UNITED STATES
 SECURITIES AND EXCHANGE COMMISSION
 Washington, D.C. 20549

 FORM 10-K

 (Mark One)

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

 For the fiscal year ended December 31, 2023
 OR

 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) 200-5218

 (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.

 Securities registered pursuant to Section 12(g) of the Act:

 Title of each class

 Common stock, par value $0.0001 per share

 Warrants, each whole warrant exercisable for one share common stock, at an exercise price of $11.50 per share

 Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes No
 Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act Yes No
 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 has filed a report on and attestation to its management's assessment of the effectiveness of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit report.
 If securities are registered pursuant to Section 12(b) of the Act, indicate by check mark whether the financial statements of the registrant included in the filing reflect the correction of an error to previously issued financial statements.
 Indicate by check mark whether any of those error corrections are restatements that required a recovery analysis of incentive-based compensation received by any of the registrant's executive officers during the relevant recovery period pursuant to §240.10D-1(b).
 Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act): Yes No
 As of June 30, 2023, the aggregate market value of the voting and non-voting common equity held by non-affiliates of the registrant was approximately $ 161.0 million (based upon the closing sales price of such stock as reported by Nasdaq on such date). As of June 30, 2024, the aggregate market value of the voting and non-voting common equity held by non-affiliates of the registrant was approximately $44.7 million (based upon the last trading price of such stock as reported by the OTC Markets on such date).
 As of March 21, 2025, there were 164,825,277 shares of the registrant's common stock outstanding.
 DOCUMENTS INCORPORATED BY REFERENCE

 None.

 CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS
 This Annual Report on Form 10-K (this "Form 10-K") 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-K, 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. The forward-looking statements in this Form 10-K are only predictions. 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-K 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 Part I, Item 1A. "Risk Factors." 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 and the timing of such remediation;
 • the performance of the Company's stock, particularly given the limited liquidity and depressed trading prices of the Company's common stock as a result of delisting of the Company's securities from The Nasdaq Stock Market LLC ("Nasdaq");
 • whether the Company's common stock and warrants, which are trading on OTC Markets Group Inc.'s ("OTC") Expert Market (the "OTC Expert Market"), may remain on the OTC Expert Market rather than be listed on the OTCQX, OTCQB or OTC Pink markets;
 • developments in the pending stockholder class action and derivative complaints or other legal proceedings, relating to the Investigation and Restatement (each as defined below) or otherwise;
 • regulatory disputes and governmental inquiries, including the SEC Investigation (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 acquire and protect intellectual property;
 • our ability to successfully identify, complete, integrate and realize synergies from acquisitions, such as the HDW Acquisition and the HelloTech Merger (each as defined below), including the ability to retain key personnel from such acquisitions;
 • the potential adverse impact of the HDW Acquisition, HelloTech Merger and any future acquisitions, including the potential increase in risks already existing in our operations, poor performance or decline in value of HDW, HelloTech or other acquired businesses and unexpected costs or liabilities that may arise from the HDW Acquisition, HelloTech Merger or any future acquisitions; and
 • the impact of remediating the findings of the Investigation.

 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-looking statements in this Form 10-K 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-K 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.

 Page

 Item 1. Business

 Item 1A. Risk Factors

 Item 1B. Unresolved Staff Comments

 Item 1C. Cybersecurity

 Item 2. Properties

 Item 3. Legal Proceedings

 Item 4. Mine Safety Disclosures

 Item 5. Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities

 Item 6. R eserved

 Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations

 Item 7A. Quantitative and Qualitative Disclosures About Market Risk

 Item 8. Financial Statements and Supplementary Data

 Item 9. Changes in and Disagreements With Accountants on Accounting and Financial Disclosures

 Item 9A. Controls and Procedures

 Item 9B. Other Information

 Item 9C. Disclosure Regarding Foreign Jurisdiction that Prevent Inspections

 Item 10. Directors, Executive Officers and Corporate Governance

 Item 11. Executive Compensation

 Item 12. Security Ownership of Certain Beneficial Owner and Management and Related Stockholder Matters

 Item 13. Certain Relationships and Related Transactions, and Director Independence

 Item 14. Principal Accounting Fees and Services

 Item 15. Exhibits, Financial Statement Schedules

 Item 16. Form 10-K Summary

 Signatures

 Item 1. Business
 Unless the context otherwise requires, references in this subsection to "we," "our," "Latch" and the "Company" refer to the business and operations of Latch Systems, Inc. (formerly known as Latch, Inc.) and its consolidated subsidiaries prior to the Business Combination (as defined below) and to Latch, Inc. (formerly known as TS Innovation Acquisitions Corp.) and its consolidated subsidiaries following the consummation of the Business Combination.
 Overview
 Latch is a technology company primarily serving the multifamily rental home market segment of the smart building industry deploying hardware and software technology to digitize otherwise manual processes, including building and unit access and in-unit device control.
 We combine hardware, software and services into a system that enables smart access for users of a multifamily building, enabling easier, more modernized experiences for residents and visitors, more efficient operations for building owners and property managers and more convenient interaction for service providers. We designed and developed a cloud-based software-as-a-service ("SaaS") platform (the "Latch Platform") to address the access requirements of modern multifamily buildings. Our customers include real estate developers, builders, building owners and property managers in the multifamily market segment in the United States and Canada.
 The Latch Platform consists of features that our customers select to match their specific building's or portfolio's needs, with software bundles based on the specific features the customer selects. Customers separately purchase our hardware devices to complement the selected bundles.
 There are three tiers of bundles based on property type and service level, as detailed below. A la carte options are also available for property owners looking to customize or create a bespoke experience based on their priorities and preferred resident experience. The three bundle tiers consist of the following:
 • Base: Base-building and common area smart access solution with basic property management capabilities.
 • Complete: Full-building smart access and property management solution with robust data, insights and analytics.
 • Enterprise: Full-building solution with integrations, Software Development Kits ("SDKs") and premium customer success and customer support.
 After Latch devices have been installed and the Latch Platform has been set up at a building, property managers or channel partners add residents as users to the Latch Platform. Upon move-in, the resident-facing Latch application enables residents to unlock connected spaces in Latch buildings, such as primary or secondary entries, package rooms, common areas and unit doors. In June 2024, we announced the launch of the DOOR application, which provides similar functionalities as the Latch application while also enabling additional services for residents (such application, together with the Latch application, the "Latch App"). The DOOR application is available to certain customers, and we expect to make it available to additional customers throughout 2025. Within the Latch App, residents and property managers can monitor and control Internet-of-Things ("IoT") devices, such as leak detectors, smart thermostats or smart lighting, remotely view visitors at the front door and provide access. The average Latch App user interacts with the Latch App multiple times per day, and in the future, we believe that Latch has an opportunity to provide users with new offerings and services through the Latch App.
 In addition to our core smart access business described above, we recently acquired certain property management and service-provider focused businesses, as described in more detail below under "Recent Developments." The integration of these new businesses is at an early stage, and the impact of these businesses on our results of operations remains uncertain.
 Market Opportunity
 Real estate is the world's largest asset class. We believe the market of large investor-owned and investor-managed buildings represents a significant opportunity for us. We expect to augment our existing product suite to fit the needs of customers and stakeholders across the real estate industry.
 Currently, we primarily serve the multifamily rental home markets in the United States. Based on U.S. census data for 2022, there are approximately 27 million multifamily units (in buildings with five or more home units) in the United States. Multifamily real estate ownership is highly fragmented, with the top 50 multifamily owners holding less than 10% of total

 multifamily home units in the United States. Within the multifamily rental home market, we target new construction and retrofits of existing buildings.
 New Multifamily Construction
 According to U.S. census data, between 2019 and 2023, an average of approximately 351,000 new multifamily rental home units were built each year, representing new construction completions for buildings with five or more home units.
 Multifamily Retrofits
 Smart access retrofit projects can be initiated as part of major or regular property maintenance, upon a building sale or as a stand-alone project. As adoption of smart access grows, we expect the retrofit market to become increasingly important. Since our launch, we have seen, and expect to continue to see, the share of our business coming from retrofit opportunities increasing. In order to meet the particular needs of this growing segment in a cost-effective way while providing customers and their residents with a high-quality experience, we may partner with other access hardware manufacturers to develop compatible products that serve the particular needs of retrofit buildings.
 The Latch Platform
 The Latch Platform is a full building software platform that brings together the elements that make up the modern building experience for building owners, property managers, residents, visitors and service providers. The Latch Platform is comprised of the following software products:
 • Mission Control - Latch's central, web-based application for building owners, property managers and channel partners. Our fully integrated system lets property managers support the resident experience from a single software application. From Mission Control, property managers can enable move-ins, control access sharing, resolve issues remotely, manage rental unit turnover, monitor and control IoT devices and ensure their residents are secure. We also offer a mobile application version of Mission Control, the "Latch Manager App."
 • Latch App - Offered for iOS and Android devices and used by residents as the primary tool to unlock doors, give access to guests or service providers, control and manage smart home devices and interact and communicate with property managers or consumer services. Property managers can also use the Latch Manager App to manage access across buildings.
 • Concierge Pro - The Latch Platform includes Concierge Pro, a 24 hours-a-day, seven-days-a-week, remote receptionist for deliveries. Available for spaces equipped with Latch Intercom or Latch Link (described below), Concierge Pro allows customers to augment their building staff with a flexible and on-demand resource to more efficiently operate their building and help improve resident experience.
 • Open Kit - Latch partners, such as hospitality, delivery and other property technology platforms, can now build tightly integrated and differentiated experiences in concert with the Latch Platform using OpenKit to enable unlocking and other features directly within partner applications. OpenKit complements Latch's platform support for third-party software workflows around resident move-in and move-out.
 Hardware Devices
 The Latch Platform operates with Latch hardware and hardware products manufactured by others. First-party hardware devices are Latch-branded devices that we manufacture or contract to manufacture according to our design and specifications.
 • C, M, Interconnect and R Series - The Latch R is our common area and building entrance access device and the Latch C, M and Interconnect are our unit access devices. The Latch R modernizes traditional low-frequency radio transmitter and key card functionality in retrofit projects, while the Latch C, M and Interconnect replace traditional unit door locks. These hardware devices are door or wall mounted access control products that interface with industry-standard lock hardware. They are built to industry standards and compliant with building code requirements.
 • Other Latch Devices - Latch Intercom and Latch Link allow audio and video calls for remote unlocking. Latch Link is a hardware-free intercom solution made possible by a simple QR code plaque that serves as a full building virtual intercom without wiring or connectivity requirements. Latch Camera is a dome camera that integrates seamlessly into Latch Intercom, Latch Link and the Latch Platform to allow for video calls for remote unlocking. Latch Field Station (previously known as Latch Hub), is an all-in-one connectivity solution that enables smart access, smart home and sensor devices by acting as an interface between the Latch Platform and smart home devices. In 2023, Latch began launching a number of smart home devices that interface with the Latch Field Station.

 Third-Party Integration
 Latch Lens enables third parties to connect their access devices and lock formats to the Latch Platform. Our Latch Lens Partnership Program allows partners to incorporate the Latch Lens into their hardware devices to integrate their best-in-class hardware products with the Latch Platform to set themselves apart by offering smart locks, without spending time and money to independently develop and maintain firmware, software and security features. One of our Latch Lens Partners is Townsteel, Inc. ("Townsteel"), with whom we have partnered to develop and sell Latch Platform-powered Interconnect locks.
 Software and Partnerships
 Operating a multifamily building can be complex, and it can take many different processes, systems and tools to effectively manage a building. Many of our customers use property management software to manage back-office operations. As a result, we have forged partnerships with property management software companies such as Yardi, RealPage, Entrata and AppFolio and enabled integrations between their software and the Latch Platform so property managers can operate seamlessly between the two systems.
 We also leverage the Latch Platform to unlock new use-cases with partners that serve buildings. We allow partners such as Tour24 and Pynwheel to integrate with the Latch Platform to enable self-guided tours.
 Channel Partners
 We primarily distribute our hardware through our channel program. When a customer would like to place an order for our hardware they contact a channel partner, a third-party service provider that sells, installs and implements our hardware and software solutions. When a customer purchases hardware from a channel partner, they separately license, directly from Latch, software with the Latch Platform capabilities they select.
 We also sell hardware, license software and provide installation and implementation services directly to certain customers.
 Competitive Strengths
 SaaS Revenue Model
 Each Latch customer must execute a software contract with Latch in order to utilize our suite of products and services through the Latch Platform. The license fees related to these binding contracts provide Latch with a recurring revenue stream.
 Unified Management Experience for Multifamily Residential Operators
 The Latch Platform enables a unified management experience for building owners and property managers with a single interface to manage Latch experiences instead of requiring a separate interface for each vendor and solution. Latch also enables a unified resident experience with a single interface through the Latch App for resident-facing interactions and Latch experiences in our customers' buildings. We believe devices that are part of the Latch Platform work better together because our curated set of partner devices and the Latch Platform seamlessly integrate unlike the alternative patchwork of devices from different vendors with varying standards and interfaces that create technology silos for multifamily building operators and limited experiences for its residents.
 Network of Partners Acting as External Salesforce
 Through our channel program, we believe we have a network of partners able to market, sell and install Latch products across the most significant U.S. markets. These partners are trained in our products to deliver a high-quality installation and implementation experience for our customers.
 Our Intellectual Property Portfolio
 Our intellectual property portfolio, which includes patents, trademarks, copyrights and trade secrets, enables us to protect our proprietary technology, brands and other intellectual property against dilution, infringement, misappropriation and competitive pressure. Specifically, we own several patents and pending patent applications in the United States that cover the material aspects of the Latch Platform, including smart access, delivery and guest management, smart home and sensors and resident experience. None of these patents are expected to expire prior to 2035. We also own patents and pending patent applications in the United States covering the ornamental design of our hardware products. None of such patents are expected

 to expire prior to 2025. We also own foreign counterparts related to the foregoing patents and pending patent applications. Additionally, our proprietary software and firmware are protected as trade secrets.
 Our Go to Market and Growth Strategy
 Our main objective is to increase the number of customers on the Latch Platform and increase utilization of our platform by customers and residents. To achieve this objective, we pursue the following strategies:
 Further Penetration of North American Multifamily Rental Market
 We plan to further expand in the North American multifamily rental market via three primary strategies. First, we aim to continue to acquire new customers through our in-house sales strategy. The Latch sales team engages directly with existing and potential customers with the goal of further penetrating the portfolio of existing customers and acquiring new customers. Second, we have established a network of channel partners that sell Latch hardware in their local markets. Third, we are leveraging an e-commerce platform to streamline sales processes by enabling channel partners to buy our products online.
 New Products and Services
 Our dedicated team of designers, engineers, software developers and product managers creates new and innovative products and features for the Latch Platform. Once a customer is using the Latch Platform, new software versions, features and modules can be activated over the air via the Latch Platform. Our goal is to make spaces better places to live, work and visit by providing a full-building platform designed to help owners, residents and third parties like guests, couriers and service providers seamlessly experience the modern building. By combining software, products and services into a holistic platform, we believe that we help make spaces more efficient, enjoyable and profitable.
 Selling into a Growing Market
 As adoption of smart access technology grows and initiatives to standardize smart home technology increase, we believe the market for our products and services will grow. We believe smart buildings will become the rule, not the exception, for Class A multifamily buildings and that smart device penetration will continue to increase in Class B and C buildings.
 Competition
 Given the emerging nature of the smart building industry, many companies are developing solutions that may be similar to the Latch Platform, or parts thereof. We expect competition to intensify as the adoption of smart access technology grows. Our success in the market depends on a number of factors, including:
 • our platforms' and solutions' functionality, performance, ease of use, reliability, availability and cost effectiveness relative to that of our competitors' products;
 • our success in utilizing new and proprietary technologies to offer solutions and features previously not available in the marketplace;
 • our success in identifying new markets, applications and technologies;
 • our ability to attract and retain partners;
 • our ability to develop partnerships with other lock manufacturers;
 • our name recognition and reputation;
 • our ability to leverage artificial intelligence in our product offerings;
 • our ability to recruit software engineers and sales and marketing personnel; and
 • our ability to protect our intellectual property.
 Manufacturing and Supply Chain
 We outsource the manufacturing of our hardware products to multiple contract manufacturers in Asia and the United States. The majority of the components that go into the manufacturing of our products are sourced from third-party suppliers and are generally purchased on our behalf by our manufacturers, subject to certain supplier lists we approve. Our supply chain team coordinates the relationships between our contract manufacturers and component suppliers.
 We purchase from our contract manufacturers on a purchase order basis. Under our governing agreements, our contract manufacturers must follow our established product design specifications, quality assurance programs and manufacturing standards. We pay for and own certain tooling and equipment specifically required to manufacture our products to have control of supply pipelines. To ensure adequate inventory supply and avoid excess inventory supply, we must forecast

 inventory needs and expenses and place orders in advance with our suppliers and contract manufacturers, based on our estimates of future demand for particular products and services.
 Government Regulation
 We operate our business primarily in the United States, and our products are sold in the United States and Canada. We are subject to regulation by various federal, state, local and foreign governmental agencies, including, but not limited to, agencies and regulatory bodies or authorities responsible for monitoring and enforcing product safety and consumer protection laws, data privacy and security laws and regulations, employment and labor laws, workplace safety laws and regulations, environmental laws and regulations, export and import control laws and regulations, antitrust laws, securities laws and tax laws and regulations.
 Anti-Corruption and Export Laws
 We are subject to the U.S. bribery of public officials statute contained in 18 U.S.C. § 201, the U.S. Foreign Corrupt Practices Act of 1977, as amended, the U.S. Travel Act and possibly other anti-bribery laws, including those designed to comply with the Organization for Economic Cooperation and Development (the "OECD") Convention on Combating Bribery of Foreign Public Officials in International Business Transactions or other international conventions. Anti-corruption laws are often interpreted broadly and generally prohibit our company, employees and agents from authorizing, offering, promising or providing, directly or indirectly, improper payments of anything of value to recipients in the public sector to obtain or retain business or an unfair business advantage. Certain anti-corruption laws also prohibit us from soliciting or accepting bribes or kickbacks or from engaging in bribery involving private persons. We can be held liable in certain circumstances for the corrupt activities of our representatives, contractors, channel partners and agents, even if we did not explicitly authorize such activity. Although we have implemented policies and procedures designed to promote compliance with applicable anti-corruption laws, there can be no assurance that all of our employees, representatives, contractors, channel partners and agents will comply with these laws and policies.
 Because we primarily operate in the United States, import from Asia and export to Canada, we are subject to laws in various jurisdictions. We are subject to anti-money laundering laws such as the USA PATRIOT Act and may be subject to similar laws in other jurisdictions. Our products are subject to export and import control laws and regulations, including the U.S. Export Administration Regulations, U.S. Customs regulations and various economic and trade sanctions regulations administered by the U.S. Treasury Department's Office of Foreign Assets Control. We also may be subject to import/export laws and regulations in other jurisdictions in which we conduct business or source our products. If we fail to comply with these laws and regulations, we and certain of our employees could be subject to substantial civil or criminal penalties, including the possible loss of export or import privileges, fines, which may be imposed on us and responsible employees or managers and, in extreme cases, the incarceration of responsible employees or managers.
 United States
 We and our business customers are subject to various federal, state and local regulations related to access control products, such as state and local building and fire codes, the Americans with Disabilities Act, and requirements for Underwriter Laboratories ("UL") and Federal Communications Commission ("FCC") certifications. We and our business customers may be subject to numerous federal and state laws and regulations, including data breach notification laws, data privacy and security laws, and consumer protection laws and regulations (e.g., Section 5 of the Federal Trade Commission Act (the "FTC Act") that govern the collection, use, disclosure and protection of personal information. Privacy and security laws, self-regulatory schemes, regulations, standards and other obligations are constantly evolving, may conflict with each other to complicate compliance efforts and can result in investigations, proceedings or actions that may lead to significant civil and/or criminal penalties and restrictions on data processing. For example, the California Consumer Privacy Act went into effect on January 1, 2020 and was amended by the California Privacy Rights Act that went into effect on January 1, 2023 (together, the "CCPA"). The CCPA, among other things, created new data privacy obligations for covered companies and provided new privacy rights to California residents, including the right to access and delete their personal information, opt out of certain personal information processing and sharing and receive detailed information about how their personal information is used. The CCPA also created a private right of action with statutory damages for certain data breaches, thereby potentially increasing risks associated with a data breach. Pursuant to the CCPA, the California legislature also created a new California data protection agency specifically tasked to enforce the law, which has resulted in increased regulatory scrutiny of organizations conducting business in California in the areas of data protection and security. Similar laws have been passed in other states and are continuing to be proposed at the state and federal level, reflecting a trend toward more stringent privacy legislation in the United States. The enactment of such laws could have potentially conflicting requirements that would make

 compliance challenging. In the event that we are subject to or affected by domestic privacy and data protection laws, any liability from failure to comply with these laws could adversely affect our financial condition.
 In addition to state privacy bills, local regulation is also increasing. For instance, in 2021, New York City enacted the Tenant Data Privacy Act (the "TDPA"), regulating how building access data is collected, processed and disposed of by property managers and smart access system operators. The TDPA went into effect in July 2021, and we had to make certain adjustments to our retention of data collected from New York City users of the Latch Platform to comply with its requirements. Similar local legislation in other cities where we operate is likely, which will further increase the complexity and expense of ensuring that our privacy practices are compliant.
 Additionally, the interpretations of existing federal and state consumer protection laws relating to online collection, use, dissemination and security of personal information adopted by the Federal Trade Commission (the "FTC"), state attorneys general, private plaintiffs and courts have evolved, and may continue to evolve, over time. Consumer protection laws require us to publish statements that describe how we handle personal information and choices individuals may have about the way we handle their personal information. If such information that we publish is deemed untrue, we may be subject to government claims of unfair or deceptive trade practices, which could lead to significant liabilities and consequences. Furthermore, according to the FTC, violating consumers' privacy rights or failing to take appropriate steps to keep consumers' personal information secure may constitute unfair acts or practices in or affecting commerce in violation of Section 5 of the FTC Act. The FTC expects a company's data security measures to be reasonable and appropriate in light of the sensitivity and volume of consumer information it holds, the size and complexity of its business and the cost of available tools to improve security and reduce vulnerabilities.
 Canada
 In Canada, the Personal Information Protection and Electronic Documents Act ("PIPEDA") and similar provincial laws impose obligations with respect to processing personal information. PIPEDA requires companies to obtain an individual's consent prior to collecting, using or disclosing that individual's personal information. Individuals have the right to access and challenge the accuracy of their personal information held by an organization, and personal information may only be used for the purposes for which it was collected. If an organization intends to use personal information for another purpose, it must again obtain that individual's consent to the proposed processing. Failure to comply with PIPEDA and similar provincial laws could result in significant fines and penalties.
 Human Capital
 Our employees are critical to our success. As of December 31, 2024 and 2023, we had approximately 120 and 75 full-time employees in the United States, respectively. As a result of the July 2024 HelloTech Merger (as described below), we had approximately 100 Philippines-based full-time employees as of December 31, 2024. We also engage consultants and contractors in the United States and internationally, primarily in Argentina, India and Romania, to supplement our permanent workforce. A majority of our employees are engaged in engineering, software and product development, sales and related functions. To date, we have not experienced any work stoppages and consider our relationship with our employees and service providers to be in good standing. None of our domestic or international employees are subject to a collective bargaining agreement or represented by a labor union.
 We recognize the importance of inclusion and diversity and strive to foster an inclusive environment. We believe we offer competitive compensation, including base pay, discretionary bonus and equity incentive opportunities, paid time off and a family-friendly benefits package, including paid parental leave, to ensure our team members have the flexibility and support for a healthy work/life balance. Other than our St. Louis-based employees, our workforce generally operates on a remote basis, which we believe is suitable for the conduct of our business.
 Corporate History
 TS Innovation Acquisitions Corp. ("TSIA") was incorporated in Delaware on September 18, 2020 as a special purpose acquisition company formed to acquire one or more operating businesses through a business combination. On January 24, 2021, TSIA entered into an agreement and plan of merger (the "TSIA Merger Agreement") by and among Latch Systems, Inc., a Delaware corporation formed in 2014 ("Legacy Latch"), TSIA and Lionet Merger Sub Inc., a Delaware corporation and a wholly-owned subsidiary of TSIA ("Merger Sub"). On June 4, 2021 (the "TSIA Closing Date"), we consummated the merger, pursuant to which Merger Sub merged with and into Legacy Latch, with Legacy Latch becoming a wholly-owned subsidiary of TSIA (the "Business Combination" and, collectively with the other transactions described in the TSIA Merger Agreement, the "Transactions"). In connection with the consummation of the Transactions (the "Closing"), the post-

 combination company, TSIA, changed its name from TS Innovation Acquisitions Corp. to Latch, Inc. On June 7, 2021, the Company's common stock and warrants began trading on Nasdaq under the ticker symbols "LTCH" and "LTCHW," respectively.
 Investigation and Restatement
 During the quarter ended June 30, 2022, the audit committee (the "Audit Committee") of the Company's board of directors (the "Board") commenced an investigation (the "Investigation") of certain of the Company's key performance indicators and revenue recognition practices, including the accounting treatment, financial reporting and internal controls related thereto. Following the Investigation, the Company completed a comprehensive review of its previously issued financial statements (the "Financial Statement Review"). The Company identified errors related to, among other items: (i) revenue recognition of hardware and software sales, (ii) revenue recognition and billing on software licenses, (iii) recognition of various expenses and (iv) errors in certain key performance indicators, including "bookings" and related metrics.
 As a result of the Investigation and Financial Statement Review, the Company restated certain of its financial statements (the "Restatement") in its Annual Report on Form 10-K for the year ended December 31, 2022 (the "2022 Annual Report").
 2023 Business Update
 January 2023 Management Transition
 On January 11, 2023, the Company appointed Jason Keyes and Marc Landy, each of AP Services, LLC, an affiliate of AlixPartners, LLP (together, "AlixPartners"), as Interim Chief Executive Officer and Interim Chief Financial Officer, respectively, to replace the Company's prior management team, including the Chief Executive Officer, Interim Chief Financial Officer and Chief Accounting Officer, each of whom resigned as of January 11, 2023.
 HDW Acquisition and Hiring of Jamie Siminoff as Chief Strategy Officer
 On May 15, 2023, the Company, LS Key Merger Sub 1, Inc., a wholly-owned subsidiary of the Company ("Merger Sub I"), and LS Key Merger Sub 2, LLC, a wholly-owned subsidiary of the Company ("Merger Sub II"), entered into an Agreement and Plan of Merger (as amended, the "HDW Merger Agreement") with Honest Day's Work, Inc. ("HDW"). On July 3, 2023 (the "HDW Closing Date"), (i) Merger Sub I merged with and into HDW, with HDW continuing as the surviving corporation, and subsequently, (ii) HDW merged with and into Merger Sub II, with Merger Sub II continuing as the surviving entity and a wholly-owned subsidiary of the Company (collectively, the "HDW Acquisition").
 On the HDW Closing Date, the Company issued to HDW's stockholders as merger consideration (i) $22.0 million aggregate principal amount of unsecured promissory notes (the "Promissory Notes") and (ii) approximately 29.0 million shares of the Company's common stock (the "Consideration Shares"). Certain of HDW's stockholders (the "Ineligible Holders") that were not eligible to receive unregistered shares of the Company's common stock received $0.76 in lieu of each Consideration Share such stockholder would otherwise have received as merger consideration, with the total cash consideration paid to all Ineligible Holders equaling approximately $0.02 million. Upon the HDW Closing Date, Latch indirectly acquired all of HDW's assets, including its intellectual property and $8.0 million in cash. Additionally, approximately 35 HDW team members joined Latch.
 The Consideration Shares were originally non-transferable until July 3, 2028 (the "Restricted Period"), subject to certain accelerated releases. As a result of the Company's delisting from Nasdaq, the Restricted Period now terminates on April 15, 2027. In the event the Company's 60 trading day volume-weighted average price ("VWAP") exceeds the price thresholds set forth in the table below (the "Share Price Thresholds"), the applicable portion of the Consideration Shares set forth below will be released from transfer restrictions:

 Percent of Consideration Shares Released

 $2.00
 25%

 $3.00
 25%

 $4.00
 25%

 $5.00
 25%

 In addition, there may be accelerated releases of the Consideration Shares in connection with a change of control of the Company.

 In connection with the HDW Acquisition, the Company and Jamie Siminoff entered into a stock restriction agreement, dated May 15, 2023 (the "Original Siminoff Stock Restriction Agreement"). Pursuant to the Original Siminoff Stock Restriction Agreement, which was amended and restated in connection with the execution of his separation agreement in November 2024, in the event Mr. Siminoff ceased to be an employee of the Company during the Restricted Period, the Company would have the right to repurchase, for nominal consideration, all of Mr. Siminoff's Consideration Shares that had not already been released from transfer restriction, subject to certain exceptions. In the event Mr. Siminoff was terminated without Cause or resigned for Good Reason (each as defined in the Siminoff Employment Agreement (as defined below)), or upon his death or disability (each, an "Exit"), his Consideration Shares would accelerate in an amount equal to the greater of (i) the number of Consideration Shares to which he was entitled pursuant to the Share Price Thresholds (with linear interpolation of Consideration Shares based on the 60 trading day VWAP as of the date of Exit) and (ii) the number of Consideration Shares equal to the product of (a) his total Consideration Shares multiplied by (b) the quotient of (x) the number of calendar days between July 3, 2023 and his Exit divided by (y) 1,825; provided, however, that in no event would the number of Mr. Siminoff's Consideration Shares that accelerate in connection with an Exit be less than 40% of the total number of his Consideration Shares.
 The Promissory Notes accrued paid-in-kind interest at a rate of 10% per annum and were scheduled to mature on July 3, 2025, unless earlier accelerated in connection with an event of default (including certain events of delisting from Nasdaq) or change of control of the Company. As of December 31, 2023, the Company concluded that it was virtually certain the Promissory Notes would become payable within the upcoming 12 months due to the Company's then-anticipated delisting from Nasdaq, which was an event of default with respect to the Promissory Notes. Consequently, the Company reclassified the debt obligation as current as of December 31, 2023, despite the event of default not yet occurring. On April 26, 2024, the Company repaid the Promissory Notes in full without penalty. The Company paid an aggregate of $23.9 million in principal and accrued interest to the holders of the Promissory Notes.
 On the HDW Closing Date, in connection with the consummation of the HDW Acquisition and as contemplated by the HDW Merger Agreement, 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.
 In connection with the HDW Acquisition, the Company and Mr. Siminoff entered into an employment agreement, dated May 15, 2023 (the "Siminoff Employment Agreement"). Pursuant to the Siminoff Employment Agreement, on the HDW Closing Date, Mr. Siminoff was appointed as the Company's Chief Strategy Officer. At the time, Mr. Siminoff was expected to be appointed as Chief Executive Officer of the Company following completion of the Restatement. As described below under "—Recent Developments—November 2024 Executive Transition," Mr. Siminoff ceased to serve as Chief Strategy Officer on December 31, 2024 and will no longer be appointed as the Company's Chief Executive Officer.
 Hiring of David Lillis as Senior Vice President of Finance
 On July 3, 2023, the Company and David Lillis entered into an employment agreement, pursuant to which Mr. Lillis served as Senior Vice President of Finance until February 2025. Mr. Lillis was appointed Chief Executive Officer in February 2025. See "—Recent Developments—February 2025 Leadership Appointments" below for additional details.
 July 2023 Reduction in Force
 In July 2023, we commenced a reduction in force (the "July 2023 RIF") in order to streamline our business operations, reduce costs and complexities in the business and create further operating efficiencies. The July 2023 RIF, substantially completed in the fourth quarter of 2023, impacted approximately 95 employees, or approximately 70% of the Company's full-time employees at the time.

 Rebrand to DOOR
 In September 2023, the Company announced plans to rebrand to DOOR and expand its business to providing technology solutions aimed at empowering service providers like builders, property managers, contractors, drivers, cleaners and dog walkers to help them deliver best-in-class experiences for their customers. The backend platform offered by DOOR is expected to support these service providers by simplifying their day-to-day operations, increasing their support and improving their efficiency. As part of the rebranding announcement, the Company introduced the James application (the "James App"), a ride booking application that allows drivers to book clients and manage their businesses, while riders can connect directly with drivers they know and trust. The James App provides drivers backend support to operate their businesses, remain in control of their schedules and maximize the economics of their work.
 Recent Developments
 Launch of Door Property Management
 In March 2024, the Company announced the launch of its property management division, Door Property Management, LLC (a wholly-owned subsidiary of the Company) ("Door PM"), in conjunction with the acquisition of the property management business of The Broadway Company, a Boston-based real estate investment company ("Broadway"). This acquisition (the "Property Management Acquisition") enables the Company to operate all aspects of a multifamily residential property, from physical management to providing advanced technology solutions. The Property Management Acquisition also enables the Company to gain hands-on experience in property management to further refine and optimize its products and services.
 HelloTech Merger and Loan Agreement
 On June 21, 2024, the Company and LS HT Merger Sub, Inc., a wholly-owned subsidiary of the Company ("HT Merger Sub"), entered into an Agreement and Plan of Merger with HelloTech, Inc. ("HelloTech"). On July 1, 2024, HT Merger Sub merged with and into HelloTech, with HelloTech continuing as the surviving corporation and a wholly-owned subsidiary of the Company (the "HelloTech Merger").
 HelloTech is a service platform delivering on-demand, last-mile installation, setup and connected device support. The HelloTech platform, in combination with the technology Latch acquired in the HDW Acquisition, is expected to serve as the foundation for DOOR Services, bringing full-service amenities to multifamily buildings by enabling residents to efficiently share and book service providers, such as dog walkers, house cleaners, and tech support.
 As consideration for the HelloTech Merger, the Company (i) as further specified below, assumed HelloTech's outstanding borrowings under its existing term loan, which had outstanding borrowings of approximately $6.9 million as of July 1, 2024 (the "Prior Loan") with Customers Bank and (ii) paid $250,000 of HelloTech's merger-related expenses. HelloTech's stockholders or other equity holders (including option holders, warrant holders or holders of simple agreements for future equity) did not receive any consideration in connection with the HelloTech Merger.
 On July 15, 2024, the Company, Latch Systems, Inc., a wholly-owned subsidiary of the Company ("Latch Systems"), and HelloTech (collectively with the Company and Latch Systems, the "Borrowers") entered into an Amended and Restated Loan and Security Agreement (the "Loan Agreement") with Customers Bank.
 Pursuant to the Loan Agreement, Customers Bank issued the Borrowers a term loan in the principal amount of $6.0 million (the "New Loan"). The Loan Agreement, which amended and restated the terms of the Prior Loan, did not result in the Borrowers receiving any additional loan proceeds. Interest is payable on the New Loan at a rate equal to the greater of (a) the prime rate published in The Wall Street Journal or (b) 6.0%. The New Loan matures on July 15, 2029 (the "Maturity Date").
 The Borrowers were required to pay interest on the New Loan monthly until January 15, 2025. Thereafter, the Borrowers are required to pay equal monthly installments of principal plus accrued interest until the Maturity Date. There is no penalty for prepayment of the New Loan.
 Pursuant to the Loan Agreement, the Borrowers have granted Customers Bank security interests in substantially all of the Borrowers' assets, other than intellectual property. HelloTech is required to maintain an operating account with Customers Bank with a sufficient balance to support monthly payments. Additionally, the Borrowers are collectively required to maintain a liquidity ratio of at least 4.00, tested monthly, which is calculated as the quotient of unrestricted cash and cash equivalents of the Company and its subsidiaries (subject to certain limitations with respect to cash of foreign subsidiaries), divided by all outstanding indebtedness owed to Customers Bank.

 Appointment of Jason Mitura as Chief Product Officer
 Effective August 16, 2024, the Board appointed Jason Mitura as the Company's Chief Product Officer. Mr. Mitura was the Chief Product Officer at Ring from July 2017 to December 2023, where, leading a team of over 2,000, he oversaw all aspects of the company's hardware and software development and design. Mr. Mitura served as a consultant to the Company between January 2024 and August 2024.
 November 2024 Executive Transitions
 On November 18, 2024 (the "Siminoff Agreement 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 (the "Siminoff Separation Date"). Mr. Siminoff remained Chief Strategy Officer through the Siminoff Separation Date, after which he began serving in an advisory role that will continue through December 31, 2026 (such advisory services, the "Advisory Services," and such date, the "Advisory End Date"). Mr. Siminoff ceased to serve as an "executive officer" of the Company under Rule 3b-7 of the Exchange Act on the Siminoff Separation Date. Upon the Company's request, in performing the Advisory Services, Mr. Siminoff is expected to, among other services, (i) meet with customers and stakeholders, (ii) assist or advise on product development, (iii) assist or advise on corporate development or strategic transactions and (iv) provide transition services. In addition, Mr. Siminoff will no longer be appointed as the Company's Chief Executive Officer.
 In connection with Mr. Siminoff's transition to the advisory role described above, on the Siminoff Agreement Date, Mr. Siminoff and the Company entered into a Separation and Advisory Agreement and Release (the "Siminoff Transition Agreement"). Pursuant to the Siminoff Transition Agreement, the Company and Mr. Siminoff agreed to amend and restate the Original Siminoff Stock Restriction Agreement. In addition, under the Siminoff Transition Agreement, the Company agreed to reimburse Mr. Siminoff for certain legal expenses.
 Pursuant to an amended and restated common stock restriction agreement, which was entered into between Mr. Siminoff and the Company on the Siminoff Agreement Date (the "Restated Restriction Agreement"), and in accordance with the terms of the Original Siminoff Stock Restriction Agreement, the Company exercised its repurchase option with respect to 15,260,540 Consideration Shares held by Mr. Siminoff (the "Repurchased Shares") for $0.00005080 per share (the "Repurchase Price"), or a total payment of $775.24. The Repurchased Shares represent 80% of the 19,075,675 Consideration Shares received by Mr. Siminoff in connection with the HDW Acquisition.
 Pursuant to the Restated Restriction Agreement, the 3,815,135 Consideration Shares that were not repurchased by the Company (the "Remaining Shares") are subject to transfer restrictions and an amended repurchase option (the "Amended Repurchase Option") pursuant to which the Company has a right 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 Agreement (the "Repurchase Trigger Date").
 The Remaining Shares are split into two tranches with different provisions governing their release from the transfer restrictions and the Amended Repurchase Option: the Separation Shares and the Advisory Shares (each as hereafter defined).
 The "Separation Shares" consist of 2,861,351 shares (representing 75% of the Remaining Shares) and will be released from the transfer restrictions and the Amended Repurchase Option in equal tranches (each, a "Release Tranche") as follows:
 i.20% of the Separation Shares will be released when the average final trading price of the Company's common stock for any 60-trading day period prior to the Repurchase Trigger Date (the "Threshold Price") is equal to or exceeds $1.00 (the "First Tier");
 ii.20% of the Separation Shares will be released when the Threshold Price is equal to or exceeds $2.00 (the "Second Tier");
 iii.20% of the Separation Shares will be released when the Threshold Price is equal to or exceeds $3.00 (the "Third Tier");
 iv.20% of the Separation Shares will be released when the Threshold Price is equal to or exceeds $4.00 (the "Fourth Tier"); and
 v.20% of the Separation Shares will be released when the Threshold Price is equal to or exceeds $5.00 (the "Fifth Tier" and, collectively with the other respectively named tiers, the "Price Tiers").
 The Restated Restriction Agreement also includes provisions governing the impact of a change in control on the release of certain Separation Shares.

 The "Advisory Shares" consist of 953,784 shares (representing 25% of the Remaining Shares) and will be released from the transfer restrictions and the Amended Repurchase Option as follows:
 i. All of the Advisory Shares will be released on the Advisory End Date, provided that a termination of the Advisory Services has not occurred prior to such date.
 ii. In the event of a termination of the Advisory Services by Mr. Siminoff prior to the Advisory End Date other than due to the Company's breach of its ongoing contractual obligations to Mr. Siminoff, subject to notice requirements, the Amended Repurchase Option will immediately apply to all of the Advisory Shares as of the date of such termination (the "Advisory Termination Date"), and the Company will be deemed to have automatically exercised such Amended Repurchase Option with respect thereto.
 iii. In the event of a termination of the Advisory Services by the Company as a result of Mr. Siminoff's willful failure or refusal to perform the Advisory Services in good faith in accordance with the terms of the Siminoff Transition Agreement (a "Termination for Cause"), subject to notice requirements, the Amended Repurchase Option will immediately apply to all of the Advisory Shares as of the Advisory Termination Date, and the Company will be deemed to have automatically exercised such Amended Repurchase Option with respect thereto.
 iv. In the event of a termination of the Advisory Services by the Company other than a Termination for Cause or a change in control prior to the Advisory End Date, or in the event Mr. Siminoff terminates the Advisory Services as a result of the Company's breach of its ongoing contractual obligations to Mr. Siminoff, the Amended Repurchase Option will immediately apply to the portion of the Advisory Shares represented by the solution to the following equation:
 (1 – X/730) * 953,784, with "X" equaling the number of days elapsed between the Siminoff Separation Date and the Advisory Termination Date, and the Company will be deemed to have automatically exercised such Amended Repurchase Option with respect thereto.
 With respect to the Advisory Shares to which the Amended Repurchase Option does not apply, such Advisory Shares will be released from the Amended Repurchase Option and the Transfer Restrictions on the Advisory Termination Date.
 On November 26, 2024, the Company and Mr. Mitura mutually agreed that Mr. Mitura would step down as the Company's Chief Product Officer effective as of such date, at which time Mr. Mitura ceased to serve as an "executive officer" of the Company under Rule 3b-7 of the Exchange Act. Also on November 26, 2024, the Company and Mr. Mitura entered into a Separation and Transition Agreement and Release (the "Mitura Separation Agreement"). The Mitura Separation Agreement provides that the Company and Mr. Mitura's affiliated entity would enter into a consulting agreement pursuant to which Mr. Mitura would assist the Company in product development. In addition, under the Mitura Separation Agreement, the Company agreed to reimburse Mr. Mitura for certain legal expenses. Pursuant to the consulting agreement, which terminated March 23, 2025, the Company paid Mr. Mitura's related entity approximately $0.7 million in each of 2024 and 2025.
 February 2025 Leadership Appointments
 Following the December 2024 filing of the 2022 Annual Report and completion of the Restatement, on February 4, 2025, Jason Keyes, Interim Chief Executive Officer, and Marc Landy, Interim Chief Financial Officer, provided notice of their resignations from their positions with the Company effective as of February 6, 2025 (the "Appointment Date"). Messrs. Keyes and Landy were serving in such capacities pursuant to an agreement between the Company and AlixPartners. On the Appointment Date, the Board appointed David Lillis as Chief Executive Officer, Jeff Mayfield as Chief Financial Officer and Priyen Patel as Chief Strategy and Legal Officer.
 Mr. Lillis had served as Senior Vice President of Finance of the Company since July 2023. He was previously Chief Financial Officer of RubinBrown LLP, an accounting and professional consulting firm. In such role, which began in 2021, Mr. Lillis served as the top finance executive for the firm and was responsible for all financial operations. He is a Chartered Financial Analyst and a Certified Public Accountant.
 Mr. Mayfield joined the Company in September 2023 as Controller. Mr. Mayfield has over 20 years of experience and expertise in global accounting, finance strategy and operational leadership. From 2001 to September 2023, Mr. Mayfield held progressive leadership roles at Mastercard Worldwide, where he led financial integration efforts for over ten acquisitions with deal values ranging from $25 million to $3 billion. He is a Certified Public Accountant.
 Mr. Patel joined the Company in April 2019 as VP of Legal and most recently served as Senior Vice President, Head of Corporate Strategy, General Counsel and Corporate Secretary. In such role, Mr. Patel has built and led the Company's legal function and acted as a trusted advisor and leader for the Company and the Board through several critical events, including its

 initial public offering, the Restatement process and several leadership transitions. Prior to joining the Company, Mr. Patel was an attorney at White & Case LLP, a position he started in May 2018 with a focus on technology transactions and mergers and acquisitions.
 Available Information
 Our internet website address for our stockholders and other interested parties is  We make available, free of charge, through our website or through the SEC's website at www.sec.gov, our Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K and amendments to those reports, as soon as reasonably practicable after filing such reports with the SEC. Also, the charters of our Audit Committee, Compensation Committee and Nominating and Corporate Governance Committee, our Code of Business Conduct and Ethics, Corporate Governance Guidelines and stockholder communications are available through our website, and we also intend to disclose any amendments to our Code of Business Conduct and Ethics, or waivers to such code on behalf of our Chief Executive Officer or Chief Financial Officer, on our website. All of these corporate governance materials are available free of charge and in print to any stockholder who provides a written request to the Corporate Secretary at 1220 N. Price Rd, Suite 2, Olivette, Missouri 63132. The contents of our website are not intended to be incorporated by reference into this Form 10-K or any other report or document we file and any reference to our website is intended to be an inactive textual reference only.

 Item 1A. Risk Factors
 Summary of Risk Factors
 The following is a summary of some of the risks and uncertainties that could materially adversely affect our business, financial condition and results of operations. You should read this summary together with the more detailed risk factors contained below.
 Risks Related to the Restatement, Internal Controls and Related Matters
 • We and our directors and certain of our former officers have been named in lawsuits related to the circumstances that gave rise to the Restatement and may be named in further proceedings.
 • We are subject to an ongoing investigation by the SEC and may be named in future governmental or other regulatory investigations and proceedings.
 • Because our securities are traded on the OTC Expert Market, there is a minimal public market for our securities, which negatively affects the value of our securities and may make it difficult or impossible for you to sell or buy them.
 • Matters relating to or arising from the Restatement and the Investigation have had, and could continue to have, an adverse effect on our business and financial condition and reputation.
 • We have material weaknesses in our internal control over financial reporting.
 Risks Related to our Business and Industry
 • The presence of various risks and uncertainties associated with the Company's liquidity position may adversely affect its ability to sustain its operations.
 • We are an early-stage company with a history of losses, we may not achieve or maintain profitability in the future, and our operating results and financial condition may continue to fluctuate.
 • Our growth and the markets in which we operate make it difficult to evaluate our current business and future prospects.
 • Our restructuring and associated workforce reductions resulted in the loss of institutional knowledge.
 • We face various risks related to our HelloTech business, many of which are difficult to predict while the business is being integrated into the Company.
 • Our future operating results will rely in part upon the successful execution of our strategic partnerships.
 • If our security controls are breached, or unauthorized or inadvertent access to user information or other data or to control or view systems are otherwise obtained, we may incur significant liabilities.
 • We may be unable to attract new customers and maintain customer satisfaction with current customers.
 • We rely on our channel partner network and certain third-party providers of licensed software and services that are important to our business.
 • Customer turnover or costs we incur to retain and upsell our customers could adversely affect our financial performance.

 • If we are unable to develop new solutions, adapt to technological change, sell our software, services and products into new markets or further penetrate our existing markets, our revenue may not grow as expected.
 • We operate in the emerging and evolving smart building technology industry, which may develop more slowly than we expect and may become more competitive.
 • We may not realize the anticipated benefits of the HDW Acquisition, the HelloTech Merger or other acquisitions.
 • Changes in effective tax rates, adverse outcomes resulting from examination of our income or other tax returns and an inability to use some or all of our net operating loss carryforwards could adversely affect our results of operations.
 • We may require additional capital to pursue our business objectives and to operate our business.
 • If we are unable to acquire or adequately protect intellectual property, we could be competitively disadvantaged.
 • Accusations of infringement of third-party intellectual property rights could materially and adversely affect our business.
 • Some of our products and services contain open source software, which may pose particular risks to our business.
 • Our products and services may be affected from time to time by design and manufacturing defects.
 • If we fail to continue to develop our brands, our business may suffer.
 • We must successfully upgrade and maintain our information technology systems, and problems with our information systems, third-party systems and infrastructure upon which we rely could interfere with our business and operations.
 • We collect, store, process and use personal information, which subjects us to legal obligations and laws and regulations related to security and privacy.
 • We rely on a limited number of suppliers, manufacturers and logistics partners that we do not control.
 • Increases in component costs, long lead times, supply shortages and changes, labor shortages and construction delays could disrupt our supply chain and operations.
 • Our operating results could be adversely affected if we are unable to accurately forecast customer demand for our products and services and adequately manage our inventory.
 • From time to time, we may be subject to legal proceedings, regulatory disputes and governmental inquiries that could cause us to incur significant expenses, divert our management's attention and materially harm our business.
 • Our smart building technology is subject to varying state and local regulations, and we must also comply with import and export, bribery and money laundering laws, regulations and controls.
 • If we are unable to sustain pricing levels, our business could be adversely affected.
 • Insurance policies may not cover all of our operating risks, and a casualty loss beyond the limits of our coverage could negatively impact our business.
 • Downturns in general economic and market conditions and reductions in spending may reduce demand for our software, services and products, which could harm our revenue, results of operations and cash flows.
 • We are dependent upon relationships with manufacturers in Taiwan and China, which exposes us to complex regulatory regimes, logistical challenges and business risk.
 Risks Related to Ownership of Our Securities
 • Our common stock price may be volatile or may decline regardless of our operating performance.
 • We do not intend to pay dividends on our common stock for the foreseeable future.
 • Our issuance or sale of additional shares of common stock or convertible securities could make it difficult for another company to acquire us, may dilute your ownership of us and could adversely affect our stock price.
 • Our warrants are subject to various limitations and features that could adversely impact the holders of such warrants.
 • Anti-takeover provisions in our governing documents and under Delaware law could make an acquisition of us more difficult or limit attempts by our stockholders to replace or remove our current management.
 • Our governing documents provide a sole and exclusive forum for substantially all disputes between us and our stockholders, which could limit our stockholders' ability to obtain a favorable judicial forum for disputes with us.
 Risks Related to the Investigation, Restatement, Internal Controls and Related Matters
 We and certain of our current and former officers and directors have been named in stockholder class action lawsuits and derivative lawsuits related to the circumstances that gave rise to the Restatement and extended filing delay in filing our periodic reports with the SEC and may be named in further litigation, government investigations and proceedings, which could require significant additional management time and attention, has resulted and could result in significant

 additional legal expenses or result in government enforcement actions, any of which could have a material adverse impact on our results of operations, financial condition, liquidity and cash flows.
 We and certain of our current and former officers and directors have been named in, or are required to indemnify certain defendants of, stockholder class action lawsuits and derivative lawsuits (collectively, the "Stockholder Lawsuits") relating to the matters identified in the Investigation and audit and compliance efforts and may become subject to further litigation, government investigations or proceedings arising out of the Restatement. The pending litigation has been, and any future litigation, investigation or other actions that may be filed or initiated against us or our current or former officers or directors may be, time consuming and expensive. We cannot predict what losses we may incur in these litigation matters and contingencies related to our obligations under the federal and state securities laws, or in other legal proceedings or governmental investigations or proceedings related to the Restatement.
 To date, we have incurred significant costs in connection with the Stockholder Lawsuits and other pending litigation. Any legal proceedings will likely involve significant defense and other costs and, if decided adversely to us or settled, could result in significant monetary damages, penalties and reputational harm. We have also agreed to contribute towards certain settlements related to the Stockholder Lawsuits, which remain subject to court approval. These cash outflows have negatively impacted, and will continue to negatively impact, our cash position, liquidity and profitability.
 We have entered into indemnification agreements with each of our current and former directors, certain of our current and former officers and certain third parties, and our amended and restated certificate of incorporation requires us to indemnify each of our directors and officers, to the fullest extent permitted by Delaware law, who was or is a party or is threatened to be made a party to any threatened, pending or completed action, suit or proceeding by reason of the fact that he or she is or was a director or officer of the Company. 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, and insurance coverage may not be available to us at a reasonable cost. As a result, we have been and may continue to be exposed to substantial uninsured liabilities, including pursuant to our indemnification obligations, which could materially adversely affect our business, prospects, results of operations and financial condition.
 See Part I, Item 3. "Legal Proceedings" and Note 12. Commitments and Contingencies, in Part II, Item 8. "Financial Statements" for additional discussion of these matters.
 We are subject to an ongoing SEC investigation and may be named in future governmental or other regulatory investigations and proceedings, each of which could have a material adverse impact on our business, financial condition, results of operation, cash flows and reputation.
 Since being contacted by the Staff of the SEC in March 2023, the Company has been cooperating with the Staff's investigation into issues related to the Company's key performance indicators and revenue recognition practices that led to the Restatement and related issues. We cannot predict the duration or outcome of the SEC Investigation or whether the SEC will bring an enforcement action against us.
 We cannot predict or provide any assurance as to the timing, outcome or consequences of the SEC Investigation. If the SEC were to conclude that enforcement action is appropriate, we could be required to pay civil penalties and fines, and the SEC could impose other sanctions against us or against our current and former officers and directors. We have incurred, and may continue to incur, significant expenses related to legal and other professional services in connection with matters relating to or arising from the SEC Investigation. These cash outflows have, and will continue to, negatively impact our cash position and profitability. We cannot predict if the SEC will impose any penalty or fine and, if it does, the magnitude or timing of such penalty or fine; however, any penalty or fine would also negatively impact our cash position, profitability and liquidity.
 In addition, our Board, management and employees have expended, and may continue to expend, a substantial amount of time on the SEC Investigation, diverting resources and attention that would otherwise be directed toward our operations and implementation of our business strategy, all of which could materially adversely affect our business, financial condition and results of operations. Publicity surrounding the foregoing, or any SEC enforcement action or settlement as a result of the SEC Investigation, even if ultimately resolved favorably for us, could have an adverse impact on our reputation, business, financial condition and results of operations.
 In addition, although we have completed the Restatement, we could receive additional inquiries from the SEC or other regulatory authorities regarding our restated financial statements or matters relating thereto, and we could be subject to future claims, investigations or proceedings. Any future inquiries from regulatory authorities, or future claims or proceedings as a

 result of the Restatement or any related regulatory investigation, will, regardless of the outcome, consume a significant amount of our internal resources and result in additional legal and accounting costs.
 Because our securities are trading on the OTC Expert Market, there is a minimal public market for our securities, which negatively affects the value of our securities and may make it difficult or impossible for you to sell them. We cannot assure you that our common stock and warrants will be traded on the OTCQX, OTCQB or OTC Pink markets or listed on Nasdaq or any other national securities exchange in the future.
 On February 7, 2023, the Company received a Staff Delisting Determination (the "Staff Determination") from the Listing Qualifications Department of Nasdaq (the "Nasdaq Staff") notifying the Company that Nasdaq had initiated a process that could result in the delisting of the Company's securities from Nasdaq as a result of the Company's failure to timely file all required periodic financial reports with the SEC. The Company presented a Compliance Plan (the "Compliance Plan") at a March 23, 2023 hearing before a Nasdaq Hearings Panel (the "Panel"). As set forth in the Compliance Plan, the Company intended to regain compliance with its periodic filing obligations under Nasdaq Listing Rule 5250(c)(1) (the "Listing Rule") by filing with the SEC, on or before August 4, 2023, (i) the 2022 Annual Report, (ii) its Quarterly Reports on Form 10-Q for the quarterly periods ended June 30, 2022 and September 30, 2022 (together, the "Delinquent Quarterly Reports") and (iii) the Quarterly Report on Form 10-Q for the quarterly period ended March 31, 2023 (the "First Quarter 2023 Report"). On April 5, 2023, the Company received a decision from the Panel granting the Company's request for continued listing on Nasdaq, subject to the Company demonstrating compliance with the Listing Rule on or before August 4, 2023.
 On July 31, 2023, the Company notified the Panel that the Company did not anticipate filing the required reports to regain compliance with the Listing Rule on or before August 4, 2023. On August 8, 2023, the Company received a notice from the Panel stating that it had determined to suspend trading of the Company's securities on August 10, 2023 and commence delisting procedures because of the Company's failure to regain compliance with the Listing Rule by August 4, 2023. On March 21, 2024, Nasdaq filed a Form 25 with the SEC notifying the SEC of Nasdaq's determination to remove the Company's securities from listing on Nasdaq. The delisting was effective April 1, 2024. Since the suspension of trading in the Company's common stock and warrants on Nasdaq, the Company's securities have been traded on the OTC Expert Market.
 Quotes in the OTC Expert Market are "Unsolicited Only." This means broker-dealers may only use the OTC Expert Market to publish unsolicited quotes representing limit orders from retail and institutional investors who are not affiliates or insiders of the Company. Quotations in OTC Expert Market securities are restricted from public viewing. Only broker-dealers and professional or sophisticated investors are permitted to view quotations in OTC Expert Market securities. Because of these restrictions, there is a minimal public market for our securities, which negatively affects the value of our securities and may make it difficult or impossible for you to sell them. We cannot assure you that our common stock and warrants will be traded on the OTC Pink markets or the OTCQX or OTCQB markets, which generally offer greater liquidity than the OTC Expert Market, in the future.
 Over-the-counter markets are generally considered to be less efficient than, and not as broad as, a national stock exchange. In addition, our ability to raise additional capital may be impaired because of the less liquid nature of the over-the-counter markets. While we cannot guarantee that we would be able to complete an equity financing on acceptable terms, or at all, we believe that dilution from any equity financing while our shares are quoted on an over-the-counter market would likely be substantially greater than if we were to complete a financing while our common stock is traded on a national securities exchange.
 Our common stock may also be subject to penny stock rules, which impose additional sales practice requirements on broker-dealers who sell our common stock. The SEC generally defines "penny stock" as an equity security that has a market price of less than $5.00 per share, subject to certain exceptions. The ability of broker-dealers to sell our common stock and the ability of our stockholders to sell their shares in the secondary market will be limited and, as a result, the market liquidity for our common stock will likely be adversely affected. Further, certain brokerage firms have implemented rules regarding the deposit of penny stock shares into new or existing accounts where such stocks do not meet minimum price and volume requirements. Such rules may make it difficult or even prevent stockholders from timely selling their shares through such brokerage firms unless the shares meet such minimum requirements.
 No assurance can be provided that an active trading market for our securities will develop or, if one develops, will continue. The lack of an active trading market for our securities may limit the liquidity of an investment in our common stock or warrants, meaning you may not be able to sell any shares of common stock or warrants you own at times, or at prices, attractive to you. Any of these factors may materially adversely affect the price of our common stock and warrants.

