended effective as of April 1,
2005 (the “2005 Amendment”), as of January 1, 2011 (the “2011 Amendment”) and as of January 1, 2017
(the “2017 Amendment”). Pursuant to the 2005 Amendment, tax benefits granted in accordance with the provisions of the Investment
Law prior to its revision by the 2005 Amendment remain in force, but any benefits granted subsequently are subject to the provisions of
the amended Investment Law. Similarly, the 2011 Amendment introduced new benefits to replace those granted in accordance with the provisions
of the Investment Law in effect prior to the 2011 Amendment. However, companies entitled to benefits under the Investment Law as in effect
prior to January 1, 2011 were entitled to choose to continue to enjoy such benefits, provided that certain conditions are met, or
elect instead, irrevocably, to forego such benefits and have the benefits of the 2011 Amendment apply. The 2017 Amendment introduces new
benefits for Technological Enterprises, alongside the existing tax benefits.
76
Tax benefits under the 2011 amendment.
The 2011 Amendment cancelled the availability of the benefits granted to Industrial Companies under the Investment Law prior to 2011 and,
instead, introduced new benefits for income generated by a “Preferred Company” through its “Preferred Enterprise”
(as such terms are defined in the Investment Law) as of January 1, 2011. The definition of a Preferred Company includes a company
incorporated in Israel that is not fully owned by a governmental entity, and that has, among other things, Preferred Enterprise status
and is controlled and managed from Israel. Pursuant to the 2011 Amendment, a Preferred Company is entitled to a reduced corporate tax
rate of 15% with respect to its income derived by its Preferred Enterprise in 2011 and 2012, unless the Preferred Enterprise is located
in a specified development zone, in which case the rate will be 10%. Under the 2011 Amendment, such corporate tax rate was reduced from
15% and 10%, respectively, to 12.5% and 7%, respectively, in 2013, 16% and 9% respectively, in 2014, 2015 and 2016, and 16% and 7.5%,
respectively, in 2017 and thereafter. Income derived by a Preferred Company from a “Special Preferred Enterprise” (as such
term is defined in the Investment Law) would be entitled, during a benefits period of 10 years, to further reduced tax rates of 8%,
or 5% if the Special Preferred Enterprise is located in a certain development zone.
Dividends distributed from income which is attributed to a “Preferred
Enterprise” will be subject to withholding tax at source at the following rates: (i) Israeli resident corporations –
0%, (although, if such dividends are subsequently distributed to individuals or a non-Israeli company the below rates detailed
in sub sections (ii) and (iii) shall apply), (ii) Israeli resident individuals – 20%, and (iii) non-Israeli residents
(individuals and corporations) – if a valid certificate is obtained in advance from the Israel Tax Authority (“ITA”)
- 20% under the Investment Law or a reduced tax rate under the provisions of any applicable double tax treaty – if such a valid
certificate is not obtained then the applicable withholding tax rate shall be 25% or 30%.
The 2011 Amendment also provided transitional provisions to address
companies already enjoying existing tax benefits under the Investment Law. These transitional provisions provide, among other things,
that unless an irrevocable request is made to apply the provisions of the Investment Law as amended in 2011 with respect to income to
be derived as of January 1, 2011, a Benefited Enterprise can elect to continue to benefit from the benefits provided to it before
the 2011 Amendment came into effect, provided that certain conditions are met.
We do not currently intend to implement the 2011 Amendment.
New tax benefits under the 2017
Amendment that became effective on January 1, 2017. The 2017 Amendment was enacted as part of the Economic Efficiency Law
that was published on December 29, 2016, and is effective as of January 1, 2017. The 2017 Amendment provides new tax benefits
for two types of “Technological Enterprises,” as described below, and is in addition to the other existing tax beneficial
programs under the Investment Law. In addition, the 2017 Amendment also changed the definition of the term “preferred income,”
which is the income eligible for benefits according to the 2011 Amendment.
The 2017 Amendment provides that a technological company satisfying
certain conditions will qualify as a “Preferred Technological Enterprise” and will thereby enjoy a reduced corporate tax rate
of 12% on income that qualifies as “Preferred Technological Income”, as defined in the Investment Law. The tax rate is further
reduced to 7.5% for a Preferred Technological Enterprise located in development zone “A”. In addition, a Preferred Technological
Company will enjoy a reduced corporate tax rate of 12% on capital gain derived from the sale of certain “Benefitted Intangible Assets”
(as defined in the Investment Law) to a related foreign company if the Benefitted Intangible Assets were acquired from a foreign company
on or after January 1, 2017 for at least ILS 200 million, and the sale receives prior approval from the IIA.
The 2017 Amendment further provides that a technological company
satisfying certain conditions (including, inter alia, having group consolidated revenues
of at least ILS 10 billion) will qualify as a “Special Preferred Technological Enterprise” and will thereby enjoy a reduced
corporate tax rate of 6% on “Preferred Technological Income” regardless of the company’s geographic location within
Israel. In addition, a Special Preferred Technological Enterprise will enjoy a reduced corporate tax rate of 6% on capital gain derived
from the sale of certain “Benefitted Intangible Assets” to a related foreign company if the Benefitted Intangible Assets were
either developed by the Special Preferred Technological Enterprise or acquired from a foreign company on or after January 1, 2017,
and the sale received prior approval from the IIA. A Special Preferred Technological Enterprise that acquires Benefitted Intangible Assets
from a foreign company for more than ILS 500 million will be eligible for these benefits for at least 10 years, subject to certain
approvals as specified in the Investment Law.
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Dividends distributed to Israeli shareholders by a Preferred Technological
Enterprise or a Special Preferred Technological Enterprise, paid out of Preferred Technological Income, are generally subject to withholding
tax at source at the rate of 20% (in the case of non-Israeli shareholder - subject to the receipt in advance of a valid certificate from
the ITA allowing for such reduced tax rate, or such lower rate as may be provided in an applicable tax treaty). However, if such dividends
are paid to an Israeli company, no tax is required to be withheld (although, if such dividends are subsequently distributed to individuals
or a non-Israeli company, withholding tax at a rate of 20% or such lower rate as may be provided in an applicable tax treaty, will apply).
If such dividends are distributed to a foreign company that holds solely or together with other foreign companies 90% or more in the Israeli
company and other conditions are met, the withholding tax rate will be 4% (in either case, subject to the receipt in advance of a valid
certificate from the ITA allowing for such 4% rate or lower treaty tax rate).
We believe that we may be eligible to receive the tax benefits
under the 2017 Amendment but there is no assurance that we will meet all the terms and conditions required under the Investment Law that
will allow us to enjoy any tax benefits under the Investment Law. It should be noted that the proportion of income that may be considered
Preferred Technological Income and enjoy the tax benefits described above should be calculated according to the Nexus Formula, which is
based on the proportion as that of qualifying expenditures in the intellectual property compared to overall expenditures.
Taxation of Our Shareholders
Capital gains taxes applicable
to non-Israeli resident shareholders. A non-Israeli resident who derives capital gains from the sale of ordinary shares in an Israeli
resident company that were purchased after December 31, 2008, should be exempt from Israeli tax unless, among other requirements, the
ordinary shares were held through a permanent establishment that the non-resident maintains in Israel. If not exempt, a non-Israeli resident
shareholder would generally be subject to tax on capital gain at the ordinary corporate income tax rate (23% in 2025), if generated by
a company, or at the rate of 25%, if generated by an individual, or 30%, if generated by an individual who is a “substantial shareholder”
(as defined under the Ordinance), at the time of sale or at any time during the preceding 12-month period (or if the shareholder claims
a deduction for interest and linkage differences expenses in connection with the purchase and holding of such shares). A “substantial
shareholder” is generally a person who, alone or together with such person’s relatives or another person who collaborates
with such person on a permanent basis, holds, directly or indirectly, at least 10% of any of the “means of control” of the
corporation. “Means of control” generally include, among others, the right to vote, receive profits, nominate a director or
an executive officer, receive assets upon liquidation, or order someone who holds any of the aforesaid rights how to act, regardless of
the source of such right. Individual and corporate shareholders dealing in securities in Israel are taxed at the tax rates applicable
to business income (corporate income tax rate for a corporation (23% in 2025) and a marginal tax rate of up to 47% for an individual in
2025 (excluding surtax as discussed below)) unless contrary provisions in a relevant tax treaty apply. Non-Israeli corporations will not
be entitled to the foregoing exemption if Israeli residents: (i) have a controlling interest of more than 25% in such non-Israeli
corporation or (ii) are the beneficiaries of, or are entitled to, 25% or more of the revenues or profits of such non-Israeli corporation,
whether directly or indirectly. In addition, such exemption is not applicable to a person whose gains from selling or otherwise disposing
of the ordinary shares are deemed to be business income.
Additionally, a sale of ordinary shares by a non-Israeli resident
may be exempt from Israeli capital gains tax under the provisions of an applicable tax treaty. For example, under The Convention Between
the Government of the United States of America and the Government of the State of Israel with respect to Taxes on Income, as amended (the
“United States-Israel Tax Treaty”), the sale, exchange or other disposition of ordinary shares by a shareholder who is a United
States resident (for purposes of the treaty) holding the ordinary shares as a capital asset and is entitled to claim the benefits afforded
to such a resident by the United States-Israel Tax Treaty (a “Treaty U.S. Resident”) is generally exempt from Israeli capital
gains tax, unless: (i) the capital gain arising from such sale, exchange or disposition is attributed to real estate located in Israel;
(ii) the capital gain arising from such sale, exchange or disposition is attributed to royalties; (iii) the capital gain arising
from the such sale, exchange or disposition is attributed to a permanent establishment in Israel, under certain terms; (iv) such
Treaty U.S. Resident holds, directly or indirectly, shares representing 10% or more of the voting capital during any part of the 12-month
period preceding the sale, exchange or disposition, subject to certain conditions; or (v) such Treaty U.S. Resident is an individual
and was present in Israel for 183 days or more during the relevant taxable year. In each case, the sale, exchange or disposition of our
ordinary shares would be subject to Israeli tax, to the extent applicable; however, under the United States-Israel Tax Treaty, the taxpayer
may be permitted to claim a credit for such taxes against the U.S. federal income tax imposed with respect to such sale, exchange or disposition,
subject to the limitations under U.S. law applicable to foreign tax credits. The United States-Israel Tax Treaty does not provide such
credit against any U.S. state or local taxes.
In some instances where our shareholders may be liable for Israeli
tax on the sale of their ordinary shares, the payment of the consideration may be subject to the withholding of Israeli tax at source.
Shareholders may be required to demonstrate that they are exempt from tax on their capital gains in order to avoid withholding at source
at the time of sale (i.e., a valid withholding tax certificate issued by the ITA, residency certificate or other documentation may be
required).
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Taxation of non-Israeli shareholders
on receipt of dividends. Non-Israeli residents (either individuals or corporations) are generally subject to Israeli income tax
on the receipt of dividends paid on our ordinary shares at the rate of 25%, which tax will be withheld at source, unless relief is provided
in a treaty between Israel and the shareholder’s country of residence (subject to the receipt in advance of a valid withholding
tax certificate from the ITA allowing for a reduced tax rate). With respect to a person who is a “substantial shareholder”
at the time of receiving the dividend or on any time during the preceding 12 months, the applicable tax rate is 30%. Such dividends are
generally subject to Israeli withholding tax at a rate of 25% so long as the ordinary shares are registered with a nominee company (whether
the recipient is a substantial shareholder or not) and, subject to the receipt in advance of a valid withholding tax certificate from
the ITA allowing for a reduced tax rate, 15% if the dividend is distributed from income attributed to an Approved Enterprise or a Benefited
Enterprise and 20% if the dividend is distributed from income attributed to a Preferred Enterprise, a Special Preferred Enterprise, Preferred
Technological Enterprise or Special Preferred Technological Enterprise or such lower rate as may be provided in an applicable tax treaty.
For example, under the United States Israel Tax Treaty, the maximum rate of tax withheld at source in Israel on dividends paid to a holder
of our ordinary shares who is a Treaty U.S. Resident is 25%. However, generally, the maximum rate of withholding tax on dividends, not
generated by an Approved Enterprise, Benefited Enterprise, Preferred Enterprise, Special Preferred Enterprise, Preferred Technological
Enterprise or Special Preferred Technological Enterprise, that are paid to a U.S. corporation holding 10% or more of the outstanding voting
capital throughout the tax year in which the dividend is distributed as well as during the previous tax year, is 12.5%, provided that
not more than 25% of the gross income for such preceding year consists of certain types of dividends and interest. Notwithstanding the
foregoing, dividends distributed from income attributed to an Approved Enterprise, Benefited Enterprise, Preferred Enterprise, Special
Preferred Enterprise, Preferred Technological Enterprise or Special Preferred Technological Enterprise are not entitled to such reduction
under the tax treaty but are subject to a withholding tax rate of 15% for a shareholder that is a U.S. corporation, provided that the
conditions related to 10% or more holdings and to our gross income for the previous year (as set forth in the previous sentence) are met.
The aforementioned rates under the United States-Israel Tax Treaty would not apply if the dividend income is derived through a permanent
establishment of the U.S. resident in Israel. If the dividend is attributable partly to income derived from an Approved Enterprise, Benefited
Enterprise, Preferred Enterprise, Special Preferred Enterprise, Preferred Technological Enterprise or Special Preferred Technological
Enterprise and partly to other sources of income, the withholding rate will be a blended rate reflecting the relative portions of the
two types of income. We cannot assure you that we will designate the profits that we may distribute in a way that will reduce shareholders’
tax liability.
A non-Israeli resident who receives dividends from which all taxes
due were withheld at source according to applicable provisions of the Ordinance and the regulations promulgated thereunder is generally
exempt from the obligation to file tax returns in Israel with respect to such income, provided that (i) such income was not generated
from business conducted in Israel by the taxpayer, (ii) the taxpayer has no other taxable sources of income in Israel with respect
to which a tax return is required to be filed, and (iii) the taxpayer is not obligated to pay surtax (as further explained below).
Surtax. Subject to the
provisions of an applicable tax treaty, individuals who are subject to tax in Israel (whether any such individual is an Israeli resident
or non-Israeli resident) are also subject to an additional tax at a rate of 3% on annual income (including, but not limited to, dividends,
interest and capital gain) exceeding ILS 721,560 for 2026, which amount is generally linked to the annual change in the Israeli consumer
price index. In addition, the portion of an individual’s annual income from capital sources (e.g., capital gains, real estate
appreciation, dividends, interest, CPI linkage differentials, rental income, passive royalties, etc.) exceeding a certain threshold (ILS
721,560 in 2026) is subject to an additional surtax of 2%. It should be emphasized that with respect to non-Israeli residents, these surtaxes
apply to Israeli source income (unless such income is exempt under Israeli domestic law or an applicable tax treaty), whereas with respect
to Israeli residents, these surtaxes apply to worldwide income.
Estate and Gift Tax. Israeli
law presently does not impose estate or gift taxes.
United States Federal Income
Taxation
The following is a description of certain material U.S. federal
income tax consequences of the acquisition, ownership and disposition of our ordinary shares and warrants. This description addresses
only the U.S. federal income tax consequences to U.S. Holders (as defined below) that hold our ordinary shares or warrants as capital
assets within the meaning of Section 1221 of the Internal Revenue Code of 1986, as amended (the “Code”). This discussion
is based upon the Code, applicable U.S. Treasury regulations, administrative pronouncements and judicial decisions, in each case as in
effect on the date hereof, all of which are subject to change (possibly with retroactive effect). No ruling has been or will be requested
from the IRS regarding the tax consequences of the acquisition, ownership or disposition of the ordinary shares and warrants, and there
can be no assurance that the IRS will agree with the discussion set out below. This summary does not address any U.S. tax consequences
other than U.S. federal income tax consequences (e.g., the estate and gift tax, the alternative minimum tax or the Medicare tax on net
investment income) and does not address any state, local or non-U.S. tax consequences.
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This description does not address tax considerations applicable
to holders that may be subject to special tax rules, including, without limitation:
| • |
banks, financial institutions or insurance companies; |
| • |
real estate investment trusts or regulated investment companies; |
| • |
dealers or brokers; |
| • |
traders that elect to mark to market; |
| • |
tax exempt entities or organizations; |
| • |
“individual retirement accounts” and other tax deferred accounts; |
| • |
certain former citizens or long term residents of the United States; |
| • |
persons that are resident or ordinarily resident in or have a permanent establishment in a jurisdiction outside the United States;
|
| • |
persons that acquired our ordinary shares or warrants pursuant to the exercise of any employee share option or otherwise as compensation
for the performance of services; |
| • |
persons that have a functional currency other than the U.S. dollar; |
| • |
persons holding our ordinary shares or warrants as part of a “hedging,” “integrated” or “conversion”
transaction or as a position in a “straddle” for U.S. federal income tax purposes; |
| • |
persons subject to special tax accounting rules as a result of any item of gross income with respect to the ordinary shares or warrants
being taken into account in an applicable financial statement; |
| • |
partnerships or other pass-through entities and persons holding ordinary shares or warrants through partnerships or other pass through
entities; or |
| • |
holders that own directly, indirectly or through attribution 10% or more of the total voting power or value of all of our outstanding
shares. |
For purposes of this description, a “U.S. Holder” is
a beneficial owner of our ordinary shares or warrants that, for U.S. federal income tax purposes, is:
| • |
an individual who is a citizen or resident of the United States; |
| • |
a corporation (or other entity treated as a corporation for U.S. federal income tax purposes) created or organized in or under the
laws of the United States or any state thereof, including the District of Columbia; |
| • |
an estate the income of which is subject to U.S. federal income taxation regardless of its source; or |
| • |
a trust if such trust has validly elected to be treated as a United States person for U.S. federal income tax purposes or if (1) a
court within the United States is able to exercise primary supervision over its administration and (2) one or more United States
persons have the authority to control all of the substantial decisions of such trust. |
If a partnership (or any other entity or arrangement treated as
a partnership for U.S. federal income tax purposes) holds our ordinary shares or warrants, the tax treatment of a partner in such partnership
will generally depend on the status of the partner and the activities of the partnership. Such a partner or partnership should consult
its tax advisor as to the particular U.S. federal income tax consequences of acquiring, owning and disposing of our ordinary shares or
warrants in its particular circumstance.
