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Item 8. Financial Statements and Supplementary Data

2024-03-27 compared with 2023-03-16 · 309 added, 406 removed, 707 unchanged (50% of the section changed)

2 unchanged sentences

Report of Independent Registered Public Accounting Firm (PCAOB ID 34 )

Consolidated B alance S heets

Consolidated S tatements of O perations and C omprehensive L oss

Consolidated S tatements of S tockholders’ E quity ( D eficit)

Consolidated S tatements of C ash F lows

Notes to C onsolidated F inancial S tatements

Consolidated Balance Sheets

Consolidated Statements of Operations and Comprehensive Loss

Consolidated Statements of Stockholders’ Equity (Deficit)

Consolidated Statements of Cash Flows

Notes to Consolidated Financial Statements

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

45 unchanged sentences

Operating lease liabilities, noncurrent 14,858 16,681

Deferred rent, noncurrent — 3,032

Other noncurrent liabilities 409 126

9 unchanged sentences

Additional paid-in capital 366,647 345,757

Accumulated other comprehensive loss ( 1,279 ) ( 391 )

Accumulated other comprehensive income (loss) 10 ( 1,279 )

Accumulated deficit ( 337,635 ) ( 250,509 )

14 unchanged sentences

General and administrative 25,234 36,762

Impairment of long-lived assets 9,988 —

Total operating expenses 73,921 93,723

1 unchanged sentence

OTHER INCOME (EXPENSE):

Change in fair value of convertible note, embedded derivative liability, and warrant liabilities ( 14 ) 223

Gain on PPP loan forgiveness — 2,297

Change in fair value of convertible note and warrant liabilities ( 858 ) ( 14 )

Interest income and other 1,317 1,545

3 unchanged sentences

Net loss $ ( 87,126 ) $ ( 98,714 )

Change in net unrealized loss on available-for-sale securities, net of tax ( 940 ) ( 391 )

Change in net unrealized gain (loss) on available-for-sale securities, net of tax 1,264 ( 940 )

Change in fair value due to instrument-specific credit risk, net of tax ( 21 ) ( 25 )

7 unchanged sentences

(In thousands, except share data)

Preferred Stock Common Stock Additional Paid-in Capital Accumulated Other Comprehensive Loss Accumulated Deficit Total Stockholders’ Equity

Preferred Stock Common Stock Additional Paid-in Capital Accumulated Other Comprehensive Income (Loss)

Accumulated Deficit Total Stockholders’ Equity

Shares Amount Shares Amount

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Issuance of common stock under the Common Stock Purchase Agreement — — 19,500 — 136 — — 136

Transaction costs related to the Common Stock Purchase Agreement — — — — ( 29 ) — — ( 29 )

Issuance of common stock upon exercise of public warrants — — 10 — — — — —

Stock issuance costs related to the Common Stock Purchase Agreement — — — — ( 3 ) — — ( 3 )

Issuance of common stock through the Employee Stock Purchase Plan — — 64,773 — 334 — — 334

Conversions of convertible note into common stock — — 502,530 — 3,338 — — 3,338

Other comprehensive loss, net of tax — — — — — ( 888 ) — ( 888 )

Other comprehensive income, net of tax — — — — — 1,289 — 1,289

Net loss — — — — — — ( 87,126 ) ( 87,126 )

1 unchanged sentence

— $ — 6,310,090 $ 1 $ 366,647 $ 10 $ ( 337,635 ) $ 29,023

Preferred Stock Common Stock Additional Paid-in Capital Accumulated Other Comprehensive Loss Accumulated Deficit Total Stockholders’ Equity (Deficit)

Preferred Stock Common Stock Additional Paid-in Capital Accumulated Other Comprehensive Loss Accumulated Deficit Total Stockholders’ Equity

Shares Amount Shares Amount

BALANCE—December 31, 2020 (as previously reported) 16,383,725 $ 62,639 10,838,010 $ — $ 5,920 $ — $ ( 86,784 ) $ ( 18,225 )

Retroactive application of recapitalization (Note 2) ( 16,383,725 ) ( 62,639 ) 90,448,635 10 62,629 — — —

Balance as of December 31, 2020, as adjusted (Note 2) — — 101,286,645 10 68,549 — ( 86,784 ) ( 18,225 )

BALANCE—December 31, 2021 — $ — 5,171,241 $ 1 $ 320,952 $ ( 391 ) $ ( 151,795 ) $ 168,767

Stock based compensation — — — — 23,959 — — 23,959

Issuance of common stock upon exercise of stock options — — 107,332 — 1,174 — — 1,174

Conversion of convertible notes and accrued interest into Class A common stock — — 20,778,097 2 39,093 — — 39,095

Business combination and PIPE financing — — 31,894,635 3 256,808 — — 256,811

Transaction costs related to Business Combination and PIPE financing — — — — ( 52,661 ) — — ( 52,661 )

Net settlement of common stock and Series A preferred stock warrants — — 240,806 — — — — —

Assumption of the private placement warrant liability in connection with Business Combination — — — — ( 268 ) — — ( 268 )

Commitment shares for Common Stock Purchase Agreement — — 302,634 — 1,583 — — 1,583

Repurchase of stock options — — — — ( 1,500 ) — — ( 1,500 )

Issuance of common stock upon vesting of restricted stock units — — 130,268 — — — — —

Taxes related to net share settlement of equity awards — — ( 44,694 ) — ( 3,790 ) — — ( 3,790 )

Unrealized loss on available-for-sale debt securities — — — — — ( 391 ) — ( 391 )