 We may not ever be able to satisfy the initial or continued listing requirements for our common stock to be listed on any stock exchange, including Nasdaq, which are often more widely-traded and liquid markets. Some, but not all, of the factors that may delay or prevent the listing of our common stock on a more widely-traded and liquid market include the following: our stockholders' equity may be insufficient; the market value of our outstanding securities may be too low; our net income from operations may be too low; our common stock may not be sufficiently widely held; we may not be able to secure market makers for our common stock; the SEC Investigation may remain ongoing; and we may fail to regain or maintain compliance with the relevant listing rules and requirements.
 In the future, if eligible to do so, we could elect to deregister our securities under the Exchange Act. Deregistration would result in less disclosure about us and may negatively affect the liquidity and trading prices of our securities.
 In the future, if eligible to do so, our Board may elect to voluntarily deregister our securities under the Exchange Act and suspend our reporting obligations. While no Board approval of deregistration has taken place, in the future, the Board may consider and/or authorize the Company to file with the SEC a Form 15 to voluntarily deregister our securities under Section 12(g) of the Exchange Act and suspend our reporting obligations under Section 15(d) of the Exchange Act, if eligible to do so. If the Board approves such deregistration, we would file a Form 15 and our obligations to file periodic reports, such as annual reports on Form 10-K, quarterly reports on Form 10-Q and current reports on Form 8-K, would be suspended immediately upon the filing of the Form 15 with the SEC, and our proxy statement, Section 16 and other Section 12(g) reporting responsibilities would terminate effective 90 days after the filing of the Form 15. Following any deregistration, we would not expect to publish periodic financial information or furnish such information to our stockholders except as may be required by applicable laws or stock exchange rules. As a result of the foregoing factors, deregistration may result in less disclosure about us and may negatively affect the liquidity and trading prices of our securities.
 Matters relating to or arising from the Restatement and the Investigation, including adverse publicity and potential concerns from our customers, have had, and could continue to have, an adverse effect on our business and financial condition.
 We have been, and could continue to be, the subject of negative publicity focusing on the Investigation and the Restatement and have been, and may continue to be, adversely impacted by negative reactions from our customers or others with whom we do business. Concerns include the perception of the effort required to address our accounting and control environment and the ability for us to be a long-term provider to our customers. The continued occurrence of any of the foregoing could harm our business and have an adverse effect on our financial condition.
 We have identified deficiencies in our internal control over financial reporting that resulted in material weaknesses in our internal control over financial reporting and have concluded that our internal control over financial reporting and our disclosure controls and procedures were not effective as of December 31, 2023. If we fail to properly remediate these or any future material weaknesses or deficiencies or to maintain proper and effective internal controls, further material misstatements in our financial statements could occur and impair our ability to produce accurate and timely financial statements and could adversely affect investor confidence in our financial reports, which could negatively affect our business.
 A material weakness is a deficiency or combination of deficiencies in internal control over financial reporting such that there is a reasonable possibility that a material misstatement of the financial statements would not be prevented or detected on a timely basis. We have concluded that our internal control over financial reporting was not effective as of December 31, 2023 due to the existence of material weaknesses, and we have also concluded that our disclosure controls and procedures were not effective as of December 31, 2023 due to material weaknesses in our internal control over financial reporting, all as described in Part II, Item 9A. "Controls and Procedures." Our management has determined that we have material weaknesses in the Company's internal control over financial reporting as of December 31, 2023 related to (i) control environment, (ii) risk assessment, (iii) control activities, (iv) information and communication and (v) monitoring activities. All of these material weaknesses existed as of December 31, 2022, and certain of these material weaknesses also existed as of December 31, 2021.
 As of the date of this Form 10-K, our remediation efforts are on-going. We cannot assure you that additional material weaknesses in our internal control over financial reporting will not arise or be identified in the future. We intend to continue our control remediation activities and to continue to improve our operational, information technology, financial systems and infrastructure procedures and controls, as well as to continue to expand, train, retain and manage our personnel who are essential to effective internal controls. In doing so, we will continue to incur expenses and expend management time on

 compliance-related issues. We may be unable to hire or retain such personnel, including qualified accounting and financial reporting personnel.
 If our remediation measures are insufficient to address the identified deficiencies, or if additional deficiencies in our internal control over financial reporting are discovered or occur in the future, our consolidated financial statements may contain material misstatements, and we could be required to restate our financial results. Moreover, because of the inherent limitations of any control system, material misstatements due to error or fraud may not be prevented or detected on a timely basis, or at all. Although we are working to remedy the ineffectiveness of the Company's internal control over financial reporting, there can be no assurance as to when the remediation plan will be fully implemented, the aggregate cost of implementation or whether the remediation plan will be adequate and effective. Until our remediation plan is fully implemented, our management will continue to devote significant time and attention to these efforts. If we do not complete our remediation in a timely fashion, or at all, or if our remediation plan is inadequate or ineffective, there is an increased risk that we will be unable to timely file future periodic reports with the SEC and that our future consolidated financial statements could contain errors that will be undetected. If we are unable to provide reliable and timely financial reports in the future, our business and reputation may be further harmed. Restated financial statements and failures in internal controls may also cause us to fail to meet reporting obligations, result in the delisting of our securities, negatively affect investor confidence in our management and the accuracy of our financial statements and disclosures, or result in adverse publicity and concerns from investors, any of which could have a negative effect on the price of our common stock, subject us to further regulatory investigations and penalties or stockholder litigation, and materially adversely impact our business and financial condition.
 If we identify any new material weaknesses in the future, any such weakness could limit our ability to prevent or detect a misstatement of our financial statements. In addition, if we are unable to assert that our internal control over financial reporting is effective, or if our independent registered public accounting firm is unable to express an unqualified opinion as to the effectiveness of our internal control over financial reporting, we may be unable to maintain compliance with securities law requirements regarding timely filing of periodic reports in addition to applicable stock exchange listing requirements, investors may lose confidence in the accuracy of our financial reporting and our stock price may decline as a result. We cannot assure you that the measures we have taken to date, or any measures we may take in the future, will be sufficient to avoid potential future material weaknesses.
 Risks Related to our Business and Industry
 The presence of various risks and uncertainties associated with the Company's liquidity position may adversely affect its ability to sustain its operations.
 As of the date of this Form 10-K (the "Filing Date"), the presence of the following risks and uncertainties associated with the Company's liquidity position may adversely affect its ability to sustain its operations:
 • 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 against the Company;
 • Potential expenditures associated with defending, negotiating or resolving the service provider demand described in Note 12. Commitments and Contingencies, in Part II, Item 8. "Financial Statements;"
 • Unexpected expenditures related to the Stockholder Lawsuits in the event the agreed-to settlements are not approved by the respective courts, or otherwise;
 • The incurrence of significant expenses related to other legal or regulatory proceedings, whether actual or threatened;
 • The failure of the Company to achieve its revenue expectations, including as a result of:
 Pricing compression for the Company's SaaS products;
 Market adoption of the DOOR application;
 The success of the HelloTech business;
 The impact of elevated interest rates on the Company's potential customers, who may eliminate or delay expenditures for the products or services the Company offers; and
 Market perception of the Company and its offerings;
 • Costs of revenue and operating expenses exceeding the Company's expectations;
 • The Company's failure to maintain the liquidity ratio required by the Loan Agreement with Customers Bank;
 • The Company's inability to fully leverage its prepaid inventory; or
 • The catastrophic loss of inventory due to theft, natural disaster or otherwise.
 Due to the risks and uncertainties described above, the Company continues to monitor its liquidity position. The Company recognizes the challenge of maintaining sufficient liquidity to sustain its operations and remain in compliance with the

 liquidity ratio required by the Loan Agreement. However, notwithstanding its liquidity position as of the Filing Date, and while it is difficult to predict its future liquidity requirements with certainty, the Company currently expects it will be able to generate sufficient liquidity to fund its operations over the 12 months beyond the Filing Date.
 In response to the risks and uncertainties described above, the Company may attempt to secure additional outside capital. However, the Company has not sought any commitments of additional outside capital and can provide no assurance it will be able to secure any outside capital in the future at all, or on terms that are acceptable to the Company. Additionally, the Company's securities are currently traded on the OTC Expert Market. Because of applicable restrictions, there is a minimal public market for the Company's securities, and the Company's ability to raise additional capital may be impaired because of the less liquid nature of the over-the-counter markets. The Company also plans to continue to closely monitor its cash flow forecast and, if necessary, may implement certain incremental cost savings measures to preserve its liquidity beyond the 2022 RIFs and the July 2023 RIF. See Note 20. Restructuring, in Part II, Item 8. "Financial Statements."
 As of December 31, 2023 and 2024, the Company's unrestricted cash and cash equivalents and current and non-current available-for-sale securities were approximately $179.5 million and $75.5 million, respectively. Current financial information regarding the Company, including its results of operations and statement of cash flows, will not be available until we file our 2024 financial statements.
 We are an early-stage company with a history of losses. We have not been profitable historically and may not achieve or maintain profitability in the future.
 We have experienced net losses in each year since inception, including a net loss of $107.5 million for the year ended December 31, 2023. We believe we will continue to incur operating losses and negative cash flow in the near term as we continue to invest significantly in our business, in particular to enhance and develop new Latch Platform features, services and products to position us for future growth. Additionally, we have incurred substantial losses and expended significant resources to market, promote and sell our solutions and products and expect to continue to do so in the future. We also expect to continue to invest for future growth, including for customer acquisition, technology infrastructure and services development. As noted above, we have also incurred significant costs in connection with the Stockholder Lawsuits and SEC Investigation.
 We expect to continue to incur losses for the foreseeable future and will have to generate and sustain increased revenues to achieve future profitability. Achieving profitability will require us to increase revenues, manage our cost structure and avoid significant liabilities. Revenue growth may slow, revenues may decline or we may incur significant losses in the future for a number of possible reasons, including general macroeconomic conditions, increasing competition (including competitive pricing pressures), a decrease in the growth of the markets in which we compete or if we fail for any reason to continue to capitalize on growth opportunities. Additionally, we may encounter unforeseen operating expenses, difficulties, complications, delays and service quality problems or other unknown factors that may result in losses in future periods. If these losses exceed our expectations or our revenue growth expectations are not met in future periods, our financial performance will be harmed and our stock price could be volatile or decline.
 Our operating results and financial condition may fluctuate from period to period.
 Our operating results and financial condition fluctuate from quarter-to-quarter and year-to-year and are likely to continue to vary due to a number of factors, many of which are not within our control. Both our business and the smart building technology industry are changing rapidly, and our historical operating results may not be useful in predicting our future operating results. If our operating results, guidance or projections we provide to the marketplace do not meet previous guidance or projections or the expectations of securities analysts or investors, or we adjust such guidance or projections downward, the market price of our common stock will likely decline. We have experienced declines in our common stock since 2021. Fluctuations in our operating results and financial condition may occur due to a number of factors, including:
 • the portion of our revenue attributable to SaaS versus hardware and other sales;
 • the impact of organizational changes, including any reductions in force and the transition of Mr. Siminoff into an advisory role in 2025;
 • fluctuations in demand for our platform and solutions;
 • changes in pricing by us in response to competitive pricing actions or otherwise;
 • the ability of our hardware vendors to continue to manufacture high-quality products and to supply sufficient products to meet our demands;
 • the timing and success of introductions of new solutions, products or upgrades by us or our competitors;

 • changes in our business and pricing policies or those of our competitors;
 • our ability to accurately forecast demand and revenue;
 • our ability to control costs, including our operating expenses and the costs of the hardware we purchase;
 • competition, including entry into the industry by new competitors and new offerings by existing competitors;
 • our ability to successfully manage and integrate the HDW Acquisition, the HelloTech Merger and any future acquisitions of businesses;
 • issues related to introductions of new or improved products such as shortages of prior generation products or decreased demand for next generation products;
 • the amount and timing of expenditures, including those related to expanding our operations, increasing research and development, introducing new services, solutions or products or paying litigation or similar expenses, including those related to the Stockholder Lawsuits and the SEC Investigation;
 • the ability to effectively manage growth within existing and new markets;
 • changes in the payment terms for our products and services;
 • the strength of regional, national and global economies;
 • the impact of the any economic disruption, such as those caused by disruptions in access to bank deposits or lending commitments due to bank failures, the Russian invasion of Ukraine, increasing interest rates, the implementation of tariffs on imports, inflationary pressures and the threat of a recession;
 • changes in the fair values of our financial instruments (including certain warrants that we assumed in connection with the Business Combination); and
 • the impact of natural disasters or man-made problems such as terrorism.
 Due to the foregoing factors, and the other risks discussed in this Form 10-K, you should not rely on quarter-over-quarter and year-over-year comparisons of our operating results as indicators of our future performance.
 Our growth and the quickly changing markets in which we operate make it difficult to evaluate our current business and future prospects, which may increase the risk of investing in our common stock.
 We have grown since 2017 when we introduced our smart building technology. We have encountered and expect to continue to encounter risks and uncertainties frequently experienced by growing companies in rapidly changing markets. If our assumptions regarding these uncertainties are incorrect or change in reaction to changes in our markets, or if we do not manage or address these risks successfully, our results of operations could differ materially from our expectations, and our business could suffer.
 Our restructuring and associated workforce reductions in May and August 2022 and July 2023 resulted in the loss of institutional knowledge and could disrupt our business.
 The reductions in force conducted in 2022 (the "2022 RIFs") and the July 2023 RIF, and attrition following the restructurings, resulted in the loss of institutional knowledge and expertise and the reallocation and combination of certain roles and responsibilities across the Company, all of which could adversely affect our operating results and financial condition. Additionally, we are subject to service-level agreements ("SLAs") with certain customers, and we may be unable to comply with such agreements as a result of the restructuring, attrition or other factors.
 We cannot guarantee that we will not have to undertake additional workforce reductions or restructuring activities in the future. Furthermore, strategic restructuring may be disruptive to our operations. For example, any workforce reduction could impair our ability to achieve our current or future business objectives and yield unanticipated consequences, such as attrition beyond planned staff reductions, increased difficulties in our day-to-day operations and reduced employee morale. We believe the organizational restructuring of our sales and marketing teams as part of the 2022 RIFs and the July 2023 RIF negatively impacted our revenue. Restructurings could also cause us to delay, limit, reduce or eliminate certain product development plans, each of which could have an adverse impact on our operating results and financial condition. Any workforce reduction could also harm our ability to attract and retain qualified management and other personnel who are critical to our business. Any failure to attract or retain qualified personnel could significantly delay or prevent the achievement of our development and strategic objectives.
 We engage some individuals classified as independent contractors, not employees, and if U.S. or international regulatory authorities mandate that they be classified as employees, our business would be adversely impacted.
 We engage independent contractors and are subject to U.S. and international regulations and guidelines regarding independent contractor classification. For instance, the technicians that provide services through the HelloTech platform are

 engaged as independent contractors. These classification regulations and guidelines vary by jurisdiction, are highly fact sensitive and are subject to judicial and agency interpretation, and it could be determined that our current or former independent contractor classifications are inapplicable. Further, if legal standards for classification of independent contractors change, it may be necessary to modify our compensation structure for these personnel, including by paying additional compensation or reimbursing expenses. In addition, if our independent contractors are determined to have been misclassified as independent contractors, we would incur additional exposure under U.S. and international law, workers' compensation, unemployment benefits, labor, employment and tort laws, including for prior periods, as well as potential liability for employee benefits and tax withholding. Any of these outcomes could result in substantial costs to us, could significantly impair our financial condition and our ability to conduct our business as we choose and could damage our reputation and our ability to attract and retain other personnel.
 In addition to the harms listed above, a determination in, resolution of, or settlement of, any legal proceeding related to the classification of HelloTech technicians may require us to significantly alter the existing HelloTech business model and/or operations (including suspending or ceasing operations in impacted jurisdictions), increase our costs and impact our ability to add qualified technicians to our platform and grow our business, which could have an adverse effect on our business, financial condition and results of operations and our ability to achieve or maintain profitability in the future.
 We rely on third-party background check providers to screen potential and existing HelloTech technicians, and if such providers fail to provide accurate information, or if providers are unable to complete background checks because of data access restrictions, court closures or other unforeseen government shutdowns, or if we do not maintain business relationships with them, our business, financial condition and results of operations could be adversely affected.
 We rely on third-party background check providers to screen the records of potential and existing HelloTech technicians to help identify those that are not qualified to utilize our platform pursuant to applicable laws or any internal standards. Our HelloTech business may be adversely affected to the extent we cannot attract or retain qualified technicians as a result of such providers being unable to complete certain background checks, or being significantly delayed in completing certain background checks, because of data access restrictions, or to the extent that they do not meet their contractual obligations, our expectations or the requirements of applicable laws or regulations. If any of our third-party background check providers terminates its relationship with us, we may need to find an alternate provider, and may not be able to secure similar terms or replace such partners in an acceptable time frame.
 If we cannot find alternate third-party background check providers on terms acceptable to us, we may not be able to timely onboard potential technicians, and as a result, our platform may be less attractive to qualified technicians. Further, if the background checks conducted by our third-party background check providers do not meet our expectations or the requirements under applicable laws and regulations, unqualified technicians may be permitted to provide services on the HelloTech platform, and as a result, our reputation and brand could be adversely affected and we could be subject to increased regulatory or litigation exposure.
 We are also subject to a number of laws and regulations applicable to background checks for potential and existing technicians on the HelloTech platform. If we or technicians on our platform fail to comply with applicable laws, rules and legislation, our reputation, business, financial condition and results of operations could be adversely affected.
 Any negative publicity related to any of our third-party background check providers, including publicity related to safety incidents or data security breaches or incidents, could adversely affect our reputation and brand and could potentially lead to increased regulatory or litigation exposure. Any of the foregoing risks could adversely affect our business, financial condition and results of operations.
 Any failure to offer high-quality support of our HelloTech platform may harm our relationships with merchants, consumers, and technicians and could adversely affect our business, financial condition and results of operations.
 Our ability to attract and retain merchants, consumers, and technicians to our HelloTech platform is dependent in part on our ability to provide high-quality support. Merchants, property owners, consumers and technicians depend on our support organization to resolve any issues relating to our platform. As we continue to grow our HelloTech business and improve our offerings, we will face challenges related to providing high-quality support services at scale. Any failure to maintain high-quality support, or a market perception that we do not maintain high-quality support, could harm our reputation and adversely affect our ability to scale our platform and business, financial condition and results of operations.

 If HelloTech platform users engage in, or are subject to, criminal, violent, inappropriate or dangerous activity that results in safety incidents, our ability to attract and retain technicians, consumers and merchants may be harmed, which could have an adverse impact on our reputation, business, financial condition and operating results.
 We are not able to control or predict the actions of HelloTech platform users and third parties, either during their use of the HelloTech platform or otherwise, and we may be unable to protect or provide a safe environment for technicians, consumers and customers as a result of certain actions by technicians, consumers, merchants and third parties. Such actions may result in injuries, loss of life, property damage, theft, unauthorized use of credit and debit cards or bank accounts, business interruption, brand and reputational damage or other significant liabilities. Although we administer certain qualification processes for technicians on our HelloTech platform, including background checks through third-party service providers, these qualification processes and background checks may not expose all potentially relevant information and are limited in certain jurisdictions according to national and local laws, and our third-party service providers may fail to conduct such background checks adequately or disclose information that could be relevant to a determination of eligibility. In addition, we do not independently verify technicians' skills.
 At the same time, if the measures we have taken to guard against illegal, improper or otherwise inappropriate activities by HelloTech technicians, such as our requirement that all technicians undergo a background check, are too restrictive and inadvertently prevent technicians otherwise in good standing from using our platform, or if we are unable to implement and communicate these measures fairly and transparently or are perceived to have failed to do so, the growth of technicians on our platform could be adversely affected.
 If HelloTech technicians, or individuals impersonating technicians, engage in criminal activity, misconduct or inappropriate conduct or use our HelloTech platform as a conduit for criminal activity, customers may not consider our service offerings safe. Furthermore, if consumers or other customers engage in criminal activity or misconduct while using our HelloTech platform, technicians may be unwilling to use our platform.
 The success of our HelloTech platform depends, in substantial part, on our ability to establish and maintain relationships with quality and trustworthy service professionals.
 We must continue to attract, retain and grow the number of skilled and reliable service professionals who can provide services on our HelloTech platform. If we do not offer innovative services that resonate with customers and technicians generally, as well as provide technicians with attractive economics, the number of technicians affiliated with our platform would decrease. Any such decrease would result in smaller and less diverse networks and directories of technicians, and in turn, decreases in service requests, which could adversely impact our business, financial condition and results of operations.
 The success of our HelloTech platform depends in part on our ability to cost-effectively attract and retain technicians who satisfy our screening criteria and procedures and to increase the use of our platform by existing technicians. Technicians have the ability to decline service orders or stop using our platform entirely at any time, and we do not have exclusivity provisions with technicians. Accordingly, if we do not continue to provide technicians with flexibility on our platform and compelling opportunities to earn income, we may fail to attract new technicians or retain existing technicians or increase their use of our platform, or we may experience complaints, negative publicity or work stoppages that could adversely affect our users and our business.
 Relatedly, if customers choose to use competing offerings, we may lack sufficient opportunities for technicians to earn, which may reduce the perceived utility of our platform and impact our ability to attract and retain technicians. Changes in certain laws and regulations, including immigration and labor and employment laws, or laws that require us to make changes to our platform that decrease the flexibility provided to technicians in certain markets, may result in a decrease in the pool of technicians, which may result in increased competition for technicians or higher costs of recruitment and engagement. Other factors outside of our control, such as increases in the price of gasoline, vehicles or insurance, may also reduce the number of technicians that utilize our platform or the use of our platform by technicians. If we fail to attract technicians, retain existing technicians on favorable terms or maintain or increase the use of our HelloTech platform by existing technicians, we may not be able to meet the demand of customers, and our business, financial condition and results of operations could be adversely affected.
 Our future operating results will rely in part upon the successful execution of our strategic partnerships, which may not be successful. If these companies choose not to partner with us, our business and results of operations may be harmed.
 Establishing a strategic partnership between two independent businesses is a complex, costly and time-consuming process that requires significant management attention and resources. Realizing the benefits of our strategic partnerships, particularly

 our relationships with RealPage, Yardi, Entrata, Townsteel and YoSmart, among others, will depend in part on our ability to work with our strategic partners to develop, integrate, market and sell co-branded or connected solutions. In particular, working with major technology platforms and their products and services may take an extended period of time to deliver. Setting up and maintaining the operations and processes necessary for these strategic partnerships may cause us to incur significant costs and disrupt our business and, if implemented ineffectively, would limit the expected benefits to us. In addition, the process of bringing solutions that rely on third-party technology to market may take longer than anticipated, which could negate or reduce any anticipated benefits and revenue opportunities, and it may be necessary in the future to renegotiate agreements relating to various aspects of these solutions or other third-party solutions. The failure to successfully and timely implement and operate our strategic partnerships could harm our ability to realize the anticipated benefits of these partnerships and could adversely affect our business, financial condition, cash flows and results of operations. In addition, if these third-party solution providers choose not to partner with us, choose to integrate their solutions with our competitors' platforms or are unable or unwilling to update their solutions, our business, financial condition, cash flows and results of operations could be harmed.
 If our security controls are breached, or unauthorized or inadvertent access to user information or other data or to control or view systems are otherwise obtained, our products, software or services may be perceived as insecure, our business may be harmed and we may incur significant liabilities.
 Use of our solutions and services involves the storage, transmission and processing of personal information of our end users, and may in certain cases help secure, or permit access to, our end users' homes or properties. We also maintain and process confidential, proprietary and personal information in our business, including our employees' and contractors' personal information and confidential business information. We rely on proprietary and commercially available systems, software, tools and monitoring to protect against unauthorized use or access of the information we process and maintain. Our services and the networks and information systems we utilize in our business are at risk for breaches as a result of third-party action, employee or partner error, malfeasance or other factors. Although we have established security measures to protect customer information, our or our partners' security and testing measures may not prevent security breaches. Further, advances in computer capabilities, new discoveries in the field of cryptography, inadequate facility security or other developments may result in a compromise or breach of the technology we use to protect personal information.
 Criminals and other nefarious actors are using increasingly sophisticated methods, including cyberattacks, phishing, malicious code, computer viruses, malware (e.g., ransomware), social engineering and other illicit acts to capture, access or alter various types of information, to engage in illegal activities such as fraud and identity theft and to expose and exploit potential security and privacy vulnerabilities in corporate systems and websites. In addition, our information technology systems are vulnerable to attack, damage and interruption from employee theft or misuse, human error, fraud, denial or degradation of service attacks, sophisticated nation-state and nation-state-supported actors or unauthorized access or use by persons inside our organization, or persons with access to systems inside our organization. Unauthorized intrusion into the portions of our systems and networks and data storage devices that process and store confidential and private end-user information, the loss of such information or the deployment of malware or other harmful code to our services or our networks or systems may result in negative consequences, including the actual or alleged malfunction of our products, software or services. In addition, third parties, including our partners, could also be sources of security risks to us in the event of a failure of their own security systems and infrastructure. The threats we and our partners face continue to evolve and are difficult to predict due to advances in computer capabilities, new discoveries in the field of cryptography and new and sophisticated methods used by criminals. There can be no assurances that our defensive measures will prevent cyberattacks or that we will discover network or system intrusions or other breaches on a timely basis or at all. We may suffer a compromise or breach of the technology protecting the systems or networks that house or access our software, services and products or on which we or our partners process or store personal information or other sensitive information or data, or any such incident may be believed or reported to have occurred. Any such actual or perceived compromises or breaches to systems, or unauthorized access to our customers' data, products, software or services, or acquisition or loss of data, whether suffered by us, our partners or other third parties, whether as a result of employee error or malfeasance or otherwise, could harm our business. They could, for example, cause interruptions in operations, loss of data, loss of confidence in our services, software and products and damage to our reputation and could limit the adoption of our software, services and products. They could also subject us to costs, regulatory investigations and orders, litigation, breach notification obligations or regulatory or administrative sanctions, contract damages, indemnity demands and other liabilities and materially and adversely affect our customer base, sales, revenues and profits. Any of these could, in turn, have a material adverse impact on our business, financial condition, cash flows or results of operations.

 We and certain of our service providers are from time to time subject to cyberattacks and security incidents. While we do not believe that we have experienced any significant system failure, accident or security breach to date, if such an event were to occur it could result in unauthorized access to or loss of any data, which could subject us to data privacy and security laws and regulations and substantial fines by U.S. federal and state authorities or foreign data privacy authorities and private claims by companies or individuals. A cyberattack may cause us to incur additional costs, such as investigative and remediation costs, the costs of providing individuals and/or data owners with notice of any breach, legal fees and the costs of any additional fraud detection activities required by law, a court, a regulator or a third party. Additionally, some of our customer contracts require us to indemnify customers from damages they may incur as a result of a breach of our systems. There can be no assurance that the limitation of liability provisions in our contracts for a security breach would be enforceable or would otherwise protect us from any such liabilities or damages with respect to any particular claim.
 Further, if a high profile security breach occurs with respect to another provider of smart building solutions, customers and potential customers may lose trust in the security of our services or in the smart building technology industry generally, which could adversely impact our ability to retain or attract customers. Even in the absence of any security breach, customer concerns about security, privacy or data protection may deter them from using our software, services and products.
 Our insurance policies covering errors and omissions and certain security and privacy damages and claim expenses may not be sufficient to compensate for all potential liability. Although we maintain cyber liability insurance, we cannot be certain that our coverage will be adequate for liabilities actually incurred or that insurance will continue to be available to us on economically reasonable terms, or at all.
 Direct selling may subject us to additional risks.
 Historically, our channel partners have contracted with building owners to own the full scope of installation and service of our smart access products. However, during 2021, we launched an integrated direct selling and deployment strategy targeted at certain larger enterprise accounts in which Latch directly owns the full scope of installation and service of our products with the building. Additionally, in 2023, we launched direct sales to customers through our e-commerce platform. These strategies involve significant risks and uncertainties, including distraction of management from other business operations, significant research and development, sales and marketing and other resources dedicated to the strategies at the expense of resources being dedicated to other business operations, generation of insufficient revenue to offset expenses associated with the strategies, inadequate return of capital, increased exposure to liability for improper installation (where applicable) and other risks that we may not have adequately anticipated. Because new strategies and initiatives are inherently risky, our direct selling strategy may not be successful and could materially adversely affect our business, results of operations and financial condition.
 We may be unable to attract new customers and maintain customer satisfaction with current customers, which could have an adverse effect on our business and rate of growth.
 Our business and revenue growth is dependent on our ability to continuously attract and retain customers, and we cannot be sure that we will be successful in these efforts, or that customer retention levels will not materially decline. There are a number of factors that could lead to a decline in customer levels or that could prevent us from increasing our customer levels, including:
 • our failure to introduce new features, products or services that customers find engaging or our introduction of new products or services, or changes to existing products and services, that are not favorably received;
 • harm to our brand and reputation, including as a result of the Investigation, the Restatement, the SEC Investigation, the 2022 RIFs and the July 2023 RIF, delisting from Nasdaq or otherwise;
 • pricing and perceived value of our products, software and services;
 • our inability to deliver quality products, software and services;
 • our customers engaging with competitive software, services and products;
 • technical or other problems preventing customers from using our software, services and products in a rapid and reliable manner or otherwise affecting the customer experience;
 • deterioration of the real estate industry, including declining levels of, or significant delays in, new construction of multifamily rental buildings and reduced spending in the real estate industry;
 • unsatisfactory experiences with the delivery, installation or service of our products; and
 • deteriorating general economic conditions or a change in consumer spending preferences or buying trends.

 As a result of these factors, we cannot be sure that our customer levels will be adequate to maintain or permit the expansion of our operations. A decline in customer levels could have an adverse effect on our business, financial condition and results of operations.
 We rely on certain third-party providers of licensed software and services that are important to the operation of our business.
 Certain aspects of the operation of our business depend on third-party software and service providers, such as cloud infrastructure services. We rely on certain software technology that we license from third parties and use in our software, services and products to perform key functions and provide critical functionality. With regard to licensed software technology, we are, to a certain extent, dependent upon the ability of third parties to maintain, enhance or develop their software and services on a timely and cost-effective basis, to meet industry technological standards and innovations to deliver software and services that are free of defects or security vulnerabilities and to ensure their software and services are free from disruptions or interruptions and claims of intellectual property infringement. These third-party services and software licenses may not always be available to us on commercially reasonable terms or at all.
 If our agreements with third-party software or service vendors are not renewed or the third-party software or services become obsolete, fail to function properly, no longer include features or functionality our customers expect, are incompatible with future versions of our products or services, are defective or otherwise fail to address our needs, there is no assurance that we would be able to replace the functionality provided by the third-party software or services with software or services from alternative providers, and we may be unable to meet the requirements of certain SLAs. Furthermore, even if we obtain licenses to alternative software or services that provide the functionality we need, we may be required to replace hardware installed at our customers' properties to effect our integration of or migration to alternative software products. Any of these factors could have a material adverse effect on our financial condition, cash flows or results of operations.
 We rely on our channel partner network to sell and deploy our products, and the inability of our channel partners to effectively perform to our standards, or the loss of key channel partners, could adversely affect our operating results.
 Our channel partners are third-party onsite product specialists that provide specific knowledge and expertise to assist in the sale and deployment of Latch products. We provide our channel partners with specific training and programs to assist them in selling our software, services and products, but there can be no assurance that these steps will be effective. In addition, our channel partners may be unsuccessful in selling and supporting our software, services and products. In the future, these partners may also market, sell and support products and services that are competitive with ours and may devote more resources to the marketing, sales and support of such competitive products. We cannot assure you that we will retain these channel partners or that we will be able to secure additional or replacement channel partners. The loss of one or more of our significant channel partners, or a decline in the number or size of orders from any of them, could harm our results of operations. In addition, any new channel partner requires training and may take several weeks or more to achieve productivity. Our channel partner sales structure could subject us to lawsuits, potential liability and reputational harm if, for example, any of our channel partners misrepresents the functionality of our software, services or products to customers or violates laws or our corporate policies. If we fail to effectively manage our existing sales channels, if our channel partners are unsuccessful in fulfilling orders for our products or if we are unable to enter into arrangements with, retain and incentivize a sufficient number of high quality channel partners in each of the regions in which we sell products and services, our ability to sell our products and results of operations will be harmed.
 We recently significantly reduced the number of channel partners to whom we directly sell our products, and we cannot guarantee that our existing channel partners can service our current and future customer base.
 Potential customer turnover, or costs we incur to retain and upsell our customers, could materially and adversely affect our financial performance.
 Our customers have no obligation to renew their contracts for our software services after the expiration of the initial term. In the event that these customers do renew their contracts, they may choose to renew for fewer units, shorter contract lengths or less expensive subscriptions. We cannot predict the renewal rates for customers that have entered into software contracts with us.
 Customer turnover and reductions in the number of units for which a customer subscribes each could have a significant impact on our results of operations, as does the cost we incur to retain our customers and to encourage them to upgrade their services and increase the number of their units that use our software, services and products. Our turnover rate could increase if customers are not satisfied with our software, services and products, the value proposition of our services or our ability to

 meet their needs and expectations. The number of units contracted by a customer could also decrease due to factors beyond our control, including the failure or unwillingness of customers to pay for our software, services and products due to financial constraints or macroeconomic factors. If a significant number of customers terminate, reduce or fail to renew their software contracts, it could have a material adverse effect on our financial condition, cash flows or results of operations. Furthermore, we may be required to incur significantly higher marketing expenditures in order to increase the number of new customers or to upsell existing customers, which could harm our business and results of operations.
 Our future success also depends in part on our ability to sell additional functionalities to our customers and to sell into our customers' future projects. This may require a longer sales cycle and increasingly sophisticated and more costly sales efforts, technologies and tools. Any increase in the costs necessary to upgrade, expand and retain existing customers could materially and adversely affect our financial performance. If our efforts to convince customers to add units and purchase additional functionalities are not successful, our business may suffer. In addition, such increased costs could cause us to increase our prices, which could increase our customer turnover rate.
 If we are unable to develop new solutions, adapt to technological change, sell our software, services and products into new markets or further penetrate our existing markets, our revenue may not grow as expected.
 Our ability to increase sales will depend, in large part, on our ability to enhance and improve our platforms, software, services and products, introduce new software, services and products in a timely manner, sell into new markets and further penetrate our existing markets. The success of any enhancement or new platform, software, services and products depends on several factors, including the timely completion, introduction and market acceptance of enhanced or new software, services and products, the ability to maintain and develop relationships with partners and vendors, the ability to attract, retain and effectively train sales and marketing personnel, the effectiveness of our marketing programs and the ability of our software, services and products to maintain compatibility with a wide range of connected devices. Any new product or service we develop, acquire or offer, such as property management services or services for residents or consumers, may not be introduced in a timely or cost-effective manner and may not achieve the broad market acceptance necessary to generate significant revenue. Any new markets into which we attempt to sell our software, services and products, including new vertical markets and new regions, may not be receptive. Our ability to further penetrate our existing markets depends on the quality, availability and reliability of our software, services and products and our ability to design our software, services and products to meet customer demand. Similarly, if any of our competitors implement new technologies before we are able to implement ours, those competitors may be able to provide more effective products, possibly at lower prices. Any delay or failure in the introduction of new or enhanced solutions could harm our business, financial condition, cash flows and results of operations.
 We operate in the emerging and evolving smart building technology industry, which may develop more slowly or differently than we expect. If the smart building technology industry does not grow as we expect, or if we cannot expand our platforms and solutions to meet the demands of this market, our revenue may decline, fail to grow or fail to grow at an accelerated rate, and we may incur operating losses.
 The market for integrated smart apartment solutions, such as home automation, security monitoring, video monitoring, energy management and building services, is in an early stage of development, and it is uncertain how rapidly or how consistently this market will develop and the degree to which our platforms and solutions will be accepted. Some customers may be reluctant or unwilling to use our platforms and solutions for a number of reasons, including satisfaction with traditional solutions, concerns about additional costs, concerns about data privacy or lack of awareness of the benefits of our platforms and solutions. Our ability to expand into new markets depends on several factors, including the reputation and recognition of our platforms and solutions, the timely completion, introduction and market acceptance of our platforms and solutions, our ability to attract, retain and effectively train sales and marketing personnel, our ability to develop relationships with service providers, the effectiveness of our marketing programs, the costs of our platforms and solutions and the success of our competitors. If we are unsuccessful in developing and marketing our platforms and solutions into new markets, or if customers do not perceive or value the benefits of our platforms and solutions, the market for our platforms and solutions might not continue to develop or might develop more slowly than we expect, either of which would harm our revenue and growth prospects.

 The markets in which we participate could become more competitive, and many companies, including large technology companies, point solution providers such as traditional lock companies and other managed service providers, may target the markets in which we do business, including the smart building technology industry. If we are unable to compete effectively with these potential competitors, our sales and profitability could be adversely affected.
 The smart building technology industry in which we participate may become more competitive, and competition may intensify in the future. Our ability to compete depends on a number of factors, including:
 • our platforms' and solutions' functionality, performance, ease of use, reliability, availability and cost effectiveness relative to our competitors' products;
 • our success in utilizing new and proprietary technologies to offer solutions and features previously not available;
 • our success in identifying new markets, applications and technologies;
 • our ability to attract and retain partners;
 • our name recognition and reputation;
 • our ability to recruit hardware and software engineers and sales and marketing personnel; and
 • our ability to protect our intellectual property.
 Potential customers may prefer to purchase from existing suppliers rather than a new supplier regardless of product performance or features. In the event a customer decides to evaluate a smart apartment solution, the customer may be more inclined to select a competitor if such competitor's product offerings are broader or at a better price point than those that we offer.
 Many vendors have emerged, and may continue to emerge, to provide point products with advanced functionality for use in buildings, such as video doorbells, thermostats or lights that can be controlled by an application on a smartphone. We expect a significant increase in the number of electronics and appliance products that are network-aware and connected, with each likely having its own smart device (phone or tablet) application. Customers may be attracted to the relatively low costs of these point solution products and the ability to expand their building control solution over time with minimal upfront costs, which may reduce demand for our integrated solutions. If so, building managers may offer the point products and services of competitors, which would adversely affect our sales and profitability. If a significant number of customers in our target market chooses to adopt point products rather than our integrated solutions, then our business, financial condition, cash flows and results of operations will be harmed, and we may not be able to achieve sustained growth, or our business may decline.
 We may expand through acquisitions of, or investments in, other companies, each of which may divert our management's attention, result in additional dilution to our stockholders, increase expenses, disrupt our operations and harm our results of operations.
 Our business strategy may, from time to time, include acquiring or investing in complementary services, technologies or businesses, such as the HDW Acquisition or the HelloTech Merger. We cannot assure you that we will successfully identify suitable acquisition candidates, integrate or manage disparate technologies, lines of business, personnel and corporate cultures, realize our business strategy or the expected return on our investment, or manage a geographically dispersed company. Any such acquisition or investment could materially and adversely affect our results of operations. Acquisitions and other strategic investments involve significant risks and uncertainties, including:
 • the potential failure to achieve the expected benefits of the combination or acquisition;
 • unanticipated costs and liabilities;
 • difficulties in integrating new software, services and products, businesses, operations and technology infrastructure in an efficient and effective manner;
 • difficulties in maintaining customer relations;
 • the potential loss of key employees of the acquired businesses;
 • the diversion of the attention of our senior management from the operation of our daily business;
 • the potential adverse effect on our cash position to the extent that we use cash for the purchase price;
 • the potential significant increase of our interest expense, leverage and debt service requirements if we incur additional debt to pay for an acquisition;
 • the potential issuance of securities that would dilute our stockholders' percentage ownership;
 • the potential to incur large and immediate write-offs and restructuring and other related expenses; and
 • the inability to maintain uniform standards, controls, policies and procedures.

 Moreover, we cannot assure you that we will realize the anticipated benefits of any acquisition or investment, including the HDW Acquisition and HelloTech Merger. In addition, our inability to successfully operate and integrate newly acquired businesses appropriately, effectively and in a timely manner could impair our ability to take advantage of future growth opportunities and other advances in technology and could adversely affect our revenues, gross margins and expenses.
 New lines of business or new products and services may subject us to additional risks.
 From time to time, we may implement new lines of business or offer new products and services within existing lines of business. For instance, in 2023, we launched the James ride sharing application and, in 2024, we launched Door Property Management and acquired HelloTech. In addition, we will continue to make investments in research, development, and marketing for new products and services. There are substantial risks and uncertainties associated with these efforts, particularly in instances where the markets are not fully developed. In developing and marketing new lines of business or new products and services, we may invest significant time and resources. Initial timetables for the development and introduction of new lines of business or new products or services may not be achieved and price and profitability targets may not prove feasible. New regulatory and compliance regimes, such as those related to transportation, ride sharing or property management operations, may be found to apply to new lines of business, and we may not be in compliance. Furthermore, if customers do not perceive our new offerings as providing significant value, they may fail to accept our new lines of business or products and services. External factors, such as competitive alternatives and shifting market preferences, may also impact the successful implementation of a new line of business or a new product or service. Furthermore, the burden on management and our information technology of introducing any new line of business or new product or service could have a significant impact on the effectiveness of our system of internal controls. Failure to successfully manage these risks in the development and implementation of new lines of business or new products or services could have a material adverse effect on our business, financial condition and results of operations.
 Claims from riders, drivers, residents, guests or third parties that allege harm, whether or not our products or services are in use, could adversely affect our business, brand, financial condition and results of operations.
 In connection with the James app, property management business or HelloTech platform, we may become subject to claims, lawsuits, investigations and other legal proceedings relating to injuries to, or deaths of, riders, drivers, pedestrians, residents, guests or other third-parties that are attributed to our operations or applications. We may also be subject to claims alleging that we are directly or vicariously liable for the acts of the drivers on the James app or technicians on our HelloTech platform or for harm related to the actions of drivers, technicians, riders or third parties, or the management and safety of the James app or HelloTech platform, including harm caused by criminal activity. We may be subject to personal injury claims whether or not such injury actually occurred as a result of activity on the James app or HelloTech platform or is attributable to our operations. We may incur expenses to settle personal injury claims. Regardless of the outcome of any legal proceeding, any injuries to, or deaths of, any riders, drivers, residents, guests or third parties could result in negative publicity and harm to our brand, reputation, business, financial condition and results of operations. Insurance policies and programs are not available for all possible claims we may face, may not be economically feasible and may not provide any coverage or sufficient coverage to mitigate potential liability. We may have to pay high premiums or deductibles for coverage and, for certain situations or categories of claims, we may not be able to secure coverage at all.
 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, such as the HDW Acquisition. At December 31, 2023, we had approximately $25.3 million of goodwill on our consolidated balance sheet. We assess potential impairment of our goodwill annually, or more frequently if an event or circumstance indicates an impairment loss may have been incurred. Impairment may result from significant changes in the manner or use of the acquired assets, in connection with the sale, spin off or other divestiture of a business unit, a decrease in our market capitalization, or negative industry or economic trends. Our impairment analysis was performed retrospectively as of December 31, 2023, leveraging inputs that were both known and knowable as of such date. While we did not identify any impairment of our goodwill as of December 31, 2023, we continue to monitor Company performance, along with the risks related to our business and industry, to evaluate if the carrying value of the Company exceeds its estimated fair value. We expect that some or all of the goodwill on our consolidated balance sheet could be impaired during the year ended December 31, 2024 due to various factors, including lower revenue projections based on current business performance, a reduced cash position resulting from financing our ongoing operations and a decline in the trading price of our common stock during 2024. Because we have not completed the accounting, or finalized our financial statements, for the year ended December 31, 2024, including the quarterly periods

 therein, we have not yet determined the amount of any additional goodwill on our balance sheet as of December 31, 2024 related to any other business combinations, such as the HelloTech Merger, or any related impairment.
 Changes in effective tax rates or tax laws, or adverse outcomes resulting from examination of our income or other tax returns, could adversely affect our results of operations and financial condition.
 Our future effective tax rates could be subject to volatility or adversely affected by a number of factors, including:
 • changes in the valuation of our deferred tax assets and liabilities;
 • expiration of, or lapses in, the research and development tax credit laws;
 • expiration or non-utilization of net operating loss carryforwards;
 • tax effects of share-based compensation;
 • expansion into new jurisdictions;
 • potential challenges to and costs related to implementation and ongoing operation of the intercompany arrangements among our domestic and foreign entities;
 • changes in tax laws and regulations and accounting principles, or interpretations or applications thereof; and
 • certain non-deductible expenses as a result of acquisitions.
 Any changes in our effective tax rate could adversely affect our results of operations.
 Moreover, changes in applicable tax laws could increase our costs and adversely affect our operating results. The OECD has announced an accord to set a minimum global corporate tax rate of 15%, which is being or may be implemented in many jurisdictions, including the United States. The OECD is also issuing tax-related guidelines that are different, in some respects, than current tax principles. If countries amend their tax laws to adopt all or part of the OECD guidelines, this may increase tax uncertainty and increase taxes applicable to us or our stockholders. We cannot predict whether the U.S. Congress or any other governmental body, whether in the United States or in other jurisdictions, will enact new tax legislation (including increases to tax rates), whether the U.S. Internal Revenue Service or any other tax authority will issue new regulations or other guidance, whether the OECD or any other intergovernmental organization will publish any further guidelines on taxation or whether member states will implement such guidelines, nor can we predict what effect such legislation, regulations or international guidelines might have.
 We may be unable to use some or all of our net operating loss carryforwards, which could materially and adversely affect our reported financial condition and results of operations.
 As of December 31, 2023, we had approximately $18.2 million in federal net operating loss ("NOL") carryforwards available to offset future taxable income that will begin to expire in 2034 and approximately $387.0 million in federal NOL carryforwards available to offset future taxable income that have an indefinite life. As of December 31, 2023, we had approximately $354.8 million in state NOL carryforwards available to offset future taxable income. Some of these state NOLs have an indefinite life and others are subject to different expiration rules.
 In addition, under Section 382 of the Internal Revenue Code of 1986, as amended (the "Code"), our ability to utilize NOL carryforwards or other tax attributes in any taxable year may be limited if we experience an "ownership change." A Section 382 "ownership change" generally occurs if one or more stockholders or groups of stockholders, who each own at least 5% of our common stock, increase their collective ownership by more than 50 percentage points over their lowest ownership percentage within a rolling three-year period. Similar rules may apply under state tax laws. Because the limitations on utilization of NOLs and other tax attributes that are triggered in connection with an ownership change are generally based on the value of the issuer at the time of the ownership change, if we have undergone an ownership change (whether in connection with the HDW Acquisition or any other changes in our ownership) at a time when the stock price of our common stock is limited in relation to the size of our NOLs, it could materially limit the future potential value of our NOLs. We have not completed a Section 382 analysis of the potential ownership changes that may have occurred prior to the date of this Form 10-K.
 It is possible that we will not generate taxable income in time to use our NOL carryforwards that are subject to expiration (or that we will not generate taxable income at all). If, in the event that it is determined that we have experienced an "ownership change" in the past, or if we experience one or more Section 382 "ownership changes" in the future, we may not be able to utilize a material portion of our NOLs, even if we achieve profitability. If we are limited in our ability to use our NOLs in future years in which we have taxable income, we will pay more taxes than if we were able to fully utilize our NOLs. This could materially and adversely affect our results of operations.

 A 1% U.S. federal excise tax could be imposed on us in connection with any redemptions we undertake.
 On August 16, 2022, the Inflation Reduction Act of 2022 (the "IRA") was signed into federal law. The IRA provides for, among other things, a U.S. federal 1% excise tax on certain repurchases (including redemptions) of stock by publicly traded U.S. corporations and certain other persons (a "covered corporation"). Because we are a Delaware corporation and our securities have traded on Nasdaq (and may in the future be listed on a stock exchange), we may be a "covered corporation" for this purpose. The excise tax is imposed on the repurchasing corporation itself, not its stockholders from which shares are repurchased. The amount of the excise tax is generally 1% of the fair market value of the shares repurchased at the time of the repurchase. However, for purposes of calculating the excise tax, repurchasing corporations are permitted to net the fair market value of certain new stock issuances against the fair market value of stock repurchases during the same taxable year. In addition, certain exceptions apply to the excise tax. The U.S. Treasury Department has been given authority to provide regulations and other guidance to carry out, and prevent the abuse or avoidance of, the excise tax. If we were to conduct repurchases of our stock or other transactions covered by the excise tax described above, we could potentially be subject to this excise tax, which could increase our costs and adversely affect our operating results.
 We may require additional capital to pursue our business objectives and to respond to business opportunities, challenges or unforeseen circumstances. If capital is not available to us, our business, results of operations and financial condition may be adversely affected.
 We intend to continue to make expenditures and investments to support the growth of our business and may require additional capital to pursue our business objectives and respond to business opportunities, challenges or unforeseen circumstances, including the need to develop new products or software or enhance our existing products and software, enhance our operating infrastructure or acquire complementary businesses and technologies. Accordingly, we may need to engage in equity or debt financings to secure additional funds. However, additional funds may not be available when we need them on terms that are acceptable to us, or at all. Any debt financing that we secure could involve restrictive covenants, such as those in our Loan Agreement with Customers Bank, which may make it more difficult for us to obtain additional capital or to pursue business opportunities. In addition, the restrictive covenants in any credit facilities or debt instruments may restrict us from being able to conduct our operations in a manner required for our business and may restrict our growth, which could have an adverse effect on our business, financial condition or results of operations.
 In addition, volatility in the credit markets may have an adverse effect on our ability to obtain debt financing, and the increasing interest rates observed since 2022 would increase the cost of any such debt financing. Any future issuances of equity or convertible debt securities could result in significant dilution to our existing stockholders, and any new equity securities we issue could have rights, preferences and privileges superior to those of holders of our common stock. Any offering of equity will be made significantly more difficult, and result in less proceeds, to the extent our common stock is not trading on a national securities exchange at the time of such offering. If we are unable to obtain adequate financing or financing on terms satisfactory to us, when we require it, our ability to continue to pursue our business objectives and to respond to business opportunities, challenges or unforeseen circumstances could be significantly limited, and our business, results of operations, financial condition and prospects could be materially and adversely affected.
 If we are unable to acquire intellectual property or adequately protect intellectual property, we could be competitively disadvantaged.
 Our intellectual property, including our patents, trademarks, copyrights, trade secrets and other proprietary rights, constitutes a significant part of our value. Our success depends, in part, on our ability to protect our proprietary technology, brands and other intellectual property against dilution, infringement, misappropriation and competitive pressure by defending our intellectual property rights. To protect our intellectual property rights, we rely on a combination of patent, trademark, copyright and trade secret laws of the United States, Canada and countries in Europe and Asia and a combination of confidentiality procedures, contractual provisions and other methods, all of which offer only limited protection. In addition, we make efforts to acquire rights to intellectual property necessary for our operations. However, there can be no assurance that these measures will be successful in any given case, particularly in those countries where the laws do not protect our proprietary rights as fully as in the United States.
 We own a portfolio of issued U.S. patents and pending U.S. and foreign patent applications that relate to a variety of smart building technology utilized in our business. We may file additional patent applications in the future in the United States or internationally. The process of obtaining patent protection is expensive and time-consuming, and we may not be able to prosecute all necessary or desirable patent applications at a reasonable cost or in a timely manner all the way through to the successful issuance of a patent. We may choose not to seek patent protection for certain innovations and may choose not to

 pursue patent protection in certain jurisdictions. In addition, issuance of a patent does not guarantee that we have an absolute right to practice the patented invention.
 If we fail to acquire the necessary intellectual property rights or adequately protect or assert our intellectual property rights, competitors may dilute our brands or manufacture and market similar software, services and products or convert our customers, which could adversely affect our market share and results of operations. We may not receive patents or trademarks for all our pending patent and trademark applications, and existing or future patents or licenses may not provide competitive advantages for our software, services and products. Furthermore, it is possible that our patent applications may not issue as granted patents, that the scope of our issued patents will be insufficient or not have the coverage originally sought or that our issued patents will not provide us with any competitive advantages. Our competitors may challenge, invalidate or avoid the application of our existing or future intellectual property rights that we obtain or license. In addition, patent rights may not prevent our competitors from developing, using or selling products or services that are similar to or address the same market as our software, services and products. The loss of protection for our intellectual property rights could reduce the market value of our brands and our software, services and products, reduce new customer originations or upgrade sales to existing customers, lower our profits and have a material adverse effect on our business, financial condition, cash flows or results of operations.
 Our policy is to require our employees to execute written agreements in which they assign to us their rights in potential inventions and other intellectual property created within the scope of their employment (or, with respect to consultants and service providers, their engagement to develop such intellectual property), but we cannot assure you that we have adequately protected our rights in every such agreement or that we have executed an agreement with every such party. Finally, in order to benefit from the protection of patents and other intellectual property rights, we must monitor and detect infringement, misappropriation or other violations of our intellectual property rights and pursue infringement, misappropriation or other claims in certain circumstances in relevant jurisdictions, all of which are costly and time-consuming. As a result, we may not be able to obtain adequate protection or to effectively enforce our issued patents or other intellectual property rights.
 In addition to patents and registered trademarks, we rely on trade secret rights, copyrights and other rights to protect our unpatented proprietary intellectual property and technology. Despite our efforts to protect our proprietary technologies and our intellectual property rights, unauthorized parties, including our employees, consultants, service providers or subscribers, may attempt to copy aspects of our products or obtain and use our trade secrets or other confidential information. We generally enter into confidentiality agreements with our employees, contractors and third parties that have access to our material confidential information and generally limit access to and distribution of our proprietary information and proprietary technology through certain procedural safeguards. These agreements may not effectively prevent unauthorized use or disclosure of our intellectual property or technology, could be breached or otherwise may not provide meaningful protection for our trade secrets and know-how related to the design, manufacture or operation of our products and may not provide an adequate remedy in the event of unauthorized use or disclosure. We cannot assure you that the steps taken by us will prevent misappropriation of our intellectual property or technology or infringement of our intellectual property rights. Competitors may independently develop technologies or products that are substantially equivalent or superior to our solutions or that inappropriately incorporate our proprietary technology into their products, or they may hire our former employees who may misappropriate our proprietary technology or misuse our confidential information. In addition, the laws of foreign countries where we engage service providers or may do business in the future may not protect intellectual property rights and technology to the same extent as the laws of the United States, and these countries may not enforce these laws as diligently as government agencies and private parties in the United States.
 From time to time, legal action by us may be necessary to enforce our patents and other intellectual property rights, to protect our trade secrets, to determine the validity and scope of the intellectual property rights of others or to defend against claims of infringement, misappropriation or invalidity. Such litigation could result in substantial costs and diversion of resources and could negatively affect our business, operating results and financial condition. If we are unable to protect our intellectual property and technology, we may find ourselves at a competitive disadvantage to others who need not incur the additional expense, time and effort required to create our products.
 Accusations of infringement of third-party intellectual property rights could materially and adversely affect our business.
 There has been substantial litigation in the areas in which we operate regarding intellectual property rights. In some instances, we have agreed to indemnify our customers for expenses and liability resulting from claimed intellectual property infringement by our solutions. From time to time, we may receive requests for indemnification in connection with allegations of intellectual property infringement, and we may choose, or be required, to assume the defense and/or reimburse our customers for their expenses, settlement and/or liability. We cannot assure you that we will be able to settle any future claims

 or, if we are able to settle any such claims, that the settlement will be on terms favorable to us. Our broad range of technology may increase the likelihood that third parties will claim that we or our customers infringe their intellectual property rights. We cannot be certain that our products and services or those of third parties that we incorporate into our offerings do not and will not infringe the intellectual property rights of others. Some competitors and others may now and in the future have larger and more mature patent portfolios than we have and may therefore have an advantage over us in the event of patent litigation.
 We have in the past been sued for infringement and received, and may in the future be sued for or receive, notices of allegations of infringement, misappropriation or misuse of other parties' proprietary rights, including by special purpose or so-called "non-practicing" entities that focus solely on extracting royalties and settlements by enforcing intellectual property rights and against whom our patents may therefore provide little or no deterrence or protection. Furthermore, regardless of their merits, accusations and lawsuits like these may require significant time and expense to defend, may negatively affect customer relationships, may divert management's attention away from other aspects of our operations and, upon resolution, may have a material adverse effect on our business, results of operations, financial condition and cash flows.
 Certain technology necessary for us to provide our solutions may, in fact, be patented by other parties either now or in the future. If such technology were validly patented by another person, we may have to negotiate a license for the use of that technology. We may not be able to negotiate such a license at a price that is acceptable to us or at all. The existence of such a patent, or our inability to negotiate a license for any such technology on acceptable terms, could force us to cease using the technology and cease offering subscriptions incorporating the technology, which could materially and adversely affect our business and results of operations.
 If we, or any of our solutions, were found to be infringing on the intellectual property rights of any third party, we could be subject to liability for such infringement, which could be material. We could also be prohibited from using or selling certain subscriptions, prohibited from using certain processes or required to redesign certain products, each of which could have a material adverse effect on our business and results of operations.
 These and other outcomes may:
 • result in the loss of a substantial number of existing customers or inhibit the acquisition of new customers;
 • cause us to pay license fees for intellectual property we are alleged or deemed to have infringed;
 • cause us to incur costs and devote valuable technical resources to redesigning our products;
 • cause our cost of revenue to increase;
 • cause us to accelerate expenditures to preserve existing revenues;
 • materially and adversely affect our brand in the marketplace and cause a substantial loss of goodwill;
 • cause us to change our business methods or subscriptions; and
 • require us to cease certain business operations or offering certain products or features.
 Some of our products and services contain open source software, which may pose particular risks to our proprietary software, technologies, products and services in a manner that could harm our business.
 We use open source software in our products and services and anticipate using open source software in the future. Some open source software licenses require those who distribute open source software as part of their own software product to publicly disclose all or part of the source code to such software product or to make available any derivative works of the open source code on unfavorable terms or at no cost; and all open source software licenses contain conditions and restrictions. Some open source software may include generative artificial intelligence (AI) software or other software that incorporates or relies on generative AI. The use of such software may expose us to risks as the intellectual property ownership and license rights, including copyright, of generative AI software and tools has not been fully interpreted by U.S. courts or been fully addressed by federal, state or international regulations, and there is a risk that open source software licenses, including those that incorporate or rely on generative AI, could be construed in a manner that imposes unanticipated conditions or restrictions on our ability to provide or distribute our products or services. Additionally, we could face claims from third parties claiming ownership of, or demanding release of, the open source software or derivative works that we developed using such software, which could include our proprietary source code, or otherwise seeking to enforce, or alleging copyright infringement on the basis that we have failed to comply with, the terms of the applicable open source license. These claims could result in litigation and statutory damages for copyright infringement and could require us to make our software source code freely available, purchase a costly license or cease offering the implicated products or services unless and until we can re-engineer them to avoid infringement. This re-engineering process could require us to expend significant additional research and development resources, and we cannot guarantee that we would be successful.