You should consult your tax advisor with respect to the U.S. federal,
state, local and foreign tax consequences of acquiring, owning and disposing of our ordinary shares and warrants under your particular
circumstances.
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Distributions on Ordinary Shares
Subject to the discussion under “Passive
Foreign Investment Company Considerations” below, the gross amount of any distribution made to you with respect to our ordinary
shares, before reduction for any Israeli taxes withheld therefrom, generally will be includible in your income as dividend income on the
date on which the dividends are actually or constructively received, to the extent such distribution is paid out of our current or accumulated
earnings and profits as determined under U.S. federal income tax principles. To the extent that the amount of any distribution by us exceeds
our current and accumulated earnings and profits as determined under U.S. federal income tax principles, it will be treated first as a
tax-free return of your adjusted tax basis in our ordinary shares and thereafter as capital gain. However, we do not expect to maintain
calculations of our earnings and profits under U.S. federal income tax principles and, therefore, you should expect that the entire amount
of any distribution generally will be reported as dividend income to you. If you are a non-corporate U.S. Holder, you may qualify for
the lower rates of taxation with respect to dividends on ordinary shares applicable to long term capital gains (i.e., gains from the sale
of capital assets held for more than one year), provided that we are not a PFIC (as discussed below under “Passive Foreign Investment
Company Considerations”) with respect to you in our taxable year in which the dividend was paid or in the prior taxable year and
certain other conditions are met, including certain holding period requirements and the absence of certain risk reduction transactions.
However, such dividends will not be eligible for the dividends received deduction generally allowed to corporate U.S. Holders.
Dividends paid to you with respect to our ordinary shares generally
will be treated as foreign source income, which may be relevant in calculating your foreign tax credit limitation. Subject to certain
conditions and limitations, Israeli tax withheld on dividends may be credited against your U.S. federal income tax liability or, at your
election, be deducted from your U.S. federal taxable income. An election to deduct creditable foreign taxes instead of claiming foreign
tax credits would generally apply to all such foreign taxes paid or accrued in such taxable year. Dividends that we distribute generally
should constitute “passive category income” for purposes of the foreign tax credit. A foreign tax credit for foreign taxes
imposed on distributions may be subject to significant limitations. The rules relating to the determination of the foreign tax credit
are complex, and you should consult your tax advisor to determine whether and to what extent you would be entitled to this credit.
Sale, Exchange or Other Disposition of Ordinary Shares and Warrants
Subject to the discussion under “Passive Foreign Investment
Company Considerations” below, you generally will recognize gain or loss on the sale, exchange or other disposition of our ordinary
shares or warrants equal to the difference between the amount realized on such sale, exchange or other disposition and your adjusted tax
basis in our ordinary shares or warrants, and such gain or loss will be capital gain or loss. If you are a non-corporate U.S. Holder,
capital gain from the sale, exchange or other disposition of ordinary shares or warrants is currently generally eligible for a preferential
rate of taxation applicable to capital gains, if your holding period for such ordinary shares or warrants exceeds one year (i.e., such
gain is long term capital gain). The deductibility of capital losses for U.S. federal income tax purposes is subject to limitations. Any
such gain or loss that a U.S. Holder recognizes generally will be treated as U.S. source income or loss for foreign tax credit limitation
purposes.
The rules governing the treatment of foreign taxes imposed
on a U.S. Holder and foreign tax credits are complex, and U.S. Holders should consult their tax advisors as to whether, for example,
the Israeli tax on gains may be creditable or deductible in light of their particular circumstances, including their eligibility for benefits
under an applicable income tax treaty and the potential impact of applicable United States Treasury regulations.
Exercise or Lapse of a Warrant
Except as discussed below with respect to the cashless exercise
of a warrant, a U.S. Holder generally will not recognize gain or loss upon the acquisition of an ordinary share on the exercise of a warrant
for cash. A U.S. Holder’s tax basis in the ordinary shares received upon exercise of warrants generally should be an amount equal
to the sum of the U.S. Holder’s tax basis in the warrants exchanged therefor and the exercise price. The U.S. Holder’s holding
period for ordinary shares received upon exercise of warrants will begin on the date following the date of exercise (or possibly on the
date of exercise) of the warrants and will not include the period during which the U.S. Holder held the warrants. If a warrant is allowed
to lapse unexercised, a U.S. Holder generally will recognize a capital loss equal to such holder’s tax basis in the warrant.
The tax consequences of a cashless exercise of a warrant are not
clear under current U.S. federal income tax law. A cashless exercise may be tax-deferred, either because the exercise is not a realization
event or because the exercise is treated as a recapitalization for U.S. federal income tax purposes. In either tax-deferred situation,
a U.S. Holder’s basis in the ordinary shares received would equal the U.S. Holder’s basis in the warrants exercised. If the
cashless exercise is not treated as a realization event, a U.S. Holder’s holding period in the ordinary shares would be treated
as commencing on the date following the date of exercise (or possibly on the date of exercise) of the warrants. If the cashless exercise
were treated as a recapitalization, the holding period of the ordinary shares would include the holding period of the warrants exercised.
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It is also possible that a cashless exercise of a warrant could
be treated in part as a taxable exchange in which gain or loss would be recognized in the manner set forth above under “Sale, Exchange
or Other Disposition of Ordinary Shares and Warrants.” In such event, a U.S. Holder could be deemed to have surrendered the number
of warrants equal to the number of ordinary shares having an aggregate fair market value equal to the exercise price for the total number
of warrants to be exercised. Under that treatment, subject to the discussion under “Passive Foreign Investment Company Considerations”
below, the U.S. Holder would recognize capital gain or loss in an amount generally equal to the difference between (i) the fair market
value of the warrants deemed surrendered and (ii) the U.S. Holder’s tax basis in such warrants deemed surrendered. In this
case, a U.S. Holder’s tax basis in the ordinary shares received would equal the sum of (i) U.S. Holder’s tax basis in
the warrants deemed exercised and (ii) the exercise price of such warrants. A U.S. Holder’s holding period for the ordinary
shares received in such case generally would commence on the date following the date of exercise (or possibly on the date of exercise)
of the warrants.
Due to the absence of authority on the U.S. federal income tax
treatment of a cashless exercise of warrants, there can be no assurance which, if any, of the alternative tax consequences and holding
periods described above would be adopted by the IRS or a court of law. Accordingly, U.S. Holders should consult their tax advisors regarding
the tax consequences of a cashless exercise of warrants.
Possible Constructive Distributions
The terms of each warrant provide for an adjustment to the number
of ordinary shares for which the warrant may be exercised or to the exercise price of the warrant in certain events. An adjustment which
has the effect of preventing dilution generally is not taxable. A U.S. Holder of a warrant would, however, generally be treated as receiving
a constructive distribution from us if the adjustment increases such holder’s proportionate interest in our assets or earnings and
profits (for instance, through an increase in the number of ordinary shares that would be obtained upon exercise of such warrant). Such
constructive distribution would be subject to tax as described under that section in the same manner as if the U.S. Holder of such warrant
received a cash distribution from us equal to the fair market value of such increased interest in our assets or earnings and profits.
Passive Foreign Investment Company Considerations
In general, a non-U.S. corporation will be classified as a PFIC
for any taxable year if at least (i) 75% of its gross income is classified as “passive income” or (ii) 50% of its gross assets
(generally determined on the basis of a quarterly average) produce or are held for the production of passive income. Passive income for
this purpose generally includes dividends, interest, royalties, rents, gains from commodities and securities transactions and the excess
of gains over losses from the disposition of assets which produce passive income. For these purposes, cash and other assets readily convertible
into cash are considered passive assets, and goodwill and other unbooked intangibles are generally taken into account. In making this
determination, the non-U.S. corporation is treated as earning its proportionate share of any income and owning its proportionate share
of any assets of any corporation in which it directly or indirectly holds 25% or more (by value) of the stock.
We believe we were not a PFIC for our taxable year ending December
31, 2025. However, as discussed below, whether we were a PFIC for any given taxable year is based on a complex and factual determination
and there is no assurance that the IRS will agree with our determination. Based on the current and anticipated composition of our income,
assets and operations, and those of our subsidiaries, we cannot be sure as to whether we will be a PFIC for U.S. federal income tax purposes
for our taxable year ending December 31, 2026 or in future taxable years. Because we believe we were a PFIC for one or more prior taxable
years and the factors that led to such characterization may persist or recur, there is a risk that we may be characterized as a PFIC in
future taxable years. Moreover, because PFIC status is based on our income, assets and activities for the entire taxable year, it is not
possible to determine whether we will be characterized as a PFIC for our current taxable year or future taxable years until after the
close of the applicable taxable year. Moreover, we must determine our PFIC status annually based on tests that are factual in nature,
and our status in future years will depend on our income, assets and activities in each of those years and, as a result, cannot be predicted
with certainty as of the date hereof. The value of our assets (including unbooked goodwill) for purposes of the PFIC determination may
be determined by reference to the trading value of our ordinary shares, which could fluctuate significantly.
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As previously disclosed in our Annual Report filed on Form 20-F
on March 12, 2024 and our Annual Report filed on March 12, 2025, we believe we were a PFIC for our taxable years ending December 31, 2023
and December 31, 2024, respectively. U.S. Holders that held our ordinary shares and/or warrants during any taxable year in which we were
a PFIC may be subject to adverse consequences under the PFIC rules as discussed further below. U.S. Holders who held our ordinary shares
or warrants during any taxable year in which we were a PFIC should consult their tax advisors concerning the proper tax treatment of any
dispositions of ordinary shares or warrants and any distributions by us, as well as any elections available to such U.S. Holders with
respect to us.
If we are determined to be a PFIC for any taxable year (or portion
thereof) that is included in the holding period of a U.S. Holder of our ordinary shares or warrants and, in the case of our ordinary shares,
the U.S. Holder did not make either a timely qualified electing fund (“QEF”) election or a mark-to-market election for our
first taxable year as a PFIC in which the U.S. Holder held (or was deemed to hold) ordinary shares, as described below, such holder generally
will be subject to special rules with respect to:
| • |
any gain recognized by the U.S. Holder on the sale or other disposition of its ordinary shares or warrants (or shares of any of our
subsidiaries that are Lower-Tier PFICs, as defined and discussed below); and |
| • |
any “excess distribution” made to the U.S. Holder (generally, any distributions to such U.S. Holder during a taxable
year of the U.S. Holder that are greater than 125% of the average annual distributions received by such U.S. Holder in respect of the
ordinary shares during the three preceding taxable years of such U.S. Holder or, if shorter, such U.S. Holder’s holding period for
the ordinary shares) and certain distributions received on shares of any of our subsidiaries that are Lower-Tier PFICs, as defined and
discussed below. |
Under these rules,
| • |
the U.S. Holder’s gain or excess distribution will be allocated ratably over the U.S. Holder’s holding period for the
ordinary shares and warrants; |
| • |
the amount allocated to the U.S. Holder’s taxable year in which the U.S. Holder recognized the gain or received the excess
distribution, or to the period in the U.S. Holder’s holding period before the first day of our first taxable year in which we are
a PFIC, will be taxed as ordinary income; |
| • |
the amount allocated to other taxable years (or portions thereof) of the U.S. Holder and included in its holding period will be taxed
at the highest tax rate in effect for that year and applicable to the U.S. Holder; and |
| • |
the interest charge generally applicable to underpayments of tax will be imposed in respect of the tax attributable to each such
other taxable year of the U.S. Holder. |
In general, if we are determined to be a PFIC, a U.S. Holder may
avoid the PFIC tax consequences described above with respect to our ordinary shares (but not our warrants) by making a timely QEF election
(if eligible to do so) to include in income its pro rata share of our net capital gains (as long-term capital gain) and other earnings
and profits (as ordinary income), on a current basis, in each case whether or not distributed, in the taxable year of the U.S. Holder
in which or with which our taxable year ends.
A U.S. Holder generally may make a separate election to defer the
payment of taxes on undistributed income inclusions under the QEF rules, but if deferred, any such taxes will be subject to an interest
charge. A U.S. Holder may not make a QEF election with respect to its warrants. As a result, if a U.S. Holder sells or otherwise disposes
of such warrants (other than upon exercise of such warrants), under currently proposed Treasury regulations, any gain recognized generally
may be subject to the special tax and interest charge rules treating the gain as an excess distribution, as described above, if we were
a PFIC at any time during the period the U.S. Holder held the warrants (which, we believe, would include our taxable years ending December
31, 2023 and December 31, 2024). If a U.S. Holder that exercises such warrants properly makes a QEF election with respect to the newly
acquired ordinary shares (or has previously made a QEF election with respect to our ordinary shares), the QEF election will apply to the
newly acquired ordinary shares, but the adverse tax consequences relating to PFIC shares, adjusted to take into account the current income
inclusions resulting from the QEF election, will continue to apply with respect to such newly acquired ordinary shares (which generally
will be deemed to have a holding period for purposes of the PFIC rules that includes the period the U.S. Holder held the warrants), unless
the U.S. Holder makes a purging election. One type of purging election creates a deemed sale of such shares at their fair market value.
Any gain recognized in this deemed sale will be subject to the special tax and interest charge rules treating the gain as an excess distribution,
as described above. As a result of this election, the U.S. Holder will have additional tax basis and, solely for purposes of the PFIC
rules, a new holding period in the ordinary shares acquired upon the exercise of the warrants. U.S. Holders are urged to consult their
tax advisors as to the application of the rules governing purging elections to their particular circumstances (including a potential separate
“deemed dividend” purging election that may be available if we are a “controlled foreign corporation” for U.S.
federal income tax purposes).
83
The QEF election is made on a shareholder-by-shareholder basis
and, once made, can be revoked only with the consent of the IRS. A U.S. Holder generally makes a QEF election by attaching a completed
IRS Form 8621 (Information Return by a Shareholder of a Passive Foreign Investment Company or Qualified Electing Fund), including the
information provided in a PFIC Annual Information Statement, to a timely filed U.S. federal income tax return for the tax year to which
the election relates. Retroactive QEF elections generally may be made only by filing a protective statement with such return and if certain
other conditions are met or with the consent of the IRS. U.S. Holders should consult their tax advisors regarding the availability and
tax consequences of a retroactive QEF election under their particular circumstances.
In order to comply with the requirements of a QEF election, a U.S.
Holder must receive a PFIC Annual Information Statement from us. There can be no assurance, however, that we will timely provide such
information for the current taxable year or subsequent taxable years. The failure to provide such information on an annual basis could
prevent a U.S. Holder from making a QEF election or result in the invalidation or termination of a U.S. Holder’s prior QEF election.
If we are determined to be a PFIC and a U.S. Holder does not make
a QEF election with respect to our ordinary shares as described above, we would continue to be treated as a PFIC with respect to such
U.S. Holder unless (i) we cease to be a PFIC and (ii) the U.S. Holder made a purging election under the PFIC rules. One type of purging
election creates a deemed sale of such shares at their fair market value. Any gain recognized in this deemed sale will be subject to the
special tax and interest charge rules treating the gain as an excess distribution, as described above. As a result of this election, the
U.S. Holder will have additional tax basis and, for purposes of the PFIC rules, a new holding period in the ordinary shares. U.S. Holders
are urged to consult their tax advisors as to the application of the rules governing purging elections to their particular circumstances
(including a potential separate “deemed dividend” purging election that may be available if we are a “controlled foreign
corporation” for U.S. federal income tax purposes).
If a U.S. Holder has made a QEF election with respect to our ordinary
shares, and the special tax and interest charge rules do not apply to such shares (because of a timely QEF election for our first taxable
year as a PFIC in which the U.S. Holder holds (or is deemed to hold) such shares or a purge of the PFIC taint pursuant to a purging election,
as described above), any gain recognized on the sale of our ordinary shares generally will be taxable as capital gain and no interest
charge will be imposed under the PFIC rules. As discussed above, U.S. Holders of a QEF are currently taxed on their pro rata shares of
our earnings and profits, whether or not distributed. In such case, a subsequent distribution of such earnings and profits that were previously
included in income generally should not be taxable as a dividend to such U.S. Holders. The tax basis of a U.S. Holder’s shares in
a QEF will be increased by amounts that are included in income, and decreased by amounts distributed but not taxed as dividends, under
the above rules.