Issuance of common stock under the Common Stock Purchase Agreement — — 38,167 — 2,891 — — 2,891

Transaction costs related to the Common Stock Purchase Agreement — — — — ( 29 ) — — ( 29 )

Issuance of common stock upon exercise of public warrants — — — — — — — —

Conversions of convertible note into common stock — — 34,323 — 600 — — 600

Other comprehensive loss, net of tax — — — — — ( 888 ) — ( 888 )

Net loss — — — — — — ( 98,714 ) ( 98,714 )

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Depreciation and amortization 1,547 1,422

Loss on sale of property and equipment, net 59 —

Noncash lease expense relating to operating lease right-of-use assets 1,406 1,338

Noncash common stock purchase agreement costs — 1,583

Impairment of long-lived assets 9,988 —

Gain from early termination of right-of-use assets ( 35 ) —

Inventory write-downs, net of scrapped inventory 7,712 675

Change in fair value of convertible note, embedded derivative liability, and warrant liabilities 14 ( 223 )

Noncash gain on PPP loan forgiveness — ( 2,297 )

Loss on advances to suppliers 1,385 —

Change in fair value of convertible note and warrant liabilities 858 14

Realized loss on instrument-specific credit risk 46 —

Stock-based compensation 18,071 23,959

Convertible note issuance costs — 474

Amortization of debt issuance costs — 725

Amortization of debt discount — 752

Realized loss on redemption of marketable securities — 77

Amortization of premiums on marketable securities, net of change in accrued interest 1,086 310

Amortization of premiums and accretion of discounts on marketable securities, net of change in accrued interest ( 211 ) 1,086

Expected credit losses 35 —

Changes in operating assets and liabilities:

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Operating lease liabilities ( 1,528 ) ( 1,341 )

Deferred rent — ( 538 )

Contract liabilities ( 987 ) ( 1,931 )

Other noncurrent liabilities 383 —

Net cash used in operating activities ( 50,725 ) ( 71,649 )

CASH FLOWS FROM INVESTING ACTIVITIES:

Purchase of property and equipment ( 4,200 ) ( 1,021 )

Purchases of property and equipment ( 1,951 ) ( 4,200 )

Proceeds from sale of property and equipment 283 —

Proceeds from redemptions and maturities of marketable securities 76,350 96,592

Purchase of available-for-sale securities ( 23,929 ) ( 150,525 )

Net cash provided by (used in) investing activities 68,463 ( 151,546 )

Purchases of marketable securities ( 19,331 ) ( 23,929 )

Net cash provided by investing activities 55,351 68,463

CASH FLOWS FROM FINANCING ACTIVITIES:

Proceeds from exercise of stock options 455 1,174

Proceeds from Business Combination and PIPE financing — 256,811

Transaction costs related to Business Combination and PIPE financing — ( 52,372 )

Proceeds from the issuance of convertible notes — 9,850

1 unchanged sentence

Payment of 2022 convertible note issuance costs — ( 324 )

Proceeds from bank loan — 10,000

Principal payments on bank loans — ( 13,333 )

Payment of debt issuance costs — ( 717 )

Taxes paid related to the net share settlement of equity awards ( 1,445 ) ( 4,621 )

Repurchase of stock options — ( 1,500 )

Proceeds from issuance of common stock under the Common Stock Purchase Agreement 136 2,891

Payment of transaction costs related to the Common Stock Purchase Agreement ( 29 ) —

Net cash provided by financing activities 8,067 207,084

NET INCREASE (DECREASE) IN CASH, CASH EQUIVALENTS AND RESTRICTED CASH 4,881 ( 165 )

Stock issuance costs related to the Common Stock Purchase Agreement ( 3 ) ( 29 )

Proceeds from issuance of common stock through the Employee Stock Purchase Plan 334 —

Net cash (used in) provided by financing activities

( 6,758 ) 8,067

NET (DECREASE) INCREASE IN CASH, CASH EQUIVALENTS AND RESTRICTED CASH ( 2,132 ) 4,881

CASH, CASH EQUIVALENTS AND RESTRICTED CASH—Beginning of period 21,214 16,333

CASH, CASH EQUIVALENTS AND RESTRICTED CASH—Ending $ 21,214 $ 16,333

CASH, CASH EQUIVALENTS AND RESTRICTED CASH—End of period $ 19,082 $ 21,214

SUPPLEMENTAL CASH FLOW INFORMATION:

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Operating lease right-of-use assets obtained in exchange for lease obligations upon adoption of ASC 842 — 16,284

Conversion of Series A and Series B preferred stock into Class A common stock — 62,639

Operating lease liabilities extinguished upon early lease termination 335 —

Operating lease right-of-use assets obtained in exchange for lease obligation — 556

Conversion of convertible notes and accrued interest into Class A common stock 3,338 600

Operating lease right-of-use assets obtained in exchange for lease obligations 556 —

Taxes related to net share settlement of equity awards included in accrued liabilities — 4

Assumption of the private placement warrant liability in connection with Business Combination — 268

Transaction costs paid in 2020, previously recorded to other non-current assets and reclassified to additional paid-in capital in 2021 — 289

The accompanying notes are an integral part of these consolidated financial statements.

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ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

(the “Company” or “AEye”) is a provider of high-performance, active lidar systems for vehicle autonomy, advanced driver-assistance systems (ADAS), and robotic vision applications.

AEye’s 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.

On February 17, 2021, AEye Technologies, Inc., then known as AEye, Inc.

(“AEye Technologies”), entered into the Agreement and Plan of Merger (the “Merger Agreement”) with CF Finance Acquisition Corp.

