UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)


☒			QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended ~~September~~March 3031, ~~2025~~2026


☐			TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For transition period from to

Commission File Number 001-39688

Latch, Inc.

(Exact name of registrant as specified in its charter)


Delaware						85-3087759
(State or other jurisdiction of incorporation or organization)						(I.R.S. Employer Identification Number)

1220 N. Price Road, Suite 2

Olivette, Missouri 63132

(314) 227-1100

(Address, including zip code, and telephone number, including area code, of registrant’s principal executive offices)

Securities registered pursuant to Section 12(b) of the Act: None.

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. Yes ☒ No ☐

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). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.


Large accelerated filer	☐	Accelerated filer	☐
Non-accelerated filer	☒	Smaller reporting company	☒
		Emerging growth company	☐

If an emerging growth company, 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. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act): Yes ☐ No ☒

As of ~~February~~May 913, 2026, there were 164,257,801 shares of the registrant’s common stock outstanding.

CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS

This Quarterly Report on Form 10-Q (this “Form 10-Q”) contains forward-looking statements. We intend such forward-looking statements to be covered by the safe harbor provisions for forward-looking statements contained in Section 27A of the Securities Act of 1933, as amended (the “Securities Act”), and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). All statements other than statements of historical facts contained in this Form 10-Q, including statements concerning possible or assumed future actions, business strategies, events or results of operations, and any statements that refer to projections, forecasts or other characterizations of future events or circumstances, including any underlying assumptions, are forward-looking statements. These statements involve known and unknown risks, uncertainties and other important factors that may cause our actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by the forward-looking statements.

In some cases, you can identify forward-looking statements by terms such as “may,” “should,” “expect,” “plan,” “anticipate,” “could,” “intend,” “target,” “project,” “contemplate,” “believe,” “estimate,” “predict,” “potential” or “continue” or the negative of these terms or other similar expressions. We have based these forward-looking statements largely on our current expectations and projections about future events and financial trends that we believe may affect our business, financial condition and results of operations. These forward-looking statements speak only as of the date of this Form 10-Q and are subject to a number of important factors that could cause actual results to differ materially from those in the forward-looking statements, including the risks, uncertainties and assumptions described under the section in our Annual Report on Form 10-K for the year ended December 31, ~~2024~~2025 (the “~~2024~~2025 Annual Report”) filed with the Securities and Exchange Commission (the “SEC”), titled “Risk Factors,” as updated by Part II, Item 1A. “Risk Factors” in this Form 10-Q. These forward-looking statements are subject to numerous risks, including, without limitation, the following:

•our ability to remediate the material weaknesses we identified in our internal control over financial reporting or other findings in the Company’s 2022-2023 internal investigation, and the timing of such remediation;

•the performance of ~~the~~our ~~Company’s~~common stock, particularly given the limited liquidity and depressed trading prices of ~~the~~our ~~Company’s~~ common stock, aswhich ais ~~result~~trading ofon ~~delisting~~OTC ofMarkets ~~the~~Group ~~Company~~Inc.’s ~~securities~~(“OTC”) ~~from~~OTCID ~~The~~Basic ~~Nasdaq~~Market ~~Stock~~(the “OTCID Market”), ~~LLC~~and may not be listed on the OTCQX or OTCQB markets or a national securities exchange;

•~~whether~~developments ~~the~~in ~~Company’s common stock and warrants, which are trading on OTC Markets Group Inc.’s (“OTC”) Expert Market (~~the ~~“OTC~~pending ~~Expert~~derivative ~~Market”),~~actions ~~may remain on the OTC Expert Market rather than be listed on the OTCQX, OTCQB, OTCID~~ or ~~OTC~~other ~~Pink~~legal ~~Limited markets~~proceedings;

•developments in the pending stockholder class action and derivative complaints or other legal proceedings;

•regulatory disputes and governmental inquiries, including the SEC Investigation (as defined below);

•privacy and data protection laws, privacy or data breaches, or the loss of data;

•the impact of changes in consumer spending patterns, consumer preferences, local, regional and national economic conditions, crime, weather, demographic trends and employee availability;

•increases in component costs, long lead times, supply shortages and other disruptions to our supply chain;

•delays in construction timelines at our customers’ building sites;

•any defects in new products or enhancements to existing products;

•our ability to continue to develop new products, services and innovations to meet constantly evolving customer demands;

•our ability to hire, retain, manage and motivate employees, including key personnel;

•the impact of workforce reductions on our business, financial condition and results of operations;

•our ability to improve operating and financial results and attain profitability;

•compliance with laws and regulations applicable to our business;

•the impact of macroeconomic conditions on our business, our suppliers and our existing and potential customers;

•our ability to upgrade and maintain our information technology systems;

•our ability to create, acquire and protect intellectual property;

•our ability to successfully identify, complete, integrate and realize synergies from acquisitions, including the ability to retain key personnel from such acquisitions; and

•the potential adverse impact of any future acquisitions, including the potential increase in risks already existing in our operations, poor performance or decline in value of acquired businesses and unexpected costs or liabilities that may arise ~~from any future acquisitions~~.

Because forward-looking statements are inherently subject to risks and uncertainties, some of which cannot be predicted or quantified and some of which are beyond our control, you should not rely on these forward-looking statements as predictions of future events. The events and circumstances reflected in our forward-looking statements may not be achieved or occur, and actual results could differ materially from those projected in the forward-looking statements. Moreover, we operate in an evolving environment. New risk factors and uncertainties may emerge from time to time, and it is not possible for management to predict all risk factors and uncertainties. As a result of these factors, we cannot assure you that the forward-

evolving environment. New risk factors and uncertainties may emerge from time to time, and it is not possible for management to predict all risk factors and uncertainties. As a result of these factors, we cannot assure you that the forward-looking statements in this Form 10-Q will prove to be accurate. Except as required by applicable law, we do not plan to publicly update or revise any forward-looking statements contained herein, whether as a result of any new information, future events, changed circumstances or otherwise.

You should read this Form 10-Q completely and with the understanding that our actual future results may be materially different from what we expect. We qualify all of our forward-looking statements by these cautionary statements.

Latch, Inc. and Subsidiaries

Form 10-Q

Table of Contents

			Page
Part I - Financial Information			1
Item 1. Financial Statements (unaudited)			1
Condensed Consolidated Balance Sheets (unaudited) as of September 30, 2025 and December 31, 2024			1
Condensed Consolidated Balance Sheets (unaudited) as of March 31, 2026 and December 31, 2025			1
Condensed Consolidated Statements of Operations and Comprehensive Loss (unaudited) for the three and nine months ended September 30, 2025 and 2024			2
Condensed Consolidated Statements of Operations and Comprehensive Loss (unaudited) for the three months ended March 31, 2026 and 2025			2
Condensed Consolidated Statements of Stockholders’ Equity (unaudited) for the three and nine months ended September 30, 2025 and 2024			3
Condensed Consolidated Statements of Stockholders’ Equity (unaudited) for the three months ended March 31, 2026 and 2025			3
Condensed Consolidated Statements of Cash Flows (unaudited) for the nine months ended September 30, 2025 and 2024			5
Condensed Consolidated Statements of Cash Flows (unaudited) for the three months ended March 31, 2026 and 2025			4
Notes to Condensed Consolidated Financial Statements (unaudited)			65
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations			2624
Item 3. Quantitative and Qualitative Disclosures About Market Risk			3733
Item 4. Controls and Procedures			3733
Part II - Other Information			4137
Item 1. Legal Proceedings			4137
Item 1A. Risk Factors			4137
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds			4137
Item 3. Defaults Upon Senior Securities			4137
Item 4. Mine Safety Disclosures			4137
Item 5. Other Information			4137
Item 6. Exhibits			4238
Signatures			4339

Part I. Financial Information

Item 1. Financial Statements

Latch, Inc. and Subsidiaries

Condensed Consolidated Balance Sheets (unaudited)

(in thousands, except share amounts)

September 30, 2025

December 31, 2024

March 31, 2026

December 31, 2025

Assets

Current assets

Cash and cash equivalents

4227,~~576~~945

7034,~~203~~620

Available-for-sale securities

~~1,733~~576

~~5,187~~—

Accounts receivable, net

75,~~918~~903

97,~~864~~960

Inventories, net current

1512,~~124~~708

1415,~~376~~258

Prepaid expenses and other current assets

1210,~~262~~526

307,~~523~~098

Total current assets

7957,~~613~~658

~~130~~64,~~153~~936

Property and equipment, net

~~921~~800

~~1,073~~835

Internally-developed software, net

98,~~061~~320

108,~~748~~382

Inventories, net non-current

1412,~~612~~266

1612,~~082~~080

Goodwill

3013,~~205~~605

Intangible assets, net

2,~~382~~211

2,~~584~~297

Other non-current assets

4,~~819~~511

54,~~579~~667

Total assets

~~141~~99,~~613~~371

~~196~~106,~~424~~802

Liabilities and Stockholders’ Equity

Current liabilities

Accounts payable

64,~~993~~901

74,~~821~~447

Accrued expenses

12,910

35,066

Deferred revenue, current

11,451

11,900

Current portion of long-term debt

1,314

Other current liabilities

730

1,092

Accrued expenses

10,171

10,458

Total current liabilities

33,398

57,193

Deferred revenue, current

10,912

11,237

Deferred revenue, non-current

16,506

21,282

Other current liabilities

782

790

Long-term debt

3,655

4,515

Total current liabilities

28,080

28,246

Other non-current liabilities

2,175

2,251

Deferred revenue, non-current

13,955

15,138

Total liabilities

55,734

85,241

Long-term debt

3,007

3,330

Commitments and contingencies (see Note 15)

Other non-current liabilities

2,071

2,077

Stockholders’ equity

Total liabilities

47,113

48,791

Common stock - $0.0001 par value, 1,000,000,000 shares authorized; 163,296,812 and 164,087,277 shares issued and outstanding as of September 30, 2025 and December 31, 2024, respectively(1)

Commitments and contingencies (see Note 14)

Stockholders' equity

Common stock - $0.0001 par value, 1,000,000,000 shares authorized; 163,519,801 and 163,519,801 shares issued and outstanding as of March 31, 2026 and December 31, 2025, respectively(1)

Treasury stock

(1)

Additional paid-in capital

770,~~238~~578

~~769~~770,~~866~~423

Accumulated other comprehensive income

2669

2139

Accumulated deficit

(~~684~~718,~~403~~407)

(~~658~~712,~~722~~469)

Total stockholders’ equity

8552,~~879~~258

~~111~~58,~~183~~011

Total liabilities and stockholders’ equity

~~141~~99,~~613~~371

~~196~~106,~~424~~802

(1)Shares issued and outstanding exclude 738,000 shares subject to vesting requirements held by TS Innovation Acquisitions Sponsor, L.L.C. (the “Sponsor”) related to the 2021 business combination (the “Sponsor Shares”).

See accompanying notes to the condensed consolidated financial statements.

Latch, Inc. and Subsidiaries

Condensed Consolidated Statements of Operations and Comprehensive Loss (unaudited)

(in thousands, except share and per share amounts)

Three Months Ended September 30,

Nine Months Ended September 30,

Three Months Ended March 31,

2025

2024

2025

2024

2026

2025

Revenue

Hardware

54,~~146~~357

34,~~611~~037

~~15,099~~

~~13,837~~

Software

56,~~370~~143

5,~~077~~159

~~15,773~~

~~15,136~~

Professional services

65,~~910~~202

6,~~255~~578

~~21,383~~

~~10,943~~

Total revenue

1715,~~426~~702

1415,~~943~~774

~~52,255~~

~~39,916~~

Cost of revenue(1)

Hardware

3,~~927~~218

3,~~537~~303

~~11,380~~

~~10,914~~

Software

~~502~~531

~~519~~551

~~1,556~~

~~1,449~~

Professional services

53,~~279~~734

4,~~812~~441

~~15,926~~

~~9,092~~

Total cost of revenue

97,~~708~~483

8,~~868~~295

~~28,862~~

~~21,455~~

Operating expenses

Research and development

3,~~759~~793

45,~~875~~633

~~13,846~~

~~12,016~~

Sales and marketing

34,~~995~~272

3,~~954~~577

~~11,722~~

~~8,705~~

General and administrative

54,~~019~~691

127,~~827~~771

~~18,646~~

~~41,402~~

Depreciation and amortization

1,~~271~~007

1,~~805~~522

~~4,113~~

~~5,515~~

Total operating expenses

1413,~~044~~763

2318,~~461~~503

~~48,327~~

~~67,638~~

Loss from operations

(65,~~326~~544)

(1711,~~386~~024)

~~(24,934)~~

~~(49,177)~~

Other (expense) income, net

Other expense, net

Change in fair value of warrant liability

(61)

(38)

(62)

Interest expense, net

(323)

(253)

Interest (expense) income, net

(251)

405

(785)

1,372

Change in fair value of warrant liability

(37)

Other (expense) income, net

(3634)

~~(14)~~64

~~239~~

Total other (expense) income, net

(256)

330

(747)

1,549

Total other expense, net

(394)

(226)

Loss before income taxes

(65,~~582~~938)

(1711,~~056~~250)

~~(25,681)~~

~~(47,628)~~

Provision for income taxes

—

Net loss

(65,~~582~~938)

(1711,~~056~~250)

~~(25,681)~~

~~(47,630)~~

Other comprehensive income (loss)

Unrealized gain (loss) on available-for-sale securities

—

(16)

(31)

Unrealized loss on available-for-sale securities

(3)

(14)

Foreign currency translation adjustment

3233

~~(9)~~4

~~(7)~~

Comprehensive loss

(65,~~550~~908)

(1711,~~052~~260)

~~(25,676)~~

~~(47,668)~~

Net loss per common share:

Basic and diluted net loss per common share

(0.04)

(0.1107)

~~(0.16)~~

~~(0.30)~~

Weighted average shares outstanding:

Basic and diluted

160,~~435~~658,~~461~~450

~~156~~160,~~386~~272,~~470~~142

~~160,375,254~~

~~156,386,470~~

(1)Exclusive of depreciation and amortization shown in operating expenses.

See accompanying notes to the condensed consolidated financial statements.

Latch, Inc. and Subsidiaries

Condensed Consolidated Statements of Stockholders’ Equity (unaudited)

(in thousands)

	Common Stock(1)			AdditionalPaid-InCapital		~~Accumulated~~Treasury ~~OtherComprehensiveIncome~~Stock ~~(Loss)~~Amount		~~AccumulatedDeficit~~Accumulated OtherComprehensiveIncome (Loss)		~~TotalStockholders’ Equity~~AccumulatedDeficit		TotalStockholders’ Equity
	Shares	Amount
January 1, 2024	175,462	$	19	$	770,196	$	48	$	(601,126)	$	169,137
January 1, 2025	164,087	$	19	$	769,866	$	(1)	$	21	$	(658,722)	$	111,183
Stock-based compensation	—	—		~~2,119~~247		—		—		~~2,119~~—		247
Foreign currency translation adjustment	—	—		—		6—		—4		6—		4
Unrealized loss on available-for-sale securities	—	—		—		~~(35)~~—		—(14)		~~(35)~~—		(14)
Net loss	—	—		—		—		~~(13,637)~~—		(1311,~~637~~250)		(11,250)
March 31, 2024	175,462	19		772,315		19		(614,763)		157,590
March 31, 2025	164,087	$	19	$	770,113	$	(1)	$	11	$	(669,972)	$	100,170
Stock-based compensation	—	—		1,979		—		—		1,979
Foreign currency translation adjustment	—	—		—		(4)		—		(4)
Unrealized loss on available-for-sale securities	—	—		—		(9)		—		(9)
Net loss	—	—		—		—		(16,937)		(16,937)
June 30, 2024	175,462	19		774,294		6		(631,700)		142,619
Foreign currency translation adjustment	—	—		—		(9)		—		(9)
Stock-based compensation	—	—		1,832		—		—		1,832
Unrealized gain on available-for-sale securities	—	—		—		13		—		13
Net loss	—	—		—		—		(17,056)		(17,056)
September 30, 2024	175,462	$	19	$	776,126	$	10	$	(648,756)	$	127,399

(1)Shares issued and outstanding exclude 738,000 Sponsor Shares subject to vesting requirements.


	Common Stock(1)			Additional Paid-In Capital		Treasury Stock Amount		Accumulated Other Comprehensive Income (Loss)		Accumulated Deficit		Total Stockholders’ Equity
	Shares	Amount
January 1, 2026	164,087	$	19	$	770,423	$	(1)	$	39	$	(712,469)	$	58,011





Stock-based compensation	—	—		155		—		—		—		155
Foreign translation adjustment	—	—		—		—		33		—		33
Unrealized loss on available-for-sale securities	—	—		—		—		(3)		—		(3)
Net loss	—	—		—		—		—		(5,938)		(5,938)
March 31, 2026	164,087	$	19	$	770,578	$	(1)	$	69	$	(718,407)	$	52,258

Latch, Inc. and Subsidiaries

Condensed Consolidated Statement of Stockholders’ Equity (unaudited)

(in thousands)

	Common Stock(1)			AdditionalPaid-InCapital		Treasury Stock Amount		Accumulated OtherComprehensiveIncome (Loss)		AccumulatedDeficit		TotalStockholders’ Equity
	Shares	Amount
January 1, 2025	164,087	$	19	$	769,866	$	(1)	$	21	$	(658,722)	$	111,183
Stock-based compensation	—	—		247		—		—		—		247
Foreign currency translation adjustment	—	—		—		—		4		—		4
Unrealized loss on available-for-sale securities	—	—		—		—		(14)		—		(14)
Net loss	—	—		—		—		—		(11,250)		(11,250)
March 31, 2025	164,087	19		770,113		$	(1)	11		(669,972)		100,170
Stock-based compensation	—	—		(46)		—		—		—		(46)
Foreign currency translation adjustment	—	—		—		—		(15)		—		(15)
Unrealized loss on available-for-sale securities	—	—		—		—		(2)		—		(2)
Net loss	—	—		—		—		—		(7,849)		(7,849)
June 30, 2025	164,087	19		770,067		(1)		(6)		(677,821)		92,258
Stock-based compensation	—	—		171		—		—		—		171
Foreign currency translation adjustment	—	—		—		—		32		—		32
Net loss	—	—		—		—		—		(6,582)		(6,582)
September 30, 2025	164,087	$	19	$	770,238	(1)		$	26	$	(684,403)	$	85,879

(1)Shares issued and outstanding exclude 738,000 Sponsor Shares subject to vesting requirements.

See accompanying notes to the condensed consolidated financial statements.

Latch, Inc. and Subsidiaries

Condensed Consolidated Statements of Cash Flows (unaudited)

(in thousands)

	Nine Months Ended September 30,
	Three Months Ended March 31,
	2025		2024
	2026		2025
Operating activities
Net loss	$	(255,~~681~~938)	$	(4711,~~630~~250)
Adjustments to reconcile net loss to net cash used by operating activities
Depreciation and amortization	41,~~113~~007		51,~~515~~522
Non-cash interest income	(~~149~~4)		(~~1,101~~74)
Change in fair value of warrant liability	3837		6237
Unrealized (income) loss on marketable securities	(14)		89
Change in unrealized loss on marketable securities	(3)		(12)
Realized loss on available-for-sale securities	—		1
Provision for expected credit losses, net of recoveries	(22)		38
Impairment loss on long-lived assets	—		189
Provision for credit losses on contract assets	(3)		(9)
Provision for expected credit losses, net of recoveries	87		(124)
Stock-based compensation expense	154		251
Provision for credit losses on contract assets	(12)		(143)
Stock-based compensation expense	368		5,761
Changes in assets and liabilities (excluding effects of acquisitions)
Accounts receivable	12,~~859~~079		(32,~~406~~698)
Inventories, net	~~722~~2,364		2(3,~~220~~009)
Prepaid expenses and other current assets	18(3,~~280~~416)		~~822~~15,534
Other non-current assets	~~904~~(23)		~~315~~610
Accounts payable	~~(827)~~449		(1,~~085~~766)
Accrued expenses	(~~22,155~~275)		(176,~~147~~495)
Other current liabilities	(~~362~~8)		(12,~~448~~344)
Other non-current liabilities	(8533)		~~146~~(446)
Deferred revenue	(51,~~225~~508)		(~~5,008~~26)
Net cash used in operating activities	(285,~~139~~143)		(6110,~~972~~137)
Investing activities
Purchase of available-for-sale securities	(~~6,656~~572)		(114,~~897~~255)
Proceeds from sales and maturities of available-for-sale securities	~~10,257~~—		893,~~094~~562
Business acquisitions, net of cash acquired	—		(950)
Capitalized internally-developed software	(823)		(242)
Purchase of property and equipment	(74)		(230)
Net cash used in investing activities	(1,395)		(935)
Capitalized internally-developed software	(1,997)		(4,143)
Net cash provided by investing activities	1,530		71,874
Financing activities
Repayment of term loan	(~~889~~333)		—(223)
Repayment of unsecured promissory notes	—		(22,000)
Net cash used in financing activities	(333)		(223)
Net cash used in financing activities	(889)		(22,000)
Effect of exchange rate on cash	196		(191)
Effect of exchange rate on cash	(129)		14
Net change in cash and cash equivalents	(6,675)		(11,486)
Net change in cash and cash equivalents	(27,627)		(12,084)
Cash and cash equivalents
Beginning of period	7034,~~203~~620		9470,~~675~~203
End of period	$	4227,~~576~~945	$	8258,~~591~~717
Supplemental disclosure of non-cash investing and financing activities
Capitalization of stock-based compensation to internally developed software	$	41	$	~~169~~(4)
Net assets acquired as part of business acquisitions	$	—	$	2,067
Debt assumed/issued as part of business acquisitions	$	—	$	6,000

See accompanying notes to the condensed consolidated financial statements.

Latch, Inc. and Subsidiaries

Notes to Condensed Consolidated Financial Statements (unaudited)

(in thousands, except share and per share data)

1.DESCRIPTION OF BUSINESS

Latch, Inc. (collectively with its subsidiaries, the “Company”) iscombines aaccess ~~technology~~control ~~company~~hardware ~~delivering~~and ansmart ~~integrated~~home ~~ecosystem~~technology ofinto ~~hardware~~one unified platform connecting access, ~~software~~devices and ~~services~~property ~~designed~~data to ~~enhance~~improve operations ~~and~~across ~~experiences within buildings~~portfolios, primarily serving the multifamily ~~rental~~and ~~market~~student housing markets.

In August 2025, the Company rebranded as DOOR, although its legal name remains Latch, Inc. In connection with the rebrand to DOOR, Latch Systems, Inc., the Company’s primary operating entity and a wholly-owned subsidiary, changed its name to DOOR Systems, Inc. (“Legacy Latch,” ~~“Latch Systems”~~ or “DOOR Systems,” as the context requires). The Company, referred to herein interchangeably as “Latch” or “DOOR,” operates as one reportable segment and derives revenues primarily from operations in North America.

Basis of Presentation

The accompanying condensed consolidated financial statements have been prepared in accordance with generally accepted accounting principles in the United States of America (“GAAP”) for interim financial reporting and Article 10 of Regulation S-X. Accordingly, certain information and footnote disclosures normally included in financial statements prepared under GAAP have been condensed or omitted pursuant to the rules and regulations of the Securities and Exchange Commission (the “SEC”) for interim financial reporting. In the opinion of management, all adjustments considered necessary for a fair presentation of the Company’s financial position, results of operations and cash flows have been included and are of a normal and recurring nature.

The operating results presented for interim periods are not necessarily indicative of the results that may be expected for any other interim period or for the entire year. These financial statements should be read in conjunction with the Company’s consolidated financial statements and the notes thereto, which are included in the Annual Report on Form 10-K for the year ended December 31, ~~2024~~2025 (the “~~2024~~2025 Annual Report”).

Principles of Consolidation

The accompanying condensed consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries. All intercompany transactions have been eliminated in consolidation. Certain prior period amounts have been reclassified for consistency with the current period presentation. These reclassifications would not have a material effect on the reported financial results.

Use of Estimates

The preparation of condensed consolidated financial statements in accordance with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the condensed consolidated financial statements and the reported amounts of income and expense during the reporting period. Significant estimates are used when accounting for stock-based compensation, inventory valuation, goodwill and intangible asset impairments, business combinations and litigation. Management evaluates its estimates and assumptions on an ongoing basis using historical experience and other factors, including the current economic environment, and makes adjustments when facts and circumstances dictate. These estimates are based on information available as of the date of the condensed consolidated financial statements; actual results could differ from those estimates.

