What changed in this filing

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Item 1. Business

2023-03-16 compared with 2022-03-28 · 79 added, 62 removed, 182 unchanged (44% of the section changed)

We are a provider of high-performance, active lidar systems technology for vehicle autonomy, advanced driver-assistance systems, or ADAS, and robotic vision applications.

With a sophisticated workforce of leaders and researchers, AEye has developed an artificial intelligence technology that enables adaptive “intelligent sensing,” differentiating AEye in the marketplace from its competition.

We have developed an artificial intelligence technology that enables adaptive “intelligent sensing,” differentiating us in the marketplace from our competition.

Our proprietary software-definable 4Sight TM Intelligent Sensing Platform combines solid-state active lidar, an optionally fused low-light HD camera, and integrated deterministic artificial intelligence to capture more intelligent information with less data, enabling faster, more accurate, and more reliable perception of the surroundings.

AEye was founded in 2013 by Luis Dussan, AEye’s Chief Technology Officer, to create a deterministic AI-driven sensing system that performs better than the human eye and visual cortex.

We were founded in 2013 by Luis Dussan, our Chief Technology Officer, to create a deterministic AI-driven sensing system that performs better than the human eye and visual cortex.

Dussan’s experience developing mission-critical targeting systems for fighter jets and ground troops on behalf of the U.S.

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While traditional sensing systems passively collect data, our active 4Sight TM Intelligent Sensing Platform leverages principles from automated targeting systems and biomimicry to scan the environment, while intelligently focusing on what matters in order to enable safer, smarter, and faster decisions in complex scenarios.

From its inception, AEye’s culture drew from esteemed scientists and electro-optics engineers from the National Aeronautics and Space Administration, or NASA, Lockheed Martin Corporation, Northrop Grumman Corporation, the U.S.

From our inception, our culture drew from esteemed scientists and electro-optics engineers from the National Aeronautics and Space Administration, or NASA, Lockheed Martin Corporation, Northrop Grumman Corporation, the U.S.

Air Force, and the Defense Advanced Research Projects Agency, or DARPA, to create the highest performing sensing and perception system for the most challenging situations, ensuring the highest levels of safety for autonomous driving.

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Our modular design facilitates product hardware updates as technologies evolve, and its small size and modest heat dissipation enable very flexible placement options on the interior or exterior of a vehicle.

4Sight also leverages a common architecture to create application-specific products across the Automotive, Mobility and Industrial markets.

Our systems-based approach encourages partnership from the well-established automotive supply chain, including original equipment manufacturers, or OEMs, as well as Tier 1 and Tier 2 suppliers.

There is strong alignment between us and our partners given what is required to produce a high-performance automotive grade products at scale, including quality, reliability, and affordability.

4Sight also leverages a common architecture to create application-specific products across the Automotive and Industrial markets.

Our systems-based approach encourages partnership from the well-established automotive supply chain, including original equipment manufacturers, or OEMs, as well as Tier 1 and Tier 2 OEM suppliers.

There is strong alignment between us and our partners given what is required to produce high-performance automotive grade products at scale, including quality, reliability, and affordability.

Our Tier 1 partners will add value with OEM customers through industrialization, manufacturing, integration, sales, marketing, product liability, and warranty.

Our Tier 2 partners will provide automotive-grade sub-components, which are used not only in automotive lidar for ADAS use cases, but also for our products to be sold in the Industrial and Mobility markets.

We expect the result will be a high-quality, high-performance product at a low cost, which we believe to be a key enabler in accelerating adoption of lidar across various markets in Automotive and beyond.

In pursuing this strategy, we have partnered with leading Tier 1 automotive suppliers including Continental, Hella, Aisin, and ZKW Group GmbH (an affiliate of LG Electronics).

One of our Tier 1 partners is currently in the process of bidding for long range lidar series production awards with OEMs that are expected to represent a substantial portion of our 2026 forecasted revenues.

The main markets for lidar, including Automotive, Industrial, and Mobility, are projected to see significant growth in both the near and long term.