III, a Delaware corporation (“CF III”), now known as AEye, Inc., and Meliora Merger Sub, Inc., a Delaware corporation and a wholly owned subsidiary of CF III (“Merger Sub”).

Based on CF III’s business activities, it was a “shell company” as defined under the Securities Exchange Act of 1934, as amended (the “Exchange Act”).

On August 16, 2021 (the “Closing Date”), CF III closed the business combination (the “Business Combination,” and together with the other transactions contemplated by the Merger Agreement, the “Transactions”) pursuant to the Merger Agreement, and Merger Sub was merged with and into AEye Technologies with AEye Technologies surviving the merger as a wholly owned subsidiary of CF III.

On the Closing Date, and in connection with the closing of the Transactions (the “Closing”), CF III changed its name to AEye, Inc.

The Company’s common stock and public warrants are now listed on the Nasdaq Stock Market LLC (“Nasdaq”) under the symbols “LIDR” and “LIDRW”, respectively.

Unless otherwise specified, “we,” “us,” “our,” “AEye,” and the “Company” refers to AEye, Inc., the combined entity following the Business Combination.

Refer to Note 2 for further discussion of the Business Combination.

(the “Company” or “AEye”) is a provider of high-performance, active lidar systems for vehicle autonomy, advanced driver-assistance systems (ADAS), and smart industrial applications.

AEye’s software-definable 4Sight TM Intelligent Sensing Platform combines solid-state active lidar 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, Inc., formerly known as CF Finance Acquisition Corp.

III, (“CF III”) was originally incorporated in Delaware on March 15, 2016 under the name CF SPAC Re Inc.

On February 17, 2021, AEye Technologies, Inc., then known as AEye, Inc., entered into an Agreement and Plan of Merger with CF III.

Based on CF III’s business activities, it was a “shell company” as defined under the Securities Exchange Act of 1934, as amended.

On August 16, 2021, the business combination contemplated by the Agreement and Plan of Merger was closed and CF III changed its name to AEye, Inc.

The Company’s common stock and public warrants are listed on the Nasdaq Stock Market LLC (“Nasdaq”) under the symbols “LIDR” and “LIDRW”, respectively.

Unless otherwise specified, “we,” “us,” “our,” “AEye,” and the “Company” refers to AEye, Inc.

Principle of Consolidation and Liquidity

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The Company has funded its operations primarily through the business combination and issuances of stock.

As of December 31, 2022, the Company’s existing sources of liquidity included cash, cash equivalents and marketable securities of $ 94.2 million.

The Company has incurred losses and negative cash flows from operations.

As the Company incurs additional losses in the future, it may need to raise additional capital through issuances of equity and debt.

However, management believes that the Company’s existing sources of liquidity are adequate to fund its operations for at least the next 12 months.

As of December 31, 2023, the Company’s existing sources of liquidity included cash, cash equivalents and marketable securities of $ 36,523 .

ASC 205-40, Presentation of Financial Statements - Going Concern , requires management to assess an entity’s ability to continue as a going concern within one year of the date the financial statements are issued.

In each reporting period, including interim periods, an entity is required to assess conditions known and reasonably knowable as of the financial statement issuance date to determine whether it is probable an entity will not meet its financial obligations within one year from the financial statement issuance date.

As is common in early-stage companies with limited operating histories, the Company is subject to risks and uncertainties such as its ability to develop and commercialize its products;

produce and deliver lidar and software products meeting acceptable performance metrics;

attract new and retain existing customers;

develop, obtain, or progress strategic partnerships;

secure an automotive OEM design win;

secure additional capital to support the business plan;

and other risks and uncertainties such as those described in Part I, Item 1A of this Annual Report on Form 10-K.

Since its inception, the Company has incurred net losses and negative cash flows from operations.

As of December 31, 2023, the Company had an accumulated deficit of $ 337,635 .

For the twelve months ended December 31, 2023 and 2022, the Company incurred a net loss of $ 87,126 and $ 98,714 , respectively, and the Company had net cash outflows from operating activities of $ 50,725 and $ 71,649 , respectively.

As of December 31, 2023, the Company had $ 36,523 of cash and marketable securities.

As the Company is still in its early stages, it is expected to incur additional operating losses and negative cash flows as it continues to focus on achieving commercialization of its lidar solutions.

When conditions and events, in the aggregate, impact an entity’s ability to continue as a going concern, management evaluates the mitigating effect of its plans to determine if it is probable that the plans will be effectively implemented, and, when implemented, the plans will mitigate the relevant conditions or events.

The decision by the Company's Tier 1 partner, Continental, to discontinue its joint lidar development program, may have a material and adverse effect on the Company's business, which is predicated on licensing its lidar designs and other intellectual property to Tier 1 partners.

The Company has a plan to improve its results and

liquidity through securing additional financing and finding a replacement Tier 1 partner.

Should the Company not be able to do so, the Company has plans which would further reduce operating expenses and cash outlays.

The Company believes that these plans alleviate substantial doubt about the Company's ability to continue as a going concern, which will result in adequate cash flows to support its ongoing operations for at least one year following the date these financial statements are issued.

Based upon the results of Management’s assessment, which has been performed as of March 26, 2024, these consolidated financial statements have been prepared on a going concern basis.

Reverse Stock Split

On December 27, 2023, the Company effected a 1-for-30 reverse stock split of its issued and outstanding shares of common stock (the "Reverse Stock Split").

Pursuant to the Reverse Stock Split, every thirty (30) shares of issued and outstanding shares of common stock were combined into one (1) share of common stock.