Although a determination as to our PFIC status will be made annually,
an initial determination that our company is a PFIC will generally apply for subsequent years to a U.S. Holder who held ordinary shares
or warrants while we were a PFIC, whether or not we meet the test for PFIC status in those subsequent years. Because we believe we were
a PFIC for our taxable years ending December 31, 2023 and December 31, 2024, this rule is expected to apply to U.S. Holders of our ordinary
shares or warrants during such taxable years. A U.S. Holder who makes the QEF election discussed above for our first taxable year as a
PFIC in which the U.S. Holder holds (or is deemed to hold) ordinary shares, however, will not be subject to the PFIC tax and interest
charge rules discussed above in respect to such shares. In addition, such U.S. Holder will not be subject to the QEF inclusion regime
with respect to such ordinary shares for any taxable year of us that ends within or with a taxable year of the U.S. Holder and in which
we are not a PFIC. On the other hand, if the QEF election is not effective for each of our taxable years in which we are a PFIC and the
U.S. Holder holds (or is deemed to hold) ordinary shares, the PFIC rules discussed above will continue to apply to such ordinary shares
unless the U.S. Holder makes a purging election, as described above, and pays the tax and interest charge with respect to the gain inherent
in such shares attributable to the pre-QEF election period.
Alternatively, if a U.S. Holder, at the close of its taxable year,
owns shares in a PFIC that are treated as marketable stock, the U.S. Holder may make a mark-to-market election with respect to such shares
for such taxable year. If the U.S. Holder makes a valid mark-to-market election for the first taxable year of the U.S. Holder in which
the U.S. Holder holds (or is deemed to hold) ordinary shares and for which we are determined to be a PFIC, such U.S. Holder generally
will not be subject to the PFIC rules described above in respect to its ordinary shares. Instead, in general, the U.S. Holder will include
as ordinary income each year the excess, if any, of the fair market value of its ordinary shares at the end of its taxable year over the
adjusted basis in its ordinary shares. Such a U.S. Holder also will be allowed to take an ordinary loss in respect of the excess, if any,
of the adjusted basis of its ordinary shares over the fair market value of its ordinary shares at the end of its taxable year (but only
to the extent of the net amount of previously included income as a result of the mark-to-market election). Such U.S. Holder’s basis
in its ordinary shares will be adjusted to reflect any such income or loss amounts, and any further gain recognized on a sale or other
taxable disposition of the ordinary shares will be treated as ordinary income. Currently, a mark-to-market election may not be made with
respect to our warrants.
84
The mark-to-market election is available only for stock that is
regularly traded on a national securities exchange that is registered with the SEC, including Nasdaq, or on a foreign exchange or market
that the IRS determines, has rules sufficient to ensure that the market price represents a legitimate and sound fair market value. U.S.
Holders should consult their tax advisors regarding the availability and tax consequences of a mark-to-market election in respect to our
ordinary shares under their particular circumstances.
Certain of the PFIC rules may impact U.S. Holders with respect
to equity interests in subsidiaries and other entities which we may hold, directly or indirectly, that are PFICs (collectively, “Lower-Tier
PFICs”). There can be no assurance, however, that we do not own, or will not in the future acquire, an interest in a subsidiary
or other entity that is or would be treated as a Lower-Tier PFIC. If we are a PFIC and own any interests in a Lower-Tier PFIC, a U.S.
Holder generally must make a separate QEF election for each Lower-Tier PFIC, subject to our providing the relevant tax information for
each Lower-Tier PFIC on an annual basis. Because there is no provision in the Code, Treasury regulations or other official guidance that
provides for a right to make a mark-to-market election for any Lower-Tier PFICs that we may own, you will generally continue to be subject
to the adverse U.S. federal income tax consequences discussed above with respect to your indirect interest in any such Lower-Tier
PFIC (particularly if such Lower-Tier PFIC’s shares are not regularly traded on a qualified exchange) even if you make a mark-to-market
election with respect to our ordinary shares. U.S. Holders should consult their tax advisors regarding the application of the PFIC
rules to any of our subsidiaries.
A U.S. Holder of a PFIC may be required to file an IRS Form 8621
on an annual basis in certain circumstances which include, but are not limited to, if a U.S. Holder recognizes gain on a disposition of
such ordinary shares or receives distributions with respect to such ordinary shares. U.S. Holders should consult their tax advisors regarding
any reporting requirements that may apply to them if we are a PFIC.
The rules dealing with PFICs and with the QEF and mark-to-market
elections are very complex, are unclear in certain respects, and are affected by various factors in addition to those described above.
Accordingly, U.S. Holders of ordinary shares or warrants should consult their tax advisors concerning the application of the PFIC rules
to our ordinary shares or warrants under their particular circumstances.
Backup Withholding Tax and Certain Information Reporting Requirements
Distributions on, and proceeds paid from the sale or other taxable
disposition of, the ordinary shares and warrants may be subject to information reporting to the IRS. In addition, a U.S. Holder may be
subject to backup withholding on payments received in connection with distributions and proceeds from the sale or other taxable disposition
of ordinary shares or warrants made within the United States or through certain U.S. related financial intermediaries.
Backup withholding will not apply, however, to a U.S. Holder that
furnishes a correct taxpayer identification number, provides other required certification and otherwise complies with the applicable requirements
of the backup withholding rules or that is otherwise exempt from backup withholding (and, when required, demonstrates such exemption).
Backup withholding is not an additional tax. Rather, any amount withheld under the backup withholding rules will be creditable or refundable
against the U.S. Holder’s U.S. federal income tax liability, provided the required information is timely furnished to the IRS.
Foreign Asset Reporting
Certain U.S. Holders are required to report their holdings of certain
foreign financial assets, including equity of foreign entities, if the aggregate value of all of these assets exceeds certain threshold
amounts, by filing IRS Form 8938 with their federal income tax return. Our ordinary shares and warrants are expected to constitute foreign
financial assets subject to these requirements unless the ordinary shares or warrants are held in an account at certain financial institutions.
U.S. Holders are urged to consult their tax advisors regarding their information reporting obligations, if any, with respect to their
ownership and disposition of our ordinary shares and warrants and the significant penalties for non-compliance.
The above description is not intended to constitute a complete
analysis of all U.S. federal income tax consequences relating to acquisition, ownership and disposition of our ordinary shares and warrants.
You should consult your tax advisor concerning the tax consequences of your particular situation.
F. Dividends and Paying Agents
Not applicable.
85
G. Statement by Experts
Not applicable.
H. Documents on Display
We are subject to the informational requirements of the Exchange
Act. Accordingly, we are required to file reports and other information with the SEC, including annual reports on Form 20-F and reports
on Form 6-K.
As a foreign private issuer, we are exempt under the Exchange Act
from, among other things, the rules prescribing the furnishing and content of proxy statements. In addition, we are not required under
the Exchange Act to file periodic reports and financial statements with the SEC as frequently or as promptly as U.S. companies whose securities
are registered under the Exchange Act. We are required to make certain filings with the SEC. The SEC maintains an internet website that
contains reports, proxy statements and other information about issuers, like us, that file electronically with the SEC. The address of
that site is www.sec.gov.
Our ordinary shares and warrants are quoted on Nasdaq. Information
about us is also available on our website at https://innoviz.tech. Our website and the information
contained therein or connected thereto will not be deemed to be incorporated into this Annual Report and you should not rely on any such
information in making your decision whether to purchase our ordinary shares or warrants.
I. Subsidiary Information
Not applicable.
J. Annual Report to Security Holders
Not applicable.
| Item 11. |
Quantitative and Qualitative Disclosures about Market Risk |
We are exposed to market risk in the ordinary course of our business.
Market risk represents the risk of loss that may impact our financial position due to adverse changes in financial market prices and rates.
Our market risk exposure is primarily a result of foreign currency exchange rates and interest rates, which are discussed in detail below.
Interest Rate Risk
As of December 31, 2025 and 2024, our cash equivalents consisted
of interest-bearing short-term deposits and marketable securities. Our primary exposure to market risk is interest rate sensitivity, which
is affected by changes in the general level of interest of the Bank of Israel, and U.S. Federal Reserve interest rates. Due to the short-term
nature and the low-risk profile of our interest-bearing accounts, an immediate 10% change in interest rates would
not have a material effect on the fair market value of our cash and cash equivalents and short-term restricted bank deposits or on our
financial position or results of operations. We are currently exposed to a significant market risk related to changes in foreign currency
exchange rates, as we pay most of our salaries in ILS and we contract with vendors located in Israel and Europe. Our operations may be
subject to fluctuations in foreign currency exchange rates in the future.
We do not believe that inflation had a material effect on our business,
financial condition or results of operations during the years ended December 31, 2025 and 2024.
Foreign Currency Risk
Our financial results are reported in USD, and changes in the exchange
rate between USD and local currencies in the countries in which we operate (primarily the ILS) may affect the results of our operations.
In the year ended December 31, 2025, approximately 100% of our revenues were denominated in USD. The USD cost of our operations in countries
other than the United States, may be negatively influenced by revaluation of the USD against other currencies.
During the year ended December 31, 2025, the value of the USD devaluated
against the value of the ILS by approximately 12.5%. Our most significant foreign currency exposures are related to our operations in
Israel. The company hedges its anticipated exposure by exchanging USD into ILS in amounts sufficient to fund up to three months of operations
and monitoring foreign currency exchange rates over time.
| Item 12. |
Description of Securities Other than Equity Securities |
Not applicable.
86
PART II
| Item 13. |
Defaults, Dividend Arrearages and Delinquencies |
None.
| Item 14. |
Material Modifications to the Rights of Security Holders and Use of Proceeds |
None.
| Item 15. |
Controls and Procedures |
Evaluation of Disclosure Controls and Procedures
We maintain disclosure controls and procedures (as that term is
defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act) that are designed to ensure that information required to be disclosed
in our company’s reports under the Exchange Act is recorded, processed, summarized and reported within the time periods specified
in the SEC’s rules and forms and that such information is accumulated and communicated to our management, including our Chief Executive
Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosures. Any controls and procedures,
no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives. Our management,
with the participation of our Chief Executive Officer and Chief Financial Officer, has evaluated the effectiveness of the design and operation
of our disclosure controls and procedures as of December 31, 2025. Based upon that evaluation, our Chief Executive Officer and
Chief Financial Officer concluded that, as of December 31, 2025, our disclosure controls and procedures were effective to accomplish
their objectives at the reasonable assurance level.
Management’s Annual Report on Internal
Control over Financial Reporting
Our management is responsible for establishing and maintaining
adequate internal control over our financial reporting, as such term is defined in Rule 13a-15(f) under the Exchange Act. Our management
conducted an assessment of the effectiveness of our internal control over financial reporting based on the criteria set forth in “Internal
Control - Integrated Framework (2013)” issued by the Committee of Sponsoring Organizations of the Treadway Commission. Based on
this assessment, our management concluded that, as of December 31, 2025, our internal control over financial reporting was effective.
Attestation Report of the Registered Public
Accounting Firm
This Annual Report does not include an attestation report of our
registered public accounting firm as we are an emerging growth company and are exempt from the requirement to provide such a report.
Changes in Internal Control
over Financial Reporting
There were no changes in our internal controls over financial reporting
(as such term is defined in Rules 13a-15(f) and 15d-15(f) under the Securities Exchange Act) that occurred during the period covered by
this Annual Report that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
| Item 16. |
[Reserved] |
| Item 16A. |
Audit Committee Financial Expert |
Our board of directors has determined that Mr. Dan Falk, chairperson
of our audit committee, satisfies the “independence” requirements set forth in Rule 10A-3 under the Exchange Act. Our
board of directors has also determined that Mr. Dan Falk is considered an “audit committee financial expert” as
defined in Item 16A of Form 20-F under the Exchange Act.
| Item 16B. |
Code of Ethics |
We have adopted a Code of Ethics and Conduct that applies to all
our employees, officers and directors, including our principal executive, principal financial and principal accounting officers. Our Code
of Ethics and Conduct addresses, among other things, competition and fair dealing, conflicts of interest, financial matters and external
reporting, company funds and assets, confidentiality and corporate opportunity requirements and the process for reporting violations of
the Code of Ethics and Conduct, employee misconduct, conflicts of interest or other violations. Our Code of Ethics and Conduct is intended
to meet the definition of “code of ethics” under Item 16B of Form 20-F under the Exchange Act.
We will disclose on our website any amendment to, or waiver from,
a provision of our Code of Ethics and Conduct that applies to our directors or executive officers to the extent required under the rules
of the SEC or Nasdaq. Our Code of Ethics and Conduct is available on our website at https://ir.innoviz.tech.
The information contained on or through our website, or any other website referred to herein, is not incorporated by reference in this
Annual Report.
87
| Item 16C. |
Principal Accounting Fees and Services |
The table below sets out the total amount of services rendered
to us by Kesselman & Kesselman, a member firm of PricewaterhouseCoopers International Limited (“PwC”), our independent
registered public accounting firm, for services performed in the years ended December 31, 2025 and 2024, and breaks down these amounts
by category of service:
|
2025 |
2024 |
|||||||
|
(in thousands) |
||||||||
|
Audit Fees |
$ |
546 |
$ |
417 |
||||
|
Audit Related Fees
|
— |
— |
||||||
|
Tax Fees |
5 |
9 |
||||||
|
All Other Fees |
2 |
2 |
||||||
|
Total |
$ |
553 |
$ |
428 |
||||
Audit Fees
Audit fees for the years ended December 31, 2025 and 2024
include fees for the audit of our annual financial statements. This category also includes services that the independent accountant generally
provides, such as consents and assistance with and review of documents filed with the SEC.
Audit Related Fees
None.
Tax Fees
Tax fees for the years ended December 31, 2025 and 2024 were
related to ongoing tax advisory, tax compliance and tax planning services.
All Other Fees
All other fees for the year ended December 31, 2025 include
license fees for the use of an accounting research tool.
Pre-Approval Policies and Procedures
The advance approval of the audit committee or members thereof,
to whom approval authority has been delegated, is required for all audit and non-audit services provided by our auditors.
All services provided by our auditors are approved in advance by
either the audit committee or members thereof, to whom authority has been delegated, in accordance with the audit committee’s pre-approval
policy.
| Item 16D. |
Exemptions from the Listing Standards for Audit Committees |
Not applicable.
| Item 16E. |
Purchases of Equity Securities by the Issuer and Affiliated Purchasers |
None.
| Item 16F. |
Change in Registrant’s Certifying Accountant |
None.
88
| Item 16G. |
Corporate Governance |
We are a “foreign private issuer” (as such term is
defined in Rule 3b-4 under the Exchange Act) and our ordinary shares are listed on Nasdaq. We believe the following to be the significant
differences between our corporate governance practices and those applicable to U.S. companies under the Nasdaq listing standards. Under
the Nasdaq rules, listed companies that are foreign private issuers are permitted to follow home country practice in lieu of the corporate
governance provisions specified by the Nasdaq with limited exceptions. We rely on this “home country practice exemption” with
respect to (a) the quorum requirement for shareholder meetings, (b) the establishment or amendment of equity-based compensation plans
and arrangements and (c) obtaining shareholder approval for certain corporation actions.
As permitted under the Companies Law, pursuant to our Articles,
the quorum required for an ordinary meeting of shareholders consists of at least two shareholders present in person, by proxy or by other
voting instrument in accordance with the Companies Law, who hold at least 25% of the voting power of our shares (and in an adjourned meeting,
with some exceptions, any number of shareholders), instead of 33 1/3% of the issued share capital required under the Nasdaq corporate
governance rules.
In addition, we follow our home country law, instead of the Nasdaq
Marketplace Rules, which require that we obtain shareholder approval for the establishment or amendment of certain equity based compensation
plans and arrangements. Under Israeli law and practice, in general, the approval of the board of directors is required for the establishment
or amendment of equity based compensation plans and arrangements, unless the arrangement is for the benefit of a director or a controlling
shareholder, in which case compensation committee or audit committee and shareholder approval are also required.
We will also seek shareholder approval for all corporate actions
requiring such approval under the requirements of the Companies Law, rather than seeking approval for corporate actions in accordance
with Nasdaq Listing Rule 5635. In particular, under the Nasdaq Listing Rule, shareholder approval is generally required for: (i) an acquisition
of shares/assets of another company that involves the issuance of 20% or more of the acquirer’s shares or voting rights or if a
director, officer or 5% shareholder has greater than a 5% interest (or such persons collectively have a 10% or greater interest) in the
target company or the assets to be acquired or the consideration to be received and the present or potential issuance of ordinary shares,
or securities convertible into or exercisable for ordinary shares, could result in an increase in outstanding common shares or voting
power of 5% or more; (ii) the issuance of shares leading to a change of control; (iii) adoption/amendment of a stock option or purchase
plan or other equity compensation arrangements, pursuant to which stock may be acquired by officers, directors, employees or consultants
(with certain limited exception); and (iv) issuances of 20% or more of the shares or voting rights (including securities convertible into,
or exercisable for, equity) of a listed company via a private placement (and/or via sales by directors/officers/5% shareholders) if such
equity is issued (or sold) at below the greater of the book or market value of shares. We will seek shareholder approval for all actions
requiring such under the Companies Law. Under the Companies Law, the adoption of, and material changes to, equity-based compensation plans
generally require the approval of the board of directors.
We otherwise comply with and intend to continue to comply with
the rules generally applicable to U.S. domestic companies listed on the Nasdaq. We may in the future, however, decide to use other
foreign private issuer exemptions with respect to some or all the other Nasdaq listing rules. Following our home country governance practices
may provide less protection than is accorded to investors under the Nasdaq listing rules applicable to domestic issuers.
| Item 16H. |
Mine Safety Disclosure |
Not applicable.
| Item 16I. |
Disclosure Regarding Foreign Jurisdictions that Prevent Inspections |
Not applicable.
89
Item
16J. Insider Trading Policies
We
have adopted an
insider trading policy governing the purchase, sale, and other dispositions of our securities by directors, senior management,
and employees. Our insider trading policy aims to promote compliance with applicable insider trading laws, rules and regulations, and
Nasdaq listing standards. A copy of our insider trading policy is incorporated by reference to Exhibit 11.1 to the company’s Annual
Report on Form 20-F filed with the SEC on March 12, 2025.