 Additionally, the use of certain open source software can lead to greater risks than use of third-party commercial software, as open source licensors generally do not provide warranties or controls on the origin of software. There is typically no support available for open source software, and we cannot ensure that the authors of such open source software will implement or push updates to address security risks or will not abandon further development and maintenance. Many of the risks associated with the use of open source software and the use of generative AI, such as the lack of warranties or assurances of title or performance, cannot be eliminated and could negatively affect our business. We cannot be sure that all open source software is identified or submitted for approval prior to use in our products and services. Any of these risks could be difficult to eliminate or manage, and, if not addressed, could have an adverse effect on our business, financial condition and operating results.
 Our products and services may be affected from time to time by design and manufacturing defects that could adversely affect our business and result in harm to our reputation.
 We offer complex software and hardware products and services that can be affected by design and manufacturing defects. Sophisticated full building operating system software and applications, such as those offered by us, have issues that can unexpectedly interfere with the intended operation of hardware or software products. Defects may also exist in components and products that we source from third parties. Any such defects could make our software, services and products unsafe, create a risk of property damage and personal injury and subject us to the hazards and uncertainties of product liability claims and related litigation. In addition, from time to time, we may experience outages, service slowdowns or errors that affect our software and full building operating system offerings. As a result, our services may not perform as anticipated and may not meet customer expectations. There can be no assurance that we will be able to detect and fix all issues and defects in the hardware, software and services we offer. Failure to do so could result in widespread technical and performance issues affecting our products and services and could lead to claims against us. Design and manufacturing defects, and claims related thereto, may subject us to judgments or settlements that result in damages that are either not covered by our insurance policies or are materially in excess of the limits of our insurance coverage. In addition, we may be exposed to recalls, product replacements or modifications, write-offs of inventory, property, plant and equipment or intangible assets, and significant warranty and other expenses such as litigation costs and regulatory fines. If we cannot successfully defend against any large claim, maintain our applicable liability insurance on acceptable terms or maintain adequate coverage against potential claims, our financial results could be adversely impacted. Further, given that some of our solutions are considered security systems, quality problems could subject us to substantial liability, adversely affect the experience for users of our software, services and products and result in harm to our reputation, loss of competitive advantage, poor market acceptance, reduced demand for our software, services and products, delay in new product and service introductions and lost revenue.
 Our new software, services and products may not be successful.
 We launched our first smart building products in 2017. Since that time, we have launched a number of other offerings and may launch additional software, services and products in the future, such as expanding into new verticals or introducing new features or applications for residents. The software, services and products we launch in the future may not be well-received by our customers, may not help us to generate new customers, may adversely affect the attrition rate of existing customers, may increase our customer acquisition costs and may increase the costs to service our customers. Any profits we may generate from these or other new products, software or services may be lower than profits generated from our existing software, services and products and may not be sufficient for us to recoup our development or customer acquisition costs incurred. New software, services and products may also have lower gross margins, particularly to the extent that they do not fully utilize our existing infrastructure. In addition, new software, services and products may require increased operational expenses or customer acquisition costs and present new and difficult technological and intellectual property challenges that may subject us to claims or complaints if subscribers experience service disruptions or failures or other quality issues. To the extent our new software, services and products are not successful, it could have a material adverse effect on our business, financial condition, cash flows and results of operations.
 If we fail to continue to develop our brands, our business may suffer.
 We believe that continuing to strengthen our brand will be critical to achieving widespread acceptance of our software, services and products and will require continued focus on active marketing efforts. The demand for and cost of online and traditional advertising have been increasing and may continue to increase. Furthermore, in September 2023, the Company announced plans to rebrand to DOOR. Accordingly, we may need to increase our investment in, and devote greater resources to, advertising, marketing and other efforts to create and maintain brand loyalty among users. Brand promotion activities may not yield increased revenues, and even if they do, any increased revenues may not offset the expenses incurred in building our brand. In addition, if we do not handle customer complaints effectively, our brand may suffer, we may lose our customers'

 confidence and they may choose to terminate, reduce or not renew their subscriptions. Many of our customers also participate in social media and online blogs about smart building technology solutions, including our products, and our success depends in part on our ability to minimize negative, and generate positive, customer feedback through such online channels where existing and potential customers seek and share information. If we fail to promote and maintain our brand, or our rebranding efforts are not successful, our business could be materially and adversely affected.
 Our applications run on mobile operating systems, networks and devices that we do not control.
 Our customers can access our platform through the Latch App and Latch Manager App (collectively, the "Latch Apps"). There is no guarantee that popular mobile devices and operating systems will continue to support the Latch Apps. We are dependent on the interoperability of the Latch Apps with popular mobile operating systems that we do not control, such as Android and iOS, and any changes in such systems that degrade the functionality of our digital offering or give preferential treatment to competitors could adversely affect our platform's usage on mobile devices. Additionally, in order to deliver high-quality mobile content, it is important that our digital offering is designed effectively and works well with a range of mobile technologies, systems, networks and standards that we do not control. We may not be successful in developing relationships with key participants in the mobile industry or in developing products that operate effectively with these technologies, systems, networks or standards, which could harm our business.
 We must successfully upgrade and maintain our information technology systems.
 We rely on various information technology systems to manage our operations and to provide services to our customers. We are currently in the process of optimizing, overhauling and reducing our existing information technology systems, and we may subsequently implement modifications and upgrades to these systems and replace certain of our legacy systems with successor systems with new functionality. There are inherent costs and risks associated with modifying or changing these systems and implementing new systems, including potential disruption of our internal control structure, substantial capital expenditures, additional administrative and operating expenses, retention of sufficiently skilled personnel to implement and operate the new systems, demands on management time and other risks and costs of delays or difficulties in transitioning to new systems or of integrating new systems into our current systems. While management seeks to identify and remediate issues, we can provide no assurance that our identification and remediation efforts will be successful or that we will not encounter additional issues as we complete the implementation of these and other systems. In addition, our information technology system implementations may not result in productivity improvements at a level that outweighs the costs of implementation, or at all. The implementation of new information technology systems may also cause disruptions in our business operations and have an adverse effect on our business, cash flows and operations.
 Potential problems with our information systems, third-party systems and infrastructure upon which we rely could interfere with our business and operations.
 We rely on our information systems and third-party information systems and infrastructure (such as cloud computing platforms and databases) for hosting and making our software products available, processing customer orders, distribution of our products, billing customers, processing credit card transactions, customer relationship management, supporting financial planning and analysis, accounting functions and financial statement preparation and otherwise running our business. Information systems may experience interruptions, including interruptions of related services from third-party providers, which may be beyond our control. Such business interruptions could cause us to fail to meet customer requirements, including SLAs. All information systems, both internal and external, are vulnerable to damage or interruption from a variety of sources, including computer viruses, security breaches, energy blackouts, natural disasters, terrorism, war, telecommunication failures, employee or other theft and third-party provider failures. Any errors or disruption in our information systems and those of the third parties upon which we rely could have a significant impact on our business. In addition, we may implement additional information systems in the future to meet the demands resulting from our growth and to provide additional capabilities and functionality. The implementation of new systems and enhancements is frequently disruptive to the underlying business of an enterprise and can be time-consuming and expensive, increase management responsibilities and divert management attention.
 We collect, store, process and use personal information, which subjects us to legal obligations and laws and regulations related to security and privacy, and any actual or perceived failure to meet those obligations could harm our business.
 We collect, store, process and use a wide variety of data from current and prospective customers and end-users of our products and services, including personal information, such as names, home addresses, email addresses and access events. Federal, state and international laws and regulations governing privacy and data protection require us to safeguard our

 customers' personal information. The scope of such laws and regulations is rapidly changing. We are also subject to the terms of our privacy policies and contractual obligations to third parties related to privacy, data protection and information security. We strive to comply with applicable laws, regulations, policies and other legal obligations relating to privacy, data protection and information security. However, the regulatory framework for privacy, data protection and information security is, and is likely to remain, uncertain for the foreseeable future, and it is possible that these or other actual or alleged obligations may be interpreted and applied in a manner that is inconsistent from one jurisdiction to another and may conflict with other rules or our practices.
 We also expect that there will continue to be new laws, regulations and industry standards concerning privacy, data protection, information security and the use of generative AI proposed and enacted in various jurisdictions. States throughout the United States are increasingly adopting or revising laws and regulations relating to the processing of personal data that could have a significant impact on our current and planned privacy, data protection and information security-related practices, our collection, use, sharing, retention and safeguarding of customer, consumer and/or employee information, as well as any other third-party information we receive, our use of generative AI to enhance our operations, and some of our current or planned business activities. For example, California enacted the CCPA, which requires covered businesses that process the personal information of California residents to, among other things: (i) provide certain disclosures to California residents regarding the business's collection, use and disclosure of their personal information; (ii) receive and respond to requests from California residents to access, delete and correct their personal information, or to opt out of certain disclosures of their personal information; and (iii) enter into specific contractual provisions with service providers that process California resident personal information on the business's behalf. Many additional states have passed similar laws, several of which have taken effect or will take effect in 2024 and 2025, and privacy bills are moving through the legislative process in a number of other states. We expect that some of these bills will be passed as laws, thereby further increasing our state privacy obligations.
 In addition to state privacy bills, local regulation is also increasing. For instance, in 2021, New York City passed into law the TDPA, regulating how building access data is collected, processed and disposed of by property managers and smart access system operators. The TDPA went into effect in July 2021, and we had to make certain adjustments to our retention of data collected from New York City users of the Latch Platform to comply with its requirements. Similar local legislation in other cities where we operate is likely, which will further increase the complexity and expense of ensuring that our privacy practices are compliant.
 Additionally, the interpretations of existing federal and state consumer protection laws relating to online collection, use, dissemination and security of personal information adopted by the FTC, state attorneys general, private plaintiffs and courts have evolved, and may continue to evolve, over time. Consumer protection laws require us to publish statements that describe how we handle personal information and choices individuals may have about the way we handle their personal information. If such information that we publish is deemed untrue, we may be subject to government claims of unfair or deceptive trade practices, which could lead to significant liabilities and consequences. Furthermore, according to the FTC, violating consumers' privacy rights or failing to take appropriate steps to keep consumers' personal information secure may constitute unfair acts or practices in or affecting commerce and thus violate Section 5(a) of the FTC Act. The FTC expects a company's data security measures to be reasonable and appropriate in light of the sensitivity and volume of consumer information it holds, the size and complexity of its business and the cost of available tools to improve security and reduce vulnerabilities.
 In Canada, PIPEDA and similar provincial laws impose obligations with respect to processing personal information. PIPEDA requires companies to obtain an individual's consent prior to collecting, using or disclosing that individual's personal information. Individuals have the right to access and challenge the accuracy of their personal information held by an organization, and personal information may only be used for the purposes for which it was collected. If an organization intends to use personal information for another purpose, it must again obtain that individual's consent to the proposed processing. Failure to comply with PIPEDA and similar provincial laws could result in significant fines and penalties.
 With data privacy and security laws and regulations imposing new and relatively burdensome obligations, and with substantial uncertainty over the interpretation and application of these and other laws and regulations, we may face challenges in addressing their requirements and making necessary changes to our policies and practices and may incur significant costs and expenses in an effort to do so. Any failure or perceived failure by us to comply with our privacy policies, our data privacy or security related obligations to our customers or any of our other legal obligations relating to data privacy or security may result in governmental investigations or enforcement actions, litigation, claims or public statements against us by consumer advocacy groups or others and could result in significant liability, loss of relationships with key third parties or loss of customers' trust, which could have an adverse effect on our reputation and business.

 Furthermore, we may be required to disclose personal information pursuant to demands from individuals, privacy advocates, regulators, government agencies and law enforcement agencies in various jurisdictions with conflicting privacy and security laws. This disclosure or refusal to disclose personal information may result in a breach of privacy and data protection policies, notices, laws, rules, court orders and regulations and could result in proceedings or actions against us in the same or other jurisdictions, damage to our reputation and brand and inability to provide our products and services to customers in certain jurisdictions. Additionally, changes in the laws and regulations that govern our collection, use and disclosure of personal information could impose additional requirements with respect to the retention and security of personal information, limit our marketing activities and have an adverse effect on our business, financial condition and operating results.
 We rely on a limited number of suppliers, manufacturers and logistics partners for our products. A loss of any of these partners could negatively affect our business.
 We rely on a limited number of suppliers to manufacture and transport our products, including in some cases only a single supplier for some of our products and components. Our reliance on a limited number of manufacturers increases our risks, since we do not currently have alternative or replacement manufacturers. In the event of interruption of any of our manufacturers, we may not be able to increase capacity from other sources or develop alternate or secondary sources without incurring material additional costs and substantial delays. Furthermore, many of these manufacturers' primary facilities are located in Asia. Thus, our business could be adversely affected if one or more of our suppliers is impacted by a natural disaster or other interruption at a particular location.
 If we experience a significant increase in demand for our products, or if we need to replace an existing supplier or logistics partner, we may be unable to supplement or replace them on terms that are acceptable to us, which may undermine our ability to deliver our products to customers in a timely manner. For example, it may take a significant amount of time to identify a manufacturer that has the capability and resources to build our products to our specifications in sufficient volume. Identifying suitable suppliers, manufacturers and logistics partners is an extensive process that requires us to become satisfied with their quality control, technical capabilities, responsiveness and service, financial stability, regulatory compliance and labor and other ethical practices, particularly with respect to conflict minerals. Accordingly, a loss of any of our significant suppliers, manufacturers or logistics partners could have an adverse effect on our business, financial condition and operating results.
 We have limited control over our suppliers, manufacturers and logistics partners, which may subject us to significant risks, including the potential inability to produce or obtain quality products and services on a timely basis or in sufficient quantity.
 We have limited control over our suppliers, manufacturers and logistics partners, which subjects us to risks, such as the following:
 • inability to satisfy demand for our products;
 • reduced control over delivery timing and product reliability;
 • reduced ability to monitor the manufacturing process and components used in our products;
 • limited ability to develop comprehensive manufacturing specifications that take into account any material shortages or substitutions;
 • variance in the manufacturing capability of our third-party manufacturers;
 • price increases;
 • failure of a significant supplier, manufacturer or logistics partner to perform its obligations to us for technical, market or other reasons;
 • insolvency, bankruptcy or liquidation of a significant supplier, manufacturer or logistics partner;
 • difficulties in establishing additional supplier, manufacturer or logistics partner relationships if we experience difficulties with our existing suppliers, manufacturers or logistics partners;
 • shortages of materials or components;
 • misappropriation of our intellectual property;
 • exposure to natural catastrophes, political unrest, terrorism, labor disputes and economic instability resulting in the disruption of trade from Taiwan, China or foreign countries in which our products are manufactured or the components thereof are sourced;
 • changes in local economic conditions in Taiwan, China or other jurisdictions where our suppliers, manufacturers and logistics partners are located;
 • the imposition of new laws and regulations, including those relating to labor conditions, quality and safety standards, imports, duties, tariffs, including those imposed against China by the Trump Administration in February 2025, taxes

 and other charges on imports, as well as trade restrictions and restrictions on currency exchange or the transfer of funds; and
 • insufficient warranties and indemnities on components supplied to our manufacturers or performance by our partners.
 The occurrence of any of these risks, especially during seasons of peak demand, could cause us to experience a significant disruption in our ability to produce and deliver our products to our customers.
 Increases in component costs, long lead times, supply shortages and changes, labor shortages and construction delays could disrupt our supply chain and operations and have an adverse effect on our business, financial condition and operating results.
 Meeting customer demand partially depends on our ability to obtain timely and adequate delivery of components for our smart building products. All of the components that go into the manufacturing of our products are sourced from a limited number of third-party suppliers, and some of these components are provided by a single supplier. Our manufacturers generally purchase these components on our behalf, subject to certain supplier lists we approve, and we do not have long-term arrangements with some of our component suppliers. We are therefore subject to the risk of shortages and long lead times in the supply of these components and the risk that our suppliers discontinue or modify components used in our products. In addition, the lead times associated with certain components are lengthy and preclude rapid changes in design, quantities and delivery schedules. During the year ended December 31, 2022, as a result of the COVID-19 pandemic and other general economic factors, we experienced, and may continue to experience in the future, component shortages, and the predictability of the future availability of these components is limited. Such component shortages resulted in higher component costs, particularly where we paid spot market prices for such components. The COVID-19 pandemic and other general economic factors also affected the supply chain for many of our product components, creating shipping and logistical challenges, delays and elevated shipping costs for us.
 From time-to-time, industry-wide supply chain disruptions have created shortages of certain construction materials and other products. Additionally, our customers have also experienced trade labor availability constraints and delays. These factors have caused our customers to experience construction delays, which have and may continue to delay the timing of the installation of our products and our recognition of hardware and software revenue.
 In the event of a component shortage or supply interruption from suppliers of these components, we may not be able to develop alternate sources in a timely manner. Developing alternate sources of supply for these components may be time-consuming, difficult and costly, and we may not be able to source these components on terms that are acceptable to us, or at all, which may undermine our ability to fill our orders in a timely manner. Any interruption or delay in the supply of any of these parts or components, or the inability to obtain these parts or components from alternate sources at acceptable prices and within a reasonable amount of time, would harm our ability to meet our scheduled product deliveries to our customers.
 Moreover, volatile economic conditions may make it more likely that our suppliers may be unable to timely deliver supplies, or at all, and there is no guarantee that we will be able to timely locate alternative suppliers of comparable quality at an acceptable price. Increases in our component costs could have a material effect on our gross margins. The loss of a significant supplier, an increase in component costs or delays or disruptions in the delivery of components could adversely impact our ability to generate future revenue and earnings and have an adverse effect on our business, financial condition and operating results.
 Regulations related to "conflict minerals" require us to incur additional expenses and could limit the supply and increase the cost of certain metals used in manufacturing our products.
 We are subject to the requirements under the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 (the "Dodd-Frank Act") that require us to determine and disclose whether our products contain "conflict minerals." The rules require disclosure related to sourcing of certain minerals that are necessary to the functionality or production of products we manufacture or contract to be manufactured. Our products contain some of the specified minerals. As a result, we have incurred and may continue to incur additional expenses in connection with complying with the rules, including with respect to the due diligence that is required under the rules. In addition, compliance with the rules could adversely affect the sourcing, supply and pricing of materials used in our products. There may only be a limited number of suppliers offering "conflict free" conflict minerals, and we cannot be certain that we will be able to obtain necessary "conflict free" minerals from such suppliers in sufficient quantities or at competitive prices. We may not be able to sufficiently verify the origins of

 the relevant minerals used in certain components of our products through the due diligence procedures that we implement, which could harm our reputation.
 Our operating results could be adversely affected if we are unable to accurately forecast customer demand for our products and services and adequately manage our inventory.
 To ensure adequate inventory supply, we must forecast inventory needs and expenses and place orders sufficiently in advance with our suppliers and contract manufacturers based on our estimates of future demand for particular products and services. Failure to accurately forecast our needs may result in manufacturing delays or increased costs. Our ability to accurately forecast demand could be affected by many factors, including changes in customer demand for our products and services, changes in demand for the software, services and products of our competitors, unanticipated changes in general market conditions and the weakening of economic conditions or customer confidence in future economic conditions, such as those caused by the COVID-19 pandemic. This risk will be exacerbated by the fact that we may not carry a significant amount of inventory for certain products and may not be able to satisfy short-term demand increases. If we fail to accurately forecast customer demand, we may experience excess inventory levels or a shortage of products available for sale.
 Inventory levels in excess of customer demand may result in inventory write-downs or write-offs and the sale of excess inventory at discounted prices, which would cause our gross margins to suffer and could impair the strength of our brand. Further, lower than forecasted demand could also result in excess manufacturing capacity or reduced manufacturing efficiencies, which could result in lower margins.
 Furthermore, if we cancel all or part of our inventory or component orders, we may be liable to our suppliers and manufacturers for the cost of the unused component orders or components purchased by our manufacturers. For instance, the Company materially reduced its demand plan in the second quarter of 2022, resulting in non-cancellable purchase commitments to certain manufacturers. During the year ended December 31, 2023, we accrued $0.6 million for non-cancellable inventory purchase commitments.
 Net inventories not expected to be sold according to a one year forecasted sales projection are classified as other non-current assets on the Consolidated Balance Sheets. Inventory on hand that exceeds a three year forecasted sales projection is recorded as an excess and obsolete inventory reserve. This reserve is comprised of inventory greater than can be used to meet future needs (excess) or for which the product is outdated or otherwise not expected to be sold (obsolete).
 Both the one year and three year sales forecasts were lower as of December 31, 2023 than as of December 31, 2022. The total excess and obsolete inventory reserve increased by $9.1 million as of December 31, 2023, $6.9 million of which was due to these lower forecasts and $2.2 million of which represents inventory the Company had determined had become obsolete during the period. The total excess and obsolete inventory reserve as of December 31, 2023 and December 31, 2022 was $12.9 million and $3.8 million, respectively. During the year ended December 31, 2022, the Company underwent significant leadership changes, both at the executive level and sales department level, which impacted the business and related sales projections. See Note 5. Inventories, Net, in Part II, Item 8. "Financial Statements."
 Conversely, if we underestimate customer demand, our suppliers and manufacturers may not be able to deliver products to meet our requirements, or we may be subject to higher costs in order to secure the necessary production capacity. Our inability to meet customer demand and delays in the delivery of our products to customers could result in reputational harm, damage customer relationships and have an adverse effect on our business, financial condition and operating results.
 From time to time, we may be subject to legal proceedings, regulatory disputes and governmental inquiries that could cause us to incur significant expenses, divert our management's attention and materially harm our business, financial condition and operating results.
 In addition to the Stockholder Lawsuits and the ongoing SEC Investigation described above, from time to time, we may be subject to claims, lawsuits, government investigations and other proceedings involving products liability, competition and antitrust, intellectual property, privacy, consumer protection, securities, tax, labor and employment, commercial disputes and other matters that could adversely affect our business operations and financial condition. As our business grows, we may see a rise in the number and significance of these disputes and inquiries. Litigation, regulatory proceedings and any intellectual property infringement matters that we could face may be protracted and expensive, and the results are difficult to predict. Additionally, our litigation costs could be significant. Adverse outcomes with respect to litigation or any of these legal proceedings may result in significant settlement costs or judgments, penalties and fines, require us to modify our products or services, make content unavailable or require us to stop offering certain features, all of which could negatively affect our revenue growth.

 The results of litigation, investigations, claims and regulatory proceedings cannot be predicted with certainty, and determining reserves for pending litigation and other legal and regulatory matters requires significant judgment. There can be no assurance that our expectations will prove correct, and even if these matters are resolved in our favor or without significant cash settlements, these matters, and the time and resources necessary to litigate or resolve them, could harm our business, financial condition and operating results.
 Our smart building technology is subject to varying state and local regulations, which are updated from time to time.
 Our smart building technology is subject to certain state and local regulations, which are updated from time to time. For example, our software, services and products are subject to regulations relating to building and fire codes, public safety, access control systems and data privacy and security. The regulations to which we are subject may change, additional regulations may be imposed or existing regulations may be applied in a manner that creates special requirements for the implementation and operation of our software, services and products that may significantly impact or even eliminate some of our revenues or markets. In addition, we may incur material costs or liabilities in complying with any such regulations. Furthermore, some of our customers must comply with numerous laws and regulations, which may affect their willingness and ability to purchase our software, services and products. The modification of existing laws and regulations or interpretations thereof or the adoption of future laws and regulations could adversely affect our business, cause us to modify or alter our methods of operations and increase our costs and the price of our software, services and products. In addition, we cannot provide any assurance that we will be able, for financial or other reasons, to comply with all applicable laws and regulations. If we fail to comply with these laws and regulations, we could become subject to substantial penalties or restrictions that could materially and adversely affect our business.
 We may fail to comply with import and export, bribery and money laundering laws, regulations and controls.
 We sell our products and services in the United States and Canada and source our products from Asia and the United States. We are subject to regulation by various federal, state, local and foreign governmental agencies, including, but not limited to, agencies and regulatory bodies or authorities responsible for monitoring and enforcing product safety and consumer protection laws, data privacy and security laws and regulations, employment and labor laws, workplace safety laws and regulations, environmental laws and regulations, antitrust laws, federal securities laws and tax laws and regulations.
 Our operations require us to import from Asia and export to Canada, which geographically stretches our compliance obligations. We are also subject to anti-money laundering laws such as the USA PATRIOT Act and may be subject to similar laws in other jurisdictions. Our products are subject to export control and import laws and regulations, including the U.S. Export Administration Regulations, U.S. Customs regulations and various economic and trade sanctions regulations administered by the U.S. Treasury Department's Office of Foreign Assets Control. We may also be subject to import/export laws and regulations in other jurisdictions in which we conduct business or source our products. If we fail to comply with these laws and regulations, we and certain of our employees could be subject to substantial civil or criminal penalties, including the possible loss of export or import privileges, fines, which may be imposed on us and responsible employees or managers and, in extreme cases, the incarceration of responsible employees or managers.
 Changes in laws that apply to us could result in increased regulatory requirements and compliance costs, which could harm our business, financial condition, cash flows and results of operations. In certain jurisdictions, regulatory requirements may be more stringent than in the United States. Noncompliance with applicable regulations or requirements could subject us to whistleblower complaints, investigations, sanctions, settlements, mandatory product recalls, enforcement actions, disgorgement of profits, fines, damages, civil and criminal penalties or injunctions, suspension or debarment from contracting with certain governments or other customers, the loss of export privileges, multi-jurisdictional liability, reputational harm and other collateral consequences. If any governmental or other sanctions are imposed, or if we do not prevail in any possible civil or criminal litigation, our business, financial condition, cash flows and results of operations could be materially harmed. In addition, responding to any action will likely result in a materially significant diversion of management's attention and resources and an increase in legal costs and other professional fees.
 If we are unable to sustain pricing levels for our software, services and products, our business could be adversely affected.
 If we are unable to sustain pricing levels for our software, services and products, whether due to competitive pressure or otherwise, our gross margins could be significantly reduced. Further, our decisions around the development of new software, services and products are grounded in assumptions about eventual pricing levels. If there is price compression in the market after these decisions are made, it could have a negative effect on our business.

 Insurance policies do not cover all of our operating risks, and a casualty loss beyond the limits of our coverage could negatively impact our business.
 We are subject to all of the operating hazards and risks normally incidental to the provision of our products and services and business operations. While we maintain insurance policies in such amounts and with such coverage and deductibles as required by law and that we believe are reasonable and prudent, such insurance is not adequate to protect us from all the liabilities and expenses that may arise from claims for personal injury, death or property damage arising in the ordinary course of our business, the SEC Investigation or the pending Stockholder Lawsuits, and we may not be able to maintain our current levels of insurance at economical prices. We may choose to self-insure certain liabilities either by bearing such liabilities fully or by selecting a higher deductible in exchange for reduced premiums. If a significant liability claim is brought against us that is not covered by insurance, or we incur numerous smaller claims that do not meet applicable deductibles, then we may have to pay such claims with our own funds, which could have a material adverse effect on our business, financial condition, cash flows or results of operations.
 Downturns in general economic and market conditions and reductions in spending may reduce demand for our software, services and products, which could harm our revenue, results of operations and cash flows.
 Our revenue, results of operations and cash flows depend on the overall demand for our software, services and products. Negative conditions in the general economy both in the United States and abroad could cause a decrease in consumer discretionary spending and business investment and diminish growth expectations in the U.S. economy and abroad. Such conditions include those resulting from a pandemic or other global health crisis, the impact of the economic disruption caused by the recent and potential future disruptions in access to bank deposits or lending commitments due to bank failures, the Russian invasion of Ukraine, increasing interest rates, inflationary pressures and the threat of a recession, changes in gross domestic product growth, financial and credit market fluctuations, construction slowdowns, energy costs, international trade relations and other geopolitical issues, the availability and cost of credit and changes in the global housing and mortgage markets.
 During weak economic times, the pool of potential customers may decline as the prospects for multifamily apartment construction and renovation projects diminish, which may have a corresponding impact on our growth prospects. Increasing interest rates have significantly impacted the multifamily industry, particularly property owners or developers subject to variable rate loans. These property owners or developers may be unable to refinance loans at attractive rates, or at all, and may have to reduce their capital expenditures accordingly. In addition, there is a risk that a higher percentage of property developers will file for bankruptcy protection, which may harm our revenue, profitability and results of operations, and we may determine that the cost of pursuing any claim in bankruptcy outweighs the recovery potential of such claim.
 Recent macroeconomic conditions have caused significant uncertainty and volatility in global markets, which has caused, and may continue to cause, consumer discretionary spending to decline. A prolonged economic slowdown and a material reduction in new multifamily apartment construction and renovation projects may result in diminished sales of our platforms and solutions. Further worsening, broadening or protracted extension of the economic downturn could have a negative impact on our business, revenue, results of operations and cash flows.
 We are dependent upon relationships with foreign-based manufacturers and service providers, which exposes us to complex regulatory regimes, logistical challenges and business risk.
 Most of our manufacturing is outsourced to contract manufacturers in China and Taiwan. We also engage consultants and contractors internationally, including in Argentina, Romania and Spain, to supplement our permanent workforce. These foreign exposures result in additional factors that could interrupt our relationships, affect our ability to acquire the necessary products on acceptable terms, disrupt our operations or subject us to additional regulatory regimes and business risks, including:
 • political, social and economic instability and the risk of war or other international incidents;
 • fluctuations in foreign currency exchange rates that may increase our cost of products;
 • imposition of duties, taxes, tariffs or other charges, embargoes or other restrictions on imports, including the 10% additional tariffs on imports from China that the Trump Administration announced in February 2025;
 • difficulties in complying with import and export laws, regulatory requirements and restrictions;
 • natural disasters and public health emergencies, such as the COVID-19 pandemic;
 • import shipping delays resulting from foreign or domestic labor shortages, slow-downs or stoppage;
 • the failure of local laws to provide a sufficient degree of protection against infringement of our intellectual property;

 • potential loss of developed technology through piracy, misappropriation or more lenient laws regarding intellectual property protection;
 • imposition of new legislation relating to import quotas or other restrictions that may limit the quantity of our products that may be imported into the United States from countries or regions where our products are manufactured;
 • financial or political instability in any of the countries in which our products are manufactured or our contractors are located;
 • potential recalls or cancellations of orders for any products that do not meet our quality standards;
 • disruption of imports and operations by labor disputes or strikes and local business practices;
 • political or military conflict involving the United States, China, Taiwan or any country in which our suppliers or contractors are located, which could cause a delay in, or restrict, the import and transportation of our products, an increase in transportation costs, additional risk to products being damaged and delivered on time and disruption in our operations;
 • heightened terrorism and security concerns, which could subject imported goods to additional, more frequent or more thorough inspections, leading to delays in deliveries or impoundment of goods for extended periods;
 • inability of our non-U.S. suppliers to obtain adequate credit or access liquidity to finance their operations; and
 • our ability to enforce agreements with our foreign suppliers.
 If we were unable to import products from China and Taiwan at all or in a cost-effective manner, we could suffer irreparable harm to our business and be required to significantly curtail our operations, file for bankruptcy or cease operations.
 From time to time, we may also have to resort to administrative and court proceedings to enforce our legal rights with foreign suppliers. However, it may be more difficult to evaluate and enforce the level of legal protection available to us in China and Taiwan, and the corresponding outcome of any administrative or court proceedings, as compared to in the United States.
 We may face exposure to foreign currency exchange rate fluctuations.
 While we have historically transacted in U.S. dollars with the majority of our customers and suppliers, we have transacted in some foreign currencies, such as the Canadian Dollar, British Pound Sterling and the New Taiwan Dollar, and may transact in additional foreign currencies in the future. Accordingly, changes in the value of foreign currencies relative to the U.S. dollar may affect our revenue and operating results. As a result of such foreign currency exchange rate fluctuations, it could be more difficult to detect underlying trends in our business and operating results. In addition, to the extent that fluctuations in currency exchange rates cause our operating results to differ from our expectations or the expectations of our investors, the trading price of our common stock could decrease.
 Our private placement warrants are accounted for as liabilities, and the changes in value of our warrants could have a material effect on our financial results.
 On April 12, 2021, the SEC Staff issued a statement regarding the accounting and reporting considerations for warrants issued by special purpose acquisition companies entitled "Staff Statement on Accounting and Reporting Considerations for Warrants Issued by Special Purpose Acquisition Companies ("SPACs")" (the "SEC Statement"). The SEC Statement regarding the accounting and reporting considerations for warrants issued by SPACs focused on certain settlement terms and provisions related to certain tender offers following a business combination. The terms described in the SEC Statement are common in SPACs and are similar to the terms contained in the warrant agreement, dated as of November 9, 2020, between the Company and Continental Stock Transfer & Trust Company (the "Warrant Agreement") governing the private placement warrants that were originally issued in connection with TSIA's initial public offering that Legacy Latch assumed as part of the Closing of the Business Combination (the "Private Placement Warrants"). In response to the SEC Statement, we reevaluated the accounting treatment of the Private Placement Warrants and determined to classify the Private Placement Warrants as derivative liabilities measured at fair value, with changes in fair value each period reported in earnings.
 As a result, included on our balance sheet as of December 31, 2023 contained elsewhere in this Form 10-K is a derivative liability related to embedded features contained within the Private Placement Warrants. Accounting Standards Codification ("ASC") 815, Derivatives and Hedging, provides for the re-measurement of the fair value of such derivatives at each balance sheet date, with a resulting non-cash gain or loss related to the change in the fair value being recognized in earnings in the statement of operations. As a result of the recurring fair value measurement, our financial statements and results of operations will fluctuate quarterly based on factors which are outside of our control. Due to the recurring fair value measurement, we expect that we will recognize non-cash gains or losses on the Private Placement Warrants each reporting period and that the amount of such gains or losses could be material.

 Risks Related to Our Indebtedness
 We may not be able to generate sufficient cash to service our indebtedness, and we may be forced to take other actions to satisfy our obligations under applicable debt instruments, which may not be successful.
 Our ability to make scheduled payments on or to refinance our indebtedness obligations, including the Loan Agreement, depends on our financial condition and operating performance, which are subject to prevailing economic and competitive conditions and certain financial, business and other factors beyond our control. We may not be able to maintain a level of cash flows from operating activities sufficient to permit us to pay the principal and interest on our indebtedness.
 If our cash flows and capital resources are insufficient to fund debt service obligations, we may be forced to reduce or delay investments and capital expenditures, sell assets, seek additional capital or restructure or refinance indebtedness. Our ability to restructure or refinance indebtedness will depend on market conditions and our financial condition at such time. Any refinancing of indebtedness could be at higher interest rates and may require us to comply with more onerous covenants, which could further restrict business operations. The terms of existing or future debt instruments may restrict us from adopting some of these alternatives. In the absence of sufficient cash flows and capital resources, we could face liquidity problems and might be required to dispose of material assets or operations to meet debt service and other obligations. The Loan Agreement restricts our ability to dispose of assets and our use of the proceeds from such disposition. We may not be able to consummate those dispositions, and the proceeds of any such disposition may not be adequate to meet any debt service obligations then due. These alternative measures may not be successful and may not permit us to meet scheduled debt service obligations, which could have a material adverse effect on our financial condition and results of operations.
 The Loan Agreement does, and any future agreements related to indebtedness may, restrict our current and future operations, particularly our ability to respond to changes in business or to take certain actions.
 The Loan Agreement contains, and any agreement related to future indebtedness we incur will likely contain, a number of restrictive covenants that impose significant operating and financial restrictions, including restrictions on our ability to engage in acts that may be in our best long-term interest. For instance, the Loan Agreement limits the Company's ability to:
 • engage in certain asset dispositions;
 • permit a change in control;
 • merge or consolidate;
 • incur indebtedness or grant liens on its assets;
 • declare or pay dividends, distributions or redemptions;
 • make loans or investments; and
 • engage in certain transactions with affiliates.
 A breach of any of these covenants could result in an event of default under the Loan Agreement.
 The Loan Agreement also requires the Company to maintain an operating account with Customers Bank with a sufficient balance to support monthly payments. Additionally, the Company is required to maintain a liquidity ratio of at least 4.00, tested monthly, which is calculated as the quotient of unrestricted cash and cash equivalents of the Company and its subsidiaries (subject to certain limitations with respect to cash of foreign subsidiaries), divided by all outstanding indebtedness owed to Customers Bank.
 Upon the occurrence of an event of default, all amounts outstanding under the Loan Agreement could be declared to be immediately due and payable. If indebtedness under the Loan Agreement is accelerated, there can be no assurance that we will have sufficient assets to repay such indebtedness. Additionally, upon an occurrence of an event of default, Customers Bank has the right to dispose of collateral, representing substantially all the assets of the Company.
 Risks Related to Ownership of Our Securities
 Our common stock price may be volatile or may decline regardless of our operating performance. You may lose some or all of your investment.
 The trading price of our common stock has been and is likely to continue to be volatile, particularly since it began trading on the OTC Expert Market in August 2023. The stock market, and our industry in particular, has recently experienced extreme volatility. This volatility often has been unrelated or disproportionate to the operating performance of particular companies.

 You may not be able to resell your shares at an attractive price due to a number of factors such as those listed in "—Risks Related to Our Business and Industry" and the following:
 • increasing interest rates, inflationary pressures and the threat of a recession in the United States and around the world;
 • the impact of organizational changes, including any reductions in force and the transition of Mr. Siminoff into an advisory role in 2025;
 • the impact of adverse resolution or settlement of, any developments in, or change in status of, the Stockholder Lawsuits, the SEC Investigation or any new, threatened or other pending litigation, investigation or regulatory action;
 • the minimal public market for our securities that exists while they are traded on the OTC Expert Market or other OTC markets;
 • our operating and financial performance and prospects;
 • our quarterly or annual earnings, or those of other companies in our industry, compared to market expectations;
 • conditions that impact demand for our products and/or services;
 • future announcements concerning our business, our customers' businesses or our competitors' businesses;
 • public reaction to our press releases, other public announcements and filings with the SEC;
 • the size of our public float;
 • coverage by or changes in financial estimates by securities analysts or failure to meet their expectations;
 • market and industry perception of our success, or lack thereof, in pursuing our growth strategy;
 • strategic actions by us or our competitors, such as acquisitions or restructurings;
 • changes in laws or regulations that adversely affect our industry or us;
 • privacy and data protection laws, privacy or data breaches or the loss of data;
 • changes in accounting standards, policies, guidance, interpretations or principles;
 • issuances, exchanges or sales, or expected issuances, exchanges or sales, of our capital stock;
 • changes in our dividend policy; and
 • changes in general market, economic and political conditions in the United States, China, Taiwan and global economies or financial markets, including those resulting from natural disasters, terrorist attacks, acts of war and responses to such events.
 These broad market and industry factors may materially reduce the market price of our common stock, regardless of our operating performance. In addition, price volatility may be greater if the public float and trading volume of our common stock is low. As a result, you may suffer a loss on your investment.
 We do not intend to pay dividends on our common stock for the foreseeable future.
 We currently intend to retain all available funds and any future earnings to fund the development and growth of our business. As a result, we do not anticipate declaring or paying any cash dividends on our common stock in the foreseeable future. Any decision to declare and pay dividends in the future will be made at the discretion of our Board and will depend on, among other things, our business prospects, results of operations, financial condition, cash requirements and availability, certain restrictions related to any indebtedness, industry trends and other factors that our Board may deem relevant. Any such decision will also be subject to compliance with contractual restrictions and covenants in the agreements governing any indebtedness. As a result, you may have to sell some or all of your common stock after price appreciation in order to generate cash flow from your investment, which you may not be able to do. Our inability or decision not to pay dividends, particularly when others in our industry have elected to do so, could also adversely affect the market price of our common stock.
 Our issuance of additional shares of common stock or convertible securities could make it difficult for another company to acquire us, may dilute your ownership of us and could adversely affect our stock price.
 In August 2021, we filed a registration statement on Form S-8 (the "S-8 Registration Statement") with the SEC providing for the registration of shares of our common stock issued or reserved for issuance under the Latch, Inc. 2021 Incentive Award Plan (the "2021 Plan"). Subject to the satisfaction of vesting conditions, shares registered under S-8 Registration Statement are available for resale without restriction. From time to time in the future, we may also issue additional shares of our common stock or securities convertible into our common stock pursuant to a variety of transactions, including acquisitions, as we did in connection with the HDW Acquisition. The issuance by us of additional shares of our common stock or securities convertible into our common stock would dilute your ownership of us, and the sale of a significant amount of such shares in the public market could adversely affect prevailing market prices of our common stock.

 In the future, we may obtain financing or further increase our capital resources by issuing additional shares of our common stock or offering debt or other equity securities, including senior or subordinated notes, debt securities convertible into equity or shares of preferred stock. Issuing additional shares of our common stock, other equity securities or securities convertible into equity may dilute the economic and voting rights of our existing stockholders, reduce the market price of our common stock or both. Debt securities convertible into equity could be subject to adjustments in the conversion ratio pursuant to which certain events may increase the number of equity securities issuable upon conversion. Preferred stock, if issued, could have a preference with respect to liquidating distributions or a preference with respect to dividend payments that could limit our ability to pay dividends to the holders of our common stock. Our decision to issue securities in any future offering will depend on market conditions and other factors beyond our control, which may adversely affect the amount, timing or nature of our future offerings. As a result, holders of our common stock bear the risk that any future offerings may reduce the market price of our common stock and dilute their percentage ownership.
 Future sales, or the perception of future sales, of our common stock by us or our existing stockholders in the public market could cause the market price for our common stock to decline.
 The sale of substantial amounts of shares of our common stock in the public market, or the perception that such sales could occur, could harm the prevailing market price of shares of our common stock. These sales, or the possibility that these sales may occur, also might make it more difficult for us to sell equity securities in the future at a time and at a price that we deem appropriate.
 In accordance with our obligations under our registration rights agreements, we are required to register for resale the shares of common stock of certain of our stockholders. By exercising their registration rights and selling a large number of shares, these stockholders could cause the prevailing market price of our common stock to decline.
 As any transfer restrictions on shares of our common stock terminate or expire, the market price of our common stock could drop significantly if the holders of these shares sell them or are perceived by the market as intending to sell them. These factors could also make it more difficult for us to raise additional funds through future offerings of shares of our common stock or other securities.
 In addition, the shares of our common stock issued under the 2021 Plan are, or will become, eligible for sale in the public market once those shares are issued, subject to provisions relating to various vesting agreements and, in some cases, limitations on volume and manner of sale applicable to affiliates under Rule 144 under the Securities Act, as applicable. The number of shares reserved for future issuance under the 2021 Plan equals (i) 22,500,611 plus (ii) an annual increase for ten years on the first day of each calendar year beginning January 1, 2022, equal to the lesser of (A) 5% of the aggregate number of shares of our common stock outstanding on the final day of the immediately preceding calendar year and (B) such smaller number of shares as is determined by the Board. 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. The maximum number of shares of our common stock that may be issued pursuant to the exercise of incentive stock options granted under the 2021 Plan is equal to 120,329,359. We filed the S-8 Registration Statement to register shares of our common stock or securities convertible into or exchangeable for shares of our common stock issued pursuant to our equity incentive plans. The S-8 Registration Statement automatically became effective upon filing on August 9, 2021, but we 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 (the "Form 12b-25"). We expect to resume using the S-8 Registration Statement once we are current in our SEC filings, in which case shares registered under such registration statement will again be available for sale in the open market, subject to the limitations noted elsewhere in this Form 10-K.
 Since the Company's filing of the Form 12b-25 on August 10, 2022 through the date on which we become current in our SEC filings, (the "Suspension Period"), restricted stock units ("RSUs") that vested have not been immediately settled, and accordingly, not all common stock underlying such vested RSUs will have been delivered to participants. Similarly, during the Suspension Period, the exercise of any stock options of the Company has also been suspended. Accordingly, at certain times in the future, a significant number of RSUs may be settled and the common stock underlying such RSUs will be delivered to the participants. For instance, in December 2024, we settled, and issued to participants, approximately 3.9 million shares of common stock in connection with vested RSUs. Additionally, participants may choose to exercise their stock options upon conclusion of the Suspension Period. As a result, a significant number of shares of common stock may become issued and outstanding at certain times in the future, which could cause the prevailing market price of our common stock to decline.

 You may only be able to exercise the public warrants on a "cashless basis" under certain circumstances, and if you do so, you will receive fewer shares of common stock from such exercise than if you were to exercise such warrants for cash.
 The Warrant Agreement provides that in the following circumstances holders of warrants who seek to exercise their warrants will not be permitted to do for cash and will, instead, be required to do so on a cashless basis in accordance with Section 3(a)(9) of the Securities Act: (i) if the shares of common stock issuable upon exercise of the warrants are not registered under the Securities Act in accordance with the terms of the Warrant Agreement; (ii) if we have so elected and the shares of common stock are at the time of any exercise of a warrant not listed on a national securities exchange such that they satisfy the definition of "covered securities" under Section 18(b)(1) of the Securities Act; and (iii) if we have so elected and we call the public warrants for redemption. If you exercise your public warrants on a cashless basis, you would pay the warrant exercise price by surrendering the warrants for that number of shares of common stock equal to (A) the quotient obtained by dividing (x) the product of the number of shares of common stock underlying the warrants, multiplied by the excess of the "Fair Market Value" (as defined in the next sentence) over the exercise price of the warrants by (y) the Fair Market Value and (B) 0.361 per whole warrant. The "Fair Market Value" is the volume weighted average price of the common stock for the ten trading days ending on the third trading day prior to the date on which the notice of exercise is received by the warrant agent or on which the notice of redemption is sent to the holders of warrants, as applicable. As a result, you would receive fewer shares of common stock from such exercise than if you were to exercise such warrants for cash.
 We may amend the terms of the warrants in a manner that may have an adverse effect on holders of public warrants with the approval by the holders of at least 50% of the then-outstanding public warrants. As a result, the exercise price of your warrants could be increased, the exercise period could be shortened and the number of shares of common stock purchasable upon exercise of a warrant could be decreased, all without your approval.
 Our warrants were issued in registered form under the Warrant Agreement between Continental Stock Transfer & Trust Company, as warrant agent, and us. The Warrant Agreement provides that the terms of the warrants may be amended without the consent of any holder for the purpose of (i) curing any ambiguity or curing, correcting or supplementing any defective provision or (ii) adding or changing any provisions with respect to matters or questions arising under the Warrant Agreement as the parties to the Warrant Agreement may deem necessary or desirable and that the parties deem to not adversely affect the rights of the registered holders of the warrants, provided that the approval by the holders of at least 50% of the then-outstanding public warrants is required to make any change that adversely affects the rights of the registered holders of public warrants. Accordingly, we may amend the terms of the public warrants in a manner adverse to a holder of public warrants if holders of at least 50% of the then-outstanding public warrants approve of such amendment. Although our ability to amend the terms of the public warrants with the consent of at least 50% of the then-outstanding public warrants is unlimited, examples of such amendments could be amendments to, among other things, increase the exercise price of the warrants, convert the warrants into cash or shares, shorten the exercise period or decrease the number of shares of common stock purchasable upon exercise of a warrant.
 We may redeem your unexpired warrants prior to their exercise at a time that is disadvantageous to you, thereby making your warrants worthless.
 We have the ability to redeem outstanding warrants at any time prior to their expiration (a) at a price of $0.01 per warrant, provided that the closing price of our common stock equals or exceeds $18.00 per share (as adjusted for share splits, share capitalizations, reorganizations, recapitalizations and the like) for any 20 trading days within a 30 trading-day period ending on the third trading day prior to the date on which we give proper notice of such redemption to the warrant holders and provided certain other conditions are met or (b) at a price of $0.10 per warrant, provided that the closing price of our common stock equals or exceeds $10.00 per share (as adjusted for share splits, share capitalizations, reorganizations, recapitalizations and the like) for any 20 trading days within a 30 trading-day period ending on the third trading day prior to the date on which we give proper notice of such redemption to the warrant holders and provided certain other conditions are met. If and when the warrants become redeemable by us, we may exercise our redemption right even if we are unable to register or qualify the underlying securities for sale under all applicable state securities laws. Redemption of the outstanding warrants could force you to (i) exercise your warrants and pay the exercise price therefor at a time when it may be disadvantageous for you to do so, (ii) sell your warrants at the then-current market price when you might otherwise wish to hold your warrants or (iii) accept the nominal redemption price, which, at the time the outstanding warrants are called for redemption, is likely to be substantially less than the market value of your warrants. None of the Private Placement Warrants will be redeemable by us so long as they are held by TS Innovation Acquisitions Sponsor, L.L.C. or its permitted transferees.

 Our Warrant Agreement designates the courts of the State of New York or the U.S. District Court for the Southern District of New York as the sole and exclusive forum for certain types of actions and proceedings that may be initiated by holders of the warrants, which could limit the ability of warrant holders to obtain a favorable judicial forum for disputes with us.
 Our Warrant Agreement provides that, subject to applicable law, (i) any action, proceeding or claim against us arising out of or relating in any way to the Warrant Agreement, including under the Securities Act, will be brought and enforced in the courts of the State of New York or the U.S. District Court for the Southern District of New York and (ii) we irrevocably submit to such jurisdiction, which jurisdiction shall be the exclusive forum for any such action, proceeding or claim. We will waive any objection to such exclusive jurisdiction and that such courts represent an inconvenient forum.
 Notwithstanding the foregoing, these provisions of the Warrant Agreement will not apply to suits brought to enforce any liability or duty created by the Exchange Act or any other claim for which the federal district courts of the United States are the sole and exclusive forum. Any person or entity purchasing or otherwise acquiring any interest in any of our warrants shall be deemed to have notice of and to have consented to the forum provisions in our Warrant Agreement. If any action, the subject matter of which is within the scope the forum provisions of the Warrant Agreement, is filed in a court other than a court of the State of New York or the U.S. District Court for the Southern District of New York (a "foreign action") in the name of any holder of our warrants, such holder shall be deemed to have consented to: (x) the personal jurisdiction of the state and federal courts located in the State of New York in connection with any action brought in any such court to enforce the forum provisions (an "enforcement action"), and (y) having service of process made upon such warrant holder in any such enforcement action by service upon such Warrant holder's counsel in the foreign action as agent for such warrant holder.
 This choice-of-forum provision may limit a warrant holder's ability to bring a claim in a judicial forum that it finds favorable for disputes with us, which may discourage such lawsuits. Alternatively, if a court were to find this provision of our Warrant Agreement inapplicable or unenforceable with respect to one or more of the specified types of actions or proceedings, we may incur additional costs associated with resolving such matters in other jurisdictions, which could materially and adversely affect our business, financial condition and results of operations and result in a diversion of the time and resources of our management and Board.
 Anti-takeover provisions in our governing documents and under Delaware law could make an acquisition of us more difficult, limit attempts by our stockholders to replace or remove our current management and limit the market price of our common stock.
 Our second amended and restated certificate of incorporation (our "Charter"), our amended and restated bylaws (our "Bylaws") and Delaware law contain provisions that could have the effect of rendering more difficult, delaying or preventing an acquisition deemed undesirable by our Board. Among other things, our Charter and Bylaws include the following provisions:
 • a staggered board, which means that our Board is classified into three classes of directors with staggered three-year terms, and directors are only able to be removed from office for cause;
 • limitations on convening special stockholder meetings, which could make it difficult for our stockholders to adopt desired governance changes;
 • a prohibition on stockholder action by written consent, which means that our stockholders will only be able to take action at a meeting of stockholders and will not be able to take action by written consent for any matter;
 • a forum selection clause, which means certain litigation against us can only be brought in Delaware;
 • the authorization of undesignated preferred stock, the terms of which may be established and shares of which may be issued without further action by our stockholders; and
 • advance notice procedures, which apply for stockholders to nominate candidates for election as directors or to bring matters before an annual meeting of stockholders.
 These provisions, alone or together, could delay or prevent hostile takeovers and changes in control or changes in our management. As a Delaware corporation, we are also subject to provisions of Delaware law, including Section 203 of the Delaware General Corporation law (the "DGCL"), which prevents interested stockholders, such as certain stockholders holding more than 15% of our outstanding common stock, from engaging in certain business combinations unless (i) prior to the time such stockholder became an interested stockholder, the Board approved the transaction that resulted in such stockholder becoming an interested stockholder, (ii) upon consummation of the transaction that resulted in such stockholder becoming an interested stockholder, the interested stockholder owned at least 85% of the common stock or (iii) following board approval, such business combination receives the approval of the holders of at least two-thirds of our outstanding common stock not held by such interested stockholder at an annual or special meeting of stockholders.

 Any provision of our Charter, our Bylaws or Delaware law that has the effect of delaying, preventing or deterring a change in control could limit the opportunity for our stockholders to receive a premium for their shares of our common stock and could also affect the price that some investors are willing to pay for our common stock.
 Our Charter and Bylaws provide that the Court of Chancery of the State of Delaware is the sole and exclusive forum for substantially all disputes between us and our stockholders, which could limit our stockholders' ability to obtain a favorable judicial forum for disputes with us or our directors, officers or employees.
 Our Charter and Bylaws provide that, unless we consent in writing to the selection of an alternative forum, (a) the Court of Chancery (the "Chancery Court") of the State of Delaware (or, in the event that the Chancery Court does not have jurisdiction, the federal district court for the District of Delaware or other state courts of the State of Delaware) shall, to the fullest extent permitted by law, be the sole and exclusive forum for: (i) any derivative action, suit or proceeding brought on our behalf; (ii) any action, suit or proceeding asserting a claim of breach of fiduciary duty owed by any of our directors, officers or stockholders to us or to our stockholders; (iii) any action, suit or proceeding asserting a claim arising pursuant to the DGCL, our Charter or our Bylaws; or (iv) any action, suit or proceeding asserting a claim governed by the internal affairs doctrine; and (b) subject to the foregoing, the federal district courts of the United States shall be the exclusive forum for the resolution of any complaint asserting a cause of action arising under the Securities Act. Notwithstanding the foregoing, such forum selection provisions shall not apply to suits brought to enforce any liability or duty created by the Exchange Act or any other claim for which the federal courts of the United States have exclusive jurisdiction. The choice of forum provision may limit a stockholder's ability to bring a claim in a judicial forum that it finds favorable for disputes with us or our directors, officers or other employees, which may discourage such lawsuits against us and our directors, officers and other employees. Alternatively, if a court were to find the choice of forum provision contained in our Charter to be inapplicable or unenforceable in an action, we may incur additional costs associated with resolving such action in other jurisdictions, which could harm our business, results of operations and financial condition.
 Additionally, Section 22 of the Securities Act creates concurrent jurisdiction for federal and state courts over all suits brought to enforce any duty or liability created by the Securities Act or the rules and regulations thereunder. As noted above, our Charter and Bylaws provide that the federal district courts of the United States shall have jurisdiction over any action arising under the Securities Act. Accordingly, there is uncertainty as to whether a court would enforce such provision. Our stockholders will not be deemed to have waived our compliance with the federal securities laws and the rules and regulations thereunder.
 General Risk Factors
 Climate change and related environmental issues may have an adverse effect on our business, financial condition and operating results.
 Climate change related events, such as increasing temperatures, rising sea levels and changes to patterns and intensity of wildfires, hurricanes, floods, other storms and severe weather-related events and natural disasters, may have an adverse effect on our business, financial condition and operating results. We recognize that there are inherent climate related risks regardless of how and where we conduct our operations. For example, a catastrophic natural disaster could negatively impact the locations of our customers and suppliers. Access to clean water and reliable energy in the communities where we conduct our operations is critical to us. Accordingly, a natural disaster has the potential to disrupt our and our customers' and suppliers' businesses and may cause us to experience work stoppages, project delays, financial losses and additional costs to resume operations, including increased insurance costs or loss of coverage, legal liability and reputational losses.
 Stockholder and customer emphasis on environmental, social, and governance responsibility may impose additional costs on us or expose us to new risks.
 Our stockholders, customers and employees continue to expect a more proactive response to environmental, social, and governance ("ESG") matters. We may incur increased costs and may be exposed to new risks responding to these higher expectations. Although we believe that ESG priorities can help drive sustainable business practices, we may face reputational challenges in the event that we are unable to achieve certain ESG goals or our ESG standards do not meet those set by certain constituencies. These reputational challenges could have a material adverse effect on our business, financial condition, results of operations and cash flows.