The Company did not issue fractional shares in connection with the Reverse Stock Split.

Stockholders who were otherwise entitled to fractional shares of common stock were instead entitled to receive a proportional cash payment.

The number of shares of common stock issuable under our equity incentive plans and exercisable under the outstanding warrants were also proportionately adjusted.

In connection with the Reverse Stock Split, there was no change to the shares authorized or in the par value per share of common stock of $ 0.0001 .

Accordingly, all historical per share data, number of shares issued and outstanding, stock awards, and other common stock equivalents for the periods presented in the accompanying consolidated financial statements and notes thereto have been adjusted retroactively, where applicable, to reflect the Reverse Stock Split.

Reclassification of Prior Year Presentation

Certain prior year amounts have been reclassified for consistency with the current year presentation.

Advances to suppliers has been broken out from Other within Footnote 6, Prepaid and other current assets.

Amortization of premiums on marketable securities, net within Footnote 13, Interest Expense and Other is now presented as Amortization of premiums on marketable securities, net of accretion and discounts.

Accrued severance has been broken out from Accrued payroll within Footnote 9, Accrued expenses and other current liabilities.

Emerging Growth Company

The Company is an “emerging growth company,” as defined in Section 2(a) of the Securities Act, as modified by the Jumpstart Our Business Startups Act of 2012 (the “JOBS Act”), and it may take advantage of certain exemptions from various reporting requirements that are applicable to other public companies that are not emerging growth companies including, but not limited to, not being required to comply with the independent registered public accounting firm attestation requirements of Section 404 of the Sarbanes-Oxley Act, reduced disclosure obligations regarding executive compensation in its periodic reports and proxy statements, and exemptions from the requirements of holding a nonbinding advisory vote on executive compensation and stockholder approval of any golden parachute payments not previously approved.

Further, Section 102(b)(1) of the JOBS Act exempts emerging growth companies from being required to

comply with new or revised financial accounting standards until private companies (that is, those that have not had a Securities Act registration statement declared effective or do not have a class of securities registered under the Exchange Act) are required to comply with the new or revised financial accounting standards.

Further, Section 102(b)(1) of the JOBS Act exempts emerging growth companies from being required to comply with new or revised financial accounting standards until private companies (that is, those that have not had a Securities Act registration statement declared effective or do not have a class of securities registered under the Exchange Act) are required to comply with the new or revised financial accounting standards.

The JOBS Act provides that a company can elect to opt out of the extended transition period and comply with the requirements that apply to non-emerging growth companies but any such election to opt out is irrevocable.

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Actual results could differ from those estimates.

Significant items subject to such estimates and assumptions include investments, fair value of the 2022 convertible note, embedded derivative and warrant liabilities, and stock-based compensation.

items subject to such estimates and assumptions include impairment of long-lived assets, write-downs of inventory to the lower of cost or net realizable value, investments, fair value of the 2022 convertible note, embedded derivative and warrant liabilities, and stock-based compensation.

Segment Reporting

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The CEO decides how to allocate resources and assesses the Company’s performance based upon consolidated financial information.

All of the Company's sales were made to customers (in USD) located in the U.S., Europe, and Asia through AEye, Inc.

Of the $ 7,665 of net property and equipment as of December 31, 2022, $ 7,207 is located in the United States, $ 108 is located in Europe, and $ 350 is located in Asia.

All of the Company's sales were made to customers in USD located in the U.S., Europe, and Asia-Pacific through AEye, Inc.

All of the Company's $ 281 of net property and equipment as of December 31, 2023 is located in the United States.

Cash, Cash Equivalents, and Marketable Securities

8 unchanged sentences

AFS debt securities included in marketable securities on the consolidated balance sheets consist of securities with original maturities greater than three months at the time of purchase.

Interest on marketable securities is included within interest income.

Interest on marketable securities is included within interest income and other on the consolidated statements of operations.

Amortization of premiums and accretion of discounts are included within interest expense and other on the consolidated statements of operations.

Restricted Cash

Restricted cash of $ 2,150 and $ 2,150 as of December 31, 2022 and 2021, respectively consists of funds that are contractually restricted as to usage or withdrawal due to a contractual agreement.

The Company has a letter of credit to the amount of $ 2,150 with Silicon Valley Bank as security for the payment of rent on its headquarters in Dublin, CA which require lease payments through 2026.

Restricted cash of $ 2,150 as of December 31, 2023 and 2022, consists of funds that are contractually restricted as to usage or withdrawal due to a contractual agreement.

The Company has a letter of credit to the amount of $ 2,150 with Citibank N.A.

as of December 31, 2023 as security for the payment of rent on its headquarters in Dublin, CA which require lease payments through 2026.

At December 31, 2022, the letter of credit was held with Silicon Valley Bank.

The Company determines current or non-current classification of restricted cash based on the expected duration of the restriction.

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The Company’s marketable securities have investment grade ratings when purchased which mitigates risk.

The Company’s accounts receivables are derived from customers located in the U.S., Europe, and Asia.

The Company’s accounts receivables are derived from customers located in the U.S., Europe, and Asia-Pacific.

The Company mitigates its credit risks by performing ongoing credit evaluations of its customers’ financial conditions.

The Company generally does not require collateral.

The Company’s concentration of risk related to accounts receivable and accounts payable was determined by evaluating the number of customers and vendors accounting for 10% or more of accounts receivable (“AR”) and accounts payable (“AP”).

accounts payable (“AP”).

As of December 31, 2023, AEye had four customers, each accounting for 10 % or more of AR and one vendor accounting for 10 % or more of AP.