Item
16K. Cybersecurity
Cybersecurity
Risk Management and Strategy
We
have developed and implemented a cybersecurity risk management program intended to protect the confidentiality, integrity ,
and availability of our critical systems and Confidential Information.
Risk
Management Processes
We
design and assess our program based on the NIST Cybersecurity Framework (CSF), and our cybersecurity risk management program incorporates
information security management systems certified under ISO/IEC 27001:2022 and TISAX (Trusted Information Security Assessment Exchange)
requirements. These frameworks provide a structured approach to identifying, assessing, and managing cybersecurity risks relevant to our
business. These internationally recognized frameworks provide independent third-party validation and assessment of our security controls
and governance practices. However, the fact that we follow these frameworks does not imply that we meet any particular technical standards,
specifications, or requirements.
| • |
ISO/IEC 27001:2022 certification is designed to
demonstrate that our information security management systems align with rigorous international standards. The certification process includes
independent third-party audits, management reviews, and requirements intended to support the continuous improvement of our security posture.
|
| • |
Our TISAX assessment includes evaluations of our
security governance, controls, processes, and supply chain security practices to support the information security, data privacy and prototype
requirements of the German and other European automotive and aerospace industries. |
Our
cybersecurity risk management program is integrated into our overall risk management program, and shares common methodologies, reporting
channels and governance processes that apply across the risk management program to other legal, compliance, strategic, operational, and
financial risk areas.
Key
elements of our cybersecurity risk management program include but are not limited to the following:
| • |
suppliers and third-party risk assessments and
scans designed to identify material risks from cybersecurity threats from third parties to our critical systems and information, including
assessment of third-party compliance with relevant security standards such as TISAX where deemed applicable to their criticality to our
operations; |
| • |
an in-house security team principally responsible
for managing (i) our cybersecurity risk assessment processes, (ii) our security controls, (iii) our ISO/IEC 27001:2022 certification and
TISAX assessment requirements, and (iv) our response to cybersecurity incidents and threats; |
| • |
engagement of external service providers, where
appropriate, to assess, test or otherwise assist to minimize and mitigate the risk with aspects of our security processes and technical
infrastructure; |
| • |
cybersecurity awareness training of our employees,
including training related to risks from external contractors or entities, incident response personnel, and senior management to intervene
when needed; |
| • |
a cybersecurity incident response plan that includes
procedures for responding to cybersecurity incidents from external entities; and |
| • |
|
90
Material
Cybersecurity Risks
Cybersecurity
Governance
Board
Oversight
Our
board of directors considers cybersecurity risk as part of its risk oversight function and oversees cybersecurity risks, including oversight
of management’s implementation of our cybersecurity risk management program and our alignment with ISO/IEC 27001:2022 certification
and TISAX requirements.
The
board of directors receives quarterly reports from management on our cybersecurity risks. In addition, management updates the board of
directors, where it deems appropriate, and the audit committee, where it deems appropriate, regarding cybersecurity incidents it considers
to be significant or potentially significant. The board of directors also receives periodic updates on our progress toward maintaining
and renewing our ISO/IEC 27001:2022 certification and completing our TISAX security assessments.
Members
of our board of directors receive presentations on cybersecurity topics from our Chief Operating Officer, on a quarterly basis, as part
of its continuing education on topics that impact public companies.
Management
Responsibility
Our
management team takes steps to stay informed
about and monitor efforts to prevent, detect, mitigate, and remediate cybersecurity risks and incidents through various means, which may
include briefings from internal security personnel; threat intelligence and other information obtained from governmental, public or private
sources, including external consultants engaged by us; and alerts and reports produced by security tools deployed
in our IT environment.
PART
III
Item
17. Financial Statements
We
have provided financial statements pursuant to Item 18.
Item
18. Financial Statements
The
audited consolidated financial statements as required under Item 18 are attached hereto starting on page F-1 of this Annual
Report. The audit report of Kesselman & Kesselman, a member firm of PricewaterhouseCoopers International Limited, an independent registered
public accounting firm, is included herein preceding the audited consolidated financial statements.
91
List
all exhibits filed as part of the registration statement or annual report, including exhibits incorporated by reference.
|
Incorporation
by Reference | ||||||
|
Exhibit
No. |
Description |
Form |
File
No. |
Exhibit
No. |
Filing
Date |
Filed
/ Furnished |
|
1.1 |
Amended
and Restated Articles of Association of Innoviz Technologies Ltd. |
F-3 |
333-265170 |
3.1 |
May
24, 2022 |
|
|
2.1 |
Description
of Securities. |
20-F |
001-40310 |
2.1 |
April
21, 2021 |
|
|
4.1† |
Form
of Director and Officer Indemnification Agreement. |
F-4/A |
333-252023 |
10.12 |
February
12, 2021 |
|
|
4.2† |
Compensation
Policy for Directors and Officers (as amended). |
6-K |
99.1 |
November
6, 2025 |
||
|
4.3† |
2016
Share Incentive Plan of Innoviz Technologies Ltd. |
F-4 |
333-252023 |
10.10 |
January
11, 2021 |
|
|
4.4† |
2021
Share Incentive Plan of Innoviz Technologies Ltd. |
20-F |
001-40310 |
4.4 |
March
30, 2022 |
|
|
4.5 |
Amendment
to Innoviz Technologies Ltd. 2021 Share Incentive Plan. |
S-8 |
333-292573 |
99.2 |
January
5, 2026 |
|
|
4.6†† |
Joint
Development and Supply Agreement, dated as of December 4, 2017, by and between Magna Electronics Inc. and Innoviz Technologies Ltd. |
F-4 |
333-252023 |
10.15 |
January
11, 2021 |
|
|
4.7†† |
Statement
of Work, dated February 2, 2018, by and between Magna Electronics Europe GmbH & Co. OHG and Innoviz Technologies Ltd. |
F-4 |
333-252023 |
10.16 |
January
11, 2021 |
|
|
4.8†† |
Amendment
No. 1 to Statement of Work, dated May 10, 2019, by and between Magna Electronics Europe GmbH & Co. OHG and Innoviz Technologies Ltd. |
F-4 |
333-252023 |
10.17 |
January
11, 2021 |
|
|
4.9†† |
Memorandum
of Understanding, dated October 12, 2020, by and between Magna Electronics Technology, Inc. and Innoviz Technologies Ltd. |
F-4 |
333-252023 |
10.18 |
January
11, 2021 |
|
|
4.10†† |
Addendum
to Memorandum of Understanding, dated December 8, 2020, by and between Magna Electronics Technology, Inc. and Innoviz Technologies Ltd. |
F-4 |
333-252023 |
10.19 |
January
11, 2021 |
|
|
4.11 |
Warrant
Agreement, dated as of April 30, 2020, between Continental Stock Transfer & Trust Company and Collective Growth. |
F-4 |
333-252023 |
4.4 |
January
11, 2021 |
|
|
4.12 |
Assignment,
Assumption and Amendment Agreement, by and among Innoviz Technologies Ltd., Collective Growth, American Stock Transfer & Trust Company
and Continental Stock Transfer & Trust Company. |
20-F |
001-40310 |
4.11 |
April
21, 2021 |
|
|
4.13 |
Registration
Rights Agreement, dated as of December 10, 2020, by and among Innoviz, certain equityholders of Innoviz, certain equityholders of Collective
Growth, Perception and Antara Capital. |
F-4 |
333-252023 |
4.8 |
January
11, 2021 |
|
|
4.14 |
Put
Option Agreement, dated as of December 10, 2020, by and between Innoviz and Antara Capital. |
F-4 |
333-252023 |
10.7 |
January
11, 2021 |
|
92
|
4.15 |
Lease
Agreement dated as of November 1, 2021 between Innoviz Technologies Ltd. and Mifaley Tahanot Ltd. |
20-F |
001-40310 |
4.14 |
March
30, 2022 |
|
|
4.16 |
Nomination
Agreement dated November 4, 2022 between Innoviz Technologies Ltd. and CARIAD SE. |
20-F |
001-40310 |
4.15 |
March
9, 2023 |
|
|
4.17†† |
Magna
Agreement dated December 29, 2023 between Innoviz Technologies Ltd., Magna Electronics Technology, Inc., and Magna Electronics Europe
GmbH & Co. OHG. |
20-F |
001-40310 |
4.16 |
March
12, 2024 |
|
|
4.18†† |
Mobileye
TS dated August 7, 2024, between Innoviz Technologies Ltd. and Mobileye Vision Technologies Ltd. |
20-F |
001-40310 |
4.17 |
March
12, 2025 |
|
|
4.19†† |
LOI
dated December 19, 2024, between Innoviz Technologies Ltd. and an existing customer. |
20-F |
001-40310 |
4.18 |
March
12, 2025 |
|
|
4.20 |
Form
of Ordinary Share Warrant Agreement. |
6-K |
001-40310 |
4.1 |
February
12, 2025 |
|
|
4.21 |
Open
Market Sale Agreement℠, dated August 13, 2025, between Innoviz Technologies Ltd. and Jefferies LLC |
F-3 |
333-
289554 |
1.2 |
August
13, 2025 |
|
|
4.22†† |
Master
Manufacture and Supply Agreement, dated March 3, 2025, between Innoviz Technologies Ltd. and Fabrinet |
* | ||||
|
4.23†† |
Long
Term Agreement, effective as of September 1, 2025, between Innoviz Technologies Ltd. and Daimler Truck North America LLC. |
* | ||||
|
8.1 |
List
of Subsidiaries. |
* | ||||
|
11.1 |
Innoviz
Technologies Ltd. Insider Trading Policy |
20-F |
001-40310 |
11.1 |
March
12, 2025 |
|
|
12.1 |
Principal
Executive Officer Certification Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. |
* | ||||
|
12.2 |
Principal
Financial Officer Certification Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. |
* | ||||
|
13.1 |
Principal
Executive Officer Certification Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. |
** | ||||
|
13.2 |
Principal
Financial Officer Certification Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. |
** | ||||
|
15.1 |
Consent
of Kesselman & Kesselman, Certified Public Accountants (Isr.), a member firm of PricewaterhouseCoopers International Limited, independent
registered public accounting firm. |
* | ||||
|
97 |
Clawback
Policy. |
20-F |
001-40310 |
97 |
March
12, 2024 |
|
|
101.INS |
XBRL
Instance Document. |
* | ||||
|
101.SCH |
XBRL
Taxonomy Extension Schema Document. |
* | ||||
|
101.CAL |
XBRL
Taxonomy Extension Calculation Linkbase Document. |
* | ||||
|
101.DEF |
XBRL
Taxonomy Definition Linkbase Document. |
* | ||||
|
101.LAB |
XBRL
Taxonomy Extension Label Linkbase Document. |
* | ||||
|
101.PRE |
XBRL
Taxonomy Extension Presentation Linkbase Document |
* | ||||
|
104 |
Cover
Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101) |
* |
| * |
Filed herewith. |
| ** |
Furnished herewith. |
| † |
Indicates management contract or compensatory
plan or arrangement. |
| †† |
Certain confidential portions (indicated by brackets
and asterisks) have been omitted from this exhibit. |
Certain
agreements filed as exhibits to this Annual Report contain representations and warranties that the parties thereto made to each other.
These representations and warranties have been made solely for the benefit of the other parties to such agreements and may have been qualified
by certain information that has been disclosed to the other parties to such agreements and that may not be reflected in such agreements.
In addition, these representations and warranties may be intended as a way of allocating risks among parties if the statements contained
therein prove to be incorrect, rather than as actual statements of fact. Accordingly, there can be no reliance on any such representations
and warranties as characterizations of the actual state of facts. Moreover, information concerning the subject matter of any such representations
and warranties may have changed since the date of such agreements.
93
SIGNATURES
The
registrant hereby certifies that it meets all of the requirements for filing on Form 20-F and that it has duly caused and authorized the
undersigned to sign this Annual Report on its behalf.
|
|
INNOVIZ
TECHNOLOGIES LTD. | |
|
|
| |
|
Date:
March 4, 2026 |
By: |
/s/
Eldar Cegla |
|
|
|
Name:
Eldar Cegla |
|
|
|
Title:
Chief Financial Officer |
94
INNOVIZ
TECHNOLOGIES LTD. AND ITS SUBSIDIARIES
CONSOLIDATED
FINANCIAL STATEMENTS
AS
OF DECEMBER 31, 2025
INDEX
|
Page
| |
|
Report
of Independent Registered Public Accounting Firm (PCAOB ID
|
F-2
|
|
Consolidated
Balance Sheets |
F-3
- F-4 |
|
Consolidated
Statements of Operations |
F-5
|
|
Statements
of Changes in Shareholders’ Equity |
F-6
|
|
Consolidated
Statements of Cash Flows |
F-7
- F-8 |
|
Notes
to Consolidated Financial Statements |
F-9
- F-35 |
- - - - - - - - - - -
Report of Independent Registered Public Accounting Firm
To the Board of Directors
and Shareholders of Innoviz Technologies Ltd.
Opinion
on the Financial Statements
We
have audited the accompanying consolidated balance sheets of Innoviz Technologies Ltd. and its subsidiaries (the “Company”)
as of December 31, 2025 and 2024, and the related consolidated statements of operations, of changes in shareholders’ equity and
of cash flows for each of the three years in the period ended December 31, 2025, including the related notes (collectively referred
to as the “consolidated financial statements”). In our opinion, the consolidated financial statements present fairly, in all
material respects, the financial position of the Company as of December 31, 2025 and 2024, and the results of its operations and its cash
flows for each of the three years in the period ended December 31, 2025 in conformity with accounting principles generally accepted in
the United States of America.
Basis
for Opinion
These
consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion
on the Company’s consolidated financial statements based on our audits. We are a public accounting firm registered with the Public
Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance
with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We
conducted our audits of these consolidated financial statements in accordance with the standards of the PCAOB. Those standards require
that we plan and perform the audits to obtain reasonable assurance about whether the consolidated financial statements are free of material
misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal
control over financial reporting. As part of our audits we are required to obtain an understanding of internal control over financial
reporting but not for the purpose of expressing an opinion on the effectiveness of the Company's internal control over financial reporting.
Accordingly, we express no such opinion.
Our
audits included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due
to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence
regarding the amounts and disclosures in the consolidated financial statements. Our audits also included evaluating the accounting principles
used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements.
We believe that our audits provide a reasonable basis for our opinion.
|
|
/s/ |
|
March 4, 2026
|
Certified Public Accountants
(Isr.) |
|
A member firm of PricewaterhouseCoopers
International Limited |
We have served as the
Company’s auditor since 2023.
Kesselman & Kesselman,
146 Derech Menachem Begin St. Tel-Aviv 6492103, Israel,
P.O Box 7187 Tel-Aviv 6107120, Telephone: +972 -3- 7954555, Fax:+972 -3- 7954556, www.pwc.com/il
P.O Box 7187 Tel-Aviv 6107120, Telephone: +972 -3- 7954555, Fax:+972 -3- 7954556, www.pwc.com/il
F
- 2
INNOVIZ
TECHNOLOGIES LTD. AND ITS SUBSIDIARIES
CONSOLIDATED
BALANCE SHEETS
U.S.
dollars in thousands (except share and per share data)
|
December
31, |
||||||||
|
2025
|
2024
|
|||||||
|
ASSETS
|
||||||||
|
CURRENT ASSETS:
|
||||||||
|
Cash
and cash equivalents |
$
|
|
$
|
|
||||
|
Short-term
restricted cash |
|
|
||||||
|
Bank
deposits |
|
|
||||||
|
Marketable
securities |
|
|
||||||
|
Trade
receivables, net |
|
|
||||||
|
Inventory
|
|
|
||||||
|
Prepaid
expenses and other current assets |
|
|
||||||
|
Total current assets
|
|
|
||||||
|
LONG-TERM ASSETS:
|
||||||||
|
Restricted
deposits |
|
|
||||||
|
Property
and equipment, net |
|
|
||||||
|
Operating
lease right-of-use assets, net |
|
|
||||||
|
Other
long-term assets |
|
|
||||||
|
Total long-term assets
|
|
|
||||||
|
Total assets
|
$
|
|
$
|
|
||||
The accompanying notes
are an integral part of the consolidated financial statements.
F
- 3
INNOVIZ
TECHNOLOGIES LTD. AND ITS SUBSIDIARIES
CONSOLIDATED
BALANCE SHEETS
U.S.
dollars in thousands (except share and per share data)
|
December
31, |
||||||||
|
2025
|
2024
|
|||||||
|
LIABILITIES
AND SHAREHOLDERS’ EQUITY |
||||||||
|
CURRENT LIABILITIES:
|
||||||||
|
Trade
payables |
$
|
|
$
|
|
||||
|
Deferred
revenues |
|
|
||||||
|
Employees
and payroll accruals |
|
|
||||||
|
Accrued
expenses and other current liabilities |
|
|
||||||
|
Operating
lease liabilities |
|
|
||||||
|
Total current liabilities
|
|
|
||||||
|
LONG-TERM LIABILITIES:
|
||||||||
|
Operating
lease liabilities |
|
|
||||||
|
Warrants
liability |
|
|
||||||
|
Total long-term liabilities
|
|
|
||||||
|
SHAREHOLDERS’ EQUITY:
|
||||||||
|
Ordinary
shares of no-par value: Authorized: |
|
|
||||||
|
Additional
paid-in capital |
|
|
||||||
|
Accumulated
deficit |
(
|
)
|
(
|
)
| ||||
|
Total shareholders’
equity |
|
|
||||||
|
Total liabilities and
shareholders’ equity |
$
|
|
$
|
|
||||
The accompanying notes
are an integral part of the consolidated financial statements.