2.SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

There have been no material changes to the Company’s accounting policies since December 31, ~~2024~~2025, as described in Note 2. Summary of Significant Accounting Policies, in Part II, Item 8. “Financial Statements” in the ~~2024~~2025 Annual Report.

3.SEGMENT REPORTING

As of ~~September~~March 3031, ~~2025~~2026, the Company had one operating and reportable segment, as it reports financial information on an aggregate and consolidated basis. The Company’s chief operating decision maker (“CODM”) as of such date was the Chief Executive Officer. The CODM reviews results to assess performance, make decisions and allocate the Company’s operating and capital resources as a whole, on a consolidated basis. All of the Company’s revenue is attributable to one operating segment. The CODM does not distinguish among the Company’s principal business activities for the purpose of internal reporting and uses net loss to allocate resources in the annual budgeting and forecasting process, along with using that measure as a basis for evaluating financial performance quarterly. The measure of segment assets is reported on the Condensed Consolidated Balance Sheets as total assets.

Latch, Inc. and Subsidiaries

Notes to Condensed Consolidated Financial Statements (unaudited)

(in thousands, except share and per share data)

~~The~~reporting and uses net loss to allocate resources in the annual budgeting and forecasting process, along with using that measure as a basis for evaluating financial performance quarterly. In addition, the CODM reviews the expense categories presented on the accompanying Condensed Consolidated Statements of Operations and Comprehensive Loss ~~for~~to manage the ~~three~~Company’s ~~and~~operations. ~~nine~~The ~~months~~measure ~~ended~~of ~~September 30,~~segment ~~2025~~assets ~~and~~is ~~2024~~reported ~~reflect~~on the ~~one~~accompanying ~~reportable~~Condensed ~~segment~~Consolidated Balance Sheets as total assets.

The accompanying Condensed Consolidated Statements of Operations and Comprehensive Loss for the three months ended March 31, 2026 and 2025 reflect the one reportable segment.

Geographic Information

~~The~~A ~~Company’s~~summary ~~revenues are primarily generated in the United States. Revenues outside~~ of ~~the~~revenues ~~United~~by ~~States~~geographic ~~were~~information ~~approximately~~is ~~$0.1~~as ~~million~~follows: and $0.4 million for the three and nine months ended September 30, 2025, respectively, and $0.1 million and $0.4 million for the three and nine months ended September 30, 2024, respectively. The Company does not have any long-lived assets located outside the United States.

4.ACQUISITIONS


	Three Months Ended March 31,
	2026		2025
United States	$	14,834	$	15,541
Canada	868		233
Total	$	15,702	$	15,774

~~During~~The ~~2024, the~~ Company ~~completed~~does ~~several~~not ~~acquisitions~~have toany ~~expand~~long-lived ~~its service offerings and operational capabilities, including the acquisition of substantially all of the~~ assets oflocated ~~the~~outside ~~property management divisions of The Broadway Company and Boston Realty Advisors (collectively,~~ the ~~“Property~~United ~~Management Acquisitions”) and the merger with HelloTech, Inc~~States. (“HelloTech” and, such merger, the “HelloTech Merger”). These transactions were accounted for as business combinations under Accounting Standards Codification (“ASC”) 805, Business Combinations. The results of operations of the acquired businesses have been included in the Company’s consolidated financial statements from their respective acquisition dates.

The following unaudited supplemental pro forma financial information presents the Company’s consolidated results of operations for the three and nine months ended September 30, 2025, as if the Property Management Acquisitions and the HelloTech Merger had been consummated on January 1, 20244.REVENUE

	Three Months EndedSeptember 30, 2024		Nine Months EndedSeptember 30, 2024
Total revenue	$	14,943	$	51,130
Net loss	$	(17,056)	$	(50,387)

The supplemental pro forma financial information presented above is not necessarily indicative of the results of operations that would have been achieved had the acquisitions occurred on January 1, 2024, nor is it indicative of future operating results. The supplemental pro forma financial information does not reflect potential cost savings, operating synergies or other efficiencies that may result from the acquisitions.

The Company completed its acquisition accounting for the 2024 acquisitions as of December 31, 2024. No material measurement-period adjustments were recorded during the three and nine months ended September 30, 2025, and the Company does not expect to record any additional measurement-period adjustments related to these acquisitions.

5.REVENUE

The Company currently generates its revenue from three primary sources: (1) sales of hardware devices, (2) licenses of software products, and (3) professional services.

Hardware

The Company generates hardware revenue primarily from the sale of its portfolio of devices. The Company sells hardware to customers, which include real estate developers, builders, building owners and property managers, directly or through its channel partners, who act as intermediaries, installers or wholesalers. The Company recognizes hardware revenue when there is evidence a contract exists and control of the hardware has been transferred to the customer. The Company has determined that control transfers to a customer when hardware is shipped, as the Company’s standard delivery terms are Free on Board (“FOB”) Shipping Point. Certain customers may request FOB Destination, in which case control transfers to the customer upon delivery to the requested destination.

The Company generally provides warranties that its hardware will be substantially free from defects in materials and workmanship for a period of one or two years for electronic components, depending on the hardware product, and five years for mechanical components. The Company determines in its sole discretion whether to replace or refund warrantable devices. The Company determined these warranties are not separate performance obligations as they cannot be purchased separately and do not provide a service in addition to an assurance the hardware will function as expected. The Company records a reserve as a component of cost of hardware revenue based on historical costs of replacement units for returns of defective

Latch, Inc. and Subsidiaries

Notes to Condensed Consolidated Financial Statements (unaudited)

(in thousands, except share and per share data)

products. For the three and nine months ended September 30, 2025, the reserve recorded for hardware warranties was approximately 2% and 3%, respectively, of cost of hardware revenue. For the three and nine months ended September 30, 2024, the reserve recorded for hardware warranties was approximately 3% and 3%, respectively, of cost of hardware revenue. The Company also provides certain customers a right of return for non-defective product, which is treated as a reduction of hardware revenue based on the Company’s expectations and historical experience. For the three and nine months ended September 30, 2025, the allowance for returns resulted in a recovery of revenue by $0.2 million and $0.1 million, respectively. For the three and nine months ended September 30, 2024, the allowance for returns resulted in a recovery of revenue of $0.3 million and $0.4 million, respectively.

Software

The Company generates software revenue primarily through the license of its software-as-a-service (“SaaS”) cloud-based platform to customers on a subscription-based arrangement. Subscription fees vary depending on the features selected by customers as well as the term. SaaS arrangements generally have term lengths of one, two, five or ten years and include a fixed fee generally paid in advance, annually or monthly. When significant discounts are provided to customers on the longer-term software contracts paid in advance, the Company has determined that there is a significant financing component related to the time value of money and therefore has recorded the interest expense in interest expense, net on the accompanying Condensed Consolidated Statements of Operations and Comprehensive Loss. The interest expense related to the significant financing component is recorded using the effective interest method, which has higher interest expense at inception and declines over time to match the underlying economics of the transaction. The amount of interest expense related to this component was $0.6 million and $2.0 million for the three and nine months ended September 30, 2025, respectively, and $0.8 million and $2.7 million for the three and nine months ended September 30, 2024, respectively.

The SaaS licenses provided by the Company are considered stand-ready performance obligations where customers benefit from the services evenly throughout the service period. Revenue generally is recognized ratably over the subscription period beginning when or as control of the promised services is transferred to the customer.

Professional Services

The Company generates professional services revenue in three primary ways: (i) by facilitating smart access hardware installation and activation to multifamily building customers, (ii) through fees generated by installation and other services performed through the HelloTech platform, and (iii) through property management services performed by its subsidiary, Door Property Management, LLC (“DPM”), for its multifamily building customers.

The Company provides smart access hardware installation and activation services to select customers. The revenues associated with these services are recognized over time based on a percentage of the installation completed and represent a transfer of services to a customer under contract.

Through the HelloTech platform, a network of independent contractors provides in-home technology services and support such as installation, repair and troubleshooting. Orders placed through the HelloTech platform are recognized as revenue as services are completed over time. Customers may purchase a HelloTech subscription for discounted in-home services. Subscription revenues are recognized ratably over the subscription term.

DPM provides property management services, including operating DPM customers’ buildings, which involves maintenance and repair, construction management, leasing and administrative services, typically pursuant to a property management agreement with an annual term. Property management service revenues are recognized ratably over the service period.

Latch, Inc. and Subsidiaries

Notes to Condensed Consolidated Financial Statements (unaudited)

(in thousands, except share and per share data)

Disaggregation of Revenue

The following table provides information about disaggregated revenue from customers into the nature of the products and services provided and the related timing of revenue recognition:

Three Months Ended September 30,

Nine Months Ended September 30,

Three Months Ended March 31,

2025

2024

2025

2024

2026

2025

Point-in-time revenue:

Hardware

54,~~146~~357

34,~~611~~037

~~15,099~~

~~13,837~~

Total point-in-time revenue

54,~~146~~357

34,~~611~~037

~~15,099~~

~~13,837~~

Period-of-time revenue:

Software

56,~~370~~143

5,~~077~~159

~~15,773~~

~~15,136~~

Hardware installation and activation services

21,~~095~~432

1,~~306~~828

~~6,938~~

~~5,324~~

HelloTech in-home services

3,833

4,125

11,390

4,125

HelloTech services

2,952

3,636

Property management services

~~980~~817

~~822~~1,111

~~3,048~~

~~1,486~~

Other

Total period-of-time revenue

1211,~~280~~345

11,~~332~~737

~~37,156~~

~~26,079~~

Total revenue

1715,~~426~~702

1415,~~943~~774

~~52,255~~

~~39,916~~

~~Deferred~~The ~~Contract~~Company ~~Costs~~records a reserve as a component of cost of hardware revenue based on historical costs of replacement units for returns of defective products. For the three months ended March 31, 2026 and 2025, the reserve recorded for hardware warranties was approximately 2% and 3%, respectively, of cost of hardware revenue. The Company also provides certain customers a right of return for non-defective product, which is treated as a reduction of hardware revenue based on the Company’s expectations and historical experience. For the three months ended March 31, 2026 and 2025, the allowance for returns resulted in a recovery of revenue by $0.1 million and $0.04 million, respectively.

The Company ~~capitalizes~~generates ~~commission expenses that are incremental to obtaining customer~~ software ~~contracts.~~revenue ~~Costs~~primarily ~~related~~through to the ~~initial~~license ~~signing~~ of its software-as-a-service ~~contracts~~(“SaaS”) ~~are~~cloud-based ~~amortized~~platform ~~over the average customer life, which has been estimated~~ to becustomers ~~ten~~on ~~years~~a subscription-based ~~upon contract duration~~arrangement, ~~including~~as ~~renewals~~well ~~and~~as ~~extensions.~~from ~~Amounts~~the ~~expected~~resale ~~to be recognized within one year~~ of ~~the~~third-party ~~balance~~software ~~sheet~~in ~~date~~connection ~~are~~with ~~recorded~~HelloTech asservices. ~~deferred~~Subscription ~~contract~~fees ~~costs,~~vary ~~current~~depending ~~and~~on ~~are~~the ~~included~~features inselected ~~prepaid~~by ~~expenses~~customers ~~and~~as ~~other~~well ~~current~~as ~~assets on~~ the ~~accompanying~~term. ~~Condensed~~SaaS ~~Consolidated~~arrangements ~~Balance~~generally ~~Sheets;~~have ~~the~~term ~~remaining~~lengths ~~portion~~of isone, ~~recorded~~two, asfive ~~deferred~~or ~~contract~~ten ~~costs,~~years ~~non-current~~ and isinclude ~~included~~a infixed ~~other~~fee ~~non-current~~generally ~~assets~~paid onin ~~the~~advance, ~~accompanying~~annually ~~Condensed~~or ~~Consolidated Balance Sheets~~monthly. ~~Amortization~~When ~~expense~~significant isdiscounts ~~included~~are inprovided ~~sales~~to ~~and~~customers ~~marketing expense~~ on the ~~accompanying~~longer-term ~~Condensed~~software ~~Consolidated~~contracts ~~Statements~~paid ofin ~~Operations and Comprehensive Loss.~~

~~The following table represents a roll-forward of the Company’s deferred contract costs:~~6

Balance as of January 1, 2025	$	3,117
Additions to deferred contract costs	—
Amortization of deferred contract costs	(322)
Balance as of September 30, 2025	$	2,795

Cost of Revenue

Cost of hardware revenue consists primarily of product costs, including manufacturing costs, duties and other applicable importation costs, shipping and handling costs, packaging, warranty costs, assembly costs and warehousing costs, as well as other non-inventoriable costs, including personnel-related expenses associated with supply chain logistics. Costs of hardware revenue also include charges related to lower of cost or market adjustments and reserves for excess inventory and non-cancellable purchase commitments.

Cost of software revenue consists primarily of outsourced hosting costs and personnel-related expenses associated with monitoring and managing outsourced hosting service providers.

Cost of professional services revenue consists primarily of (i) third-party installation labor costs and parts and materials, (ii) labor costs associated with HelloTech independent technicians and credit card fees and (iii) costs related to third-party property service providers.

Latch, Inc. and Subsidiaries

Notes to Condensed Consolidated Financial Statements (unaudited)

(in thousands, except share and per share data)

6advance, the Company has determined that there is a significant financing component related to the time value of money and therefore has recorded the discount as interest expense, net on the accompanying Condensed Consolidated Statements of Operations and Comprehensive Loss.~~ACCOUNTS~~ ~~RECEIVABLE~~The interest expense related to the significant financing component is recorded using the effective interest method, ~~NET~~which ~~AND~~has ~~CONTRACT~~higher ~~BALANCES~~interest expense at inception and declines over time to match the underlying economics of the transaction. The amount of interest expense related to this component was $0.5 million and $0.7 million for the three months ended March 31, 2026 and 2025, respectively.

Deferred Contract Costs

The following table represents a roll-forward of the Company’s deferred contract costs:


Balance as of January 1, 2026	$	2,690
Additions to deferred contract costs	—
Amortization of deferred contract costs	(108)
Balance as of March 31, 2026	$	2,582

5.ACCOUNTS RECEIVABLE, NET AND CONTRACT BALANCES

The Company classifies its right to consideration in exchange for deliverables as either a receivable or a contract asset.

Accounts Receivable, Net

The opening and closing balances of accounts receivable, net is as follows:

September 30, 2025

December 31, 2024

March 31, 2026

December 31, 2025

Balance at beginning of the year

97,~~864~~960

69,~~001~~864

Ending balance

75,~~918~~903

97,~~864~~960

Change

(12,~~946~~057)

3(1,~~863~~904)

The Company recognizes an accounts receivable allowance based on estimates of expected credit losses. The following table represents a roll-forward of the Company’s allowance for expected credit losses:

	Three Months Ended September 30,				Nine Months Ended September 30,
	Three Months Ended March 31,
	2025		2024		2025		2024
	2026		2025
Balance as of beginning of period	$	~~119~~117	$	~~177~~96	$	96	$	~~496~~
Provision for expected credit losses	~~123~~(22)		~~150~~65		~~335~~		~~363~~
Recoveries	~~(81)~~—		(~~160~~23)		~~(248)~~		~~(486)~~
Write-offs charged against the allowance	(6923)		(4319)		~~(91)~~		~~(249)~~
Balance as of end of period	92$	72	~~124~~$	119	92		~~124~~

Contract Balances

The opening and closing balances of contract assets (unbilled receivables) are as follows:

September 30, 2025

December 31, 2024

March 31, 2026

December 31, 2025

Balance at beginning of the year

42,~~074~~009

54,~~942~~074

Ending balance

2,~~629~~385

42,~~074~~009

Change

~~(1,445)~~376

(12,~~868~~065)

The difference between the opening and closing balances of the Company’s contract assets (unbilled receivables) primarily results from timing differences between the Company’s performance and the ~~Company~~customer’s ~~invoicing~~payment as well as the number of active installation projects.

~~The opening and closing balances of contract liabilities (deferred revenue) were as follows:~~7

	September 30, 2025		December 31, 2024
Balance at beginning of the year	$	33,182	$	39,579
Ending balance	27,957		33,182
Change	$	(5,225)	$	(6,397)

The difference between the opening and closing balances of the Company’s contract liabilities (deferred revenue) primarily relates to a shift from multi-year contracts billed upfront to contracts billed on an annual basis, resulting in less deferred revenue being added upon invoice date.

The Company recognized $3.3 million and $11.6 million of prior year deferred software revenue during the three and nine months ended September 30, 2025, respectively, and $3.5 million and $11.7 million of prior year deferred software revenue during the three and nine months ended September 30, 2024, respectively.

Latch, Inc. and Subsidiaries

Notes to Condensed Consolidated Financial Statements (unaudited)

(in thousands, except share and per share data)

~~Contract~~The opening and closing balances of contract liabilities (deferred revenue) ~~consisted~~were ofas ~~the following~~follows:

	September 30, 2025		December 31, 2024
	March 31, 2026		December 31, 2025
Revenue	$	13,291	$	14,419
Balance at beginning of the year	$	26,375	$	33,182
Interest expense	(1,840)		(2,519)
Ending balance	24,867		26,375
Total current deferred revenue	$	11,451	$	11,900
Change	$	(1,508)	$	(6,807)
Revenue	$	19,887	$	25,990
Interest expense	(3,381)		(4,708)
Total non-current deferred revenue	$	16,506	$	21,282

7The difference between the opening and closing balances of the Company’s contract liabilities (deferred revenue) primarily related to a shift from multi-year contracts billed upfront to contracts billed on an annual basis, resulting in less deferred revenue being added upon invoice date.~~INVESTMENTS~~ The ending contract liabilities balance represents advance consideration, net of discount, to be recognized as revenue over time, with the associated financing component recognized as interest expense.

The Company recognized $4.7 million and $4.4 million of prior year deferred software revenue during the three months ended March 31, 2026 and 2025, respectively.

The contract liabilities (deferred revenue) consisted of the following amounts that will be recorded as revenue, net of the discount:


	March 31, 2026		December 31, 2025
Revenue	$	12,386	$	12,879
Interest expense	(1,474)		(1,642)
Total current deferred revenue	$	10,912	$	11,237

Revenue	$	16,690	$	18,183
Interest expense	(2,735)		(3,045)
Total non-current deferred revenue	$	13,955	$	15,138

6.INVESTMENTS

Available-for-Sale Securities (Marketable Securities)

The Company’s investments in marketable securities are classified and accounted for as available-for-sale and consist of high quality asset-backed securities, commercial paper, corporate bonds and U.S. Government debt securities. The Company’s marketable securities with remaining effective maturities of 12 months or less from the balance sheet date are classified as current; otherwise, they are classified as non-current on the accompanying Condensed Consolidated Balance Sheets. Commercial paper and corporate bonds and U.S. Government debt securities are classified as current assets while asset-backed securities are classified as non-current assets. Unrealized gains and losses on marketable securities classified as available-for-sale are recognized in other comprehensive income (loss).

The Company’s marketable securities by security type are summarized as follows:

	As of September 30, 2025
	As of March 31, 2026
	Amortized Cost		Gross Unrealized Gain		Estimated Fair Value
U.S. Government debt securities	$	~~1,732~~576	$	1—	$	~~1,733~~576
Total available-for-sale securities	$	~~1,732~~576	$	1—	$	~~1,733~~576

	As of December 31, 2024
	Amortized Cost		Gross Unrealized Gain		Estimated Fair Value
U.S. Government debt securities	$	5,184	$	3	$	5,187
Total available-for-sale securities	$	5,184	$	3	$	5,187

Contractual maturities of the Company’s available-for-sale and trading securities are summarized as follows:

As of September 30, 2025

As of March 31, 2026

Amortized Cost

Estimated Fair Value

Due in less than one year

~~1,732~~576

~~1,733~~576

Due in one to five years

—

Total investments

~~1,732~~576

~~1,733~~576

	As of December 31, 2024
	Amortized Cost		Estimated Fair Value
Due in less than one year	$	5,184	$	5,187
Due in one to five years	—		—
Total investments	$	5,184	$	5,187

The Company did not have any investments in marketable securities as of December 31, 2025.

118

Latch, Inc. and Subsidiaries

Notes to Condensed Consolidated Financial Statements (unaudited)

(in thousands, except share and per share data)

The Company regularly reviews its investment portfolio to identify and evaluate investments that have indications of possible impairment. Investments that are impaired are those that are considered to have losses that are other-than-temporary. Factors considered in determining whether a loss is temporary include:

•the length of time and extent to which fair value has been lower than the cost basis;

•the financial condition, credit quality and near-term prospects of the investee; and

•whether it is more likely than not that the Company will be required to sell the investment prior to recovery.

As of ~~September~~March 3031, ~~2025~~2026, the Company had not identified any impairment indicators in its investments.

For the three ~~and nine~~ months ended ~~September~~March 3031, ~~2025~~2026, the Company ~~received~~did ~~$2.0~~not ~~million~~receive ~~and~~any ~~$10.3 million, respectively, of~~ proceeds from maturities and call redemptions ~~and recorded minimal realized losses from the sale of available-for-sale securities~~. ~~For~~The ~~the three and nine months ended September 30, 2024, the~~ Company received $153.86 million ~~and $89.1 million, respectively,~~ of proceeds from maturities and call redemptions, ~~recorded~~for ~~minimal realized losses from~~ the ~~sale~~three ofmonths ~~available-for-sale~~ended ~~securities~~March 31, ~~and received no proceeds from sales~~2025. Gains and losses are determined using the specific identification method, whereby realized gains and losses are calculated based on the historical cost of the specific available-for-sale securities sold, matured or redeemed.

Investment in Private Company

The Company holds an equity investment in a privately held company consisting of 654,000 shares of common stock. The investment does not have a readily determinable fair value and is accounted for under the measurement alternative in accordance with Accounting Standards Codification (“ASC”) 321, Equity Securities. Accordingly, the investment is carried at cost, adjusted for observable price changes in orderly transactions for the identical or a similar investment of the same issuer, less any impairment. See Note 87. Fair Value Measurements and Concentrations of Credit Risk.

~~During~~On ~~the~~May ~~three months ended December 31~~1, ~~2025~~2026, the ~~privately~~Company ~~held~~received ~~company~~cash ~~entered~~consideration ~~into~~of a$1.7 million ~~definitive~~in ~~agreement~~connection towith bethe ~~acquired~~acquisition by a third-party. ~~The Company did not record any adjustment to the carrying value~~ of ~~the~~a ~~investment~~privately asheld ofcompany. ~~September 30,~~See ~~2025~~Note ~~since the transaction has not been finalized and is subject to customary closing conditions and regulatory approval~~22. ~~The~~Subsequent ~~Company will evaluate the impact of the transaction on the fair value of the investment in future reporting periods~~Events.

87.FAIR VALUE MEASUREMENTS AND CONCENTRATIONS OF CREDIT RISK

Financial instruments that potentially subject the Company to concentrations of credit risk consist primarily of cash and cash equivalents and trade accounts receivable. The Company primarily invests its excess cash in low-risk, highly liquid money market funds with major financial institutions as well as marketable securities.