As of December 31, 2022, AEye had four customers, each accounting for 10 % or more of AR and two vendors, each accounting for 10 % or more of AP.

As of December 31, 2021, AEye had one customer accounting for 10 % or more of AR and two vendors accounting for 10 % or more of AP.

During the years ended December 31, 2022 and 2021, the Company did not have any write offs of accounts receivable and at December 31, 2022 and 2021, did not record an allowance for doubtful accounts as all accounts receivable amounts were expected to be collected.

For the years ended December 31, 2023 and 2022, revenue from the Company’s major customers representing 10% or more of total revenue was as follows:

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Accounts receivable are recorded at the invoiced amount and do not bear interest.

Amounts collected on accounts receivable are included in net cash provided by operating activities in the consolidated statements of cash

If necessary, accounts receivable are reduced by an allowance for doubtful accounts, which is the Company’s best estimate of the amount of credit losses inherent in its existing accounts receivable.

The Company reviews the need for an allowance for doubtful accounts quarterly based on historical experience with each customer and the specifics of each arrangement.

During the years ended December 31, 2022 and 2021, the Company did not have any write-offs and at December 31, 2022 and 2021 did not record an allowance for doubtful accounts as all accounts receivable amounts are expected to be collected.

Amounts collected on accounts receivable are included in net cash provided by operating activities in the consolidated statements of cash flows.

If necessary, accounts receivable are reduced by a provision for expected credit losses, which is the Company’s best estimate of the amount of credit losses inherent in its existing accounts receivable.

The Company reviews the provision quarterly based on historical experience with each customer and the specifics of each arrangement.

During the years ended December 31, 2023 and 2022, the Company did not have any write-offs, and at December 31, 2023 and 2022, recorded a $ 35 and $ 0 provision for expected credit losses, respectively.

Inventories, net

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The Company evaluates the need for inventory write-downs associated with obsolete, slow moving, and non-sellable inventory by reviewing estimated net realizable values on a periodic basis and records a provision for excess and obsolete inventory to adjust the carrying value of inventory as needed.

The Company's inventory as of December 31, 2022 and 2021 was written down by $ 833 and $ 1,122 , respectively, in order to record inventory at its estimated net realizable value.

Deferred Transaction Costs

The Company capitalized qualified legal, accounting, and other direct costs related to the Business Combination which were deferred until completion of the Business Combination.

In August 2021, upon the completion of the Business Combination, all deferred costs were offset against proceeds from the Business Combination and the private investment in public equity (“PIPE”) financing.

The Company's current and non-current

inventory as of December 31, 2023 and 2022 was written down by $ 5,062 and $ 833 , respectively, in order to record inventory at its estimated net realizable value.

Property and Equipment, net

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Recoverability of assets to be held and used is measured by a comparison of the carrying amount of an asset to future undiscounted net cash flows expected to be generated by the asset.

If such assets are impaired, the impairment to be recognized is measured by the amount by which the carrying amount of the assets exceeds the fair value of the assets.

There are no impairment charges recorded in the consolidated statements of operations and comprehensive loss for the years ended December 31, 2022 and 2021.

If the test for recoverability identifies a possible impairment, the impairment to be recognized is measured by the amount by which the carrying amount of the assets exceeds the fair value of the assets.

The fair value is calculated based on estimated salvage value, estimated orderly liquidation value, or a value-in-use approach depending on the asset's highest and best use.

When an impairment loss is recognized for assets to be held and used, the adjusted carrying amount of the long-lived asset becomes its new cost basis which is depreciated over the asset's remaining useful life.

There were $ 9,988 of non-cash impairment charges recorded in the consolidated statements of operations and comprehensive loss for the year ended December 31, 2023.

No impairment charges were recorded for the year ended December 31, 2022.

Warrant Liability

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The warrants assumed in connection with the 2022 convertible note are accounted for in accordance with ASC 815-40, Derivatives and Hedging—Contracts in Entity’s Own Equity , under which the warrants do not meet the criteria for equity treatment and must be recorded as liabilities.

The Private Placement Warrants issued in connection with the IPO are classified as liabilities.

The Private Placement Warrants issued in connection with the business combination are classified as liabilities.

The Company adjusts the warrants to fair value at each reporting period.

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The Company's lease term includes the noncancelable period, any rent-free periods provided by the lessor, and options to extend or terminate the lease when it is reasonably certain that it will exercise that option.

At lease inception, and in subsequent periods as necessary, the Company estimates the lease term based on its assessment of extension and termination options that are reasonably certain to be exercised.

At lease inception, and in subsequent periods as necessary, the Company estimates the lease term based on its assessment of extension and termination options that are

reasonably certain to be exercised.

Operating lease expense for lease payments is recognized on a straight-line basis over the lease term and is included in operating expenses on the consolidated statements of operations and comprehensive loss.

1 unchanged sentence

Convertible Notes

The Company elected to early adopt Accounting Standards Update (“ASU”) 2020-06, Debt—Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging—Contracts in Entity’s Own Equity (Subtopic 815-40):

The Company adopted Accounting Standards Update (“ASU”) 2020-06, Debt—Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging—Contracts in Entity’s Own Equity (Subtopic 815-40):

Accounting for Convertible instruments and Contracts in an Entity’s Own Equity (“ASU 2020-06”).

1 unchanged sentence

The Company acknowledges that its election to apply the fair value option is irrevocable.

The Company recognized costs incurred upon issuance of the 2022 convertible note as an expense in its consolidated income statement for the twelve months ended December 31, 2022.