F
- 4
INNOVIZ
TECHNOLOGIES LTD. AND ITS SUBSIDIARIES
CONSOLIDATED
STATEMENTS OF OPERATIONS
U.S.
dollars in thousands (except share and per share data)
|
Year
ended December 31, |
||||||||||||
|
2025
|
2024
|
2023
|
||||||||||
|
Revenues
|
$
|
|
$
|
|
$
|
|
||||||
|
Cost of revenues
|
(
|
)
|
(
|
)
|
(
|
)
| ||||||
|
Gross profit (loss)
|
|
(
|
)
|
(
|
)
| |||||||
|
Operating expenses:
|
||||||||||||
|
Research
and development |
|
|
|
|||||||||
|
Sales
and marketing |
|
|
|
|||||||||
|
General
and administrative |
|
|
|
|||||||||
|
Total operating expenses
|
|
|
|
|||||||||
|
Operating loss
|
(
|
)
|
(
|
)
|
(
|
)
| ||||||
|
Financial income, net
|
|
|
|
|||||||||
|
Loss before taxes on
income |
(
|
)
|
(
|
)
|
(
|
)
| ||||||
|
Taxes on income
|
(
|
)
|
(
|
)
|
(
|
)
| ||||||
|
Net loss
|
$
|
(
|
)
|
$
|
(
|
)
|
$
|
(
|
)
| |||
|
Basic and diluted net
loss per ordinary share |
$
|
(
|
)
|
$
|
(
|
)
|
$
|
(
|
)
| |||
|
Weighted average number
of ordinary shares used in computing basic and diluted net loss per ordinary share |
|
|
|
|||||||||
The accompanying notes
are an integral part of the consolidated financial statements.
F
- 5
INNOVIZ
TECHNOLOGIES LTD. AND ITS SUBSIDIARIES
CONSOLIDATED
STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY
U.S.
dollars in thousands (except share and per share data)
|
|
Ordinary
Shares |
Additional |
Total |
|||||||||||||||||
|
|
Number
|
Amount
|
Paid-in
Capital
|
Accumulated
Deficit
|
Shareholders’
Equity
|
|||||||||||||||
|
Balance as of January 1, 2023 |
|
$ |
|
$ |
|
$ |
(
|
) |
$ |
|
||||||||||
|
Issuance of ordinary shares, net of issuance costs |
|
|
|
|
|
|||||||||||||||
|
Reclassification of warrants liability to equity |
- |
|
|
|
|
|||||||||||||||
|
Exercise of shares options |
|
|
|
|
|
|||||||||||||||
|
Vesting of RSUs |
|
|
|
|
|
|||||||||||||||
|
Share-based compensation |
- |
|
|
|
|
|||||||||||||||
|
Net Loss |
- |
|
|
(
|
) |
(
|
) | |||||||||||||
|
|
||||||||||||||||||||
|
Balance as of December 31, 2023 |
|
$ |
|
$ |
|
$ |
(
|
) |
$ |
|
||||||||||
|
Exercise of shares options |
|
|
|
|
|
|||||||||||||||
|
Vesting of RSUs |
|
|
|
|
|
|||||||||||||||
|
Share-based compensation |
- |
|
|
|
|
|||||||||||||||
|
Net Loss |
- |
|
|
(
|
) |
(
|
) | |||||||||||||
|
|
||||||||||||||||||||
|
Balance as of December 31, 2024 |
|
$ |
|
$ |
|
$ |
(
|
) |
$ |
|
||||||||||
|
Issuance of ordinary shares and warrants, net of issuance costs
|
|
|
|
|
|
|||||||||||||||
|
Issuance of ordinary shares, net of issuance costs |
|
|
|
|
|
|||||||||||||||
|
Reclassification of warrants liability to equity |
- |
|
|
|
|
|||||||||||||||
|
Exercise of shares options |
|
|
|
|
|
|||||||||||||||
|
Vesting of RSUs |
|
|
|
|
|
|||||||||||||||
|
Share-based compensation |
- |
|
|
|
|
|||||||||||||||
|
Net Loss |
- |
|
|
(
|
) |
(
|
) | |||||||||||||
|
|
||||||||||||||||||||
|
Balance as of December 31, 2025 |
|
$ |
|
$ |
|
$ |
(
|
) |
$ |
|
||||||||||
The accompanying notes are an integral part of the consolidated financial statements.
F
- 6
INNOVIZ
TECHNOLOGIES LTD. AND ITS SUBSIDIARIES
CONSOLIDATED
STATEMENTS OF CASH FLOWS
U.S.
dollars in thousands (except share and per share data)
|
Year
ended December 31, |
||||||||||||
|
2025
|
2024
|
2023
|
||||||||||
|
Cash
flows from operating activities: |
||||||||||||
|
Net
loss |
$
|
(
|
)
|
$
|
(
|
)
|
$
|
(
|
)
| |||
|
Adjustments required
to reconcile net loss to net cash used in operating activities: |
||||||||||||
|
Depreciation
and amortization |
|
|
|
|||||||||
|
Remeasurement
of warrants liability |
(
|
)
|
(
|
)
|
(
|
)
| ||||||
|
Change
in accrued interest on bank deposits |
(
|
)
|
|
(
|
)
| |||||||
|
Change
in marketable securities |
(
|
)
|
(
|
)
|
(
|
)
| ||||||
|
Share-based
compensation |
|
|
|
|||||||||
|
Capital
gain, net |
|
(
|
)
|
|
||||||||
|
Foreign
exchange gain, net |
(
|
)
|
(
|
)
|
(
|
)
| ||||||
|
Change
in prepaid expenses and other assets |
|
(
|
)
|
(
|
)
| |||||||
|
Change
in trade receivables, net |
(
|
)
|
|
(
|
)
| |||||||
|
Change
in inventory |
|
(
|
)
|
|
||||||||
|
Change
in operating lease assets and liabilities, net |
|
(
|
)
|
|
||||||||
|
Change
in trade payables |
(
|
)
|
(
|
)
|
|
|||||||
|
Change
in accrued expenses and other liabilities |
|
(
|
)
|
|
||||||||
|
Change
in employees and payroll accruals |
|
(
|
)
|
|
||||||||
|
Change
in deferred revenues |
|
(
|
)
|
|
||||||||
|
Net cash used in operating
activities |
(
|
)
|
(
|
)
|
(
|
)
| ||||||
|
Cash
flows from investing activities: |
||||||||||||
|
Purchase
of property and equipment |
(
|
)
|
(
|
)
|
(
|
)
| ||||||
|
Proceeds
from sale of machinery (see Note 2h) |
|
|
|
|||||||||
|
Proceeds
from sales of property and equipment |
|
|
|
|||||||||
|
Investment
in bank deposits |
(
|
)
|
(
|
)
|
(
|
)
| ||||||
|
Withdrawal
of bank deposits |
|
|
|
|||||||||
|
Investment
in restricted deposits |
(
|
)
|
(
|
)
|
(
|
)
| ||||||
|
Release
of restricted deposits |
|
|
|
|||||||||
|
Investment
in marketable securities |
(
|
)
|
(
|
)
|
(
|
)
| ||||||
|
Proceeds
from sales and maturities of marketable securities |
|
|
|
|||||||||
|
Net cash provided by
(used in) investing activities |
$
|
(
|
)
|
$
|
|
$
|
|
|||||
The accompanying notes
are an integral part of the consolidated financial statements.
F
- 7
INNOVIZ
TECHNOLOGIES LTD. AND ITS SUBSIDIARIES
CONSOLIDATED
STATEMENTS OF CASH FLOWS
U.S.
dollars in thousands (except share and per share data)
|
Year
ended December 31, |
||||||||||||
|
2025
|
2024
|
2023
|
||||||||||
|
Cash
flows from financing activities: |
||||||||||||
|
Issuance
of ordinary shares and warrants, net of issuance costs |
|
|
|
|||||||||
|
Issuance
of ordinary shares, net of paid issuance costs |
|
|
|
|||||||||
|
Proceeds
from exercise of shares options |
|
|
|
|||||||||
|
Net cash provided by
financing activities |
|
|
|
|||||||||
|
Effect of exchange rate
changes on cash, cash equivalents and restricted cash |
|
|
|
|||||||||
|
Decrease in cash, cash
equivalents and restricted cash |
(
|
)
|
(
|
)
|
(
|
)
| ||||||
|
Cash, cash equivalents
and restricted cash at the beginning of the year |
|
|
|
|||||||||
|
Cash, cash equivalents
and restricted cash at the end of the year |
$
|
|
$
|
|
$
|
|
||||||
|
Supplementary
disclosure of cash flows activities: |
||||||||||||
|
(1) Cash paid during
the year for: |
||||||||||||
|
Income
taxes |
$
|
|
$
|
|
$
|
|
||||||
|
(2) Non-cash transactions:
|
||||||||||||
|
Purchase
of property and equipment |
$
|
|
$
|
|
$
|
|
||||||
|
Reclassification
from property and equipment, net to inventory |
$
|
|
$
|
|
$
|
|
||||||
|
Reclassification
of warrants liability to equity |
$
|
|
$
|
|
$
|
|
||||||
|
Issuance
cost to be paid |
$
|
|
$
|
|
$
|
|
||||||
|
Exercise
of shares options |
$
|
|
$
|
|
$
|
|
||||||
|
Right-of-use
assets recognized with corresponding lease liabilities |
$
|
|
$
|
|
$
|
|
||||||
|
(3) Cash, cash equivalents
and restricted cash at the end of the year: |
||||||||||||
|
Cash
and cash equivalents |
$
|
|
$
|
|
$
|
|
||||||
|
Short-term
restricted cash |
|
|
|
|||||||||
|
$
|
|
$
|
|
$
|
|
|||||||
The accompanying notes
are an integral part of the consolidated financial statements.
F
- 8
INNOVIZ
TECHNOLOGIES LTD. AND ITS SUBSIDIARIES
NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
U.S. dollars in thousands (except share and per share data)
| NOTE 1: - |
GENERAL
|
| a. |
Innoviz Technologies Ltd. and its subsidiaries
(the “Company” or “Innoviz”) is a Tier-1 direct supplier of high-performance, automotive-grade LiDAR sensor platforms
and complementary solutions that are designed to bring enhanced vision and superior performance through safe autonomous driving and other
perception-focused applications at a mass scale. The Company provides complete LiDAR based solutions for OEMs (original equipment manufacturers) and
Tier-1 partners developing autonomous driving vehicles for the passenger car, robotaxi, shuttle, delivery vehicle and truck markets. The
Company also leverages its automotive-grade LiDAR technology to offer solutions for non-automotive markets, including smart infrastructure,
perimeter security, traffic management and robotics. |
| b. |
The Company was incorporated on January 18, 2016,
under the laws of the state of Israel. |
| c. |
On December 10, 2020, the Company entered into
definitive agreements in connection with a merger (the “Transactions”) with Collective Growth Corporation (“Collective
Growth”), a special purpose acquisition company, that resulted in Collective Growth becoming a wholly owned subsidiary of the Company
upon the consummation of the Transactions on April 5, 2021 (the “Closing Date”). |
The
Transactions were accounted for as a recapitalization in accordance with accounting principles generally accepted in the United States
(“GAAP”).
The
Company’s ordinary shares and warrants were listed on the Nasdaq Stock Market LLC under the trading symbols “INVZ” and
“INVZW”, respectively, on April 5, 2021.
| d. |
As of December 31, 2025, the Company’s principal
source of liquidity includes its cash and cash equivalents in the amount of $ |
| e. |
In October 2023, Israel was attacked by a terrorist
organization and entered a state of war. In October 2025, the sides agreed to a ceasefire, although there is no assurance that this agreement
will be upheld. On February 28, 2026, the United States and Israel launched a joint attack on Iran. Iran launched ballistic missiles and
drones against targets in Israel and against U.S. military bases and other targets in several countries in the Persian Gulf. As of the
date of these consolidated financial statements, the war is ongoing and continues to evolve. The intensity and duration of the war is
difficult to predict, as such are the war’s economic implications of the conflict on the Company’s operational and financial
performance. The Company considered the impact of the war and determined that there were no material adverse impacts on the consolidated
financial statements, including related significant estimates made by management, for the period ended December 31, 2025.
|
F - 9
INNOVIZ
TECHNOLOGIES LTD. AND ITS SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
U.S.
dollars in thousands (except share and per share data)
| NOTE 2: - |
SIGNIFICANT ACCOUNTING
POLICIES |
The
consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States
(“U.S. GAAP”).
| a. |
Use of estimates: |
The
preparation of consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect
the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated
financial statements and the reported amounts of revenues and expenses during the reporting period.
Significant
items subject to such estimates and assumptions include inventory reserves and useful lives of property, plant, and equipment. The Company
bases these estimates on historical and anticipated results, trends and various other assumptions that it believes are reasonable under
the circumstances, including assumptions as to future events. Actual results could differ from those estimates.
| b. |
Financial statements in U.S. dollars:
|
A
substantial portion of the Company’s financing activities, including equity transactions and cash investments, are incurred in U.S.
dollars. The Company’s management believes that the U.S. dollar is the currency of the primary economic environment in which the
Company operates. Thus, the functional and reporting currency of the Company is the U.S. dollar.
A
subsidiary’s functional currency is the currency of the primary economic environment in which the subsidiary operates; normally,
that is the currency of the environment in which a subsidiary primarily generates and expends cash. In making the determination of
the appropriate functional currency for a subsidiary, the Company considers cash flow indicators, local market indicators, financing indicators
and the subsidiary’s relationship with both the parent company and other subsidiaries. For subsidiaries that are primarily
a direct and integral component or extension of the parent entity’s operations, the U.S. dollar is the functional currency.
The
Company has determined the functional currency of its foreign subsidiaries is the U.S. Dollar. The foreign operations are considered
a direct and integral part or extension of the Company’s operations. The day-to-day operations of the foreign subsidiary are dependent
on the economic environment of the U.S. Dollar.
Accordingly,
monetary accounts maintained in currencies other than the U.S. dollar are remeasured into U.S. dollars in accordance with Statement of
the Accounting Standard Codification (“ASC”) No. 830 “Foreign Currency Matters” (“ASC No. 830”). All
transaction gains and losses of the remeasured monetary balance sheet items are reflected in the Company's consolidated statements of
operations as financial income or expenses as appropriate.
| c. |
Principles of consolidation:
|
The
consolidated financial statements include the accounts of the Company and its wholly owned subsidiaries. Intercompany transactions and
balances have been eliminated upon consolidation.
F - 10
INNOVIZ
TECHNOLOGIES LTD. AND ITS SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
U.S.
dollars in thousands (except share and per share data)
| NOTE 2: - |
SIGNIFICANT
ACCOUNTING POLICIES (Cont.) |
| d. |
Cash and cash equivalents, restricted cash and
restricted deposits: |
The
Company considers all highly liquid short-term deposits with original maturities of three months or less from the investment date to be
cash equivalents. Cash equivalents consist primarily of amounts invested in short term deposits. Restricted cash and restricted deposits
consist deposits that serve as collateral mainly for lease agreements at the Company’s financial institutions.
| e. |
Inventory: |
Inventory
is stated at the lower of cost or estimated net realizable value.
Cost
of inventory is determined as follows:
Raw
materials and work in process - based on weighted average cost.
Finished
goods - based mainly on weighted average standard cost method.
The
Company charges cost of revenues for write-downs of inventory which are obsolete or in excess of anticipated demand based on a consideration
of marketability and product life cycle stage, product development plans, component cost trends, manufacturing yields, demand forecasts,
historical revenue and assumptions about future demand and market conditions.
Losses
expected to arise from firm non-cancelable commitments for future purchases of inventory are charged to cost of revenues unless the losses
are recoverable through firm sales contracts or other means.
| f. |
Property and equipment, net:
|
Property
and equipment are stated at cost, net of accumulated depreciation and impairment. The estimated useful lives of property and equipment
are determined when those assets are initially recognized and are routinely reviewed for the remaining estimated useful lives. When useful
life is reassessed for an asset, the remaining carrying amount of the asset is accounted for prospectively and depreciated over the revised
estimated useful life. Depreciation is calculated on a straight-line basis over the estimated useful lives of the related assets, at the
following annual rates:
|
%
| |
|
Computers and software
|
|
|
Office furniture and
equipment |
|
|
Machinery and lab equipment
|
|
|
Leasehold improvements
|
|
F - 11
INNOVIZ
TECHNOLOGIES LTD. AND ITS SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
U.S.
dollars in thousands (except share and per share data)
| NOTE 2: - |
SIGNIFICANT
ACCOUNTING POLICIES (Cont.) |
| g. |
Impairment of long-lived assets:
|
Long-lived
assets are reviewed for impairment in accordance with ASC 360, “Property, Plant and Equipment” (“ASC 360”), whenever
events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Impairment exists when the carrying
value of the asset exceeds the aggregate undiscounted cash flows expected to be generated by the asset. The impairment to be recognized
is measured by the amount by which the carrying amount of the assets exceeds their fair value. During the years ended December 31,
2025, 2024 and 2023, the Company recorded impairment losses in the amount of $519 ,
$542
and $1,997 ,
respectively.
| h. |
Revenue recognition: |
According
to Accounting Standards Codification 606, Revenue from Contracts with Customers, and all the related amendments (“ASC 606”),
a performance obligation is a promise to provide a distinct good or service or a series of distinct goods or services. Goods and services
that are not distinct are bundled with other goods or services in the contract until a bundle of goods or services that is distinct is
created. A good or service promised to a customer is distinct if the customer can benefit from the good or service either on its own or
together with other resources that are readily available to the customer and the entity’s promise to transfer the good or service
to the customer is separately identifiable from other promises in the contract.