Fair Value Measurements

The Company’s financial assets that are measured at fair value on a recurring basis are summarized as follows:

	As of September 30, 2025
	As of March 31, 2026
	Fair Value Measurements Using
	Level 1		Level 2		Level 3		Total
Cash	$	3,218	$	—	$	—	$	3,218
Assets
Money market funds and other cash equivalents	—		39,358		—		39,358
Cash	$	3,059	$	—	$	—	$	3,059
Total cash and cash equivalents	3,218		39,358		—		42,576
Money market funds and other cash equivalents	—		24,886		—		24,886
Available-for-sale securities	1,694		39				1,733
Total cash and cash equivalents	3,059		24,886		—		27,945
Investment in private company	—		—		954		954
Total assets	$	43,~~912~~059	$	3924,~~397~~886	$	954	$	4528,~~263~~899
Liabilities
Warrant liability	$	—	$	6849	$	—	$	6849
Total liabilities	$	—	$	6849	$	—	$	6849

129

Latch, Inc. and Subsidiaries

Notes to Condensed Consolidated Financial Statements (unaudited)

(in thousands, except share and per share data)

	As of December 31, 2024
	As of December 31, 2025
	Fair Value Measurements Using
	Level 1		Level 2		Level 3		Total
Cash	$	43,~~087~~392	$	—	$	—	$	43,~~087~~392
Money market funds and other cash equivalents	—1,191		6630,~~116~~037		—		6631,~~116~~228
Total cash and cash equivalents	4,~~087~~583		6630,~~116~~037		—		7034,~~203~~620
Available-for-sale securities	544		4,643		—		5,187
Investment in private company	—		—		954		954
Total assets	$	4,~~631~~583	$	7030,~~759~~037	$	954	$	7635,~~344~~574
Liabilities
Warrant liability	$	—	$	3012	$	—	$	3012
Total liabilities	$	—	$	—12	$	—	$	—12

The Company’s investments in cash, money market funds and other cash equivalents that are highly liquid and low-risk have been classified as Level 1 as they are valued utilizing quoted prices (unadjusted) in active markets for identical assets. Investments in other cash equivalents, ~~that are not active are classified as Level 2. Investments in~~ asset-backed securities, commercial paper, corporate bonds and U.S. Government debt securities that are valued using quoted prices in less active markets or other directly or indirectly observable inputs are classified as Level 2. Fair values of corporate bonds and U.S. Government debt securities were derived from a consensus or weighted-average price based on input of market prices from multiple sources for the reporting period. With regard to commercial paper, all of the securities had high credit ratings and one year or less to maturity; therefore, fair value was derived from accretion of purchase price to face value over the term of maturity or quoted market prices for similar instruments, if available.

As of ~~September~~March 3031, ~~2025~~2026 and December 31, ~~2024~~2025, respectively, the Company’s investment in private company was classified as Level 3 in the fair value hierarchy because it relied significantly on inputs that were unobservable in the market. The Company assessed the fair value of this investment by reviewing the private company’s recent operating results and trends and confirming the absence of any observable transactions of its equity securities and other publicly available data. Valuations of private companies are inherently more complex due to the lack of readily available market data. As such, the Company believes that providing a sensitivity analysis is not practicable.

During the three ~~and nine~~ months ended ~~September~~March 3031, ~~2025~~2026, there were no purchases, sales or transfers of financial assets between Level 1 and Level 2. There were no purchases, sales, or transfers of Level 3 instruments during the three ~~and nine~~ months ended ~~September~~March 3031, ~~2025~~2026.

Concentrations of Credit Risk

Significant customers are those that represent more than 10% of the Company’s total revenue, or gross accounts receivable balance or gross unbilled receivables balance at each balance sheet date. AsFor ofthe ~~September~~three months ended March 3031, 2026 and 2025, the Company had one customer that accounted for $4.3 million and $4.7 9 million, or 4628% and 31%, of ~~gross~~total ~~accounts~~revenue, ~~receivable~~respectively. As of ~~December~~March 31, ~~2024~~2026, the Company had ~~two~~one ~~customers~~customer that accounted for $~~4.8 million and $~~1.3 9 million, or 4830% ~~and 13%~~, ~~respectively,~~ of gross accounts receivable. As of ~~September 30, 2025 and~~ December 31, ~~2024~~2025, the Company had one customer that accounted for $13.9 million ~~and $3.2 million~~, or 6647% ~~and 78%~~, ~~respectively,~~ of ~~unbilled~~gross ~~receivables~~accounts receivable. ~~For~~As ~~the~~of ~~three and nine months ended September~~March 3031, ~~2025~~2026, the Company had ~~one~~two ~~customer~~customers that accounted for $51.~~5 million and $17.~~0 million, or 3244% ~~and 32%,~~ of ~~total~~unbilled ~~revenue, respectively~~receivables. ~~For~~As ~~the~~of ~~three and nine months ended September~~December 3031, ~~2024~~2025, the Company had one customer that accounted for $30.7 million ~~and $13.3 million,~~ or 2536% ~~and 33%, respectively,~~ of ~~total~~unbilled ~~revenue~~receivables.

1310

Latch, Inc. and Subsidiaries

Notes to Condensed Consolidated Financial Statements (unaudited)

(in thousands, except share and per share data)

98.INVENTORIES, NET

Inventories, net consisted of the following:

September 30, 2025

December 31, 2024

March 31, 2026

December 31, 2025

Raw materials

43,~~503~~527

64,~~115~~324

Finished goods

109,~~621~~181

810,~~261~~934

Total current inventories, net

1512,~~124~~708

1415,~~376~~258

Finished goods, non-current, net

1412,~~612~~266

1612,~~082~~080

Total inventories, net

2924,~~736~~974

3027,~~458~~338

The total excess and obsolete inventory reserve as of ~~September~~March 3031, ~~2025~~2026 and December 31, ~~2024~~2025 was $1110.6 million and $1210.89 million, respectively.

109.PREPAID EXPENSES AND OTHER CURRENT ASSETS

Prepaid expenses and other current assets consisted of the following:

	September 30, 2025		December 31, 2024
	March 31, 2026		December 31, 2025
Prepaid inventory	$	52,~~771~~706	$	122,~~721~~070
Insurance receivable	298		10,001
Unbilled receivables, net	2,385		2,009
Unbilled receivables, net	2,629		4,074
Investment in private company	954		954
Prepaid capitalized incentives	~~436~~437		437
Prepaid installation payments	87423		~~227~~150
Other prepaid expenses and other current assets	2,087		2,109
Insurance receivable	426		82
Total prepaid expenses and other current assets	$	12,262	$	30,523
Other prepaid expenses and other current assets	3,195		1,396
Total prepaid expenses and other current assets	$	10,526	$	7,098

~~As of December 31, 2024, insurance receivable includes $~~10.0INTERNALLY-DEVELOPED ~~million related to a stockholder class action lawsuit settlement that was paid by the Company’s insurers to the designated plaintiff account in the nine months ended September 30~~SOFTWARE, ~~2025.~~NET

11.INTERNALLY-DEVELOPED SOFTWARE, NET

Internally-developed software, net consisted of the following:

September 30, 2025

December 31, 2024

March 31, 2026

December 31, 2025

Internally-developed software

2729,~~312~~670

2329,~~188~~085

Software-in-development

32,~~384~~210

51,~~507~~971

Less: accumulated amortization

(2123,~~635~~560)

(1722,~~947~~674)

Total internally-developed software, net

98,~~061~~320

108,~~748~~382

~~During~~The ~~the three and nine months ended September 30, 2025, the~~ Company capitalized $0.98 million and $2.0 .2 million, ~~respectively,~~ in internally-developed software. ~~During~~during the three ~~and nine~~ months ended ~~September~~March 3031, ~~2024,~~2026 ~~the Company capitalized $1.5 million~~ and ~~$4.2 million~~2025, respectively~~, in internally-developed software~~. Capitalized costs associated with software-in-development are not amortized until the related assets are put into service, and capitalized amounts are presented net of costs related to discontinued projects.

Total amortization expense related to internally-developed software for the three ~~and nine~~ months ended ~~September~~March 3031, 2026 and 2025 was $10.19 million and $~~3.7 million, respectively, and $~~1.~~3 million and $~~4.0 million ~~for the three and nine months ended September 30~~, ~~2024,~~ respectively.

1411

Latch, Inc. and Subsidiaries

Notes to Condensed Consolidated Financial Statements (unaudited)

(in thousands, except share and per share data)

1211.GOODWILL AND INTANGIBLE ASSETS, NET

Goodwill

The ~~Company~~following ~~tests~~table ~~goodwill~~represents ~~and~~a ~~indefinite~~roll-~~lived~~forward ~~intangible assets for impairment annually as~~ of December 31, or more frequently if events or circumstances indicate that the carrying amount may not be recoverable. Management also evaluates, on an ongoing basis, whether changes in business conditions or other events require interim impairment testing. During the three and nine months ended September 30, 2025 and 2024, management determined there were no triggering events or changes in circumstances that would indicate the carrying value of the Company’s goodwill is not recoverable. As such, no quantitative assessment for impairment was required. No goodwill impairment charges were recorded during each of the three and nine months ended September 30, 2025 and 2024.:

As management prepares its forecast and performs its annual quantitative impairment assessment as of December 31, 2025, as of the date of these financial statements, management believes it is likely that some or all of the Company’s goodwill could be impaired as of December 31, 2025. Factors that could contribute to a potential impairment include the Company’s ability to achieve forecasted financial results, continued operating losses or cash usage resulting in lower cash and cash equivalents balances relative to prior periods, changes in discount rates or other valuation assumptions, and adverse developments in market or industry conditions.


	March 31, 2026		December 31, 2025
Balance, beginning of period	$	13,605	$	30,205

Impairment	—		(16,600)
Balance, end of period	$	13,605	$	13,605

During the three months ended March 31, 2026 and 2025, management determined there were no triggering events or changes in circumstances that would indicate the carrying value of the Company’s goodwill is not recoverable. As such, no quantitative assessment for impairment was required. No goodwill impairment charges were recorded during each of the three months ended March 31, 2026 and 2025.

Intangible Assets, Net

Intangible assets, net consisted of the following:

	September 30, 2025		December 31, 2024
	March 31, 2026
Domain names	$	2,034	$	2,034
	Gross Carrying Amount		Accumulated Amortization		Net Carrying Amount
Developed technology	600		600
Domain names	$	2,034	$	(856)	$	1,178
Customer relationships	595		595
Developed technology	600		(105)		495
Patents	37		37
Customer relationships	595		(74)		521
Non-compete	10		10
Patents	37		(23)		14
Licenses	4		4
Non-compete	10		(7)		3
Intangible assets	3,280		3,280
Licenses	4		(4)		—
Less: accumulated amortization	(898)		(696)
Total	$	3,280	$	(1,069)	$	2,211
Total intangible assets, net	$	2,382	$	2,584

Total amortization expense related to intangible assets was $0.1 million and $0.2 million for the three and nine months ended September 30, 2025, respectively, and $0.3 million and $0.7 million for the three and nine months ended September 30, 2024, respectively.


	December 31, 2025
	Gross Carrying Amount		Accumulated Amortization		Net Carrying Amount
Domain names	$	2,034	$	(797)	$	1,237
Developed technology	600		(90)		510
Customer relationships	595		(64)		531
Patents	37		(22)		15
Non-compete	10		(6)		4
Licenses	4		(4)		—
Total	$	3,280	$	(983)	$	2,297

~~The~~Total ~~estimated~~amortization ~~useful~~expense ~~life~~related ofto ~~the~~ intangible assets iswas as$0.1 ~~follows:~~million and $0.03 million for the three months ended March 31, 2026 and 2025, respectively.

						Useful life in years
Developed technology						6 - 10
Domain names						3 - 13
Customer relationships						15 - 20
Patents						12
Non-compete						3
Licenses						5

There was no intangible impairment expense recorded in the three and nine months ended September 30, 2025 and 2024.

Latch, Inc. and Subsidiaries

Notes to Condensed Consolidated Financial Statements (unaudited)

(in thousands, except share and per share data)

~~13.ACCRUED~~The ~~EXPENSES~~estimated useful life of the intangible assets is as follows:


						Useful life in years
Developed technology						6 - 10
Domain names						3 - 13
Customer relationships						15 - 20
Patents						12
Non-compete						3
Licenses						5

There was no intangible asset impairment expense recorded in the three months ended March 31, 2026 and 2025.

12.ACCRUED EXPENSES

Accrued expenses consisted of the following:

	September 30, 2025		December 31, 2024
	March 31, 2026		December 31, 2025
Accrued litigation costs	$	97,~~037~~745	$	257,~~627~~279
Accrued compensation	~~866~~636		~~722~~549
Accrued warranties	61		226
Accrued purchases	9		246
Accrued purchases	291		3,109
Accrued audit fees	—		207
Accrued audit fees	365		2,008
Accrued warranties	66		72
Accrued restructuring costs	58		1,053
Other accrued expenses	1,715		2,105
Other accrued expenses	2,232		2,321
Total accrued expenses	$	10,171	$	10,458
Total accrued expenses	$	12,910	$	35,066

As of ~~September~~March 3031, ~~2025,~~2026 ~~accrued litigation costs primarily included (i) $6.8 million related to a service provider demand~~ and ~~(ii) $1.95 million related to settlement of the Schwartz Action. As of~~ December 31, ~~2024~~2025, accrued litigation costs primarily included ~~(i) the Company’s~~ $~~14.875 million share of the settlement related to consolidated class action complaints in the Court of Chancery of the State of Delaware, (ii) $~~6.8 million related to ~~the~~a service provider demand~~, (iii) $1~~.~~95 million~~ related to settlement of the securities class action pursuant to the complaint in the United States District Court for the Southern District of New York (Brennan v. Latch, Inc., et al., Case No. 1:22-cv-07473, the “Brennan Action”), and (iv) $1.95 million related to settlement of the Schwartz Action. See Note 1514. Commitments and Contingencies for definitions and further discussion of such matters.

1413.DEBT

A summary of the Company’s debt is as follows:

September 30, 2025

December 31, 2024

March 31, 2026

December 31, 2025

Term loan

4,~~969~~321

54,~~829~~644

Total debt

4,~~969~~321

54,~~829~~644

Less: Current portion of long-term debt

(1,314)

Total long-term debt

3,~~655~~007

43,~~515~~330

On July 15, 2024, the Company entered into an Amended and Restated Loan and Security Agreement (the “Loan Agreement”) with Customers Bank. Pursuant to the Loan Agreement, Customers Bank issued a term loan in the principal amount of $6.0 million (the “Loan”). Interest is payable on the Loan at a rate equal to the greater of (a) the prime rate published in The Wall Street Journal or (b) 6.0%, and the maturity date is July 15, 2029 (the “Maturity Date”).

~~Concurrent~~The ~~with~~fair ~~the~~value ~~Company’s~~of ~~entry in~~ the Loan ~~Agreement,~~was ~~the Company issued a warrant to Customers Bank to purchase 1,000,000 shares of the Company’s common stock (the “Bank Warrant”). The Bank Warrant has an exercise price of~~ $14.253 ~~per~~million ~~share, exercisable upon issuance~~ and ~~expiring on July 15, 2030~~$4.6 ~~The~~million ~~Bank Warrant is classified~~ as aof ~~liability under ASC 815~~March 31, ~~Derivatives~~2026 and ~~Hedging (“ASC 815”) and is remeasured at fair value each reporting period~~December 31, ~~with changes recognized in other income~~2025, ~~net~~respectively. AtThe ~~issuance,~~Company ~~the~~is ~~Bank~~required ~~Warrant~~to ~~was~~pay ~~recorded~~equal atmonthly ~~its~~installments ~~fair value~~ of ~~$0.2~~principal ~~million~~plus ~~and~~accrued ~~reflected~~interest asuntil athe ~~debt~~Maturity ~~discount,~~Date. ~~which~~There is ~~being~~no ~~amortized~~penalty tofor ~~interest~~prepayment ~~expense over the term~~ of the Loan.

~~The~~Pursuant ~~fair~~to ~~value of~~ the Loan Agreement, Customers Bank was ~~$5.0~~granted ~~million~~security ~~and~~interest ~~$5.8~~in ~~million~~substantially asall of ~~September 30~~the Company’s assets, ~~2025~~other than intellectual property, and ~~December~~the Loan Agreement contains customary affirmative and negative covenants, including a requirement to maintain a liquidity ratio equal to four times the outstanding principal balance. As of March 31, ~~2024~~2026, ~~respectively~~the Company was in compliance with the covenants under the Loan Agreement.

Payments under the Loan were interest-only through January 15, 2025. Thereafter, the Company is required to pay equal monthly installments of principal plus accrued interest until the Maturity Date. There is no penalty for prepayment of the Loan.13

Latch, Inc. and Subsidiaries

Notes to Condensed Consolidated Financial Statements (unaudited)

(in thousands, except share and per share data)

The ~~Loan~~following istable ~~secured~~presents ~~by substantially all of~~ the ~~Company’s~~future ~~assets,~~minimum ~~excluding~~principal ~~intellectual~~payments ~~property,~~on ~~and~~ the ~~Loan~~total ~~Agreement~~borrowings ~~contains customary affirmative and negative covenants, including a minimum liquidity ratio of 4.00. If an event of default occurs~~ under ~~the Loan Agreement, Customers Bank may declare~~ all ~~outstanding~~debt ~~obligations~~agreements ~~immediately~~as ~~due and payable and exercise its other rights and remedies. As~~ of ~~September~~March 3031, ~~2025, the Company was in compliance with all covenants.~~2026:

The following table presents the future minimum principal payments on the total borrowings under all debt agreements as of September 30, 2025:


Remainder of 2026	$	1,000
2027	1,333
2028	1,333
2029	778
2030	—

Total future minimum payments	4,444
Less: debt discount	(123)
Total	$	4,321

Remainder of 2025	$	334
2026	1,333
2027	1,333
2028	1,333
2029	778
Total future minimum payments	5,111
Less: debt discount	(142)
Total	$	4,969

On May 11, 2026, the Loan Agreement was terminated. See Note 22. Subsequent Events.

1514.COMMITMENTS AND CONTINGENCIES

Registration Rights Agreements

In connection with the 2021 business combination (the “2021 Business Combination”) with TS Innovation Acquisitions Corp. (“TSIA”), the Company and certain stockholders of Legacy Latch and TSIA entered into an amended and restated registration rights agreement (the “2021 Registration Rights Agreement”). Pursuant to the 2021 Registration Rights Agreement, in June 2021, the Company filed a registration statement on Form S-1 with respect to the registrable securities under the 2021 Registration Rights Agreement. Certain Legacy Latch stockholders and TSIA stockholders may each request to sell all or any portion of their registrable securities in an underwritten offering up to two times in any 12-month period, so long as the total offering price is reasonably expected to exceed $75.0 million. The Company also agreed to provide certain demand and “piggyback” registration rights. The 2021 Registration Rights Agreement also provides that the Company pays certain expenses relating to such registrations and indemnifies the stockholders against certain liabilities. The Company bears the expenses incurred in connection with the filing of any such registration statements. The 2021 Registration Rights Agreement does not provide for any penalties connected with delays in registering the Company’s common stock.

In connection with the consummation of the 2023 acquisition of Honest Day’s Work, Inc. (“HDW”), the Company and certain of HDW’s stockholders (the “Holders”) entered into that certain Registration Rights Agreement (the “2023 Registration Rights Agreement”), pursuant to which the Company agreed to file a shelf registration statement registering the resale of the Registrable Securities (as defined in the 2023 Registration Rights Agreement) as promptly as reasonably practicable after the date on which the Company files its Quarterly Report on Form 10-Q for the quarterly period ended June 30, 2023 (and no later than the 20th business day following the filing date of such Quarterly Report). Up to twice in any 12-month period, the Holders may request to sell all or any portion of their Registrable Securities in an underwritten offering so long as the total offering price is reasonably expected to exceed $25 million. The Company also agreed to provide customary “piggyback” registration rights to certain Holders designated as “Major Equityholders,” subject to certain requirements and customary conditions. The 2023 Registration Rights Agreement also provides that the Company will pay certain expenses relating to such registrations and indemnify the stockholders against certain liabilities. In the event the Company is unable to file a registration statement required by the 2023 Registration Rights Agreement, the Company is not required to repurchase or settle any Registrable Securities.

Legal Contingencies

~~Securities~~Derivative Litigation

On ~~January~~February 1115 and July 13, 2023, antwo alleged ~~stockholder~~stockholders of Latch stock filed aderivative ~~purported~~actions ~~securities~~purportedly ~~class~~on ~~action~~behalf ~~complaint~~of Latch in the United States District Court for the Southern District of ~~Delaware~~New ~~(Schwartz~~York: Manley v. Latch, Inc., et al., Case No. 1:23-cv-~~00027~~01273 (the “Manley Action”) and Gottlieb v. Latch, Inc., et al., Case No. 1:23-cv-06047 (the “~~Schwartz~~Gottlieb Action”). The ~~complaint~~actions, ~~alleges~~which ~~that~~were consolidated under the ~~Company~~caption ~~and~~In ~~certain~~re ofLatch ~~its~~Inc. ~~current~~Derivative ~~and~~Litigation, ~~former~~Case ~~directors~~No. ~~violated~~1:23-cv-01273 ~~Sections~~(together, 11the “Derivative Actions”), generally allege that certain directors and 15former officers of the ~~Securities~~Company ~~Act~~breached oftheir ~~1933,~~fiduciary asduties ~~amended~~and violated Section 14(a) of the ~~“Securities~~Exchange Act”) by making false or misleading statements regarding the Company’s business, operations and prospects. The ~~complaint~~Gottlieb Action includes additional claims for ~~damages~~unjust enrichment, ~~including~~abuse ~~interest~~of control, gross mismanagement, waste of corporate assets and ancontribution ~~award~~against certain individual defendants named in Brennan v.

1714

Latch, Inc. and Subsidiaries

Notes to Condensed Consolidated Financial Statements (unaudited)

(in thousands, except share and per share data)

ofLatch, ~~reasonable~~Inc. ~~costs~~et ~~and~~al., ~~attorneys’~~Case ~~fees~~No. ~~and~~1:22-cv-07473 ~~expert~~(S.D.N.Y.) ~~fees~~and toSchwartz ~~a putative class~~v. ~~On April 24~~Latch, ~~2023~~Inc., ~~the~~et ~~court~~al., ~~appointed~~Case ~~Scott~~No. ~~Schwartz~~1:23-cv-00027 ~~as lead plaintiff~~(D. ~~In May 2023~~Del.), ~~the~~two ~~parties~~securities ~~agreed~~class toactions ~~stay~~which ~~the~~have ~~action~~been ~~pending~~settled ~~completion~~in ofexchange for the ~~restatement~~release of ~~certain~~all ofclaims against the ~~Company’s~~defendants ~~historical~~in ~~financial~~those ~~statements (the “Restatement”)~~actions, ~~and~~along towith ~~allow~~consolidated ~~the~~class ~~lead~~action ~~plaintiff~~complaints ain ~~period~~the Court of 21Chancery ~~days~~of ~~following~~the ~~completion~~State of ~~the~~Delaware. ~~Restatement~~The inDerivative ~~which~~Actions toseek ~~file~~orders anpermitting ~~amended~~plaintiffs ~~complaint.~~to Onmaintain ~~September~~each ~~27,~~action ~~2024,~~derivatively on behalf of the Company, ~~filed~~awarding aunspecified ~~motion~~damages toallegedly ~~transfer~~sustained by the ~~complaint~~Company, toawarding ~~the~~restitution ~~United~~from ~~States~~the ~~District~~individual ~~Court~~defendants, ~~for~~requiring the ~~Southern~~Company ~~District~~to ofmake ~~New~~certain ~~York.~~reforms ~~The~~to ~~motion~~its ~~was~~corporate ~~denied~~governance onand ~~November~~controls ~~13,~~and ~~2024~~awarding costs and attorneys’ fees. In ~~December~~March ~~2024~~2026, the ~~parties~~Company agreed in principle to a settlement ~~and~~involving ~~entered~~the ~~into~~implementation ~~a binding memorandum~~ of ~~understanding~~certain ~~pursuant~~governance toreforms ~~which~~and the Company’s ~~agreed~~payment ~~to pay a settlement class in the amount~~ of $10.955 million in ~~exchange~~attorneys’ fees, for ~~the~~which ~~release of all claims against~~ the ~~defendants (including the~~ Company). ~~The~~does ~~amount~~not ofexpect ~~the~~any ~~settlement~~insurance iscontribution. ~~reflected~~Accordingly, ~~(i) in general and administrative expenses on~~ the ~~accompanying~~Company ~~Condensed~~accrued ~~Consolidated~~$0.5 million ~~Statements~~ of ~~Operations and Comprehensive Loss as of the date the complaint was filed and (ii) as accrued~~ expenses on the accompanying Condensed Consolidated Balance ~~Sheets~~Sheet as of ~~September~~March 3031, ~~2025~~2026 and December 31, ~~2024~~2025, respectively. The ~~parties~~settlement ~~filed~~remains subject to a final stipulation of settlement inand ~~June~~approval ~~2025, which was approved~~ by the court ~~in December 2025~~. The Company ~~paid~~does ~~the~~not ~~settlement~~believe ~~amount~~the inallegations ~~November~~are ~~2025.~~meritorious ~~The~~and ~~defendants~~intends ~~continue~~ to ~~deny~~vigorously ~~any~~defend ~~fault,~~against ~~liability,~~them ~~wrongdoing~~should ~~or damages in connection with~~ the ~~allegations~~parties ~~raised in the Schwartz Action. The Company does~~ not ~~expect~~reach ~~insurers~~a tofinal ~~contribute to the~~ settlement ~~amount~~.