The 2022 convertible note is classified and presented as a current liability on the Consolidated Balance Sheet as of December 31, 2022.

Changes in fair value are recorded in the consolidated statements of operations and changes in fair value related to credit risk are recorded in other comprehensive loss.

The Company reports interest expense, including accrued interest, related to this convertible debt under the fair value option, within the change in fair value of convertible notes in the consolidated statement of operations.

The Company recognized costs incurred upon issuance of the 2022 convertible note as an expense in its consolidated statement of operations for the twelve months ended December 31, 2022.

The 2022 convertible note was classified and presented as a current liability on the consolidated balance sheet as of December 31, 2022.

As of December 31, 2023, the 2022 convertible note has no outstanding principal balance as all outstanding principal and accrued interest has been fully settled.

Changes in fair value were recorded in the consolidated statements of operations and changes in fair value related to credit risk are recorded in other comprehensive loss.

The Company reported interest expense, including accrued interest, related to this convertible debt under the fair value option, within the change in fair value of convertible notes in the consolidated statement of operations.

Revenue Recognition

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The consideration is allocated between separate performance obligations in proportion to their estimated standalone selling price (SSP).

The SSP reflects the price the Company would charge for a specific product or service if it were sold separately in similar circumstances and to similar customers.

The SSP reflects the price the Company would charge for a specific

product or service if it were sold separately in similar circumstances and to similar customers.

If the selling price is not directly observable, the Company determines SSP using information that may include other observable inputs, such as the cost plus margin approach, to estimate SSP.

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Cost of revenue primarily consists of costs directly associated with the production of those prototypes that are held for sale and certain costs associated with development arrangements.

Such costs for prototypes are direct materials, direct labor, indirect labor, warranty expense, and allocation of overhead.

Such costs for prototypes are direct materials, direct labor, indirect labor, inventory write-downs, losses on purchase commitments, warranty expense, and allocation of overhead.

Direct and indirect labor includes personnel-related costs and packaging and procurement respectively associated with the production of prototypes.

Other costs such as indirect manufacturing costs are recognized in research and development and general and administrative expenses on the consolidated statements of operations and comprehensive loss.

Costs associated with development arrangements include the direct costs and allocation of overhead costs involved in the execution of the contract.

Costs associated with development arrangements include the

direct costs and allocation of overhead costs involved in the execution of the contract.

Research and Development Expenses

Research and development expenses include personnel costs (including salaries, benefits, bonuses, and stock-based compensation), new hardware and software materials to the extent no future economic benefits are expected, other related expenses such as lab equipment, third party development-related contractors, and allocated overhead expenses.

Research and development expenses include personnel costs (including salaries, benefits, bonuses, one-time termination benefits, and stock-based compensation), new hardware and software materials to the extent no future economic benefits are expected, other related expenses such as lab equipment, third party development-related contractors, and allocated overhead expenses.

Substantially all the R&D expenses are related to the development of new products and services, including contract development expenses.

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The grant-date fair value for stock options and stock purchase rights under the employee stock purchase plan ("ESPP") is estimated using the Black-Scholes option-pricing model.

The Black-Scholes option-pricing model requires the input of subjective assumptions, including the option’s expected term and the price volatility of the underlying stock.

Stock options and RSUs for all periods prior to the Business Combination have been retroactively restated to give effect to the recapitalization.

Refer to Note 2 for further discussion of the equity recapitalization resulting from the Business Combination.

The grant-date fair value for RSUs with an associated market condition is estimated using the Monte-Carlo simulation model.

Both the Black-Scholes option-pricing model and the Monte-Carlo simulation model require the input of subjective assumptions, including the award’s expected term and the price volatility of the underlying stock.

Income taxes are accounted for under the asset and liability method.

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In making such a determination, the Company considers all available positive and negative evidence, including future reversals of existing taxable temporary differences, projected future taxable income, tax-planning strategies, and results of recent operations.

If the Company determines that it would be able to realize deferred tax

assets in the future in excess of their net recorded amount, an adjustment to the deferred tax asset valuation allowance would be made to reduce the provision for income taxes.

If the Company determines that it would be able to realize deferred tax assets in the future in excess of their net recorded amount, an adjustment to the deferred tax asset valuation allowance would be made to reduce the provision for income taxes.

The Company records uncertain tax positions in accordance with FASB ASC Topic 740, Income Taxes (“ASC 740”) on the basis of a two-step process in which determinations are made (1) whether it is more likely than not that the tax positions will be sustained on the basis of the technical merits of the position and (2) for those tax positions that meet the more-likely-than-not recognition threshold, the Company recognizes the largest amount of tax benefit that is more than 50% likely to be realized upon ultimate settlement with the related tax authority.

The Company recognizes interest and penalties related to unrecognized tax benefits on the income tax expense line in the accompanying consolidated statements of operations and comprehensive loss.

Accrued interest and penalties are included on the related tax liability line in the consolidated balance sheets.

The Company recognizes interest and penalties related to unrecognized tax benefits in the provision for income tax expense in the accompanying consolidated statements of operations and comprehensive loss.

Accrued interest and penalties are included in accrued expenses and other current liabilities in the consolidated balance sheets.

As of and for the year ended December 31, 2023 and 2022 there were no interest or penalties recorded.

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Basic net loss per share is computed using net loss available to common stockholders divided by the weighted average number of common shares outstanding during the period.

Diluted net loss per share reflects the dilutive effects of stock options, restricted stock units, preferred stock, stock to be issued under the ESPP, convertible notes, and warrants outstanding during the period to the extent such securities would not be anti-dilutive and is determined using the if-converted and treasury stock methods.