The
Company derives its revenues mainly from sales of LiDAR sensors, critical components and application engineering services for its customers.
As such, the Company contracts with its customers, may contain the following main performance obligations: (i) sales of LiDAR sensors;
(ii) sales of critical components; (iii) application engineering services. The Company evaluates each performance obligation to determine
if it is satisfied at a point in time or over time.
Revenue
from LiDAR sensors and critical components is recognized at a point in time when the control of the goods is transferred to the customer,
generally upon delivery. During the years ended December 31, 2025, 2024 and 2023, the Company recognized revenue at a point in time for
LiDAR sensors and critical components, after transferring the control of the goods to the customer of $9,479 ,
$6,311
and $5,651 ,
respectively.
Application
engineering services to certain customers may require substantive customer acceptance due to performance acceptance criteria that is considered
more than a formality. For these services, revenue is recognized at a point in time upon customer acceptance. During the years ended December
31, 2025, 2024 and 2023, the Company recognized revenue at a point in time for application engineering services, after receiving customer
acceptance of $37,247 ,
$17,957
and $15,225 ,
respectively.
In
June 2025 the Company entered into a contract with a customer for the sale of machinery (including subsequent adjustments to the machinery)
for $10,000 .
During the year ended December 31, 2025, the Company recognized revenue at a point in time from the sale of machinery, after transferring
the control of the machinery to the customer of $7,156 .
In addition, during the year ended December 31, 2025, the Company recognized revenue over time from the subsequent adjustments to the
machinery of $1,207 .
F - 12
INNOVIZ
TECHNOLOGIES LTD. AND ITS SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
U.S.
dollars in thousands (except share and per share data)
| NOTE 2: - |
SIGNIFICANT
ACCOUNTING POLICIES (Cont.) |
The
Company capitalizes costs of fulfilling application engineering services contracts, to the extent recoverable, that relate directly to
contracts for which revenue recognition has yet to commence. These assets are amortized to cost of revenues consistently with the pattern
of the revenue recognition of application engineering services.
The
Company applies the practical expedient and does not assess whether a contract has a significant financing component if the expectation
at contract inception is such that the period between payment by the customer and the transfer of the promised goods or services to the
customer will be one year or less.
For
each contract which includes prepayment terms, the Company evaluates whether the contract includes a significant financing component.
The Company’s contracts with customers with prepayment terms do not include a significant financing component because the primary
purpose is not to receive financing from the customers.
The
Company’s general terms and conditions for its contracts do not contain a right of return that allows the customer to return products
and receive a credit.
Deferred
Revenues
Deferred
revenues in the Company’s consolidated balance sheets, which represent contract liabilities, include mainly billings in excess of
revenues recognized related to product sales and obligations under application engineering service agreements with OEMs and subsequent
adjustments related to sale of machinery, and are recognized as revenues when the Company performs its obligations under the contract.
During
the year ended December 31, 2025, the Company recognized $272
that was included in deferred revenues balance at December 31, 2024.
During
the year ended December 31, 2024, the Company recognized $6,865
that was included in deferred revenues balance at December 31, 2023.
Remaining
Performance Obligations
The
Company’s remaining performance obligations are comprised of application engineering services revenues not yet rendered. As of December 31,
2025, the aggregate amount of the transaction price allocated to remaining performance obligations was $7,633
(out of which none
is recorded as deferred revenues), which the Company expects to recognize as revenues within the next 12 months.
| i. |
Cost of revenues: |
Cost
of revenues includes the manufacturing cost of LiDAR sensors, which primarily consists of components costs, sub-assembly costs and personnel-related
costs, and amounts paid to third-party contract manufacturers and vendors. Cost of revenues also includes depreciation, costs of providing
application engineering services (mainly personnel related costs), an allocated portion of overhead, warranty costs, excess and obsolete
inventory and shipping costs.
F - 13
INNOVIZ
TECHNOLOGIES LTD. AND ITS SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
U.S.
dollars in thousands (except share and per share data)
| NOTE 2: - |
SIGNIFICANT
ACCOUNTING POLICIES (Cont.) |
| j. |
Warranty provision: |
The
Company provides standard product warranties for its pre-SOP products at no extra charge, that covers the compliance of the products with
agreed-upon specifications. Standard warranties are considered to be assurance type warranties and are not accounted for as separate performance
obligations. A provision is recorded for estimated warranty costs based on the Company’s experience.
Changes
in the warranty provision, presented in accrued expenses and other current liabilities, were as follow:
|
Year
ended December 31,
|
||||||||
|
2025
|
2024
|
|||||||
|
Balance at the beginning
of the year |
$
|
|
$
|
|
||||
|
Warranty provision
|
|
|
||||||
|
Warranty claims settled
|
(
|
)
|
(
|
)
| ||||
|
Balance at the end of
the year |
$
|
|
$
|
|
||||
| k. |
Research and development expenses:
|
Research
and development costs include mainly personnel-related expenses associated with the Company’s engineering personnel responsible
for the design, development and testing of its products. Such costs related to software development are included in research and development
expense until the technological feasibility is reached, which for the Company’s software products, is generally shortly before the
products are released to production. Research and development costs are charged to the consolidated statements of operations as incurred.
| l. |
Patent costs: |
Legal
and related patent costs are charged to general and administrative expenses in the consolidated statements of operations as incurred,
since their realization is uncertain.
| m. |
Leases |
The
Company applies ASU No. 2016-02, “Leases” Topic 842 (“ASC 842”) for its leases. The Company elected to not recognize
a lease liability and a right-of-use (“ROU”) asset for leases with a term of twelve months or less. Lease payments on short-term
leases are recognized as an expense on a straight-line basis over the lease term, not included in lease liabilities. In addition, the
Company also elected the practical expedient to not separate lease and non-lease components for its leases.
F - 14
INNOVIZ
TECHNOLOGIES LTD. AND ITS SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
U.S.
dollars in thousands (except share and per share data)
| NOTE 2: - |
SIGNIFICANT
ACCOUNTING POLICIES (Cont.) |
The
Company determines if an arrangement is a lease and the classification of that lease at inception based on: (1) whether the contract involves
the use of a distinct identified asset, (2) whether the Company obtains the right to substantially all the economic benefits from the
use of the asset throughout the period, and (3) whether the Company has a right to direct how and for what purpose the identified asset
is used throughout the period of use.
ROU
assets represent the right to use an underlying asset for the lease term and lease liabilities represent the obligation to make minimum
lease payments arising from the lease.
Leases
are classified as either finance leases or operating leases. A lease is classified as a finance lease if any one of the following criteria
are met: the lease transfers ownership of the asset by the end of the lease term, the lease contains an option to purchase the asset that
is reasonably certain to be exercised, the lease term is for a major part of the remaining useful life of the asset, the present value
of the lease payments equals or exceeds substantially all of the fair value of the asset, or the underlying asset is of such a specialized
nature that it is expected to have no alternative use to the lessor at the end of lease term. A lease is classified as an operating lease
if it does not meet any one of these criteria. Since all of the Company’s lease contracts do not meet any of the criteria above,
the Company concluded that all of its lease contracts should be classified as operating leases.
ROU
assets and liabilities are recognized on the commencement date based on the present value of remaining lease payments over the lease term.
For this purpose, the Company considers only payments that are fixed and determinable at the time of commencement. As most of the Company’s
leases do not provide an implicit rate, the Company uses its incremental borrowing rate based on information available on the commencement
date in determining the present value of lease payments. All ROU assets are reviewed for impairment. The lease terms may include options
to extend or terminate the lease when it is reasonably certain that the Company will exercise an extension option or not exercise a termination
option.
For
further information on the Company’s leasing activities see Note 6.
| n. |
Share-based compensation:
|
The
Company accounts for share-based compensation in accordance with ASC No. 718, “Compensation—Stock Compensation”
(“ASC No. 718”). ASC No. 718 requires companies to estimate the fair value of equity-based payment awards on the
date of grant using an option-pricing model. The value of the award is recognized as an expense over the requisite service period.
F - 15
INNOVIZ
TECHNOLOGIES LTD. AND ITS SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
U.S.
dollars in thousands (except share and per share data)
| NOTE 2: - |
SIGNIFICANT
ACCOUNTING POLICIES (Cont.) |
The
Company selected the Black-Scholes option pricing model as the most appropriate model for determining the fair value for its share options
awards, whereas the fair value of restricted share units with service conditions only is based on the closing market value of the underlying
shares at the date of grant. The option pricing model requires several assumptions, of which the most significant are the expected share
price volatility and the expected option term. The Company recognizes forfeitures of equity-based awards as they occur. For graded vesting
awards subject to a service condition only, the Company recognizes compensation expenses based on the straight-line method over the requisite
service period. For awards of restricted share units with market conditions as well as service conditions, the Company determines the
grant date fair value using a Monte-Carlo pricing model. A Monte-Carlo pricing model simulates multiple price‑path scenarios for
the underlying share price and determines the award value based on the average outcome. For these awards, compensation expenses are recognized
for each award tranche separately, on a straight line basis, based on the expected service period derived from the simulation.
| o. |
Accrued post-employment benefit:
|
Severance
pay
The
Israeli Severance Pay Law, 1963 (“Severance Pay Law”), specifies that employees are entitled to severance payment, following
the termination of their employment. Under the Severance Pay Law, the severance payment is calculated as one-month salary for each year
of employment, or a portion thereof.
The
Company’s liability for all of its Israeli employees is covered by the provisions of Section 14 of the Severance Pay Law (“Section
14”). Under Section 14 employees are entitled to monthly deposits, at a rate of 8.33 %
of their monthly salary, made on their behalf to their insurance funds. Payments in accordance with Section 14 release the Company from
any future severance payments in respect of those employees. As a result, the Company does not recognize any liability for severance pay
due to these employees and the deposits under Section 14 are not recorded as an asset in the Company's consolidated balance sheets.
Severance
pay expenses under Section 14 for the years ended December 31, 2025, 2024 and 2023, amounted to $3,394 ,
$3,537
and $3,723 ,
respectively.
| p. |
Income taxes: |
The
Company accounts for income taxes in accordance with ASC No. 740, “Income Taxes” (“ASC 740”). ASC 740 prescribes
the use of the liability method whereby deferred tax asset and liability account balances are determined based on differences between
the financial reporting and the tax basis of assets and liabilities and are measured using the enacted tax rates and laws that will be
in effect when the differences are expected to reverse. The Company provides a valuation allowance, if necessary, to reduce deferred tax
assets to their estimated realizable value, if it is more likely than not that a portion or all of the deferred tax assets will not be
realized.
F - 16
INNOVIZ
TECHNOLOGIES LTD. AND ITS SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
U.S.
dollars in thousands (except share and per share data)
| NOTE 2: - |
SIGNIFICANT
ACCOUNTING POLICIES (Cont.) |
The
Company accounts for uncertain tax positions in accordance with the provisions of ASC 740. Accounting guidance addresses the determination
of whether tax benefits claimed or expected to be claimed on a tax return should be recorded in the consolidated financial statements,
under which the Company may recognize the tax benefit from an uncertain tax position only if it is more likely than not that the tax position
will be sustained on examination by the taxing authorities, based on the technical merits of the position.
| q. |
Concentration of credit risk:
|
Financial
instruments that potentially subject the Company to concentrations of credit risk consist principally of cash and cash equivalents, trade
receivables, marketable securities, bank deposits and restricted deposits.
The
majority of the Company’s cash and cash equivalents and short-term bank deposits are invested with major banks in Israel. The Company
believes that the financial institutions that hold the Company’s cash deposits are financially sound and, accordingly, bear minimal
risk.
Trade
receivables of the Company are mainly derived from customers located globally. The Company mitigates its credit risks by performing credit
evaluations of its customers’ financial conditions and requires customer advance payments in certain circumstances. The Company
generally does not require collateral.
The
Company invests in marketable securities with an average credit rating of “A” and a maturity of up to three years. The Company’s
investment policy is not to invest more than 5 %
of its investment portfolio in a single security at time of purchase.
| r. |
Trade receivables, net: |
Trade
receivables are recorded at the invoiced amount and do not bear interest. Trade receivables are periodically assessed for allowance for
doubtful accounts, which is the Company’s best estimate of the amount of credit losses inherent in its existing accounts receivable.
In establishing the required allowance, management considers historical losses adjusted to take into account current market conditions
and customers’ financial condition, the amount of receivables in dispute, the current receivables aging, in addition to current
payment patterns. The allowance of doubtful accounts was not material for the periods presented.
| s. |
Investment
in marketable securities: |
The
Company’s investment in marketable securities consists of corporate and government debentures with quoted OTC market prices. All
the Company's marketable securities are stated at fair value as determined by the closing price of each security at balance sheet date.
Unrealized gains and losses on these securities are included in financial income, net in the consolidated statements of operations.
F - 17
INNOVIZ
TECHNOLOGIES LTD. AND ITS SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
U.S.
dollars in thousands (except share and per share data)
| NOTE 2: - |
SIGNIFICANT
ACCOUNTING POLICIES (Cont.) |
| t. |
Ordinary share warrants: |
The
Company accounts for warrants as either equity-classified or liability-classified instruments based on an assessment of the warrants’
specific terms and applicable authoritative guidance. The assessment considers whether the warrants are freestanding financial instruments,
meet the definition of a liability under ASC 480, are indexed to the Company’s own share and whether the warrants are eligible for
equity classification under ASC 815-40. This assessment is conducted at the time of warrant issuance and as of each subsequent reporting
period end date while the warrants are outstanding.
Warrants
that meet all the criteria for equity classification are recorded as a component of additional paid-in capital. Warrants that do not meet
all the criteria for equity classification, are required to be recorded as liabilities at their initial fair value on the date of issuance
and remeasured to fair value through earnings at each balance sheet date thereafter.
The
Company’s private warrants (see Note 12) include provisions that provide for potential changes to the settlement amounts that are
dependent on the characteristics of the holder of the warrant, under ASC 815-40. Therefore, those warrants are not indexed to the Company’s
ordinary shares in the manner contemplated by that Subtopic, so long as they are held by the initial purchasers or their permitted transferees.
Thus, the private warrants were classified as a liability, initially and subsequently measured at fair value through earnings.
Conversely,
since the public warrants, as well as the warrants over ordinary shares issued in February 2025 (see Note 10c), are indexed to the Company’s
own share, they qualify for equity classification under Subtopic 815-40.
| u. |
Fair value of financial instruments:
|
The
Company applies ASC No. 820, “Fair Value Measurements and Disclosures” (“ASC No. 820”), with respect
to fair value measurements of all financial assets and liabilities which are required to be measured at fair value.
F - 18
INNOVIZ
TECHNOLOGIES LTD. AND ITS SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
U.S.
dollars in thousands (except share and per share data)
| NOTE 2: - |
SIGNIFICANT
ACCOUNTING POLICIES (Cont.) |
Fair
value is an exit price, representing the amount that would be received to sell an asset or paid to transfer a liability in an orderly
transaction between market participants. As such, fair value is a market-based measurement that should be determined based on assumptions
that market participants would use in pricing an asset or a liability. A three-tier fair value hierarchy is established as a basis for
considering such assumptions and for inputs used in the valuation methodologies in measuring fair value:
| Level 1- |
Unadjusted quoted prices in active markets that
are accessible on the measurement date for identical, unrestricted assets or liabilities. |
| Level 2 - |
Quoted prices in markets that are not active,
or inputs that are observable, either directly or indirectly, for substantially the full term of the asset or liability.
|
| Level 3 - |
Prices or valuation techniques that require inputs
that are both significant to the fair value measurement and unobservable (supported by little or no market activity).
|
The
fair value hierarchy also requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when
measuring fair value.
The
carrying values of cash and cash equivalents, short-term and restricted deposits, trade receivables, other current assets, trade payables,
employees and payroll accruals and accrued expenses and other current liabilities approximate fair values due to the short-term maturities
of these instruments.
The
estimated fair value of private warrants has been determined by the Company using available market information and valuation methodologies
(see also Note 7). Considerable judgment is required in estimating fair values. Accordingly, the estimates may not be indicative of the
amounts the Company could realize in a current market exchange.
| v. |
Loss per share: |
The
Company computes basic loss per share in accordance with ASC Topic 260, “Earnings per Share”, by dividing the net loss attributable
to ordinary shareholders by the weighted average number of ordinary shares outstanding during the year. Diluted loss per share is computed
by considering the potential dilution that could occur upon the exercise of awards granted under share-based compensation plans and equity-classified
instruments using the treasury stock method. Impact of liability-classified instruments on diluted loss per share is considered using
the if-converted method. Diluted loss per share excludes all dilutive potential ordinary shares if their effect is anti-dilutive.
| w. |
Other comprehensive loss:
|
The
Company has no components of comprehensive loss other than net loss. Thus, comprehensive loss is the same as net loss for the periods
presented.
| x. |
Recently adopted accounting pronouncement:
|
In
2025 the Company early adopted ASU 2025-05, Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses for Accounts
Receivable and Contract Assets, which introduces a practical expedient for the application of the current expected credit loss (“CECL”)
model to current accounts receivable and contract assets.