Derivative Litigation

On February 15 and July 13, 2023, two alleged stockholders of Latch stock filed derivative actions purportedly on behalf of Latch in the United States District Court for the Southern District of New York: Manley v. Latch, Inc., et al., Case No. 1:23-cv-01273 (the “Manley Action”) and Gottlieb v. Latch, Inc., et al., Case No. 1:23-cv-06047 (the “Gottlieb Action”). The complaints generally allege that certain directors and former officers of the Company breached their fiduciary duties and violated Section 14(a) of the Exchange Act by making false or misleading statements regarding the Company’s business, operations and prospects. Both complaints seek orders permitting plaintiffs to maintain each action derivatively on behalf of the Company, awarding unspecified damages allegedly sustained by the Company, awarding restitution from the individual defendants, requiring the Company to make certain reforms to its corporate governance and controls and awarding costs and attorneys’ fees. The Gottlieb Action includes additional claims for unjust enrichment, abuse of control, gross mismanagement, waste of corporate assets and contribution against certain individual defendants named in the Brennan Action and Schwartz Action. On August 1, 2023, the court consolidated the Manley Action and Gottlieb Action under the caption In re Latch Inc. Derivative Litigation, Case No. 1:23-cv-01273. At this time, the Company is negotiating a potential settlement and has estimated a potential loss and accrued $0.2 million and $0.1 million of expenses on the accompanying Condensed Consolidated Balance Sheets as of September 30, 2025 and December 31, 2024, respectively. The Company does not believe the allegations are meritorious and intends to vigorously defend against them should the parties not reach a final settlement.

Service Provider Demand

The Company iswas previously in discussions with a service provider related to a demand for payment under a prior agreement. The Company does not believe that the service provider is entitled to any fees under the prior agreement. However, the Company believes it is probable that an agreement with the service provider will be reached and that the amount the Company will pay the service provider in connection with the dispute and the resolution thereof can be reasonably estimated. As of ~~September~~March 3031, ~~2025~~2026 and December 31, ~~2024~~2025, the Company had accrued approximately $6.8 million in connection with the dispute. The Company believes it is reasonably possible that this potential exposure may change based on the resolution of the ongoing discussions. No legal proceedings have been initiated with respect to this demand for payment or the prior agreement with the service provider.

SEC Investigation

~~Since~~As ~~being~~previously ~~contacted~~disclosed, bysince ~~the Staff of the SEC in~~ March 2023, the Company has been cooperating with ~~the~~an ~~Staff’s~~SEC investigation into issues related to the Company’s key performance indicators and revenue recognition practices that led to the Restatement and related issues (the “SEC Investigation”). ~~The~~Subsequent ~~Company~~to ~~cannot~~March ~~predict~~31, 2026, the ~~duration~~Company orengaged ~~outcome~~in discussions with the Staff of the SEC ~~Investigation~~regarding ora ~~whether~~potential resolution of the ~~SEC~~investigation ~~will~~and, ~~bring~~based anon ~~enforcement~~available ~~action~~information ~~against~~to date, has recorded a $250,000 liability on the ~~Company~~accompanying Condensed Consolidated Balance Sheets. See Note 22. Subsequent Events.

Other

The Company is and may become, from time to time, involved in other legal actions in the ordinary course of business, including governmental and administrative investigations, inquiries and proceedings concerning employment, labor, environmental and other claims. Although management is unable to predict with certainty the eventual outcome of any legal action, management believes the ultimate liability arising from such actions, individually and in the aggregate, which existed at March 31, 2026 (other than detailed above), will not materially affect the Company’s condensed consolidated results of operations, financial position or cash flows. Given the inherent unpredictability of these types of proceedings, however, it is possible that future adverse outcomes could have a material effect on the Company’s financial results.

1815.EQUITY

The Company’s second amended and restated certificate of incorporation designates and authorizes the Company to issue 1.1 billion shares, consisting of (i) 1.0 billion shares of common stock, par value $0.0001 per share, and (ii) 100.0 million shares of preferred stock, par value $0.0001 per share.

Latch, Inc. and Subsidiaries

Notes to Condensed Consolidated Financial Statements (unaudited)

(in thousands, except share and per share data)

environmental and other claims. Although management is unable to predict with certainty the eventual outcome of any legal action, management believes the ultimate liability arising from such actions, individually and in the aggregate, which existed at September 30, 2025 (other than detailed above), will not materially affect the Company’s condensed consolidated results of operations, financial position or cash flows. Given the inherent unpredictability of these types of proceedings, however, it is possible that future adverse outcomes could have a material effect on the Company’s financial results.

16.EQUITY

Common Stock Reserved for Future Issuance

The Company’s reserved shares for future issuance included the following:

September 30, 2025

December 31, 2024

March 31, 2026

December 31, 2025

Stock options issued and outstanding

2221,~~104~~701,~~717~~679

2621,~~436~~829,~~951~~679

Restricted stock units issued and outstanding

~~375~~50,~~640~~005

Public warrants outstanding

9,999,967

Private placement warrants outstanding

5,333,334

Bank warrant

1,000,000

2021 Incentive Award Plan available shares

3847,~~443~~161,~~376~~950

2538,~~869~~821,~~878~~060

Total

7785,~~257~~246,~~034~~935

6977,~~015~~034,~~770~~045

Public Warrants

AsUpon ~~part of~~ the closing of the 2021 Business Combination, 10.0 million public warrants sold during ~~TSIA’s~~the 2020 initial public offering of TSIA (the “TSIA IPO”) converted into 10.0 million public warrants to purchase up to 10.0 million shares of common stock of the Company, which are exercisable at $11.50 per share. The warrants will expire on June 4, 2026 or earlier upon redemption or liquidation. The Company accounts for warrants as required under ASC 815, Derivatives and Hedging (“ASC 815”) and has concluded that equity classification would be met for the public warrants as the Company has a single class of equity, and thus all holders vote 100% on all matters submitted to the Company’s stockholders and receive the same form of consideration in the event of a change of control (thus qualifying for the exception to the net cash settlement model), and the other conditions of equity classification would be met.

Private Placement Warrants

AsUpon ~~part of~~ the closing of the 2021 Business Combination, Legacy Latch assumed the private placement warrants that were originally issued in connection with the TSIA’s ~~initial~~IPO ~~public offering~~ (the “Private Placement Warrants”). The Private Placement Warrants will expire on June 4, 2026 or earlier upon redemption or liquidation. In response to SEC guidance, the Company determined to classify the Private Placement Warrants as derivative liabilities measured at fair value, with changes in fair value each period reported in earnings.

Bank Warrant

On July 15, 2024, in a private placement concurrent with the Company’s entry into the Loan Agreement, the Company issued ~~the~~a ~~Bank~~warrant ~~Warrant~~ to Customers Bank to purchase 1,000,000 shares of the Company’s common stock (the “Bank Warrant”). The Bank Warrant has an exercise price of $1.25 per share, is exercisable immediately and will expire on July 15, 2030. The Bank Warrant is classified as a liability under ASC 815 and is remeasured at fair value each reporting period, with changes recognized in other income (expense), net.

19At issuance, the Bank Warrant was recorded at its fair value of $0.2 million, as determined by an independent valuation specialist and included in other non-current liabilities, with an equal amount recorded as a reduction of the term loan, non-current on the accompanying Condensed Consolidated Balance Sheets. The reduction of the term loan is being amortized to interest expense over the 60-month loan term. The warrant liability is remeasured at fair value each reporting period, with changes recognized in other (expense) income, net on the accompanying Condensed Consolidated Statements of Operations and Comprehensive Loss.

Latch, Inc. and Subsidiaries

Notes to Condensed Consolidated Financial Statements (unaudited)

(in thousands, except share and per share data)

1716.EARNINGS PER SHARE

The following table sets forth the computation of basic and diluted net loss per share for common stock:

	Three Months Ended September 30,				Nine Months Ended September 30,
	Three Months Ended March 31,
	2025		2024		2025		2024
	2026		2025
Net loss	$	(65,~~582~~938)	$	(1711,~~056~~250)	$	~~(25,681)~~	$	~~(47,630)~~
Basic weighted-average common shares(1)	160,~~435~~658,~~461~~450		~~156~~160,~~386~~272,~~470~~142		~~160,375,254~~		~~156,386,470~~
Effect of dilutive securities	—		—		—		—
Diluted weighted-average common shares(1)	160,~~435~~658,~~461~~450		~~156~~160,~~386~~272,~~470~~142		~~160,375,254~~		~~156,386,470~~
Basic and diluted net loss per common share	$	(0.04)	$	(0.1107)	$	~~(0.16)~~	$	~~(0.30)~~

(1)The basic and diluted weighted-average common shares exclude (i) the Sponsor Shares and (ii) shares held by Jamie Siminoff, the Company’s former Chief Strategy Officer, that were subject to a right of repurchase held by the Company.

The table below sets forth the number of potential common shares underlying outstanding common stock options, restricted common stock, restricted stock units (“RSUs”) and common stock warrants that were excluded from diluted net loss per share as the Company had net losses, and their inclusion would be anti-dilutive:

September 30, 2025

September 30, 2024

March 31, 2026

March 31, 2025

Stock options

2221,~~104~~701,~~717~~679

4625,~~423~~804,~~362~~752

Restricted common stock held by the Sponsor

738,000

Restricted common stock held by Jamie Siminoff

2,861,351

193,~~075~~815,~~675~~135

Restricted stock units

~~375~~50,~~640~~005

6375,~~038,738~~640

Warrants

16,333,301

Total

4241,~~413~~684,~~009~~336

8847,~~609~~066,~~076~~828

1817.STOCK-BASED COMPENSATION

The ~~components~~Company’s stock incentive plans provide for grants of stock options, performance-~~based~~vesting ~~compensation~~stock ~~expense~~options, ~~were~~RSUs, performance-vesting RSUs and shares of common stock as ~~follows:~~compensation for services received from service providers.

	Three Months Ended September 30,				Nine Months Ended September 30,
	2025		2024		2025		2024
Stock options	$	73	$	205	$	311	$	312
Restricted common stock(1)	98		1,402		47		4,174
Restricted stock units	—		225		14		1,444
Capitalized costs(2)	(4)		(59)		(4)		(169)
Total stock-based compensation expense	$	167	$	1,773	$	368	$	5,761

Stock Incentive Plans

In January 2016, Legacy Latch adopted the Latch, Inc. 2016 Stock Plan (1the “2016 Plan” and, together with the Latchable, Inc. 2014 Stock Incentive Plan, the “Prior Plans”) ~~See~~. Under the ~~section~~2016 ~~entitled~~Plan, Legacy Latch’s board of directors was authorized (i) to grant either incentive stock options (“~~—Jamie~~ISOs”) ~~Siminoff~~or ~~Restricted~~non-qualified ~~Common~~stock ~~Stock~~options (“NSOs”) to purchase shares of the Company’s common stock to its employees and (ii) to grant NSOs to purchase shares of the Company’s common stock to outside directors and consultants. When the 2021 Plan (defined below) became effective, 22,797,955 shares (adjusted for the exchange ratio of the 2021 Business Combination (the “Exchange Ratio”)) had been authorized for issuance under the 2016 Plan. Stock options under the 2016 Plan were granted with an exercise price equal to the stock’s fair market value at the grant date. Stock options outstanding under the 2016 Plan generally have ten-year terms and vest over a four-year period starting from the date specified in each award agreement. Since the effectiveness of the 2021 Plan, no additional awards have been or will be granted under the 2016 Plan. Upon the effectiveness of the 2021 Business Combination, all outstanding stock options under the Prior Plans, whether vested or unvested, converted into options to purchase a number of shares of common stock of the Company based on the Exchange Ratio. Awards previously granted under a Prior Plan remain subject to the provisions of such Prior Plan.

The Latch, Inc. 2021 Incentive Award Plan (2the “2021 Plan”) ~~Included~~ inwas ~~internally~~approved by the TSIA stockholders on June 3, 2021 and became effective upon the closing of the 2021 Business Combination. The 2021 Plan provides for the grant of stock options, including ISOs and NSOs, stock appreciation rights, restricted stock, RSUs and other stock-~~developed~~based ~~software~~and cash-based awards. The 2021 Plan has a term of ten years. The aggregate number of shares of the Company’s common stock available for issuance under the 2021 Plan is equal to (i) 22,500,611 ~~net~~shares plus (ii) an annual increase for ten years on the ~~accompanying~~first ~~Condensed~~day ~~Consolidated~~of ~~Balance~~each ~~Sheets.~~calendar year beginning on January 1, 2022, equal to the lesser of (a) 5% of the aggregate number of shares of the Company’s

2017

Latch, Inc. and Subsidiaries

Notes to Condensed Consolidated Financial Statements (unaudited)

(in thousands, except share and per share data)

~~Stock-based~~common ~~compensation~~stock ~~expense~~outstanding ison ~~included~~the inlast ~~cost~~day of ~~revenue,~~the ~~research~~immediately preceding calendar year and ~~development~~(b) such smaller amount of shares as determined by the Board. As of January 1, ~~sales~~2026, ~~and~~the ~~marketing~~total ~~and~~number ~~general~~of ~~and~~shares ~~administrative~~reserved onfor issuance under the ~~accompanying~~2021 ~~Condensed~~Plan ~~Consolidated~~had ~~Statements~~increased by 39,647,714. As of ~~Operations~~March 31, ~~and~~2026, ~~Comprehensive~~there ~~Loss~~were as47,161,950 ~~follows:~~shares available for future grants under the 2021 Plan.

	Three Months Ended September 30,				Nine Months Ended September 30,
	2025		2024		2025		2024
Cost of revenue	$	(1)	$	—	$	1	$	3
Research and development	7		141		53		676
Sales and marketing	(2)		30		37		33
General and administrative	163		1,602		277		5,049
Total stock-based compensation expense	$	167	$	1,773	$	368	$	5,761

On August 11, 2024 (the “Program Effective Date”), the Board approved a performance-based equity incentive program (the “Performance Equity Program”) pursuant to which awards of performance-vesting stock options (“Performance Options”) and performance-vesting RSUs (“PSUs”) were expected to be granted to Company officers and service providers, and the Company granted Performance Options to certain officers and key service providers.

~~Stock~~The ~~Incentive~~Performance ~~Plans~~Equity Program provided for the Company to grant awards under the 2021 Plan that would become eligible to vest based on the Company’s common stock reaching specified market trading prices (based on a trailing 60-day volume-weighted average price (“VWAP”)) within seven years after the Program Effective Date. Awards under the Performance Equity Program were generally expected to be granted 50% in the form of PSUs that would become eligible to vest, or “earned,” in three equally-sized tranches upon attaining a $1, $2 and $3 stock price hurdle, and 50% in the form of Performance Options that would become earned in three equally-sized tranches upon attaining a $4, $5 and $6 stock price hurdle. Upon attainment of a stock price hurdle, 25% of the earned tranche of PSUs and Performance Options would vest, with the remaining 75% of such earned tranche vesting in three equal annual installments over the next three years, subject to the applicable participant’s continued service through the vesting date.

InOn ~~January 2016, Legacy Latch adopted~~ the ~~Latch,~~Program ~~Inc.~~Effective ~~2016 Stock Plan (the “2016 Plan” and~~Date, ~~together with~~ the ~~Latchable,~~Board ~~Inc.~~granted ~~2014~~Performance ~~Stock~~Options ~~Incentive Plan, the “Prior Plans”). Under the 2016 Plan, Legacy Latch’s board of directors was authorized (i)~~ to ~~grant~~certain ~~either~~officers ~~incentive stock options (“ISOs”) or non-qualified stock options (“NSOs”) to purchase shares of the Company’s common stock to its employees~~ and ~~(ii)~~key toservice ~~grant~~providers ~~NSOs~~covering toa ~~purchase~~total ~~shares~~ of ~~the Company’s common stock to outside directors and consultants~~25.5 million ~~When the 2021 Plan (defined below) became effective, 22,797,955~~ shares (~~adjusted for~~ the ~~exchange ratio of the 2021 Business Combination (the~~ “~~Exchange~~Initial ~~Ratio~~Option Grant”)~~) had been authorized for issuance under the 2016 Plan~~. ~~Stock~~As ~~options~~described ~~under~~above, the ~~2016~~Performance ~~Plan~~Options were ~~granted~~eligible ~~with an exercise price equal~~ to ~~the~~be ~~stock’s~~earned ~~fair~~in ~~market~~three ~~value~~tranches atbased ~~the~~on ~~grant date. Stock options outstanding under~~ the ~~2016~~Company’s ~~Plan~~common ~~generally~~stock ~~have~~reaching ~~ten-year~~market ~~terms~~trading ~~and~~prices ~~vest~~(based ~~over~~on a ~~four~~trailing 60-~~year~~day ~~period~~VWAP) ~~starting~~before ~~from~~ the ~~date~~seventh ~~specified~~anniversary ~~in each award agreement. Since the effectiveness~~ of the ~~2021~~Program ~~Plan,~~Effective ~~no additional awards have been or will be granted under the 2016 Plan. Upon the effectiveness of the 2021 Business Combination~~Date, ~~all~~as ~~outstanding~~set ~~stock~~forth ~~options~~in ~~under~~ the ~~Prior~~following Plans, whether vested or unvested, converted into options to purchase a number of shares of common stock of the Post-Combination Company based on the Exchange Ratio. Awards previously granted under a Prior Plan remain subject to the provisions of such Prior Plan.table:

The Latch, Inc. 2021 Incentive Award Plan (the “2021 Plan”) was approved by the TSIA stockholders on June 3, 2021 and became effective upon the closing of the 2021 Business Combination. The 2021 Plan provides for the grant of stock options, including ISOs and NSOs, stock appreciation rights, restricted stock, RSUs and other stock-based and cash-based awards. The 2021 Plan has a term of ten years. The aggregate number of shares of the Company’s common stock available for issuance under the 2021 Plan is equal to (i) 22,500,611 shares plus (ii) an annual increase for ten years on the first day of each calendar year beginning on January 1, 2022, equal to the lesser of (a) 5% of the aggregate number of shares of the Company’s common stock outstanding on the last day of the immediately preceding calendar year and (b) such smaller amount of shares as determined by the Company’s board of directors. Effective January 1, 2022, 2023, 2024 and 2025, the number of shares reserved for future issuance under the 2021 Plan increased by 7,116,177, 7,267,376, 8,810,007 and 8,241,264 shares, respectively. As of September 30, 2025, there were 38,443,376 shares available for future grants under the 2021 Plan.


Earned Tranche	Shares Subject to the Performance Option	Share Price Hurdle
1	33.33% of award	$4.00
2	33.33% of award	$5.00
3	33.34% of award	$6.00

21Upon attainment of a stock price hurdle, 25% of each earned tranche of Performance Options would vest, with the remaining 75% of such earned tranche vesting in three equal annual installments over the next three years, subject to the applicable participant’s continued service through the vesting date. The Performance Options had an exercise price of $0.41 and a ten year term; however, any portion of the Performance Option corresponding to a tranche that had not become earned based on the achievement of a share price hurdle within seven years after the Program Effective Date would be cancelled and forfeited.

In addition to the performance-based and service-based vesting requirements described above, (i) the first tranche of the Performance Option would, to the extent vested, only become exercisable in four equal installments on the second, third, fourth and fifth anniversaries of the Program Effective Date, (ii) the second tranche of the Performance Option would, to the extent vested, only become exercisable in four equal installments on the third, fourth, fifth and sixth anniversaries of the Program Effective Date, and (iii) the third tranche of the Performance Option would, to the extent vested, only become exercisable in four equal installments on the fourth, fifth, sixth and seventh anniversaries of the Program Effective Date.

On September 13, 2024, the Company granted approximately 8.6 million Performance Options to employees, none of whom participated in the Initial Option Grant. Such Performance Options have an exercise price of $0.48 and are otherwise substantially identical to those granted in the Initial Option Grant.

Since issuance through March 31, 2026, 25.1 million Performance Options were forfeited in connection with certain officers, key service providers, and employee terminations, resulting in 9.0 million Performance Options outstanding.

To date, no PSUs have been granted under the Performance Equity Program.

Latch, Inc. and Subsidiaries

Notes to Condensed Consolidated Financial Statements (unaudited)

(in thousands, except share and per share data)

Stock Options

A summary of ~~the status of~~ stock options as of ~~September~~March 3031, ~~2025~~2026, and changes during the ~~nine~~three months ended ~~September~~March 3031, ~~2025~~2026, is presented below:

	Options Outstanding	Weighted Average Exercise Price		Weighted Average Remaining Contractual Term~~(1)~~	Aggregate Intrinsic Value
Balance at December 31, 2024	26,436,951	$	0.56
Balance at December 31, 2025	21,829,679	$	0.58
Options granted	~~700,000~~—	$	~~0.16~~—
Options exercised	—	$	—
Options forfeited	(4128,~~531,832~~000)	$	0.4648
Options expired	~~(500,402)~~—	$	~~0.13~~—
Balance at September 30, 2025	22,104,717	$	0.58	6	$	—
Balance at March 31, 2026	21,701,679	$	0.58	5	$	33,000
Exercisable at September 30, 2025	12,013,397	$	0.71	2	$	—
Exercisable at March 31, 2026	12,180,063	$	0.70	2	$	7,000

~~(1) Approximately~~There ~~3.9~~were ~~million~~no ~~outstanding and exercisable~~ stock options ~~have~~granted ~~been~~or ~~excluded~~exercised ~~from~~and ~~the~~no ~~computation~~realized oftax-related ~~the~~benefits ~~weighted~~from ~~average~~disqualifying ~~remaining~~dispositions ~~contractual~~during ~~term.~~the ~~The~~three ~~remaining~~months ~~contractual~~ended ~~term~~March 31, of2026 ~~such~~and ~~options~~2025. ~~could~~During ~~not~~the bethree ~~reasonably~~months ~~estimated~~ended asMarch 31, ~~the~~2026, ~~term~~128,000 ~~end~~Performance ~~date~~Options ~~will~~were ~~not~~forfeited beas ~~known~~a ~~until~~result ~~the suspension~~ of ~~the~~employee ~~S-8 Registration Statement (as defined below) lapses~~terminations.

Total compensation expense not yet recognized related to unvested stock options was $0.104 million as of ~~September~~March 3031, ~~2025~~2026, which was expected to be recognized over a weighted-average period of 1.4.0 years. Stock options granted prior to 2024 had no material impact on the accompanying condensed consolidated financial statements. As of ~~September~~March 3031, ~~2025~~2026, total compensation expense not yet recognized related to the unvested performance stock options granted in 2024 was $1.75 million, which was expected to be recognized over a weighted-average period of 41.41 years.

Restricted Stock Units

The Company estimates the fair value of RSUs using the last trading price of its common stock as of the grant date. The Company’s RSUs are settled in shares of common stock after vesting and vest over a period of one to four years. The Company has the option, but not the obligation, to treat a participant’s failure to provide timely payment of any withholding tax arising in connection with RSUs as such participant’s election to satisfy all or any portion of the withholding tax by requesting the Company retain shares otherwise issuable pursuant to the RSU. In connection with the Restatement, the Company suspended use of its registration statement on Form S-8 under the Securities Act (the “S-8 Registration Statement”) on August 10, 2022. ~~Since~~Following ~~such~~the ~~date~~filing of the Form 10-K for the year ended December 31, 2025 on March 31, 2026, the ~~Company~~S-8 ~~has~~Registration ~~not~~Statement ~~granted~~became ~~any~~effective ~~RSUs~~again on April 2, 2026.

A summary of equity-based RSU activity is presented below:

	Number of RSUs	Weighted Average Grant Date Fair Value (per unit)
Balance at December 31, 2024	375,640	$	6.26
Balance at December 31, 2025	50,005	$	3.89
Granted	—	$	—
Vested and released	—	$	—
Forfeited	—	$	—
Balance at September 30, 2025	375,640	$	6.26
Balance at March 31, 2026	50,005	$	3.89

Approximately 0.1 million and 0.305 million RSUs vested during the ~~nine~~three months ended ~~September~~March 3031, ~~2025~~2026 and ~~the year ended December 31~~2025, ~~2024,~~ respectively, but were not released upon vesting due to the suspension of the S-8 Registration Statement. The S-8 Registration Statement became effective again on April 2, 2026. See Note 22. Subsequent Events.