 Our business is subject to the risk of earthquakes, fires, power outages, floods and other catastrophic events, and to interruption by man-made problems such as terrorism.
 Our business is vulnerable to damage or interruption from earthquakes, fires, power outages, floods, telecommunications failures, terrorist attacks, acts of war, human errors, break-ins and similar events. The third-party systems, operations and manufacturers on which we rely are subject to similar risks. For example, a significant natural disaster, such as an earthquake, fire or flood, could have an adverse effect on our business, financial condition and operating results, and our insurance coverage may be insufficient to compensate us for losses that may occur. Acts of terrorism, which may be targeted at metropolitan areas that have higher population density than rural areas, could also cause disruptions in our or our suppliers' and manufacturers' businesses or the economy as a whole. We may not have sufficient protection or recovery plans in some circumstances, such as natural disasters affecting locations that store significant inventory of our products or that house our servers. As we rely heavily on our computer and communications systems and the internet to conduct our business and provide high-quality customer service, these disruptions could negatively impact our ability to run our business and either directly or indirectly disrupt suppliers' and manufacturers' businesses, which could have an adverse effect on our business, financial condition and operating results.
 We incur increased costs as a result of being a public company. Failure to comply with laws, regulations and standards relating to our public company status could materially and adversely affect our business and results of operations.
 As a company with publicly traded securities, we have incurred, and will continue to incur, significant legal, accounting and other expenses. In addition, we are or may become subject to the reporting requirements of the Exchange Act, the Sarbanes-Oxley Act of 2002 (the "Sarbanes-Oxley Act"), the Dodd-Frank Act, the requirements of a national securities exchange or the OTC markets and other applicable securities rules and regulations. These laws, rules and regulations may increase our legal and financial compliance costs, which could adversely affect the trading price of our securities.
 In addition, changing laws, regulations and standards relating to corporate governance and public disclosure are creating uncertainty for public companies, increasing legal and financial compliance costs and making some activities more time-consuming. These laws, regulations and standards are subject to varying interpretations, in many cases due to their lack of specificity, and, as a result, their application in practice may evolve over time as new guidance is provided by regulatory and governing bodies. This could result in continuing uncertainty regarding compliance matters and higher costs necessitated by ongoing revisions to disclosure and governance practices. Additionally, certain members of our management team have limited or no experience in the management of a publicly traded company, which is subject to significant regulatory oversight and reporting obligations under federal securities laws. We intend to invest resources to comply with evolving laws, regulations and standards, and this investment may result in increased general and administrative expenses and a diversion of management's time and attention from revenue-generating activities to compliance activities. Our failure to comply with these laws, regulations and standards could materially and adversely affect our business and results of operations.
 If securities analysts do not publish research or reports about us, or if they issue unfavorable commentary about us or our industry or downgrade our common stock, the price of our common stock could decline.
 The trading market for our common stock depends in part on the research and reports that third-party securities analysts publish about us and the industries in which we operate. Analysts generally ceased their coverage of us following our announcement of the Restatement. We may be slow to attract research coverage in the future, and if one or more analysts cease coverage of us, the price and trading volume of our securities may be negatively impacted. If any analysts adversely change their recommendation regarding our securities, as occurred at various times in 2022, or provide more favorable relative recommendations about our competitors, the price of our securities would likely decline. If any analyst ceases covering us or fails to regularly publish reports on us, we could lose visibility in the financial markets, which could cause the price or trading volume of our securities to decline. Moreover, if any analyst downgrades our common stock, as occurred at various times in 2022, or if our reporting results do not meet their expectations, the market price of our common stock could decline.

 Item 1B. Unresolved Staff Comments
 Not applicable.

 Item 1C. Cybersecurity
 Cybersecurity Risk Management and Strategy
 We have developed and implemented a cybersecurity risk management program intended to protect the confidentiality, integrity and availability of our critical systems and information. Our cybersecurity risk management program includes a cybersecurity incident response plan.
 We design and assess our program based on the National Institute of Standards and Technology Cybersecurity Framework ("NIST CSF"), specifically NIST 800-30 and NIST 800-37, as well as ISO 27005. This does not imply that we meet any particular technical standards, specifications or requirements, only that we use these standards as a guide to help us identify, assess and manage cybersecurity risks relevant to our business.
 Our cybersecurity risk management program is integrated into our overall enterprise risk management program and shares common methodologies, reporting channels and governance processes that apply across the enterprise risk management program to other legal, compliance, strategic, operational and financial risk areas.
 Our cybersecurity risk management program includes:
 • risk assessments designed to help identify material cybersecurity risks to our critical systems, information, products, services and our broader enterprise information technology environment;
 • a security team principally responsible for managing our cybersecurity risk assessment processes, our security controls and our response to cybersecurity incidents;
 • the use of external service providers, where appropriate, to assess, test or otherwise assist with aspects of our cybersecurity controls;
 • cybersecurity awareness training of our employees, incident response personnel and senior management;
 • a cybersecurity incident response plan that includes procedures for responding to cybersecurity incidents; and
 • a third-party risk management process for service providers, suppliers and vendors that have access to our critical systems and information.
 We have not identified risks from known cybersecurity threats, including as a result of any prior cybersecurity incidents, that have materially affected or are reasonably likely to materially affect us, including our operations, business strategy, results of operations or financial condition. For more information regarding the possible impact of such an incident, see "—Risk Factors—If our security controls are breached, or unauthorized or inadvertent access to user information or other data or to control or view systems are otherwise obtained, our products, software or services may be perceived as insecure, our business may be harmed and we may incur significant liabilities."
 Cybersecurity Governance
 Our Board considers cybersecurity risk as part of its risk oversight function and has delegated to the Audit Committee oversight of cybersecurity and other information technology risks. The Audit Committee oversees management's implementation of our cybersecurity risk management program.
 The Audit Committee receives periodic reports from management on our cybersecurity risks. In addition, management updates the Audit Committee, as necessary, regarding any material cybersecurity incidents, as well as any incidents with lesser impact potential.
 The Audit Committee reports to the Board regarding its activities.
 Our cybersecurity team has over 30 years of combined cybersecurity experience and is responsible for assessing and managing our material risks from cybersecurity threats. The team has primary responsibility for our overall cybersecurity risk management program and incident response plan and supervises both our internal and any external cybersecurity personnel. Our cybersecurity team's experience includes threat detection, risk assessment, incident response, security architecture, compliance with industry standards (e.g., NIST, SOC2), vulnerability management and security operations, among others.
 Our cybersecurity team supervises efforts to prevent, detect, mitigate and remediate cybersecurity risks and incidents through various means, including threat intelligence and other information obtained from governmental, public or private sources, including external consultants, and alerts and reports produced by our active cybersecurity tools.

 Item 2. Properties
 Effective November 1, 2023, we relocated our headquarters to St. Louis (Olivette), Missouri, occupying approximately 49,000 square feet of leased warehouse and office space. In January 2024, the Company entered into an amendment to the lease agreement, expanding the premises by approximately 13,000 square feet. The term of the lease agreement commenced March 1, 2024 and continues through June 1, 2029. The total commitment of approximately $2.1 million is payable monthly with escalating rental payments over the approximate five-year lease term.
 In November 2023, we leased office space in Los Angeles, California occupying approximately 2,000 square feet. The lease expires in December 2025. Following the Property Management Acquisition, in July 2024 we began a month-to-month lease for our property management team in Boston, Massachusetts. From 2020 through 2023, we operated offices in Denver, Colorado, New York, New York, Los Angeles, California and Taipei, Taiwan.
 Throughout 2023, we were party to a lease for approximately 9,600 square feet of office and warehouse space in Denver that expired in November 2024. We ceased using the property in November 2023. Along with our U.S. facilities, we lease a small office space in Taipei, Taiwan, which lease expires in June 2025. From September 2024 to January 2025, we leased office space in Argentina. As a result of the HelloTech Merger, we are subject to a month-to-month office lease in Cebu City, Philippines.
 We believe that our new headquarters and current facilities will enable better support for our customers and improve operational discipline and efficiency. We believe that suitable additional space will be available to accommodate any expansion of our operations as needed. Other than our St. Louis-based employees and our property management business, our workforce generally operates on a remote basis, which we believe is suitable for the conduct of our business.

 Item 3. 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 December 31, 2023, will not materially affect the Company's consolidated results of operations, financial position or cash flows, except as set forth in Note 12. Commitments and Contingencies, in Part II, Item 8. "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 4. Mine Safety Disclosures
 Not applicable.

 Item 5. Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities
 Market Information
 Since August 11, 2023, Latch's common stock and warrants have been traded on the OTC Expert Market under the ticker symbols "LTCH" and "LTCHW," respectively. Any over-the-counter market quotations reflect inter-dealer prices, without retail mark-up, mark-down or commission, and may not necessarily represent actual transactions.
 Prior to the transition to the OTC markets, beginning June 7, 2021, Latch common stock and warrants were listed and traded on Nasdaq. Before June 7, 2021 and the completion of the Business Combination with TSIA, the units, common stock and warrants of TSIA traded on Nasdaq under the ticker symbols "TSIAU," "TSIA" and "TSIAW," respectively.
 Nasdaq Delisting
 On February 7, 2023, the Company received the Staff Determination from the Nasdaq Staff notifying the Company that Nasdaq had initiated a process that could result in the delisting of the Company's securities from Nasdaq as a result of the Company's failure to timely file all required periodic financial reports with the SEC. The Company presented the Compliance Plan at a March 23, 2023 hearing before the Panel. As set forth in the Compliance Plan, the Company intended to regain compliance with the Listing Rule by filing with the SEC, on or before August 4, 2023, (i) the 2022 Annual Report, (ii) the Delinquent Quarterly Reports and (iii) the First Quarter 2023 Report. On April 5, 2023, the Company received a decision from the Panel granting the Company's request for continued listing on Nasdaq, subject to the Company demonstrating compliance with the Listing Rule on or before August 4, 2023.
 On July 31, 2023, the Company notified the Panel that the Company did not anticipate filing the required reports to regain compliance with the Listing Rule on or before August 4, 2023. On August 8, 2023, the Company received a notice from the Panel stating that it had determined to suspend trading of the Company's securities on August 10, 2023 and commence delisting procedures because of the Company's failure to regain compliance with the Listing Rule by August 4, 2023. On March 21, 2024, Nasdaq filed a Form 25 with the SEC notifying the SEC of Nasdaq's determination to remove the Company's securities from listing on Nasdaq. The delisting was effective April 1, 2024.
 Holders
 As of March 21, 2025, we had 164,825,277 shares of common stock outstanding held by approximately 425 record holders, excluding stockholders for whom shares are held in "nominee" or "street" name. The actual number of stockholders of our common stock is greater than this number of record holders and includes stockholders who are beneficial owners but whose shares of common stock are held in street name by banks, brokers and other nominees.
 Dividend Policy
 We have not declared dividends on our common stock to date, and we do not anticipate declaring or paying any cash dividends on our common stock in the foreseeable future. We currently intend to retain all available funds and any future earnings to fund the development and growth of our business. Any decision to declare and pay dividends in the future will be made at the discretion of our Board and will depend on, among other things, our business prospects, results of operations, financial condition, cash requirements and availability, certain restrictions related to our indebtedness, industry trends and other factors that our Board may deem relevant.
 Equity Compensation Plan Information
 The following table presents the securities authorized for issuance under our equity compensation plans as of December 31, 2023. See Note 15. Stock-Based Compensation, in Part II, Item 8. "Financial Statements" for additional information about our equity compensation plans.
 As noted above, in connection with the Restatement, we suspended use of the S-8 Registration Statement on August 10, 2022. During the Suspension Period, we have not granted any RSUs and have not settled any RSUs upon vesting. However, in December 2023 and 2024, we settled certain RSUs for which participants faced year-end tax liability. We expect to resume granting and regularly settling vested RSUs pursuant to the S-8 Registration Statement once we are current in our SEC filings.

 Plan Category
 (a) Number of Securities to be Issued Upon Exercise of Outstanding Options, Warrants, and Rights
 (b) Weighted Average Exercise Price of Outstanding Options, Warrants, and Rights
 (c) Number of Securities Remaining Available for Issuance Under Equity Compensation Plans (Excluding Securities Reflected in column (a))

 Equity Compensation Plans Approved by Security Holders:

 Latch, Inc. 2021 Incentive Award Plan

 6,126,062
 (1)

 —
 (2)

 17,895,423
 (3)

 Equity Compensation Plans Not Approved by Security Holders:

 Latchable, Inc. 2014 Stock Incentive Plan
 500,402
 $
 0.13
 —
 (4)

 Latch, Inc. 2016 Stock Plan
 12,363,395
 $
 0.73
 —
 (5)

 Total
 18,989,859
 17,895,423

 (1)Represents RSUs granted to service providers, net of forfeitures and releases. Excludes cash-settled RSUs as described in Note 2. Summary of Significant Accounting Policies, and Note 15. Stock-Based Compensation, in Part II, Item 8. "Financial Statements."
 (2)The RSUs have no exercise price.
 (3)The aggregate number of shares 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 Board. 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.
 (4)Under the Latchable, Inc. 2014 Stock Incentive Plan, no award may be granted after June 4, 2021, but awards previously granted will continue to be subject to the provisions thereof.
 (5)Under the Latch, Inc. 2016 Stock Plan, no award may be granted after June 4, 2021, but awards previously granted will continue to be subject to the provisions thereof.
 Repurchase of Equity by the Company
 None.
 Recent Sales of Unregistered Equity Securities
 In connection with the HDW Acquisition, the Company issued approximately 29.0 million shares of the Company's common stock (valued at approximately $40.6 million as of the acquisition date) to HDW's stockholders in transactions exempt from registration under the Securities Act by virtue of Section 4(a)(2) of the Securities Act. The Company and certain of HDW's stockholders entered into the 2023 Registration Rights Agreement, pursuant to which the Company agreed to file a shelf registration statement registering the resale of the Registrable Securities. See Part I, Item 1. "Business—2023 Business Update."
 On July 15, 2024, in a private placement concurrent with the Company's entry into the Loan Agreement, 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 $1.25 per share, is exercisable immediately and will expire six years from the date of issuance, or July 15, 2030. Such issuance was exempt from registration pursuant to Section 4(a)(2) of the Securities Act and/or Regulation D promulgated thereunder. See the Company's Current Report on Form 8-K filed with the SEC on July 15, 2024 for additional information.

 Item 6. Reserved
 Not applicable.

 Item 7. 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 consolidated financial statements and the related notes of Latch, Inc. and its subsidiaries included elsewhere in this Form 10-K. 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 Part I, Item 1A. "Risk Factors," actual results may differ materially from those anticipated in these forward-looking statements. Unless the context otherwise requires, references in this subsection to "we," "our," "Latch" and the "Company" refer to the business and operations of Latch Systems, Inc. (formerly known as Latch, Inc.) and its consolidated subsidiaries prior to the Business Combination and to Latch, Inc. (formerly known as TS Innovation Acquisitions Corp.) and its consolidated subsidiaries following the consummation of the Business Combination.
 For a comparison of our financial condition and results of operations for the years ended December 31, 2022 and December 31, 2021, see "Management's Discussion and Analysis of Financial Condition and Results of Operations" in the 2022 Annual Report.

 Overview
 Latch is a technology company primarily serving the multifamily rental home market segment of the smart building industry deploying hardware and software technology to digitize otherwise manual processes, including building and unit access and in-unit device control.
 We combine hardware, software and services into a system that enables smart access for users of a multifamily building, enabling easier, more modernized experiences for residents and visitors, more efficient operations for building owners and property managers and more convenient interaction for service providers. We designed and developed the Latch Platform, a cloud-based SaaS product, to address the access requirements of modern multifamily buildings.

 Key Factors Affecting Our Performance
 We believe that our future success is dependent on many factors, including those further discussed below. While these areas represent opportunities for Latch, they also represent challenges and risks that we must successfully address in order to operate and grow our business.
 Evolving our go-to-market strategy. Our performance is dependent on evolving our go-to-market strategy to address the needs of our customers and facilitate efficient internal motions. We must continue to develop a go-to-market strategy that scales and allows higher sales volumes at lower incremental costs. Our ability to generate operating profits and grow our business depends, in part, on the success of our go-to-market strategy.
 Investing in research and development ("R&D") and enhancing our customer experience. Our performance is dependent on the investments we make in research and development, including our ability to attract and retain highly skilled research and development personnel. We believe we must continually develop and introduce innovative new hardware products, software applications and other offerings. If we fail to innovate and enhance our brand and our products, our market position and revenue will likely be adversely affected.
 Category adoption, expansion of our total addressable market and market growth. Our future growth depends in part on the continued adoption of hardware and software products that improve resident experience and the growth of this market.

 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.

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

 2023
 2022
 $ Change

 % Change

 GAAP Measures:

 Software revenue
 $
 17,775
 $
 13,024
 $
 4,751
 36.5
 %

 $
 $
 $
 2,006
 4.7
 %

 $
 (107,540)
 $
 (162,336)
 $
 54,796
 (33.8
 %)

 Non-GAAP Measure:

 Adjusted EBITDA
 $
 (68,459)
 $
 (118,573)
 $
 50,114
 (42.3
 %)

 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-K 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 stock-based compensation expense, depreciation and amortization expense, interest income, interest expense, provision for income taxes, restructuring, non-ordinary course legal fees and settlement reserves, loss on extinguishment of debt, gain or loss on change in fair value of derivative instruments, warrant liabilities and trading securities and transaction-related expenses. 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-K, 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.

 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):

 2023
 2022

 $
 (107,540)
 $
 (162,336)

 Depreciation and amortization
 7,201
 5,504

 Interest (income) expense, net(1)

 (2,309)
 2,961

 Provision for income taxes

 Change in fair value of warrant liability
 (230)
 (9,558)

 Change in fair value of trading securities
 —
 3,460

 Restructuring costs(2)

 5,812
 8,573

 Transaction-related costs(3)

 Non-ordinary course legal fees and settlement reserves(4)

 10,405
 2,010

 Stock-based compensation(5)

 18,171
 30,256

 Adjusted EBITDA
 $
 (68,459)
 $
 (118,573)

 (1)As a result of significant discounts provided to our customers on certain long-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 has therefore broken out the interest component and recorded it as a component of interest expense, net on the Consolidated Statements of Operations and Comprehensive Loss. Interest (income) expense, net includes interest expense associated with the significant financing component of $4.6 million and $5.1 million for the years ended December 31, 2023 and 2022, respectively.
 (2)Reflects restructuring costs primarily associated with the July 2023 RIF for the year ended December 31, 2023 and resulting from the 2022 RIFs for the year ended December 31, 2022.
 (3)Transaction costs related to the Business Combination.
 (4)Non-ordinary course legal fees and settlement reserves incurred in connection with non-ordinary course litigation and disputes. For the year ended December 31, 2023, the amount includes (i) the Company's $14.875 million share of the settlement amount related to the Merger Lawsuits, as defined and described in Note 12. Commitments and Contingencies, in Part II, Item 8. "Financial Statements," offset by (ii) the $10.0 million contribution insurers provided to such settlement. While the Company is involved in various litigation and legal disputes in the ordinary course of its business, the Company believes the non-ordinary course legal fees and settlement reserves included in our calculation of Adjusted EBITDA do not represent normal and recurring operating expenses. See Note 12. Commitments and Contingencies, in Part II, Item 8. "Financial Statements." These costs are included within general and administrative within the Consolidated Statements of Operations and Comprehensive Loss.
 (5)See Note 15. Stock-Based Compensation, in Part II, Item 8. "Financial Statements."

 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 apartment 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. The Company recognizes hardware revenue when there is evidence a contract exists and control has been transferred to the customer. The Company provides warranties that its 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. The Company determines in its sole discretion whether to replace, repair or refund warrantable devices.
 From time-to-time, industry-wide supply chain disruptions have created shortages of certain construction materials and other products. Additionally, our customers have also experienced trade labor availability constraints and delays. These factors have caused our customers to experience construction delays, which have delayed and may continue to delay the timing of the installation of our products and our recognition of hardware and software revenue.
 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. The SaaS provided by the Company are considered stand-ready performance obligations where customers benefit from the services evenly throughout the service period. Revenue is generally recognized ratably over the subscription period beginning when or as control of the promised services is transferred to the customer.
 Installation Services Revenue. We generate revenue by facilitating hardware installation and activation services to select customers. This revenue is recognized over time on a percentage of completion basis.
 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 installation services revenue consists primarily of third-party installation labor costs, parts and materials and personnel-related expenses associated with deployment of our hardware.
 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.
 R&D Expenses. R&D 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, R&D 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.
 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. We expect our general and administrative expenses to increase at least through 2024, due to professional services costs related to the Investigation, the SEC Investigation, the Restatement and remediation activities.
 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 Income (Expense), Net
 Other income (expense), net consists of interest expense associated with the significant financing component of our longer-term software contracts, interest expense associated with our previous 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 income (expense), net is summarized as follows:

 2023
 2022

 Interest income

 $
 8,099
 $
 4,481

 Interest expense

 (5,790)
 (7,442)

 Interest income (expense), net
 $
 2,309
 $
 (2,961)

 Income Taxes
 The provision for income taxes consists primarily of income taxes related to state and 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.

 Results of Operations
 The tables and period-to-period comparisons of operating results below summarize our Consolidated Statements of Operations and Comprehensive Loss data and are not necessarily indicative of results for future periods.
 Comparison of years ended December 31, 2023 and December 31, 2022

 2023
 2022
 $ Change
 % Change

 Revenue

 $
 19,739
 $
 24,532
 $
 (4,793)
 (19.5)
 %

 17,775
 13,024
 4,751
 36.5
 %

 7,447
 5,399
 2,048
 37.9
 %

 2,006
 4.7
 %

 Cost of revenue(1)

 24,074
 39,533
 (15,459)
 (39.1)
 %

 2,023
 1,561
 29.6
 %

 6,539
 5,785
 13.0
 %

 Total cost of revenue
 32,636
 46,879
 (14,243)
 (30.4)
 %

 Operating expenses

 Research and development
 33,787
 54,933
 (21,146)
 (38.5)
 %

 Sales and marketing
 15,394
 45,589
 (30,195)
 (66.2)
 %

 General and administrative
 66,211
 55,292
 10,919
 19.7
 %

 Depreciation and amortization
 7,201
 5,504
 1,697
 30.8
 %

 Total operating expenses
 122,593
 161,318
 (38,725)
 (24.0)
 %

 Loss from operations
 (110,268)
 (165,242)
 54,974
 (33.3)
 %

 Change in fair value of warrant liability
 9,558
 (9,328)
 (97.6)
 %

 Change in fair value of trading securities
 —
 (3,460)
 3,460
 (100.0)
 %

 Interest income (expense), net
 2,309
 (2,961)
 5,270
 (178.0)
 %

 (142)
 (254.2)
 %

 Total other income (expense), net

 2,758
 2,995
 (237)
 (7.9)
 %

 Loss before income taxes
 (107,510)
 (162,247)
 54,737
 (33.7)
 %

 Provision for income taxes
 (59)
 (66.3)
 %

 (107,540)
 (162,336)
 54,796
 (33.8)
 %

 Other comprehensive loss

 Unrealized loss on available-for-sale securities
 1,515
 (787)
 2,302
 (292.5)
 %

 Foreign currency translation adjustment
 (7)
 (10)
 (333.3)
 %

 Comprehensive loss
 $
 (106,032)
 $
 (163,120)
 $
 57,088
 (35.0)
 %

 Net loss per common share:

 Basic and diluted net loss per common share

 $
 (0.68)
 $
 (1.13)
 $
 0.45
 (39.8)
 %

 Weighted average shares outstanding:

 Basic and diluted
 159,146,081
 143,615,820

 (1)Exclusive of depreciation and amortization shown in operating expenses below.
 N.M.: Not meaningful

 Revenue
 Revenue increased by $2.0 million for the year ended December 31, 2023 compared to the year ended December 31, 2022, driven by increases of $4.8 million in software revenue and $2.0 million in installation services revenue, partially offset by a $4.8 million decrease in hardware revenue. The decrease in hardware revenue was primarily driven by lower units delivered, including higher units returned, which negatively impacted net delivered units, partially offset by higher average selling prices. Increased software revenue reflects the continued growth in subscriptions as a result of the continued increases in cumulative delivered hardware units. Installation services revenue growth reflects continued expansion of the direct deployment program.
 Cost of Revenue
 Cost of revenue decreased by $14.2 million for the year ended December 31, 2023 compared to the year ended December 31, 2022. The decrease was primarily a result of a $15.5 million decrease in hardware sales related costs, partially offset by a $0.8 million increase in cost of installation services revenue and a $0.5 million increase in software related expenses, which reflects the increased server costs associated with an expansion in licensed buildings. The decrease in hardware sales related costs was driven by (i) $9.5 million of fewer units delivered, net of units returned, (ii) an $8.8 million decrease in inventory purchase commitments liability, (iii) a $2.1 million decrease due to a reduction in the size of the supply-chain team and (iv) a $0.3 million smaller adjustment in the cost of inventory to net realizable value. The decrease was offset by a $5.7 million increase of expense for excess and obsolete reserves.
 Research and Development Expenses
 Research and development expenses decreased by $21.1 million for the year ended December 31, 2023 compared to the year ended December 31, 2022. The decrease was primarily due to: (i) $18.8 million decrease in personnel-related expenses, comprised of $11.9 million of decreased compensation expense and $6.9 million of decreased stock-based compensation expense due to the impact of the 2022 RIFs and the July 2023 RIF; (ii) $0.9 million decrease in professional fees related to outsourced brand and website refresh initiatives; (iii) $0.4 million decrease in travel expenses and (iv) $1.1 million decrease in other research and development expenses. These decreases were partially offset by a $0.6 million increase in restructuring costs.
 Sales and Marketing Expenses
 Sales and marketing expenses decreased by $30.2 million for the year ended December 31, 2023 compared to the year ended December 31, 2022. The decrease was primarily due to: (i) $19.3 million decrease in personnel-related expenses, comprised of $15.1 million of decreased compensation expense and $4.2 million of decreased stock-based compensation expense due to the impact of the 2022 RIFs and the July 2023 RIF; (ii) $3.6 million decrease in paid marketing expense; (iii) $3.5 million decrease in restructuring costs due to the magnitude of the 2022 RIFs as compared to the July 2023 RIF; (iv) $0.7 million decrease in professional and consulting fees; (v) $1.0 million decrease in software license expense due to decreased headcount and (vi) $1.1 million decrease in travel expenses.
 General and Administrative Expenses
 General and administrative expenses increased by $10.9 million for the year ended December 31, 2023 compared to the year ended December 31, 2022. The increase was primarily due to (i) a $7.3 million increase in legal fees, including a $4.9 million increase in settlement reserves; (ii) an increase of $5.8 million in professional fees related to the Investigation and Restatement; (iii) $3.8 million in higher professional fees related to outsourced management; and (iv) an increase of $2.7 million in audit fees. These increases were partially offset by a (i) $2.2 million decrease in compensation expense; (ii) $0.4 million decrease in stock-based compensation expense, comprised of a $7.2 million decrease related to the 2022 RIFs and the July 2023 RIF, mostly offset by a $6.8 million increase related to stock-based compensation expense in connection with the HDW Acquisition; (iii) $2.2 million decrease in insurance expenses; (iv) $2.1 million decrease in bad debt expense related to software; (v) $0.4 million decrease in recruiting expense as a result of certain key hires in 2022; (vi) $1.3 million decrease in IT and software licenses expenses and (vii) $0.2 million decrease in impairment of long-lived assets.
 Depreciation and Amortization Expenses
 Depreciation and amortization expenses increased by $1.7 million for the year ended December 31, 2023 compared to the year ended December 31, 2022. The increase was primarily due to the increased amortization of capitalized internally-developed software.

 Total Other Income (Expense), Net
 Total other income (expense), net decreased by $0.2 million for the year ended December 31, 2023 compared to the year ended December 31, 2022. The decrease was primarily due to a smaller decrease in the price of our common stock during the year ended December 31, 2023 compared to the year ended December 31, 2022, which resulted in a $9.3 million unfavorable change in the fair value of the private placement warrants liability. The decrease was partially offset by (i) a $5.3 million increase in interest income related to higher interest rates; (ii) a $3.5 million favorable variance in the change in fair value of trading securities driven by the Company ceasing to own any trading securities as of December 31, 2022 and (iii) a $0.3 million favorable change in other miscellaneous income and expense.

 Liquidity and Capital Resources
 We have incurred losses since our inception. Prior to the Closing of the Business Combination, our operations were financed primarily through net proceeds from the issuance of our redeemable convertible preferred stock and Convertible Notes, as well as borrowings under our term loan. We received approximately $450.0 million in cash proceeds, net of fees and expenses funded in connection with the Closing, which included approximately $192.6 million from the sale of approximately 19.3 million newly-issued shares of common stock in connection with the Business Combination. See Note 1. Description of Business, in Part II, Item 8. "Financial Statements."
 As of December 31, 2023 and 2024, the Company's unrestricted cash and cash equivalents and current and non-current available-for-sale securities were approximately $179.5 million and $75.5 million, respectively. The Company's 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. The Company's investment policy generally requires securities to be investment grade and limits the amount of credit exposure to any one issuer.
 Prior to December 31, 2023, the Company (i) received $19.3 million of proceeds from the sale of a maturing available-for-sale security and (ii) reinvested the proceeds by purchasing an equal amount of new securities prior to such date. The Company uses trade-date accounting and, as such, the new securities position of $19.3 million is included in the balance of available-for-sale securities of $84.9 million on the Company's Consolidated Balance Sheets as of December 31, 2023, and a liability of $19.3 million presented as investment purchases payable is included in accrued expenses on the Company's Consolidated Balance Sheets as of December 31, 2023. The funds were deducted from the Company's account in early January 2024. Accordingly, the sum of the Company's cash and cash equivalents as of December 31, 2023 is $19.3 million higher than it would have been had the funds been deducted from the Company's account prior to year end. See Note 2. Summary of Significant Accounting Policies - Cash and Cash Equivalents, and Note 9. Accrued Expenses, in Part II, Item 8. "Financial Statements."
 Historically, our short-term liquidity needs have primarily included working capital for salaries, including sales and marketing and research and development, as well as component inventory purchases from our contract manufacturers. To better align staffing and expense levels with sales volumes and the macroeconomic environment and create operating efficiencies, we incurred $8.6 million in restructuring costs during the year ended December 31, 2022 resulting from the 2022 RIFs (excluding the impact of stock-based compensation). In 2023, we conducted the July 2023 RIF in order to further streamline our business operations, reduce costs and complexities in the business and create additional operating efficiencies. In connection with the July 2023 RIF, we incurred $5.8 million in restructuring costs (excluding the impact of stock-based compensation).
 Beginning in the second quarter of 2022 and continuing through 2025, we have incurred, and may continue to incur, significant professional fees, primarily consisting of legal, forensic accounting, management consulting and related advisory services as a result of the Investigation and the SEC Investigation, as well as accounting related consulting services, independent registered accounting firm fees and advisory services related to the Restatement and Financial Statement Review. Additionally, we have incurred significant costs in connection with various pending litigation. See Note 12. Commitments and Contingencies, in Part II, Item 8. "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.
 In connection with the HDW Acquisition, in July 2023 the Company issued to HDW's stockholders as merger consideration $22.0 million aggregate principal amount of unsecured Promissory Notes. The Promissory Notes accrued paid-in-kind interest at a rate of 10% per annum and were scheduled to mature on July 3, 2025, unless earlier accelerated in connection

 with an event of default (including certain events of delisting from Nasdaq) or change of control of the Company. On April 26, 2024, the Company repaid the Promissory Notes in full without penalty. The Company paid an aggregate of $23.9 million in principal and accrued interest to the holders of the Promissory Notes.
 We contract with third parties to manufacture our products. During the normal course of business, we and our contract manufacturers procure components based upon a demand plan. During the year ended December 31, 2022, we materially reduced our original demand plan and started engaging in discussions with our contract manufacturers regarding our obligation to purchase the inventory based on our original demand plan. In 2022, we purchased and received excess inventory for certain products based on our original demand plan. Additionally, as a result of these discussions, we agreed to prepay certain contract manufacturers approximately $12.3 million for material and component obligations. As of December 31, 2023, we had prepaid approximately $11.7 million of such obligations, resulting in a net purchase obligation of $0.6 million. We may not be able to utilize such prepayments and inventory in the foreseeable future.
 Near-Term Liquidity Position
 As of the date of this Form 10-K (the "Filing Date"), the presence of the following risks and uncertainties associated with the Company's liquidity position may adversely affect its ability to sustain its operations:
 • 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 against the Company;
 • Potential expenditures associated with defending, negotiating or resolving the service provider demand described in Note 12. Commitments and Contingencies, in Part II, Item 8. "Financial Statements;"
 • Unexpected expenditures related to the Stockholder Lawsuits in the event the agreed-to settlements are not approved by the respective courts, or otherwise;
 • The incurrence of significant expenses related to other legal or regulatory proceedings, whether actual or threatened;
 • The failure of the Company to achieve its revenue expectations, including as a result of:
 Pricing compression for the Company's SaaS products;
 Market adoption of the DOOR application;
 The success of the HelloTech business;
 The impact of elevated interest rates on the Company's potential customers, who may eliminate or delay expenditures for the products or services the Company offers; and
 Market perception of the Company and its offerings;
 • Costs of revenue and operating expenses exceeding the Company's expectations;
 • The Company's failure to maintain the liquidity ratio required by the Loan Agreement with Customers Bank;
 • The Company's inability to fully leverage its prepaid inventory; or
 • The catastrophic loss of inventory due to theft, natural disaster or otherwise.
 Due to the risks and uncertainties described above, the Company continues to monitor its liquidity position. The Company recognizes the challenge of maintaining sufficient liquidity to sustain its operations and remain in compliance with the liquidity ratio required by the Loan Agreement. However, notwithstanding its liquidity position as of the Filing Date, and while it is difficult to predict its future liquidity requirements with certainty, the Company currently expects it will be able to generate sufficient liquidity to fund its operations over the 12 months beyond the Filing Date.
 In response to the risks and uncertainties described above, the Company may attempt to secure additional outside capital. However, the Company has not sought any commitments of additional outside capital and can provide no assurance it will be able to secure any outside capital in the future at all, or on terms that are acceptable to the Company. Additionally, the Company's securities are currently traded on the OTC Expert Market. Because of applicable restrictions, there is a minimal public market for the Company's securities, and the Company's ability to raise additional capital may be impaired because of the less liquid nature of the over-the-counter markets. The Company also plans to continue to closely monitor its cash flow forecast and, if necessary, may implement certain incremental cost savings measures to preserve its liquidity beyond the 2022 RIFs and the July 2023 RIF. See Note 20. Restructuring, in Part II, Item 8. "Financial Statements."
 As of December 31, 2023 and 2024, the Company's unrestricted cash and cash equivalents and current and non-current available-for-sale securities were approximately $179.5 million and $75.5 million, respectively. Current financial information regarding the Company, including its results of operations and statement of cash flows, will not be available until we file our 2024 financial statements.

 Other significant factors that affect our overall management of liquidity include certain actions controlled by management such as capital expenditures and acquisitions. See Note 10. Leases, Note 11. Debt, and Note 12. Commitments and Contingencies, in Part II, Item 8. "Financial Statements."

 Indebtedness
 Revolving Credit Facility
 On July 1, 2021, the Company executed a new revolving credit facility replacing the matured facility described in Note 11. Debt, in Part II, Item 8. "Financial Statements." The revolving credit facility, which was subsequently amended in May 2022, had a credit limit of $6.0 million with no stated maturity date. Installment plan agreements were executed for each financing request, which included the interest rate. The revolving credit facility had no financial or other covenants. As of December 31, 2023, no amount was outstanding under the revolving credit facility, which the Company cancelled in January 2023.
 Promissory Notes
 As discussed above, in July 2023 in connection with the HDW Acquisition, the Company issued to HDW's stockholders as merger consideration $22.0 million aggregate principal amount of Promissory Notes. The Promissory Notes accrued paid-in-kind interest at a rate of 10% per annum and were scheduled to mature on July 3, 2025, unless earlier accelerated in connection with an event of default (including certain events of delisting from Nasdaq) or change of control of the Company. As of December 31, 2023, the Company concluded that it was virtually certain the Promissory Notes would become payable within the upcoming 12 months due to the Company's then-anticipated delisting from Nasdaq, which was an event of default with respect to the Promissory Notes. Consequently, the Company reclassified the debt obligation as current as of December 31, 2023, despite the event of default not yet occurring. On April 26, 2024, the Company repaid the Promissory Notes in full without penalty. The Company paid an aggregate of $23.9 million in principal and accrued interest to the holders of the Promissory Notes.
 Term Loan with Customers Bank
 Following the closing of the HelloTech Merger, on July 15, 2024, Latch Systems and HelloTech, as the Borrowers, entered into the Loan Agreement with Customers Bank.
 Pursuant to the Loan Agreement, Customers Bank issued the Borrowers the New Loan, a term loan in the principal amount of $6.0 million. The Loan Agreement did not result in the Borrowers receiving any additional loan proceeds. Interest is payable on the New 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 Borrowers were required to pay interest on the New Loan monthly until January 15, 2025. Thereafter, the Borrowers are required to pay equal monthly installments of principal plus accrued interest until the Maturity Date. There is no penalty for prepayment of the New Loan.
 Pursuant to the Loan Agreement, the Borrowers have granted Customers Bank security interests in substantially all of the Borrowers' assets, other than intellectual property. HelloTech is required to maintain an operating account with Customers Bank with a sufficient balance to support monthly payments. Additionally, the Borrowers are collectively required to maintain a liquidity ratio of at least 4.00, tested monthly, which is calculated as the quotient of unrestricted cash and cash equivalents of the Company and its subsidiaries (subject to certain limitations with respect to cash of foreign subsidiaries), divided by all outstanding indebtedness owed to Customers Bank. As of December 31, 2024, the Company was in compliance with the liquidity ratio covenant.
 The Loan Agreement contains various covenants that, among other things, limit the Borrowers' ability to:
 • engage in certain asset dispositions;
 • permit a change in control;
 • merge or consolidate;
 • incur indebtedness or grant liens on its 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 New 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 involving the Borrowers; or
 • the rendering of judgments against a Borrower that remain undischarged, unvacated, unbonded, unsatisfied or unstayed for a certain period.

 Cash Flows
 The following table sets forth a summary of our cash flows for the years ended December 31, 2023, 2022 and 2021 (in thousands):

 2023
 2022

 Net cash used in operating activities
 $
 (65,586)
 $
 (135,239)

 Net cash provided by investing activities
 50,479
 126,356

 Net cash used in financing activities
 —
 (6,039)

 Effect of exchange rates on cash
 (46)
 (32)

 Net change in cash and cash equivalents
 $
 (15,153)
 $
 (14,954)

 Cash flows for the year ended December 31, 2023 compared to December 31, 2022
 Operating Activities. Net cash used in operating activities in 2023 decreased by $69.7 million compared to 2022. This resulted primarily from a decrease in net loss of $54.8 million, a decrease in inventories, net of $36.3 million, a net increase in accrued expenses and accounts payable of $25.4 million, a reduction in the change in the fair value of warrant liability and trading securities of $5.9 million and an increase in depreciation and amortization of $1.7 million. These sources of cash were partially offset by an increase in prepaid expense and other current assets of $19.7 million, a decrease in deferred revenue of $13.8 million, a decrease in stock-based compensation expense of $12.1 million, a decrease in non-cash interest expense of $4.8 million, and a decrease in the provision for doubtful accounts of $2.2 million.
 Investing Activities. Net cash provided by investing activities in 2023 decreased by $75.9 million compared to 2022, primarily due to an increase in purchases of available-for-sale securities of $47.0 million and a decrease in the proceeds from sales and maturities of available-for-sale securities of $42.4 million. These uses of cash were partially offset by $8.1 million cash received, net of cash paid, in connection with the HDW Acquisition, $3.3 million in lower capitalization of internally developed software costs and a decrease of $1.9 million in purchases of property and equipment.
 Financing Activities. The Company did not conduct any financing activities in the year ended December 31, 2023. In the year ended December 31, 2022, net cash used in financing activities primarily consisted of (i) the net repayment of $3.4 million of our revolving credit facility and (ii) payments of $3.4 million for tax withholding on net settlement of equity awards. These uses of cash were partially offset by $0.7 million in proceeds from the issuance of common stock.

 Off-Balance Sheet Arrangements
 We had no off-balance sheet arrangements as of December 31, 2023 or 2022 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
 Our consolidated financial statements, which include estimates, have been prepared in accordance with GAAP. Our critical accounting estimates are those estimates made in accordance with GAAP that involve a significant level of estimation uncertainty and have had or are reasonably likely to have a material impact on our consolidated financial condition or results of operations. In making these determinations, management makes subjective and complex judgments that frequently require

 estimates about matters that are inherently uncertain. It is reasonably likely that changes in these estimates could occur from period to period and result in a material impact on our consolidated financial statements. A summary of each of these critical accounting estimates follows.
 Stock-Based Compensation
 We record stock-based compensation expense related to stock options based upon the award's grant date fair value. We estimate the fair value of stock options using the Black-Scholes-Merton option-pricing model, which requires us to estimate the risk-free interest rate, expected term, expected stock price volatility and dividend yield. The risk-free interest rate assumption is based upon observed interest rates for constant maturity U.S. Treasury securities consistent with the expected term of our stock options.
 The expected term of stock options represents the period of time the stock options are expected to be outstanding based on the "simplified method." Under the "simplified method," the expected term of an option is presumed to be the mid-point between the vesting date and the end of the contractual term. We use the "simplified method" due to the lack of sufficient historical exercise data to provide a reasonable basis upon which to otherwise estimate the expected term of the stock options.
 Since we have minimal trading history of our common stock, the expected stock price volatility was derived from the average historical stock volatility of several unrelated public companies within our industry that we consider to be comparable to our business over a period equivalent to the expected term of the awards.
 The assumptions used in calculating the fair values of stock option grants represent management's best estimates, but these estimates involve inherent uncertainties and the application of judgment. If material changes in these assumptions occur, they could have a material impact on our stock-based compensation expense.
 Inventory Valuation
 We regularly monitor inventory quantities on hand and in transit and reserve for excess and obsolete inventories using estimates based on historical and projected sales trends, specific categories of inventory and age of inventory. If actual conditions or product demands are less favorable than our assumptions, additional inventory reserves may be required.
 Net inventories not expected to be sold according to a one year forecasted sales projection are classified as other non-current assets on the Consolidated Balance Sheets. Inventory on hand that exceeds a three year forecasted sales projection is recorded as an excess and obsolete inventory reserve. This reserve is comprised of inventory greater than can be used to meet future needs (excess) or for which the product is outdated or otherwise not expected to be sold (obsolete).
 Both the one year and three year sales forecasts were lower as of December 31, 2023 than at December 31, 2022. The total excess and obsolete inventory reserve increased by $9.1 million as of December 31, 2023, $6.9 million of which was due to these lower forecasts and $2.2 million of which represents inventory the Company had determined had become obsolete during the period.
 We also review our inventory to ensure that its carrying value does not exceed its net realizable value ("NRV"), with NRV based on the estimated selling price of inventory in the ordinary course of business, less estimated costs of completion, disposal and transportation. Each of these estimates requires management to make subjective and complex judgments. When our expectations indicate that the carrying value of inventory exceeds its NRV, we estimate the amount by which carrying value exceeds NRV and record additional cost of revenue for the difference. Should our estimates used in these calculations, such as sales forecasts, estimated selling prices or disposal costs, change, additional write-downs may occur.
 Goodwill and Intangible Asset Impairments
 The HDW Acquisition resulted in our recording of intangible assets, which primarily consist of developed technologies, trade names and goodwill. Key assumptions used in the valuation of these intangible assets include revenue growth rates, expectations of profitability and discount rates. We allocated the fair value of purchase consideration to the assets acquired and liabilities assumed based on their fair values at the acquisition date. The excess of the fair value of consideration transferred over the fair value of the net assets acquired is recorded as goodwill. Goodwill is generally attributable to the value of the synergies between the combined companies and the value of the acquired assembled workforce, neither of which qualifies for recognition as an intangible asset. At December 31, 2023, we recorded $25.3 million of goodwill and $4.8 million of other intangible assets on the Consolidated Balance Sheets.

 We test goodwill and indefinite-lived intangible assets for impairment annually, as of December 31 of each year, or more frequently if indicators arise. The Company operates as a single reporting unit, and, therefore, goodwill is assessed for impairment at this level.
 Management evaluates whether events or circumstances have occurred that may affect the estimated useful life or the recoverability of the remaining balance of goodwill and other identifiable intangible assets. If the events or circumstances indicate that the remaining balance may be impaired, the potential impairment will be measured based upon the difference between the carrying amount of the intangible asset or goodwill and the fair value of such asset.
 Determining the Fair Value
 Per ASC 350, Intangibles – Goodwill and Other, the fair value of a reporting unit refers to the price that would be received to sell the unit as a whole in an orderly transaction between market participants at the measurement date. Quoted market prices in active markets are typically the best evidence of fair value and shall be used as the basis for the measurement, if available.
 We utilize third-party valuation specialists to assist us in the determination of the most appropriate evaluation techniques and perform the calculation of fair value of the reporting unit in accordance with ASC 820, Fair Value Measurement ("ASC 820"). The valuation methodologies applied consider both entity-specific and observable market information under the fair value hierarchy in ASC 820, and changes in, or additions to, available information may affect the assumptions we use in estimating fair value. Our analysis was based upon both the income approach and the market approach, equally weighted. These approaches required significant assumptions, including: expected future revenue growth rates, profit margins, discount rate, terminal growth rate, the selection of guideline public companies and selected guideline public company revenue multiples. We performed the analysis retrospectively as of December 31, 2023, leveraging inputs that were both known and knowable as of such date.
 In conducting our annual impairment test of goodwill as of December 31, 2023, we elected to perform a quantitative assessment without first considering qualitative factors. After adjusting for the Company's cash and debt on the Consolidated Balance Sheets as of December 31, 2023, the Company determined its estimated fair value to be $204.0 million, which exceeded the carrying value of $169.1 million by $34.9 million, or 20.6%. Because the estimated fair value exceeded the carrying value, no impairment was recorded as of December 31, 2023.
 We performed a reconciliation of our market capitalization to our implied total equity value and determined that the Company's market capitalization as of December 31, 2023 was $118.1 million, which is approximately 73% less than the estimated fair value of $204.0 million. The company attributes this significant difference to various factors, including low trading volume, stock price volatility, net cash position as of the measurement date and the lack of information available to the public due to the Company's non-current filing status.
 Sensitivity Analysis
 The fair value analysis requires significant assumptions, as noted above. We believe the assumptions and estimates made are reasonable and appropriate. Different assumptions and estimates, however, could materially impact our reported financial results. For instance, different assumptions regarding the Company's anticipated performance could result in an impairment charge, which would decrease operating income and result in lower asset values on our Consolidated Balance Sheet. We performed a sensitivity analysis on the impairment test described above by applying two separate adjustments while holding all other assumptions constant. First, we reduced the selected terminal growth rate in the discounted cash flow analysis from 3% to 2%. Second, we reduced the selected guideline public company multiples from 0.40x next fiscal year ("NFY") revenue and 0.30x NFY+1 revenue to 0.30x and 0.20x, respectively. The sensitivity analysis, while not predictive in nature, indicated a fair value of $192.5 million, exceeding the carrying value by $23.4 million, or 14%, confirming no goodwill impairment as of December 31, 2023.
 Potential Future Impairment Risk
 Our impairment analysis was performed retrospectively as of December 31, 2023, leveraging inputs that were both known and knowable as of such date. While we did not identify any impairment of our goodwill as of December 31, 2023, we continue to monitor Company performance, along with the risks related to our business and industry, to evaluate if the carrying value of the Company exceeds its estimated fair value. We expect that some or all of the goodwill on our consolidated balance sheet could be impaired during the year ended December 31, 2024 due to various factors, including lower revenue projections based on current business performance, a reduced cash position resulting from financing our ongoing operations and a decline in the trading price of our common stock during 2024. Because we have not completed the

 accounting, or finalized our financial statements, for the year ended December 31, 2024, including the quarterly periods therein, we have not yet determined the amount of any additional goodwill on our balance sheet as of December 31, 2024 related to any other business combinations, such as the HelloTech Merger, or any related impairment.
 Business Combinations
 We account for business combinations using the acquisition method of accounting, in which the purchase price is allocated to the assets acquired and liabilities assumed and recorded at their estimated fair values at the date of acquisition. Management is required to make significant assumptions and estimates in determining the fair value of the assets acquired, particularly the intangible assets. Purchased intangible assets are primarily comprised of acquired trade names and customer relationships that are recorded at fair value at the date of acquisition. We utilize third-party valuation specialists to assist us in the determination of the fair value of the intangibles. The fair value of acquired trade names is determined using the relief-from-royalty method, which relies on the use of estimates and assumptions about projected revenue growth rates, royalty rates and discount rates. The fair value of customer relationships is determined using the multi-period excess earnings method, which relies on the use of estimates and assumptions about projected revenue growth rates, customer attrition rates, profit margins and discount rates. Intangible assets are recorded at their estimated fair value at the date of acquisition and are amortized over their estimated useful lives using the straight-line method. Determining the useful lives of intangible assets also requires management to make various assumptions and is inherently uncertain. There is a measurement period of up to one year in which to finalize the fair value determinations, and preliminary fair value estimates may be revised if new information is obtained during this period.
 Litigation
 Latch is subject to various legal proceedings, investigations and claims. Latch routinely assesses the likelihood of any adverse judgments or outcomes of these matters, as well as ranges of probable losses. A determination of the amount of the accruals required, if any, for these contingencies is made after analysis of each known issue. The analysis, which involves the advice of counsel, includes consideration of various factors such as the amount and timing of any potential exposure, interpretations of applicable laws, regulations or contractual terms, the likelihood or status of proceedings, the merits of the arguments, negotiations or discussions with the applicable counterparties and results of similar fact patterns experienced by the Company or third parties. Accruals are subject to change based upon changes in the above factors. The accrued expenses on the Consolidated Balance Sheets as of December 31, 2023 associated with the Stockholder Lawsuits are based upon settlement amounts agreed to between the applicable parties that remain subject to court approval. However, in the event court approval does not occur, the expense amounts are subject to change.

 Recent Accounting Pronouncements
 See Note 2. Summary of Significant Accounting Policies, in Part II, Item 8. "Financial Statements" for information about recent accounting pronouncements.

 Item 7A. 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 8. Financial Statements and Supplementary Data.
 INDEX TO FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

 Page

 Report of Independent Registered Public Accounting Firm (PCAOB ID No. 34)

 Consolidated Balance Sheets as of December 31, 2023 and 2022

 Consolidated Statements of Operations and Comprehensive Loss for the years ended December 31, 2023, 2022 and 2021

 Consolidated Statements of Redeemable Convertible Preferred Stock and Stockholders' Equity for the years ended December 31, 2023, 2022 and 2021

 Consolidated Statements of Cash Flows for the years ended December 31, 2023, 2022 and 2021

 REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
 To the Stockholders and the Board of Directors of Latch, Inc.
 Opinion on the Financial Statements
 We have audited the accompanying consolidated balance sheets of Latch, Inc. and subsidiaries (the "Company") as of December 31, 2023 and 2022, the related consolidated statements of operations and comprehensive loss, redeemable convertible preferred stock and stockholders' equity (deficit), and cash flows, for each of the three years in the period ended December 31, 2023, and the related notes (collectively referred to as the "financial statements"). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2023 and 2022, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2023, in conformity with accounting principles generally accepted in the United States of America.
 Basis for Opinion
 These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on the Company's financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
 We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits, we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company's internal control over financial reporting. Accordingly, we express no such opinion.
 Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.
 Critical Audit Matters
 The critical audit matters communicated below are matters arising from the current-period audit of the financial statements that were communicated or required to be communicated to the audit committee and that (1) relate to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matters below, providing separate opinions on the critical audit matters or on the accounts or disclosures to which they relate.
 Revenue recognized for hardware sold through channel partners, and the related accounts receivable, hardware inventory and cost of revenue, allowance for doubtful accounts and the reserves for returns — Refer to Note 2 and Note 5 to the financial statements
 Critical Audit Matter Description
 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. Hardware shipped to channel partners is considered channel inventory until there is evidence control has passed to the customer. The Company recognizes hardware revenue when there is evidence a contract exists and control has been transferred to the customer.
 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.

 The Company recognizes an accounts receivable allowance based on estimates of expected credit losses. Accounts receivable are stated net of allowance for doubtful accounts and reserve for returns.
 We identified revenue recognition for hardware sold through channel partners, and the related accounts receivable, hardware inventory, and cost of revenue, as a critical audit matter because of the judgments necessary for management to determine when a contract exists and when control has transferred to the customer. We identified the reserve for returns and the allowance for doubtful accounts related to hardware sold to channel partners as a critical audit matter because of the judgments necessary to determine estimated product returns and estimate of credit loss.
 The audit procedures to evaluate that the Company recognized revenue when a contract exists and control has transferred to the customer, and to evaluate the Company's expectations and historical experience for returns and estimate of credit loss involved a high degree of auditor judgment and an increased extent of audit effort.
 Our audit procedures related to whether a contract existed, control had transferred to the customer, and to evaluate the Company's expectations and historical experience for returns and credit loss included the following, among others:
 • With the assistance of professionals in our firm having expertise in revenue accounting, we evaluated the Company's conclusions regarding when revenue for hardware sold through the Company's channel partners is to be recognized under accounting principles generally accepted in the United States of America.
 • We selected a sample of hardware revenue transactions sold through channel partners and wholesalers. For each selection, we obtained evidence that a contract existed and control had transferred to the customer, which included purchase orders, invoices, bills of lading, packing slips and cash receipts. We also reconciled the discount recorded by management to the discount on the invoice.
 • We selected a sample of hardware revenue transactions subsequent to year-end and obtained evidence that a contract existed, control had transferred to the customer and revenue was appropriately recognized subsequent to year-end, which included purchase orders, invoices, bills of lading, packing slips and cash receipts.
 • We selected a sample of hardware contracts that did not meet the revenue recognition criteria and obtained evidence revenues were not recorded.
 • We selected a sample of cash receipts subsequent to year-end and obtained evidence that revenue was recognized in the appropriate period.
 • To evaluate the Company's expectations and historical experience for returns and estimate of credit loss, we obtained the Company's return reserve and credit loss analyses and performed procedures to determine the mathematical accuracy and reasonableness of the assumptions. We performed procedures to test the completeness and accuracy of the data used in the analyses.
 Internally-developed software, net, and the related depreciation and amortization — Refer to Notes 2 and 8 to the financial statements
 Critical Audit Matter Description
 The Company capitalizes certain development costs incurred in connection with its internally-developed software, including specific software upgrades and enhancements when it is probable the expenditures will result in additional features and functionality. These capitalized costs primarily pertain to software that is hosted by the Company and the firmware in the Company's devices. Costs incurred in the preliminary stages of development are expensed as incurred.
 Once a project has reached the development stage, internal and external costs, if direct and incremental, are capitalized until the application is substantially complete and ready for its intended use. Capitalization ceases upon completion of all substantial testing, at which time amortization of the capitalized software begins. Costs are also expensed when the Company determines that a planned feature is discontinued.
 We identified internally-developed software, net, and the related depreciation and amortization as a critical audit matter because of the judgments necessary for management (i) to begin amortizing software-in-development upon completion of all substantial testing and (ii) to expense software-in-development when the Company determines the planned feature is discontinued. The audit procedures to evaluate whether management began amortizing software-in-development upon completion of all substantial testing and expensed software-in-development when planned features were discontinued involved an increased extent of audit effort.

 Our audit procedures to evaluate whether management began amortizing software-in-development upon completion of all substantial testing and expensed software-in-development when planned features were discontinued included the following, among others:
 • We selected a sample of capitalized software being amortized and obtained evidence the costs were capitalized appropriately and amortization began upon completion of all substantial testing performed by the Company to reach technical feasibility.
 • We selected a sample of software-in-development and obtained audit evidence the costs were capitalized appropriately, and the software was not substantially complete and ready for its intended use and related to a planned feature that was not discontinued.
 • We selected a sample of software-in-development costs that were expensed and obtained evidence that the costs were expensed when the planned feature was discontinued. This included obtaining evidence of the rationale for discontinuing the project and corroborating the discontinuation with project managers.
 Software revenue and deferred revenue — Refer to Note 2 to the financial statements
 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. 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.
 The Company recognizes software revenue ratably over the subscription period beginning when or as control of the promised services is transferred to the customer. The Company records contract liabilities as deferred revenue when it bills customers in advance of the performance obligations being satisfied.
 We identified software revenue and deferred revenue as a critical audit matter because the audit procedures to determine when control of the promised services was transferred to its customers involved an increased extent of audit effort.
 Our audit procedures related to evaluating when control of the promised services was transferred to the customer included selecting a sample of software revenue transactions and performing the following procedures, among others:
 • We obtained the software contract and determined that it was executed.
 • We obtained evidence from the Company's operating software indicating the date that the property was added and the date the property administrator was added.
 • We compared the date when control of the promised services was transferred to the date the Company began amortizing deferred software revenue and recognizing software revenue.
 Acquisition of Honest Day's Work — Refer to Notes 1, 2, 15 and 19 to the financial statements
 On July 3, 2023 the Company completed its acquisition of Honest Day's Work, Inc. ("HDW"). The total consideration transferred included cash, issuance of the Company's common stock, and unsecured promissory notes. The HDW acquisition qualified as a business combination and the Company was determined to be the acquirer. Accordingly, total consideration was first allocated to the fair value of assets acquired as of the date of acquisition, with the excess being recorded as goodwill.
 We identified the acquisition as a critical audit matter due to the significant judgment required in (a) accounting for the transaction, including the issuance of common stock, and (b) evaluating the forecasted revenues and discount rate used in estimating fair value of the developed technology intangible asset and resulting goodwill. This required a high degree of auditor judgment and increased extent of audit effort, including the involvement of professionals in our firm having expertise in accounting for business combinations and share based compensation and fair value specialists.
 Our audit procedures related to accounting for the acquisition and the forecasted revenues and discount rate used in estimating fair value of the developed technology intangible asset and resulting goodwill included the following, among others:

 • With the assistance of professionals in our firm having expertise in accounting for business combinations and share based compensation, we evaluated the appropriateness of the Company's accounting for the business combination and share based compensation.
 • We evaluated the reasonableness of forecasted revenues by comparing assumptions to external market sources.
 • We assessed the knowledge, skills, abilities, and objectivity of management's valuation specialist.
 • With the assistance of our fair value specialists, we evaluated the reasonableness of the discount rate by:
 Testing the source information underlying the discount rate and testing the mathematical accuracy of the calculations.
 Developing a range of independent estimates and comparing those to the discount rate selected by management.
 Goodwill Impairment — Refer to Note 2 to the financial statements
 Goodwill is assessed for impairment annually, or more frequently if indicators arise. It was determined the Company operates as a single reporting unit. The Company's evaluation of goodwill for impairment involves the comparison of the fair value of the reporting unit to its carrying value. The Company uses a combination of the income and market approaches to develop an estimate of the reporting unit fair value. These approaches required significant assumptions, including (i) expected future revenue growth rates, (ii) profit margins, (iii) discount rate, (iv) terminal growth rate, (v) the selected guideline public companies and (vi) selected guideline public company revenue multiples. The fair value of the reporting unit exceeded its carrying value as of the measurement date and, therefore, no impairment was recognized.
 We identified goodwill for the single reporting unit as a critical audit matter because of the significant judgments made by management to estimate the fair value of the reporting unit. This required a high degree of auditor judgment and an increased extent of effort, including the need to involve our fair value specialists, when performing audit procedures to evaluate the reasonableness of management's estimates and assumptions related to (i) expected future revenue growth rates, (ii) profit margins, (iii) the selected discount rate, (iv) the terminal growth rate, (v) the selected guideline public companies, and (vi) the selected guideline public company revenue multiples.
 Our audit procedures for the selection of valuation methodologies and management's estimates and assumptions related to (i) expected future revenue growth rates, (ii) profit margins, (iii) selected discount rate, (iv) terminal growth rate, (v) the selected guideline public companies and (vi) the selected guideline public company revenue multiples to estimate the fair value of the reporting unit included the following, among others:
 • With the assistance of our fair value specialists, we:
 Evaluated the reasonableness of the valuation methodologies, the discount rate and the terminal growth rate, including testing the underlying source information and mathematical accuracy of the calculations and developing a range of independent estimates, and comparing those to assumptions selected by management.
 Evaluated the selection of guideline public companies and guideline public company revenue multiples by developing an independent analysis of the guideline public companies and the guideline public company revenue multiples.
 Evaluated the reconciliation of the fair value of the reporting unit to the market capitalization of the Company.
 • We inquired of senior executives of the Company and inspected internal communications to corroborate strategic plans for growth that were known and knowable near the measurement date.
 • We evaluated the reasonableness of management's expected future revenue growth rates and profit margins by comparing the assumptions to historical results and certain peer companies.
 /s/ Deloitte & Touche LLP
 New York, New York
 We have served as the Company's auditor since 2020.