We believe this expected growth will allow AEye to achieve greater market share as well as pursue specialization opportunities like highway autonomous driving applications that benefit from our products.

Our Tier 2 partners will provide automotive-grade sub-components, which are used not only in automotive lidar for ADAS use cases, but also for our products to be sold in the Industrial market.

We expect the result will be a high-

quality, high-performance product at the right price point, which we believe to be a key enabler in accelerating adoption of lidar across various markets in Automotive and beyond.

In pursuing this strategy, we have partnered with leading Tier 1 automotive suppliers, including Continental, who is in the process of bidding for long range lidar series production awards with OEMs that are expected to represent a substantial portion of our future revenues.

The main markets for lidar, including Automotive and Industrial, are projected to see significant growth in both the near and long term.

We believe this expected growth will allow us to capture significant market share as well as pursue specialization opportunities like highway autonomous driving applications that benefit from our products.

We expect that lidar will be a required sensing solution across many end markets, and we intend to be the leading solutions provider in these spaces.

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We believe that lidar will be a required sensing solution across many end markets.

We broadly define our three key end markets as Automotive, Mobility and Industrial.

We broadly define our two key end markets as Automotive and Industrial.

We believe that lidar will be a critical component of ADAS and fully autonomous driving or self-driving systems.

Applications for the Automotive end market include lidar sensors and software for passenger and commercial vehicles.

Automotive and commercial vehicle OEMs seek to introduce lidar sensors to add ADAS features and improve safety for passengers and pedestrians.

To achieve these objectives, our sensors can search, detect, acquire, and track small objects at long distances.

Automotive and commercial vehicle OEMs are expected to introduce lidar sensors to add ADAS features and improve safety for passengers and pedestrians.

For vehicles to achieve greater autonomous functionality and perform those functions at higher speeds, we believe long-range lidar will be necessary.

Our sensors were designed to search, detect, acquire, and track small objects at long distances.

We may also introduce other mid- and short-range lidar systems based on the same 4Sight Intelligent Sensing Platform.

Our system is particularly well-suited to reduce the intensive compute (and associated power and latency) requirements of autonomous systems because our platform handles critical data processing at the sensor level, thereby allowing the self-driving system to focus limited compute resources on the vehicle's path planning.

We believe that our strategy to partner with Tier 1 automotive suppliers to produce high-quality, long-range lidar at scale will drive adoption of lidar in series production across major global OEMs.

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These highway systems rely on consistent detection of dangerous, often small, obstacles at long distances and high speeds, which our system can optimize for in software.

• Commercial vehicle ADAS — hub-to-hub autonomy in commercial vehicles enabled by lidar promises similar technological utility to that in passenger vehicles.

• Commercial vehicle ADAS — hub-to-hub autonomy in commercial vehicles, such as short- and long-range delivery vehicles, enabled by lidar, promises similar technological utility to that in passenger vehicles.

Importantly, however, the value that a commercial vehicle operator derives from commercial ADAS is driven by increased utility and safety through reduced risk from driver fatigue.

We believe that adoption rates for long-range lidar will be higher in commercial vehicles initially due to the significant share of time that highway driving represents for commercial customers.

We believe that lidar is a critical component of fully autonomous driving or self-driving systems.

Currently, fully autonomous vehicles are primarily being tested in low speed, closed-loop (meaning a fixed route or limited geographic area) conditions.

For autonomous vehicles to perform at higher speeds and unlock their full potential, we believe long-range lidar will be necessary.

We may also introduce other mid- and short-range lidar systems based on the same 4Sight Intelligent Sensing Platform.

Our system is particularly well-suited to reduce the intensive compute (and associated power and latency) requirements of fully autonomous systems because our platform handles critical data processing at the sensor level, thereby allowing the self-driving system to focus limited compute resources on the vehicle’s path planning.

We identify three distinct types of Mobility customers, each of whom stand to benefit from our best-in-class detection of small objects at long distances.

• Shuttles — moving people on-demand and along flexible routes.