The Company calculates weighted average number of common shares outstanding during the period using the Company’s Class A common stock outstanding.

As the merger has been accounted for as a reverse capitalization, the consolidated financial statements of the merged entity reflects the continuation of the pre-merger AEye Technologies financial statements, which has been retroactively adjusted to the earliest period presented to reflect the legal capital of the legal acquirer, CF III.

As a result, net loss per share was also restated for periods ended prior to the Business Combination.

See Note 2 for details on this recapitalization and Note 16 for the retroactive restatement of net loss per share.

and is determined using the if-converted and treasury stock methods.

The Company calculates weighted average number of common shares outstanding during the period using the Company’s common stock outstanding.

Basic and diluted net loss per share attributable to common stockholders was the same for all periods presented as the inclusion of all potentially dilutive securities outstanding was anti-dilutive, as AEye is currently operating in a net loss position.

Comprehensive Loss

Comprehensive loss includes all changes in equity (net assets) from non-owner sources during a period, changes in fair value due to instrument-specific credit risk, and net unrealized gains (losses) on available-for-sale debt securities.

Comprehensive Income (Loss)

Comprehensive income (loss) includes all changes in equity (net assets) from non-owner sources during a period, changes in fair value due to instrument-specific credit risk, and net unrealized gains (losses) on available-for-sale debt securities.

Recent Accounting Pronouncements

In June 2016, the FASB issued ASU 2016-13, Measurement of Credit Losses on Financial Instruments , which has subsequently been amended by ASU No.

In December 2023, the Financial Accounting Standards Board, ("FASB"), issued Accounting Standards Update ("ASU") 2023-09, Income Taxes (Topic 740) - Improvements to Income Tax Disclosures to increase the transparency and usefulness of income tax information through improvements to the income tax disclosures primarily related to the rate reconciliation and income taxes paid information.

The guidance is effective for fiscal years beginning after December 15, 2024.

The Company is currently in the process of evaluating the effects of the new guidance.

Recently Adopted Accounting Guidance

In June 2016, the Financial Accounting Standards Board, ("FASB"), issued Accounting Standards Update ("ASU") 2016-13, Measurement of Credit Losses on Financial Instruments , which has subsequently been amended by ASU No.

2018-19, ASU No.

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Early adoption is permitted.

The Company is currently evaluating the impact this standard will have on its consolidated financial statements and related disclosures and will adopt the guidance on January 1, 2023 as permitted for smaller reporting companies.

Recently Adopted Accounting Guidance

In February 2016, the FASB established Topic 842, Leases, by issuing ASU No.

FASB ASC Topic 842, Leases (“ASC 842”) supersedes the previous accounting guidance for leases included within ASC 840.

The new guidance generally requires an entity to recognize operating and financing lease liabilities and corresponding right-of-use assets on its balance sheet, as well as recognize the associated lease expenses on its statements of operations in a manner similar to that required under current accounting rules.

The guidance requires a

modified retrospective transition approach with application in all comparative periods presented (the “Comparative Method”), or alternatively, as of the effective date as the date of initial application without restating comparative period financial statements (the “Effective Date Method”).

The Company adopted the new standard on January 1, 2022 using the Effective Date Method.

Upon adoption, the Company recorded net ROU assets and lease liabilities totaling approximately $ 16,284 and $ 19,921 , respectively, and a reversal of deferred rent of $ 3,032 ;

there were no cumulative effect adjustments as of January 1, 2022.

The standard did not have a material effect on the Company's consolidated statements of operations and comprehensive loss and the consolidated statement of cash flows.

The Company elected the transition practical expedient package which, among other things, allows the carryforward of historical lease classifications.

The Company will continue to apply Topic 840 prior to January 1, 2022, including Topic 840 disclosure requirements, in the comparative periods presented.

The company did not elect to apply the hindsight practical expedient, which permits entities to use hindsight in determining the lease term and assessing impairment of right-of-use assets.

In December 2019, the FASB issued ASU 2019-12, Income Taxes (Topic 740):

Simplifying the Accounting for Income Taxes .

This standard simplifies the accounting for income taxes by, among other things, eliminating certain exceptions related to the approach for intra-period tax allocation, the methodology for calculating income taxes in an interim period and the recognition of deferred tax liabilities for outside basis differences.

ASU 2019-12 is effective for public business entities for fiscal years beginning after December 15, 2021.

The Company adopted ASU 2019-12 as of January 1, 2022, and the Company's adoption did not have a material impact on the consolidated financial statements.

In August 2020, the FASB issued ASU 2020-06, Debt - Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging - Contracts in Entity's Own Equity (Subtopic 815-40):

Accounting for Convertible Instruments and Contracts in an Entity's Own Equity, which simplifies the guidance on accounting for convertible debt instruments by removing the separation models for:

(1) convertible debt with a cash conversion feature;

and (2) convertible instruments with a beneficial conversion feature.

Also, ASU 2020-06 requires the application of the if-converted method for calculating diluted earnings per share and the treasury stock method will be no longer available.

The provisions of ASU 2020-06 are applicable for fiscal years beginning after December 15, 2023 for smaller reporting companies, with early adoption permitted no earlier than fiscal years beginning after December 15, 2020.

The Company adopted this standard using the modified retrospective method, effective January 1, 2022, and the Company's adoption did not have a material impact on the consolidated financial statements.

RECAPITALIZATION

As discussed in Note 1, on August 16, 2021, AEye Technologies and CF III closed the Business Combination, with AEye Technologies surviving the Business Combination as a wholly owned subsidiary of CF III.