 Consolidated Balance Sheets
 (in thousands, except share and per share amounts)

 Assets

 Current assets

 Cash and cash equivalents(1)

 $
 94,675
 $
 109,828

 Available-for-sale securities, current
 120,233

 Accounts receivable, net
 6,001
 7,026

 Inventories, current
 16,559
 29,435

 Prepaid expenses and other current assets
 34,757
 12,333

 Total current assets
 236,853
 278,855

 Available-for-sale securities, non-current
 —
 4,836

 Property and equipment, net
 1,465
 2,466

 Internally-developed software, net
 9,757
 13,753

 Inventories, non-current
 10,143
 13,595

 Goodwill
 25,322
 —

 Intangible assets, net
 4,791

 Other non-current assets
 6,101
 3,024

 Total assets
 $
 294,432
 $
 316,662

 Liabilities and Stockholders' Equity

 Current liabilities

 Accounts payable
 $
 3,642
 $
 6,005

 Notes payable
 22,000
 —

 Accrued expenses(1)

 54,966
 25,645

 Deferred revenue, current
 10,837
 10,686

 Other current liabilities
 2,893
 1,926

 Total current liabilities
 94,338
 44,262

 Deferred revenue, non-current
 28,742
 31,239

 Warrant liability
 —

 Other non-current liabilities
 2,215

 Total liabilities
 125,295
 75,907

 Commitments and contingencies (see Note 12)

 Stockholders' Equity

 Common stock, $ 0.0001 par value, 1,000,000,000 shares authorized, and 175,462,145 and 144,609,513 shares issued and outstanding as of December 31, 2023 and 2022, respectively(2)

 Additional paid-in capital
 770,196
 735,785

 Accumulated other comprehensive income (loss)
 ( 1,460)

 Accumulated deficit
 ( 601,126)
 ( 493,586)

 Total stockholders' equity
 169,137
 240,755

 Total liabilities and stockholders' equity
 $
 294,432
 $
 316,662

 (1) Amount presented as of December 31, 2023 includes $ 19.3 million of cash required for a purchase of securities executed during the year ended December 31, 2023 but that was not deducted from the Company's accounts until January 2024. See Note 2. Summary of Significant Accounting Policies - Cash and Cash Equivalents, and Note 9. Accrued Expenses.
 (2) Shares issued and outstanding as of December 31, 2023 and December 31, 2022 exclude 738,000 shares subject to vesting requirements. See Note 1. Description of Business - Business Combination.

 Consolidated Statements of Operations and Comprehensive Loss
 (in thousands, except share and per share amounts)

 2023
 2022
 2021

 Revenue

 $
 19,739
 $
 24,532
 $
 18,262

 17,775
 13,024
 7,402

 7,447
 5,399
 1,949

 27,613

 Cost of revenue(1)

 24,074
 39,533
 28,215

 2,023
 1,561

 6,539
 5,785
 3,685

 Total cost of revenue
 32,636
 46,879
 32,653

 Operating expenses

 Research and development
 33,787
 54,933
 46,194

 Sales and marketing
 15,394
 45,589
 34,363

 General and administrative
 66,211
 55,292
 60,797

 Depreciation and amortization
 7,201
 5,504
 3,093

 Total operating expenses
 122,593
 161,318
 144,447

 Loss from operations
 ( 110,268)
 ( 165,242)
 ( 149,487)

 Change in fair value of derivative liabilities
 —
 —
 ( 12,512)

 Change in fair value of warrant liability
 9,558
 4,085

 Change in fair value of trading securities
 —
 ( 3,460)

 Loss on extinguishment of debt
 —
 —
 ( 1,469)

 Interest income (expense), net
 2,309
 ( 2,961)
 ( 7,761)

 ( 142)

 Total other income (expense), net
 2,758
 2,995
 ( 17,606)

 Loss before income taxes
 ( 107,510)
 ( 162,247)
 ( 167,093)

 Provision for income taxes

 $
 $
 $

 Other comprehensive income (loss)

 Unrealized gain (loss) on available-for-sale securities
 1,515
 ( 787)
 ( 677)

 Foreign currency translation adjustment
 ( 7)
 ( 8)

 Comprehensive loss
 $
 ( 106,032)
 $
 ( 163,120)
 $
 ( 167,831)

 Net loss per common share:

 Basic and diluted net loss per common share
 $
 ( 0.68)
 $
 ( 1.13)
 $
 ( 1.93)

 Weighted average shares outstanding:

 Basic and diluted
 159,146,081
 143,615,820
 86,473,291

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

 Consolidated Statements of Redeemable Convertible Preferred Stock and Stockholders' Equity
 (in thousands)

 Redeemable
Convertible
Preferred Stock
 Common Stock(1)

 Additional
Paid-in
Capital
 Accumulated Other
Comprehensive
Income (Loss)
 Accumulated
Deficit
 Total
Stockholders'
Equity

 Shares
 Amount
 Shares
 Amount

 January 1, 2021
 63,756
 $
 160,605
 8,169
 $
 —
 $
 8,127
 $
 $
 ( 164,066)
 $
 ( 155,930)

 Exercises of common stock options
 —
 —
 6,310
 —
 3,271
 —
 —
 3,271

 Issuance of common stock upon settlement of restricted stock units
 —
 —
 —
 —
 —
 —
 —

 Tax withholdings on settlement of equity awards
 —
 —
 ( 69)
 —
 ( 1,779)
 —
 —
 ( 1,779)

 Conversion of Convertible Notes
 —
 —
 6,925
 —
 69,252
 —
 —
 69,252

 Conversion of Legacy Latch warrants
 —
 —
 —
 2,143
 —
 —
 2,143

 Conversion of redeemable convertible preferred stock to common shares
 ( 63,756)
 ( 160,605)
 63,756
 160,604
 —
 —
 160,605

 Reverse capitalization, net of transaction costs
 —
 —
 56,011
 434,544
 —
 —
 434,558

 Foreign currency translation adjustment
 —
 —
 —
 —
 —
 ( 8)
 —
 ( 8)

 Stock-based compensation
 —
 —
 —
 —
 29,703
 —
 —
 29,703

 Unrealized gain (loss) on available-for-sale securities
 —
 —
 —
 —
 —
 ( 677)
 —
 ( 677)

 —
 —
 —
 —
 —
 —

 December 31, 2021
 —
 —
 141,586
 705,865
 ( 676)
 ( 331,212)
 373,992

 Cumulative effect of adopting ASC 2016-13
 —
 —
 —
 —
 —
 —
 ( 38)
 ( 38)

 Exercises of common stock options
 —
 —
 1,052
 —
 —
 —

 Issuance of common stock upon settlement of restricted stock units
 —
 —
 3,029
 —
 —
 —

 Tax withholdings on settlement of equity awards
 —
 —
 ( 1,057)
 —
 ( 3,393)
 —
 —
 ( 3,393)

 Transaction costs related to reverse capitalization
 —
 —
 —
 —
 ( 25)
 —
 —
 ( 25)

 Foreign currency translation adjustment
 —
 —
 —
 —
 —
 —

 Stock-based compensation
 —
 —
 —
 —
 32,616
 —
 —
 32,616

 Unrealized gain (loss) on available-for-sale securities
 —
 —
 —
 —
 —
 ( 787)
 —
 ( 787)

 —
 —
 —
 —
 —
 —

 —
 —
 144,610
 735,785
 ( 1,460)
 ( 493,586)
 240,755

 Issuance of common stock upon settlement of restricted stock units
 —
 —
 2,501
 —
 —
 —
 —
 —

 Tax withholdings on settlement of equity awards
 —
 —
 ( 659)
 —
 —
 —
 —
 —

 Issuance of common stock related to HDW Acquisition
 —
 —
 29,010
 15,624
 —
 —
 15,627

 Foreign translation adjustment
 —
 —
 —
 —
 —
 ( 7)
 —
 ( 7)

 Stock-based compensation
 —
 —
 —
 —
 18,787
 —
 —
 18,787

 Unrealized gain (loss) on available-for-sale securities
 —
 —
 —
 —
 —
 1,515
 —
 1,515

 —
 —
 —
 —
 —
 —

 —
 —
 175,462
 $
 $
 770,196
 $
 $
 ( 601,126)
 $
 169,137

 (1) Shares issued and outstanding as of December 31, 2023 and December 31, 2022 exclude 738,000 shares subject to vesting requirements. See Note 1. Description of Business - Business Combination.

 Consolidated Statements of Cash Flows
 (in thousands)

 2023
 2022
 2021

 Operating activities

 $
 $
 $

 Adjustments to reconcile net loss to net cash used in operating activities

 Depreciation and amortization
 7,201
 5,504
 3,093

 Non-cash interest (income) expense
 ( 2,514)
 2,289
 4,494

 Change in fair value of derivatives
 —
 —
 12,512

 Change in fair value of warrant liability
 ( 230)
 ( 9,558)
 ( 4,085)

 Change in fair value of trading securities
 —
 3,460
 ( 50)

 Realized gains/losses on available-for-sale securities
 —
 —

 Impairment loss on long-lived assets
 —

 Loss on extinguishment of debt
 —
 —
 1,469

 Provision for doubtful accounts, net of recoveries
 ( 927)
 1,296
 1,080

 Provision for credit losses on contract assets
 —
 —

 Stock-based compensation expense
 18,171
 30,256
 29,055

 Changes in assets and liabilities

 Accounts receivable
 1,952
 3,566
 ( 11,352)

 Inventories, net
 16,328
 ( 19,955)
 ( 10,480)

 Prepaid expenses and other current assets
 ( 22,553)
 ( 2,877)
 ( 3,435)

 Other non-current assets
 ( 3,075)
 ( 1,585)
 ( 625)

 Accounts payable
 ( 2,363)
 ( 506)
 2,774

 Accrued expenses
 29,074
 1,831
 17,915

 Other current liabilities
 1,159

 Other non-current liabilities
 2,039

 Deferred revenue
 ( 2,346)
 11,457
 16,501

 Net cash used in operating activities
 ( 65,586)
 ( 135,239)
 ( 106,522)

 Investing activities

 Purchase of available-for-sale securities
 ( 127,179)
 ( 80,176)
 ( 269,237)

 Proceeds from sales and maturities of available-for-sale securities
 171,416
 213,795
 4,644

 HDW Acquisition, net
 8,085
 —
 —

 Purchases of trading securities
 —
 ( 250)
 ( 4,250)

 Purchase of property and equipment
 ( 327)
 ( 2,239)
 ( 1,541)

 Capitalized internally-developed software
 ( 1,516)
 ( 4,774)
 ( 5,929)

 Purchase of intangible assets
 —
 —
 ( 700)

 Net cash provided by (used in) investing activities
 50,479
 126,356
 ( 277,013)

 Financing activities

 Proceeds from Business Combination and private offering, net of issuance costs
 —
 —
 447,921

 Repayment of term loan
 —
 —
 ( 5,000)

 Proceeds from issuance of common stock
 —
 3,271

 Payments for tax withholding on net settlement of equity awards
 —
 ( 3,394)
 ( 1,766)

 Proceeds from revolving credit facility
 —
 1,345
 7,934

 Repayment of revolving credit facility
 —
 ( 4,714)
 ( 4,566)

 Net cash provided by (used in) financing activities
 —
 ( 6,039)
 447,794

 Effect of exchange rates on cash
 ( 46)
 ( 32)
 ( 6)

 Net change in cash and cash equivalents
 ( 15,153)
 ( 14,954)
 64,253

 Cash and cash equivalents

 Beginning of year
 109,828
 124,782
 60,529

 End of year
 $
 94,675
 $
 109,828
 $
 124,782

 Supplemental disclosure of cash flow information

 Cash paid during the year for:

 Interest
 $
 $
 $

 Income taxes
 $
 $
 $

 Consolidated Statements of Cash Flows
 (in thousands)

 Supplemental disclosure of non-cash investing and financing activities

 Capitalization of stock-based compensation to internally-developed software
 $
 $
 2,360
 $

 Net assets acquired
 $
 4,221
 $
 —
 $
 —

 Promissory note issued as part of HDW Acquisition
 $
 22,000
 $
 —
 $
 —

 Common stock issued for HDW Acquisition
 $
 15,627
 $
 —
 $
 —

 Accrued fixed assets
 $
 —
 $
 —
 $

 Private placement warrants received as part of business combination
 $
 —
 $
 —
 $
 13,872

 Prepaid expense received as part of business combination
 $
 —
 $
 —
 $

 1. DESCRIPTION OF BUSINESS
 Latch, Inc. (referred to herein, collectively with its subsidiaries, as "Latch" or the "Company") is a technology company primarily serving the multifamily rental home market segment of the smart building industry deploying hardware and software technology to digitize otherwise manual processes, including building and unit access and in-unit device control.
 In May 2019, the Company incorporated Latch Taiwan, Inc., a wholly-owned subsidiary, in the state of Delaware. In October 2020, the Company incorporated Latch Insurance Solutions, LLC, a wholly-owned subsidiary, in the state of Delaware. In September 2021, the Company incorporated Latch Systems Ltd, a wholly-owned subsidiary, in England and Wales. The Company's revenues are derived primarily from operations in North America.
 On June 4, 2021 (the "TSIA Closing Date"), the Company consummated the previously announced merger pursuant to that certain Agreement and Plan of Merger, dated as of January 24, 2021 (the "TSIA Merger Agreement"), by and among the Company (formerly known as TS Innovation Acquisitions Corp. ("TSIA")), Latch Systems, Inc. (formerly known as Latch, Inc. ("Legacy Latch")) and Lionet Merger Sub Inc., a wholly-owned subsidiary of TSIA ("Merger Sub"), pursuant to which Merger Sub merged with and into Legacy Latch, with Legacy Latch becoming a wholly-owned subsidiary of the Company (the "Business Combination" and, collectively with the other transactions described in the TSIA Merger Agreement, the "Transactions"). In connection with the consummation of the Transactions (the "Closing"), the Company changed its name from TS Innovation Acquisitions Corp. to Latch, Inc. The "Post-Combination Company" following the Business Combination is Latch, Inc.
 In May 2023, in connection with the HDW Acquisition (as defined and further described below), the Company formed two subsidiaries, one of which was the surviving entity of the HDW Acquisition and was renamed Honest Day's Work, LLC. In January 2024, in connection with the acquisition of a property management business, the Company formed Door Property Management, LLC. In June 2024, in connection with the HelloTech Merger (as defined and further described below), the Company formed a subsidiary into which HelloTech, Inc. merged as the surviving entity of the HelloTech Merger.
 Effective November 1, 2023, the Company relocated its headquarters to St. Louis (Olivette), Missouri. From 2020 through 2023, the Company operated offices in Denver, Colorado, New York, New York, Los Angeles, California and Taipei, Taiwan.
 Business Combination
 On January 24, 2021, TSIA entered into the TSIA Merger Agreement with Merger Sub and Legacy Latch. Legacy Latch's board of directors unanimously approved Legacy Latch's entry into the TSIA Merger Agreement.
 On June 3, 2021, TSIA held a special meeting of its stockholders (the "Special Meeting"), at which the TSIA stockholders considered and adopted, among other matters, a proposal to approve the Business Combination, including (a) adopting the TSIA Merger Agreement and (b) approving the other Transactions contemplated by the TSIA Merger Agreement.
 Upon the Closing the following occurred:
 • The mandatory conversion feature upon a business combination was triggered for the convertible notes issued by Legacy Latch between August 11, 2020 and October 23, 2020 with a maturity date of April 23, 2022 for an aggregate principal amount of $ 50.0 million (the "Convertible Notes"), causing a conversion of the $ 50.0 million outstanding principal amount of the Convertible Notes and any unpaid accrued interest into equity securities at a specified price. The noteholders received approximately 6.9 million shares of common stock in the Post-Combination Company. The embedded derivative related to the Convertible Notes was extinguished as part of the Closing.
 • The 71.1 million outstanding shares of redeemable convertible preferred stock were exchanged for 63.8 million shares of common stock in the Post-Combination Company.
 • Legacy Latch repaid in full the outstanding principal and accrued interest on the term loan in the total amount of $ 5.0 million. The embedded derivative in the warrants issued in connection with the term loan was extinguished as part of the Closing.
 • Holders of 5,916 shares of TSIA's Class A common stock sold in its initial public offering (the "Initial Shares") properly exercised their right to have such shares redeemed for a full pro rata portion of the trust account holding the

 proceeds from TSIA's initial public offering (the "TSIA IPO"), calculated as of two business days prior to the consummation of the Business Combination, which was approximately $ 10.00 per share, or approximately $ 0.06 million in the aggregate.
 • The shares of TSIA Class B common stock held by TS Innovation Acquisitions Sponsor, L.L.C. ("Sponsor") automatically converted to 7.4 million shares of common stock in the Post-Combination Company. Of the 7.4 million shares of common stock held by the Sponsor, 738,000 are subject to vesting under certain conditions (the "Sponsor Earnout Shares"), including that the volume-weighted average price ("VWAP") of the Post-Combination Company equals or exceeds $ 14.00 for any 20 trading days within a 30 trading day period on or prior to the five year anniversary of the Closing.
 • Pursuant to subscription agreements entered into in connection with the TSIA Merger Agreement, certain investors agreed to subscribe for an aggregate of approximately 19.3 million newly-issued shares of common stock at a purchase price of $ 10.00 per share for an aggregate purchase price of approximately $ 192.6 million (the "PIPE Investment"). The PIPE Investment included approximately 0.3 million newly issued shares of common stock at a purchase price of $ 10.00 per share for an aggregate purchase price of $ 2.6 million of cash election funding. See Note 15. Stock-Based Compensation. At the Closing, the Company consummated the PIPE Investment.
 • After giving effect to the Transactions, the redemption of Initial Shares as described above and the consummation of the PIPE Investment, there were approximately 140.5 million shares of common stock issued and outstanding (excluding the Sponsor Earnout Shares).
 As noted above, an aggregate of $ 0.06 million was paid from TSIA's trust account to holders that properly exercised their right to have Initial Shares redeemed, and the remaining balance immediately prior to the Closing of approximately $ 300.0 million remained in the trust account. The remaining amount in the trust account was used to fund the Business Combination. Latch received approximately $ 450.0 million in cash proceeds, net of fees and expenses funded in connection with the Closing of the Business Combination, which included approximately $ 192.6 million from the PIPE Investment mentioned above.
 The following table reconciles the elements of the Business Combination to the Consolidated Statement of Cash Flows and the Consolidated Statement of Redeemable Convertible Preferred Stock and Stockholders' Equity for the year ended December 31, 2021.

 Cash - TSIA trust and cash, net of redemptions
 $
 300,122

 Cash - PIPE Investment including cash election funding
 192,550

 Less: transaction costs and advisory fees paid
 ( 36,783)

 Less: cash election payment, net
 ( 2,313)

 Less: issuance and other costs paid
 ( 5,621)

 Net proceeds from Business Combination
 447,955

 Less: private placement warrants received as part of Business Combination
 ( 13,872)

 Plus: prepaid expenses received as part of Business Combination

 Reverse recapitalization, net of transaction costs
 $
 434,593

 As a result of the Business Combination, each share of Legacy Latch redeemable convertible preferred stock and common stock was converted into the right to receive approximately 0.8971 shares of the common stock of the Post-Combination Company (the "Exchange Ratio").
 Based on the following factors, the Company determined under the Financial Accounting Standards Board (the "FASB") Accounting Standards Codification ("ASC") 805, Business Combinations, that the Business Combination was a reverse recapitalization.
 • Legacy Latch stockholders owned approximately 60.0 % of the shares in the Post-Combination Company and thus had sufficient voting rights to exert influence over the Post-Combination Company.
 • Legacy Latch appointed a majority of the Post-Combination Company's board of directors and maintained a majority of the composition of management at the time of the transaction.
 • Legacy Latch was the larger entity based on historical revenues and business operations and comprised the ongoing operations of the Post-Combination Company.

 • The Post-Combination Company assumed the name "Latch, Inc."
 The accounting for the transaction was similar to that resulting from a reverse acquisition, except that goodwill or other intangibles were not recognized, and the transaction was followed by a recapitalization.
 In accordance with guidance applicable to these circumstances, the equity structure has been recast in all comparative periods up to the TSIA Closing Date to reflect the number of shares of the Company's common stock, par value $ 0.0001 per share, issued to Legacy Latch's stockholders in connection with the Business Combination. As such, the shares and corresponding capital amounts and earnings per share related to Legacy Latch redeemable convertible preferred stock and Legacy Latch common stock prior to the Business Combination have been retroactively recast as shares reflecting the Exchange Ratio of 0.8971 established in the Business Combination.
 Post-Combination Company common stock and warrants commenced trading on The Nasdaq Stock Market LLC ("Nasdaq") under the symbols "LTCH" and "LTCHW," respectively, on June 7, 2021. Since the August 10, 2023 suspension of trading in the Company's common stock and warrants on Nasdaq and subsequent delisting, the Company's securities have been traded on OTC Markets Group Inc.'s Expert Market.
 HDW Acquisition
 On May 15, 2023, the Company, LS Key Merger Sub 1, Inc., a wholly-owned subsidiary of the Company ("Merger Sub I"), and LS Key Merger Sub 2, LLC, a wholly-owned subsidiary of the Company ("Merger Sub II"), entered into an Agreement and Plan of Merger (as amended, the "HDW Merger Agreement") with Honest Day's Work, Inc. ("HDW"). On July 3, 2023 (the "HDW Closing Date"), (i) Merger Sub I merged with and into HDW, with HDW continuing as the surviving corporation, and subsequently, (ii) HDW merged with and into Merger Sub II, with Merger Sub II continuing as the surviving entity and a wholly-owned subsidiary of the Company (collectively, the "HDW Acquisition"). The Company concluded that the transaction was a business combination and that the Company was the acquirer.
 On the HDW Closing Date, the Company issued to HDW's stockholders as merger consideration (i) $ 22.0 million aggregate principal amount of unsecured promissory notes (the "Promissory Notes") and (ii) approximately 29.0 million shares of the Company's common stock (the "Consideration Shares"). Certain of HDW's stockholders (the "Ineligible Holders") that were not eligible to receive unregistered shares of the Company's common stock received $ 0.76 in lieu of each Consideration Share such stockholder would otherwise have received as merger consideration, with the total cash consideration paid to all Ineligible Holders equaling approximately $ 0.02 million. Upon the HDW Closing Date, Latch indirectly acquired all of HDW's assets, including its intellectual property and $ 8.0 million in cash. Additionally, approximately 35 HDW team members joined Latch.
 The Consideration Shares were originally non-transferable until July 3, 2028 (the "Restricted Period"), subject to certain accelerated releases. As a result of the Company's delisting from Nasdaq, the Restricted Period now terminates on April 15, 2027. In the event the Company's 60 trading day VWAP exceeds the price thresholds set forth in the table below (the "Share Price Thresholds"), the applicable portion of the Consideration Shares set forth below will be released from transfer restrictions:

 Percent of Consideration Shares Released

 $ 2.00
 25 %

 $ 3.00
 25 %

 $ 4.00
 25 %

 $ 5.00
 25 %

 In addition, there may be accelerated releases of the Consideration Shares in connection with a change of control of the Company.
 In connection with the HDW Acquisition, the Company and Jamie Siminoff entered into a stock restriction agreement, dated May 15, 2023 (the "Original Siminoff Stock Restriction Agreement"). Pursuant to the Original Siminoff Stock Restriction Agreement, which was amended and restated in connection with the execution of his separation agreement in November 2024, in the event Mr. Siminoff ceased to be an employee of the Company during the Restricted Period, the Company would have the right to repurchase, for nominal consideration, all of Mr. Siminoff's Consideration Shares that had not already been

 released from transfer restriction, subject to certain exceptions. In the event Mr. Siminoff was terminated without Cause or resigned for Good Reason (each as defined in the Siminoff Employment Agreement (as defined below)), or upon his death or disability (each, an "Exit"), his Consideration Shares would accelerate in an amount equal to the greater of (i) the number of Consideration Shares to which he was entitled pursuant to the Share Price Thresholds (with linear interpolation of Consideration Shares based on the 60 trading day VWAP as of the date of Exit) and (ii) the number of Consideration Shares equal to the product of (a) his total Consideration Shares multiplied by (b) the quotient of (x) the number of calendar days between July 3, 2023 and his Exit divided by (y) 1,825; provided, however, that in no event would the number of Mr. Siminoff's Consideration Shares that accelerate in connection with an Exit be less than 40 % of the total number of his Consideration Shares.
 The Promissory Notes accrued paid-in-kind interest at a rate of 10 % per annum and were scheduled to mature on July 3, 2025, unless earlier accelerated in connection with an event of default (including certain events of delisting from Nasdaq) or change of control of the Company. As of December 31, 2023, the Company concluded that it was virtually certain the Promissory Notes would become payable within the upcoming 12 months due to the Company's then-anticipated delisting from Nasdaq, which was an event of default with respect to the Promissory Notes. Consequently, the Company reclassified the debt obligation as current as of December 31, 2023, despite the event of default not yet occurring. On April 26, 2024, the Company repaid the Promissory Notes in full without penalty. The Company paid an aggregate of $ 23.9 million in principal and accrued interest to the holders of the Promissory Notes.
 On the HDW Closing Date, in connection with the consummation of the HDW Acquisition and as contemplated by the HDW Merger Agreement, 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.
 In connection with the HDW Acquisition, the Company and Mr. Siminoff entered into an employment agreement, dated May 15, 2023 (the "Siminoff Employment Agreement"). Pursuant to the Siminoff Employment Agreement, on the HDW Closing Date, Mr. Siminoff was appointed as the Company's Chief Strategy Officer. At the time, Mr. Siminoff was expected to be appointed as Chief Executive Officer of the Company following the completion of the restatement of certain of the Company's historical financial statements (the "Restatement"). As described below in Note 21. Subsequent Events, Mr. Siminoff ceased to serve as Chief Strategy Officer on December 31, 2024 and will no longer be appointed as the Company's Chief Executive Officer.
 Liquidity Position
 The Company has incurred losses since the Company's inception. Prior to the Closing of the Business Combination, the Company's operations were financed primarily through net proceeds from the issuance of the Company's redeemable convertible preferred stock and Convertible Notes, as well as borrowings under the Company's term loan. The Company received approximately $ 450.0 million in cash proceeds, net of fees and expenses funded in connection with the Closing, which included approximately $ 192.6 million from the sale of approximately 19.3 million newly-issued shares of common stock in connection with the Business Combination.
 As of December 31, 2023 and 2024, the Company's unrestricted cash and cash equivalents and current and non-current available-for-sale securities were approximately $ 179.5 million and $ 75.5 million, respectively. The Company's 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.
 Historically, the Company's short-term liquidity needs have primarily included working capital for salaries, including sales and marketing and research and development, as well as component inventory purchases from the Company's contract

 manufacturers. Beginning in the second quarter of 2022 and continuing through 2025, the Company has incurred, and may continue to incur, significant professional fees, primarily consisting of legal, forensic accounting, management consulting and related advisory services as a result of the Investigation and the SEC Investigation (each as defined below), as well as accounting related consulting services, independent registered accounting firm fees and advisory services related to the Restatement and the Company's comprehensive financial statement review. Additionally, the Company has incurred significant costs in connection with various pending litigation. Such litigation involves significant defense and other costs and, if decided adversely to the Company or settled, has resulted or could result in significant monetary damages or expenditures. Although the Company maintains insurance coverage in amounts and with deductibles that it believes are appropriate for its operations, its insurance coverage does not cover all claims that have been or may be brought against it.
 In light of the Company's liquidity position described above, the Company may attempt to secure additional outside capital. However, the Company has not sought any commitments of additional outside capital and can provide no assurance it will be able to secure any outside capital in the future at all, or on terms that are acceptable to the Company. Additionally, the Company's securities are currently traded on the OTC Expert Market. Because of applicable restrictions, there is a minimal public market for the Company's securities, and the Company's ability to raise additional capital may be impaired because of the less liquid nature of the over-the-counter markets.

 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
 Basis of Presentation
 The consolidated financial statements have been prepared in accordance with generally accepted accounting principles in the United States of America ("GAAP").
 Principles of Consolidation
 The consolidated financial statements include the accounts of Latch, Inc. and its wholly-owned subsidiaries as of December 31, 2023, Latch Systems, Inc., Latch Taiwan, Inc., Latch Insurance Solutions, LLC and Latch Systems Ltd. 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 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 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 consolidated financial statements; actual results could differ from those estimates.
 Cash and Cash Equivalents
 The Company considers all highly liquid investments with an original maturity of three months or less when purchased to be cash and cash equivalents. Cash and cash equivalents are recorded at cost, which approximates fair value. As of December 31, 2023 and 2022, cash consisted primarily of funds held in the Company's checking accounts, money market funds and commercial paper. The Company considers these money market funds and commercial paper to be Level 1 financial instruments.
 The Company's cash balances exceed the limits that are federally insured. To date, the Company has not recognized any losses caused by uninsured balances.
 Prior to December 31, 2023, the Company (i) received $ 19.3 million of proceeds from the sale of a maturing available-for-sale security and (ii) reinvested the proceeds by purchasing an equal amount of new securities prior to such date. The Company uses trade-date accounting and, as such, the new securities position of $ 19.3 million is included in the balance of available-for-sale securities of $ 84.9 million on the Company's Consolidated Balance Sheets as of December 31, 2023, and a liability of $ 19.3 million presented as investment purchases payable is included in accrued expenses on the Company's

 Consolidated Balance Sheets as of December 31, 2023. The funds were deducted from the Company's account in early January 2024. Accordingly, the sum of the Company's cash and cash equivalents as of December 31, 2023 is $ 19.3 million higher than it would have been had the funds been deducted from the Company's account prior to year end. See Note 9. Accrued Expenses.
 Marketable Securities
 The Company classifies its fixed income marketable securities as available-for-sale based on its intentions with regard to these instruments. Accordingly, marketable securities are reported at fair value, with all unrealized holding gains and losses reflected in stockholders' equity. If it is determined that an investment has an other-than-temporary decline in fair value, the Company recognizes the investment loss in other income (expense), net in the Consolidated Statements of Operations and Comprehensive Loss. The Company periodically evaluates its investments to determine if impairment charges are required.
 Accounts Receivable and Allowance for Doubtful Accounts
 Accounts receivable are stated at net realizable value, net of allowance for doubtful accounts and reserve for returns (see "Revenue Recognition" below for further information). The Company adopted Accounting Standards Update ("ASU") 2016-13 effective January 1, 2022. Following the adoption, the Company recognizes an accounts receivable allowance based on estimates of expected credit losses. The Company estimates the total expected credit loss over the lifetime of the receivables using historical loss data and by applying a loss-rate method using relevant available information from internal and external sources, including historical write-off activity, current conditions and reasonable and supportable forecasts. Historical credit loss experience provides the basis for the estimation of expected credit losses. Adjustments to historical loss information are made for changes in economic conditions. When certain amounts are deemed uncollectible, those balances are reserved in full.
 The allowance for doubtful accounts is measured on a pooled basis when similar risk characteristics exist. When assessing whether to measure certain financial assets on a pooled basis, the Company considers various risk characteristics, including the financial asset type, size and historical or expected credit loss pattern. The Company has considered customer identity, customer type and product lines and determined that further segmentation of the accounts receivable would not yield a materially different credit loss allowance. The Company only segments its receivables based on the age of the outstanding balance.
 As of December 31, 2023, 2022 and 2021, the allowance for doubtful accounts contains an estimate of credit losses for outstanding invoices related to (1) hardware accounts receivable when revenue was recognized for consideration received from the related software contract and (2) invoices related to software accounts receivable. The Company generally does not require any security or collateral to support its receivables.
 The following table represents a roll-forward of the Company's allowance for doubtful accounts:

 Balance as of January 1, 2022
 $
 1,241

 Provision for doubtful accounts
 1,296

 Balance as of December 31, 2022
 2,537

 Provision for doubtful accounts, net of recoveries
 ( 927)

 Write-offs charged against the allowance
 ( 1,114)

 Balance as of December 31, 2023
 $

 Inventories, Net
 Inventories consist of finished goods and component parts. Finished goods are manufactured by the Company or purchased from contract manufacturers and component suppliers. Inventories are stated at the lower of cost or net realizable value with cost being determined using the average cost method. The Company periodically assesses the valuation of inventory and writes down the value for estimated excess and obsolete inventory based upon estimates of future demand and market conditions, when necessary. As of December 31, 2023, net inventories in excess of one year of historical sales are classified as other non-current assets on the Consolidated Balance Sheets.

 Hardware shipped to channel partners is considered channel inventory until there is evidence a contract exists and control has passed to the customer. Channel inventory is included within inventory, net on the Consolidated Balance Sheets. Channel inventory is stated at the lower of cost or net realizable value with cost being determined using the average cost method.
 Property and Equipment, Net
 Property and equipment are stated at cost less accumulated depreciation. Depreciation is calculated using the straight-line method over the estimated useful lives of the assets as follows:

 Useful life
in years

 Office furniture

 Computers and equipment
 3 - 5

 The Company capitalizes the cost of pre-production tooling that it owns. Pre-production tooling that the Company will not own or that will not be used in producing products under long-term supply arrangements, including the related engineering costs, is expensed as incurred.
 Internally Developed Software, Net
 The Company capitalizes certain development costs incurred in connection with its internally-developed software (including specific software upgrades and enhancements when it is probable the expenditures will result in additional features and functionality). These capitalized costs are primarily related to software that is hosted by the Company and the firmware in the Company's devices. Costs incurred in the preliminary stages of development are expensed as incurred. Once a project has reached the development stage, internal and external costs, if direct and incremental, are capitalized until the application is substantially complete and ready for its intended use. Capitalization ceases upon completion of all substantial testing, at which time amortization of the capitalized software begins. The Company also capitalizes costs related to specific software upgrades and enhancements when it is probable the expenditures will result in additional features and functionality. Internally-developed software is amortized on a straight-line basis over its estimated useful life, generally three to five years.
 When the Company determines that a planned feature is discontinued or will not be implemented, costs are expensed. Maintenance costs are also expensed as incurred.
 Goodwill
 Goodwill represents the excess of purchase consideration over the fair value of identifiable net assets acquired in a business combination. As of December 31, 2023, the Consolidated Balance Sheet includes $ 25.3 million in goodwill, entirely from the HDW Acquisition.
 Impairment Testing
 Goodwill is assessed for impairment annually, as of December 31 of each year, or more frequently if indicators arise. Operating as a single reporting unit, the Company's entire goodwill balance is subject to this assessment.
 Fair Value Determination
 According to ASC 350, Intangibles - Goodwill and Other ("ASC 350"), the fair value of a reporting unit is the price that would be received to sell the unit as a whole in an orderly transaction between market participants at the measurement date. The Company concluded the appropriate valuation approach was a combination of the income and market approaches.
 The Company engaged third-party valuation specialists to determine the reporting unit's fair value, using both income and market approaches, per ASC 820, Fair Value Measurement ("ASC 820"). The valuation methodologies applied consider both entity-specific and observable market information under the fair value hierarchy in ASC 820, and changes in, or additions to, available information may affect the assumptions the Company uses in estimating fair value. The Company's analysis relied on significant assumptions, including: expected future revenue growth rates, profit margins, discount rate, terminal growth rate, the selection of guideline public companies and selected guideline public company revenue multiples. The analysis was performed retrospectively as of December 31, 2023, leveraging inputs that were both known and knowable as of such date.

 Impairment Test Results
 The quantitative assessment, equally weighting the income and market approaches, estimated the Company's fair value at $ 204.0 million, exceeding the carrying value of $ 169.1 million by $ 34.9 million, or 20.6 %. Consequently, no goodwill impairment was recorded as of December 31, 2023.
 The Company performed a sensitivity analysis by adjusting key assumptions in the analysis, reducing the terminal growth rate from 3 % to 2 % and lowering the guideline public company multiples from 0.40 x next fiscal year ("NFY") revenue and 0.30 x NFY+1 revenue to 0.30 x and 0.20 x, respectively. The sensitivity analysis, while not predictive in nature, indicated a fair value of $ 192.5 million, exceeding the carrying value by $ 23.4 million, or 14 %, confirming no goodwill impairment as of December 31, 2023.
 Intangible Assets
 Intangible assets are recorded at their estimated fair value at the date of acquisition and are amortized over their estimated useful lives using the straight-line method. Intangible assets consisted of the following, which are included within other non-current assets on the Consolidated Balance Sheets:

 Domain names
 $
 1,634
 $

 Patents

 Licenses

 Developed technology
 3,795
 —

 Intangible assets
 5,470

 Less: accumulated amortization
 ( 679)
 ( 226)

 Total intangible assets, net
 $
 4,791
 $

 Total amortization expense related to intangible assets was $ 0.5 million, $ 0.2 million and $ 0.1 million for the years ended December 31, 2023, 2022 and 2021, respectively. Total intangible impairment expense was zero, $ 0.5 million and zero for the years ended December 31, 2023, 2022 and 2021, respectively, and included in general and administrative expense on the Consolidated Statement of Operations and Comprehensive Loss.
 The estimated useful life of the intangible assets is as follows:

 Useful life in years

 Domain names
 3 - 13

 Patents

 Licenses

 Developed technology

 Leases
 On January 1, 2022, the Company adopted ASU 2016-02, Leases (Topic 842) ("ASC 842") using a modified retrospective approach recording a cumulative-effect adjustment to retained earnings. The Company elected to adopt the practical expedients that permit it to combine lease and non-lease components for all lease contracts and also elected not to recognize right-of-use ("ROU") assets and lease liabilities for leases with terms of 12 months or less.
 ASC 842 requires that leases be evaluated and classified as operating or finance leases for financial reporting purposes. The lease liability is calculated as the present value of the remaining future lease payments over the lease term, including reasonably assured renewal options. The discount rates used in valuing the Company's leases are not readily determinable and are based on the Company's incremental borrowing rate ("IBR") on a fully collateralized basis. In calculating its IBR, the Company considers observed debt rates and the significant financing component of longer-term software contracts.

 In accordance with ASC 842, the Company determined the initial classification and measurement of its right-of-use assets and lease liabilities at the lease commencement date and thereafter. The lease terms include any renewal options and termination options that the Company is reasonably assured to exercise, if applicable. The present value of lease payments is determined by using the implicit interest rate in the lease, if that rate is readily determinable; otherwise, the Company develops an IBR based on the information available at the commencement date in determining the present value of the future payments.
 The Company determines if an arrangement contains a lease at the inception of the arrangement. As part of the lease determination process, the Company assesses several factors, including, but not limited to, whether there is a right to control and direct the use of the asset and whether the other party has a substantive substitution right. As the Company's leases generally do not have identical or nearly identical contract provisions, the Company accounts for each of its leases at the contract level.
 The Company has made the policy election to not separate lease and non-lease components for any of its leases within its existing classes of assets. The Company will evaluate this election for any new leases involving a new underlying class of asset. The Company has also made the policy election to not recognize a lease liability or an ROU asset for any leases with a term of 12 months or less. These lease payments are recognized on a straight-line basis over the lease term.
 The Company has evaluated lease renewal options on a contract-by-contract basis to determine whether specific circumstances would result in the conclusion that any options are reasonably certain to be exercised. Generally, the Company does not enter into lease arrangements where the option to renew or terminate a lease is controlled by the lessor.
 The Company cannot readily determine the interest rate implicit in leases where it is the lessee. As such, it uses its IBR to measure lease liabilities. The IBR is the rate of interest that the Company would have to pay to borrow over a similar term, and with a similar security, the funds necessary to obtain an asset of comparable value to the ROU asset in a similar economic environment. IBR therefore reflects what the Company "would have to pay," which requires estimation when no observable rates are available or where the applicable rates need to be adjusted to reflect the terms and conditions of the lease. The Company estimates the IBR using observable inputs (such as market interest rates) when available and is required to make certain entity-specific estimates. The Company's leases are generally not sensitive to changes in IBR due to their relatively short terms.
 ROU assets represent the right to use an underlying asset for the term of the lease, and lease liabilities represent the obligation to make lease payments throughout the term of the lease. ROU assets and lease liabilities are recognized as of the commencement date of the lease based on the present value of contractual lease payments due over the term of the lease. The Company uses an incremental borrowing rate to determine the present value of the lease payments, as the leases do not state the rate implicit in the lease.
 ROU assets resulting from operating leases are recorded within other non-current assets, and lease liabilities from operating leases are recorded within current liabilities and non-current liabilities, on the Consolidated Balance Sheets. The Company did not have any finance leases or subleases as of December 31, 2023 and 2022.
 Rent expense is allocated among cost of revenue, research and development, sales and marketing, and general and administrative, based on headcount and the use of the underlying leased property.
 Revenue Recognition
 In determining the appropriate amount of revenue to be recognized as it fulfills its obligations under its agreements, the Company performs the following steps: (i) identify contracts with customers; (ii) identify performance obligations; (iii) determine the transaction price; (iv) allocate the transaction price to the performance obligations; and (v) recognize revenue when (or as) the Company satisfies each performance obligation.
 A performance obligation is a promise in a contract to transfer a distinct good or service to a customer and is the unit of account in ASC 606 and its related amendments (collectively known as ASC 606, Revenue from Contracts with Customers). Revenues are recognized when control of the promised goods or services is transferred to a customer in an amount that reflects the consideration that the Company expects to receive in exchange for those services. The Company currently generates its revenues from three primary sources: (1) sales of hardware devices, (2) licenses of software products and (3) installation services related to the hardware devices.

 Performance Obligations
 The Company enters into contracts that contain multiple distinct performance obligations: hardware, software and installation services. The hardware performance obligation includes the delivery of hardware, the software performance obligation allows the customer access to the software during the contracted-use term when the promised service is transferred to the customer and the installation services obligation includes the delivery of activation and installation of the hardware. The Company has determined that the hardware, software and installation services are individual distinct performance obligations because they can be and generally are sold by the Company on a standalone basis, and because other vendors sell similar technologies and services on a standalone basis.
 For each performance obligation identified, the Company estimates the standalone selling price, which represents the price at which the Company would sell the good or service separately. If the standalone selling price is not observable through past transactions, the Company estimates the standalone selling price, taking into account available information such as market conditions, historical pricing data and internal pricing guidelines related to the performance obligations. The Company then allocates the transaction price among those obligations based on the estimation of standalone selling price. For software revenue, the Company estimates the transaction price, including variable consideration, at the commencement of the contract and recognizes revenue over the contract term.
 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 has been transferred to the customer.
 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, repair 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 products. For the years ended December 31, 2023, 2022 and 2021, the reserve recorded for hardware warranties was approximately 2 %, 2 % and 2 % of cost of hardware revenue, respectively. 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 years ended December 31, 2023, 2022 and 2021, the allowance for returns resulted in a recovery of revenue by $ 0.1 million and reduced revenue by $ 0.6 million and $ 0.3 million, respectively.
 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 were 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 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 $ 4.6 million, $ 5.1 million and $ 3.1 million for the years ended December 31, 2023, 2022 and 2021, 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.

 Installation Services
 The Company generates revenues by facilitating hardware installation and activation services. These revenues are recognized over time on a percentage of completion basis. The Company recognized installation services revenue of $ 7.4 million, $ 5.4 million and $ 1.9 million for the years ended December 31, 2023, 2022 and 2021, respectively.
 Disaggregation of Revenue
 The following disaggregated revenue presentation illustrates the nature, amount and timing of revenue and cash flows across the Company's various offerings.
 Revenue recognition varies by product or service category. Hardware consists of different product categories, and the sales cycle, contractual obligations, customer requirements and go-to-market strategies are generally consistent. Revenue for hardware is recognized at a point in time upon transfer of control. SaaS is subscription-based, and revenue is recognized over the subscription period. Installation services revenue is generated by facilitating hardware installation for select customers and is recognized over time using the percentage of completion method.
 The revenue disaggregation presented below aligns with the Company's Consolidated Statements of Operations, categorized into hardware, software and installation services. The following table presents revenue broken down by offering type and the timing of revenue recognition:

 2023
 2022
 2021

 Product revenue (point-in-time):

 $
 19,739
 $
 24,532
 $
 18,262

 Service revenue (period-of-time):

 17,775
 13,024
 7,402

 7,447
 5,399
 1,949

 Total service revenue
 25,222
 18,423
 9,351

 $
 $
 $
 27,613

 Deferred Contract Costs
 The Company capitalizes commission expenses paid that are incremental to obtaining customer software contracts. Costs related to the initial signing of software contracts are amortized over the average customer life, which has been estimated to be ten years. The Company determined the period of benefit by taking into consideration the length of terms in its customer contracts, including renewals and extensions. Amounts expected to be recognized within one year of the balance sheet date are recorded as deferred contract costs, current and are included in prepaid expenses and other current assets on the Consolidated Balance Sheets; the remaining portion is recorded as deferred contract costs, non-current and is included in other non-current assets on the Consolidated Balance Sheets. Amortization expense is included in sales and marketing expense in the Consolidated Statements of Operations and Comprehensive Loss.
 The following table represents a roll-forward of the Company's deferred contract costs:

 Balance as of January 1, 2022
 $
 1,237

 Additions to deferred contract costs
 1,615

 Amortization of deferred contract costs
 ( 235)

 Balance as of Balance as of December 31, 2022
 2,617

 Additions to deferred contract costs
 1,338

 Amortization of deferred contract costs
 ( 416)

 Balance as of December 31, 2023
 $
 3,539

 Contract Assets and Contract Liabilities
 The Company enters into contracts with its customers, which may give rise to contract assets (unbilled receivables) and contract liabilities (deferred revenue) due to revenue recognition differing from the timing of billing to customers. The Company recognizes unbilled receivables when the performance obligation precedes the invoice date. The Company reports unbilled receivables within prepaid expenses and other current assets on the Consolidated Balance Sheets.

 Contract assets (unbilled receivables), net
 $
 5,942
 $

 Contract liabilities (deferred revenue)
 $
 39,579
 $
 41,925

 The Company records contract liabilities as deferred revenue when the Company bills customers in advance of the performance obligations being satisfied, which is generally the case for the Company's software contracts. The Company recognized $ 14.1 million, $ 9.5 million and $ 4.5 million of prior year deferred software revenue during the years ended December 31, 2023, 2022 and 2021, respectively.
 As of December 31, 2023, total deferred revenue was $ 39.6 million. The current amount of $ 10.8 million is comprised of $ 13.0 million of deferred revenue, net of $ 2.2 million of deferred interest expense related to the significant financing component. The non-current amount of $ 28.8 million is comprised of $ 37.2 million of deferred revenue, net of $ 8.4 million of deferred interest expense related to the significant financing component. The decrease in deferred revenue as of December 31, 2023 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 signature date.
 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 installation services revenue consists primarily of third-party installation labor costs, parts and materials and personnel-related expenses associated with deployment of hardware.
 Cost of revenue excludes depreciation and amortization shown in operating expenses.
 Research and Development
 Research and development ("R&D") expense consists primarily of personnel and related expenses for employees working on 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 third-party contract manufacturers for tooling, engineering and prototype costs of hardware products, fees paid to third-party consultants, R&D supplies, rent and restructuring costs. R&D costs that do not meet the criteria for capitalization are expensed as incurred.
 Sales and Marketing
 Sales and marketing expense consists primarily of personnel and related expenses for employees working on 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 advertising), professional fees, rent, restructuring costs and customer support. Advertising expense was zero, $ 2.7 million and $ 2.5 million for the years ended December 31, 2023, 2022 and 2021, respectively.

 General and Administrative
 General and administrative expense consists primarily of personnel and related expenses for 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, Investigation and Restatement costs, restructuring costs, bad debt expense and insurance costs.
 Depreciation and Amortization
 Depreciation and amortization expense consists primarily of depreciation expense related to investments in property and equipment, internally-developed software and intangible assets.
 Impairment of Long-Lived Assets
 The Company assesses long-lived assets for impairment in accordance with the provisions of ASC 350 and ASC 360, Property, Plant and Equipment. Long-lived assets, such as property and equipment and internally-developed software costs subject to amortization, are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of the asset may not be recoverable. The carrying amount of a long-lived asset is not recoverable if it exceeds the sum of the undiscounted future cash flows expected to result from the use and eventual disposition of the asset. The amount of impairment loss, if any, is measured as the difference between the carrying value of the asset and its estimated fair value. Fair value is determined through various valuation techniques, including discounted cash flow models, quoted market values and third-party independent appraisals, as considered necessary. During the years ended December 31, 2023, 2022 and 2021, $ 0.7 million, $ 0.9 million and zero of long-lived assets were impaired, respectively, which is included in general and administrative expense in the Consolidated Statement of Operations.
 Equity Issuance Costs
 Costs incurred in connection with the issuance of the Company's series preferred stock have been recorded as a direct reduction against redeemable convertible preferred stock within the Consolidated Balance Sheets.
 Additionally, certain transaction costs incurred in connection with the TSIA Merger Agreement that are direct and incremental to the Business Combination have been recorded as a component of additional paid-in capital within the Consolidated Balance Sheets. See Note 1. Description of Business.
 Restructuring
 Costs associated with a restructuring plan generally consist of involuntary employee termination benefits, contract termination costs and other exit-related costs, including costs to close facilities. The Company records a liability for involuntary employee termination benefits when management has committed to a plan that establishes the terms of the arrangement and that plan has been communicated to employees. Costs to terminate a contract before the end of the term are recognized on the termination date, and costs that will continue to be incurred in a contract for the remaining term without economic benefit are recognized as of the cease-use date. Restructuring and related costs may also include the write-down of related assets, including operating lease ROU assets, when the sale or abandonment of the asset is a direct result of the plan. Other exit-related costs are recognized as incurred. Restructuring and related costs are recognized as an operating expense within the Consolidated Statements of Operations and Comprehensive Loss and are classified based on the Company's classification policy for each category of operating expense.
 Other Income (Expense), Net
 Other income (expense), net consists of interest expense associated with the significant financing component of the Company's longer-term software contracts, interest expense associated with the Company's previous 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 derivatives, warrant liabilities and trading securities.

 2023
 2022
 2021

 Interest income

 $
 8,099
 $
 4,481
 $
 1,333

 Interest expense

 ( 5,790)
 ( 7,442)
 ( 9,094)

 $
 2,309
 $
 ( 2,961)
 $
 ( 7,761)

 Income Taxes
 Income taxes are accounted for under the asset and liability method. Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the consolidated financial statement carrying amounts of existing assets and liabilities and their respective tax bases and operating loss and tax credit carryforwards. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date. A valuation allowance is recorded for deferred tax assets if it is more likely than not that some portion or all of the deferred tax assets will not be realized. As of December 31, 2023 and 2022, the Company recorded a full valuation allowance against its deferred tax assets.
 The Company recognizes the effect of income tax positions only if those positions are more likely than not to be sustained. Recognized income tax positions are measured at the largest amount that has a greater than 50% likelihood of being realized. Changes in recognition or measurement are reflected in the period in which the change in estimate occurs.
 Stock-Based Compensation
 The Company measures and records the expense related to stock-based payment awards based on the fair value of those awards as determined on the date of grant. The Company recognizes stock-based compensation expense over the requisite service period of the individual grant, generally equal to the vesting period, and uses the straight-line method. The fair value of restricted stock units ("RSUs") is determined using the closing trading price on the grant date. The Company uses the Black-Scholes-Merton ("Black-Scholes") option-pricing model to determine the fair value of stock options. The Black-Scholes option-pricing model requires the use of highly subjective assumptions to determine the fair value of stock options, including the option's expected term and the price volatility of the underlying stock. The Company calculates the fair value of options granted by using the Black-Scholes option-pricing model with the following assumptions:

 • Expected Volatility—The Company estimates volatility for option grants by evaluating the average historical volatility of a peer group of companies for the period immediately preceding the option grant for a term that is approximately equal to the option's expected term.
 • Expected Term—The expected term of the Company's options represents the period that the stock-based awards are expected to be outstanding. The Company has elected to use the midpoint between the stock option's vesting term and contractual expiration period to compute the expected term, as the Company does not have sufficient historical information to develop reasonable expectations about future exercise patterns and post-vesting employment termination behavior.
 • Risk-Free Interest Rate—The risk-free interest rate is based on the implied yield currently available on U.S. Treasury zero-coupon issues with a term that is equal to the option's expected term at the grant date.
 • Dividend Yield—The Company has not declared or paid dividends to date and does not anticipate declaring dividends. As such, the dividend yield has been estimated to be zero.
 Cash Settled RSUs
 The Company grants cash settled RSUs that are classified as liability awards as defined in ASC 718, Compensation - Stock Compensation. Cash settlement is required (no election for share settlement) and the cash settlement is not contingent on the occurrence of an event. These awards are recorded as a share-based liability, and fair value is remeasured quarterly. Each vested award is released for cash equal to the trading value of the Company's common stock.

 Fair Value Measurement
 Fair value accounting is applied for all financial assets and liabilities and nonfinancial assets and liabilities that are recognized or disclosed at fair value in the consolidated financial statements on a recurring basis (at least annually). Fair value is defined as the exchange price that would be received for an asset or an exit price that would be paid to transfer a liability in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date.
 ASC 820 establishes a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurements) and the lowest priority to measurements involving significant unobservable inputs (Level 3 measurements). The levels of the fair value hierarchy are as follows:
 • Level 1—Inputs are quoted prices (unadjusted) in active markets for identical assets or liabilities that the Company has the ability to access at the measurement date.
 • Level 2—Inputs are observable, either directly or indirectly, unadjusted quoted prices in active markets for similar assets or liabilities, unadjusted quoted prices for identical or similar assets or liabilities in markets that are not active or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the related assets or liabilities.
 • Level 3—Inputs are generally unobservable and typically reflect management's best estimate of assumptions that market participants would use in pricing the asset or liability.
 The level in the fair value hierarchy within which a fair value measurement in its entirety falls is based on the lowest-level input that is significant to the fair value measurement in its entirety.
 Convertible Notes and Derivatives
 The Company accounts for convertible notes, net using an amortized cost model pursuant to ASC 835, Interest. Convertible notes are classified as liabilities measured at amortized cost, net of debt discounts from debt issuance costs, lender fees and the initial fair value of bifurcated derivatives, which reduce the initial carrying amount of the notes. The carrying value is accreted to the stated principal amount at contractual maturity using the effective-interest method with a corresponding charge to interest expense pursuant to ASC 835. Debt discounts are presented on the balance sheet as a direct deduction from the carrying amount of the related debt.
 The Company accounts for its derivatives in accordance with ASC 815-10, Derivatives and Hedging, or ASC 815-15, Embedded Derivatives, depending on the nature of the derivative instrument. ASC 815 requires each contract that is not a derivative in its entirety to be assessed to determine whether it contains embedded derivatives that are required to be bifurcated and accounted for as a derivative financial instrument. The embedded derivative is bifurcated from the host contract and accounted for as a freestanding derivative if (i) the combined instrument is not accounted for in its entirety at fair value with changes in fair value recorded in earnings, (ii) the terms of the embedded derivative are not clearly and closely related to the economic characteristics of the host contract and (iii) a separate instrument with the same terms as the embedded derivative would qualify as a derivative instrument. Embedded derivatives are measured at fair value and re-measured at each subsequent reporting period and recorded within convertible notes, net on the consolidated balance sheets and changes in fair value recorded in other income (expense), net within the statements of operations and comprehensive loss.
 Earnings per Share
 The calculation of earnings per share is based on the weighted average number of shares of common stock or common stock equivalents outstanding during the applicable period. The dilutive effect of common stock equivalents is excluded from basic earnings per share and is included in the calculation of diluted earnings per share. Potentially dilutive securities include convertible preferred stock, common stock options, common stock warrants and RSUs.
 The Company follows the two-class method when computing net loss per common share when shares are issued that meet the definition of participating securities. The two-class method determines net loss per common share for each class of common stock and participating securities according to dividends declared or accumulated and participation rights in undistributed earnings. The two-class method requires income available to common stockholders for the period to be allocated between common stock and participating securities based upon their respective rights to receive dividends as if all income for the period had been distributed. The Company's redeemable convertible preferred stock contractually entitled the holders of such

 shares to participate in dividends but did not contractually require the holders of such shares to participate in the Company's losses. For periods in which the Company reports net losses, diluted net loss per share is the same as basic net loss per share because potentially dilutive common shares are not assumed to have been issued if their effect is anti-dilutive.
 Diluted shares outstanding are calculated using the treasury stock method or the two-class method, depending on which method is more dilutive for a given period. Under the treasury stock method, the assumed proceeds, which include the exercise price of stock options or warrants plus the average unrecognized compensation cost for future service, are assumed to be used by the Company to repurchase shares of its common stock at the average share price for the fiscal period.
 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. See Note 3. Investments.
 Significant customers are those that represent more than 10% of the Company's total revenue or gross accounts receivable balance at each balance sheet date. As of December 31, 2023 and 2022, the Company had one customer that accounted for $ 3.1 million and $ 2.9 million, or 43 % and 26 %, of gross accounts receivable, respectively. For the year ended December 31, 2023, the Company had one customer that accounted for $ 14.6 million, or 32 %, of total revenue. For the year ended December 31, 2022, the Company had one customer that accounted for $ 9.7 million, or 23 %, of total revenue. For the year ended December 31, 2021, the Company had one customer that accounted for $ 4.9 million, or 18 %, of total revenue.
 Segment Information
 As of December 31, 2023, the Company had one operating and reportable segment as it only reports financial information on an aggregate and consolidated basis to its chief operating decision maker.
 Legal Fees
 The company accounts for legal fees as they are incurred and typically classifies such fees as general and administrative expenses in the Consolidated Statements of Operations and Comprehensive Loss. Total legal fees were $ 12.8 million, $ 8.3 million and $ 8.7 million for the years ended December 31, 2023, 2022 and 2021, respectively.
 Recent Accounting Pronouncements
 In July 2023, the Financial Accounting Standards Board ("FASB") issued ASU 2023-03, Presentation of Financial Statements (Topic 205), Income Statement — Reporting Comprehensive Income (Topic 220), Distinguishing Liabilities from Equity (Topic 480), Equity (Topic 505) and Compensation — Stock Compensation (Topic 718) ("ASU 2023-03"). ASU 2023-03 amends the ASC in response to certain SEC staff bulletins and announcements. As ASU 2023-03 did not provide any new guidance, there was no transition or effective date associated with its adoption. Accordingly, the Company adopted ASU 2023-03 immediately upon its issuance. The adoption of ASU 2023-03 did not have any impact on the Company's consolidated financial statements, including their presentation and related disclosures.
 In October 2023, the FASB issued ASU No. 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 the consolidated financial statements.
 In November 2023, the FASB issued ASU 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures, which expands annual and interim disclosure requirements for reportable segments, primarily through enhanced disclosures about significant segment expenses. The ASU is effective for annual reporting periods beginning after December 15, 2023 and interim periods in fiscal years beginning after December 15, 2024, and early adoption is permitted. The Company is currently evaluating the impact this ASU may have on its consolidated financial statements and related disclosures.