• Logistics — moving goods medium and long distances in bulk quantities.

• Delivery — moving goods short and medium distances in small quantities.

We believe there are a broad range of use cases for lidar in Industrial markets, including but not limited to rail, construction, mining, agriculture, aerospace, defense, and intelligent transportation systems.

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We employ two different go-to-market models:

one model addresses the traditional Automotive end market and the other model addresses Industrial and Mobility end markets.

one model addresses the traditional Automotive end market and the other model addresses the Industrial end market.

We employ a channel model in the traditional Automotive market by working through Tier 1 suppliers that sell products to OEM customers.

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We work alongside our Tier 1 supplier partners to quote new business according to the OEM’s specifications.

Our announced Tier 1 developing supplier partner engagements include Continental, Hella, ZKW Group GmbH (an affiliate of LG Electronics) and Aisin.

Our announced Tier 1 supplier engagements include Continental.

We are also currently engaged in partnership discussions with other Tier 1 suppliers.

For the Industrial and Mobility markets, we either sell directly to the customer or through systems integrators.

For the Industrial market, we either sell directly to the customer or through systems integrators.

Contract manufacturers with whom we have agreements, assemble, test, and deliver these products.

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Our lidar products employ a single product platform that is based on components sourced from an established Tier 2 automotive supply chain to drive down costs and increase reliability.

We expect to utilize those same components to address the Industrial and Mobility markets, which enables us to leverage our volume in automotive, and drive costs down for the products made by our contract manufacturing partners.

We expect to utilize those same components to address the Industrial market, which enables us to leverage our volume in automotive, and drive costs down for the products made by our contract manufacturing partners.

Relationship with Continental

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We expect that for each unit that Continental sells based upon our licensed product design, Continental will pay us a royalty.

Our product offerings are currently comprised of the 4Sight A and 4Sight M, both of which are built on the 4Sight Intelligent Sensing Platform.

The 4Sight A is currently in early sample testing with Continental and Hella, while the 4Sight M began its transition to commercial production with automotive qualified contract manufacturers in the fourth calendar quarter of 2021.

We developed the 4Sight Intelligent Sensing Platform, to combine solid-state active lidar, an optionally fused low-light HD camera, and integrated deterministic artificial intelligence to capture more intelligent information with less data, enabling faster, more accurate, and more reliable perception of the surroundings.

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The laser we utilize is a 1550nm fiber laser.

The 1550nm wavelength provides a photon budget far exceeding (>100x) 905nm lasers, because 1550nm is a retina-safe wavelength, therefore allowing more energy to be utilized by lidar solutions using 1550nm lasers.

We leverage custom high resonance micro-electro-mechanical systems, or MEMS, mirrors for agile scanning over a wide field of view.

The MEMS that we use are extremely small when compared to competing MEMS-based lidar solutions, and when coupled with the extremely high resonant frequency at which they can operate, our MEMS meet and exceed shock and vibration requirements for the Automotive, Industrial, and Defense markets.

The 1550nm wavelength provides a photon budget far exceeding (>100x) 905nm lasers, and because 1550nm is a retina-safe wavelength, more energy can be utilized by lidar solutions using 1550nm lasers.

We leverage custom high resonance micro-electro-mechanical systems, or MEMS, for agile scanning over a wide field of view.

The bistatic architecture that we use is key to our proprietary camera-lidar system integration.

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This intelligence is enabled by our patented bistatic architecture, which keeps the transmit and receive channels separate, allowing 4Sight to optimize for both.

As each laser pulse is transmitted, the receiver is told where and when to look for its return — enabling deterministic artificial intelligence to be introduced into the sensing process at the point the laser pulse is received.

As each laser pulse is transmitted, the receiver is told where and when to look for its return.

Ultimately, this establishes the 4Sight platform as active — allowing it to focus on what matters most in a vehicle’s surroundings.

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It can also dynamically alter its scan pattern on the fly.

Responsive 4Sight is akin to human perception.