2219

Latch, Inc. and Subsidiaries

Notes to Condensed Consolidated Financial Statements (unaudited)

(in thousands, except share and per share data)

Jamie Siminoff Restricted Common Stock

OnIn November 2024, the ~~closing~~Company ofand Mr. Siminoff mutually agreed that he would step down as the Company’s ~~acquisition~~Chief ofStrategy ~~HDW~~Officer on December 31, ~~the~~2024, ~~Company~~after ~~issued~~which tohe ~~HDW’s~~began ~~stockholders~~serving asin ~~merger~~an ~~consideration~~advisory ~~approximately~~role 29that was expected to continue through December 31, 2026. For the three months ended March 31, 2025, the Company recognized $0.1 million ~~shares~~ of compensation expense for the ~~Company’s~~post-combination ~~common~~services rendered. Total unrecognized stock-based compensation expense as of March 31, ~~including~~2025 ~~approximately~~was 19$0.15 million ~~shares~~and was expected to Mrbe recognized over a period of 2.8 ~~Siminoff~~years. (The Company terminated the “advisory services of Jamie Siminoff, ~~Shares”)~~the Company’s former Chief Strategy Officer, in May 2025.

Upon issuance by the Company, the Siminoff Shares were subject to vesting considerations and restrictions on transfer pursuant to a stock restriction agreement dated May 15, 2023 (the “Original Siminoff Stock Restriction Agreement”). The Company estimated the fair value of the Siminoff Shares on the closing date of the HDW acquisition to be $26.7 million based upon the $1.40 closing price of the Company’s common stock on such date. Of the $26.7 million, $5.7 million was attributable to pre-~~combination~~Based ~~service~~Compensation and included in the consideration transferred and $21.0 million was attributable to post-combination service to be recognized as stock-based compensation expense over the estimated service period of 3.8 years.Expense

OnThe ~~November~~components ~~18,~~of ~~2024~~stock-based ~~(the~~compensation ~~“Siminoff~~expense ~~Agreement~~were ~~Date”), the Company and Mr. Siminoff mutually agreed that Mr. Siminoff would step down~~ as the Company’s Chief Strategy Officer on December 31, 2024, after which he began serving in an advisory role that was expected to continue through December 31, 2026 (such advisory services, the “Advisory Services,” and such date, the “Advisory End Date”).follows:

On the Siminoff Agreement Date, Mr. Siminoff and the Company entered into a Separation and Advisory Agreement and Release, pursuant to which the Company and Mr. Siminoff agreed to amend and restate the Original Siminoff Stock Restriction Agreement.


	Three Months Ended March 31,
	2026		2025
Stock options	$	99	$	137
Restricted common stock(1)	56		96
Restricted stock units	—		14
Capitalized costs(2)	(1)		4
Total stock-based compensation expense	$	154	$	251

~~Pursuant~~(1) Shares toof ~~the amended and restated~~ common stock ~~restriction~~issued ~~agreement~~to (the ~~“Restated~~Holders ~~Restriction~~as ~~Agreement”),~~merger ~~the~~consideration ~~Company~~in ~~exercised its repurchase option with respect to 15,260,540 of~~ the ~~Siminoff~~HDW ~~Shares~~acquisition ~~for~~that ~~$0.00005080~~were ~~per~~treated ~~share~~as ~~(the~~replacement ~~“Repurchase~~awards ~~Price”),~~of orunvested aHDW ~~total~~common ~~payment of $775~~stock.~~24.~~

~~Pursuant to the Restated Restriction Agreement, the 3,815,135 Siminoff Shares that were not repurchased~~ (~~the “Remaining Shares”~~2) Included ~~were~~in ~~subject~~internally-developed ~~to transfer restrictions and an amended repurchase option (the “Amended Repurchase Option”)~~software, ~~pursuant~~net toon ~~which~~ the ~~Company~~accompanying ~~had~~Condensed ~~the~~Consolidated ~~right~~Balance to repurchase the Remaining Shares at the Repurchase Price to the extent not released from the transfer restrictions and the Amended Repurchase Option by the fifth anniversary of the effective date of the Restated Restriction AgreementSheets.

~~The~~Stock-based ~~Remaining~~compensation ~~Shares~~expense ~~were~~is ~~split~~included ~~into~~in ~~two~~cost ~~tranches~~of ~~with~~revenue, ~~different~~research ~~provisions~~and ~~governing~~development, ~~their~~sales ~~release~~and ~~from~~marketing ~~the~~and ~~transfer~~general ~~restrictions~~ and administrative on the ~~Amended~~accompanying ~~Repurchase~~Condensed ~~Option:~~Consolidated ~~the~~Statements ~~Separation~~of ~~Shares~~Operations and ~~the~~Comprehensive ~~Advisory~~Loss ~~Shares (each~~ as ~~hereafter defined).~~follows:

The “Separation Shares” consisted of 2,861,351 shares (representing 75% of the Remaining Shares) releasable from the transfer restrictions and the Amended Repurchase Option in equal tranches based upon the Company’s common stock reaching specified market trading prices. For the three and nine months ended September 30, 2025, the Company recognized stock-based compensation expense of $0.1 million and $0.3 million, respectively, related to the Separation Shares. The unrecognized stock-based compensation expense related to the Separation Shares was $0.5 million as of September 30, 2025, which was being expensed over a weighted-average period of 3.0 years.


	Three Months Ended March 31,
	2026		2025
Cost of revenue	$	—	$	1
Research and development	14		43
Sales and marketing	14		20
General and administrative	126		187
Total stock-based compensation expense	$	154	$	251

~~Prior to the execution of the Restated Restriction Agreement, the Company recognized stock-based compensation expense of $1~~18.4INTEREST ~~million and $4.2 million for the three and nine months ended September 30~~EXPENSE, 2024, respectively, of the $21.0 million attributable to post-combination service. Total unrecognized stock-based compensation expense related to the Siminoff Shares as of September 30, 2024 was $14.1 million, which was being expensed over a period of 2.5 years.NET

The ~~“Advisory~~components ~~Shares” consisted~~ of ~~953~~interest expense,~~784~~ ~~shares~~net ~~(representing~~include ~~25%~~interest ofexpense ~~the~~associated ~~Remaining~~with ~~Shares) releasable from~~ the ~~transfer~~significant ~~restrictions~~financing ~~and~~component ~~the Amended Repurchase Option on the Advisory End Date, provided that a termination~~ of the ~~Advisory~~Company’s ~~Services~~longer-term ~~had~~software ~~not~~contracts ~~occurred~~and ~~prior~~interest toexpense ~~such~~associated ~~date.~~with In the ~~event~~Company’s ofdebt ~~such~~financing ~~termination~~arrangements, ~~certain~~offset ~~Advisory~~by ~~Shares~~interest ~~would~~income ~~not~~on behighly ~~released,~~liquid asshort-term ~~set forth in the Restated Restriction Agreement~~investments.

InInterest ~~May 2025~~expense, ~~the~~net ~~Company~~is ~~terminated~~summarized ~~the~~as Advisory Services. In connection therewith, the Company repurchased 0.8 million of the Advisory Shares from Mr. Siminoff for the Repurchase Price, or a total payment of $40.16, with the balance released from the Amended Repurchase Option and the transfer restrictions. The repurchase resulted in the reversal of $0.2 million of stock-based compensation expense by the Company.follows:


	Three Months Ended March 31,
	2026		2025
Interest income	$	245	$	614
Interest expense	(568)		(867)
Interest expense, net	$	(323)	$	(253)

Latch, Inc. and Subsidiaries

Notes to Condensed Consolidated Financial Statements (unaudited)

(in thousands, except share and per share data)

19.~~INTEREST (EXPENSE)~~ INCOME, ~~NET~~TAXES

The ~~components of interest (expense)~~ income, ~~net~~tax ~~include~~provision ~~interest~~for ~~expense associated with~~ the ~~significant~~three ~~financing~~months ~~component~~ended ofMarch 31, ~~the~~2026 ~~Company’s~~and ~~longer-term~~2025 ~~software~~was ~~contracts~~zero and ~~interest expense associated with the Company’s debt financing arrangements~~zero, ~~offset by interest income on highly liquid short-term investments~~respectively.

~~Interest~~For ~~(expense)~~the ~~income~~three months ended March 31, ~~net~~2026 and 2025, the Company’s effective tax rate was different from the U.S. federal statutory rate. This difference is ~~summarized~~primarily asattributable ~~follows:~~to the effect of foreign, state and local income taxes and permanent differences between expenses deductible for financial reporting purposes offset by the valuation allowances placed on the Company’s deferred tax assets.

	Three Months Ended September 30,				Nine Months Ended September 30,
	2025		2024		2025		2024
Interest income	$	453	$	1,327	$	1,544	$	4,950
Interest expense	(704)		(922)		(2,329)		(3,578)
Interest (expense) income, net	$	(251)	$	405	$	(785)	$	1,372

As of March 31, 2026, no liability for unrecognized tax benefits was required to be recorded by the Company. Management does not expect any significant changes in its unrecognized tax benefits in the next 12 months.

20.INCOME TAXES

The income tax provision for the three and nine months ended September 30, 2025 was zero and zero, respectively. The income tax provision for the three and nine months ended September 30, 2024 was zero and $0.002 million, respectively.

For the three and nine months ended September 30, 2025 and 2024, the Company’s effective tax rate was different from the U.S. federal statutory rate. This difference is primarily attributable to the effect of foreign, state and local income taxes and permanent differences between expenses deductible for financial reporting purposes offset by the valuation allowances placed on the Company’s deferred tax assets.

As of September 30, 2025, no liability for unrecognized tax benefits was required to be recorded by the Company. Management does not expect any significant changes in its unrecognized tax benefits in the next 12 months.

To date, the Company has incurred cumulative net losses and maintains a full valuation allowance on its net deferred tax assets as the Company has determined that it is more likely than not that these assets will not be fully realized.

2120.RELATED-PARTY TRANSACTIONS

The Company has customers who are also stockholders and directors, or affiliates thereof, in the Company. The Company charges market rates for products and services that are offered to ~~such~~these customers. As of ~~September~~March 3031, ~~2025~~2026 and December 31, ~~2024~~2025, the Company had $0.3 million and $0.052 million, respectively, of receivables due from these customers, which isare included within accounts receivable on the accompanying Condensed Consolidated Balance Sheets. For the three ~~and nine~~ months ended ~~September~~March 3031, ~~2025~~2026, the Company had $0.~~001~~002 million ~~and $0.004 million, respectively,~~ of hardware revenue, $0.0503 million ~~and $0.1 million, respectively,~~ of software revenue, and $0.43 million ~~and $0.9 million, respectively,~~ of services revenue from these customers, which was included on the accompanying Condensed Consolidated Statements of Operations and Comprehensive Loss. For the three ~~and nine~~ months ended ~~September~~March 3031, ~~2024~~2025, the Company had $0.01001 million ~~and $0.01 million, respectively,~~ of hardware revenue and $0.0305 million ~~and $0.11 million, respectively,~~ of software revenue from these customers, which is included on the accompanying Condensed Consolidated Statements of Operations and Comprehensive Loss.

2221.RECENTLY ISSUED ACCOUNTING STANDARDS

Recently Adopted Pronouncements

No new accounting standards that were material to the Company were adopted in the three months ended ~~September~~March 3031, ~~2025~~2026.

Accounting Pronouncements Not Yet Adopted

In October 2023, the Financial Accounting Standards Board (the “FASB”) issued Accounting Standards Update (“ASU”) 2023-06, Disclosure Improvements: Codification Amendments in Response to the SEC’s Disclosure Update and Simplification Initiative (“ASU 2023-06”). ASU 2023-06 was intended to align the requirements of the ASC with overlapping SEC requirements. The guidance in ASU 2023-06 is required to be applied prospectively, and the ASC amendments will be effective only upon the removal of the overlapping SEC disclosure requirements. If, however, the SEC does not act to remove the relevant overlapping requirements by June 30, 2027, the FASB amendments will not be effective. The Company does not anticipate that the adoption of ASU 2023-06 will have a material impact on its consolidated financial statements.

24In November 2024, the FASB issued ASU 2024-03, Disaggregation of Income Statement Expenses (Subtopic 220-40) (“ASU 2024-03”). ASU 2024-03 requires additional disclosure of the nature of expenses included in the income statement as well as disclosures about specific types of expenses included in the expense captions presented in the income statement. In addition, the FASB issued ASU 2025-01, Income Statement - Reporting Comprehensive Income - Expense Disaggregation Disclosures (Subtopic 220-40): Clarifying the Effective Date in January 2025 to clarify the requirement to adopt ASU 2024-03 in annual reporting periods beginning after December 15, 2026 and interim periods within annual reporting periods beginning after December 15, 2027. The Company is currently evaluating these standards to determine the impact on its consolidated financial statements and related disclosures.

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 (“ASU 2025-06”). ASU 2025-06 amends the guidance in ASC 350-40, Intangibles—Goodwill and Other—Internal-Use Software. The amendments modernize the recognition and disclosure framework for internal-use software costs, removing the previous “development stage” model and introducing a more judgment-based approach. ASU 2025-06 is effective for fiscal years beginning after December 15, 2027

Latch, Inc. and Subsidiaries

Notes to Condensed Consolidated Financial Statements (unaudited)

(in thousands, except share and per share data)

~~amendments~~and ~~will~~for beinterim ~~effective~~periods ~~only~~within ~~upon~~those ~~the~~annual ~~removal~~reporting ~~of the overlapping SEC disclosure requirements. If~~periods, ~~however,~~with ~~the~~early ~~SEC~~adoption ~~does not act to remove the relevant overlapping requirements by June 30, 2027, the FASB amendments will not be effective~~permitted. The Company ~~does~~is ~~not~~currently ~~anticipate~~evaluating ~~that~~ the ~~adoption~~impact of ASU ~~2023~~2025-06 ~~will have a material impact~~ on its consolidated financial statements.

In ~~December~~November ~~2023~~2025, the FASB issued ASU ~~2023~~2025-0908, ~~Income~~Financial ~~Taxes~~instruments – Credit Losses (Topic ~~740~~326): ~~Improvements~~Purchased toLoans ~~Income~~(“ASU ~~Tax Disclosures~~2025-08:), which ~~intends~~amends tothe ~~increase~~guidance in ASC 326 on the ~~transparency~~accounting offor ~~income~~certain ~~tax~~purchased ~~disclosures~~loans. Under ASU 2025-08, ~~particularly~~entities ~~the~~must ~~rate~~account ~~reconciliation~~for ~~table~~acquired ~~and~~loans, ~~disclosures~~excluding ~~about~~credit ~~income~~card, ~~taxes~~that ~~paid.~~meet ~~For~~certain ~~public~~criteria ~~business~~at ~~entities,~~acquisition it(purchased isseasoned ~~effective~~loans) by recognizing them at their purchase price plus an allowance for ~~annual~~expected ~~periods~~credit ~~beginning~~losses. ~~after~~Purchased ~~December~~seasoned ~~15,~~loans ~~2024,~~are ~~and~~defined ~~interim~~as ~~periods~~either: ~~beginning~~(i) ~~after~~non-purchased ~~December~~credit ~~15,~~deteriorated ~~2025,~~loans ~~with~~that ~~early~~are ~~adoption~~obtained ~~permitted.~~in ~~The~~a ~~Company~~business ~~has~~combination, ~~not~~or ~~early~~(ii) non-~~adopted~~purchased ~~this~~credit ~~standard~~deteriorated ~~and~~loans that (a) are obtained in an asset acquisition or upon consolidation of a variable interest entity that is ~~evaluating~~not ~~its~~a ~~impact~~business onand ~~the~~(b) ~~Company’s~~are ~~consolidated~~acquired ~~financial~~more ~~statements~~than ~~for~~90 ~~the~~days ~~year~~after ~~ended~~their ~~December~~origination ~~31,~~date by a transferee that was not involved in their origination. The Company is currently evaluating the impact of ASU 2025-08 on its consolidated financial statements.

In ~~November~~December ~~2024~~2025, the FASB issued ASU ~~2024~~2025-0311, ~~Disaggregation~~Interim ofReporting ~~Income Statement Expenses~~ (~~Subtopic~~Topic ~~220-40~~270): Narrow-Scope Improvements (“ASU ~~2024~~2025-0311”). ASU ~~2024~~2025-0311 ~~requires~~clarifies ~~additional~~the ~~disclosure~~applicability of the ~~nature~~interim ofreporting ~~expenses~~guidance, ~~included in~~ the ~~income~~types ~~statement~~of asinterim ~~well~~reporting, asand ~~disclosures~~the ~~about~~form ~~specific~~and ~~types~~content of ~~expenses~~interim ~~included~~financial instatements ~~the expense captions presented~~ in ~~the~~accordance ~~income~~with ~~statement~~GAAP. InPer ~~addition,~~ the FASB, ~~issued~~this ASU ~~2025-01,~~is ~~Income~~not ~~Statement~~intended -to ~~Reporting~~change ~~Comprehensive~~the ~~Income~~fundamental -nature ~~Expense~~of ~~Disaggregation~~interim ~~Disclosures~~reporting ~~(Subtopic~~or ~~220-40):~~expand ~~Clarifying~~or ~~the~~reduce ~~Effective~~current ~~Date~~interim indisclosure ~~January~~requirements ~~2025~~but torather ~~clarify~~provide ~~the~~clarity ~~requirement~~and toimprove ~~adopt~~navigability ~~ASU~~of ~~2024-03~~the inexisting ~~annual~~interim reporting ~~periods~~requirements. ~~beginning~~This ~~after~~guidance ~~December~~is ~~15,~~effective ~~2026~~for ~~and~~ interim reporting periods within annual reporting periods beginning after December 15, 2027. Early adoption is permitted. The Company is currently evaluating ~~these~~the ~~standards~~impact toof ~~determine~~ASU ~~the~~2025-11 ~~impact~~ on its consolidated financial statements ~~and related disclosures~~.

In ~~September~~December 2025, the FASB issued ASU 2025-0612, ~~Intangibles~~Codification ~~- Goodwill and Other - Internal-Use Software (Subtopic 350-40): Targeted~~ Improvements ~~to the Accounting for Internal-Use Software~~ (“ASU 2025-0612”). ASU 2025-0612 ~~amends~~addresses ~~the~~suggestions ~~guidance~~received infrom ~~ASC~~stakeholders ~~350-40,~~regarding ~~Intangibles—Goodwill~~the ASC and ~~Other—Internal-Use~~makes ~~Software~~other incremental improvements to GAAP. The ~~amendments~~update ~~modernize~~represents changes to the ~~recognition~~ASC ~~and~~that ~~disclosure~~clarify, ~~framework~~correct ~~for~~errors ~~internal-use~~in ~~software~~or ~~costs,~~make ~~removing~~other ~~the~~improvements ~~previous~~to ~~“development~~a ~~stage”~~variety ~~model~~of ~~and~~topics ~~introducing~~that aare ~~more~~intended ~~judgment-based~~to ~~approach~~make it easier to understand and apply. ~~ASU~~This ~~2025-06~~guidance is effective for ~~fiscal~~annual ~~years~~periods beginning after December 15, ~~2027~~2026, ~~and~~including ~~for~~ interim reporting periods within those ~~annual~~fiscal ~~reporting periods~~years, with early adoption permitted. Entities are required to apply the amendments to ASC 260, Earnings Per Share, retrospectively. All other amendments may be applied prospectively or retrospectively. The Company is currently evaluating the impact of ASU 2025-0612 on its consolidated financial statements.

Management has evaluated other recently issued accounting pronouncements and does not believe that any of these pronouncements will have a significant impact on the Company’s consolidated financial statements and related disclosures.

2322.SUBSEQUENT EVENTS

The Company has evaluated subsequent events through the date of these financial statements and determined that there have been no events that have occurred that would require adjustments to its disclosures in the accompanying condensed consolidated financial statements.

25Registration Statement

The Company filed a S-8 Registration Statement to register shares of its common stock or securities convertible into or exchangeable for shares of common stock issued pursuant to the 2021 Plan. The S-8 Registration Statement automatically became effective upon filing on August 9, 2021, but the Company suspended use of the S-8 Registration Statement commencing with the Company’s filing of a Notification of Late Filing on Form 12b-25 on August 10, 2022.

Upon the filing of the Form 10-K for the year ended December 31, 2025 on March 31, 2026, the Company became current in its reporting obligations and the S-8 Registration Statement became effective again on April 2, 2026.

SEC Investigation

Subsequent to March 31, 2026, the Company engaged in discussions with the Staff of the SEC regarding a potential resolution of the investigation and, based on available information to date, has recorded a $250,000 liability on the accompanying Condensed Consolidated Balance Sheets. As the Company continues its discussions with the SEC, the amount of the resolution could exceed this accrual. The Company cannot predict whether a resolution with the SEC will be reached, the timing of any such resolution, the duration, or outcome of the SEC investigation, or whether the SEC will bring an enforcement action.

Latch, Inc. and Subsidiaries

Notes to Condensed Consolidated Financial Statements (unaudited)

(in thousands, except share and per share data)

Investment in Private Company

On May 1, 2026, the Company received cash consideration of $1.7 million in connection with the acquisition by a third-party of a privately held company. The Company held an investment in the privately held company of 654,000 shares of common stock as described in Note 6. Investments. As a result of this transaction, the Company will recognize a realized gain of $0.8 million.

Debt Refinance

Entry into a Material Definitive Agreement.

On May 11, 2026, DOOR Systems entered into a revolving credit facility (the “Credit Facility”) with Truist Bank (the “Lender”), providing for borrowing of up to $5.0 million. The Credit Facility matures in May 2028, bears interest at a variable rate equal to one-month term Secured Overnight Financing Rate plus 1.75% per annum. The Credit Facility requires monthly interest-only payments, with all principal due at maturity, and includes customary fees, reporting requirements and events of default.

The Credit Facility is governed by a promissory note (the “Promissory Note”) and related loan documents. To secure the Credit Facility, the Company is required to maintain a minimum cash balance of $5.25 million in a restricted deposit account with the Lender. Borrowing under the Credit Facility is secured by certain cash deposit accounts and/or certificates of deposit of the Company, including all funds held therein.

The Promissory Note contains customary covenants and events of default, including covenants relating to:

•delivery of periodic financial reporting to the lender;

•maintenance of the lender’s security interest in collateral;

•compliance with applicable sanctions, anti-corruption and other laws;

•restrictions on certain mergers, liquidations and other fundamental transactions; and

•use of loan proceeds for permitted business purposes.

If an event of default exists under the Promissory Note, the Lender will be able to accelerate the maturity of the loan and exercise other rights and remedies. Events of default include, but are not limited to, the following events:

•failure to pay any principal or interest within three business days of the due date;

•failure to perform or otherwise comply with the covenants and obligations in the Promissory Note, subject, in certain instances, to certain grace periods;

•bankruptcy or insolvency events involving the Company; or

•any lien or security interest of the Lender in the collateral, or any portion thereof, terminates, fails for any reason to have the priority agreed to by the Lender on the date granted, or becomes unenforceable, unperfected or invalid for any reason.

The foregoing description of the Credit Facility and the Promissory Note does not purport to be complete and is qualified in its entirety by reference to the full text of the Promissory Note filed as Exhibits 10.3 to this Quarterly Report on Form 10-Q, each of which is incorporated herein by reference.

Termination of a Material Definitive Agreement

In connection with entering into the Credit Facility, the Company borrowed approximately $4.4 million under the Credit Facility to repay all outstanding principal, accrued interest, and fees under the Loan. Upon repayment, all amounts and other obligations under the Loan Agreement were satisfied, and the Loan Agreement and all commitments thereunder were terminated. No material early termination penalties were incurred.

In connection with the termination of the Loan Agreement, liens and security interests previously granted in favor of Customers Bank will be released subject to customary payoff documentation, including lien releases and UCC termination statements.

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

The following discussion and analysis of our financial condition and results of operations should be read in conjunction with the accompanying condensed consolidated financial statements and the related notes of Latch, Inc. and its subsidiaries included elsewhere in this Form 10-Q. Some of the information contained in this discussion and analysis contains forward-looking statements that involve risks and uncertainties. As a result of many factors, such as those set forth in the section captioned “Risk Factors” in the ~~2024~~2025 Annual Report, as updated in this Form 10-Q, actual results may differ materially from those anticipated in these forward-looking statements. ~~References~~Unless the context otherwise requires, references in this subsection to “we,” “our,” “Latch,” “DOOR” and the “Company” refer to the business and operations of Latch, Inc. and its consolidated subsidiaries.