 In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures, to expand the disclosure requirements for income taxes, specifically related to rate reconciliation and income taxes paid. The ASU is effective for annual reporting periods beginning after December 15, 2024, and early adoption is permitted. The Company is currently evaluating the impact that this ASU may have on its consolidated financial statements and related disclosures.

 In November 2024, the FASB issued ASU 2024-03, Disaggregation of Income Statement Expenses (Subtopic 220-40) ("ASU 2024-03"), which is intended to improve disclosures about a public business entity's expenses, primarily through additional disaggregation of income statement expenses. The guidance will be effective for annual reporting periods beginning after December 15, 2026 and interim reporting periods beginning after December 15, 2027. Early adoption is permitted. The standard may be applied using either a prospective or retrospective application. The Company is currently evaluating ASU 2024-03 to determine the impact on its consolidated financial statements and related disclosures.
 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.

 3. 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 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 December 31, 2023

 Amortized Cost
 Gross Unrealized Gain
 Estimated Fair Value

 Commercial paper and corporate bonds
 $
 54,374
 $
 $
 54,405

 U.S. Government debt securities
 30,440
 30,456

 Total available-for-sale securities
 $
 84,814
 $
 $

 As of December 31, 2022

 Amortized Cost
 Gross Unrealized Loss
 Estimated Fair Value

 Asset-backed securities
 $
 5,015
 $
 ( 178)
 $
 4,837

 Commercial paper and corporate bonds
 104,828
 ( 995)
 103,833

 U.S. Government debt securities
 16,689
 ( 290)
 16,399

 Total available-for-sale securities
 $
 126,532
 $
 ( 1,463)
 $
 125,069

 As of December 31, 2023 and 2022, the Company recorded $ 0.05 million of gross unrealized gain and $ 1.5 million of gross unrealized loss, respectively, in accumulated other comprehensive income (loss) on the Consolidated Balance Sheets, primarily due to a decrease in the fair value of the corporate bonds.

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

 As of December 31, 2023

 Amortized Cost
 Estimated Fair Value

 Due in less than one year
 $
 83,435
 $

 Due in one to five years
 —
 —

 Total investments
 $
 83,435
 $

 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 security prior to recovery.
 As of December 31, 2023, the Company had not identified any impairment indicators in its investments.
 During the year ended December 31, 2023, the Company received $ 171.4 million of proceeds from maturities and call redemptions and recorded minimal realized losses from the sale of available-for-sale securities. During the year ended December 31, 2022, the Company received $ 213.8 million of proceeds from maturities and call redemptions and $ 36.7 million of proceeds from sales of money market funds, which are classified as cash and cash equivalents, and recorded minimal realized losses from the sale of available-for-sale securities and received no proceeds from sales. Gains and losses are determined using the first-in first-out method.
 Investment in Private Company
 In July 2021, the Company purchased a convertible promissory note (the "Note") from a counterparty for $ 4.0 million. In November 2021 and March 2022, the Company executed additional convertible promissory notes in the amounts of $ 0.3 million and $ 0.3 million, respectively, under the same terms as the initial Note (collectively referred to as the "Notes"). The outstanding principal of the Notes, together with unpaid and accrued interest, was originally due and payable on September 30, 2022. The maturity date was extended to November 15, 2022. The Notes contained certain embedded features, including: acceleration in the event of default; automatic conversion into the equity of the counterparty upon a subsequent equity financing by the counterparty; optional conversion into equity upon the sale of preferred stock by the counterparty; and optional acceleration or conversion into equity upon certain corporate transactions by the counterparty. Interest accrued at 6 % per annum. The Notes met the definition of a debt security under the provisions of ASC 320, Investments - Debt Securities.
 In December 2022, the counterparty was acquired by a privately held corporation (the "Reference Transaction"). In connection with the Reference Transaction, the Company entered into an agreement in which the Notes were exchanged for consideration, as follows: (i) approximately 124,000 shares of the acquirer's common stock ("investment in private company") and (ii) contingent consideration in the form of the acquirer's common stock and cash ("contingent consideration"), to be paid subject to the acquirer's achievement of a performance milestone by the second quarter of 2023. The acquirer achieved the performance milestone, and the Company received contingent consideration of approximately 530,000 additional shares of the acquirer's common stock and $ 0.3 million of cash in May 2023.
 As there was no readily determinable fair value of the acquirer's common stock, the Company elected to apply the measurement alternative to subsequently value the private company equity interests in accordance with ASC 321, Investments - Equity Securities. The contingent consideration was further discounted to reflect the estimated achievement of the performance milestone. The Company classified the consideration received within Level 3 of the fair value hierarchy. See Note 4. Fair Value Measurements. Changes in fair value are reported in other income (expense), net in the Consolidated Statements of Operations and Comprehensive Loss.
 The Company received $ 1.1 million of consideration for the Notes and recorded a loss of $ 3.5 million during the year ended December 31, 2022 on the Consolidated Statements of Operations and Comprehensive Loss. The consideration received was comprised of investment in private company of $ 0.2 million and contingent consideration of $ 0.9 million, which are presented in prepaid expenses and other current assets on the Consolidated Balance Sheets.

 For the year ended December 31, 2023, the Company recorded a gain on the contingent consideration of $ 0.2 million. Because the Notes were exchanged in the Reference Transaction in December 2022, there were no recorded gains or losses on the Notes during the year ended December 31, 2023. During the year ended December 31, 2022, the Company recorded a loss on the Notes of $ 3.5 million. These changes in fair value are recorded on the Consolidated Statements of Operations and Comprehensive Loss. As of December 31, 2023, the fair value of the investment in private company and contingent consideration was $ 1.0 million and zero, respectively, and presented in prepaid expenses and other current assets on the Consolidated Balance Sheets.

 4. FAIR VALUE MEASUREMENTS
 The Company's financial assets and liabilities that are measured at fair value on a recurring basis are summarized as follows:

 As of December 31, 2023

 Fair Value Measurements Using

 Level 1
 Level 2
 Level 3
 Total

 Assets

 Cash
 $
 81,641
 $
 —
 $
 —
 $
 81,641

 Money market funds and other cash equivalents
 11,221
 1,813
 —
 13,034

 Total cash and cash equivalents
 92,862
 1,813
 —
 94,675

 Available-for-sale securities
 —
 —

 Investment in private company
 —
 —

 Total assets
 $
 92,862
 $
 86,674
 $
 $
 180,490

 Liabilities

 Warrant liability
 $
 —
 $
 —
 $
 —
 $
 —

 Total liabilities
 $
 —
 $
 —
 $
 —
 $
 —

 As of December 31, 2022

 Fair Value Measurements Using

 Level 1
 Level 2
 Level 3
 Total

 Assets

 Cash
 $
 12,180
 $
 —
 $
 —
 $
 12,180

 Money market funds and other cash equivalents
 93,364
 4,284
 —
 97,648

 Total cash and cash equivalents
 105,544
 4,284
 —
 109,828

 Available-for-sale securities
 —
 125,069
 —
 125,069

 Investment in private company
 —
 —

 Contingent consideration
 —
 —

 Total assets
 $
 105,544
 $
 129,353
 $
 1,033
 $
 235,930

 Liabilities

 Warrant liability
 $
 —
 $
 $
 —
 $

 Total liabilities
 $
 —
 $
 $
 —
 $

 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.
 The Company's warrant liability includes private placement warrants that were originally issued in connection with the TSIA IPO that Legacy Latch assumed as part of the Closing of the Business Combination (the "Private Placement Warrants"). The Private Placement Warrants are recorded on the consolidated balance sheets at fair value. This valuation is subject to re-measurement at each balance sheet date. With each re-measurement, the valuation will be adjusted to fair value, with the change in fair value recognized in the consolidated statements of operations and comprehensive loss. The Private Placement Warrants are held by a single holder. ASC 820, Fair Value Measurements, indicates that the fair value should be determined "from the perspective of a market participant that holds the identical item" and "use the quoted price in an active market held by another party, if that price is available." As the only market for the transfer of the Private Placement Warrants is the public market, the Company has determined that the fair value of the Private Placement Warrants at a specific date is determined by the closing or final trading price of the Company's public warrants, traded under the symbol "LTCHW," and within Level 2 of the fair value hierarchy. The closing or final trading price of the public warrants was zero and $ 0.04 as of December 31, 2023 and 2022, respectively. The fair value of the Private Placement Warrants was zero and $ 0.2 million as of December 31, 2023 and 2022, respectively.
 The Company's investments in private company and contingent consideration were classified as Level 3 as of December 31, 2023 and 2022, in the fair value hierarchy because they relied significantly on inputs that were unobservable in the market. The contingent consideration was dependent on varying events and equity value and therefore was estimated. Significant assumptions included: (i) the equity value of the acquirer as of December 31, 2023 and (ii) the ability of the counterparty to achieve future technical milestones in order to make the contingent payment. As discussed in Note 3. Investments, during the year ended December 31, 2023, the Company recorded a gain on the contingent consideration of $ 0.2 million. During the year ended December 31, 2022, the Company recorded a loss on the fair value of the Notes of $ 3.5 million.
 The following table represents the activity of the Level 3 instruments:

 January 1, 2022
 $
 4,300

 Purchases

 Change in fair value(1)

 ( 3,517)

 1,033

 Change in fair value(1)

 Contingent consideration received in cash
 ( 297)

 $

 (1)Recorded in other income (expense), net within the Consolidated Statements of Operations and Comprehensive Loss.
 During the years ended December 31, 2023 and December 31, 2022, there were no transfers of financial assets between Level 1 and Level 2. The Company purchased trading securities during the year ended December 31, 2022, which are categorized as Level 3 in the fair value hierarchy. There were no purchases of Level 3 instruments during the year ended December 31, 2023. Except as discussed in Note 3. Investments, in relation to the conversion of the Notes and as shown in the table above, there were no sales of Level 3 instruments during the years ended December 31, 2023 and 2022. There were no transfers of instruments into or out of Level 3 during the years ended December 31, 2023 and 2022.

 5. INVENTORIES, NET
 Inventories, net consisted of the following:

 Raw materials
 $
 6,665
 $
 7,295

 Finished goods
 9,479
 18,484

 Channel inventory
 3,656

 Total current inventories, net
 16,559
 29,435

 Finished goods, non-current
 10,143
 13,595

 Total inventories, net
 $
 26,702
 $
 43,030

 Hardware shipped to channel partners is considered channel inventory until there is evidence a contract exists and control has passed to the customer. Inventories, net are stated at the lower of cost or net realizable value at their cost being determined using the average cost method. The Company did not record a write-down of channel inventory in cost of hardware revenue for the year ended December 31, 2023. Inventories, net are written down to their net realizable value if they have a cost basis in excess of expected net realizable value. There was no charge on channel inventory to the lower of cost or net realizable value for the year ended December 31, 2023. The Company recorded $ 0.5 million in cost of hardware revenue related to the write-down of channel inventory for the year ended December 31, 2022.
 Net inventories not expected to be sold according to a one year forecasted sales projection are classified as other non-current assets on the Consolidated Balance Sheets. Inventory on hand that exceeds a three year forecasted sales projection is recorded as an excess and obsolete inventory reserve. This reserve is comprised of inventory greater than can be used to meet future needs (excess) or for which the product is outdated or otherwise not expected to be sold (obsolete).
 During the year ended December 31, 2023, the Company's Chief Executive Officer, Interim Chief Financial Officer and Chief Accounting Officer resigned, and the Company appointed an Interim Chief Executive Officer and Interim Chief Financial Officer. The newly appointed leadership team conducted an in-depth analysis of the business and changed the Company's strategy resulting in the rationalization and discontinuation of products and a reduction in the number of distribution channels. As a result, the one year and three year sales forecasts were lower as of December 31, 2023 than as of December 31, 2022. The Company reduced its sales forecasts due to, among other factors, overall market conditions, strained customer relationships and ongoing brand issues due to adverse publicity from the Investigation and Restatement as well as significant turnover of the sales team. The total excess and obsolete inventory reserve increased by $ 9.1 million as of December 31, 2023, $ 6.9 million of which was due to these lower forecasts and $ 2.2 million of which represents inventory the Company had determined had become obsolete during the period. The total excess and obsolete inventory reserve as of December 31, 2023 and December 31, 2022 was $ 12.9 million and $ 3.8 million, respectively.

 6. PREPAID EXPENSES AND OTHER CURRENT ASSETS
 Prepaid expenses and other current assets consisted of the following:

 Insurance receivable
 $
 10,961
 $

 Prepaid inventory
 11,745
 6,168

 Investment in private company and contingent consideration
 1,033

 Unbilled receivables
 5,942

 Prepaid capitalized incentives

 Prepaid installation payments

 Other prepaid expenses and other current assets
 4,041
 3,469

 Total prepaid expenses and other current assets
 $
 34,757
 $
 12,333

 7. PROPERTY AND EQUIPMENT, NET
 Property and equipment, net consisted of the following:

 Computers and equipment
 $
 5,866
 $
 5,580

 Office furniture

 Property and equipment
 5,982
 5,666

 Less: accumulated depreciation
 ( 4,517)
 ( 3,200)

 Total property and equipment, net
 $
 1,465
 $
 2,466

 Total depreciation expense for the years ended December 31, 2023, 2022 and 2021 was $ 1.3 million, $ 1.3 million and $ 0.7 million, respectively.
 The Company did not acquire any property and equipment under capital leases during the years ended December 31, 2023, 2022 and 2021.

 8. INTERNALLY-DEVELOPED SOFTWARE, NET
 Internally-developed software, net consisted of the following:

 Internally-developed software
 $
 21,613
 $
 17,927

 Software-in-development

 3,264

 Less: accumulated amortization
 ( 12,697)
 ( 7,438)

 Total internally-developed software, net
 $
 9,757
 $
 13,753

 The Company capitalized $ 1.3 million, $ 6.8 million and $ 6.6 million in internally-developed software during the years ended December 31, 2023, 2022 and 2021, respectively. Capitalized costs associated with software-in-development are not amortized into amortization expense until the related assets are put into service.
 Total amortization expense related to internally-developed software for the years ended December 31, 2023, 2022 and 2021 was $ 5.4 million, $ 3.9 million and $ 2.2 million, respectively. Impairment expense was $ 0.7 million and $ 0.5 million for the years ended December 31, 2023 and 2022, respectively, which is included in general and administrative expense on the Consolidated Statement of Operations and Comprehensive Loss.

 9. ACCRUED EXPENSES
 Accrued expenses consisted of the following:

 Accrued compensation
 $
 2,099
 $
 1,090

 Accrued warranties

 Accrued purchases
 2,842

 Accrued non-cancellable purchase commitments
 5,303

 Accrued litigation costs
 26,819
 6,846

 Investment purchases payable
 19,322
 —

 Accrued restructuring costs
 1,301

 Other accrued expenses
 4,451
 9,110

 Total accrued expenses
 $
 54,966
 $
 25,645

 For the year ended December 31, 2023, accrued litigation costs primarily include (i) $ 1.95 million related to settlement of the Brennan Action, (ii) $ 6.8 million related to the service provider demand, (iii) $ 1.95 million related to settlement of the

 Schwartz Action and (iv) the Company's $ 14.875 million share of the settlement in the Merger Lawsuits, each as defined and/or further described in Note 12. Commitments and Contingencies.
 Prior to December 31, 2023, the Company (i) received $ 19.3 million of proceeds from the sale of a maturing available-for-sale security and (ii) reinvested the proceeds by purchasing an equal amount of new securities prior to such date. The Company uses trade-date accounting and, as such, the new securities position of $ 19.3 million is included in the balance of available-for-sale securities of $ 84.9 million on the Company's Consolidated Balance Sheets as of December 31, 2023, and a liability of $ 19.3 million presented as investment purchases payable is included in accrued expenses on the Company's Consolidated Balance Sheets as of December 31, 2023. The funds were deducted from the Company's account in early January 2024. Accordingly, the sum of the Company's cash and cash equivalents as of December 31, 2023 is $ 19.3 million higher than it would have been had the funds been deducted from the Company's account prior to year end.
 For the year ended December 31, 2022, (i) other accrued expenses includes $ 1.95 million related to settlement of the Brennan Action and (ii) accrued litigation costs include $ 6.8 million related to the service provider demand, each as defined and/or further described in Note 12. Commitments and Contingencies.

 10. LEASES
 The Company has entered into various operating lease agreements, which are generally for offices and facilities. As of December 31, 2023, the Company leased office spaces in St. Louis, Los Angeles, Denver, and Taiwan with lease termination dates through May 2034. The lease terms range from one to 11 years with varying renewal options. The lease agreements often include escalating lease payments, renewal provisions and other provisions that require the Company to pay costs related to taxes, insurance and maintenance.
 As the Company's leases do not have a readily determinable implicit interest rate, the Company used an IBR, which is the rate incurred to borrow on a collateralized basis over a term similar to the term of the lease for which the rate is estimated. The Company determined the IBR to be 10.0 % for leases entered into during the year ended December 31, 2023. The Company determined the IBR to be 14.5 % for leases entered into during the years ended December 31, 2022 and prior. The IBR used by the Company is based on an estimated rate that considered the Company's credit risk in the United States for a collateralized borrowing and term similar to the respective leases.
 Upon adoption of ASC 842 as of January 1, 2022, the Company recognized on the Consolidated Balance Sheets (i) $ 0.7 million of operating lease ROU assets recorded in other non-current assets and (ii) operating lease liabilities of $ 0.3 million recorded in other current liabilities and $ 0.4 million recorded in other non-current liabilities.

 Additional information related to operating leases included on the Consolidated Balance Sheet as of the year ended December 31, 2023 is presented in the table below (in thousands, except weighted average term and discount rate):

 ROU assets
 $
 2,796

 Lease liabilities
 $
 2,754

 Operating lease cost
 $

 Short-term lease cost
 $

 Cash paid for amounts included in the measurement of operating lease liabilities
 $

 Weighted average remaining lease term - operating leases
 8.1 years

 Weighted average discount rate - operating leases
 10.2
 %

 Maturities of lease liabilities as of December 31, 2023 are as follows:

 2024
 $

 2025

 2026

 2027

 2028

 Thereafter
 1,935

 Total lease payments
 4,182

 Less: imputed interest
 1,428

 Total lease liabilities
 $
 2,754

 The following table presents the future minimum lease payments under the non-cancelable operating leases as of December 31, 2023:

 Minimum Lease Payments

 2024
 $

 2025

 2026

 2027

 2028

 Thereafter
 1,935

 Rent expense related to all leases for the years ended December 31, 2023, 2022 and 2021 was $ 0.6 million, $ 1.1 million and $ 0.9 million, respectively.

 11. DEBT
 Promissory Notes
 In connection with the HDW Acquisition, in July 2023 the Company issued to HDW's stockholders as merger consideration $ 22.0 million aggregate principal amount of unsecured promissory notes ("Promissory Notes"). The Promissory Notes accrued paid-in-kind interest at a rate of 10 % per annum and were scheduled to mature on July 3, 2025, unless earlier accelerated in connection with an event of default (including certain events of delisting from Nasdaq) or change of control of the Company. As of December 31, 2023, the Company concluded that it was virtually certain the Promissory Notes would become payable within the upcoming 12 months due to the Company's then-anticipated delisting from Nasdaq, which was an event of default with respect to the Promissory Notes. Consequently, the Company reclassified the debt obligation as current as of December 31, 2023, despite the event of default not yet occurring. On April 26, 2024, the Company repaid the Promissory Notes in full without penalty. The Company paid an aggregate of $ 23.9 million in principal and accrued interest to the holders of the Promissory Notes.
 Revolving Credit Facility and Term Loan
 In September 2020, Legacy Latch obtained a revolving line of credit as well as a term loan, both of which were secured by a first-perfected security interest in substantially all of the assets of Legacy Latch. In connection with the term loan, Legacy Latch issued warrants to purchase common stock. The revolving line of credit provided for a credit extension of up to $ 5.0 million and bore interest at the greater of the prime rate plus 2 % or 5.25 % per annum, as long as Legacy Latch maintained an Adjusted Quick Ratio (as defined in the credit agreement) of 1.25. Legacy Latch did not draw any amounts on the line of credit, which was cancelled upon repayment in full of the term loan in connection with the Closing of the Business Combination.
 The available amount under the term loan was an initial $ 5.0 million, with two additional tranches of $ 2.5 million each, which Legacy Latch could draw down on in annual increments from closing subject to certain revenue and financing conditions. The term loan bore interest at the greater of the prime rate plus 3 % or 6.25 % per annum. The term loan was set to

 mature on December 1, 2024. The term loan was paid off including accrued interest in connection with the Closing of the Business Combination. See Note 1. Description of Business. The Company identified certain embedded derivatives in the warrants issued related to the term loan. These embedded derivatives were extinguished at Closing.
 Legacy Latch was subject to certain affirmative and negative financial covenants that it was required to meet in order to maintain its credit facilities, including approval required for certain transactions and a minimum bookings amount if Legacy Latch's cash balance plus the amount available under the revolving line of credit fell below $ 20.0 million combined. The Company believes that Legacy Latch was in compliance with all debt covenants as of the repayment date of June 4, 2021.
 In January 2021, Legacy Latch signed an agreement for a revolving credit facility (the "revolving facility") with a freight forwarding and customs brokerage company. The revolving facility had a credit limit of $ 1.0 million. Upon maturity on July 1, 2021, the Company executed a new revolving credit facility (the "new revolving facility") with a credit limit of $ 6.0 million. Both the revolving facility and new revolving facility were available to finance supply chain commercial invoices, including freight and customs duty charges. The Company authorized payment of invoices by the lender on the due date and repaid the financed amount plus interest 90 days following the initial payment date. An installment plan agreement was executed for each financing request, which included the interest rate. The interest rate for the installment plan agreements executed during the year ended December 31, 2022 ranged from 0.87 % to 1.25 % per month. The new revolving facility had no financial covenants and limited non-financial covenants, including requiring the lender's consent prior to a disposition of substantially all assets, a merger or acquisition or an ownership change in excess of 50 % of the voting capital stock of the borrower. In January 2023, the Company cancelled the new revolving facility.

 12. COMMITMENTS AND CONTINGENCIES
 Purchase Commitments
 The Company subcontracts with third-party contract manufacturers to build most Latch hardware products. During the normal course of business and consistent with industry practice, contract manufacturers procure components and build finished goods based upon a forecasted demand plan provided by the Company. Although the Company is allowed to cancel or reschedule orders, there are situations when orders cannot be cancelled, such as when a demand plan change occurs after a contract manufacturer has purchased the components or built the finished goods based on a previous demand plan. The Company materially reduced its demand plan in the second quarter of 2022 and started engaging in discussions with its contract manufacturers regarding the Company's obligation to purchase inventory based on the original demand plan. As of December 31, 2023, the Company had unfunded non-cancellable purchase commitments of approximately $ 0.6 million.
 The Company records a liability for non-cancellable orders to the extent it does not expect to be able to use the inventory related to such orders. As of December 31, 2023 and 2022, the Company accrued $ 0.6 million and $ 5.3 million, respectively, for non-cancellable inventory purchase commitments. See Note 9. Accrued Expenses.
 Registration Rights Agreements
 In connection with the execution of the TSIA Merger Agreement, 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.
 On the HDW Closing Date, in connection with the consummation of the HDW Acquisition and as contemplated by the HDW Merger Agreement, 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 Litigation
 On August 31, 2022, an alleged stockholder of Latch stock filed a purported securities class action 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"). The complaint alleges that the Company and certain of its former officers violated Section 10(b) of the Exchange Act, Rule 10b-5 promulgated thereunder and Section 20(a) of the Exchange Act by making false or misleading statements regarding the Company's business, operations and prospects. The complaint includes claims for damages, including interest, and an award of reasonable costs and attorneys' fees and expert fees to the putative class. On January 17, 2023, the court appointed VB PTC Establishment as Trustee of Gersec Trust as lead plaintiff. On November 12, 2024, the Company and lead plaintiff filed with the court a settlement agreement pursuant to which the Company agreed to pay the settlement class in the amount of $ 1.95 million in exchange for the dismissal of all claims against the defendants (including the Company). The court preliminarily approved the settlement on January 17, 2025, and a final hearing has been set for May 28, 2025. The Company paid the settlement amount in March 2025. The amount of the proposed settlement is reflected (i) in general and administrative expenses in the accompanying Consolidated Statements of Operations and Comprehensive Loss as of the date the complaint was filed and (ii) as accrued expenses in the accompanying Consolidated Balance Sheet as of December 31, 2023. Under the terms of the proposed settlement, the defendants (including the Company) continue to deny any liability or wrongdoing. The Company does not expect insurers to contribute to the settlement amount.
 On January 11, 2023, an alleged stockholder of Latch stock filed a purported securities class action complaint in the United States District Court for the District of Delaware (Schwartz v. Latch, Inc., et al., Case No. 1:23-cv-00027, the "Schwartz Action"). The complaint alleges that the Company and certain of its current and former directors violated Sections 11 and 15 of the Securities Act by making false or misleading statements regarding the Company's business, operations and prospects. The complaint includes claims for damages, including interest, and an award of reasonable costs and attorneys' fees and expert fees to the putative class. On April 24, 2023, the court appointed Scott Schwartz as lead plaintiff. In May 2023, the parties agreed to stay the action pending completion of the Restatement, and to allow the lead plaintiff a period of 21 days following completion of the Restatement in which to file an amended complaint. On September 27, 2024, the Company filed a motion to transfer the complaint to the United States District Court for the Southern District of New York. The motion was denied on November 13, 2024. In December 2024, the parties agreed in principle to a settlement and entered into a binding memorandum of understanding pursuant to which the Company agreed to pay the settlement class in the amount of $ 1.95 million in exchange for the dismissal of all claims against the defendants (including the Company). The amount of the proposed settlement is reflected (i) in general and administrative expenses in the accompanying Consolidated Statements of Operations and Comprehensive Loss as of the date the complaint was filed and (ii) as accrued expenses in the accompanying Consolidated Balance Sheet as of December 31, 2023. The settlement remains subject to a final stipulation of settlement and approval by the court. The defendants continue to deny any fault, liability, wrongdoing or damages in connection with the allegations raised in the Schwartz Action. The Company does not expect insurers to contribute to the settlement amount.
 On May 9, 10 and 19, 2023, three alleged stockholders of Latch stock filed purported class action complaints in the Court of Chancery of the State of Delaware: Kilari v. TS Innovation Acquisitions Sponsor, LLC, et al., C.A. No. 2023-0509; Subramanian v. TS Innovation Acquisitions Sponsor, LLC, et al., C.A. No. 2023-0514; and Garfield v. Speyer, et al., C.A. No. 2023-0504 (together, the "Merger Lawsuits"). On July 6, 2023, the court consolidated the Merger Lawsuits under the caption In re TS Innovation Acquisitions Sponsor, LLC Stockholder Litigation, No. 2023-0509-LWW (Del. Ch.) and appointed Phanindra Kilari, Subash Subramanian and Robert Garfield as co-lead plaintiffs. The Merger Lawsuits allege that TSIA's directors and officers, and alleged entity and individual controllers, breached their fiduciary duties by making false or misleading statements in connection with the merger between Latch and TSIA and by approving a merger unfair to TSIA's stockholders. The Merger Lawsuits include claims for unjust enrichment, damages and an award of costs and attorneys' fees

 to the putative class. Pursuant to the TSIA Merger Agreement, Latch has agreed to indemnify and hold harmless, to the fullest extent permitted by law, TSIA and each of its directors and officers (present and former) named as defendants in the Merger Lawsuits against any costs or expenses, reasonable attorneys' fees, losses, damages or liabilities incurred in connection with these actions. In April 2024, Latch and TS Innovation Acquisitions Sponsor, LLC agreed to share the costs of the settlement amount equally. On December 2, 2024, the defendants and lead plaintiffs filed with the court a settlement pursuant to which the defendants agreed to pay the settlement class in the amount of $ 29.75 million in exchange for the dismissal and release of all claims against the defendants and the Company. While the settlement remains subject to approval by the court, in accordance with the settlement agreement, the full settlement amount of $ 29.75 million was paid in January 2025. The defendants continue to deny any fault, liability, wrongdoing or damages in connection with the allegations raised in the Merger Lawsuits. Of the $ 29.75 million, the Company's insurers paid $ 10.0 million and Latch paid $ 4.875 million. The net amount of the Company's share of the proposed settlement ($ 4.875 million) is reflected in general and administrative expenses in the accompanying Consolidated Statements of Operations and Comprehensive Loss as of the date the complaint was filed. The Company's share of the settlement amount of $ 14.875 million is reflected as accrued expenses in the accompanying Consolidated Balance Sheet as of December 31, 2023. The expected insurance contribution of $ 10.0 million is reflected as prepaid and other current assets in the accompanying Consolidated Balance Sheet as of December 31, 2023.
 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-07473 (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. At this time, the Company is unable to estimate potential losses, if any, related to these actions. The Company does not believe the allegations are meritorious and intends to vigorously defend against them. 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. The parties agreed to stay the action until 21 days following the resolution of any and all motions to dismiss both the Brennan Action and the Schwartz Action. The parties are in discussions regarding a potential resolution.
 Service Provider Demand
 The Company is 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 December 31, 2023 and 2022, 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 being contacted by the Staff of the SEC in March 2023, the Company has been cooperating with the Staff's 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 Company cannot predict the duration or outcome of the SEC Investigation or whether the SEC will bring an enforcement action against the Company.

 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 December 31, 2023 (other than detailed above), will not materially affect the Company's 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.

 13. 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.
 Common Stock Reserved for Future Issuance
 As of December 31, 2023, the Company's reserved shares for future issuance included the following:

 Stock options issued and outstanding
 12,516,060
 12,863,797

 Restricted stock units issued and outstanding
 6,126,062
 11,573,764

 Public warrants outstanding
 9,999,967
 9,999,967

 Private placement warrants outstanding
 5,333,334
 5,333,334

 2021 Incentive Award Plan available shares
 29,116,354
 17,895,423

 Total
 63,091,777
 57,666,285

 Warrants
 As part of the Closing of the Business Combination, 10.0 million public warrants sold during the TSIA IPO converted into 10.0 million public warrants to purchase up to 10.0 million shares of common stock of the Post-Combination Company, which are exercisable at $ 11.50 per share. The Company accounts for warrants as required under 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.
 Fair Valuation Methodology - Private Placement Warrants
 The Private Placement Warrants, which Legacy Latch assumed as part of the Closing of the Business Combination, are recorded as warrant liabilities. See Note 4. Fair Value Measurements.

 14. EARNINGS PER SHARE
 The following table sets forth the computation of basic and diluted net loss per share for common stock:

 2023
 2022
 2021

 $
 $
 $

 Basic weighted-average common shares(1)

 159,146,081
 143,615,820
 86,473,291

 Effect of dilutive securities
 —
 —
 —

 Diluted weighted-average common shares(1)

 159,146,081
 143,615,820
 86,473,291

 Basic and diluted net loss per common share
 $
 ( 0.68)
 $
 ( 1.13)
 $
 ( 1.93)

 (1)The basic and diluted weighted-average common shares exclude 738,000 shares subject to vesting requirements held by the Sponsor related to the Business Combination as the performance conditions have not been met.
 The table below sets forth the number of potential common shares underlying outstanding common stock options, 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:

 2023
 2022
 2021

 Stock options
 12,516,060
 12,863,797
 15,009,656

 Restricted stock units(1)

 6,126,062
 11,573,764
 6,498,869

 Warrants
 15,333,301
 15,333,301
 15,333,301

 Total
 33,975,423
 39,770,862
 36,841,826

 (1) Amount includes zero, 5,377, 21,356 liability-based RSUs as of December 31, 2023, 2022 and 2021, respectively, that the Company settles in cash. As a result, the shares of common stock underlying the liability-based RSUs were not issued upon vesting and were returned to the 2021 Incentive Award Plan as available shares.

 15. STOCK-BASED COMPENSATION
 For the years ended December 31, 2023, 2022 and 2021, the components of stock-based compensation expense were as follows:

 2023
 2022
 2021

 Stock options
 $
 $
 2,251
 $
 15,947

 Restricted stock units
 18,140
 30,365
 13,756

 Capitalized costs(1)

 ( 616)
 ( 2,360)
 ( 648)

 Total stock-based compensation expense
 $
 18,171
 $
 30,256
 $
 29,055

 (1)Included in internally-developed software on the Consolidated Balance Sheets.

 Stock-based compensation expense is included in cost of revenue, research and development, sales and marketing and general and administrative on the Consolidated Statements of Operations and Comprehensive Loss as follows:

 2023
 2022
 2021

 Cost of revenue
 $
 ( 20)
 $
 $

 Research and development
 6,528
 13,408
 10,499

 Sales and marketing
 1,540
 5,755
 3,273

 General and administrative
 10,123
 10,509
 14,906

 Total stock-based compensation expense
 $
 18,171
 $
 30,256
 $
 29,055

 Stock Incentive Plans
 In January 2016, Legacy Latch adopted the Latch, Inc. 2016 Stock Plan (the "2016 Plan" and, together with the Latchable, Inc. 2014 Stock Incentive Plan, the "Prior Plans"). Under the 2016 Plan, Legacy Latch's board of directors was authorized (i) to grant either incentive stock options ("ISOs") or non-qualified 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) 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 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 Post-Combination 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 (the "2021 Plan") was approved by the TSIA stockholders on June 3, 2021 and became effective upon the Closing. 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 (the "Board"). Effective January 1, 2022 and 2023, the number of shares reserved for future issuance under the 2021 Plan increased by 7,116,177 and 7,267,376 shares, respectively. As of December 31, 2023, 24,359,792 shares had been granted under the 2021 Plan. Effective January 1, 2024 and 2025, the number of shares reserved for future issuance under the 2021 Plan increased by 8,810,007 and 8,241,264 shares, respectively.

 Stock Options
 A summary of the status of employee and non-employee stock options as of December 31, 2023, and changes during 2023, is presented below:

 Options Outstanding
 Weighted Average Exercise Price
 Weighted Average Remaining Contractual Term(1)

 Aggregate Intrinsic Value

 Balance at December 31, 2022
 12,863,797
 $
 0.71

 Options forfeited
 ( 347,737)
 $
 1.60

 Options expired
 —
 $
 —

 Options exercised
 —
 $
 —

 Balance at December 31, 2023
 12,516,060
 $
 0.68
 $
 1,705,807

 Exercisable at December 31, 2023
 12,453,430
 $
 0.68
 $
 1,705,807

 (1)Approximately 3.6 million outstanding and exercisable stock options have been excluded from the computation of the weighted average remaining contractual term. The remaining contractual term of such options could not be reasonably estimated as the term end date will not be known until the suspension of the S-8 Registration Statement (as defined below) lapses.
 No stock options were granted during the years ended December 31, 2023 and 2022.
 The total intrinsic value of options exercised during the years ended December 31, 2023, 2022 and 2021 was zero, $ 2.0 million and $ 27.6 million, respectively.
 There were no realized tax-related benefits from the exercise of stock options or disqualifying dispositions for the year ended December 31, 2023. The tax-related benefit realized from the exercise of stock options and disqualifying dispositions totaled $ 0.1 million and $ 0.7 million for the years ended December 31, 2022 and 2021, respectively.
 The Company records stock-based compensation expense on a straight-line basis over the vesting period. As of December 31, 2023, total compensation expense not yet recognized related to unvested stock options was $ 0.04 million, which was expected to be recognized over a weighted-average period of 0.7 years. Additionally, the Company records forfeitures as they occur.
 The Company estimates the fair value of stock options on the date of grant using the Black-Scholes option-pricing model. The Black-Scholes option-pricing model requires estimates of highly subjective assumptions, which affect the fair value of each stock option.
 The assumptions used to estimate the fair value of stock options granted during the year ended December 31, 2021 are as follows:

 Expected term
 6 years

 Volatility
 49.01 % - 49.29 %

 Risk-free interest rate
 0.50 % - 0.63 %

 Dividend yield
 0 %

 Because the Company's common stock has only been publicly traded since June 7, 2021, the expected volatility is based on the historical and implied volatility of similar companies whose stock or option prices are publicly available, after considering the industry, stage of life cycle, size, market capitalization and financial leverage of the other companies. The risk-free interest rate assumption is based on observed U.S. Treasury yield curve interest rates in effect at the time of grant appropriate for the expected term of the stock options granted. As permitted under the guidance, due to the limited amount of option exercises, the Company used the simplified method to compute the expected term for options granted in the year ended December 31, 2021.

 Restricted Stock Units
 During 2022 and 2021, the Company granted RSUs to employees, independent directors and consultants under the 2021 Plan. The equity-based RSUs are settled in shares of common stock after vesting and the liability-based RSUs are settled in cash after vesting. The RSUs 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. As noted above, 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 such date, the Company has not granted any RSUs.
 Equity-based
 A summary of equity-based RSU activity for the year ended December 31, 2023 is presented below.

 Number of RSUs
 Weighted Average Grant Date Fair Value (per unit)

 Balance at December 31, 2022
 11,568,387
 $
 4.17

 Granted
 —
 $
 4.00

 Vested and released
 ( 2,500,546)
 $
 4.88

 Forfeited
 ( 2,941,779)
 $
 —

 Balance at December 31, 2023
 6,126,062
 $
 3.90

 Stock-based compensation expense is recognized on a straight-line basis through the vesting date of the RSUs. The unrecognized stock-based compensation expense related to unvested RSUs was $ 2.1 million as of December 31, 2023 and will be expensed over a weighted-average period of 0.9 years. In addition, approximately 5.6 million RSUs vested during the year ended December 31, 2023 but were not released upon vesting due to the suspension of the S-8 Registration Statement.
 The total fair value of equity-based RSUs vested and released during the years ended December 31, 2023, 2022 and 2021 was $ 1.9 million, $ 9.8 million and $ 4.2 million, respectively.
 Liability-based
 A summary of liability-based RSU activity for the year ended December 31, 2023 is presented below.

 Number of RSUs

 Balance at December 31, 2022
 5,377

 Granted
 —

 Vested
 ( 3,386)

 Forfeited
 ( 1,991)

 Balance at December 31, 2023
 —

 Liability-based RSU expense is recognized on a straight-line basis through the vesting date of the RSUs. For the year ended December 31, 2023, the Company recognized $ 0.003 million of bonus expense within cost of hardware revenue in the Consolidated Statements of Operations and Comprehensive Loss. As of December 31, 2023, there was no remaining unrecognized expense related to the unvested liability-based RSUs. The Company settled 3,386 liability-based RSUs for $ 0.003 million in cash for the year ended December 31, 2023.
 The total fair value of liability-based RSUs vested was less than $ 0.1 million for the years ended December 31, 2023, 2022 and 2021.
 The tax expense realized in connection with the vesting of RSUs was $ 1.3 million, $ 3.0 million and $ 0.2 million for the years ended December 31, 2023, 2022 and 2021, respectively.

 Modification of Stock Options and RSUs
 During the three months ended March 31, 2023, the Company modified the option and RSU awards of five former employees and service providers to extend the post-termination exercise window of 2,647,440 vested options and to accelerate the vesting of 35,150 unvested RSUs that were improbable of vesting as of the modification date. The modification of the vested options resulted in an increase in stock-based compensation expense of $ 0.2 million. The modification of the unvested RSUs was treated as a Type III modification in accordance with ASC 718, which is accounted for as the cancellation of the original award and the issuance of a new award under the modified terms. The modification of the unvested RSUs led to the reversal of previously recognized stock-based compensation expense of $ 0.04 million, offset by the fair value of the new awards of $ 0.03 million as of the modification date, resulting in a net reversal of $ 0.004 million to stock-based compensation expense. For the year ended December 31, 2023, these modifications of vested options and unvested RSUs resulted in a net increase in stock-based compensation expense of $ 0.2 million in the Consolidated Statements of Operations and Comprehensive Loss.
 During the three months ended September 30, 2023, the Company commenced a reduction in force (the "July 2023 RIF"). As a result, the Company modified the option and RSU awards of approximately 40 former employees and service providers to extend the post-termination exercise window of 1,003,562 vested options and to accelerate the vesting of 702,689 unvested RSUs that were improbable of vesting as of the modification date. The modification of the vested options resulted in an increase in stock-based compensation expense of $ 0.05 million for the three and nine months ended September 30, 2023. The modification of the unvested RSUs was treated as a Type III modification in accordance with ASC 718, which is accounted for as the cancellation of the original award and the issuance of a new award under the modified terms. The modification of the unvested RSUs led to the reversal of previously recognized stock-based compensation expense of $ 0.01 million, offset by the fair value of the new awards of $ 0.8 million as of the modification date, resulting in a net increase of $ 0.8 million to stock-based compensation expense for the three and nine months ended September 30, 2023. Additionally, certain former employees and service providers provided service between the date the July 2023 RIF was announced and their later termination date. As a result, the fair value of their new awards was ratably recognized over their remaining service periods, which led to incremental stock-based compensation expense recorded of $ 0.1 million for the three months ended December 31, 2023. For the year ended December 31, 2023, these modifications of vested options and unvested RSUs resulted in a net increase in stock-based compensation expense of $ 1.0 million in the Consolidated Statements of Operations and Comprehensive Loss.
 During the three months ended December 31, 2023, the Company also modified the option and RSU awards of three former employees and service providers to extend the post-termination exercise window of 64,292 vested options and to accelerate the vesting of 20,827 unvested RSUs that were improbable of vesting as of the modification date. The modification of the vested options resulted in an increase in stock-based compensation expense of $ 0.03 million. The modification of the unvested RSUs was treated as a Type III modification in accordance with ASC 718, which is accounted for as the cancellation of the original award and the issuance of a new award under the modified terms. There was no previously recognized stock-based compensation expense recorded for the original awards. The Company recorded the fair value of the new awards of $ 0.02 million as of the modification date in stock-based compensation expense. For the three months and year ended December 31, 2023, these modifications of vested options and unvested RSUs resulted in a net increase in stock-based compensation expense of $ 0.05 million in the Consolidated Statements of Operations and Comprehensive Loss.
 In the aggregate, the above modifications resulted in a net increase in stock-based compensation expense of $ 1.30 million in the Consolidated Statements of Operations and Comprehensive Loss for the year ended December 31, 2023.
 Secondary Purchase
 On January 19, 2021, one of Legacy Latch's existing equity holders acquired an additional 2.8 million shares (as adjusted based on the Exchange Ratio) of Legacy Latch's common stock from certain employees and non-employee service providers at a price per share of $ 9.92 (as adjusted based on the Exchange Ratio). This price was determined based on the pre-money equity valuation ascribed to the Post-Combination Company by TSIA and the estimated conversion ratio at the time of the sales. The foregoing sales were consummated directly among the equity holders to satisfy the acquiring equity holder's demand for additional shares of Legacy Latch's common stock without increasing the size of the PIPE Investment and causing incremental dilution to investors in the Post-Combination Company. Legacy Latch determined that the price per share paid by the equity holder was in excess of fair value. The Company recorded $ 13.8 million during the year ended December 31, 2021 in stock-based compensation expense related to the transaction, which was allocated to research and development, sales and marketing, and general and administrative in the Consolidated Statements of Operations and Comprehensive Loss.

 Cash Election
 Prior to the Business Combination, Legacy Latch's holders of vested stock options were given an election to cancel up to 25 % of the vested stock options in exchange for $ 10.00 per share less the exercise price applicable to each share. An aggregate amount of approximately 0.3 million options were cancelled (adjusted for the Exchange Ratio). Payment for the cash election in the amount of $ 2.6 million was funded as part of the PIPE Investment and 0.3 million newly issued shares of common stock were granted. See Note 1. Description of Business.
 HDW Acquisition
 As discussed in Note 1. Description of Business, on the HDW Closing Date, the Company issued to HDW's stockholders as merger consideration approximately 29.0 million shares of the Company's common stock. These Consideration Shares consisted of (i) approximately 3.8 million shares of the Company's common stock issued to holders of HDW common stock (excluding Mr. Siminoff, the "HDW Common Holders"), (ii) approximately 19.1 million shares to Mr. Siminoff, who was also a holder of HDW common stock (the "Siminoff Shares"), and (iii) approximately 6.1 million shares to holders of HDW preferred stock.
 In connection with and immediately prior to the HDW Acquisition, HDW's board of directors modified certain shares of HDW common stock held by HDW Common Holders that were unvested as of the HDW Closing Date to accelerate vesting upon the change in control. As a result, at closing, the original shares of HDW common stock were exchanged for shares of the Company.
 The modification of the HDW common stock and subsequent exchange for the Company's common stock is treated in accordance with the guidance for replacement awards prescribed by ASC 805. Pursuant to the guidance, the fair value of the "replacement awards" is allocated between consideration transferred and post-combination compensation expense.
 The Company determined the total fair value of the 3.8 million shares of the Company's common stock issued to the HDW Common Holders on the HDW Closing Date was $ 5.3 million based upon the $ 1.40 closing price of the Company's common stock on the HDW Closing Date. Of the $ 5.3 million, (i) $ 1.4 million was attributable to pre-combination service and included in the consideration transferred and (ii) $ 3.9 million was attributable to post-combination service and recognized as stock-based compensation expense by the Company in the post-combination financial statements immediately upon the closing of the HDW Acquisition.
 In connection with and immediately prior to the HDW Acquisition, HDW's board of directors modified certain shares of HDW common stock held by Mr. Siminoff that were unvested as of the HDW Closing Date to accelerate vesting upon the change in control. As a result, at closing, the original shares of HDW common stock were exchanged for shares of the Company.
 Upon issuance by the Company, the terms of the 19.1 million Siminoff Shares were subject to vesting considerations and restrictions on transfer pursuant to the Original Siminoff Stock Restriction Agreement. The Company estimated the fair value of the Siminoff Shares on the HDW Closing Date to be $ 26.7 million based upon the $ 1.40 closing price of the Company's common stock on the HDW Closing Date. Of the $ 26.7 million, $ 5.7 million was attributable to pre-combination service 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. The estimated service period was determined using the Monte Carlo method, which considered the likelihood of the occurrence of a release from the transfer restrictions, including as a result of the Company's delisting from Nasdaq and the achievement of the Share Price Thresholds.
 In the post-combination financial statements for the year ended December 31, 2023, $ 2.8 million of the $ 21.0 million of Siminoff Shares attributable to post-combination service was recognized as stock-based compensation expense by the Company for the post-combination service rendered. Total unrecognized stock-based compensation expense as of December 31, 2023 was $ 18.2 million and is expected to be recognized over a period of 3.3 years.
 The approximately 6.1 million Consideration Shares issued to holders of HDW preferred stock did not result in the Company's recognition of any stock-based compensation expense as the Consideration Shares were not subject to any vesting terms or other restrictions.

 In total, during the year ended December 31, 2023, the Company recorded $ 6.8 million in stock-based compensation expense related to the HDW Acquisition, which was allocated to general and administrative expense in the Consolidated Statements of Operations and Comprehensive Loss.

 16. INCOME TAXES
 The provision for income taxes for the year ended December 31, 2023, 2022 and 2021 consisted of the following:

 2023
 2022
 2021

 Current

 Federal
 $
 —
 $
 —
 $
 —

 State
 —

 Foreign

 Total current

 Deferred

 Federal
 —
 —
 —

 State
 —
 —
 —

 Foreign
 —
 —
 —

 Total deferred
 —
 —
 —

 Total provision
 $
 $
 $

 As of December 31, 2023 and 2022, the Company's net deferred tax liabilities consisted of the following:

 Net operating losses
 $
 107,546
 $
 89,569

 Provision for doubtful accounts
 1,064

 Inventory reserves
 3,343
 1,074

 Sales reserves
 1,514

 Accrued expenses
 6,537
 2,988

 Deferred revenue
 10,242
 10,926

 Unrealized foreign exchange gain/loss

 Stock-based compensation
 5,313
 5,534

 Charitable contributions

 Lease liability

 Fixed assets

 Capitalized research and development
 15,431
 11,066

 R&D tax credits

 Total deferred tax assets before valuation allowance
 150,291
 124,380

 Valuation allowance
 ( 146,740)
 ( 120,912)

 Deferred tax assets net of valuation allowance
 3,551
 3,468

 Deferred commissions
 ( 916)
 ( 675)

 Intangible assets
 ( 1,914)
 ( 2,684)

 Right-of-use asset
 ( 721)
 ( 109)

 Total deferred tax liabilities
 ( 3,551)
 ( 3,468)

 Deferred tax liabilities, net
 $
 —
 $
 —

 As of December 31, 2023, the Company had approximately $ 18.2 million in gross federal NOL carryforwards available to offset future taxable income that will begin to expire in 2034 and approximately $ 387.0 million in gross federal NOL carryforwards available to offset future taxable income that have an indefinite life. The Company had approximately $ 354.8 million in gross state NOL carryforwards available to offset future taxable income. Some of these NOLs follow the federal Tax Cuts and Job Act of 2017 (the "Jobs Act") and have an indefinite life, while others have a finite life with various expiration dates.
 The NOL carryforwards and research and development ("R&D") tax credits are available to reduce future taxable income and tax. However, Sections 382 and 383 of the Internal Revenue Code of 1986, as amended (the "Code"), and similar state regulations, contain provisions that may limit the NOL carryforwards and R&D tax credits available to be used to offset income in any given year upon the occurrence of certain events, including changes in the ownership interests of significant stockholders. In the event of a cumulative change in the ownership interest of significant stockholders in excess of 50% over a three-year period, the amount of the NOL carryforwards and R&D tax credits that the Company may utilize in any one year may be limited.
 Management assesses the available positive and negative evidence to estimate whether sufficient future taxable income will be generated to permit use of the existing deferred tax assets. A significant piece of objective negative evidence was the cumulative loss incurred over the three-year periods ended December 31, 2023 and 2022. Such objective evidence limits the ability to consider other subjective evidence, such as the Company's projections for future growth.
 On the basis of this evaluation, as of December 31, 2023 and 2022, a valuation allowance of $ 146.7 million and $ 120.9 million, respectively, has been recorded to recognize only the portion of the deferred tax asset that is more likely than not to be realized. The amount of the deferred tax asset considered realizable, however, could be adjusted if estimates of future taxable income during the carryforward period are reduced or increased or if objective negative evidence in the form of cumulative losses is no longer present and additional weight is given to subjective evidence such as the Company's projections for future growth. For the years ended December 31, 2023 and 2022, the valuation allowance increased $ 25.8 million and $ 41.2 million, respectively.
 For the years ended December 31, 2023 and 2022, 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.
 The reconciliation of the Company's effective tax rate to the statutory federal rate is as follows:

 Income tax expense at federal statutory rate
 $
 ( 22,577)
 21.00
 %
 $
 ( 34,072)
 21.00
 %

 Permanent items
 2,871
 ( 2.67)
 2,360
 ( 1.45)

 State and local taxes, net of federal taxes
 ( 4,954)
 4.61
 ( 8,553)
 5.27

 Deferred rate changes
 1,420
 ( 1.32)
 ( 415)
 0.26

 Foreign operations
 ( 0.03)
 ( 0.02)

 Foreign dividends and earnings taxable in the U.S.
 —
 —
 —

 Valuation allowance
 25,828
 ( 24.02)
 41,256
 ( 25.43)

 Other
 ( 2,585)
 2.40
 ( 513)
 0.31

 Income tax expense at effective tax rate
 $
 ( 0.03
 %)
 $
 ( 0.06)
 %

 The Company evaluated the provisions of ASC 740, Income Tax, related to the accounting for uncertainty in income taxes recognized in an enterprise's financial statements. ASC 740 prescribes a comprehensive model for financial statement recognition, measurement, presentation and disclosure of uncertain positions taken or expected to be taken in a tax return. For those benefits to be recognized, a tax position must be more likely than not to be sustained upon examination by taxing authorities. Differences between tax positions taken or expected to be taken in a tax return and the benefits recognized and measured pursuant to the interpretation under ASC 740 are referred to as "unrecognized tax benefits." A liability is recognized (or an amount of NOL carryover or tax refundable is reduced) for an unrecognized tax benefit because it represents an enterprise's potential future obligation to the taxing authorities for a tax position that was not recognized as a result of applying the provisions of ASC 740. As of December 31, 2023 and 2022, 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. The Company includes interest and penalties related to unrecognized tax benefits within income tax expense. There are no interest or penalties relating to tax positions during the years ended December 31, 2023, 2022 and 2021.
 The Company files tax returns as prescribed by the tax laws of the jurisdictions in which it operates. In the normal course of business, the Company is subject to examination by federal, state and foreign jurisdictions, where applicable. As of December 31, 2023, the Company's tax years for federal tax purposes are still open under statute from December 31, 2020 to present and from December 31, 2018 to present for state returns. Federal and state NOLs are subject to review by taxing authorities in the year utilized.
 For tax years beginning after December 31, 2021, the Jobs Act eliminated the option to deduct R&D expenditures in the year incurred and requires the mandatory capitalization and amortization of these expenses over five years for expenditures incurred in the United States and over 15 years for expenditure incurred in a foreign jurisdiction. The Company does not expect this provision of the Jobs Act to have a material impact on cash paid for income taxes for the foreseeable future due to available NOLs and tax credits.

 17. RELATED-PARTY TRANSACTIONS
 From time to time, 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 these customers. As of December 31, 2023 and December 31, 2022, the Company had $ 0.02 million and $ 0.04 million, respectively, of receivables, due from these customers, which are included within accounts receivable on the Consolidated Balance Sheets. For the years ended December 31, 2023, 2022 and 2021, the Company had $ 0.1 million, $ 0.1 million and $ 0.5 million, respectively, of hardware revenue from these customers and $ 0.2 million, $ 0.1 million and $ 0.5 million, respectively, of software revenue from these customers, which is included within the Consolidated Statements of Operations and Comprehensive Loss.
 In January 2021, one of the Company's existing equity holders acquired shares of Legacy Latch's common stock from certain employees and non-employee service providers. See Note 15. Stock-Based Compensation.

 18. RETIREMENT PLAN
 The Company has a savings plan pursuant to Section 401(k) of the Code under which all employees meeting eligibility requirements are able to participate. Subject to certain limits set forth in the Code, employees are permitted to make contributions to the plan on a pre-tax salary reduction basis. The Company may elect to make discretionary matching and profit-sharing contributions each year as determined annually. The Company made no employer contributions to the savings plan for the years ended December 31, 2023, 2022 and 2021.