The system is intelligent, proactively understanding and interrogating the scene, and perpetually optimizing its own scan patterns and data collection to focus on the information that matters most and responds based on firmware feedback.

The system is intelligent, with the ability to interrogate the scene, and perpetually optimize its own scan patterns and data collection to focus on the information that matters most and respond based on firmware feedback.

Predictive 4Sight:

Predictive 4Sight (motion forecasting) takes what is offered in Responsive 4Sight but looks ahead and, therefore, is even smarter about where (and what) it interrogates.

Predictive 4Sight (motion forecasting) can take what is offered in Responsive 4Sight but look ahead enabling even smarter interrogation.

In this level, basic perception can be distributed to the edge of the sensor network.

Just like a human, Predictive 4Sight understands the motion of everything it sees, which enables the system to deliver more information with less data, focusing its energy on the most important objects in a scene while paying attention to everything else in its periphery.

The end result of Predictive 4Sight is motion forecasting through neural networks.

Like human intuition, Predictive 4Sight can “sense” (i.e., predict) where an object will be at different times in the future, enabling the vehicle to solve even the most challenging edge cases.

4Sight A is our high-performance, software-configurable lidar solution for Automotive markets.

Built on a modular architecture, the 4Sight A series is easily customizable to address the specific design requirements for multiple OEMs.

Industrialized, manufactured, tested, and validated by our Tier 1 partners, the 4Sight A series features industry leading, long-range ADAS performance, designed to address the need for high-performance applications.

4Sight A is built on our patented 1550nm, solid-state, active lidar.

We expect that the 4Sight A will generally utilize one of the first three software levels described above:

Predictive 4Sight seeks to understand the motion of everything it sees, thereby enabling the system to deliver more information with less data by focusing its energy on the most important objects in a scene while paying attention to everything else in its periphery.

Predictive 4Sight can “sense” (i.e., predict) where an object will be at different times in the future, enabling the vehicle to solve challenging edge cases.

4Sight for Automotive

Built on a modular architecture, the 4Sight series is easily customizable to address the specific design requirements for multiple Automotive OEMs.

Industrialized, manufactured, tested, and validated by our Tier 1 partners, the 4Sight series features industry leading, long-range ADAS performance, designed to address the need for high-performance applications.

4Sight is built on our patented 1550nm, solid-state, active lidar.

We expect that the 4Sight solutions for Automotive will generally utilize one of the first three software levels described above:

4Sight at Design, Triggered 4Sight, or Responsive 4Sight.

We believe the unique combination of features of 4Sight A include:

We believe the unique combination of features of 4Sight include:

• Active lidar enables user’s choice of deterministic scan patterns catered to specific use cases and applications, such as highway autopilot;

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• Functional Safety (“FuSa”)/Safety of the Intended Functionality (“SOTIF” or ISO 21448) compliant for signal path — providing necessary determinism for testing and validation.

• Lower cost than other long range lidar for ADAS applications with similar start of production date.

4Sight M is our high-performance, software-configurable lidar solution for the Mobility and Industrial markets.

Built on our unique 4Sight Intelligent Sensing Platform, 4Sight M meets the diverse array of performance and functional requirements for the Mobility and Industrial markets with our industry-leading lidar performance, integrated intelligence, advanced vision capabilities, and unmatched reliability and safety.

4Sight M is a cost-effective, customizable perception solution that leverages the complete 4Sight software platform and includes a comprehensive software development kit for an extensible roadmap to autonomous functionality.

4Sight M may utilize any of the four software levels described above:

4Sight for Industrial

Built on our unique 4Sight Intelligent Sensing Platform, 4Sight meets the diverse array of performance and functional requirements for the Industrial market with our industry-leading lidar performance, integrated intelligence, advanced vision capabilities, and unmatched reliability and safety.

4Sight is a cost-effective, customizable perception solution that leverages the complete 4Sight software platform and includes a comprehensive software development kit for an extensible roadmap to autonomous functionality.