Overview

Latch iscombines aaccess ~~technology~~control ~~company~~hardware ~~delivering~~and ansmart ~~integrated~~home ~~ecosystem~~technology ofinto ~~hardware~~one unified platform, ~~software~~connecting access, devices, and ~~services~~property ~~designed~~data to ~~enhance~~improve operations ~~and~~across ~~experiences within buildings~~portfolios, primarily serving the multifamily ~~rental~~and ~~market~~student housing markets. In August 2025, we rebranded as DOOR, although our legal name remains Latch, Inc.

Our core offering is built around a proprietary, cloud-based software-as-a-service (“SaaS”) platform (the “DOOR Platform”), which powers and manages our suite of smart access control devices (including locks, readers and intercoms) and smart home devices and integrates with other connected devices within a building.

We provide solutions that streamline building management for property owners and operators, offer modern convenience and security for residents and simplify interactions for visitors and service providers. While our foundation remains smart access control, we are actively expanding the DOOR Platform and our device integrations to encompass broader smart home solutions, managing devices such as sensors, thermostats and lighting. This ongoing expansion leverages our established platform to create more connected and efficient buildings as we lay the groundwork for a building intelligence platform, automating and streamlining building operations, including work order management and automation, property maintenance and unit inspections and repairs.

Our customers, which include real estate developers, builders, owners and property managers in the United States and Canada, typically purchase our hardware devices and license our SaaS platform (directly or indirectly through our channel partner network) ~~and directly license our SaaS platform~~. Residents interact with the DOOR Platform through the DOOR mobile application and its predecessor Latch mobile application (together, the “DOOR App”). Through the DOOR App, residents access common areas and unlock residential doors, provide guest access, manage smart home devices and book services.

Our professional services offerings are integral to ensuring successful deployment of the DOOR Platform and ongoing support for our customers and their residents. This includes connecting our multifamily property customers with our partners for installation of Latch and third-party smart access and smart home hardware, ensuring that solutions are implemented efficiently and correctly.

Complementing our multifamily installation capabilities, our HelloTech, Inc. (“HelloTech”) business provides a scalable, nationwide network of skilled independent technicians. HelloTech connects these service providers with residents and property managers seeking a wide range of on-demand technical services, such as TV mounting and smart home device installation and set-up, as well as broader home services, such as furniture assembly, ~~handyman services~~ and ~~home~~handyman ~~cleaning~~services.

Additionally, we offer a comprehensive property management service in and around Boston, Massachusetts.

We operate in one operating and reporting segment.

Key Business Metrics

We are presenting software revenue (prepared in accordance with generally accepted accounting principles in the United States of America (“GAAP”)), total revenue (GAAP), net loss (GAAP) and Adjusted EBITDA (non-GAAP) as key business metrics, as we believe each of those metrics is important in measuring our performance, identifying trends affecting our business, formulating business plans and making strategic decisions that will impact our future operational results.

2624

Our key business metrics are as follows for the periods presented (in thousands):

	Three Months Ended September 30,
	Three Months Ended March 31,
	2025		2024			$ Change		% Change
	2026		2025			$ Change		% Change
GAAP Measures:
Software revenue	$	56,~~370~~143	$	5,~~077~~159		$	~~293~~984	519.81	%
Total revenue	$	1715,~~426~~702	$	1415,~~943~~774		$	~~2,483~~(72)	16(0.65	%)
Net loss	$	(65,~~582~~938)	$	(1711,~~056~~250)		$	105,~~474~~312	(6147.42	%)
Non-GAAP Measure:
Adjusted EBITDA	$	(43,~~605~~947)	$	(117,~~966~~266)	~~(1)~~	$	73,~~361~~319	(6145.57	%)

(1) The previously reported Adjusted EBITDA of $(12.4) million for the three months ended September 30, 2024 has been corrected to $(12.0) million herein to exclude an additional $0.4 million in non-ordinary course legal fees and settlement reserves.

	Nine Months Ended September 30,
	2025		2024			$ Change		% Change
GAAP Measures:
Software revenue	$	15,773	$	15,136		$	637	4.2	%
Total revenue	$	52,255	$	39,916		$	12,339	30.9	%
Net loss	$	(25,681)	$	(47,630)		$	21,949	(46.1	%)
Non-GAAP Measure:
Adjusted EBITDA	$	(17,560)	$	(25,560)	(1)	$	8,000	(31.3	%)

(1) The previously reported Adjusted EBITDA of $(29.7) million for the nine months ended September 30, 2024 has been corrected to $(25.6) million herein to exclude an additional $4.1 million in non-ordinary course legal fees and settlement reserves.

Adjusted EBITDA

To supplement our financial statements presented in accordance with GAAP and to provide investors with additional information regarding our financial results, we have presented in this Form 10-Q Adjusted EBITDA, a non-GAAP financial measure. Adjusted EBITDA is not based on any standardized methodology prescribed by GAAP and is not necessarily comparable to similarly titled measures presented by other companies.

We define Adjusted EBITDA as our net loss, excluding the impact of the following items, if applicable: (i) depreciation and amortization expense, (ii) net interest income or expense, (iii) provision for income taxes, (iv) change in fair value of warrant liability, trading securities, or derivative instruments, (v) restructuring costs, (vi) transaction-related costs, (vii) ~~net~~ impairment of ~~intangible~~ assets, (viii) non-ordinary course legal fees and settlement reserves, (ix) stock-based compensation expense and (x) gain or loss on extinguishment of debt. The most directly comparable GAAP measure is net loss. We believe excluding the impact of these items in calculating Adjusted EBITDA can provide a useful measure for period-to-period comparisons of our core operating performance. We monitor, and have presented in this Form 10-Q, Adjusted EBITDA because it is a key measure used by our management and Board to understand and evaluate our operating performance, to establish budgets and to develop operational goals for managing our business. We believe Adjusted EBITDA helps identify underlying trends in our business that could otherwise be masked by the effect of the expenses that we include in net loss. Accordingly, we believe Adjusted EBITDA provides useful information to investors, analysts and others in understanding and evaluating our operating results, enhancing the overall understanding of our past performance.

Adjusted EBITDA is not prepared in accordance with GAAP and should not be considered in isolation of, or as an alternative to, measures prepared in accordance with GAAP. There are a number of limitations related to the use of Adjusted EBITDA rather than net loss, which is the most directly comparable financial measure calculated and presented in accordance with GAAP. In addition, the expenses and other items that we exclude in our calculations of Adjusted EBITDA may differ from the expenses and other items, if any, that other companies may exclude from Adjusted EBITDA when they report their operating results.

2725

In addition, other companies may use other measures to evaluate their performance, all of which could reduce the usefulness of Adjusted EBITDA as a tool for comparison. The following table reconciles Adjusted EBITDA to net loss, the most directly comparable financial measure calculated and presented in accordance with GAAP (in thousands):

	Three Months Ended September 30,				Nine Months Ended September 30,
	Three Months Ended March 31,
	2025		2024		2025		2024
	2026		2025
Net loss	$	(65,~~582~~938)	$	(1711,~~056~~250)	$	~~(25,681)~~	$	~~(47,630)~~
Depreciation and amortization	1,~~271~~007		1,~~805~~522		~~4,113~~		~~5,515~~
Interest expense (income), net(1)	251		(405)		785		(1,372)
Interest expense, net(1)	323		253
Provision for income taxes	—		—		—		4
Change in fair value of warrant liability	37		37
Change in fair value of warrant liability	(31)		61		38		62
Restructuring costs	—		(58)
Restructuring costs	(5)		715		(93)		780
Non-ordinary course legal fees and settlement reserves(2)	470		1,979
Non-ordinary course legal fees and settlement reserves(2)	324		1,141		2,910		11,320
Stock-based compensation expense(3)	154		251
Stock-based compensation expense(3)	167		1,773		368		5,761
Adjusted EBITDA	$	(3,947)	$	(7,266)
Adjusted EBITDA(4)	$	(4,605)	$	(11,966)	$	(17,560)	$	(25,560)

(1)As a result of significant discounts provided to our customers on certain long-term software contracts paid in advance, we determined that there is a significant financing component related to the time value of money and have therefore broken out the interest component and recorded it as a ~~component~~discount ofin interest (expense~~) income~~, net on the accompanying Condensed Consolidated Statements of Operations and Comprehensive Loss. Interest (expense~~) income~~, net includes interest expense associated with the significant financing component of $0.65 million and $2.0.7 million for the three ~~and nine~~ months ended ~~September~~March 3031, ~~2025,~~2026 ~~respectively,~~ and ~~$0.8 million and $2.7 million for the three and nine months ended September 30~~2025, ~~2024,~~ respectively.

(2)~~Amounts~~The amounts primarily represent legal fees related to ~~securities~~stockholder ~~and~~lawsuits ~~derivative litigation~~ and the SEC’s ongoing investigation into issues related to our key performance indicators and revenue recognition practices (the “SEC Investigation”). The previously reported amount of $0.7 million and $7.2 million for the three and nine months ended September 30, 2024, respectively, has been corrected to $1.1 million and $11.3 million, respectively, herein to include an additional $0.4 million and $4.1 million, respectively, in non-ordinary course legal fees and settlement reserves, consistent with the current-period presentation. While we are involved in various litigation and legal disputes in the ordinary course of our business, we believe the non-ordinary course legal fees and settlement reserves included in our calculation of Adjusted EBITDA do not represent normal operating expenses. See Note 1514. Commitments and Contingencies, in Part I, Item 1. “Financial Statements.” These costs are included within general and administrative on the accompanying Condensed Consolidated Statements of Operations and Comprehensive Loss.

(3)See Note 1817. Stock-Based Compensation, in Part I, Item 1. “Financial Statements.”

(4)The previously reported Adjusted EBITDA of $(12.4) million and $(29.7) million for the three and nine months ended September 30, 2024, respectively, has been corrected to $(12.0) million and $(25.6) million, respectively, herein to exclude an additional $0.4 million and $4.1 million, respectively, in non-ordinary course legal fees and settlement reserves.

Components of Results of Operations

Revenue

Hardware Revenue. We generate hardware revenue primarily from the sale of our portfolio of devices for our smart access and smart home solutions. We sell hardware to customers, which include real estate developers, builders, building owners and property managers, directly or through our channel partners, who act as intermediaries, installers or wholesalers. We recognize hardware revenue when there is evidence a contract exists and control of the hardware has been transferred to the customer. We provide warranties that our hardware will be substantially free from defects in materials and workmanship, generally for a period of one or two years for electronic components, depending on the hardware product, and five years for mechanical components. We determine in our sole discretion whether to replace or refund warrantable devices. We record a reserve as a component of cost of hardware revenue based on historical costs of replacement units for returns of defective products.

Software Revenue. We generate software revenue primarily through the license of our SaaS over our cloud-based platform on a subscription-based arrangement. Subscription fees vary depending on the features selected by customers. SaaS arrangements generally have term lengths between one and ten years. When significant discounts are provided to customers on the longer-term software contracts paid in advance, we determined that there is a significant financing component related to the time value of money and therefore have recorded the ~~interest~~discount ~~expense~~as in interest expense, net on the accompanying Condensed Consolidated Statements of Operations and Comprehensive Loss. Our SaaS is considered a stand-ready performance obligation where customers benefit from the service evenly throughout the service period. Revenue is recognized ratably over the subscription period beginning when or as control of the promised services is transferred to the customer.

performance obligation where customers benefit from the service evenly throughout the service period. Revenue is recognized ratably over the subscription period beginning when or as control of the promised services is transferred to the customer.

Professional Services Revenue. We generate professional services revenue in three primary ways: (i) by facilitating project-based hardware installation and activation services for enterprise customers, (ii) through fees generated by technology and home services performed for residents and consumers, and (iii) through property management services performed by our subsidiary, Door Property Management, LLC (“DPM”), for our multifamily building customers.

We facilitate hardware installation and activation services to select customers. The revenues associated with these services are recognized over time based on a percentage of installation performed and completed and represent a transfer of services to a customer under contract.

Through our HelloTech platform, a network of independent contractors provides in-home technology services such as installation, repair, troubleshooting and technical support. Orders placed through the HelloTech platform are recognized as revenue as services are completed over time. We also offer a subscription service through the HelloTech platform that includes discounted home services and other technical support such as 24/7 online support, home technology checkups, and antivirus and password manager software support. Subscription revenues are recognized ratably over the subscription period.

DPM’s property management activities include operating DPM customers’ buildings, which involves maintenance and repair, construction management, leasing and administrative services. Property management service revenues are recognized ratably over the service period.

Cost of Revenue

Cost of hardware revenue consists primarily of product costs, including manufacturing costs, duties and other applicable importing costs, shipping and handling costs, packaging costs, warranty costs, assembly costs and warehousing costs, as well as other non-inventoriable costs, including personnel-related expenses associated with supply chain logistics and direct deployment and outsourced labor costs. We expect hardware cost of revenue to move in-line with our hardware revenue. Our hardware costs have been and may continue to be impacted by any supply chain constraints, shipping cost volatility and changes in import tariffs.

Cost of software revenue consists primarily of outsourced hosting costs, other outsourced cloud-based service costs and personnel-related expenses associated with monitoring and managing outsourced hosting service providers.

Cost of professional services revenue consists primarily of (i) third-party installation labor costs and parts and materials associated with deployment of our hardware, (ii) labor costs associated with HelloTech independent technicians and credit card fees, and (iii) costs related to third-party property service providers.

Cost of revenue excludes depreciation and amortization shown in operating expenses.

Operating Expenses

Operating expenses consist of research and development, sales and marketing, general and administrative and depreciation and amortization expenses. We have not granted any restricted stock units (“RSUs”) since the suspension of our registration statement on Form S-8 under the Securities Act (the “S-8 Registration Statement”) on August 10, 2022. However, wethe ~~expect~~S-8 toRegistration ~~resume~~Statement ~~granting~~became ~~RSUs~~effective ~~pursuant~~again toon ~~the~~April ~~S-8~~2, ~~Registration~~2026 ~~Statement~~and ~~after~~ we ~~are~~expect ~~current~~to inresume ~~our~~granting ~~SEC filings~~RSUs. Any such grants will increase stock-based compensation expense.

Research and Development Expenses. Research and development expenses consist primarily of personnel and related expenses for our employees working on our product, design and engineering teams, including salaries, bonuses, benefits, payroll taxes, travel and stock-based compensation. Also included are non-personnel costs such as amounts paid to our third-party contract manufacturers for tooling, engineering and prototype costs of our hardware products, fees paid to third-party consultants, research and development supplies and rent.

Sales and Marketing Expenses. Sales and marketing expenses consist primarily of personnel and related expenses for our employees working on our sales, customer success, deployment and marketing teams, including salaries, bonuses, benefits, payroll taxes, travel, commissions and stock-based compensation. Also included are non-personnel costs such as marketing activities (trade shows and events, conferences and digital advertising), professional fees, rent and customer support.

payroll taxes, travel, commissions and stock-based compensation. Also included are non-personnel costs such as marketing activities (trade shows and events, conferences and digital advertising), professional fees, rent and customer support.

General and Administrative Expenses. General and administrative expenses consist primarily of personnel and related expenses for our executive, legal, human resources, finance and IT functions, including salaries, bonuses, benefits, payroll taxes, travel and stock-based compensation. Additional expenses included in this category are non-personnel costs such as legal fees, rent, professional fees, audit fees, bad debt expense and insurance costs.

Depreciation and Amortization Expenses. Depreciation and amortization expenses consist primarily of depreciation expenses related to investments in property and equipment and internally-developed capitalized software.

Other (Expense) Income, Net

Other (expense) income, net consists of interest expense associated with the significant financing component of our longer-term software contracts, interest expense associated with our debt financing arrangements, interest income on highly liquid short-term investments, gain or loss on extinguishment of debt and gain or loss on change in fair value of derivative liabilities, warrant liabilities and trading securities.

Interest (expense~~) income~~, net is summarized as follows:

	Three Months Ended September 30,				Nine Months Ended September 30,
	Three Months Ended March 31,
	2025		2024		2025		2024
	2026		2025
Interest income	$	~~453~~245	$	~~1,327~~614	$	~~1,544~~	$	~~4,950~~
Interest expense	(~~704~~568)		(~~922~~867)		~~(2,329)~~		~~(3,578)~~
Interest (expense) income, net	$	(251)	$	405	$	(785)	$	1,372
Interest expense, net	$	(323)	$	(253)

Income Taxes

The provision for income taxes consists primarily of income taxes related to foreign jurisdictions in which we conduct business. We maintain a full valuation allowance on our deferred tax assets as we have concluded that it is more likely than not that the deferred assets will not be utilized.

3028

Results of Operations

The following tables and accompanying information set forth our historical operating results for the periods indicated. The period-to-period comparison of operating results is not necessarily indicative of results for future periods.

Comparison of three months ended ~~September~~March 3031, ~~2025~~2026 and ~~September~~March 3031, ~~2024~~2025

	Three Months Ended September 30,
	Three Months Ended March 31,
(in thousands, except share and per share data)	~~2025~~2026		~~2024~~2025		$ Change		% Change
Revenue
Hardware	$	54,~~146~~357	$	34,~~611~~037	$	~~1,535~~320	427.59	%
Software	56,~~370~~143		5,~~077~~159		~~293~~984		519.81	%
Professional services	65,~~910~~202		6,~~255~~578		~~655~~(1,376)		10(20.59	%)
Total revenue	1715,~~426~~702		1415,~~943~~774		~~2,483~~(72)		16(0.65	%)
Cost of revenue(1)
Hardware	3,~~927~~218		3,~~537~~303		~~390~~(85)		11(2.06	%)
Software	~~502~~531		~~519~~551		(1720)		(3.36	%)
Professional services	53,~~279~~734		4,~~812~~441		~~467~~(707)		9(15.79	%)
Total cost of revenue	97,~~708~~483		8,~~868~~295		~~840~~(812)		(9.58	%)
Operating expenses
Research and development	3,~~759~~793		45,~~875~~633		(1,~~116~~840)		(2232.97	%)
Sales and marketing	34,~~995~~272		3,~~954~~577		41695		119.04	%
General and administrative	54,~~019~~691		127,~~827~~771		(73,~~808~~080)		(6039.96	%)
Depreciation and amortization	1,~~271~~007		1,~~805~~522		(~~534~~515)		(2933.68	%)
Total operating expenses	1413,~~044~~763		2318,~~461~~503		(94,~~417~~740)		(4025.16	%)
Loss from operations	(65,~~326~~544)		(1711,~~386~~024)		115,~~060~~480		(6349.67	%)
Other (expense) income, net
Other expense, net
Change in fair value of warrant liability	31		(61)		92		(150.8	%)
Interest expense, net	(323)		(253)		(70)		27.7	%
Interest (expense) income, net	(251)		405		(656)		(162.0	%)
Change in fair value of warrant liability	(37)		(37)		—		—	%
Other expense, net	(36)		(14)		(22)		157.1	%
Other (expense) income, net	(34)		64		(98)		(153.1	%)
Total other (expense) income, net	(256)		330		(586)		(177.6	%)
Total other expense, net	(394)		(226)		(168)		74.3	%
Loss before income taxes	(65,~~582~~938)		(1711,~~056~~250)		105,~~474~~312		(6147.42	%)
Provision for income taxes	—		—		—		N.M.
Net loss	$	(65,~~582~~938)	$	(1711,~~056~~250)	$	105,~~474~~312	(6147.42	%)
Other comprehensive income (loss)
Unrealized gain on available-for-sale securities	—(3)		13(14)		~~(13)~~11		N.M.
Foreign currency translation adjustment	3233		~~(9)~~4		4129		N.M.
Comprehensive loss	$	(65,~~550~~908)	$	(1711,~~052~~260)	$	105,~~502~~352	(6147.65	%)
Net loss per common share:
Basic and diluted net loss per common share	$	(0.04)	$	(0.1107)	$	0.0703	(6342.69)	%
Weighted average shares outstanding:
Basic and diluted	160,~~435~~658,~~461~~450		~~156~~160,~~386~~272,~~470~~142

(1)Exclusive of depreciation and amortization shown in operating expenses below.

N.M.: Not meaningful

3129

Revenue

Revenue ~~increased~~decreased by $20.51 million for the three months ended ~~September~~March 3031, ~~2025~~2026 compared to the three months ended ~~September~~March 3031, ~~2024~~2025. The ~~increase~~decrease was primarily due to a $1.54 million ~~increase~~reduction in ~~hardware~~professional services revenue ~~due~~related to ~~higher~~(i) ~~hardware~~a ~~shipments~~$0.7 million decrease in ~~2025~~HelloTech ~~compared~~services, to(ii) ~~2024~~a $0.4 million decline in hardware activation and installation services, and (iii) a $0.73 million ~~increase~~decrease in ~~professional~~property maintenance services, ~~revenue~~partially ~~primarily~~offset by a $1.0 million increase in software revenue due to ~~higher~~continued ~~installation~~growth ~~activity~~in subscriptions and a $0.3 million increase in ~~software~~hardware revenue due to ~~continued~~higher ~~growth~~hardware shipments in ~~subscriptions~~2026 compared to 2025.

Cost of Revenue

Cost of revenue ~~increased~~decreased by $0.8 million for the three months ended ~~September~~March 3031, ~~2025~~2026 compared to the three months ended ~~September~~March 3031, ~~2024~~2025. The ~~increase~~decrease was primarily due to a $0.47 million ~~increase~~reduction in ~~hardware cost due to higher hardware shipments in 2025 compared to 2024 and a $0.5 million increase in~~ professional services cost ~~due~~related to ana ~~increase~~decline in installation projects.

Research and Development Expenses

Research and development expenses decreased by $1.18 million for the three months ended ~~September~~March 3031, ~~2025~~2026 compared to the three months ended ~~September~~March 3031, ~~2024~~2025. The decrease was primarily due to (i) a $1.0 million reduction in third-party expense associated with overlapping costs related to the transition of engineering contractors beginning in the ~~second half of 2024 through the~~ first half of 2025, (ii) a $0.38 million decrease in ~~contract~~expenses ~~manufacturing~~related ~~cost~~to abandoned capitalized internally-developed software, and (iii) a $0.34 million decrease in ~~RSU~~personnel-related ~~expense~~expenses. These decreases were partially offset by a $0.83 million increase in ~~compensation~~software license costs and a $0.2 million increase in compensation expense resulting from lower capitalization of internally-developed software costs.

Sales and Marketing Expenses

Sales and marketing expenses ~~were~~increased ~~relatively~~by ~~unchanged at~~ $4.0.7 million for ~~both~~ the three months ended ~~September~~March 3031, ~~2025~~2026 ~~and~~compared to the three months ended ~~September~~March 3031, ~~2024~~2025. The increase was primarily related to a $0.3 million increase in compensation expense due to expansions of the sales team and a $0.2 million increase in digital marketing expense related to HelloTech.

General and Administrative Expenses

General and administrative expenses decreased by $73.81 million for the three months ended ~~September~~March 3031, ~~2025~~2026 compared to the three months ended ~~September~~March 3031, ~~2024~~2025. The decrease was primarily due to (i) a $1.87 million decrease in ~~audit~~investigation, legal and settlement fees, (ii) a $10.47 million decrease in ~~RSU~~audit ~~expense~~fees, (iii) a $0.87 million decrease in ~~non-ordinary~~professional ~~course investigation, legal~~ and ~~settlement~~consulting fees, ~~(iv) a $1.0 million decrease in professional fees~~ primarily related to accounting services, (viv) a $0.83 million decrease in ~~compensation~~insurance related expense, and (viv) a $0.82 million decrease in software license expense,. ~~and~~These ~~(vii)~~increases were partially offset by a $0.35 million ~~decrease~~increase in ~~severance~~tax ~~costs~~expense ~~related~~as toa ~~restructuring~~result of a sales tax refund in ~~2024~~2025.

Depreciation and Amortization Expenses

Depreciation and amortization expenses decreased by $0.5 million for the three months ended ~~September~~March 3031, ~~2025~~2026 compared to the three months ended ~~September~~March 3031, ~~2024~~2025. The decrease was primarily due to lower amortization expense of capitalized internally-developed software and lower depreciation expense.

Total Other (Expense~~) Income~~, Net

Total other (expense~~) income~~, net ~~decreased~~increased by $0.62 million for the three months ended ~~September~~March 3031, ~~2025~~2026 compared to the three months ended ~~September~~March 3031, ~~2024~~2025. The decrease was primarily due to a $0.94 million decrease in interest income resulting from lower average principal investment balances, partially offset by a $0.23 million decrease in interest expense related to the significant financing component of longer term software contracts.