 19. ACQUISITION
 On July 3, 2023, the Company completed its acquisition of HDW in order to acquire HDW's technology assets to accelerate the development of the Company's platform, enable the Company to offer resident services and incorporate HDW's team members. As a result of the HDW Acquisition, the Company acquired all of the voting equity interests of HDW.
 Pursuant to the HDW Merger Agreement, (i) Merger Sub I merged with and into HDW, with HDW continuing as the surviving corporation, and subsequently, (ii) HDW merged with and into Merger Sub II, with Merger Sub II continuing as the surviving entity and a wholly-owned subsidiary of the Company.
 The HDW Acquisition qualified as a business combination in accordance with ASC 805, Business Combinations, and the Company was determined to be the acquirer. Accordingly, total consideration was first allocated to the fair value of assets acquired as of the date of acquisition, with the excess being recorded as goodwill. The Company incurred and expensed

 approximately $ 1.1 million related to the transaction. The acquisition date fair value of the purchase consideration was $ 37.7 million, comprised of the following:

 As of July 3, 2023

 Cash paid or payable
 $

 Value of Latch common stock issued to holders of HDW preferred stock
 8,567

 Fair value of replacement awards
 7,060

 Unsecured promissory notes
 22,000

 Fair value of total consideration transferred
 $
 37,650

 On the HDW Closing Date, the Company issued to HDW's stockholders as merger consideration approximately 29.0 million shares of the Company's common stock. These Consideration Shares consisted of (i) approximately 3.8 million shares of the Company's common stock issued to the HDW Common Holders, which excludes Mr. Siminoff, (ii) approximately 19.1 million shares to Mr. Siminoff, who was also a holder of HDW common stock, and (iii) approximately 6.1 million shares to holders of HDW preferred stock. As discussed in Note 15. Stock-Based Compensation - HDW Acquisition, the shares of HDW common stock, including the Siminoff Shares, were modified by the HDW board of directors in connection with the HDW Acquisition and subsequently exchanged for the Consideration Shares. The modification of the HDW common stock and subsequent exchange for the Consideration Shares is treated in accordance with the guidance for replacement awards prescribed by ASC 805. Pursuant to the guidance, the fair value of the "replacement awards" is allocated between consideration transferred and post-combination compensation expense.
 The Company determined the total fair value of the 3.8 million shares of the Company's common stock issued to the HDW Common Holders on the HDW Closing Date was $ 5.3 million based upon the $ 1.40 closing price of the Company's common stock on the HDW Closing Date. Of the $ 5.3 million, (i) $ 1.4 million was attributable to pre-combination service and included in the consideration transferred (presented within the fair value of replacement awards in the table above) and (ii) $ 3.9 million was attributable to post-combination service and recognized as stock-based compensation expense by the Company in the post-combination financial statements immediately upon the closing of the HDW Acquisition.
 Upon issuance by the Company, the terms of the 19.1 million Siminoff Shares were subject to vesting considerations and restrictions on transfer pursuant to the Original Siminoff Stock Restriction Agreement. The Company estimated the fair value of the Siminoff Shares on the HDW Closing Date to be $ 26.7 million based upon the $ 1.40 closing price of the Company's common stock on the HDW Closing Date. Of the $ 26.7 million, $ 5.7 million was attributable to pre-combination service and included in the consideration transferred (presented within the fair value of replacement awards in the table above) 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.
 The purchase consideration allocation of the acquired assets, based on their respective estimated fair values as of the date of the HDW Acquisition, is as follows:

 As of July 3, 2023

 Cash and cash equivalents
 $
 8,107

 Prepaid expenses and other current assets

 Intangible assets(1)

 5,111

 Accrued expenses
 ( 895)

 Total identifiable net assets
 12,328

 Goodwill
 25,322

 Fair value of net assets acquired
 $
 37,650

 (1) Includes developed technology of $ 3.8 million with a useful life of six years and trade names (domain) of $ 1.3 million with a useful life of seven years. Significant judgments were made by management related to projected financial information and discount rates used to determine the fair value of the developed technology intangible asset and resulting goodwill as of the date of the HDW Acquisition.
 The goodwill recognized as a result of the HDW Acquisition represents (i) the combined synergistic value of cost savings by leveraging HDW's offshore engineering team and downsizing Latch's U.S.-based engineering team; (ii) the ability to

 generate additional revenue by selling HDW platform services to Latch app users; and (iii) the value of the human capital being acquired, including HDW's experienced leadership team.
 There is no expected tax deduction related to the acquired goodwill.
 Following are the supplemental consolidated financial results of the Company on an unaudited pro forma basis, as if the HDW Acquisition had been consummated on January 1, 2022:

 Year Ended December 31,

 2023
 2022

 $
 $

 $
 ( 118,493)
 $
 ( 163,724)

 The supplemental pro forma information presents the combined results of operations for the years ended December 31, 2023 and 2022 as if the HDW Acquisition was completed on January 1, 2022. The supplemental pro forma financial information presented above is not necessarily indicative of the financial position or results of operations that would have been realized if the HDW Acquisition had been completed on January 1, 2022. The supplemental pro forma financial information does not reflect synergies that might have been achieved, nor is it indicative of future operating results or financial position.
 For business combinations occurring in the current reporting year, applicable accounting guidance requires disclosure of the amount of revenue and earnings of the acquired entity since the acquisition date that is included in the consolidated income statement. For the period ended December 31, 2023, HDW had no active products, customers or sales contracts and therefore had no revenue. The acquisition contributed $ 9.8 million to net loss, primarily related to the compensation expense of the team members that joined as a result of the acquisition.

 20. RESTRUCTURING
 Latch completed a reduction in force ("RIF") in May 2022 (the "May RIF") to better align staffing and expense levels with sales volumes and the then-current macroeconomic environment. The May RIF impacted approximately 130 employees, or approximately 27 % of the Company's full-time employees at the time. The Company completed an additional RIF in August 2022 (the "August RIF" and, together with the May RIF, the "2022 RIFs") to create further operating efficiencies. The August RIF impacted approximately 115 employees, or approximately 37 % of the Company's full-time employees at the time. Substantially all of the restructuring costs related to the 2022 RIFs were incurred in 2022, with nominal amounts incurred in 2023.
 In July 2023, the Company commenced the July 2023 RIF in order to streamline business operations, reduce costs and complexities in the business and create further operating efficiencies. The July 2023 RIF, substantially completed in the fourth quarter of 2023, impacted approximately 95 employees, or approximately 70 % of the Company's full-time employees at the time. The Company's Denver facilities were closed due to the July 2023 RIF. The Company vacated the premises in November 2023 but retained the lease through November 2024.
 The Company's restructuring costs by major cost-type incurred were as follows:

 Year Ended December 31,

 2023
 2022

 Severance and termination benefits
 $
 5,715
 $
 8,452

 Lease abandonment charges
 —

 Professional fees and other costs
 —

 Total restructuring costs
 $
 5,812
 $
 8,573

 The Company incurred no restructuring costs for the year ended December 31, 2021. Restructuring costs are recorded in the Consolidated Statements of Operations and Comprehensive Loss as follows:

 Year Ended December 31,

 2023
 2022

 Cost of revenue
 $
 $

 Research and development
 2,947
 2,342

 Sales and marketing
 1,650
 5,174

 General and administrative
 1,008
 1,019

 Total restructuring costs
 $
 5,812
 $
 8,573

 The following table summarizes the changes in the accrued restructuring balance, which is included in accrued expenses in the accompanying Consolidated Balance Sheets.

 Severance and Termination Benefits
 Professional Fees and Other Costs
 Total

 Balance at December 31, 2021
 $
 —
 $
 —
 $
 —

 Restructuring charges
 8,452
 8,573

 Payments
 ( 8,226)
 ( 121)
 ( 8,347)

 Balance at December 31, 2022
 —

 Restructuring charges
 5,715
 —
 5,715

 Payments
 ( 4,640)
 —
 ( 4,640)

 Balance at December 31, 2023
 $
 1,301
 $
 —
 $
 1,301

 Remaining accrual balances as of December 31, 2023 were paid in 2024. Remaining accrual balances as of December 31, 2022 were paid in 2023.

 21. 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 consolidated financial statements, except for the following:
 Delisting
 On August 8, 2023, the Company received a notice from Nasdaq stating that it had determined to suspend trading of the Company's securities on August 10, 2023 and commence delisting procedures because of the Company's failure to regain compliance with its periodic filing obligations by the August 4, 2023 deadline previously set by Nasdaq. On March 21, 2024, Nasdaq filed a Form 25 with the SEC notifying the SEC of Nasdaq's determination to remove the Company's securities from listing on Nasdaq. The delisting was effective April 1, 2024.
 Headquarters
 Effective November 1, 2023, the Company relocated its headquarters to Olivette, Missouri occupying approximately 49,000 square feet of leased warehouse and office space. In January 2024, the Company entered into an amendment to the lease agreement, expanding the premises by approximately 13,000 square feet. The term of the lease agreement commenced March 1, 2024 and continues through June 1, 2029. The total commitment of approximately $ 2.1 million is payable monthly with escalating rental payments over the approximate five year lease term.
 HelloTech Merger and Loan Agreement
 On June 21, 2024, the Company and LS HT Merger Sub, Inc., a wholly-owned subsidiary of the Company ("HT Merger Sub"), entered into an Agreement and Plan of Merger with HelloTech, Inc. ("HelloTech"). On July 1, 2024, HT Merger Sub

 merged with and into HelloTech, with HelloTech continuing as the surviving corporation and a wholly-owned subsidiary of the Company (the "HelloTech Merger").
 As consideration for the HelloTech Merger, the Company (i) as further specified below, assumed HelloTech's outstanding borrowings under its existing term loan, which had outstanding borrowings of approximately $ 6.9 million as of July 1, 2024 (the "Prior Loan") with Customers Bank and (ii) paid $ 250,000 of HelloTech's merger-related expenses. HelloTech's stockholders or other equity holders (including option holders, warrant holders or holders of simple agreements for future equity) did not receive any consideration in connection with the HelloTech Merger.
 On July 15, 2024, the Company, Latch Systems, Inc., a wholly-owned subsidiary of the Company ("Latch Systems"), and HelloTech (collectively with the Company and Latch Systems, the "Borrowers") entered into an Amended and Restated Loan and Security Agreement (the "Loan Agreement") with Customers Bank.
 Pursuant to the Loan Agreement, Customers Bank issued the Borrowers a term loan in the principal amount of $ 6.0 million (the "New Loan"). The Loan Agreement, which amended and restated the terms of the Prior Loan, did not result in the Borrowers receiving any additional loan proceeds. Interest is payable on the New Loan at a rate equal to the greater of (a) the prime rate published in The Wall Street Journal or (b) 6.0 %. The New Loan matures on July 15, 2029 (the "Maturity Date").
 The Borrowers were required to pay interest on the New Loan monthly until January 15, 2025. Thereafter, the Borrowers are required to pay equal monthly installments of principal plus accrued interest until the Maturity Date. There is no penalty for prepayment of the New Loan.
 Pursuant to the Loan Agreement, the Borrowers have granted Customers Bank security interests in substantially all of the Borrowers' assets, other than intellectual property. HelloTech is required to maintain an operating account with Customers Bank with a sufficient balance to support monthly payments. Additionally, the Borrowers are collectively required to maintain a liquidity ratio of at least 4.00, tested monthly, which is calculated as the quotient of unrestricted cash and cash equivalents of the Company and its subsidiaries (subject to certain limitations with respect to cash of foreign subsidiaries), divided by all outstanding indebtedness owed to Customers Bank. As of December 31, 2024, the Company was in compliance with the liquidity ratio covenant.
 Compensation Program and Executive Officer Appointment
 On August 11, 2024 (the "Program Effective Date"), the Board approved an extension of its temporary cash-based leadership compensation program that was established in 2023 to provide certain cash compensation to the Company's officers and key employees during the course of the Restatement. The leadership compensation program is described in more detail below.
 In addition, on 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 restricted stock units ("PSUs") would be granted to Company officers and service providers, and the Company granted Performance Options to certain officers and key service providers. The Performance Equity Program is described in more detail below.
 On the Program Effective Date, the Board also appointed Jason Mitura as the Company's Chief Product Officer beginning August 16, 2024. On August 12, 2024, the Company entered into an employment agreement with Mr. Mitura in connection with his appointment.
 Under the Company's cash-based leadership compensation program, Company officers and other participants receive an additional amount of cash compensation, payable in semi-monthly installments alongside their regular base salary, and are not eligible for any other cash incentive compensation or annual bonuses while the leadership compensation program is in place. On the Program Effective Date, the Board extended this program, originally scheduled to expire on July 31, 2024, until the earlier of (i) the listing of the Company on a national securities exchange or (ii) the date the Board determines in its discretion to terminate it. The annualized amounts payable under the program to Mr. Siminoff, David Lillis, Senior Vice President of Finance, and Mr. Mitura were $ 1,550,000, $ 475,000 and $ 650,000, respectively.
 The Performance Equity Program provides for the Company to grant awards under the 2021 Plan that will become eligible to vest based on the Company's common stock reaching specified market trading prices (based on a trailing 60 -day daily 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 will 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 will 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 will 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.
 On the Program Effective Date, the Board granted Performance Options under the Performance Equity Program and the 2021 Plan to certain officers and key service providers, including to Messrs. Siminoff, Mitura and Lillis covering the following numbers of shares: Mr. Siminoff: 8,000,000 shares; Mr. Mitura: 7,500,000 shares; and Mr. Lillis: 3,000,000 shares (the "Initial Option Grant"). The Performance Options granted to Messrs. Siminoff and Mitura were forfeited on the executives' respective separation dates.
 As described above, the Performance Options are eligible to be earned in three tranches based on the Company's common stock reaching market trading prices (based on a trailing 60 -day daily VWAP) before the seventh anniversary of the Program Effective Date, as set forth in the following table:

 Earned Tranche

 Shares Subject to the Performance Option

 Share Price Hurdle

 33.33 % of award

 $ 4.00

 33.33 % of award

 $ 5.00

 33.34 % of award

 $ 6.00

 Upon attainment of a stock price hurdle, 25 % of each earned tranche of Performance Options will 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 have an exercise price of $ 0.41 and a ten year term; however, any portion of the Performance Option corresponding to a tranche that has not become earned based on the achievement of a share price hurdle within seven years after the Program Effective Date will 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 will, 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 will, 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 will, 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 under the Performance Equity Program to service providers, 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.
 November 2024 Executive Transitions
 On November 18, 2024 (the "Siminoff Agreement 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 (the "Siminoff Separation Date"). After the Siminoff Separation Date, he began serving in an advisory role that will continue through December 31, 2026 (such advisory services, the "Advisory Services," and such date, the "Advisory End Date"). Mr. Siminoff ceased to serve as an "executive officer" of the Company under Rule 3b-7 of the Exchange Act on the Siminoff Separation Date. Upon the Company's request, in performing the Advisory Services, Mr. Siminoff is expected to, among other services, (i) meet with customers and stakeholders, (ii) assist or advise on product development, (iii) assist or advise on corporate development or strategic transactions and (iv) provide transition services. In addition, Mr. Siminoff will no longer be appointed as the Company's Chief Executive Officer.
 In connection with Mr. Siminoff's transition to the advisory role described above, on the Siminoff Agreement Date, Mr. Siminoff and the Company entered into a Separation and Advisory Agreement and Release (the "Siminoff Transition Agreement"). Pursuant to the Siminoff Transition Agreement, the Company and Mr. Siminoff agreed to amend and restate the Original Siminoff Stock Restriction Agreement. In addition, under the Siminoff Transition Agreement, the Company agreed to reimburse Mr. Siminoff for certain legal expenses.

 Pursuant to an amended and restated common stock restriction agreement, which was entered into between Mr. Siminoff and the Company on the Siminoff Agreement Date (the "Restated Restriction Agreement"), and in accordance with the terms of the Original Siminoff Stock Restriction Agreement, the Company exercised its repurchase option with respect to 15,260,540 Consideration Shares held by Mr. Siminoff (the "Repurchased Shares") for $ 0.00005080 per share (the "Repurchase Price"), or a total payment of $ 775.24. The Repurchased Shares represent 80 % of the 19,075,675 Consideration Shares received by Mr. Siminoff in connection with the HDW Acquisition.
 Pursuant to the Restated Restriction Agreement, the 3,815,135 Consideration Shares that were not repurchased by the Company (the "Remaining Shares") are subject to transfer restrictions and an amended repurchase option (the "Amended Repurchase Option") pursuant to which the Company has a right 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 Agreement (the "Repurchase Trigger Date").
 The Remaining Shares are split into two tranches with different provisions governing their release from the transfer restrictions and the Amended Repurchase Option: the Separation Shares and the Advisory Shares (each as hereafter defined).
 The "Separation Shares" consist of 2,861,351 shares (representing 75 % of the Remaining Shares) and will be released from the transfer restrictions and the Amended Repurchase Option in equal tranches (each, a "Release Tranche") as follows:
 i. 20 % of the Separation Shares will be released when the average final trading price of the Company's common stock for any 60 -trading day period prior to the Repurchase Trigger Date (the "Threshold Price") is equal to or exceeds $ 1.00 (the "First Tier");
 ii. 20 % of the Separation Shares will be released when the Threshold Price is equal to or exceeds $ 2.00 (the "Second Tier");
 iii. 20 % of the Separation Shares will be released when the Threshold Price is equal to or exceeds $ 3.00 (the "Third Tier");
 iv. 20 % of the Separation Shares will be released when the Threshold Price is equal to or exceeds $ 4.00 (the "Fourth Tier"); and
 v. 20 % of the Separation Shares will be released when the Threshold Price is equal to or exceeds $ 5.00 (the "Fifth Tier" and, collectively with the other respectively named tiers, the "Price Tiers").
 The Restated Restriction Agreement also includes provisions governing the impact of a change in control on the release of certain Separation Shares.
 The "Advisory Shares" consist of 953,784 shares (representing 25 % of the Remaining Shares) and will be released from the transfer restrictions and the Amended Repurchase Option as follows:
 i. All of the Advisory Shares will be released on the Advisory End Date, provided that a termination of the Advisory Services has not occurred prior to such date.
 ii. In the event of a termination of the Advisory Services by Mr. Siminoff prior to the Advisory End Date other than due to the Company's breach of its ongoing contractual obligations to Mr. Siminoff, subject to notice requirements, the Amended Repurchase Option will immediately apply to all of the Advisory Shares as of the date of such termination (the "Advisory Termination Date"), and the Company will be deemed to have automatically exercised such Amended Repurchase Option with respect thereto.
 iii. In the event of a termination of the Advisory Services by the Company as a result of Mr. Siminoff's willful failure or refusal to perform the Advisory Services in good faith in accordance with the terms of the Siminoff Transition Agreement (a "Termination for Cause"), subject to notice requirements, the Amended Repurchase Option will immediately apply to all of the Advisory Shares as of the Advisory Termination Date, and the Company will be deemed to have automatically exercised such Amended Repurchase Option with respect thereto.
 iv. In the event of a termination of the Advisory Services by the Company other than a Termination for Cause or a change in control prior to the Advisory End Date, or in the event Mr. Siminoff terminates the Advisory Services as a result of the Company's breach of its ongoing contractual obligations to Mr. Siminoff, the Amended Repurchase Option will immediately apply to the portion of the Advisory Shares represented by the solution to the following equation:

 ( 1 – X/ 730) * 953,784, with "X" equaling the number of days elapsed between the Siminoff Separation Date and the Advisory Termination Date, and the Company will be deemed to have automatically exercised such Amended Repurchase Option with respect thereto.
 With respect to the Advisory Shares to which the Amended Repurchase Option does not apply, such Advisory Shares will be released from the Amended Repurchase Option and the Transfer Restrictions on the Advisory Termination Date.
 On November 26, 2024, the Company and Mr. Mitura mutually agreed that Mr. Mitura would step down as the Company's Chief Product Officer effective as of such date, at which time Mr. Mitura ceased to serve as an "executive officer" of the Company under Rule 3b-7 of the Exchange Act. Also on November 26, 2024, the Company and Mr. Mitura entered into a Separation and Transition Agreement and Release (the "Mitura Separation Agreement"). The Mitura Separation Agreement provides that the Company and Mr. Mitura's affiliated entity would enter into a consulting agreement pursuant to which Mr. Mitura would assist the Company in product development. In addition, under the Mitura Separation Agreement, the Company agreed to reimburse Mr. Mitura for certain legal expenses. Pursuant to the consulting agreement, which terminated March 23, 2025, the Company paid Mr. Mitura's related entity approximately $ 0.7 million in each of 2024 and 2025.
 February 2025 Leadership Appointments
 On February 4, 2025, Jason Keyes, Interim Chief Executive Officer, and Marc Landy, Interim Chief Financial Officer, provided notice of their resignations from their positions with the Company effective as of February 6, 2025 (the "Appointment Date"). Messrs. Keyes and Landy were serving in such capacities pursuant to an agreement between the Company and AP Services, LLC, an affiliate of AlixPartners, a global consulting firm. On the Appointment Date, the Board appointed David Lillis as Chief Executive Officer, Jeff Mayfield as Chief Financial Officer and Priyen Patel as Chief Strategy and Legal Officer.

 Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
 None.

 Item 9A. Controls and Procedures
 Background
 As described elsewhere in this Form 10-K, the Audit Committee, with the assistance of independent legal and accounting advisors, conducted an internal investigation of matters relating to 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 the Company's current and historical 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 would be restated. Following the Investigation, the Company completed a comprehensive review of its previously issued financial statements. As a result, in the 2022 Annual Report, the Company restated those financial statements to correct the errors identified. As further detailed below, the Company identified errors 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.
 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-K. Based on this evaluation, our Chief Executive Officer and Chief Financial Officer concluded that the Company's disclosure controls and procedures were not effective as of December 31, 2023 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 December 31, 2023, management believes that the consolidated financial statements and related financial information included in this Form 10-K fairly present in all material respects 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
 2021 Material Weakness
 In our Annual Report on Form 10-K for the year ended December 31, 2021, we identified a material weakness related to the selection and development of control activities, including over information technology related to certain account balances (the "2021 Material Weakness"). Beginning in 2021, with the oversight of the Audit Committee, the Company began implementing a remediation plan to address the 2021 Material Weakness.
 During 2022, the Company completed multiple reductions in force that impacted approximately 245 employees, or approximately 51%, of the Company's full-time employees. The Company also experienced management changes, including the March 2022 transition of the Company's Chief Financial Officer. We believe these personnel changes hindered our ability to fully remediate the 2021 Material Weakness and contributed to additional material weaknesses identified as of December 31, 2022. The 2021 Material Weakness continued to exist as of December 31, 2023.
 2022 Material Weaknesses
 In the 2022 Annual Report, we identified additional material weaknesses. The Company did not maintain controls to execute the criteria established in the Internal Control-Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (the "COSO Framework") for (i) the control environment, (ii) risk assessment, (iii) control activities, (iv) information and communication and (v) monitoring activities.
 Each of the control deficiencies identified below constitute material weaknesses, either individually or in the aggregate that were identified as of December 31, 2022 and continued to exist as of December 31, 2023.

 Control Environment. The Company did not maintain an effective control environment and identified the following material weaknesses: (i) the tone from executive management was insufficient to create the proper environment for effective internal control over financial reporting; and (ii) the Company lacked appropriate policies and resources to develop and operate effective internal control over financial reporting, which contributed to the Company's inability to properly analyze, record and disclose accounting matters timely and accurately.
 These control environment material weaknesses also contributed to the other material weaknesses identified below.
 Risk Assessment. The Company did not design and implement an effective risk assessment and identified a material weakness relating to: (i) identifying, assessing, and communicating appropriate objectives, (ii) identifying and analyzing risks to achieve these objectives, and (iii) identifying and assessing changes in the business that could impact the system of internal controls.
 Control Activities. The Company did not design and implement effective control activities and identified the following material weaknesses, which are in addition to the 2021 Material Weakness:
 • Ineffective design and operation of certain control activities to respond to potential risks of material misstatement of revenue. In particular, the Company failed to: (i) ensure that relevant terms sales representatives had negotiated with customers were identified and communicated to the 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 of revenue to be recognized and (iii) identify and account for extended payment terms. As a result of these control design deficiencies, the policies and controls related to revenue recognition were not effective in ensuring that (a) revenue was recorded at the correct amount and in the correct period and (b) the accounting department was informed of all elements and deliverables of certain arrangements. These design deficiencies led to inaccuracies in amounts and timing of revenue recognition and allowances for uncollectible accounts that contributed to material accounting errors in 2022 and prior years.
 • Ineffective design and operation of certain control activities due to the significant 2022 personnel changes discussed above. Control deficiencies, which aggregate to a material weakness, occurred within the following areas: order to cash, inventory, financial close, sales commissions, procure-to-pay, capitalized software and information and technology general controls.
 Information and Communication. The Company did not design and implement effective information and communication activities and identified the following material weakness: the Company 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.
 Monitoring Activities. The Company did not design and implement effective monitoring activities and identified the following material weaknesses: (i) failure to adequately monitor compliance with accounting policies, procedures and controls related to revenue recognition, including accounts receivable and reserves; and (ii) failure to properly select, develop and perform ongoing evaluations of various components of internal controls.
 Management's Report on Internal Control over Financial Reporting
 Management, including our Chief Executive Officer and Chief Financial Officer, is responsible for establishing and maintaining adequate internal control over financial reporting, as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act, based upon the criteria established in the COSO Framework. The Company's internal control over financial reporting is designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with GAAP.
 An effective internal control system, no matter how well designed, has inherent limitations, including the possibility of human error, the overriding of controls or fraud. Because of these inherent limitations, internal control over financial reporting may not prevent or detect all misstatements and can provide only reasonable assurance with respect to the preparation and fair presentation of financial statements.
 Management conducted an evaluation of the effectiveness of internal control over financial reporting and based upon the criteria set forth in the COSO Framework. Based on that evaluation, management, including our Chief Executive Officer and Chief Financial Officer, concluded that the Company's internal control over financial reporting was not effective as of December 31, 2023 due to the material weaknesses described above.

 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.
 Remediation Plan and Status
 The Company is committed to remediating the material weaknesses identified above, fostering continuous improvement in internal controls and enhancing its overall internal control environment. Since identifying the above material weaknesses, the Company has corrected the errors in the financial statements for 2022 and prior and has begun implementing the remediation activities described below. The Company believes that these activities, when fully implemented, should remediate the identified material weaknesses and strengthen its internal control over financial reporting. These remediation efforts remain ongoing, and additional remediation initiatives may be necessary.
 A material weakness cannot be considered completely remediated until the applicable controls have operated for a sufficient period of time such that management can conclude, through testing, that the controls are operating effectively.
 Accordingly, as management continues to monitor the effectiveness of our internal control over financial reporting, the Company 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. The following remediation activities highlight the Company's commitment to remediating the identified material weaknesses:
 • In January 2023, appointed an interim Chief Executive Officer and an interim Chief Financial Officer to improve tone from executive management, reinforce our commitment to integrity and promote accurate record keeping, ethical values and proper business practices. We also undertook various personnel changes, including voluntary and involuntary terminations within the Company's sales and finance departments.
 • In June and July 2023, established a new leadership team and transitioned to a St. Louis-based, in-person, sales department. All remaining remotely working salespersons were terminated as part of this new strategy. As of July 2023, substantially all of the sales and accounting department members were co-located in our St. Louis office.
 • Hired finance and accounting professionals with the appropriate level of experience and training necessary to develop, maintain and improve our accounting policies, procedures and internal controls and continue to hire other qualified finance and accounting professionals.
 • Provided, and continue to provide, training for employees regarding their responsibilities related to the performance or oversight of internal controls.
 • Reinforced the importance of communication between the sales, accounting and finance departments regarding key terms of, and changes or modifications to, sales transactions, including by establishing controls requiring finance department approval of certain non-standard terms.
 • Updated operative sales contracts to clarify that no transactional terms exist outside of the signed agreements and no oral agreements are valid and enforceable. Legal department approval is required prior to execution of such contracts.
 • Developed an intranet for employees to reference, which includes an organizational chart and access to Company-wide policies and other resources, including the Code of Business Conduct and Ethics, the Whistleblower Policy and access information for our anonymous reporting hotline.
 • Began implementation of a process to reevaluate, revise and improve our Sarbanes-Oxley compliance program, including governance, risk assessment, testing methodologies and corrective action. The Company plans to enhance our risk assessment procedures and conduct a comprehensive risk assessment with a particular 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 certain financial processes and related disclosures. The Company plans 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. The Company intends to conduct a similar review annually, including review and assessment of revenue recognition-related controls and information technology system configurations.

 • In February 2025, following completion of the Restatement, appointed a new Chief Executive Officer, Chief Financial Officer and Chief Strategy and Legal Officer, and will continue to reinforce the improved tone set by the outgoing interim executive officers.
 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 December 31, 2023 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

 Item 9B. Other Information
 (b) Insider Adoption or Termination of Trading Arrangements
 No director or officer adopted or terminated a trading arrangement for the purchase of Company securities for the quarterly period ended December 31, 2023 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).

 Item 9C. Disclosure Regarding Foreign Jurisdictions that Prevent Inspections
 Not applicable.

 Item 10. Directors, Executive Officers and Corporate Governance
 Information about our Board of Directors
 Raju Rishi, Lead Independent Director
 Mr. Rishi, age 58, has served as a member of our Board since the closing of the Business Combination in June 2021 and as the Lead Independent Director since March 2022. Mr. Rishi is a General Partner at RRE Ventures, where he focuses on business primarily in enterprise technology, healthcare IT and AI. He serves on the board of a number of private companies, including Redox, a modern API for healthcare, imgix, an image optimization platform, PartnerStack, a partner and channel management platform, Ostro, a full-stack digital health marketing platform for the pharmaceutical industry, and Tive, a supply chain tracking platform, among others. Prior to joining RRE Ventures in 2015, Mr. Rishi was a Venture Partner at Sigma Prime Ventures in Boston from 2012 to 2015. Mr. Rishi has extensive career experience as an entrepreneur and operator. He is the founder of several startups in the mobile and enterprise software sectors. Prior to that, Mr. Rishi held executive roles at AT&T and Lucent. Mr. Rishi is a graduate of the Massachusetts Institute of Technology, where he holds B.S. and M.S. degrees in Materials Science and Engineering. We believe that Mr. Rishi is qualified to serve on our Board due to his extensive experience in identifying and investing in cutting-edge technology companies, his executive leadership, management, and business experience, and his experience serving on the board of directors of numerous private companies.
 Mr. Campbell, age 60, has served as a member of our Board since the closing of the Business Combination in June 2021. Mr. Campbell formerly served on the board of Tufin Software Technologies, Ltd., a New York Stock Exchange-listed security policy management company headquartered in Tel Aviv, Israel. Mr. Campbell also serves on the board and as the chairman of the Audit Committee of Dataiku Inc., an AI platform company headquartered in New York. From 2006 to 2019, Mr. Campbell served as Chief Financial Officer of Mimecast Ltd., a Nasdaq-listed company specializing in cloud-based email management, where he also served as a director from 2007 to 2015. He previously served as Chief Financial Officer of SR Telecom Inc. a Nasdaq and Toronto Stock Exchange-listed global broadband wireless systems manufacturer, where he was employed from 2002 to 2006. Prior to that, Mr. Campbell was an auditor at Ernst & Young LLP in Canada in the technology sector. Mr. Campbell is a CPA and holds a Bachelor of Commerce degree and a Graduate Diploma in accounting from the John Molson School of Business at Concordia University in Canada, where he also served as a lecturer. We believe that Mr. Campbell is qualified to serve on our Board due to his extensive financial, operational and investment expertise, including his experience serving as Chief Financial Officer of a publicly traded company and as an auditor at a global accounting firm, as well as his substantial experience serving on the board of directors of publicly traded companies.
 Ms. Han, age 53, has served as a member of our Board since the closing of the Business Combination in June 2021. Ms. Han is Chief Executive Officer of Mistplay, Inc., a mobile gaming platform. Prior to taking that position in September 2024, Ms. Han was an Entrepreneur in Residence at RRE Ventures, a role she started in October 2023. She was the Chief Executive Officer of MyFitnessPal, a health and fitness tracking app, from April 2021 to June 2023. She serves on the board of directors of Empire State Realty Trust, a New York Stock Exchange-listed real estate investment trust company, and is a member of the compensation, finance and nominating and governance committees. She previously served on the board of directors of Nutrisystem, Inc., a Nasdaq-listed leading provider of health and wellness and weight management products and services, from 2018 to 2019. From February 2020 to April 2021, she served as Chief Product Officer of Care.com, the largest U.S. marketplace connecting families and caregivers. From 2017 to 2020, Ms. Han served as Chief Executive Officer of Daily Burn, a leading fitness tech brand. Prior to Daily Burn, Ms. Han served as Chief Product Officer at Dotdash (formerly About.com), one of the largest content publishers on the Internet, from 2013 to 2017. Care.com, Daily Burn and Dotdash are each operating businesses of IAC. Ms. Han also previously served as the Senior Vice President of Product Management at WebMD from 2012 to 2013, and as Vice President of Product Development and General Manager of Commerce for DailyCandy from 2009 to 2012. Her professional experience includes leading product management teams at a variety of technology start-ups including Vindigo, Rave Wireless, and Juno Online Services. She earned her Bachelor of Arts in 1993 from Cornell University. We believe that Ms. Han is qualified to serve on our Board due to her extensive experience as a chief product officer at several technology companies, her significant management, business, and executive leadership experience, and her substantial experience serving on the board of directors of publicly traded companies.

 Allen Smith
 Mr. Smith, age 67, has served as a member of our Board since the closing of the Business Combination in June 2021. Mr. Smith is the Managing Partner of Mohari Hospitality, a family office-backed investment platform. From 2020 to 2021, he was President of Cadre, a financial technology company that provides individuals and institutions direct access to large commercial real estate properties. Prior to joining Cadre in 2020, Mr. Smith was the President and CEO of Four Seasons Hotels & Resorts from 2013 to 2018, where he oversaw significant growth in the business and financial performance of Four Seasons. Prior to that, Mr. Smith spearheaded Prudential Real Estate Investors' growth into a global organization as Chief Executive Officer from 2008 to 2013, during which time he also played a substantial role in capital raising efforts. Mr. Smith is a graduate of Cornell University, where he holds an M.S in Hotel/ Motel Administration/ Management and a B.S. in Sociology. We believe that Mr. Smith is qualified to serve on our Board due to his extensive experience in the real estate and hospitality industries and his significant executive leadership, business, and investment experience.
 Rob Speyer
 Mr. Speyer, age 55, has served as a member of our Board since the closing of the Business Combination in June 2021. Mr. Speyer also served as a member of the board of TSIA before the closing of the Business Combination. He has been the Chief Executive Officer of Tishman Speyer since 2008. Rob has led the firm's global expansion, doubling its assets under management to more than $65 billion, delivering nearly 70 million square feet of mixed-use development and redevelopment projects globally, and adding more than 13,000 units to its residential portfolio and development pipeline. Today, over 8,000 residents and nearly 1,900 industry-leading customers live and work in Tishman Speyer's portfolio across 36 markets in the United States, Asia, Europe and Latin America. Mr. Speyer has driven the firm's diversification strategy, which has included the creation of new business lines, such as housing, industrial, life science, proptech investing, and expansion into new markets. Under Rob's leadership, Tishman Speyer is also pursuing the next generation of dynamic, large-scale urban neighborhoods through partnerships with institutions such as Harvard University, the San Francisco Giants and Beijing Capital Steel. Mr. Speyer is Co-Chair of the Partnership for New York City and has served as Chair of the Advisory Board of the Mayor's Fund to Advance New York City across three mayoral administrations. He previously served as the youngest ever Chairman of the Real Estate Board of New York and as Vice Chair of the Shanghai Mayor's International Business Leaders Advisory Council. Mr. Speyer also serves on numerous Boards and councils for New York City institutions. He is active on the Board of Trustees of New York-Presbyterian, where he serves on the Executive Committee and as Chairman of the Real Estate Committee, and St. Patrick's Cathedral, where he was Co-Chairman of the Construction Committee overseeing the New York City landmark's restoration and renovation. We believe that Mr. Speyer is qualified to serve on our Board due to his extensive experience in the real estate industry and his significant executive leadership, business and investment experience.
 Andrew Sugrue
 Mr. Sugrue, age 35, has served as a member of our Board since the closing of the Business Combination in June 2021. Mr. Sugrue is a Founding Partner at Avenir, a private investment firm. He serves on the board of directors of a number of private companies. Prior to founding Avenir in 2017, Mr. Sugrue worked at Shumway Capital from 2016 to 2017, L Catterton from 2014 to 2016, and Peter J Solomon Company from 2012 to 2014. As a Robertson Scholar, he received a Master of Management Studies from the Fuqua School of Business at Duke University and a B.A. from the Honors Program at the University of North Carolina at Chapel Hill. We believe that Mr. Sugrue is qualified to serve on our Board due to his extensive experience in identifying and investing in category-defining technology companies and his experience serving on the board of directors of numerous private companies.
 Information about our Executive Officers
 David Lillis, Chief Executive Officer
 Mr. Lillis, age 50, joined the Company as Senior Vice President of Finance in July 2023 and was appointed as Chief Executive Officer in February 2025. He was previously Chief Financial Officer of RubinBrown LLP, an accounting and professional consulting firm. In such role, which began in 2021, Mr. Lillis served as the top finance executive for the firm and was responsible for all financial operations. Prior to that, Mr. Lillis was Business Finance Officer of Mastercard Global Prepaid where he oversaw financial strategy for the division following the merger of Mastercard Worldwide's Prepaid Management Services and Global Prepaid divisions. Prior to the 2018 merger, Mr. Lillis was Business Finance Officer of Mastercard's Prepaid Management Services division, a role he began in 2016. Mr. Lillis originally joined Mastercard in 2012 as Vice President, Finance - Operations and Technology. Before joining Mastercard, he spent four years as Vice President,

 Brokerage Finance - Operations & IT at Wells Fargo Advisors. His additional work experience includes roles at CNA Insurance, First National Bank of Naperville, Pfizer, Inc. and KPMG LLP. Mr. Lillis has a Bachelor of Business Administration degree and an Executive Master of Business Administration degree from the University of Notre Dame. He is a Chartered Financial Analyst and a Certified Public Accountant.
 Jeff Mayfield, Chief Financial Officer
 Mr. Mayfield, age 48, joined the Company as Controller in September 2023 and was appointed as Chief Financial Officer in February 2025. Mr. Mayfield has over 20 years of experience and expertise in global accounting, finance strategy and operational leadership. From 2001 to September 2023, Mr. Mayfield held progressive leadership roles at Mastercard Worldwide, where he led financial integration efforts for over ten acquisitions with deal values ranging from $25 million to $3 billion. In his roles at Mastercard, he also developed governance structures, streamlined processes and ensured compliance across multinational operations to maximize synergies and minimize disruptions. Mr. Mayfield has a Bachelor of Science degree in accounting from the University of Missouri and is a licensed Certified Public Accountant.
 Priyen Patel, Chief Strategy and Legal Officer
 Mr. Patel, age 38, was appointed as Chief Strategy and Legal Officer in February 2025. He joined the Company in April 2019 as VP of Legal and most recently served as Senior Vice President, Head of Corporate Strategy, General Counsel and Corporate Secretary. In such role, Mr. Patel has built and led the Company's legal function and acted as a trusted advisor and leader for the Company and the Board through several critical events, including its initial public offering, the Restatement process and several leadership transitions. Prior to joining the Company, Mr. Patel was an attorney at White & Case LLP, a position he started in May 2018 with a focus on technology transactions and mergers and acquisitions. He previously practiced at Latham & Watkins LLP and Kenyon & Kenyon LLP, focusing on complex commercial litigation and intellectual property law. Mr. Patel provides over a decade of technology-focused legal, business and management experience, and deep institutional knowledge of the Company's business. Mr. Patel has a Bachelor of Science degree in electrical engineering from the Georgia Institute of Technology and a Juris Doctorate degree from The George Washington University Law School.
 Corporate Governance
 Corporate Governance Guidelines and Code of Ethics
 Our business affairs are managed under the direction of our Board. The Board has adopted Corporate Governance Guidelines, which are reviewed annually, to formalize certain policies and procedures, and a Code of Business Conduct and Ethics (the "Code of Ethics") to prescribe standards for all Latch officers, directors and employees. The Corporate Governance Guidelines and the Code of Ethics are available on Latch's website via the "Governance" link on investors.latch.com. We will post any amendments to and waivers of the Code of Ethics on our website to the extent applicable to an executive officer or a director of Latch. The information on our website should not be deemed incorporated in this Form 10-K.
 Independence of Directors
 Our Corporate Governance Guidelines provide that a majority of our directors should be independent. The Board makes all determinations with respect to director independence on a case-by-case basis in accordance with Nasdaq listing standards and the rules and regulations promulgated by the SEC. In early 2023, 2024 and 2025, the Board undertook annual reviews of director independence, which included considering transactions and relationships between each director or any member of a director's immediate family and Latch. In particular, the Board considered whether any director or family member has a material relationship with us that could compromise the director's ability to exercise independent judgment in carrying out his or her responsibilities. After this review, our Board determined that all of our directors are "independent directors" as defined under the rules of the SEC and Nasdaq. No member of, or nominee for, our Board has a family relationship with any executive officer or other member of our Board.
 Mr. Schoenfelder, the Company's former Chief Executive Officer and Chairman of the Board, was not considered an independent director while on the Board.
 Board Committees
 The Board has three standing committees: the Audit Committee, the Compensation Committee and the Nominating and Corporate Governance Committee. Each of the standing committees is governed by a charter, all of which are available on Latch's website via the "Governance" link on investors.latch.com.

 The Audit Committee is responsible for, among other things:
 • appointing, compensating, retaining, evaluating, terminating and overseeing our independent registered public accounting firm;
 • discussing with our independent registered public accounting firm their independence from management;
 • reviewing with our independent registered public accounting firm the scope and results of their audit;
 • approving all audit and permissible non-audit services to be performed by our independent registered public accounting firm;
 • overseeing the financial reporting process and discussing with management and our independent registered public accounting firm the quarterly and annual financial statements that we file with the SEC;
 • overseeing our financial and accounting controls and compliance with legal and regulatory requirements;
 • reviewing our policies on risk assessment and risk management;
 • reviewing related person transactions; and
 • establishing and maintaining procedures for the confidential anonymous submission of concerns regarding questionable accounting, internal controls, or auditing matters.
 Our Board has affirmatively determined that Messrs. Campbell, Rishi and Smith each meet the heightened definition of "independent director" for purposes of serving on the Audit Committee under SEC and Nasdaq rules. Each member of our Audit Committee also meets the financial literacy requirements of Nasdaq listing standards. In addition, our Board has determined that Messrs. Campbell and Smith both qualify as "audit committee financial experts."
 The Compensation Committee is responsible for, among other things:
 • reviewing and approving the corporate goals and objectives with respect to the compensation of our Chief Executive Officer;
 • evaluating the performance of, and reviewing and approving (either alone or, if directed by the Board, in conjunction with a majority of the independent members) the compensation for, our Chief Executive Officer;
 • overseeing an evaluation of the performance of, and reviewing and setting (or making recommendations to our Board regarding) the compensation for, our other executive officers;
 • reviewing and approving or making recommendations to our Board regarding our incentive compensation and equity-based plans, policies and programs;
 • reviewing and approving all employment agreements and severance arrangements for our executive officers;
 • making recommendations to our Board regarding the compensation of our directors; and
 • retaining and overseeing any compensation consultants.
 Our Board has affirmatively determined that Messrs. Rishi and Smith each meet the definition of "independent director" for purposes of serving on the Compensation Committee under Nasdaq rules and are "non-employee directors" under SEC rules.
 The Nominating and Corporate Governance Committee is responsible for, among other things:
 • identifying individuals qualified to become members of our Board, consistent with criteria approved by our Board;
 • overseeing succession planning for our Chief Executive Officer and other executive officers;
 • periodically reviewing our Board's leadership structure and recommending any proposed changes to our Board;
 • overseeing an annual evaluation of the effectiveness of our Board and its committees; and
 • regularly reviewing and suggesting changes, as appropriate, to the Corporate Governance Guidelines.
 Delinquent Section 16(a) Reports
 Section 16(a) of the Exchange Act requires our executive officers and directors, our principal accounting officer and persons who beneficially own more than ten percent of our common stock to file with the SEC reports of their ownership and changes in their ownership of our common stock. To our knowledge, based solely on (i) review of the copies of such reports and amendments to such reports with respect to the year ended December 31, 2023 filed with the SEC and (ii) written representations by our directors and executive officers, all required Section 16 reports under the Exchange Act for our directors, executive officers, principal accounting officer and beneficial owners of greater than ten percent of our common stock were filed on a timely basis during the year ended December 31, 2023.

 Insider Trading Policy
 The Company has adopted an insider trading policy governing the purchase, sale and other dispositions of the Company's securities that applies to Company personnel, including directors, officers, employees and other covered persons. The Company believes that its insider trading policy is reasonably designed to promote compliance with insider trading laws, rules and regulations and listing standards applicable to the Company. A copy of the Company's insider trading policy is filed as Exhibit 19.1 to this Form 10-K.

 Item 11. Executive Compensation
 We are providing executive and director compensation disclosure pursuant to Item 402 of Regulation S-K for each of the years ended December 31, 2023 and December 31, 2024, respectively.
 2023 Executive Compensation
 2023 Summary Compensation Table
 The following table contains information about the compensation earned by our named executive officers, Luke Schoenfelder, Jason Keyes, Jamie Siminoff, Barry Schaeffer, Marc Landy and Michael Brian Jones (together, the "2023 NEOs"), during the years ended December 31, 2023 and 2022. As noted in this Form 10-K, Messrs. Schoenfelder and Schaeffer resigned from the Company effective January 11, 2023, and Mr. Jones ceased to be an executive officer on July 10, 2023. From January 11, 2023 to February 6, 2025, Messrs. Keyes and Landy, who were not employed by the Company, served as Interim Chief Executive Officer and Interim Chief Financial Officer, respectively, through the Company's engagement of AP Services, LLC ("APS"). As a result, Messrs. Keyes and Landy did not receive salary, benefits or any other direct compensation from the Company.

 Name and Principal Position
 Year
 Salary ($)(1)

 Bonus ($)
 Stock Awards ($)(2)

 All Other Compensation ($)
 Total

 Jamie Siminoff(3)

 2023
 100,000
 344,444(4)

 444,444

 Former Chief Strategy Officer

 Luke Schoenfelder(5)

 2023
 20,833

 678,500(6)

 699,333

 Former Chief Executive Officer
 2022
 500,000

 500,000

 Jason Keyes(7)

 2023

 1,785,683(8)

 1,785,683

 Former Interim Chief Executive Officer

 Barry Schaeffer(9)

 2023
 11,667
 7,083(10)

 459,450(11)

 478,200

 Former Interim Chief Financial Officer
 2022
 280,000
 141,667(10)

 656,184

 1,077,851

 Marc Landy(12)

 2023

 1,963,660(8)

 1,963,660

 Former Interim Chief Financial Officer

 Michael Brian Jones(13)

 2023
 217,898

 135,417(14)

 353,315

 Former Chief Technology Officer
 2022
 325,000

 325,000

 (1)Represents base salary earned in the year shown.
 (2)Amounts reflect the full grant-date fair value of RSUs granted in the year shown based on the closing trading price of our common stock on the date of grant and computed in accordance with ASC Topic 718. The amounts shown are not necessarily the amounts the 2023 NEOs would realize when or if the RSUs vested. No stock was awarded to the 2023 NEOs in 2023.
 (3)Mr. Siminoff was appointed as an executive officer on July 3, 2023 and was not a named executive officer in 2022 or 2021.
 (4)Represents the total additional semi-monthly payments paid to Mr. Siminoff in 2023 pursuant to the Siminoff Compensation Adjustment described below.
 (5)Mr. Schoenfelder resigned on January 11, 2023.

 (6)Represents severance payments made to Mr. Schoenfelder semi-monthly in 2023.
 (7)Mr. Keyes was not a named executive officer in 2022.
 (8)Represents payments made to APS for the services provided by the 2023 NEO to the Company as an interim executive officer.
 (9)Mr. Schaeffer resigned on January 11, 2023.
 (10)Represents the total semi-monthly bonus payments paid to Mr. Schaeffer for his service as Interim Chief Financial Officer.
 (11)Represents $403,200 in severance payments made to Mr. Schaeffer and $56,250 paid to Mr. Schaeffer for consulting services provided after his resignation as a full-time employee of the Company.
 (12)Mr. Landy was not a named executive officer in 2022.
 (13)Mr. Jones ceased to be an executive officer of the Company on July 10, 2023 but remained employed as a Technical Advisor through September 1, 2023.
 (14)Represents severance payments made to Mr. Jones in 2023.
 Elements of 2023 Executive Compensation
 The primary elements of our 2023 NEOs' compensation, other than Messrs. Keyes and Landy, and the main objectives of each are shown below.

 Category
 Compensation Element
 Purpose
 Form of Payment

 Annual, fixed
 Base salary
 Attract and retain talented executives, recognize individual roles and responsibilities, and provide stable income.
 Cash

 Annual, at-risk
 Annual performance-based incentive bonus
 Promote short-term performance objectives and reward executives for their contributions toward achieving those objectives.
 Cash

 Long-term equity
 Equity-based long-term incentive compensation
 Align executives' interests with our stockholders' interests, emphasize long-term financial and operational performance, and help retain executive talent. As noted below, due to the suspension of our S-8 Registration Statement, no equity grants were made in 2023.

 RSUs that vest (generally subject to continued employment) in 12 equal quarterly installments

 In addition, in 2023, our 2023 NEOs, other than Messrs. Keyes and Landy, were eligible to participate in our health and welfare programs and our 401(k) plan on the same basis as our other employees.
 AlixPartners Arrangement
 The Company paid APS for the services of Messrs. Keyes and Landy as Interim Chief Executive Officer and Interim Chief Financial Officer, respectively. Pursuant to the Amended and Restated Agreement for Interim Management Services by and between APS and the Company, dated January 10, 2023 (the "Interim Management Agreement"), the Company paid APS $1,140 per hour for the services of Mr. Keyes and $1,115 per hour for the services of Mr. Landy. Effective October 15, 2023, APS billing rates were discounted by 15%.
 Base Salary
 Base salaries reflect the 2023 NEOs' respective positions, duties and responsibilities. Base salaries are an important part of the 2023 NEOs' total compensation packages because they provide a reasonable degree of financial certainty and stability. Our Compensation Committee and Board annually review and determine the base salaries for our executive officers. In 2023, our 2023 NEOs (other than Messrs. Keyes and Landy) were entitled to receive the following base salaries: Mr. Schoenfelder: $500,000; Mr. Siminoff: $200,000; Mr. Schaeffer: $280,000 and Mr. Jones: $325,000. As noted above, Messrs. Keyes and Landy did not receive base salaries from the Company.

 Annual Incentive Compensation
 In 2023, Messrs. Schoenfelder, Jones and Schaeffer were eligible to receive an annual performance-based cash bonus based on a specified target amount, expressed as a percentage of base salary.
 Messrs. Keyes and Landy were not eligible to receive annual incentive compensation from the Company.
 Upon his hiring in 2023, Mr. Siminoff was initially eligible for a $500,000 annual bonus opportunity, subject to adjustment. However, Mr. Siminoff ceased to be eligible to receive an annual bonus when he began receiving the guaranteed bonus payments described below.
 The 2023 target bonuses, as applicable, for each 2023 NEO are shown below.

 Name
 2023 Target Bonus ($)
 2023 Target Bonus as a Percentage of Base Salary (%)

 Jamie Siminoff

 N/A
 N/A

 Luke Schoenfelder
 50,000

 Jason Keyes

 N/A
 N/A

 Barry Schaeffer
 56,000

 Marc Landy

 N/A
 N/A

 Michael Brian Jones
 48,750

 None of our 2023 NEOs received annual performance-based cash bonuses in 2023. In February 2023, upon the recommendation of the Compensation Committee, the Board approved a corporate bonus plan that was based on the achievement of operating expenses, capital expenditure and annual recurring revenue metrics with individual payout based upon employee performance (the "2023 Bonus Plan"). The 2023 Bonus Plan, which included weighting of each metric, included threshold, target and maximum payouts. Given the resignations of Messrs. Schoenfelder, Schaeffer and Jones in 2023, none was eligible for participation in the 2023 Bonus Plan. As noted above, none of Messrs. Siminoff, Keyes or Landy were eligible for participation in the 2023 Bonus Plan.
 Guaranteed Bonus Payments
 Beginning with his promotion to Interim Chief Financial Officer in March 2022, Mr. Schaeffer received semi-monthly non-performance based bonus payments of $7,000 until the termination of his employment in January 2023.
 Beginning as of November 1, 2023, Mr. Siminoff was entitled to receive annualized cash compensation of $1,550,000 in addition to his base salary, which was payable in semi-monthly installments. For further details of Mr. Siminoff's annual cash compensation, see the section entitled "Siminoff Employment Agreement" below.
 Equity-Based Long-Term Incentive Awards
 None of our 2023 NEOs received grants of RSUs in 2023. The Company did not make any grants of equity incentive plan awards during 2023 due to the suspension of its S-8 Registration Statement.
 Siminoff Employment Agreement
 In connection with the HDW Acquisition in May 2023, the Company and Mr. Siminoff entered into the Siminoff Employment Agreement. Pursuant to the Siminoff Employment Agreement, Mr. Siminoff served as an executive officer of the Company as Chief Strategy Officer. He ceased to serve in the role as of December 31, 2024.
 Pursuant to the Siminoff Employment Agreement, for 2023 and 2024, Mr. Siminoff received an annual base salary of $200,000 and an annual bonus opportunity of $500,000, which annual bonus opportunity could adjust in accordance with the Share Price Thresholds set forth in the table below, which Share Price Thresholds would be measured based on the greater of (i) the Company's highest 90 trading day VWAP in the first six months of the year for which such annual bonus was paid and (ii) the Company's highest 60 trading day VWAP in the last six months of the year for which such annual bonus was paid:

 Adjusted Annual Bonus

 $1.00
 $800,000.00

 $2.00
 $1,800,000.00

 $3.00
 $2,800,000.00

 $4.00
 $3,800,000.00

 $5.00
 $4,800,000.00

 The annual bonus described above was not initially subject to additional performance criteria (other than the Share Price Thresholds); provided, however, that beginning in 2025, the Compensation Committee was permitted to adjust the amount and terms of Mr. Siminoff's annual compensation and was permitted to re-allocate annual compensation among customary fixed and variable components, and the variable components could be subject to customary performance and time-vesting criteria, in each case based upon advice from the Company's independent compensation consultant.
 On November 24, 2023, the Board approved the Siminoff Compensation Adjustment (i) in recognition of the extended Restatement process and (ii) because the Company was, due to applicable securities rules and regulations, unable to award equity compensation to Mr. Siminoff pending completion of the Restatement and delinquent periodic reports. Pursuant to the Siminoff Compensation Adjustment, which was effective as of November 1, 2023, Mr. Siminoff received additional annualized cash compensation of $1,550,000, payable in semi-monthly installments, through his December 31, 2024 separation date. The Siminoff Compensation Adjustment, which the Board extended in July 2024, was to remain in effect until the earlier of (i) the listing of the Company on a national securities exchange or (ii) termination of the Siminoff Compensation Adjustment by the Board. Mr. Siminoff continued to receive his base salary (for total annualized compensation of $1,750,000) but was not eligible to receive any annual corporate bonus, including the annual bonus required by the Siminoff Employment Agreement, while the Siminoff Compensation Adjustment was in effect.
 Outstanding Equity Awards at Fiscal Year-End
 The following table summarizes the number of shares of common stock underlying outstanding equity incentive plan awards for each 2023 NEO as of December 31, 2023. As noted above, none of our 2023 NEOs received equity incentive plan awards in 2023.