4Sight for the Industrial market may utilize any of the four software levels described above:

4Sight at Design, Triggered 4Sight, Responsive 4Sight, or Predictive 4Sight.

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First, our performance is not significantly impaired by first surfaces, such as stray light reflected off of a windshield or the plastic used in the fascia or headlight.

Second, the unit’s low power requirements and small form factor makes it easier for OEM designers to integrate our sensors into a variety of locations in a vehicle, such as behind the windshield.

Second, the unit’s power requirements and small form factor makes it easier for OEM designers to integrate our sensors into a variety of locations in a vehicle, such as behind the windshield.

Competing solutions, on the other hand, may need to be integrated into the roof of the car in order to resolve challenges with excess heat or size.

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For example, we and at least one of our major competitors both use lasers that have a 1550nm wavelength.

Other competitors use MEMS-based scanning technologies that are similar to ours, although we believe our MEMS solution is unique due its small size and high resonant frequency.

Other competitors use MEMS-based scanning technologies, but we believe our MEMS solution is uniquely robust due its small size and high resonant frequency.

In addition to companies focused specifically on developing lidar solutions, we also face competition from current or potential partners and customers that may be developing lidar solutions internally.

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and foreign issued patents and we had 83 pending U.S.

and foreign patent applications, with 8 patent applications in the drafting stage.

In addition, we have two registered and five pending trademark applications.

and foreign patent applications, with three patent applications in the drafting stage.

In addition, we have two registered and two pending trademark applications.

Our patents and patent applications cover a broad range of system level and component level aspects of our key technology including, among other things, bistatic lidar system architecture, laser, scanner, receiver, and perception technology.

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We utilize a combination of channel (indirect) sales and direct sales methods.

In the Automotive market, we work with Tier 1 partners that are suppliers to the OEMs.

We intend to license our lidar designs and other intellectual property to these Tier 1 partners, who will then industrialize and sell our technology to their OEM customers.

In the Automotive market, we work with Tier 1 partners that are suppliers to OEMs.

We intend to license our lidar designs and other intellectual property to these Tier 1 partners, who will then industrialize and sell our technology to their OEM

While we intend to use Tier 1 partners as our sales channel, we also maintain direct contact with the OEMs, which better enables us to understand their specific product requirements and facilitate the implementation of our product design into their vehicles.

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This, in turn, will substantially reduce our investment in sales and marketing, and it will also substantially reduce the associated costs for manufacturing, working capital, validation, and testing, as well as the overhead of product liability and warranty over the life of the multiyear series production programs with OEMs.

In the Industrial and Mobility markets, we use the same supply chain to manufacture through global contract manufacturers, and we will sell our products primarily through system integrator channel partners that may integrate our lidar sensor and software as part of a larger solution for an end customer.

In the Industrial market, we use the same supply chain to manufacture through global contract manufacturers, and we will sell our products primarily through system integrator channel partners that may integrate our lidar sensor and software as part of a larger solution for an end customer.

We also intend to sell directly to certain customers for situations in which a system integrator relationship is either not present or not required.

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To date, we have not experienced any work stoppages.

Our corporate headquarters is located in Dublin, California, where we lease 56,549 square feet pursuant to a lease that expires December 1, 2026.

Our corporate headquarters is located in Dublin, California, where we lease 56,549 square feet pursuant to a lease that expires on December 1, 2026.

The Dublin facility contains engineering, R&D, operations, customer support, marketing, and administrative functions.

We also lease 1,540 square feet of office space in a facility in Tiburon, California pursuant to a lease which expires on September 30, 2022.

The Tiburon facility contains administrative and sales and marketing functions.

We also lease 10,198 square feet of office space in a facility in Palm Bay, Florida pursuant to a lease which expires on August 14, 2027.

The Florida facility contains R&D functions.

In addition, we also lease office/building space around the world, primarily in North America, Europe, and Asia.

We believe our existing facilities are in good condition and suitable for the conduct of our business.

Legal Proceedings

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We are not currently a party to any actions, claims, suits, or other legal proceedings the outcome of which, if determined adversely to us, would individually or in the aggregate have a material effect on our business, financial condition, or results of operations.