Comparison of nine months ended September 30, 2025 and September 30, 2024

	Nine Months Ended September 30,
(in thousands, except share and per share data)	2025		2024		$ Change		% Change
Revenue
Hardware	$	15,099	$	13,837	$	1,262	9.1	%
Software	15,773		15,136		637		4.2	%
Professional services	21,383		10,943		10,440		95.4	%
Total revenue	52,255		39,916		12,339		30.9	%
Cost of revenue(1)
Hardware	11,380		10,914		466		4.3	%
Software	1,556		1,449		107		7.4	%
Professional services	15,926		9,092		6,834		75.2	%
Total cost of revenue	28,862		21,455		7,407		34.5	%
Operating expenses
Research and development	13,846		12,016		1,830		15.2	%
Sales and marketing	11,722		8,705		3,017		34.7	%
General and administrative	18,646		41,402		(22,756)		(55.0)	%
Depreciation and amortization	4,113		5,515		(1,402)		(25.4)	%
Total operating expenses	48,327		67,638		(19,311)		(28.6)	%
Loss from operations	(24,934)		(49,177)		24,243		49.3	%
Other (expense) income, net
Change in fair value of warrant liability	(38)		(62)		24		(38.7)	%
Interest (expense) income, net	(785)		1,372		(2,157)		(157.2)	%
Other income, net	76		239		(163)		(68.2)	%
Total other (expense) income, net	(747)		1,549		(2,296)		(148.2)	%
Loss before income taxes	(25,681)		(47,628)		21,947		46.1	%
Provision for income taxes	—		2		(2)		N.M.
Net loss	$	(25,681)	$	(47,630)	$	21,949	46.1	%
Other comprehensive income (loss)
Unrealized loss on available-for-sale securities	(16)		(31)		15		48.4	%
Foreign currency translation adjustment	21		(7)		28		N.M.
Comprehensive loss	$	(25,676)	$	(47,668)	$	21,992	46.1	%
Net loss per common share:
Basic and diluted net loss per common share	$	(0.16)	$	(0.30)	$	0.14	46.7	%
Weighted average shares outstanding:
Basic and diluted	160,375,254		156,386,470

(1)Exclusive of depreciation and amortization shown in operating expenses below.

N.M.: Not meaningful

Revenue

Revenue increased by $12.3 million for the nine months ended September 30, 2025 compared to the nine months ended September 30, 2024. The increase was primarily due to (i) a $10.4 million increase in professional services revenue, driven by (a) a $7.3 million increase attributable to the HelloTech acquisition, (b) a $1.6 million increase in installation revenue, and (c) a $1.6 million increase in property management revenue, (ii) a $1.3 million increase in hardware revenue resulting from an increase in hardware shipments in 2025 compared to 2024, and (iii) a $0.6 million increase in software revenue due to the continued growth in subscriptions.

Cost of Revenue

Cost of revenue increased by $7.4 million for the nine months ended September 30, 2025 compared to the nine months ended September 30, 2024. The increase was primarily due to a $6.8 million increase in professional services costs, driven by (i) a full period of costs in 2025 following the HelloTech merger and property management acquisitions in 2024, which contributed $5.8 million of cost, and a (ii) $1.1 million increase in installation services cost. In addition, hardware costs increased by $0.5 million, primarily due to an increase in hardware shipments in 2025 compared to 2024.

Research and Development Expenses

Research and development expenses increased by $1.8 million for the nine months ended September 30, 2025 compared to the nine months ended September 30, 2024. The increase was primarily due to (i) a $1.8 million increase in compensation expense resulting from lower capitalization of internally-developed software costs, (ii) a $0.5 million increase in third-party expense associated with overlapping costs related to the transition of engineering contractors beginning in the second half of 2024 through the first half of 2025, and (iii) a $0.4 million increase in employee compensation. The increases were partially offset by a $0.8 million decrease in RSU expense and a $0.4 million decrease in contract manufacturing cost.

Sales and Marketing Expenses

Sales and marketing expenses increased by $3.0 million for the nine months ended September 30, 2025 compared to the nine months ended September 30, 2024. The increase was primarily related to HelloTech, including a $2.5 million increase in compensation expense and a $0.6 million increase in digital marketing expenses.

General and Administrative Expenses

General and administrative expenses decreased by $22.8 million for the nine months ended September 30, 2025 compared to the nine months ended September 30, 2024. The decrease was primarily due to (i) an $8.4 million decrease in non-ordinary course investigation, legal and settlement fees, (ii) a $4.8 million decrease in RSU expense, (iii) a $3.4 million decrease in consulting fees primarily related to accounting services, (iv) a $3.3 million decrease in audit fees, and (v) a $1.4 million decrease in compensation expense.

Depreciation and Amortization Expenses

Depreciation and amortization expenses decreased by $1.4 million for the nine months ended September 30, 2025 compared to the nine months ended September 30, 2024. The decrease was primarily due to lower amortization expense of capitalized internally-developed software and lower depreciation expense.

Total Other Income (Expense), Net

Total other income (expense), net decreased by $2.3 million for the nine months ended September 30, 2025 compared to the nine months ended September 30, 2024. The decrease was primarily due to a $3.7 million decrease in interest income resulting from lower average principal investment balances, partially offset by a $0.7 million decrease in interest expense related to the significant financing component of longer-term software contracts and a $0.4 million decrease in interest expense related to the payoff of promissory notes in early 2024.

Liquidity and Capital Resources

We have incurred losses since our inception. To date, our principal sources of liquidity have been the net proceeds received as a result of the 2021 business combination and payments received from our customers.

As of March 31, 2026 and December 31, 2025, our unrestricted cash and cash equivalents and current and non-current available-for-sale securities were approximately $28.5 million and $34.6 million, respectively. Our available-for-sale

~~As of December 31, 2025 and September~~ 30, 2025, our unrestricted cash and cash equivalents and current and non-current available-for-sale securities were approximately $34.7 million and $44.3 million, respectively. Our available-for-sale securities investment portfolio is primarily invested in highly rated securities, with the primary objective of minimizing the potential risk of principal loss. Our investment policy generally requires securities to be investment grade and limits the amount of credit exposure to any one issuer.

Assecurities ofinvestment ~~September 30,~~portfolio ~~2025~~is primarily invested in highly rated securities, wewith ~~also~~the ~~had~~primary ~~approximately~~objective ~~$29~~of minimizing the potential risk of principal loss.7 ~~million~~Our ininvestment ~~net~~policy ~~inventory~~generally requires securities to be investment grade and limits the amount of credit exposure to any one issuer.

~~Our~~As ~~short-term~~of ~~liquidity~~March 31, ~~needs~~2026 ~~have~~and ~~primarily~~December 31, ~~included working capital for salaries~~2025, ~~including~~we ~~sales~~also ~~and~~had ~~marketing~~approximately ~~and~~$25.0 ~~research~~million and ~~development~~$28.9 million, asrespectively, ~~well~~in asnet ~~component~~ inventory ~~purchases from our contract manufacturers~~.

~~Beginning~~Our ~~in the second quarter of 2022 and continuing through the date of this Form 10~~short-Q,term weliquidity needs have ~~incurred, and may continue to incur, significant professional fees,~~ primarily ~~consisting~~included ofworking ~~legal,~~capital ~~forensic~~for ~~accounting~~salaries, ~~management~~including ~~consulting~~sales and ~~related~~marketing ~~advisory~~and ~~services~~research ~~as a result of our 2022-2023 internal investigation (the “Investigation”)~~ and ~~the SEC Investigation~~development, as well as ~~accounting~~inventory ~~related~~purchases ~~consulting~~from services, independent registered accounting firm fees and advisory services related to the Restatement. Additionally, we have incurred significant costs in connection with various pending litigation. See Note 15. Commitments and Contingencies, in Part I, Item 1. “Financial Statements.” Such litigation involves significant defense and other costs and, if decided adversely to us or settled, has resulted or could result in significant monetary damages or expenditures. Although we maintain insurance coverage in amounts and with deductibles that we believe are appropriate for our ~~operations,~~contract ~~our insurance coverage does not cover all claims that have been or may be brought against us~~manufacturers.

~~Our~~Beginning ~~future~~in ~~capital~~the ~~requirements~~second ~~will~~quarter ~~depend~~of on2022 ~~many~~and ~~factors~~continuing through the date of this Form 10-Q, ~~including~~we ~~our~~have ~~business~~incurred, ~~plans~~and may continue to incur, ~~our~~significant ~~levels~~professional fees, primarily consisting of ~~revenue~~legal, ~~the~~forensic ~~expansion~~accounting, ofmanagement ~~sales~~consulting and ~~marketing~~related ~~activities,~~advisory ~~market~~services ~~acceptance~~as a result of our ~~products,~~2022-2023 internal investigation (the ~~results~~“Investigation”) ofand ~~business~~the ~~initiatives~~SEC Investigation, as well as accounting related consulting services, independent registered accounting firm fees and advisory services related to the ~~timing~~Restatement and comprehensive review of ~~new~~our ~~product~~previously ~~introductions~~issued financial statements. Additionally, we have incurred significant costs in connection with stockholder lawsuits. See Note 14. Commitments and ~~overall~~Contingencies, ~~economic~~in ~~conditions~~Part I, Item 1. “Financial Statements.” Such litigation involves significant defense and other costs and, if decided adversely to us or settled, has resulted or could result in significant monetary damages or expenditures. Although we maintain insurance coverage in amounts and with deductibles that we believe are appropriate for our operations, our insurance coverage does not cover all claims that have been or may be brought against us.

~~Based on our current business plan, we expect to be able to use our current cash and cash equivalents and available~~Near-~~for-sale~~Term ~~securities~~Liquidity to fund our operational cash requirements for at least 12 months from the date of this Form 10-Q. Other significant factors that affect our overall management of liquidity include certain actions controlled by management such as capital expenditures and acquisitions. See Note 15. Commitments and Contingencies, in Part I, Item 1. “Financial Statements.”Position

The following risks and uncertainties associated with our liquidity position may adversely affect our ability to sustain our operations as of the Filing Date:

•The continued incurrence of significant expenses related to legal and other professional services in connection with the SEC Investigation and the possibility that the SEC may levy civil penalties or fines;

•Potential expenditures associated with defending, negotiating or resolving the service provider demand described in See Note 14. Commitments and Contingencies, in Part I, Item 1. “Financial Statements;”

•Unexpected expenditures related to the Derivative Actions;

•The incurrence of significant expenses related to other legal or regulatory proceedings, whether actual or threatened;

•The failure to achieve revenue expectations, including as a result of:

◦Pricing compression for our products;

◦Market adoption of the DOOR application;

◦The success of the HelloTech business;

◦The impact of elevated interest rates on potential customers, who may eliminate or delay expenditures for the products or services we offer; and

◦Market perception of our offerings;

•Costs of revenue and operating expenses exceeding expectations;

•The failure to maintain the liquidity ratio required by the Loan Agreement;

•The inability to fully leverage prepaid inventory; or

•The catastrophic loss of inventory due to theft, natural disaster or otherwise.

Due to the risks and uncertainties described above, we continue to monitor our liquidity position. We recognize the challenge of maintaining sufficient liquidity to sustain our operations and remain in compliance with the liquidity ratio required by the Loan Agreement. However, notwithstanding our liquidity position as of the Filing Date, and while it is difficult to predict our future liquidity requirements with certainty, we expect to be able to use our current cash and cash equivalents and available-for-sale securities to fund our operational cash requirements for at least 12 months beyond the Filing Date. Other significant factors that affect our overall management of liquidity include certain actions controlled by management, such as capital expenditures and acquisitions. See Note 13. Debt and Note 14. Commitments and Contingencies, in Part I, Item 1. “Financial Statements.”

In response to the risks and uncertainties described above, we may attempt to secure additional outside capital. However, we can provide no assurance we will be able to secure any outside capital in the future at all, or on terms that are acceptable. Additionally, our securities are currently traded on the OTCID Market. Because of applicable restrictions, there is a minimal public market for our securities, and our ability to raise additional capital may be impaired because of the less liquid nature of

the over-the-counter markets. We plan to continue to closely monitor our cash flow forecast and, if necessary, may implement certain incremental cost savings measures to preserve liquidity.

Commitments and Contractual Obligations

We are obligated to make payments as part of certain contracts that we have entered into during the normal course of business. Following the 2024 property management acquisitions, in February 2024 we entered into a three-year advisory agreement with a partner pursuant to which the partner provides DPM with certain management and advisory services related to DPM’s property management business. Pursuant to such agreement, we are required to pay the partner $0.5 million annually. As of ~~September~~March 3031, ~~2025~~2026, we had a remaining obligation of $0.75 million under the advisory agreement.

Indebtedness

On July 15, 2024, we entered into a loan agreement with Customers Bank (the “Loan Agreement”). Pursuant to the Loan Agreement, Customers Bank issued a term loan in the principal amount of $6.0 million (the “Loan”). The Loan Agreement, which was entered into in connection with the acquisition of HelloTech, did not result in our receipt of any loan proceeds. Interest is payable on the Loan at a rate equal to the greater of (a) the prime rate published in The Wall Street Journal or (b) 6.0%, and the maturity date is July 15, 2029 (the “Maturity Date”).

Payments under the Loan were interest-only through January 15, 2025. Thereafter, we are required to pay equal monthly installments of principal plus accrued interest until the Maturity Date. There is no penalty for prepayment of the Loan.

Pursuant to the Loan Agreement, Customers Bank was granted security interests in substantially all of our assets, excluding intellectual property, and the Loan Agreement contains customary affirmative and negative covenants.

HelloTech is required to maintain an operating account with Customers Bank with a sufficient balance to support monthly payments. Additionally, we are required to maintain a liquidity ratio of at least 4.00, tested monthly, which is calculated as the quotient of our unrestricted cash and cash equivalents (subject to certain limitations with respect to cash of foreign subsidiaries), divided by all outstanding indebtedness owed to Customers Bank.

The Loan Agreement contains various covenants that, among other things, limit our ability to:

• engage in certain asset dispositions;

• permit a change in control;

• merge or consolidate;

• incur indebtedness or grant liens on our assets;

• declare or pay dividends, distributions or redemptions;

• make loans or investments; and

• engage in certain transactions with affiliates.

If an event of default exists under the Loan Agreement, Customers Bank will be able to accelerate the maturity of the Loan and exercise other rights and remedies. Events of default include, but are not limited to, the following events:

• failure to pay any principal or interest within three business days of the due date;

• failure to perform or otherwise comply with the covenants and obligations in the Loan Agreement, subject, in certain instances, to certain grace periods;

• bankruptcy or insolvency events; or

• the rendering of judgments that remain undischarged, unvacated, unbonded, unsatisfied or unstayed for a certain period.

As of ~~September~~March 3031, ~~2025~~2026 and December 31, 2025, the outstanding principal of the Loan (excluding debt discount) was $54.14 million and $4.8 million, respectively. We were in compliance with the covenants under the Loan Agreement as of ~~September~~March 3031, ~~2025~~2026 and December 31, 2025.

On July 15, 2024, in a private placement concurrent with the Loan Agreement, we issued a warrant to Customers Bank to purchase 1,000,000 shares of our common stock. The warrant has an exercise price of $1.25 per share, was exercisable upon issuance and will expire six years from the date of issuance, or July 15, 2030.

Cash Flows

The following table sets forth a summary of our cash flows for the ~~nine~~three months ended ~~September~~March 3031, ~~2025~~2026 and ~~2024~~2025 (in thousands):

	Nine Months Ended September 30,
	Three Months Ended March 31,
	2025		2024
	2026		2025
Net cash used in operating activities	$	(285,~~139~~143)	$	(6110,~~972~~137)
Net cash provided by investing activities	1,530		71,874
Net cash used in investing activities	(1,395)		(935)
Net cash used in financing activities	(~~889~~333)		(~~22,000~~223)
Effect of exchange rates on cash	~~(129)~~196		14(191)
Net change in cash and cash equivalents	$	(276,~~627~~675)	$	(1211,~~084~~486)

Operating Activities. Net cash used in operating activities for the ~~nine~~three months ended ~~September~~March 3031, ~~2025~~2026 decreased by $335.80 million compared to the ~~nine~~three months ended ~~September~~March 3031, ~~2024~~2025. The decrease was primarily attributable to a $197.36 million ~~decrease~~favorable change in ~~cash~~working ~~outflows~~capital ~~resulting~~primarily ~~from~~related ~~the~~to ~~settlement~~accounts inreceivable, ~~2024~~accounts ~~of an investment~~ payable ~~outstanding~~and atother ~~December~~current 31liabilities, ~~2023~~a $6.8 ~~The~~million decrease ~~was~~of ~~also~~cash ~~attributable~~payments related to accrued litigation settlements, a $164.17 million reduction in net loss adjusted for non-cash items, ~~a $6.8 million favorable change in working capital primarily related to accounts receivable~~ and ~~other current liabilities, and~~ a $62.81 million decrease in inventory purchases. These favorable changes were partially offset by ~~$10.8~~the ~~million~~timely ~~increase~~settlement of ~~cash~~investment ~~payments~~payables ~~related~~of to$14.0 ~~accrued~~million ~~litigation settlements~~ and $2.1.7 million ofdecrease ~~payments~~in ~~for~~unbilled ~~audit services~~receivables. Management continues to focus on cost discipline, inventory management and liquidity preservation as it seeks to reduce operating cash usage.

Investing Activities. Net cash provided by investing activities ~~decreased~~increased by $700.35 million for the ~~nine~~three months ended ~~September~~March 3031, ~~2025~~2026 compared to the ~~nine~~three months ended ~~September~~March 3031, ~~2024~~2025. Cash flows from investing activities primarily consist of the net purchases and sales of available-for-sale securities. The decrease was primarily attributable to the use of investment proceeds to fund operating losses~~, with the remaining proceeds reinvested in shorter-term securities classified as cash equivalents to maintain liquidity and preserve capital~~.

Financing Activities. For the ~~nine~~three months ended ~~September~~March 3031, ~~2025~~2026, net cash used in financing activities ~~decreased~~increased by $210.1 million compared to the ~~nine~~three months ended ~~September~~March 3031, ~~2024.~~2025 ~~The~~attributable ~~decrease~~to ~~represents~~ the ~~difference between the $22.0 million~~ repayment of the ~~Promissory Notes in 2024 and the $0.9 million repayment of the~~ Loan ~~during the nine months ended September 30, 2025~~.

Off-Balance Sheet Arrangements

We had no off-balance sheet arrangements as of ~~September~~March 3031, ~~2025~~2026 and December 31, ~~2024~~2025 that had, or were reasonably likely to have, a current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that would be material to investors.

Critical Accounting Estimates

There have been no material changes to our critical accounting estimates as disclosed in the ~~2024~~2025 Annual Report~~, except as noted below~~.

Goodwill

We test goodwill and indefinite-lived intangible assets for impairment annually as of December 31, or more frequently if events or circumstances indicate that the carrying amount may not be recoverable. Management also evaluates, on an ongoing basis, whether changes in business conditions or other events require interim impairment testing. No triggering events that would require interim impairment testing were identified during the nine months ended September 30, 2025.

In connection with our annual goodwill impairment test as of December 31, 2025, Accounting Standards Codification 350, Intangibles – Goodwill and Other, permits us to first assess qualitative factors to determine whether it is more likely than not that the fair value of the reporting unit is less than the carrying amount. Consistent with prior periods, we will elect to bypass the qualitative assessment and perform a quantitative impairment test. While no impairment of goodwill has been previously recorded, management continues to monitor operating performance, liquidity, cash usage and market conditions. As management prepares the forecast and performs the annual quantitative impairment assessment as of December 31, 2025, as of the date of this Form 10-Q, we believe it is likely that some or all of our goodwill could be impaired as of December 31, 2025. See Part II, Item 1A. “Risk Factors” for additional information.

Recent Accounting Pronouncements

See Note 2221. Recently Issued Accounting Standards, in Part I, Item 1. “Financial Statements” for information about recent accounting pronouncements.

Item 3. Quantitative and Qualitative Disclosures About Market Risk

As a smaller reporting company, as defined in Rule 12b-2 of the Exchange Act, we are not required to provide the information required by this Item.

Item 4. Controls and Procedures

Background

In 2022, the Audit Committee, with the assistance of independent legal and accounting advisors, conducted ~~the Investigation, which was~~ an internal investigation of matters relating to ~~our~~the Company’s key performance indicators and revenue recognition practices for certain transactions, including the accounting treatment, financial reporting and internal controls related to such transactions.

As a result of the accounting, financial reporting and internal control deficiencies identified by the Investigation and their material impact on our current and historical financial statements and related disclosures, the Audit Committee determined that our financial statements for 2019, 2020, 2021 and the first quarter of 2022 would be restated. Following the Investigation, we completed a comprehensive review of our previously issued financial statements. As a result, in our Annual Report on Form 10-K for the year ended December 31, 2022 (the “2022 Annual Report”), we restated those financial statements to correct the errors identified. As further detailed below, we identified the Legacy Material Weaknesses (as defined and further described below) related to, among other items: (i) revenue recognition on hardware and software sales, (ii) revenue recognition and billing on software licenses, (iii) recognition of various expenses, (iv) internally developed software, (v) stock-based compensation and (vi) errors in certain key performance indicators, including “bookings” and related metrics.33

37As a result of the accounting, financial reporting and internal control deficiencies identified by the Investigation and their material impact on the Company’s previously issued financial statements and related disclosures, the Audit Committee determined that the Company’s financial statements for 2019, 2020, 2021 and the first quarter of 2022 should be restated. Following the Investigation, the Company conducted a comprehensive review of its previously issued financial statements and, in its Annual Report on Form 10-K for the year ended December 31, 2022 (the “2022 Annual Report”), restated those financial statements to correct the identified errors.

As further detailed below, the Company identified material weaknesses in its internal control over financial reporting related to deficiencies in the control environment, risk assessment, control activities, information and communication, and monitoring activities. These deficiencies contributed to errors in the Company’s accounting and financial reporting processes, including matters affecting: (i) revenue recognition on hardware and software sales, (ii) revenue recognition and billing on software licenses, (iii) recognition of various expenses, (iv) internally developed software, (v) stock-based compensation and (vi) errors in certain key performance indicators, including “bookings” and related metrics.

A material weakness is a deficiency, or a combination of deficiencies, in internal control over financial reporting, such that a reasonable possibility exists that a material misstatement of annual or interim financial statements would not be prevented or detected on a timely basis.

Evaluation of Disclosure Controls and Procedures

Our current management, including our Chief Executive Officer and Chief Financial Officer, evaluated the effectiveness of our disclosure controls and procedures, as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act, in connection with the preparation of this Form 10-Q. Based on this evaluation, our Chief Executive Officer and Chief Financial Officer concluded that ~~our~~the Company’s disclosure controls and procedures were not effective as of ~~September~~March 3031, ~~2025~~2026 because of material weaknesses in our internal control over financial reporting, as described below.

Notwithstanding that conclusion, based on review, analysis and inquiries conducted subsequent to ~~September~~March 3031, ~~2025~~2026, management believes that the condensed consolidated financial statements and related financial information included in this Form 10-Q fairly present in all material respects ~~our~~the Company’s financial condition, results of operations and cash flows as of the dates presented, and for the periods ended on such dates, in conformity with GAAP.

Previously Disclosed Material Weakness

In our Annual Report on Form 10-K for the year ended December 31, 2021, we initially identified a material weakness related to the selection and development of control activities, including over information technology related to certain account balances. ~~(the~~As ~~“2021~~a ~~Material~~result ~~Weakness”).~~of ~~During~~the ~~2022~~Investigation, wemanagement ~~completed~~identified ~~multiple~~additional ~~reductions~~deficiencies ~~in force~~ that ~~impacted~~were ~~approximately~~primarily ~~51%~~attributable ofto ~~our~~limitations ~~full-time employees~~ in ~~addition~~resources, to the ~~transition~~absence of ~~our~~formally ~~Chief~~designed ~~Financial~~processes ~~Officer~~and incontrols, ~~March~~and ~~2022.~~insufficient ~~We believe these~~ personnel ~~changes~~with ~~hindered our ability to fully remediate~~ the ~~2021~~appropriate ~~Material~~level ~~Weakness,~~of ~~which~~accounting ~~continued~~and tointernal ~~exist~~control asexpertise. ~~of September 30~~Accordingly, ~~2025,~~we ~~and~~reported ~~contributed to~~ additional material weaknesses ~~identified~~ as of December 31, 2022 ~~in the 2022 Annual Report~~.