 Name
 Grant Date
 Option Awards

 Number of Securities Underlying Unexercised Options Exercisable (#)
 Number of Securities Underlying Unexercised Options Unexercisable (#)
 Option Exercise Price ($)
 Option Expiration Date

 Jamie Siminoff

 —
 —
 —
 —
 —

 Luke Schoenfelder

 5/12/2016
 1,795,003

 0.2229
 5/11/2026

 11/7/2018
 3,128,391

 0.6800
 11/6/2028

 Jason Keyes

 —
 —
 —
 —
 —

 Barry Schaeffer

 —
 —
 —
 —
 —

 Marc Landy

 —
 —
 —
 —
 —

 Michael Brian Jones
 02/09/2015
 126,933

 0.1338
 2/8/2025

 05/12/2016
 876,629

 0.2229
 5/11/2026

 11/07/2018
 1,514,682

 0.6800
 11/6/2028

 Other Compensation and Benefits
 Retirement Savings, Health and Welfare Benefits
 We maintain a 401(k) retirement savings plan for our employees, including our 2023 NEOs, who satisfy certain eligibility requirements. As service providers engaged through APS, neither Mr. Keyes nor Mr. Landy was eligible to participate in our 401(k) plan. The other 2023 NEOs were eligible to participate in the 401(k) plan on the same terms as other full-time employees. The Code allows eligible employees to defer a portion of their compensation, within prescribed limits, on a pre-

 tax basis through contributions to the 401(k) plan. We believe that providing this vehicle for tax-deferred retirement savings adds to the overall desirability of our executive compensation package and is consistent with market practice.
 Employee Benefits
 All of our full-time employees, including our 2023 NEOs other than Messrs. Keyes and Landy, are eligible to participate in our health and welfare plans, including medical, dental and vision benefits; medical and dependent care flexible spending accounts; short-term and long-term disability insurance; and life insurance. We believe these benefits are necessary and appropriate to provide a competitive compensation package to our executive officers.
 We generally do not provide perquisites to our named executive officers, and we do not view perquisites or other personal benefits as a significant component of our executive compensation program. In the future, we may provide perquisites or other personal benefits in limited circumstances following approval of the Compensation Committee.
 We do not generally provide any tax "gross-ups" to our named executive officers.
 Potential Payments Upon Termination or Change in Control
 Messrs. Schoenfelder, Schaeffer and Jones were no longer employed by the Company as of December 31, 2023. Thus, the descriptions below reflect the actual payments upon their respective terminations of employment, not potential payments upon other triggering events. Messrs. Keyes and Landy were not directly employed by the Company and were not eligible for severance payments upon the termination of their engagement for any reason. Mr. Siminoff and the Company were party to the Siminoff Employment Agreement, which provided Mr. Siminoff with the severance protections described below. On November 18, 2024, the Company announced that Mr. Siminoff would step down as the Company's Chief Strategy Officer on December 31, 2024. In connection with that announcement, the Company and Mr. Siminoff entered into a separation and advisory agreement and release, which is more fully described in Part I, Item 1. "Business—Recent Developments."
 Schoenfelder, Schaeffer and Jones Severance Payments
 Effective as of January 11, 2023, Messrs. Schoenfelder and Schaeffer resigned from the Company. In connection with his resignation, Mr. Schoenfelder and the Company entered into a Separation Agreement and Release (the "CEO Separation Agreement"), pursuant to the Board's exercise of discretion. The CEO Separation Agreement provides that, subject to Mr. Schoenfelder's continued compliance with the restrictive covenants in any written agreements between Mr. Schoenfelder and the Company, Mr. Schoenfelder was entitled to receive severance compensation of $708,000 and the extension of the post-termination exercise window applicable to Mr. Schoenfelder's stock options granted on May 12, 2016.
 In connection with his resignation, Mr. Schaeffer and the Company entered into a Separation Agreement and Release (the "CFO Separation Agreement"). The CFO Separation Agreement provides that, subject to Mr. Schaeffer's continued compliance with the restrictive covenants in any written agreements between Mr. Schaeffer and the Company, Mr. Schaeffer was entitled to receive severance compensation of $403,200.
 On July 10, 2023, the Company and Mr. Jones mutually agreed that Mr. Jones would step down as the Company's Chief Technology Officer and, effective as of such date, would no longer serve as an executive officer of the Company. Mr. Jones remained employed with the Company as a Technical Advisor until September 1, 2023. On July 10, 2023, Mr. Jones and the Company entered into a Transition and Separation Agreement (the "Jones Separation Agreement"). The Jones Separation Agreement provides that, subject to Mr. Jones's continued compliance with the restrictive covenants in any written agreements between Mr. Jones and the Company, Mr. Jones was entitled to receive severance compensation of $406,250, the acceleration of the vesting of 50,000 of his outstanding RSUs and the extension of his post-termination exercise window for certain of his outstanding stock options.
 Siminoff Employment Agreement
 Pursuant to the Siminoff Employment Agreement, in the event of a termination of Mr. Siminoff's employment for any reason, he was generally entitled to receive earned but unpaid salary, any owed accrued expenses and any amounts payable under any benefit plans, programs or arrangements that he participates in or benefits from. If Mr. Siminoff's employment was terminated due to death or disability, he (or his estate) would also be entitled to (i) any accrued annual bonus and (ii) a pro-rated bonus, in each case as determined by the Board based on actual performance achieved (with any subjective individual

 performance goals treated as achieved at not less than target and, if applicable, with the Share Price Threshold attainment determined based on the highest level attained during the portion of the year during which Mr. Siminoff was employed).
 If the employment of Mr. Siminoff was terminated either by Latch without "cause" or by Mr. Siminoff for "good reason" (each as defined in the Siminoff Employment Agreement), subject to his execution and non-revocation of a general release of claims and continued compliance with his restrictive covenant obligations, as described below, he would be entitled to: (i) the sum of his base salary plus, if the termination occurred after a Compensation Reallocation (as defined in the Siminoff Employment Agreement), the target bonus at the time of termination (the "Siminoff Cash Severance Payment"), payable over a 12-month period, (ii) his accrued annual bonus plus a full year annual bonus (with the Share Price Threshold attainment determined based on the highest level attained during the portion of the year during which Mr. Siminoff was employed) and (iii) coverage under the Consolidated Omnibus Budget Reconciliation Act of 1985, as amended ("COBRA"), pursuant to a Company-sponsored group health plan, less the amount the he would have paid to receive such coverage as an employee (the "COBRA Payments"), ending upon the earliest of (a) the one-year anniversary of termination, (b) the date he ceases to be eligible for COBRA or (c) the date he becomes eligible for coverage from a subsequent employer.
 If Mr. Siminoff's employment was terminated by Latch without cause or by him for good reason within three months prior to, or 24 months following, a "change in control" (as defined in the Siminoff Employment Agreement), subject to his execution and non-revocation of a general release of claims and continued compliance with his restrictive covenant obligations, as described below, he would be entitled to: (i) the Siminoff Cash Severance Payment, payable in a lump sum within 30 days following the date of his termination, (ii) his accrued annual bonus plus a full year annual bonus (with the Share Price Threshold attainment determined based on the price paid or implied in the change in control transaction), (iii) the COBRA Payments and (iv) full acceleration of the vesting of any outstanding unvested equity incentive awards.
 Mr. Siminoff remains subject to certain restrictive covenants, including confidentiality and one-year non-compete and non-solicitation covenants, under the Siminoff Employment Agreement and the Siminoff Transition Agreement.
 AlixPartners Arrangement
 As service providers engaged through APS, neither Mr. Keyes nor Mr. Landy was eligible for severance benefits or payments.
 Non-Employee Director Compensation
 We have designed our compensation program for our non-employee directors to attract, motivate and retain individuals who are committed to our culture and goals and who have the necessary skills and experience to achieve those goals. Non-employee director compensation is recommended by the Compensation Committee, with the input of its independent compensation consultant, and approved by the Board.
 Following the completion of the Business Combination, and based on input from the Compensation Committee's independent compensation consultant following a market review, we instituted the following annual compensation program for our non-employee directors.

 Who Receives
 Type of Compensation
 Annual Amount

 All non-employee directors
 Annual cash retainer, paid quarterly in arrears(1)

 $40,000

 Committee members other than chairs

 Audit: $9,000
Compensation: $5,000
Nominating and Corporate Governance: $4,000

 Committee chairs

 Audit: $18,000
Compensation: $10,000
Nominating and Corporate Governance: $8,000

 Lead Independent Director

 $20,000

 All non-employee directors
 RSU grant, vesting at subsequent annual meeting of stockholders
 Continuing directors: $150,000
New directors: $250,000

 (1) In lieu of receiving all or any portion of the annual cash retainers to which a non-employee director is entitled, a director may elect to receive an equivalent amount in the form of RSUs that vest on the same schedule as the annual cash retainers would otherwise have been paid.

 Each annual RSU grant for the non-employee directors vests in full on the earlier to occur of (i) the one-year anniversary of the grant date or (ii) the date of the next annual meeting of the Company's stockholders following the grant date, subject to such non-employee director's continued service through the applicable vesting date. In addition, all unvested RSUs held by non-employee directors will vest in full upon the occurrence of a change in control. Due to the suspension of the S-8 Registration Statement, we did not grant RSUs to our non-employee directors in 2023.
 Non-employee directors are reimbursed for reasonable out-of-pocket expenses actually incurred in connection with participation in or attendance at Board and committee meetings.
 The table below describes the compensation received by the non-employee directors for the year ended December 31, 2023.

 Name
 Fees Earned or Paid in Cash ($)(1)

 Stock Awards ($)(2)

 Total ($)

 58,000
 —
 58,000

 44,000
 —
 44,000

 Raju Rishi
 79,000
 —
 79,000

 J. Allen Smith
 54,000
 —
 54,000

 Robert J. Speyer
 40,000
 —
 40,000

 Andrew Sugrue
 48,000
 —
 48,000

 (1)Amounts shown represent cash retainers for service in 2023. Messrs. Rishi, Smith and Sugrue elected to receive such fees in the form of RSUs.
 (2)Due to the suspension of the S-8 Registration Statement, 2023 RSUs for the non-employee directors have not been granted.
 All RSUs held as of December 31, 2023 by each non-employee director were fully vested.
 2024 Executive Compensation
 2024 Summary Compensation Table
 The following table contains information about the compensation earned by our named executive officers who served in such capacities in 2024, Jamie Siminoff, Jason Mitura, Jason Keyes and Marc Landy (together, the "2024 NEOs"), during the years ended December 31, 2024 and 2023. The table also contains compensation information for Messrs. Schoenfelder, Schaeffer and Jones, each of whom served as a named executive officer for certain portions of 2023. From January 11, 2023 to February 6, 2025, Messrs. Keyes and Landy, who were not employed by the Company, served as Interim Chief Executive Officer and Interim Chief Financial Officer, respectively, through the Company's engagement of APS. As a result, Messrs. Keyes and Landy did not receive salary, benefits or any other direct compensation from the Company.

 Name and Principal Position
 Year
 Salary ($)(1)

 Bonus ($)
 Option Awards ($)(2)

 All Other Compensation ($)
 Total ($)

 Jamie Siminoff(3)

 2024
 200,075
 1,851,501(4)

 1,733,333
 26,548(5)

 3,811,457

 Former Chief Strategy Officer
 2023
 100,000
 344,444(4)

 444,444

 Jason Mitura(6)

 2024
 102,115
 189,583(4)

 1,625,000
 708,333(7)

 2,625,031

 Former Chief Product Officer

 Jason Keyes
 2024

 141,821(8)

 141,821

 Former Interim Chief Executive Officer
 2023

 1,785,683(8)

 1,785,683

 Marc Landy
 2024

 541,518(8)

 541,518

 Former Interim Chief Financial Officer
 2023

 1,963,660(8)

 1,963,660

 Luke Schoenfelder(9)

 2023
 20,833

 678,500(10)

 699,333

 Former Chief Executive Officer

 Barry Schaeffer(11)

 2023
 11,667
 7,083(12)

 459,450(13)

 478,200

 Former Interim Chief Financial Officer

 Michael Brian Jones(14)

 2023
 217,898

 135,417(15)

 353,315

 Former Chief Technology Officer

 (1)Represents base salary earned in the year shown.
 (2)Amounts reflect the full grant-date fair value of performance-based stock options granted in 2024, computed in accordance with ASC Topic 718. The amounts shown are not necessarily the amounts the 2024 NEOs would realize when or if the stock options vested.
 (3)Mr. Siminoff was appointed as an executive officer on July 3, 2023.
 (4)Represents the total additional semi-monthly payments paid to the 2024 NEO pursuant to the cash-based leadership compensation program described below.
 (5)Represents reimbursement of legal expenses in connection with the Siminoff Transition Agreement.
 (6)Mr. Mitura was an executive officer between August 16, 2024 and November 26, 2024.
 (7)Amounts paid to Mr. Mitura's related entity for consulting services provided before and after his employment by the Company.
 (8)Represents payments made to APS for the services provided by the 2024 NEO to the Company as an interim executive officer.
 (9)Mr. Schoenfelder resigned on January 11, 2023.
 (10)Represents severance payments made to Mr. Schoenfelder semi-monthly in 2023.
 (11)Mr. Schaeffer resigned on January 11, 2023.
 (12)Represents the total semi-monthly bonus payments paid to Mr. Schaeffer for his service as Interim Chief Financial Officer.
 (13)Represents $403,200 in severance payments made to Mr. Schaeffer and $56,250 paid to Mr. Schaeffer for consulting services provided after his resignation as a full-time employee of the Company.
 (14)Mr. Jones ceased to be an executive officer of the Company on July 10, 2023 but remained employed as a Technical Advisor through September 1, 2023.
 (15)Represents severance payments made to Mr. Jones in 2023.

 AlixPartners Arrangement
 The Company paid APS for the services of Messrs. Keyes and Landy as Interim Chief Executive Officer and Interim Chief Financial Officer, respectively. Pursuant to the Interim Management Agreement, the Company paid APS $1,140 per hour for the services of Mr. Keyes and $1,115 per hour for the services of Mr. Landy. Effective October 15, 2023, APS billing rates were discounted by 15%.
 Elements of Siminoff and Mitura Compensation
 The primary elements of the 2024 compensation of Messrs. Siminoff and Mitura (together, the "Employee NEOs"), and the main objectives of each, are described below. In addition, in 2024, the Employee NEOs were eligible to participate in our health and welfare programs and our 401(k) plan on the same basis as our other employees.
 Base Salary
 Base salaries reflect the Employee NEOs' positions, duties and responsibilities. Base salary is an important part of each Employee NEO's total compensation package because it provides a reasonable degree of financial certainty and stability. Our Compensation Committee and Board annually review and determine the base salaries for our executive officers. In 2024, Messrs. Siminoff and Mitura were entitled to receive a base salary of $200,000 and $350,000, respectively. As noted above, Messrs. Keyes and Landy did not receive base salaries from the Company.
 Cash-Based Leadership Compensation Program
 Under the Company's cash-based leadership compensation program, Company officers and other participants receive an additional amount of cash compensation, payable in semi-monthly installments alongside their regular base salary, and are not eligible for certain other cash incentive compensation or annual bonuses while the leadership compensation program is in place. In August 2024, the Board extended this program, originally scheduled to expire on July 31, 2024, until the earlier of (i) the listing of the Company on a national securities exchange or (ii) the date the Board determines in its discretion to terminate it.
 Beginning as of November 1, 2023, Mr. Siminoff was entitled to receive annualized cash compensation of $1,550,000, in addition to his base salary, which was payable in semi-monthly installments. Commencing with his employment on August 16, 2024, Mr. Mitura was entitled to receive annualized cash compensation of $650,000 in addition to his base salary, which was payable in semi-monthly installments. For further details of Mr. Siminoff's annual cash compensation, see the section entitled "Siminoff Employment Agreement" below.
 Performance-Based Stock Option Award
 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 restricted stock units ("PSUs") would be granted to Company officers and service providers, and the Company granted Performance Options to certain officers and key service providers.
 The Performance Equity Program provides for the Company to grant awards under the 2021 Plan that will become eligible to vest based on the Company's common stock reaching specified market trading prices (based on a trailing 60-day 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.
 On the Program Effective Date, the Board granted Performance Options under the Performance Equity Program and the 2021 Plan to certain officers and key service providers, including Messrs. Siminoff and Mitura, covering the following shares: Mr. Siminoff: 8,000,000 shares; Mr. Mitura: 7,500,000 shares. The Performance Options granted to Messrs. Siminoff and Mitura were forfeited on the executives' respective separation dates.

 As described above, the Performance Options were eligible to be earned in three tranches based on the Company's common stock reaching market trading prices (based on a trailing 60-day VWAP) before the seventh anniversary of the Program Effective Date, as set forth in the following table:

 Earned Tranche

 Shares Subject to the Performance Option

 Share Price Hurdle

 33.33% of award

 $4.00

 33.33% of award

 $5.00

 33.34% of award

 $6.00

 Upon 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.
 To date, no PSUs have been granted under the Performance Equity Program.
 Siminoff Employment Agreement
 In connection with the HDW Acquisition in May 2023, the Company and Mr. Siminoff entered into the Siminoff Employment Agreement. Pursuant to the Siminoff Employment Agreement, Mr. Siminoff served as an executive officer of the Company as Chief Strategy Officer. He ceased to serve in the role as of December 31, 2024.
 Pursuant to the Siminoff Employment Agreement, for 2023 and 2024, Mr. Siminoff received an annual base salary of $200,000 and an annual bonus opportunity of $500,000, which annual bonus opportunity could adjust in accordance with the Share Price Thresholds set forth in the table below, which Share Price Thresholds would be measured based on the greater of (i) the Company's highest 90 trading day VWAP in the first six months of the year for which such annual bonus was paid and (ii) the Company's highest 60 trading day VWAP in the last six months of the year for which such annual bonus was paid:

 Adjusted Annual Bonus

 $1.00
 $800,000.00

 $2.00
 $1,800,000.00

 $3.00
 $2,800,000.00

 $4.00
 $3,800,000.00

 $5.00
 $4,800,000.00

 The annual bonus described above was not initially subject to additional performance criteria (other than the Share Price Thresholds); provided, however, that beginning in 2025, the Compensation Committee was permitted to adjust the amount and terms of Mr. Siminoff's annual compensation and was permitted to re-allocate annual compensation among customary fixed and variable components, and the variable components could be subject to customary performance and time-vesting criteria, in each case based upon advice from the Company's independent compensation consultant.
 On November 24, 2023, the Board approved the Siminoff Compensation Adjustment (i) in recognition of the extended Restatement process and (ii) because the Company was, due to applicable securities rules and regulations, unable to award equity compensation to Mr. Siminoff pending completion of the Restatement and delinquent periodic reports. Pursuant to the Siminoff Compensation Adjustment, which was effective as of November 1, 2023, Mr. Siminoff received additional annualized cash compensation of $1,550,000, payable in semi-monthly installments, through his December 31, 2024 separation date. The Siminoff Compensation Adjustment, which the Board extended in July 2024, was to remain in effect until the earlier of (i) the listing of the Company on a national securities exchange or (ii) termination of the Siminoff

 Compensation Adjustment by the Board. Mr. Siminoff continued to receive his base salary (for total annualized compensation of $1,750,000) but was not eligible to receive any annual corporate bonus, including the annual bonus required by the Siminoff Employment Agreement, while the Siminoff Compensation Adjustment was in effect.
 Outstanding Equity Awards at Fiscal Year-End
 As of December 31, 2024, no 2024 NEO held any outstanding equity incentive plan awards. Messrs. Keyes and Landy were never granted such awards. The Performance Options granted to Messrs. Siminoff and Mitura were forfeited on the executives' respective separation dates.
 Other Compensation and Benefits
 Retirement Savings, Health and Welfare Benefits
 We maintain a 401(k) retirement savings plan for our employees, including our 2024 NEOs, who satisfy certain eligibility requirements. As service providers engaged through APS, neither Mr. Keyes nor Mr. Landy was eligible to participate in our 401(k) plan. The Employee NEOs were eligible to participate in the 401(k) plan on the same terms as other full-time employees. The Code allows eligible employees to defer a portion of their compensation, within prescribed limits, on a pre-tax basis through contributions to the 401(k) plan. We believe that providing this vehicle for tax-deferred retirement savings adds to the overall desirability of our executive compensation package and is consistent with market practice.
 Employee Benefits
 All of our full-time employees, including the Employee NEOs, were eligible to participate in our health and welfare plans, including medical, dental and vision benefits; medical and dependent care flexible spending accounts; short-term and long-term disability insurance; and life insurance. We believe these benefits are necessary and appropriate to provide a competitive compensation package to our executive officers.
 We generally do not provide perquisites to our named executive officers, and we do not view perquisites or other personal benefits as a significant component of our executive compensation program. In the future, we may provide perquisites or other personal benefits in limited circumstances following approval of the Compensation Committee.
 We do not generally provide any tax "gross-ups" to our named executive officers.
 Potential Payments Upon Termination or Change in Control
 Messrs. Siminoff and Mitura were no longer employed by the Company as of December 31, 2024. Thus, the descriptions below reflect the actual payments upon their respective terminations of employment, not potential payments upon other triggering events. Messrs. Keyes and Mr. Landy were not directly employed by the Company and were not eligible for severance payments upon the termination of their engagement for any reason.
 On the November 18, 2024 Siminoff Agreement 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. Mr. Siminoff remained in such role through December 31, 2024, after which he began serving in an advisory role.
 In connection with Mr. Siminoff's transition to the advisory role described above, on the Siminoff Agreement Date, Mr. Siminoff and the Company entered into the Siminoff Transition Agreement. Pursuant to the Siminoff Transition Agreement, the Company and Mr. Siminoff agreed to amend and restate the Original Siminoff Stock Restriction Agreement. In addition, under the Siminoff Transition Agreement, the Company agreed to reimburse Mr. Siminoff for certain legal expenses.
 Pursuant to the Restated Restriction Agreement, and in accordance with the terms of the Original Siminoff Stock Restriction Agreement, the Company exercised its repurchase option with respect to 15,260,540 Repurchased Shares for $0.00005080 per share, or a total payment of $775.24. The Repurchased Shares represent 80% of the 19,075,675 Consideration Shares received by Mr. Siminoff in connection with the HDW Acquisition.
 Pursuant to the Restated Restriction Agreement, the 3,815,135 Remaining Shares are subject to transfer restrictions and the Amended Repurchase Option pursuant to which the Company has a right 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 Repurchase Trigger Date.

 The Remaining Shares are split into two tranches with different provisions governing their release from the transfer restrictions and the Amended Repurchase Option: the Separation Shares and the Advisory Shares.
 The Separation Shares consist of 2,861,351 shares (representing 75% of the Remaining Shares) and will be released from the transfer restrictions and the Amended Repurchase Option in equal tranches as follows:
 i.20% of the Separation Shares will be released when the Threshold Price is equal to or exceeds $1.00;
 ii.20% of the Separation Shares will be released when the Threshold Price is equal to or exceeds $2.00;
 iii.20% of the Separation Shares will be released when the Threshold Price is equal to or exceeds $3.00;
 iv.20% of the Separation Shares will be released when the Threshold Price is equal to or exceeds $4.00; and
 v.20% of the Separation Shares will be released when the Threshold Price is equal to or exceeds $5.00.
 The Restated Restriction Agreement also includes provisions governing the impact of a change in control on the release of certain Separation Shares.
 The Advisory Shares consist of 953,784 shares (representing 25% of the Remaining Shares) and will be released from the transfer restrictions and the Amended Repurchase Option as follows:
 i. All of the Advisory Shares will be released on the Advisory End Date, provided that a termination of the Advisory Services has not occurred prior to such date.
 ii. In the event of a termination of the Advisory Services by Mr. Siminoff prior to the Advisory End Date other than due to the Company's breach of its ongoing contractual obligations to Mr. Siminoff, subject to notice requirements, the Amended Repurchase Option will immediately apply to all of the Advisory Shares as of the Advisory Termination Date, and the Company will be deemed to have automatically exercised such Amended Repurchase Option with respect thereto.
 iii. In the event of a Termination for Cause, subject to notice requirements, the Amended Repurchase Option will immediately apply to all of the Advisory Shares as of the Advisory Termination Date, and the Company will be deemed to have automatically exercised such Amended Repurchase Option with respect thereto.
 iv. In the event of a termination of the Advisory Services by the Company other than a Termination for Cause or a change in control prior to the Advisory End Date, or in the event Mr. Siminoff terminates the Advisory Services as a result of the Company's breach of its ongoing contractual obligations to Mr. Siminoff, the Amended Repurchase Option will immediately apply to the portion of the Advisory Shares represented by the solution to the following equation:
 (1 – X/730) * 953,784, with "X" equaling the number of days elapsed between the Siminoff Separation Date and the Advisory Termination Date, and the Company will be deemed to have automatically exercised such Amended Repurchase Option with respect thereto.
 With respect to the Advisory Shares to which the Amended Repurchase Option does not apply, such Advisory Shares will be released from the Amended Repurchase Option and the Transfer Restrictions on the Advisory Termination Date.
 On November 26, 2024, the Company and Mr. Mitura mutually agreed that Mr. Mitura would step down as the Company's Chief Product Officer effective as of such date. Also on November 26, 2024, the Company and Mr. Mitura entered into the Mitura Separation Agreement. The Mitura Separation Agreement provides that the Company and Mr. Mitura would enter into a consulting agreement pursuant to which Mr. Mitura would assist the Company in product development. In addition, under the Mitura Separation Agreement, the Company agreed to reimburse Mr. Mitura for certain legal expenses.
 AlixPartners Arrangement
 As service providers engaged through APS, neither Mr. Keyes nor Mr. Landy was eligible for severance benefits or payments.
 Non-Employee Director Compensation
 We have designed our compensation program for our non-employee directors to attract, motivate and retain individuals who are committed to our culture and goals and who have the necessary skills and experience to achieve those goals. Non-employee director compensation is recommended by the Compensation Committee, with the input of its independent compensation consultant, and approved by the Board.

 Based on input from the Compensation Committee's independent compensation consultant, we have instituted the following annual compensation program for our non-employee directors.

 Who Receives
 Type of Compensation
 Annual Amount

 All non-employee directors
 Annual cash retainer, paid quarterly in arrears(1)

 $40,000

 Committee members other than chairs

 Audit: $9,000
Compensation: $5,000
Nominating and Corporate Governance: $4,000

 Committee chairs

 Audit: $18,000
Compensation: $10,000
Nominating and Corporate Governance: $8,000

 Lead Independent Director

 $20,000

 All non-employee directors
 RSU grant, vesting at subsequent annual meeting of stockholders
 Continuing directors: $150,000
New directors: $250,000

 (1) In lieu of receiving all or any portion of the annual cash retainers to which a non-employee director is entitled, a director may elect to receive an equivalent amount in the form of RSUs that vest on the same schedule as the annual cash retainers would otherwise have been paid.
 Each annual RSU grant for the non-employee directors vests in full on the earlier to occur of (i) the one-year anniversary of the grant date or (ii) the date of the next annual meeting of the Company's stockholders following the grant date, subject to such non-employee director's continued service through the applicable vesting date. In addition, all unvested RSUs held by non-employee directors will vest in full upon the occurrence of a change in control. Due to the suspension of the S-8 Registration Statement, we did not grant RSUs to our non-employee directors in 2024.
 Non-employee directors are reimbursed for reasonable out-of-pocket expenses actually incurred in connection with participation in or attendance at Board and committee meetings.
 The table below describes the compensation received by the non-employee directors for the year ended December 31, 2024.

 Name
 Fees Earned or Paid in Cash ($)(1)

 Stock Awards ($)(2)

 Total ($)

 58,000
 —
 58,000

 44,000
 —
 44,000

 Raju Rishi
 79,000
 —
 79,000

 J. Allen Smith
 54,000
 —
 54,000

 Robert J. Speyer
 40,000
 —
 40,000

 Andrew Sugrue
 48,000
 —
 48,000

 (1)Amounts shown represent cash retainers for service in 2024. Messrs. Rishi and Sugrue elected to receive such fees in the form of RSUs. Mr. Smith elected to receive such fees in the form of RSUs through June 30, 2024.
 (2)Due to the suspension of the S-8 Registration Statement, 2024 RSUs for the non-employee directors have not been granted.
 All RSUs held as of December 31, 2024 by each non-employee director were fully vested.
 Compensation Recovery ("Clawback") Policy
 Our Board adopted the Company's Policy for Recovery of Erroneously Awarded Compensation (the "Clawback Policy"), effective as of October 2, 2023 in accordance with SEC rules and then-applicable Nasdaq listing standards. The Clawback Policy provides that, in the event that the Company is required to prepare an accounting restatement of our financial statements due to material noncompliance with financial reporting requirements, the Company must recover any incentive-based compensation received by any current or former executive officers during the three completed fiscal years immediately preceding the date of the applicable accounting restatement the amount of the incentive-based compensation received by such executive officer that exceeds the amount that would have been received had such incentive-based compensation been determined based on the restated financial reporting measure.

 Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters
 Securities Authorized for Issuance Under Equity Incentive Plans
 See Part II, Item 5. "Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities."
 Security Ownership of Certain Beneficial Owners and Management
 The following table sets forth information known to us regarding the beneficial ownership of our common stock as of March 21, 2025 by:
 • each person who is the beneficial owner of more than 5% of the outstanding shares of our common stock;
 • each of our 2023 NEOs, 2024 NEOs and directors; and
 • all of our executive officers and directors as a group.
 Beneficial ownership is determined according to the rules of the SEC, which generally provide that a person has beneficial ownership of a security if he, she or it possesses sole or shared voting or investment power over that security, including (i) options and warrants that are currently exercisable or exercisable within 60 days of March 21, 2025 and (ii) RSUs that are vested and have not been released or are scheduled to vest within 60 days of March 21, 2025. Except as described in the footnotes below and subject to applicable community property laws and similar laws, we believe that each person listed below has sole voting and investment power with respect to such shares. Unless otherwise noted, the address of each beneficial owner is c/o Latch, Inc., 1220 N. Price Rd, Suite 2, Olivette, Missouri 63132.
 The beneficial ownership of our common stock is based on 164,825,277 shares of common stock issued and outstanding as of March 21, 2025. The information is based on Form 3s, Form 4s, Form 5s, Schedule 13Ds, Schedule 13Gs and Schedule 13G/As filed through March 21, 2025.

 Name of Beneficial Owners
 Number of Shares of Common Stock Beneficially Owned
 Percentage of Outstanding Common Stock

 5% Stockholders:

 Entities affiliated with Avenir Latch Investors, LLC(1)

 21,435,551
 13.0
 %

 Entities affiliated with Lux Ventures IV, L.P.(2)

 11,312,962
 6.9
 %

 TS Innovation Acquisitions Sponsor, L.L.C.(3)

 12,713,334
 7.5
 %

 Pan-Am Equities Inc.(4)

 10,855,580
 6.6
 %

 Directors and Named Executive Officers:

 Jamie Siminoff(5)

 3,826,635
 2.3
 %

 Luke Schoenfelder(6)

 6,099,301
 3.6
 %

 136,946
 *

 164,495
 *

 Raju Rishi
 189,435
 *

 J. Allen Smith
 285,650
 *

 Robert J. Speyer(7)

 13,087,185
 7.7
 %

 Andrew Sugrue(8)

 21,603,077
 13.1
 %

 Michael Brian Jones(9)

 2,632,910
 1.6
 %

 Barry Schaeffer
 70,067
 *

 Jason Keyes

 —

 —

 Marc Landy

 —

 —

 Jason Mitura(10)

 —

 —

 Directors and executive officers as a group (nine individuals)(11)

 36,197,735
 21.7
 %

 * Less than one percent

 (1)Based on a Schedule 13D filed June 14, 2021. Avenir Latch Investors, LLC is the record holder of 7,901,893 shares of common stock. Avenir Latch Investors II, LLC is the record holder of 6,981,953 shares of common stock. Avenir Latch Investors III, LLC is the record holder of 6,551,705 shares of common stock. Avenir Management Company, LLC is the manager of each of Avenir Latch Investors, LLC, Avenir Latch Investors II, LLC and Avenir Latch Investors III, LLC. Avenir Management Company, LLC is controlled by an investment committee made up of James M. Reynolds, IV and Andrew Sugrue. As a result, each of Avenir Management Company, LLC and Messrs. Reynolds and Sugrue may be deemed to share beneficial ownership over the securities. The address for these entities and individuals is c/o Avenir Management Company, LLC, 135 Fifth Avenue, 7th Floor, New York, New York 10010.
 (2)Based on a Schedule 13G/A filed February 14, 2022. Lux Ventures IV, L.P. ("LVIV") is the record holder of 7,228,469 shares of common stock. Lux Co-Invest Opportunities, L.P. ("LCIO") is the record holder of 4,084,493 shares of common stock. Lux Venture Partners IV, LLC ("LVP") is the general partner of LVIV and exercises voting and dispositive power over the shares held by LVIV. Lux Co-Invest Partners, LLC ("LCP") is the general partner of LCIO and exercises voting and dispositive power over the shares held by LCIO. Lux Capital Management, LLC serves as the investment manager for each of LVP and LCP and, as such, may be deemed to share voting and dispositive power for the shares held by each of LVIV and LCIO. Peter Hebert and Josh Wolfe are the sole managers of LVP and LCP and may be deemed to share voting and dispositive power for the shares held by each of LVIV and LCIO. Peter Hebert and Josh Wolfe are the sole managers of Lux Venture Partners IV, LLC and Lux Co-Invest Partners, LLC and may be deemed to share voting and dispositive power for the shares held by each of Lux Ventures IV, L.P. and Lux Co-Invest Opportunities, L.P. As a result of the foregoing, for purposes of Rule 13d-3 under the Exchange Act, (i) each of LCM, Mr. Hebert and Mr. Wolfe may be deemed to beneficially own 11,312,962 shares of common stock of Latch, (ii) LVP may be deemed to beneficially own 7,228,469 shares of common stock held directly by LVIV and (iii) LCP may be deemed to beneficially own 4,084,493 shares of common stock held directly by LCIO. The address for these entities and individuals is c/o Lux Capital Management, 920 Broadway 11th Floor, New York, New York 10010.
 (3)Based on a Schedule 13D filed September 20, 2021. Consists of (a) 7,380,000 shares of common stock and (b) 5,333,334 shares of common stock issuable upon exercise of the Private Placement Warrants. The Sponsor is the record holder of such shares of common stock. The sole manager of the Sponsor is Tishman Speyer. The general partner of Tishman Speyer is Tishman Speyer Properties, Inc. ("Tishman Speyer GP"). Robert J. Speyer, Chairman and Chief Executive Officer of TSIA prior to the Business Combination and a member of the Board since the Business Combination, and Jerry I. Speyer are the co-trustees of a voting trust that holds all voting common stock in Tishman Speyer GP and therefore may be deemed to share voting and investment power with respect to the securities reported herein. Each of the reporting persons disclaims any beneficial ownership of the securities reported herein, except to the extent of any pecuniary interest therein. The address for these entities and individuals is Rockefeller Center, 45 Rockefeller Plaza, New York, New York 10111.
 (4)Based on a Schedule 13G filed December 13, 2024 (the "Pan-Am Schedule 13G"), Pan-Am Equities Inc. ("Pan-Am") and the individuals listed below (collectively with Pan-Am, the "Pan-Am Reporting Persons") beneficially own 10,855,580 shares of common stock in the aggregate (as set forth below and in the Pan-Am Schedule 13G). The Pan-Am Reporting Persons disclaim beneficial ownership of all such shares. The Pan-Am Reporting Persons entered into a Joint Filing Agreement dated as of December 13, 2024 pursuant to which the Pan-Am Reporting Persons agreed to file the Pan-Am Schedule 13G jointly in accordance with the provisions of Rule 13d-1(k)(1) promulgated under the Exchange Act. For further detail on the beneficial ownership of the Pan-Am Reporting Persons, see the table below and the Pan-Am Schedule 13G. The address for each of the Pan-Am Reporting Persons is 18 E. 50th Street, 3rd Floor, New York, NY 10022.

 Reporting Person

 Sole Voting Power
 Shared Voting Power
 Sole Dispositive Power
 Shared Dispositive Power
 Aggregate Beneficially Owned

 Pan-Am Equities Inc.

 7,204,626
 7,204,626
 7,204,626

 Gregory R. Manocherian

 1,223,143
 3,927,577
 1,223,143
 3,927,577
 5,150,720

 Kimberly Lopp-Manocherian
 3,927,580
 3,927,580
 3,927,580

 John F. Manocherian
 116,190
 116,190
 116,193

 Douglas Levine
 1,080,077
 2,764,021
 1,080,077
 2,764,021
 3,844,098

 Kaisa M. Levine

 3,844,098
 3,844,098
 3,844,098

 Abdi Mahamedi
 739,000
 976,330
 739,000
 976,330
 1,715,330

 Carl D. Schroeder
 2,000
 27,239
 2,000
 27,239
 29,239

 Lisa W. Schroeder
 29,239
 29,239
 29,239

 (5)Consists of (a) 3,815,135 shares of common stock Mr. Siminoff holds that are Remaining Shares subject to the Company's Amended Repurchase Option, as described in Part I, Item 1. "Business—Recent Developments," and (b) 11,500 shares of common stock held directly by Mr. Siminoff.
 (6)Consists of (a) 1,175,907 shares of common stock held directly by Mr. Schoenfelder and (b) 4,923,394 shares of common stock subject to exercisable options.
 (7)Consists of (a) 161,464 shares of common stock held directly by Mr. Speyer, (b) the shares of common stock identified in footnote (3) above, (c) 49,164 shares of common stock held by Madison Rock Investment, L.P. and (d) 163,223 shares of common stock held by Innovation Club Latch Holding, L.L.C. Speyer GP Holdings, LLC is the general partner of Madison Rock Investment, L.P., which is

 the managing member of Innovation Club Latch Holding, L.L.C. Mr. Speyer is the managing member of Speyer GP Holdings, LLC. As a result, Mr. Speyer may be deemed to share beneficial ownership over the shares of common stock held by Madison Rock Investment, L.P. and Innovation Club Latch Holding, L.L.C. but disclaims beneficial ownership except to the extent of his pecuniary interest therein. The address for these entities and Mr. Speyer is Rockefeller Center, 45 Rockefeller Plaza, New York, New York 10111.
 (8)Consists of (a) 167,526 shares of common stock held directly by Mr. Sugrue and (b) the shares of common stock identified in footnote (1) above. Avenir Management Company, LLC is the investment advisor and manager of each of Avenir Latch Investors, LLC, Avenir Latch Investors II, LLC, and Avenir Latch Investors III, LLC. Avenir Management Company, LLC is controlled by an investment committee comprised of Mr. Sugrue and Jamie Reynolds. As a result, Mr. Sugrue may be deemed to share beneficial ownership over the shares of common stock represented herein.
 (9)Consists of (a) 241,599 shares of common stock held directly by Mr. Jones and (b) 2,391,311 shares of common stock subject to exercisable options.
 (10)Mr. Mitura ceased to be an executive officer of the Company on November 26, 2024 and held no common stock or outstanding equity incentive plan awards as of March 21, 2025.
 (11)Consists of shares beneficially owned by the members of our Board, Mr. Lillis, Mr. Mayfield and Mr. Patel. Includes (a) 5,333,334 shares of common stock issuable upon exercise of the Private Placement Warrants and the following shares held by our directors and executive officers as a group: 92,355 shares of common stock subject to settlement of vested RSUs and 327,597 shares of common stock subject to exercisable options.

 Item 13. Certain Relationships and Related Transactions, and Director Independence
 Certain Relationships and Related Party Transactions
 In addition to the compensation arrangements with directors and executive officers described above in Item 11. "Executive Compensation," the following is a description of each transaction since January 1, 2023, and each currently proposed transaction in which:
 • we have been or are to be a participant;
 • the amount involved exceeds or will exceed $120,000; and
 • any of our directors, executive officers or beneficial holders of more than 5% of our capital stock, or any immediate family member of, or person sharing the household with, any of these individuals (other than tenants or employees), had or will have a direct or indirect material interest.
 Siminoff Employment Agreement
 In connection with the HDW Acquisition, the Company and Mr. Siminoff entered into the Siminoff Employment Agreement. Pursuant to the Siminoff Employment Agreement, for 2023 and 2024, Mr. Siminoff received an annual base salary of $200,000 and an annual bonus opportunity of $500,000, which annual bonus opportunity could adjust in accordance with the Share Price Thresholds set forth in the table below, which Share Price Thresholds would be measured based on the greater of (i) the Company's highest 90 trading day VWAP in the first six months of the year for which such annual bonus was paid and (ii) the Company's highest 60 trading day VWAP in the last six months of the year for which such annual bonus was paid:

 Adjusted Annual Bonus

 $1.00
 $800,000.00

 $2.00
 $1,800,000.00

 $3.00
 $2,800,000.00

 $4.00
 $3,800,000.00

 $5.00
 $4,800,000.00

 The annual bonus described above was not initially subject to additional performance criteria (other than the Share Price Thresholds); provided, however, that beginning in 2025, the Compensation Committee was permitted to adjust the amount and terms of Mr. Siminoff's annual compensation and was permitted to re-allocate annual compensation among customary fixed and variable components, and the variable components could be subject to customary performance and time-vesting criteria, in each case based upon advice from the Company's independent compensation consultant.
 On November 24, 2023, the Board approved the Siminoff Compensation Adjustment (i) in recognition of the extended Restatement process and (ii) because the Company was, due to applicable securities rules and regulations, unable to award equity compensation to Mr. Siminoff pending completion of the Restatement and delinquent periodic reports. Pursuant to the Siminoff Compensation Adjustment, which was effective as of November 1, 2023, Mr. Siminoff received additional

 annualized cash compensation of $1,550,000, payable in semi-monthly installments, through his December 31, 2024 separation date. The Siminoff Compensation Adjustment, which the Board extended in July 2024, was to remain in effect until the earlier of (i) the listing of the Company on a national securities exchange or (ii) termination of the Siminoff Compensation Adjustment by the Board. Mr. Siminoff continued to receive his base salary (for total annualized compensation of $1,750,000) but was not eligible to receive any annual corporate bonus, including the annual bonus required by the Siminoff Employment Agreement, while the Siminoff Compensation Adjustment was in effect.
 Siminoff Stock Restriction Agreement
 In connection with the HDW Acquisition, the Company and Jamie Siminoff entered into the Original Siminoff Stock Restriction Agreement. Pursuant to the Original Siminoff Stock Restriction Agreement, in the event Mr. Siminoff ceased to be an employee of the Company prior to July 3, 2028, the Company had the right to repurchase, for nominal consideration, all of Mr. Siminoff's Consideration Shares that had not already been released from transfer restriction, subject to certain exceptions. Upon an Exit, his Shares would accelerate in an amount equal to the greater of (i) the number of Consideration Shares to which he was entitled pursuant to the Share Price Thresholds (with linear interpolation of Shares based on the 60 trading day VWAP as of the date of Exit) and (ii) the number of Consideration Shares equal to the product of (a) his total Consideration Shares multiplied by (b) the quotient of (x) the number of calendar days between July 3, 2023 and his Exit divided by (y) 1,825; provided, however, that in no event would the number of Mr. Siminoff's Consideration Shares that accelerate in connection with an Exit be less than 40% of the total number of his Consideration Shares.
 Pursuant to the Restated Restriction Agreement, which was entered into between Mr. Siminoff and the Company on November 18, 2024, (i) the Company exercised its repurchase option with respect to 15,260,540 shares, or 80% of the Consideration Shares held by Mr. Siminoff, and (ii) the 3,815,135 Consideration Shares that were not repurchased by the Company are subject to transfer restrictions and the Amended Repurchase Option pursuant to which the Company has a right to repurchase such remaining shares. See Part I, Item 1. "Business—Recent Developments."
 2023 Registration Rights Agreement
 On July 3, 2023, in connection with the consummation of the HDW Acquisition, the Company and certain of HDW's stockholders, including Mr. Siminoff, entered into that 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.
 Sponsor Agreement
 In connection with the Business Combination in 2021, the Sponsor and TSIA's directors and officers (collectively, the "Sponsor Agreement Parties") entered into an amended and restated letter agreement (the "Sponsor Agreement") with TSIA and Legacy Latch. Under the Sponsor Agreement, the Sponsor Agreement Parties agreed, among other things, not to transfer any shares of our common stock until the earlier of (i) the one-year anniversary of the TSIA Closing Date and (ii) (x) the date on which the last reported sale price of our common stock equals or exceeds $12.00 per share (as adjusted for stock splits, stock dividends, reorganizations, recapitalizations, and the like) for any 20 trading days within any 30 trading-day period commencing at least 150 days after the TSIA Closing Date or (y) the date on which Latch completes a liquidation, merger, capital stock exchange, reorganization or other similar transaction that results in all of Latch's stockholders having the right to exchange their shares of our common stock for cash, securities or other property.
 The Sponsor Agreement provides that 738,000 shares of our common stock held by the Sponsor (the "Unvested Shares") will vest at such time as the Stock Price Level (as defined below) is achieved on or before the fifth anniversary of the closing of the Business Combination. In the event Latch enters into a binding agreement on or before such fifth anniversary related to certain sale transactions involving the shares of our common stock or all or substantially all the assets of Latch (a "Latch Sale"), the Unvested Shares will vest on the day prior to the closing of such Latch Sale if the per share price implied in such

 Latch Sale meets or exceeds the Stock Price Level. If the Unvested Shares remain unvested after the fifth anniversary of the closing of the Business Combination, such Unvested Shares will be forfeited.
 The "Stock Price Level" will be considered achieved only (a) when the volume-weighted average price of our common stock on Nasdaq is greater than or equal to $14.00 for any 20 trading days within a 30 trading-day period or (b) the per share price implied in a Latch Sale is greater than or equal to $14.00.
 2021 Registration Rights Agreement
 In connection with the Business Combination, we and certain stockholders of Legacy Latch and TSIA, including (i) the Sponsor, (ii) entities affiliated with Bventures Leverco S-B, LLC ("Brookfield"), Lux Co-Invest Opportunities, L.P. ("Lux"), RRE Ventures VII, LP ("RRE Ventures") and Avenir Latch Investors, LLC ("Avenir"), each of which held more than 5% of our outstanding capital stock at Closing of the Transactions, and (iii) Luke Schoenfelder, Garth Mitchell, Michael Brian Jones, Ali Hussain, Peter Campbell, Patricia Han, Raju Rishi, J. Allen Smith, Robert J. Speyer and Andrew Sugrue, each of whom were officers of Latch or members of our Board, entered into an amended and restated registration rights agreement (the "2021 Registration Rights Agreement"). Pursuant to the 2021 Registration Rights Agreement, we 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. We also agreed to provide customary "piggyback" registration rights. The 2021 Registration Rights Agreement also provides that we will pay certain expenses relating to such registrations and indemnify the stockholders against certain liabilities.
 Commercial Agreements
 During the years ended December 31, 2023 and 2024, we sold hardware and software in the ordinary course of business to properties owned by affiliates of Tishman Speyer for approximately $0.3 million and $0.1 million, respectively. We charge market rates for products and services, and we believe the commercial arrangements with these customers were entered into on an arm's-length basis.
 Ownership in Managed Properties
 Mr. Siminoff is a limited partner in 14 entities owning properties (the "Door PM Customers") that were formerly managed by Broadway and, as a result of the Property Management Acquisition, have been managed by Door PM since early 2024. In 2024, these Door PM Customers paid a total of $1.2 million (gross) in various fees and costs to Door PM, $0.3 million of which represents property management fees, with the remainder representing operational costs of the properties. Mr. Siminoff owns an average of 43% of the equity in the Door PM Customers, ranging from 4% to 97%. Given that the properties owned by the Door PM Customers have been cash flow positive since Mr. Siminoff's ownership therein, Mr. Siminoff has not historically been required to contribute to any fee payments to Broadway or Door PM.
 Consulting Arrangement
 We employed Mr. Mitura as Chief Technology Officer between August 16, 2024 and November 26, 2024. Between January 1, 2024 and August 16, 2024, and again between November 26, 2024 and March 23, 2025, Mr. Mitura provided consulting services to the Company through his related entity. We paid the entity approximately $0.7 million for such services in 2024, as disclosed in Part III, Item 11, "Executive Compensation," and paid the entity approximately $0.7 million in 2025.
 Employment Arrangement
 We previously employed Noah Schoenfelder, the adult sibling of Luke Schoenfelder, our former Chief Executive Officer and Chairman of the Board. Noah Schoenfelder was employed as Director of Customer Support and Product Experience and received in 2023 compensation totaling approximately $175,000. Luke Schoenfelder did not participate in setting his sibling's compensation, which was commensurate with compensation paid to other similarly situated employees.
 Director and Officer Indemnification
 Our Charter and Bylaws provide for indemnification and advancement of expenses for our directors and officers to the fullest extent permitted by Delaware law, subject to certain limited exceptions. We have entered into indemnification agreements with each member of our Board and several of our officers.

 Procedures with Respect to Review and Approval of Related Person Transactions
 Our Board recognizes that transactions with related persons present a heightened risk of conflicts of interests (or the perception of such conflicts of interest). We have adopted a written policy on transactions with related persons that conforms with the requirements for Nasdaq-listed issuers. Under the policy, our legal and accounting departments are primarily responsible for developing and implementing processes and procedures to obtain information regarding related persons involved with potential related person transactions and then determining, based on the facts and circumstances, whether such potential related person transactions do, in fact, constitute related person transactions requiring compliance with the policy.
 If our general counsel determines that a transaction or relationship is a related person transaction requiring compliance with the policy, our general counsel is required to present to the Audit Committee all relevant facts and circumstances relating to the proposed transaction. The Audit Committee will review the relevant facts and circumstances of each potential related person transaction, including if the transaction is on terms comparable to those that could be obtained in arm's-length dealings with an unrelated third party and the extent of the related person's interest in the transaction, take into account the conflicts of interest and corporate opportunity provisions of our Code of Ethics and either approve or disapprove the related person transaction. If advance Audit Committee approval of a related person transaction requiring the Audit Committee's approval is not feasible, then the transaction may be preliminarily entered into by management upon prior approval of the transaction by the chair of the Audit Committee, subject to ratification of the transaction by the Audit Committee at the committee's next regularly scheduled meeting. If the Audit Committee declines to ratify the transaction, management must make all reasonable efforts to cancel or annul the transaction.
 If a transaction was not initially recognized as a related person transaction, then, upon such recognition, the transaction will be presented to the Audit Committee for ratification at the committee's next regularly scheduled meeting. If the Audit Committee declines to ratify the transaction, management must make all reasonable efforts to cancel or annul the transaction.
 Our management will update the Audit Committee as to any material changes to any approved or ratified related person transaction and will provide a status report at least annually of all then-current related person transactions. No director will be permitted to participate in approval of a related person transaction for which he or she is a related person.
 Our Board has delegated to the officers of Latch the right to approve certain commercial agreements entered into with related parties on arm's length terms (as determined by the officers of Latch) in the ordinary course of business. However, any such agreement that is reasonably likely to require, during the term of such agreement, annual payments to or by Latch in excess of $500,000 must receive approval in accordance with our related party transaction policy discussed above.
 Director Independence
 See Part III, Item 10. "Directors, Executive Officers and Corporate Governance."

 Item 14. Principal Accounting Fees and Services
 The following table presents fees for professional services rendered by Deloitte & Touche LLP ("Deloitte") to us (including Legacy Latch) for the years subject to audit:

 Fiscal Year ended December 31,

 2023
 2022
 2021

 Audit fees
 $
 4,861,110
 $
 8,685,000
 $
 1,673,300

 Audit-related fees
 —
 —
 —

 Tax fees

 —
 —
 —

 All other fees

 —
 —
 —

 Total
 $
 4,861,110
 $
 8,685,000
 $
 1,673,300

 Services rendered by Deloitte in connection with the fees presented above are described below.

 Audit Fees
 Audit fees consist of fees billed for professional services rendered for the audit of our consolidated financial statements, reviews of interim financial information and services that only the independent auditors can reasonably provide, such as services associated with SEC registration statements or other documents issued in connection with securities offerings (including consents) and consultation on significant accounting matters. The amount presented for 2022 also includes $1.5 million of fees related to Deloitte's assessment of the Investigation.
 Audit-Related Fees
 We did not incur any audit-related fees for the years ended December 31, 2023, 2022 and 2021 from Deloitte.
 Tax Fees
 We did not incur any tax fees for the years ended December 31, 2023, 2022 and 2021 from Deloitte.
 All Other Fees
 We did not incur any other fees for the years ended December 31, 2023, 2022 and 2021 from Deloitte.
 Audit Committee Pre-Approval Policy and Procedures
 The Audit Committee has adopted the Latch, Inc. Audit and Non-Audit Services Pre-Approval Policy (the "Pre-Approval Policy"), which sets forth the procedures and conditions pursuant to which services proposed to be performed by Latch's independent registered public accounting firm may be pre-approved. Pursuant to the Pre-Approval Policy, unless a type of service to be provided by the independent registered public accounting firm has received general pre-approval, it will require specific pre-approval. The Audit Committee at least annually reviews and pre-approves the services (if any) that may be provided by the independent registered public accounting firm without obtaining specific pre-approval from the Audit Committee. The annual audit services engagement terms and fees will be subject to the specific pre-approval of the Audit Committee. In addition to the annual audit services engagement approved by the Audit Committee, the Audit Committee may grant general pre-approval to other audit services, which are those services that only the independent auditor reasonably can provide. Because the Audit Committee believes that the provision of audit-related services does not impair the independence of the auditor and is consistent with the SEC's rules on auditor independence, the Audit Committee may grant general pre-approval of audit-related services.

 Item 15. Exhibits and Financial Statement Schedules
 (a)(1) Financial Statements.
 The consolidated financial statements of the Company are included in Part II, Item 8 of this Form 10-K.
 (a)(2) Financial Statement Schedules.
 All financial statement schedules for the Company have been included in the consolidated financial statements or the related footnotes, or are either inapplicable or not required.
 (a)(3) Exhibits.
 The following is a list of exhibits filed as part of this Form 10-K.

 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.

 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.

 2.3

 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.

 2.1
 6/24/2024

 3.1
 Second Amended and Restated Certificate of Incorporation.

 3.1

 3.2
 Amended and Restated Bylaws.

 3.2

 4.1
 Specimen Common Stock Certificate.

 S-1/A
 4.2
 10/30/2020

 4.2
 Specimen Warrant Certificate.

 S-1/A
 4.3
 10/30/2020

 4.3
 Warrant Agreement, dated as of November 9, 2020, by and between TSIA and Continental Stock Transfer & Trust Company, as Warrant Agent.

 4.1
 11/13/2020

 4.4
 Description of the Registrant's Securities.

 4.4

 4.5
 Form of Promissory Note.

 4.1
 5/16/2023

 4.6
 Amendment to Promissory Notes, dated April 14, 2024.

 4.1
 4/15/2024

 4.7
 Warrant, dated as of July 15, 2024, by and between the Company and Customers Bank.

 4.1
 7/15/2024

 10.1
 Amended and Restated Registration Rights Agreement, dated as of June 4, 2021, by and among the Company, certain equityholders of TSIA named therein and certain equityholders of Legacy Latch named therein.

 10.1

 10.2
 Latchable, Inc. 2014 Stock Incentive Plan.

 S-4
 10.12

 10.3
 Latch, Inc. 2016 Stock Plan.

 S-4
 10.13

 10.4
 Latch, Inc. 2021 Incentive Award Plan.

 S-8
 99.1
 8/09/2021

 10.5
 Form of Stock Option Grant Notice and Stock Option Agreement.

 10.8

 10.6
 Form of Restricted Stock Unit Grant Notice and Restricted Stock Unit Agreement.

 10.9

 10.7
 Letter Agreement, dated as of January 24, 2021, by and among the Company, certain equityholders of TSIA named therein and certain equityholders of Legacy Latch.

 S-4
 10.9

 10.8
 Form of Subscription Agreement.

 S-4
 10.11

 10.9
 Form of Indemnification Agreement.

 S-4/A
 10.15
 3/30/2021

 10.10
 Investment Management Trust Agreement, dated as of November 9, 2020, by and between TSIA and Continental Stock Transfer & Trust Company, as trustee.

 10.2
 11/13/2020

 10.11
 Employment Agreement, dated as of January 24, 2021, by and between Legacy Latch and Luke Schoenfelder.

 S-4
 10.16

 10.12
 Employment Agreement, dated as of January 24, 2021, by and between Legacy Latch and Michael Brian Jones.

 S-4
 10.17

 10.13
 Employment Agreement, dated as of January 24, 2021, by and between Legacy Latch and Garth Mitchell.

 S-4
 10.18

 10.14
 Employment Agreement, dated as of January 24, 2021, by and between Legacy Latch and Ali Hussain.

 S-4
 10.19

 10.15
 Transition Agreement between Garth Mitchell and the Company, dated as of March 28, 2022.

 10.1
 5/05/2022

 10.16
 Employment Agreement between Barry Schaeffer and the Company, dated as of July 9, 2021.

 10.2
 5/05/2022

 10.17
 Severance Benefits Agreement by and between Latch, Inc. and Barry Schaeffer, dated as of December 2, 2022.

 10.1
 12/05/2022

 10.18
 Separation Agreement and Release, dated January 11, 2023, by and between Latch, Inc. and Luke Schoenfelder.

 10.1
 1/11/2023

 10.19
 Separation Agreement and Release, dated January 27, 2023, by and between Latch, Inc. and Barry Schaeffer.

 10.1
 2/02/2023

 10.20
 Employment Agreement, dated as of May 15, 2023, by and between Latch, Inc. and Jamie Siminoff.

 10.1
 5/16/2023

 10.21
 Stock Restriction Agreement, dated as of May 15, 2023, by and between Latch, Inc. and Jamie Siminoff.

 10.2
 5/16/2023

 10.22
 Registration Rights Agreement, dated as of July 3, 2023, by and among Latch, Inc. and the other parties thereto.

 10.1
 7/03/2023

 10.23

 Employment Agreement, dated as of July 3, 2023, by and between Latch, Inc. and David Lillis.

 10.1
 7/10/2023

 10.24

 Transition and Separation Agreement, dated as of July 10, 2023, by and between Michael Brian Jones and the Company.

 10.2
 7/10/2023

 10.25*

 Amended and Restated Agreement for Interim Management Services by and between AP Services, LLC and the Company, dated January 10, 2023.

 10.25

 10.26*

 Amended and Restated Loan and Security Agreement, by and among the Company, Latch Systems, Inc., HelloTech, Inc. and Customers Bank, dated as of July 15, 2024.

 10.1
 7/15/2024

 10.27

 Form of Performance-Based Option Agreement.

 10.1
 8/13/2024

 10.28

 Form of Performance-Based Restricted Stock Unit Agreement.

 10.2
 8/13/2024

 10.29

 Employment Agreement, dated as of August 16, 2024, by and between Latch, Inc. and Jason Mitura.

 10.3
 8/13/2024

 10.30

 Separation and Advisory Agreement and Release, dated as of November 18, 2024, by and between Latch Systems, Inc. and Jamie Siminoff.

 10.1
 11/19/2024

 10.31

 Amended and Restated Common Stock Restriction Agreement, dated as of November 18, 2024, by and between Latch, Inc. and Jamie Siminoff.

 10.2
 11/19/2024

 10.32*

 Separation and Transition Agreement and Release, dated as of November 26, 2024, by and between Latch Systems, Inc. and Jason Mitura.

 10.1
 11/27/2024

 10.33
 Amended and Restated Employment Agreement, dated as of February 5, 2025, by and between the Company and David Lillis.

 10.1
 2/06/2025

 10.34
 Amended and Restated Employment Agreement, dated as of February 5, 2025, by and between the Company and Jeff Mayfield.

 10.2
 2/06/2025

 10.35
 Amended and Restated Employment Agreement, dated as of February 5, 2025, by and between the Company and Priyen Patel.

 10.3
 2/06/2025

 14.1
 Code of Business Conduct and Ethics of Latch, Inc.

 14.1

 19.1
 Amended and Restated Insider Trading Compliance Policy (filed herewith).

 21.1
 List of Subsidiaries of Latch, Inc (filed herewith).

 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).

 97.1
 Latch, Inc. Policy for Recovery of Erroneously Awarded Compensation.

 97.1

 *
 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.

 Item 16. Form 10-K Summary
 None.

 SIGNATURES
 Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this Annual Report to be signed on its behalf by the undersigned, thereunto duly authorized.

 LATCH, INC.

 By:
 /s/ David Lillis

 David Lillis

 Chief Executive Officer

 Pursuant to the requirements of the Securities Exchange Act of 1934, this Annual Report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.

 Signature
 Title
 Date

 /s/ David Lillis
 Chief Executive Officer

 David Lillis
 (Principal Executive Officer)

 /s/ Jeff Mayfield
 Chief Financial Officer

 Jeff Mayfield
 (Principal Financial Officer and Principal Accounting Officer)

 /s/ Peter Campbell

 /s/ Patricia Han

 /s/ Raju Rishi

 Raju Rishi

 /s/ J. Allen Smith

 J. Allen Smith

 /s/ Robert J. Speyer

 Robert J. Speyer

 /s/ Andrew Sugrue

 Andrew Sugrue