The
adoption of ASU 2025-05 did not have a material impact on the consolidated financial statements.
F - 19
INNOVIZ
TECHNOLOGIES LTD. AND ITS SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
U.S.
dollars in thousands (except share and per share data)
| NOTE 2: - |
SIGNIFICANT
ACCOUNTING POLICIES (Cont.) |
| y. |
Recently issued accounting pronouncements not
yet adopted: |
As
an “emerging growth company,” the Jumpstart Our Business Startups Act (“JOBS Act”) allows the Company to delay
adoption of new or revised accounting pronouncements applicable to public companies until such pronouncements are made applicable to private
companies. The Company has elected to use this extended transition period under the JOBS Act. The adoption dates discussed below reflects
this election.
| 1. |
In December 2023 the FASB issued ASU 2023-09,
Improvements to Income Tax Disclosures, which requires disclosure of disaggregated income taxes paid, prescribes standard categories for
the components of the effective tax rate reconciliation, and modifies other income tax-related disclosures. The ASU will be effective
for the Company for fiscal years beginning after December 15, 2025, and allows adoption on a prospective basis, with a retrospective option.
The Company is currently evaluating the effect that ASU 2023-09 will have on its related disclosures. |
| 2. |
In November 2024, the FASB issued ASU No. 2024-03
Income Statement—Reporting Comprehensive Income—Expense Disaggregation Disclosures (Subtopic 220-40). The ASU improves the
disclosures about a public business entity’s expenses and provides more detailed information about the types of expenses in commonly
presented expense captions. The amendments require that at each interim and annual reporting period an entity will, inter alia, disclose
amounts of purchases of inventory, employee compensation, depreciation and amortization included in each relevant expense caption (such
as cost of revenues, research and development, sales and marketing and general and administrative). The ASU is effective for fiscal years
beginning after December 15, 2026, and interim periods within fiscal years beginning after December 15, 2027. Early adoption is permitted.
The amendments may be applied either: (1) prospectively to financial statements issued for reporting periods after the effective
date of this ASU or (2) retrospectively to all prior periods presented in the financial statements. The Company is currently evaluating
the effect that ASU 2024-03 will have on its consolidated financial statements and related disclosures. |
| 3. |
In September 2025, the FASB issued ASU 2025-06,
Intangibles, Goodwill and Other Internal-Use Software (Subtopic 350-40): Targeted Improvements to the Accounting for Internal-Use Software.
The ASU removes all references to software development stages throughout ASC 350-40. Therefore, under the ASU, an entity will be required
to start capitalizing software costs when management has authorized and committed to funding the software project, and it is probable
that the project will be completed and the software will be used to perform the intended function. The ASU is effective for
fiscal years beginning after December 15, 2027, and interim periods within those fiscal years. The ASU allows adoption either on a prospective
basis, a modified prospective approach or a retrospective approach. The Company is currently evaluating the effects that ASU 2025-06 will
have on its consolidated financial statements and related disclosures. |
F - 20
INNOVIZ
TECHNOLOGIES LTD. AND ITS SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
U.S.
dollars in thousands (except share and per share data)
| NOTE 2: - |
SIGNIFICANT
ACCOUNTING POLICIES (Cont.) |
| 4. |
In December 2025, the FASB issued ASU 2025-11
to amend the guidance in “Interim Reporting” (Topic 270). The update provides clarifications intended to improve the consistency
and usability of interim disclosure requirements, including a comprehensive listing of required interim disclosures and a new disclosure
principle for reporting material events occurring after the most recent annual period. The amendments do not change the underlying objectives
of interim reporting but are designed to enhance clarity in application. The ASU is effective for fiscal years beginning after December
15, 2027, and interim periods within those fiscal years. The Company is currently evaluating the effects that ASU 2025-11 will have on
its interim consolidated financial statements and related disclosures. |
| NOTE 3: - | INVENTORY |
| a. |
Inventory is comprised of the following: |
|
December
31, |
||||||||
|
2025
|
2024
|
|||||||
|
Raw materials
|
$
|
|
$
|
|
||||
|
Work in process
|
|
|
||||||
|
Finished goods
|
|
|
||||||
|
|
||||||||
|
$
|
|
$
|
|
|||||
| b. |
During the years ended December 31, 2025, 2024 and 2023, the Company recorded inventory write offs in the amount of $ |
| NOTE 4: - |
PREPAID EXPENSES AND OTHER CURRENT ASSETS |
Prepaid expenses and other current assets consist of the following:
|
December
31, |
||||||||
|
2025
|
2024
|
|||||||
|
Government authorities
|
$
|
|
$
|
|
||||
|
Prepaid expenses
|
|
|
||||||
|
Deferred contract costs
|
|
|
||||||
|
Other receivables
|
|
|
||||||
|
|
||||||||
|
$
|
|
$
|
|
|||||
F - 21
INNOVIZ
TECHNOLOGIES LTD. AND ITS SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
U.S.
dollars in thousands (except share and per share data)
| NOTE 5: - |
PROPERTY AND EQUIPMENT, NET |
| a. |
Property and equipment, net consist of the following: |
|
December 31, |
||||||||
|
2025 |
2024 |
|||||||
|
Cost: |
||||||||
|
Computers and software |
$ |
|
$ |
|
||||
|
Office furniture and equipment |
|
|
||||||
|
Machinery and lab equipment |
|
|
||||||
|
Leasehold improvements |
|
|
||||||
|
$ |
|
$ |
|
|||||
|
Accumulated depreciation |
|
|
||||||
|
|
||||||||
|
$ |
|
$ |
|
|||||
| b. |
Depreciation expenses for the years ended December 31, 2025, 2024 and 2023, amounted to $ |
| NOTE 6: - | LEASES |
The
Company has entered into several non-cancelable operating lease agreements, mostly for office spaces.
The
Company’s main lease agreement is of an office building located in Rosh Ha’Ayin, Israel (“Premises”). This lease
agreement includes a right to use office spaces and related facilities. The lease term is for 67 months, starting from July 1, 2022. However,
the Company was given access to the Premises starting from November 2021 in order to allow it to construct leasehold improvements. The
Company has an option to renew the lease for additional 60 months, which will be exercised automatically unless the Company informs the
lessor in advance. The Company currently estimates it is reasonably certain that it will exercise this option. The lease payments for
the Premises are based on an estimation of the Premises’ size in square meters taken prior to construction and may be updated according
to the agreement of the parties on the measurement of the Premises taken after construction. Payments are adjusted periodically to the
Israeli consumer price index (CPI). The ROU asset and lease liability were calculated using the CPI in effect at lease commencement and
will not be subsequently adjusted. In April 2025 changes were introduced to the Premises management fees, giving rise to a lease modification.
As a result, the Company remeasured the operating lease liability with a corresponding increase to the right-of-use asset. The Company
also leases additional office spaces, mainly in Germany.
F - 22
INNOVIZ
TECHNOLOGIES LTD. AND ITS SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
U.S.
dollars in thousands (except share and per share data)
| NOTE 6: - |
LEASES
(Cont.) |
Below
is a summary of the Company operating right-of-use assets, net and operating lease liabilities:
|
December 31, |
||||||||
|
2025 |
2024 |
|||||||
|
Operating lease right-of-use assets, net |
$ |
|
$ |
|
||||
|
|
||||||||
|
Operating lease liabilities, current |
$ |
|
$ |
|
||||
|
Operating lease liabilities, non-current |
|
|
||||||
|
|
||||||||
|
Total operating lease liabilities |
$ |
|
$ |
|
||||
|
Weighted average remaining lease term (years) |
|
|
||||||
|
Weighted average discount rate of operating leases |
|
% |
|
% | ||||
Additional
information regarding the Company’s operating leases:
|
Year
ended December 31,
|
||||||||||||
|
2025
|
2024
|
2023
|
||||||||||
|
Operating lease costs
|
$
|
|
$
|
|
$
|
|
||||||
|
Variable lease payments
|
$
|
|
$
|
|
$
|
|
||||||
|
Short term lease costs
|
$
|
|
$
|
|
$
|
|
||||||
|
Cash paid for operating leases, net of operating cash flows from lease incentives received |
$
|
|
$
|
|
$
|
|
||||||
Minimum
lease payments over the remaining lease periods as of December 31, 2025, are as follows:
|
Year ended December 31, |
||||
|
2026 |
$ |
|
||
|
2027 |
|
|||
|
2028 |
|
|||
|
2029 |
|
|||
|
2030 and thereafter |
|
|||
|
|
||||
|
Total undiscounted lease payments |
$ |
|
||
|
|
||||
|
Less: interest |
|
|||
|
|
||||
|
Present value of lease liabilities |
$ |
|
||
F - 23
INNOVIZ
TECHNOLOGIES LTD. AND ITS SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
U.S.
dollars in thousands (except share and per share data)
| NOTE 7: - | FAIR VALUE MEASUREMENTS |
The
below table sets forth the Company’s assets and liabilities that were measured at fair value as of December 31, 2025 by level within
the fair value hierarchy:
| December 31, 2025 | ||||||||||||||||
|
|
Level 1 |
Level 2 |
Level 3 |
Total |
||||||||||||
|
Assets: |
||||||||||||||||
|
Marketable securities |
$ |
|
$ |
|
$ |
|
$ |
|
||||||||
|
|
||||||||||||||||
|
Total financial assets |
$ |
|
$ |
|
$ |
|
$ |
|
||||||||
|
Liabilities: |
||||||||||||||||
|
Warrants (1) |
$ | $ |
$ |
|
$ |
|
||||||||||
|
Total financial liabilities |
$ | $ |
$ |
|
$ |
|
||||||||||
The
below table sets forth the Company’s assets and liabilities that were measured at fair value as of December 31, 2024 by level within
the fair value hierarchy:
|
|
December 31, 2024 |
|||||||||||||||
|
|
Level 1 |
Level 2 |
Level 3 |
Total |
||||||||||||
|
Assets: |
||||||||||||||||
|
Marketable securities |
$ |
|
$ |
|
$ |
|
$ |
|
||||||||
|
|
||||||||||||||||
|
Total financial assets |
$ |
|
$ |
|
$ |
|
$ |
|
||||||||
|
Liabilities: |
||||||||||||||||
|
Warrants (1) |
$ |
|
$ |
|
$ |
|
$ |
|
||||||||
|
Total financial liabilities |
$ |
|
$ |
|
$ |
|
$ |
|
||||||||
| (1) |
As part of the Transactions, the Company assumed a derivative warrants liability related to previously issued private placement warrants
in connection with Collective Growth’s initial public offering (see Note 12). The Company utilizes a Black-Scholes option pricing
model to estimate the fair value of the private placement warrants which is considered a Level 3 fair value measurement. The warrants
are measured at each reporting period, with changes in fair value recognized in financing income, net. |
The
change in the fair value of the derivative private warrants liability for the years ended December 31, 2025, 2024 and 2023 is summarized
as follows:
|
Year ended December 31, |
||||||||||||
|
2025 |
2024 |
2023 |
||||||||||
|
Balance at the beginning of the year |
$ |
|
$ |
|
$ |
|
||||||
|
Change in fair value of warrants liability |
(
|
) |
(
|
) |
(
|
) | ||||||
|
Reclassification of warrants liability to equity |
(
|
) |
|
(
|
) | |||||||
|
Balance at the end of the year |
$ |
|
$ |
|
$ |
|
||||||
F - 24
INNOVIZ
TECHNOLOGIES LTD. AND ITS SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
U.S.
dollars in thousands (except share and per share data)
| NOTE 8: - |
ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES |
Accrued
expenses and other current liabilities consisted of the following:
|
December 31, |
||||||||
|
2025 |
2024 |
|||||||
|
Warranty provision |
$ |
|
$ |
|
||||
|
Accrued expenses |
|
|
||||||
|
Fixed assets creditors |
|
|
||||||
|
Others |
|
|
||||||
|
|
||||||||
|
$ |
|
$ |
|
|||||
| NOTE 9: - |
COMMITMENTS AND CONTINGENCIES
|
Legal
proceedings:
On
March 28, 2024, a putative class action lawsuit was filed in the Delaware Court of Chancery against several former officers and directors
of Collective Growth (the “Defendants”) which relates to events preceding the Transactions.
Under the Transactions agreements, the Company may be required to honor all rights to indemnification or exculpation existing in favor
of the directors and officers of Collective Growth, as were in effect prior to the Closing Date, solely with respect to any matters occurring
on or prior to the Closing Date. The lawsuit generally alleges that the Defendants impaired
Collective Growth’s public stockholders’ ability to exercise their redemption on an informed basis in connection with the
Transactions, by failing to disclose material information in the proxy statement concerning the Defendants’ interests relating to
the Transactions and the net cash per share that Collective Growth could contribute to the Transactions. The lawsuit asserts claims for
breach of fiduciary duty and unjust enrichment.
On
August 9, 2024, an amended complaint was filed, and in response, on August 23, 2024, the Defendants’ legal counsel filed a motion
to dismiss. On November 19, 2025, the court granted the Defendants’ motion to dismiss with prejudice. On the same day, November
19, 2025, the plaintiff filed a notice of appeal. On January 9, 2026, the plaintiff filed its opening appellate brief. On February 9,
2026, the Defendants filed their answering appellate brief. Plaintiff filed its reply brief on February 27, 2026, and briefing on plaintiff’s
appeal was completed.
The
Defendants intend to vigorously defend against the claim.
As
of the date hereof, the Company, with advice of its legal counsel, is unable to estimate the likelihood of an outcome, favorable or unfavorable
to the Company. Hence, an estimated liability has not been recorded in the consolidated financial statements.
F - 25
INNOVIZ
TECHNOLOGIES LTD. AND ITS SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
U.S.
dollars in thousands (except share and per share data)
| NOTE 9: - |
COMMITMENTS
AND CONTINGENCIES (Cont.) |
Other
than noted above, the Company is currently not part, as plaintiff or defendant, to any legal proceedings that, individually or in the
aggregate, are expected by the Company to have a material effect on the Company's business, financial position, results of operations
or cash flows.
The
Company reviews the status of each matter and assesses its potential financial exposure. If the potential loss from any claim or legal
proceeding is considered probable and the amount can be reasonably estimated, the Company accrues a liability for the estimated loss.
These accruals are reviewed quarterly and adjusted to reflect the impact of negotiations, settlements, rulings, advice of legal counsel
and other information and events pertaining to a matter.
| NOTE 10: - |
SHAREHOLDERS’ EQUITY
|
| a. |
Composition of share capital:
|
|
December
31, |
||||||||||||||||
|
2025
|
2024
|
|||||||||||||||
|
Authorized
|
Issued
and outstanding |
Authorized
|
Issued
and outstanding |
|||||||||||||
|
Number
of Shares |
Number
of Shares |
|||||||||||||||
|
Ordinary
shares of no-par value (1) |
|
|
|
|
||||||||||||
| (1) |
Ordinary shares confer upon the holders the right
to vote in annual and special meetings of the Company, and to participate in the distribution of the surplus assets of the Company
upon liquidation of the Company. |
| b. |
On August 14, 2023 and on September 12, 2023,
the Company issued a total of
|
| c. |
On February 12, 2025, the Company issued a total
of |
| d. |
On August 13, 2025, the Company entered into an
Open Market Sale Agreement (the “Sales Agreement”) with a sales agent. In accordance with the terms of the Sales Agreement,
the Company may offer and sell its ordinary shares from time to time through the sales agent, having an aggregate offering price of up
to $ |
As
of December 31, 2025, the Company issued 9,252,639 ordinary
shares of no-par value under the Sales Agreement for a total consideration of $13,272 ,
net of sales agent fees and other issuance costs of $1,023 .
F - 26
INNOVIZ
TECHNOLOGIES LTD. AND ITS SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
U.S.
dollars in thousands (except share and per share data)
| NOTE 11: - |
SHARE-BASED COMPENSATION
|
| a. |
Share incentive plans: |
In
2016, the Company’s Board of Directors adopted an Employee Shares Incentive Plan (the “2016 Plan”). Under the 2016 Plan,
options may be granted to employees, officers, consultants and directors of the Company and its subsidiaries.
The
2016 plan was terminated in 2021, although option awards outstanding as of that date will continue in full force in accordance with the
terms under which they were granted.
In
2021, the Company’s Board of Directors adopted a new Share Incentive Plan (the “2021 Plan”). According to the 2021 Plan,
share awards, options to purchase shares or restricted share units (RSUs) may be granted to employees, directors, consultants and other
service providers of the Company or any affiliate of the Company.
Under
the 2021 Plan, as of December 31, 2025, a total of 579,177
shares were still available for future grant. Each option granted under the 2021 Plan expires no later than seven
years from the date of grant. The options vest primarily over four
years of employment unless the Board of Directors and the Board of Director’s
Compensation Committee determines otherwise. Any option which is forfeited or cancelled before expiration becomes available for future
grants.
| b. |
Options granted: |
The
fair value of the Company’s share options granted for the years ended December 31, 2025, 2024 and 2023, was estimated using the
following weighted average assumptions:
|
Year
ended December 31, | |||||
|
2025
|
2024
|
2023
| |||
|
Expected
term, in years |
|
|
| ||
|
Expected
volatility |
|
|
| ||
|
Risk-free
interest rate |
|
|
| ||
|
Expected
dividend yield |
|
|
| ||
F - 27
INNOVIZ
TECHNOLOGIES LTD. AND ITS SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
U.S.
dollars in thousands (except share and per share data)
| NOTE 11: - |
SHARE-BASED
COMPENSATION (Cont.) |
The
weighted-average grant date fair value of options granted during the years ended December 31, 2025, 2024 and 2023, was $0.88 ,
$0.47
and $2.26 ,
respectively.