InThese ~~light of these~~ material weaknesses, weexisted ~~have~~across ~~taken~~the ~~steps~~five tocomponents ~~redesign~~of ~~and reestablish~~ the ~~overall~~COSO Framework: control environment., ~~This~~risk ~~process~~assessment, ~~requires~~control ~~adequate~~activities, ~~time~~information ~~to plan~~ and ~~implement revised or new controls. Additionally~~communication, ~~to validate operating effectiveness, we must demonstrate consistent control execution~~ and ~~satisfy~~monitoring ~~audit testing requirements over multiple periods~~activities.

InManagement ~~2022,~~has weimplemented ~~identified~~and acontinues ~~material~~to ~~weakness~~implement ~~related~~remediation measures designed to address these deficiencies and strengthen the ~~tone~~Company’s ~~from~~overall ~~executive~~control ~~management~~environment. However, ~~which~~as ~~was~~of ~~determined~~March 31, to2026, bethe ~~insufficient~~material toweaknesses ~~create~~have not yet been fully remediated. Remediation efforts remain ongoing, and the ~~proper~~related ~~environment~~controls must operate for ~~effective~~a ~~internal~~sufficient ~~control~~period ~~over~~of ~~financial~~time ~~reporting~~and ~~(“Tone~~be atsubject ~~the~~to ~~Top”).~~validation ~~Since~~through ~~identifying~~testing ~~the~~before ~~material~~management ~~weakness,~~can weconclude ~~have~~that ~~undertaken~~any ~~considerable~~control ~~remediation~~is ~~efforts,~~operating ~~including:~~effectively.

~~•the~~The ~~January~~material ~~2023~~weaknesses ~~appointment~~described ofbelow ~~Messrs.~~reflect ~~Keyes and Landy as interim Chief Executive Officer and interim Chief Financial Officer, respectively, to improve tone from executive~~ management,’s ~~reinforce~~current ~~our~~assessment ~~commitment~~of tothe ~~integrity~~underlying ~~and~~deficiencies ~~promote~~within ~~accurate~~the ~~record~~Company’s ~~keeping,~~internal ~~ethical~~control ~~values and proper business practices;~~framework.

~~•undertaking~~Material ~~various~~Weaknesses ~~personnel~~in ~~changes,~~Internal ~~including~~Control ~~voluntary~~Over ~~and~~Financial ~~involuntary terminations within our sales and finance departments;~~Reporting

~~•in~~Management ~~June~~identified ~~and~~material ~~July~~weaknesses ~~2023,~~in ~~establishing~~ICFR aas ~~new~~of ~~leadership~~March 31, ~~team~~2026, ~~including~~related ~~the~~to ~~hiring~~deficiencies ofin ~~our~~all ~~present~~five ~~Chief~~components ~~Executive~~of ~~Officer~~the ~~and~~COSO ~~Chief Financial Officer~~Framework, ~~and restructuring our sales department. All remaining salespersons were terminated~~ as ~~part~~described ~~of this new strategy;~~below.

~~•regularly~~Control ~~communicating~~Environment: ~~information~~The ~~effectively~~Company ~~across~~did not maintain an effective control environment to support ICFR. The Company lacked appropriate policies and resources to develop and operate ICFR, which contributed to the ~~organization~~Company’s ininability ato ~~manner~~properly ~~that~~analyze, ~~establishes~~record aand ~~strong~~disclose ~~overall~~accounting ~~control~~matters ~~environment;~~timely and accurately.

•in February 2025, following completion of the Restatement, appointment of our present Chief Executive Officer, Chief Financial Officer and Chief Strategy and Legal Officer, who have continued to reinforce the improved tone set by the outgoing interim executive officers.34

~~While~~These ~~management~~deficiencies ~~believes~~contributed ~~that these remediation actions have resulted in meaningful improvements~~ to ~~our~~inadequate ~~control~~oversight ~~environment and strengthened the Tone at the Top, we continue to evaluate the sustained operating effectiveness~~ of ~~the~~control ~~relevant controls. As of September 30~~responsibilities, ~~2025,~~insufficient ~~management~~reinforcement ~~had not yet concluded that the remediation~~ of ~~the~~expectations ~~material weakness~~ related to ~~Tone~~internal atcontrol, ~~the~~and ~~Top~~inconsistent ~~had~~execution ~~been~~of ~~fully~~certain ~~validated~~control activities.

~~The~~Risk ~~additional,~~Assessment. ~~previously~~Management ~~disclosed~~did not design and implement an effective risk assessment and identified a material ~~weaknesses~~weakness ~~that~~relating ~~remained~~to: as(i) ofidentifying, ~~September 30~~assessing, ~~2025~~and communicating appropriate objectives, (~~collectively~~ii) ~~with~~identifying ~~Tone~~and atanalyzing ~~the~~risks ~~Top~~to achieve these objectives, and (iii) identifying and assessing changes in the ~~“Legacy~~business ~~Material~~that ~~Weaknesses”)~~could ~~are~~impact asthe ~~follows:~~system of internal controls.

38Control Activities: The Company did not design and implement effective control activities and identified the following material weaknesses:

~~Control~~–Revenue ~~Environment.~~Recognition WeControls: ~~lacked~~The ~~appropriate~~Company ~~policies~~did ~~and~~not ~~resources~~design or maintain certain control activities to ~~develop~~respond ~~and~~to ~~operate~~potential ~~effective~~risks ~~internal~~of ~~control~~material ~~over~~misstatement ~~financial~~of ~~reporting~~revenue. In particular, ~~which~~management ~~contributed~~failed to: ~~other~~(i) ~~Legacy~~ensure ~~Material~~that ~~Weaknesses~~relevant terms sales representatives had negotiated with customers were identified and ~~our~~communicated ~~inability~~to the accounting department, resulting in a failure to properly ~~analyze~~account for such terms, ~~record~~(ii) fully consider the impact of certain terms of sales agreements on the amount and ~~disclose~~timing ~~accounting~~of ~~matters~~revenue ~~timely~~to be recognized and ~~accurately~~(iii) identify and account for extended payment terms.

~~Risk~~As ~~Assessment.~~a Weresult ~~did~~of ~~not~~these control design ~~and~~deficiencies, ~~implement~~policies anand ~~effective~~controls ~~risk~~related ~~assessment~~to ~~and~~revenue ~~identified~~recognition awere ~~material~~not ~~weakness~~effective ~~relating~~in ~~to:~~ensuring that (ia) ~~identifying,~~revenue ~~assessing,~~was recorded at the correct amount and ~~communicating~~in ~~appropriate~~the ~~objectives,~~correct period and (iib) ~~identifying~~the accounting department was informed of all elements and ~~analyzing~~deliverables ~~risks~~of certain arrangements. These design deficiencies led to ~~achieve~~inaccuracies ~~these~~in ~~objectives,~~amounts and ~~(iii)~~timing ~~identifying~~of ~~and~~revenue ~~assessing~~recognition ~~changes~~and inallowances ~~the~~for ~~business~~uncollectible accounts that ~~could~~contributed ~~impact~~to ~~the~~material ~~system~~accounting oferrors ~~internal~~in ~~controls~~2022 and prior years.

~~Control~~–Financial ~~Activities.~~Reporting WeClose ~~did~~Controls: ~~not~~Management further identified ineffective design and ~~implement~~operation ~~effective~~of certain control activities. ~~and~~Control ~~identified~~deficiencies, which aggregate to a material weakness, occurred within the following ~~material~~areas: ~~weaknesses~~order to cash, ~~which~~inventory, ~~are~~financial inclose, ~~addition~~sales commissions, procure-to-pay, ~~the~~capitalized ~~2021~~software ~~Material~~and ~~Weakness:~~information and technology general controls.

~~•Ineffective~~Information ~~design~~ and ~~operation of certain control activities to respond to potential risks of material misstatement of revenue. In particular, we failed to~~Communication: ~~(i)~~Management ~~ensure~~did ~~that~~not ~~relevant~~design ~~terms sales representatives had negotiated with customers were identified~~ and ~~communicated~~implement toeffective ~~the~~information ~~accounting department, resulting in a failure to properly account for such terms, (ii) fully consider the impact of certain terms of sales agreements on the amount~~ and ~~timing~~communication ~~of revenue to be recognized and (iii) identify and account for extended payment terms~~activities. As a result ~~of these control design deficiencies~~, ~~the~~management ~~policies~~identified ~~and~~a ~~controls~~material ~~related~~weakness ~~to revenue recognition were not effective~~ in ~~ensuring that (a) revenue was recorded at~~ the ~~correct~~processes ~~amount~~ and incontrols ~~the~~for ~~correct~~communicating ~~period~~information ~~and~~among ~~(b)~~ the accounting, ~~department~~finance, ~~was~~sales ~~informed of all elements~~ and ~~deliverables~~customer ofsuccess ~~certain~~teams, ~~arrangements.~~which ~~These~~were ~~design~~not ~~deficiencies~~adequate ~~led~~ to ~~inaccuracies~~support inthe ~~amounts~~proper ~~and~~functioning ~~timing~~ of ~~revenue~~internal ~~recognition~~controls ~~and~~impacting ~~allowances~~revenue-related ~~for uncollectible~~ accounts ~~that contributed~~ to ~~material~~ensure ~~accounting~~accurate ~~errors~~revenue ~~in 2022 and prior years~~recognition.

~~•Ineffective~~Monitoring Activities: Management did not design and ~~operation~~implement ofeffective ~~certain~~monitoring ~~control~~ activities ~~due~~and toidentified the ~~significant~~following ~~2022~~material ~~personnel~~weaknesses: ~~changes~~(i) ~~discussed~~failure ~~above.~~to ~~Control~~adequately ~~deficiencies,~~monitor ~~which~~compliance ~~aggregate~~with toaccounting ~~a material weakness~~policies, ~~occurred~~procedures ~~within~~and ~~the~~controls ~~following~~related ~~areas:~~to ~~order~~revenue torecognition ~~cash,~~and ~~inventory,~~accounts ~~financial~~receivable; ~~close,~~and ~~sales~~(ii) ~~commissions,~~failure ~~procure-~~to~~-pay,~~ ~~capitalized~~properly ~~software~~select, develop and ~~information~~perform ~~and~~ongoing ~~technology~~evaluations ~~general~~of various components of internal controls.

~~Information~~Status ~~and~~of ~~Communication.~~Remediation Weof ~~did not design and implement effective information and communication activities and identified~~ the ~~following~~Material material weakness: we did not have adequate processes and controls for communicating information among the accounting, finance and sales departments, including the customer success team, necessary to support the proper functioning of internal controls impacting revenue-related accounts.Weaknesses

~~Monitoring~~Management, ~~Activities.~~with Weoversight ~~did~~from ~~not~~the ~~design~~Audit ~~and~~Committee ~~implement~~of ~~effective~~the ~~monitoring~~Board ~~activities~~of Directors, continues to devote significant time, attention and ~~identified~~resources to the ~~following~~remediation of the remaining material weaknesses: ~~(i)~~and ~~failure~~ to ~~adequately~~strengthening ~~monitor~~the ~~compliance~~Company’s ~~with~~internal ~~accounting~~control ~~policies~~over financial reporting. In the interim, management has implemented additional mitigating procedures and ~~controls~~deployed ~~related~~additional resources, to ~~revenue~~help ~~recognition,~~ensure ~~including~~that ~~accounts~~the ~~receivable~~consolidated ~~and~~financial ~~reserves;~~statements and ~~(ii)~~related ~~failure~~financial toinformation ~~properly~~included ~~select,~~in ~~develop~~this ~~and~~Form ~~perform~~10-K ~~ongoing~~are ~~evaluations~~fairly ofpresented, ~~various~~in ~~components~~all ofmaterial ~~internal~~respects, ~~controls~~in accordance with GAAP.

~~Remediation~~The ~~Plan~~remaining material weaknesses cannot be considered fully remediated until the applicable controls have been implemented and ~~Status~~have operated effectively for a sufficient period of time such that management can conclude, through testing, that the controls are operating effectively. The following summarizes the Company’s remediation initiatives to address the remaining material weaknesses.

WeStrengthening ~~are committed to remediating~~ the ~~Legacy~~Control ~~Material~~Environment ~~Weaknesses, fostering continuous improvement in internal controls~~ and ~~enhancing~~Finance our overall internal control environment. Since identifying the Legacy Material Weaknesses, we have corrected the errors in the financial statements for 2022 and prior and have begun implementing the remediation activities described above and below. We believe that these activities, when fully implemented, should remediate the Legacy Material Weaknesses and strengthen our internal control over financial reporting. These remediation efforts remain ongoing, and additional remediation initiatives may be necessary.Organization

AManagement ~~material~~has ~~weakness~~taken ~~cannot~~steps beto ~~considered~~strengthen ~~completely~~the ~~remediated~~finance ~~until~~and ~~the~~accounting ~~applicable~~organization, ~~controls~~including ~~have~~evaluating ~~operated~~and ~~for~~modifying athe ~~sufficient~~organizational ~~period~~design of ~~time~~the ~~such~~controllership ~~that~~function, ~~management~~hiring ~~can~~accounting ~~conclude,~~personnel ~~through~~with ~~testing,~~requisite ~~that~~experience ~~the~~and technical expertise in GAAP and internal controls ~~are~~and ~~operating~~providing ~~effectively~~training related to internal control responsibilities.

Accordingly, as management continues to monitor the effectiveness of our internal control over financial reporting, we will continue to perform additional procedures prescribed by management, including the use of certain manual mitigating control procedures and the employment of additional tools and resources deemed necessary, to ensure that our future consolidated financial statements are fairly stated in all material respects. In addition to the remediation activities identified with respect to the Tone at the Top material weakness, the following remediation activities highlight our commitment to remediating the Legacy Material Weaknesses:35

~~•Hired~~As ~~finance~~the ~~and~~Company ~~accounting~~has ~~professionals~~returned ~~with~~its ~~the~~financial ~~appropriate~~reporting ~~level~~to ofa ~~experience~~current and ~~training~~timely ~~necessary~~status, tomanagement ~~develop,~~is ~~maintain~~focused ~~and~~on ~~improve~~reestablishing ~~our~~a ~~accounting~~consistent ~~policies,~~financial ~~procedures~~close and ~~internal~~reporting ~~controls~~process and ~~continue~~stabilizing tofoundational ~~hire~~recurring ~~other~~processes ~~qualified~~that ~~finance~~support ~~and~~the ~~accounting~~execution ~~professionals~~of internal controls.

39Enhancing Risk Assessment and SOX Governance

~~•Provided,~~Management has enhanced enterprise risk assessment processes and ~~continue~~continues to ~~provide,~~refine ~~training~~the ~~for~~scope ~~employees~~and ~~regarding~~focus ~~their~~of ~~responsibilities~~the ~~related~~Company’s toSarbanes-Oxley ~~the~~compliance ~~performance~~program. orThese ~~oversight~~efforts include improving documentation of ~~internal~~financial ~~controls~~reporting risks and implementing processes to ensure that risk assessments are updated as business conditions change.

~~•Reinforced~~Improving ~~the~~Control ~~importance~~Design ~~of communication between the sales, accounting~~ and ~~finance~~Financial ~~departments~~Reporting ~~regarding key terms of, and changes or modifications to, sales transactions, including by establishing controls requiring finance department approval of certain non-standard terms.~~Processes

~~•Updated~~Management ~~operative~~continues ~~sales~~to ~~contracts~~develop toand ~~clarify~~implement ~~that~~formal nopolicies, ~~transactional~~procedures ~~terms~~and ~~exist~~internal ~~outside~~controls ofdesigned ~~the~~to ~~signed~~address ~~agreements~~key ~~and~~financial noreporting ~~oral~~risks. ~~agreements~~These ~~are~~actions ~~valid~~include enhancing internal control documentation and ~~enforceable.~~engaging ~~Legal~~third-party ~~department~~specialists ~~approval~~with istechnical ~~required~~accounting ~~prior~~and internal control expertise to ~~execution~~assist ofcontrol ~~such~~design ~~contracts~~and implementation.

~~•Developed~~Management anhas ~~intranet~~also ~~for~~implemented ~~employees~~enhancements to ~~reference,~~the ~~which~~review ~~includes an organizational chart~~ and ~~access~~approval ~~to Company-wide policies and other resources, including the Code~~ of ~~Ethics,~~customer ~~the~~contract ~~Whistleblower~~terms ~~Policy~~ and ~~access~~revised ~~information~~policies ~~for~~and ~~our~~procedures ~~anonymous~~related ~~reporting~~to ~~hotline~~revenue recognition.

~~•Actively~~Enhancing ~~reviewing,~~Information ~~reevaluating~~Flow and ~~improving~~Monitoring ~~our Sarbanes-Oxley compliance program, including governance, risk assessment, testing methodologies and corrective action.~~Activities

~~•Reestablished~~Management anhas ~~enterprise~~taken ~~risk~~steps ~~committee~~to improve communication across operational and finance teams and has enhanced monitoring procedures over internal control execution, ~~meeting~~including ~~regularly~~implementing a governance, risk and compliance platform designed to support SOX compliance and internal control monitoring.

•Enhanced procedures to perform an updated, comprehensive enterprise risk assessment, including a focus on the issues identified in the Investigation.

•Implemented an internal control compliance software to assist with the ongoing monitoring of control performance, streamline internal control management and allow for enhanced reporting of the status of our Sarbanes-Oxley compliance program.

•Developed, and continue to develop, internal control documentation over financial processes and related disclosures. We plan to continue to design and implement control activities to mitigate risks identified and test the operating effectiveness of such controls.

•Revised policies and procedures related to our revenue recognition process, including revisions to the assessment, approval matrix and exception handling processes. We intend to conduct a similar review annually, including review and assessment of revenue recognition-related controls and information technology system configurations.

Changes in Internal Control Over Financial Reporting

Other than described above, there have not been any changes in our internal control over financial reporting (as such term is defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) during the three months ended ~~September~~March 3031, ~~2025~~2026 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

4036

Part II - Other Information

Item 1. Legal Proceedings

We are and may become, from time to time, involved in legal actions in the ordinary course of business, including governmental and administrative investigations, inquiries and proceedings concerning employment, labor, environmental and other claims. Although management is unable to predict with certainty the eventual outcome of any legal action, management believes the ultimate liability arising from such actions, individually and in the aggregate, which existed at ~~September~~March 3031, ~~2025~~2026, will not materially affect our condensed consolidated results of operations, financial position or cash flows, except as set forth in Note 1514. Commitments and Contingencies, in Part I, Item 1. “Financial Statements.” Given the inherent unpredictability of these types of proceedings, however, it is possible that future adverse outcomes could have a material effect on our financial results.

Item 1A. Risk Factors

We are subject to various risks and uncertainties in the course of our business. For a discussion of such risks and uncertainties, please see the section in the ~~2024~~2025 Annual Report filed with the SEC on ~~November~~March 531, ~~2025~~2026 titled “Risk Factors.” There have been no material changes to the risk factors disclosed therein~~, except as noted below~~.

If we determine that our goodwill has become impaired, we may incur impairment charges, which would negatively impact our operating results.

Goodwill represents the excess of cost over the fair value of net assets acquired in business combinations. At September 30, 2025, we had approximately $30.2 million of goodwill on the accompanying Condensed Consolidated Balance Sheet. We assess goodwill for impairment at least annually, and more frequently if events or circumstances indicate it is more likely than not that the our carrying amount may not be recoverable.

Goodwill may be impaired if there are adverse changes in expected future cash flows of a reporting unit, we restructure or dispose of a portion of our business or there are sustained negative trends in our industry or the economy. Our most recent impairment analysis was performed as of December 31, 2024, using information that was known or knowable as of that date, and no impairment was identified. However, as management prepares the forecast and performs the annual quantitative impairment assessment as of December 31, 2025, as of the date of this Form 10-Q, we believe it is likely that some or all of our goodwill could be impaired as of December 31, 2025.

Goodwill is particularly sensitive to changes in financial performance and liquidity and broader industry conditions. Factors that could materially reduce our fair value include (i) a failure of financial results, including revenue growth, to meet our expectations, (ii) continued operating losses or reductions in our cash position from funding ongoing operations, and (iii) changes in discount rates or other valuation assumptions. As a result, some or all of our goodwill recorded on the accompanying Condensed Consolidated Balance Sheet may be impaired as of December 31, 2025 or in future periods.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

None.

Item 3. Defaults Upon Senior Securities

None.

Item 4. Mine Safety Disclosures

Not applicable.

Item 5. Other Information

No director or officer adopted or terminated a trading arrangement for the purchase of Company securities for the quarterly period ended ~~September~~March 3031, ~~2025~~2026 that is either (1) a contract, instruction or written plan intended to satisfy the affirmative defense conditions of Rule 10b5-1(c), or a “Rule 10b5-1 trading arrangement,” or (2) a “non-Rule 10b5-1 trading arrangement” (as defined in Item 408(c) of Regulation S-K).

4137

defense conditions of Rule 10b5-1(c), or a “Rule 10b5-1 trading arrangement,” or (2) a “non-Rule 10b5-1 trading arrangement” (as defined in Item 408(c) of Regulation S-K).

Item 6. Exhibits

Incorporated by Reference

Exhibit

Exhibit Description

Form

Exhibit

Filing Date

2.1*

Agreement and Plan of Merger, dated as of January 24, 2021, by and among TSIA, Lionet Merger Sub Inc. and Legacy Latch.

S-4/A

2.1

5/12/2021

2.2

Agreement and Plan of Merger, dated as of May 15, 2023, by and among Latch, Inc., LS Key Merger Sub 1, Inc., LS Key Merger Sub 2, LLC and Honest Day’s Work, Inc.

8-K

2.1

5/16/2023

2.3

Amendment to Agreement and Plan of Merger, dated as of June 23, 2023, by and among Latch, Inc., LS Key Merger Sub 1, Inc., LS Key Merger Sub.

10-K

2.3

12/19/2024

2.4*

Agreement and Plan of Merger, by and among Latch, Inc., LS HT Merger Sub, Inc. and HelloTech, Inc., dated as of June 21, 2024.

8-K

2.1

6/24/2024

3.1

Second Amended and Restated Certificate of Incorporation.

8-K

3.1

6/10/2021

3.2

Amended and Restated Bylaws.

8-K

3.2

6/10/2021

10.1†

Employment Agreement, dated as of April 10, 2026, by and between Latch and James Malone (filed herewith).

10-Q

10.1

5/15/2026

10.2†

Employment Agreement, dated as of April 13, 2026, by and between Latch and Ryan Salmons (filed herewith).

10-Q

10.2

5/15/2026

10.3

Form of Promissory Note (filed herewith).

10-Q

10.3

5/15/2026

31.1

Certification of Principal Executive Officer as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 (filed herewith).

31.2

Certification of Principal Financial Officer as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 (filed herewith).

32.1

Certification of Principal Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (furnished herewith).

32.2

Certification of Principal Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (furnished herewith).

101

The following financial information from Latch, Inc.’s Quarterly Report on Form 10-Q for the three months ended ~~September~~March 3031, ~~2025~~2026, formatted in Inline XBRL (Inline eXtensible Business Reporting Language): (i) the Condensed Consolidated Balance Sheets - Unaudited, (ii) the Condensed Consolidated Statements of Operations and Comprehensive Loss - Unaudited, (iii) the Condensed Consolidated Statements of Stockholders’ Equity - Unaudited, (iv) the Condensed Consolidated Statements of Cash Flows - Unaudited and (v) the Notes to Condensed Consolidated Financial Statements - Unaudited (submitted electronically herewith).

104

Cover Page Interactive Data File, formatted in Inline XBRL (included as Exhibit 101).

Certain of the exhibits and schedules to this Exhibit have been omitted in accordance with Regulation S-K Item 601(a)(5). The Company agrees to furnish a copy of all omitted exhibits and schedules to the SEC upon its request.

†

Indicates a management contract or compensatory plan or arrangement.

4238

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized:

LATCH, INC.
By:			/s/ David Lillis
			David Lillis
			Chief Executive Officer
			February 11, 2026
			May 15, 2026
By:			/s/ Jeff Mayfield
			Jeff Mayfield
			Chief Financial Officer
			February 11, 2026
			May 15, 2026

4339

Filing Compare · Latch, Inc.