Recent Developments

DGCL 205 Petition

On August 12, 2021, CF Finance Acquisition Corp.

III, or the Pre-Merger Company, our predecessor, held a special meeting of stockholders to approve certain matters related to the business combination between the Pre-Merger Company and AEye Technologies, Inc.

Among the proposals presented to the Pre-Merger Company stockholders were proposals to (i) adopt a certificate of amendment to the Pre-Merger Company’s amended and restated certificate of incorporation to increase the number of authorized shares of its Class A Common Stock from 200,000,000 to 300,000,000, or the Authorized Share Amendment, and (ii) amend and restate the charter in connection with the business combination, which included eliminating its Class B Common Stock immediately prior to the closing of the business combination after giving effect to the conversion of each outstanding share of Class B Common Stock into one share of its Class A Common Stock, or the Class B Elimination Amendment.

The proposals each received approval from the holders of a majority of the Pre-Merger Company’s outstanding shares of Class A Common Stock and Class B Common Stock, voting together as a single class, that were outstanding as of the record date for such special meeting.

Following the special meeting, the business combination was closed and the Pre-Merger Company changed its name to "AEye, Inc."

A recent ruling by the Court of Chancery of the State of Delaware, or Chancery Court, introduced uncertainty as to whether Section 242(b)(2) of the General Corporation Law of the State of Delaware, or DGCL, would have required the Authorized Share Amendment to be approved by a separate vote of the majority of the Pre-Merger Company’s then-outstanding shares of Class A Common Stock and the Class B Elimination Amendment to be approved by a separate vote of the majority of the Pre-Merger Company’s then-outstanding shares of Class B Common Stock.

Although we received no demands or inquiries from our stockholders regarding the potential uncertainty surrounding our Second Amended and Restated Certificate of Incorporation, or our Charter, which was adopted at the special meeting, and our own analysis determined that a separate class vote to adopt the Charter was not necessary, in light of the recent Chancery Court decision, and to resolve any potential uncertainty with respect to our Charter, or our capital structure, on February 23, 2023, we filed a petition in the Chancery Court under Section 205 of the DGCL, our Section 205 Petition, to seek validation of the Authorized Share Amendment, our Charter, and the shares we issued in reliance thereon.

Section 205 permits the Chancery Court, in its discretion, to validate

potentially defective corporate acts after considering a variety of factors.

Concurrently with the filing of our Section 205 Petition, we filed a motion to expedite the hearing, which was granted.

The hearing was set for March 14, 2023.

At the March 14, 2023 hearing on our Section 205 Petition, no objections were filed and the court granted our petition.

The court order declared our Charter to be valid and effective as of the date and time it was originally filed and that all shares of our capital stock that we have issued in reliance on our Charter were valid as of the date such shares were issued, thereby eliminating any uncertainty with respect to our Charter or any shares we have issued or may issue in the future in reliance thereon.

Silicon Valley Bank Closure

On March 10, 2023, Silicon Valley Bank, or SVB, was closed by the California Department of Financial Protection and Innovation, and the Federal Deposit Insurance Corporation, or FDIC, was appointed as receiver.

We have deposit accounts at SVB.

The standard deposit insurance amount is up to $250 thousand per depositor, per insured bank, for each account ownership category.

As of March 10, 2023, we had approximately $9.6 million in deposit accounts at SVB, of which approximately $2.2 million was held as collateral for letters of credit under our lease agreement.

We do not maintain any other material accounts or lines of credit with SVB.

On March 12, 2023, the U.S.

Treasury, Federal Reserve, and FDIC announced that SVB depositors will have access to all of their money starting March 13, 2023.

We began the process of withdrawing our deposits from SVB on March 13, 2023.

Available Information

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The information on our website (or any webpages referenced in this Annual Report on Form 10-K) is not part of this or any other report we file with, or furnish to, the SEC.

Unresolved Staff Comments

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 1. Business