Exercise
price - from the date the Company became public, the fair value of each ordinary share was based on the closing price of the
Company’s publicly traded ordinary shares as reported on the date of the grant.
Expected
volatility - as the Company became public in April 2021, there is not sufficient historical volatility for the expected term of
the share options. Therefore, the Company uses an average historical share price volatility based on an analysis of reported data for
a peer group of comparable publicly traded companies which were selected based upon industry similarities.
Expected
term (years) - represents the period that the Company’s options granted are expected to be outstanding. There is not sufficient
historical share exercise data to calculate the expected term of the share options. Therefore, the Company elected to utilize the simplified
method to value option grants. Under this approach, the weighted-average expected life is presumed to be the average of the shortest vesting
term and the contractual term of the option.
Risk-free
interest rate - the Company determined the risk-free interest rate by using a weighted-average equivalent to the expected term
based on the U.S. Treasury yield curve in effect as of the date of grant.
Expected
dividend yield - since inception, the Company has not paid and does not anticipate paying any dividends in the foreseeable future.
Thus, the Company used 0 %
as its expected dividend yield.
A
summary of option balances as of December 31, 2025, and changes during the year then ended are as follows:
|
Number
of options |
Weighted-average
exercise price |
Weighted-
average remaining contractual term (in years) |
Aggregate
intrinsic value |
|||||||||||||
|
Outstanding at January
1, 2025 |
|
$
|
|
|
$
|
|
||||||||||
|
Granted
|
|
$
|
|
|||||||||||||
|
Exercised
|
|
$
|
|
$
|
|
|||||||||||
|
Forfeited
|
|
$
|
|
|||||||||||||
|
Expired
|
|
$
|
|
|||||||||||||
|
Outstanding at December
31, 2025 |
|
$
|
|
|
$
|
|
||||||||||
|
Exercisable at December
31, 2025 |
|
$
|
|
|
$
|
|
||||||||||
F - 28
INNOVIZ
TECHNOLOGIES LTD. AND ITS SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
U.S.
dollars in thousands (except share and per share data)
| NOTE 11: - |
SHARE-BASED
COMPENSATION (Cont.) |
| c. |
RSUs and PSUs granted: |
A
summary of RSUs and PSUs activity for the year ended December 31, 2025, is as follows:
|
Number
of shares |
Weighted
average grant date fair value per share |
|||||||
|
Unvested as of January
1, 2025 |
|
$
|
|
|||||
|
Granted
|
|
$
|
|
|||||
|
Vested
|
|
$
|
|
|||||
|
Forfeited
|
|
$
|
|
|||||
|
Unvested as of December
31, 2025 |
|
$
|
|
|||||
| d. |
CEO grant:
|
On
December 16, 2025, the Company’s general meeting of shareholders approved an equity grant for the Company’s CEO of 6,256,265
Performance Share Units (“PSUs”), with vesting conditions subject to both achievement of long-term ordinary share price performance
criteria (ranging between $2.0
and $5.5 )
and continued employment on each applicable vesting date.
The
fair value of the Company’s PSUs was estimated using a Monte-Carlo pricing model under the following assumptions:
|
Year
ended December, 31,2025 | ||
|
Share price
|
$ |
|
|
Expected volatility
|
||
|
Risk-free interest rate
|
||
|
Expected dividend yield
|
||
|
Expected term (years)
|
||
The
grant date fair value of the award was $5,891 .
The share price value was based on the market closing price as of the grant date. The Company estimates the expected volatility of the
PSUs based on the historical volatility of the Company’s share price and of a selected peer companies that matches the expected
remaining life of the PSUs. The risk-free interest rate was determined based on the U.S. Treasury zero-coupon yield curve as of the grant
date for a maturity similar to the expected term of the PSUs.
F - 29
INNOVIZ
TECHNOLOGIES LTD. AND ITS SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
U.S.
dollars in thousands (except share and per share data)
| NOTE 11: - |
SHARE-BASED
COMPENSATION (Cont.) |
| e. |
The total share-based compensation expense related
to all of the Company’s equity-based awards, which include options, RSUs and PSUs recognized in the Company’s consolidated
statements of operations are as follow: |
|
Year
ended December 31, |
||||||||||||
|
2025
|
2024
|
2023
|
||||||||||
|
Cost of revenues
|
$
|
|
$
|
|
$
|
|
||||||
|
Research and development
|
|
|
|
|||||||||
|
Sales and marketing
|
|
|
|
|||||||||
|
General and administrative
|
|
|
|
|||||||||
|
|
||||||||||||
|
$
|
|
$
|
|
$
|
|
|||||||
As
of December 31, 2025, unrecognized compensation cost related to share options, RSUs and PSUs was $32,997 ,
which is expected to be recognized over a weighted average period of 3.20
years.
| NOTE 12: - |
WARRANTS OVER ORDINARY
SHARES |
Upon
the closing of the Transactions, 16,231,241
warrants were issued (including warrants to Perception and Antara), out of which 14,312,491
public warrants and 1,918,750
private warrants. These warrants were issued by Collective Growth prior to the Transactions, assumed by the Company and became Company
Warrants outstanding to purchase Company ordinary shares.
Each
warrant entitles the holder to purchase one Company ordinary share at a price of $11.50 five
years 0.01 18
As
of December 31, 2025, 1,631,250
private warrants are no longer held by their initial purchasers or their permitted transferees. As a result, such private warrants have
the same terms as the public warrants and were classified to equity. As of December 31, 2025, 287,500
private warrants remain outstanding.
F - 30
INNOVIZ
TECHNOLOGIES LTD. AND ITS SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
U.S.
dollars in thousands (except share and per share data)
| NOTE 13: - |
TAXES
ON INCOME |
| a. |
Corporate tax rates in Israel:
|
The
corporate tax rate in Israel is 23 %.
| b. |
Income taxes of non-Israeli subsidiaries:
|
Non-Israeli
subsidiaries are taxed according to the tax laws in their respective countries of residence.
| c. |
Carryforward tax losses and credits:
|
As
of December 31, 2025, the Company had operating loss carry forwards for Israeli income tax purposes of approximately $705,000 which
may be offset indefinitely against future taxable income.
| d. |
Deferred income taxes:
|
Deferred
income taxes reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial
reporting purposes and the amounts used for income tax purposes. The principal components of the Company’s deferred tax assets are
as follows:
|
December
31, |
||||||||
|
2025
|
2024
|
|||||||
|
Deferred tax assets:
|
||||||||
|
Net operating
loss carryforward |
$
|
|
$
|
|
||||
|
Research
and development costs carryforward |
|
|
||||||
|
Capital
loss carryforward |
|
|
||||||
|
Inventory
provision |
|
|
||||||
|
Accrued
expenses |
|
|
||||||
|
Property
and equipment |
|
|
||||||
|
Lease
liabilities |
|
|
||||||
|
Other
|
|
|
||||||
|
Total deferred tax assets
|
|
|
||||||
|
Valuation allowance
|
(
|
)
|
(
|
)
| ||||
|
Deferred tax liabilities:
|
||||||||
|
Right-of-use
assets |
(
|
)
|
(
|
)
| ||||
|
Other
|
(
|
)
|
(
|
)
| ||||
|
Total deferred tax liabilities
|
(
|
)
|
(
|
)
| ||||
|
Net deferred tax
|
$
|
|
$
|
|
||||
F - 31
INNOVIZ
TECHNOLOGIES LTD. AND ITS SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
U.S.
dollars in thousands (except share and per share data)
| NOTE 13: - |
TAXES
ON INCOME (Cont.) |
Based
on the available evidence, management believes that it is more likely than not that certain of its deferred tax assets relating to net
operating loss carryforwards and other temporary differences in Israel will not be realized and accordingly a valuation allowance has
been provided.
As
of December 31, 2025, and 2024, the Company has not provided a deferred tax liability in respect of cumulative undistributed earnings
relating to the Company’s foreign subsidiaries, as the Company intends to keep these earnings permanently invested.
| e. |
Loss before taxes on income is comprised as follows:
|
|
Year
ended December 31, |
||||||||||||
|
2025
|
2024
|
2023
|
||||||||||
|
Domestic (Israel)
|
$
|
(
|
)
|
$
|
(
|
)
|
$
|
(
|
)
| |||
|
Foreign
|
|
|
|
|||||||||
|
|
||||||||||||
|
Loss before taxes on
income |
$
|
(
|
)
|
$
|
(
|
)
|
$
|
(
|
)
| |||
| f. |
Income taxes are comprised as follows:
|
|
Year
ended December 31, |
||||||||||||
|
2025
|
2024
|
2023
|
||||||||||
|
Current
|
$
|
|
$
|
|
$
|
|
||||||
|
Domestic (Israel)
|
|
|
|
|||||||||
|
Foreign
|
|
|
|
|||||||||
|
|
||||||||||||
|
Income taxes
|
$
|
|
$
|
|
$
|
|
||||||
| g. |
The reconciliation of the tax benefit at the Israeli
statutory tax rate to the Company’s income taxes is as follows: |
|
Year
ended December 31, |
||||||||||||
|
2025
|
2024
|
2023
|
||||||||||
|
Israel tax provision
at statutory rate |
|
%
|
|
%
|
|
%
| ||||||
|
Non-deductible share-based
compensation |
(
|
)%
|
(
|
)%
|
(
|
)%
| ||||||
|
Effect of other permanent
differences |
(
|
)%
|
(
|
)%
|
(
|
)%
| ||||||
|
Change in valuation allowance
|
(
|
)%
|
(
|
)%
|
(
|
)%
| ||||||
|
Issuance costs
|
|
%
|
|
%
|
|
%
| ||||||
|
Provision to return
|
|
|
|
%
| ||||||||
|
Capital losses
|
|
%
|
|
%
|
|
%
| ||||||
|
Other adjustments
|
(
|
)%
|
(
|
)%
|
|
%
| ||||||
|
|
||||||||||||
|
Effective tax rate
|
(
|
)%
|
(
|
)%
|
(
|
)%
| ||||||
F - 32
INNOVIZ
TECHNOLOGIES LTD. AND ITS SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
U.S.
dollars in thousands (except share and per share data)
| NOTE 13: - |
TAXES
ON INCOME (Cont.) |
| h. |
Tax assessments: |
The
Company’s tax assessments through 2019 are considered final.
As
of December 31, 2025, the tax returns of the Company are still subject to audits by the tax authorities for the tax years 2020 onwards.
| i. |
Uncertain tax positions: |
The
Company has reviewed the tax positions taken, or to be taken, in its tax returns for all tax years currently open to examination by a
taxing authority. As of December 31, 2025 and 2024, the Company has not recorded any uncertain tax position liability.
| NOTE 14: - |
BASIC AND DILUTED NET
LOSS PER SHARE |
The
following table sets forth the computation of the net loss per share for the period presented:
|
Year
ended December 31, |
||||||||||||
|
2025
|
2024
|
2023
|
||||||||||
|
Numerator:
|
||||||||||||
|
Net loss
|
$
|
(
|
)
|
$
|
(
|
)
|
$
|
(
|
)
| |||
|
Denominator:
|
||||||||||||
|
|
|
|
||||||||||
The
following potential ordinary shares have been excluded from the calculation of diluted net loss per share for the period presented due
to their anti-dilutive effect:
| a. |
|
| b. |
|
| c. |
|
F - 33
INNOVIZ
TECHNOLOGIES LTD. AND ITS SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
U.S.
dollars in thousands (except share and per share data)
| NOTE 15: - |
SEGMENT
INFORMATION |
| a. |
The Company operates
as a single operating segment in the LiDAR Sensors market. The Company’s Chief Operating Decision Maker (CODM) is its Chief Executive
Officer (CEO). The CODM makes decisions on resource allocation, assesses performance of the business and monitors budget versus actual
results on a consolidated basis. As such, the segment’s profit (loss) is the Company’s consolidated net income (loss) and
the segment’s assets are the Company’s consolidated assets. |
| b. |
Segment information: |
|
Year
ended December 31, |
||||||||||||
|
2025
|
2024
|
2023 | ||||||||||
|
Revenues
from external customers |
$
|
|
$
|
|
$
|
|
||||||
|
Less:
|
||||||||||||
|
Cost
of revenues |
|
|
|
|||||||||
|
Research
and development expenses |
|
|
|
|||||||||
|
Sales
and marketing expenses |
|
|
|
|||||||||
|
General
and administrative expenses |
|
|
|
|||||||||
|
Financial
income, net |
(
|
)
|
(
|
)
|
(
|
)
| ||||||
|
Taxes
on income |
|
|
|
|||||||||
|
Segment
loss |
$
|
|
$
|
|
$
|
|
||||||
|
Other
segment disclosures: |
||||||||||||
|
Depreciation
and amortization expenses |
$
|
|
$
|
|
$
|
|
||||||
|
Share-based
compensation expenses |
$
|
|
$
|
|
$
|
|
||||||
|
Interest
income |
$
|
|
$
|
|
$
|
|
||||||
|
Assets:
|
||||||||||||
|
Segment
assets |
$
|
|
$
|
|
$
|
|
||||||
|
Expenditures
for segment assets |
$
|
|
$
|
|
$
|
|
||||||
| c. |
Geographic information: |
Following
is a summary of revenues by geographic areas. Revenues attributed to geographic areas, based on the location where the customers accept
delivery of the products and services:
|
Year
ended December 31, |
||||||||||||
|
2025
|
2024
|
2023
|
||||||||||
|
Europe, Middle
East and Africa (*) |
$
|
|
$
|
|
$
|
|
||||||
|
North America
(**) |
|
|
|
|||||||||
|
Israel
|
|
|
|
|||||||||
|
Asia Pacific
|
|
|
|
|||||||||
|
$
|
|
$
|
|
$
|
|
|||||||
| (*) |
Includes revenues from Germany in the amount of
$ |
| (**) |
Includes revenues from United States in the amount
of $ | |
F - 34
INNOVIZ
TECHNOLOGIES LTD. AND ITS SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
U.S.
dollars in thousands (except share and per share data)
| NOTE 15: - |
SEGMENT
INFORMATION (Cont.) |
| d. |
The Company’s long-lived assets (property
and equipment, net and operating lease right-of-use assets, net) are located as follows: |
|
Year
ended December
31, |
||||||||
|
2025
|
2024
|
|||||||
|
Israel
|
$
|
|
$
|
|
||||
|
Germany
|
|
|
||||||
|
Others
|
|
|
||||||
|
|
||||||||
|
$
|
|
$
|
|
|||||
| e. |
Customers accounted for over 10% of revenues:
|
For
the year ended 2025, Customer A accounted for 81 %
of revenues.
For
the year ended 2024, Customer A and Customer B accounted for 55 %
and 20 %
of revenues, respectively.
For
the year ended 2023, Customer A and Customer C accounted for 48 %
and 47 %
of revenues, respectively.
| f. |
Concentration of credit risk from major customers:
|
As
of December 31, 2025, Customer A accounted for approximately 73 %
of the Company’s trade receivables.
As
of December 31, 2024, Customer A and Customer D accounted for approximately 73 %
and 23 %
of the Company’s trade receivables, respectively.
F - 35
FAQ
What does Innoviz Technologies (INVZ) do according to its 2025 Form 20-F?
Innoviz focuses on developing and selling LiDAR sensors and complementary software stacks for automotive and non‑automotive applications. The report cites use in advanced driver assistance, autonomous driving, as well as markets like industrial, robotics, perimeter security, intelligent transportation systems, smart cities and infrastructure.
How many Innoviz Technologies ordinary shares were outstanding at the end of 2025?
As of December 31, 2025, Innoviz had 214,090,980 ordinary shares outstanding. This figure provides context for equity-based financing tools the company may use, including its at‑the‑market program, and helps investors gauge potential dilution from any future share issuance described in the filing.
What are the main risks Innoviz Technologies (INVZ) highlights in its 2025 annual report?
The report stresses limited operating history, lack of near‑term profitability, dependence on a few major OEM customers, and challenges ramping LiDAR to mass production. It also cites supply-chain vulnerabilities, evolving regulations for autonomous systems, intellectual property disputes and potential product liability exposure as material business risks.
How much does Innoviz Technologies spend on research and development?
Innoviz reports research and development expenses of $56.5 million, $73.8 million and $92.7 million for 2025, 2024 and 2023. These substantial investments support new LiDAR products and software but weigh on profitability, reinforcing management’s statement that it does not expect to be profitable in the near term.
What financing options does Innoviz Technologies describe, including its ATM program?
Innoviz notes it will likely need additional capital and in August 2025 launched an at‑the‑market program allowing sales of ordinary shares up to $75 million through a sales agent. The company explains that market conditions, trading windows and share price may limit how much it can actually raise.
Which customers are most important to Innoviz Technologies’ revenue outlook?
The filing explains that Innoviz is substantially dependent on major automotive programs with BMW, Volkswagen brands via Cariad, Mobileye and Daimler Truck. Each represents a significant share of current and projected revenues, so cancellation, delay or alteration of these programs could materially affect its business.
What manufacturing milestones and risks does Innoviz Technologies report for its LiDAR products?
Innoviz states Magna began series production of InnovizOne for BMW in 2023, and that InnovizTwo moved to contract manufacturers with first series shipments in July 2025. It warns that quality issues, yield challenges, equipment failures or delays in ramping to mass production could increase costs and hurt customer relationships.
Innoviz Technologies Ltd