As part of the closing of the Business Combination, CF III changed its name to AEye, Inc.

(the “Combined Entity”).

Immediately prior to the closing of the Business Combination, the Company’s certificate of incorporation was amended and restated to, among other things, increase the total number of authorized shares of capital stock to 301,000,000 shares, of which 300,000,000 shares were designated common stock, $ 0.0001 par value per share, and of which 1,000,000 shares were designated preferred stock, $ 0.0001 par value per share.

The Business Combination is accounted for as a reverse recapitalization, with no goodwill or other intangible assets recorded, in accordance with US GAAP.

Under this method of accounting, AEye Technologies was treated as the accounting acquirer and CF III was treated as the acquired company for financial reporting purposes under FASB ASC Topic 805, Business Combinations (“ASC 805”).

This determination is primarily based on AEye Technologies’ stockholders comprising a majority of the voting power of the Combined Entity, and having the ability to nominate the majority of the governing body of the Combined Entity, AEye Technologies’ senior management comprising the senior management of the Combined Entity and AEye Technologies’ operations comprising the ongoing operations of the Combined Entity.

Accordingly, for accounting purposes, the financial statements of the Combined Entity represented a continuation of the financial statements of AEye Technologies and the Business Combination was treated as the equivalent of AEye Technologies issuing stock for the net assets of CF III, accompanied by a recapitalization.

The net assets of CF III are stated at historical cost, with no goodwill or other intangible assets recorded.

Operations prior to the Business Combination will be those of AEye Technologies in future reports of the Combined Entity.

Loss per share and stockholders’ equity (deficit), prior to the Business Combination, have been retroactively converted into 3.7208 shares (the “Exchange Ratio”).

Immediately prior to the closing of the Business Combination, all outstanding principal and unpaid accrued interest of the 2020 Notes were ultimately converted into 5,584,308 shares of AEye Technologies’ common stock and subsequently converted to Class A common stock of the Company (see Note 14).

Separately, each issued and outstanding share of AEye Technologies’ 16,383,725 redeemable convertible preferred stock was converted into shares of AEye Technologies’ common stock based on a one -to-one ratio.

The consolidated financial statements are accounted for with a retrospective application of the Business Combination that results in 16,383,725 shares of redeemable convertible preferred stock converting into common stock of the Company.

Upon the closing of the Business Combination, each share of AEye Technologies common stock issued and outstanding was canceled and converted into the right to receive 3.7208 shares of CF III’s common stock (the “Per Share Merger Consideration”).

Immediately prior to the closing of the Business Combination, the Board approved the net-exercise of common stock warrants and Series A preferred warrants which provides for the cashless exercise of 61,612 common stock warrants into 57,770 shares of AEye Technologies common stock and 7,353 Series A preferred warrants into 6,949 shares of AEye Technologies common stock at the Transaction Price of 37.21 per share.

Upon the Closing, the combined 64,719 shares were cancelled and exchanged for 240,806 shares of the Company’s Class A common stock, after giving effect to the Exchange Ratio.

Immediately prior to the closing of the Business Combination, CF III’s amended and restated certificate of incorporation, dated November 12, 2020 (the “Charter”), was further amended and restated to eliminate the Class B common stock (after giving effect to the conversion of each outstanding share of Class B common stock immediately prior to the closing of the Business Combination into one share of Class A common stock).

PIPE Subscription Agreement

Contemporaneously with the execution of the Merger Agreement, CF III entered into separate PIPE Subscription Agreements in a private placement with a number of PIPE investors, pursuant to which the PIPE Investors agreed to purchase, and CF III agreed to sell to the PIPE Investors, an aggregate of 22,000,000 shares of common stock, for a purchase price of $ 10.00 per share and an aggregate purchase price of $ 220,000 .

CF III also entered into a PIPE Subscription Agreement for 500,000 shares of common stock, for a purchase price of $ 10.00 per share and an aggregate purchase price of $ 5,000 with an investor who defaulted on the Closing under the PIPE Subscription Agreement.

The Company has initiated litigation to enforce the terms of that investor's PIPE Subscription Agreement.

Certain CF III shareholders exercised their right to redeem certain of their outstanding shares for cash, resulting in the redemption of 19,355,365 shares of CF III Class A common stock for an aggregate payment of $ 195,498 , at a redemption price of $ 10.10 per share based on the Trust Account balance as of August 11, 2021.

Public and Private Placement Warrants

CF III Warrants issued in connection with the IPO (“Public Warrants”) and in connection with the private placement units held by the Sponsor (“Private Placement Warrants”) to purchase shares of the Company’s common stock, at an exercise price of $ 11.50 per share, remained outstanding after the closing of the Business Combination.

The warrants became exercisable 30 days after the completion of the Business Combination, subject to other conditions, including with respect to the effectiveness of a registration statement covering the shares of common stock underlying such warrants, an d will expir e five years af ter the completion of the Business Combination or earlier upon redemption or liquidation.

The Public Warrants are classified as equity and valued based on the instrument’s publicly listed trading price.

The Private Placement Warrants are classified as liabilities and measured at fair value, with changes in fair value each period reported in the consolidated statements of operations and comprehensive loss.

The Company uses the Public Warrants listed trading price to value the Private Placement Warrants each reporting period.

Transaction Costs

In connection with the Business Combination, the Company incurred direct and incremental costs of approximately $ 52,661 related to the equity issuance, consisting primarily of investment banking, legal, accounting, and other professional fees, which were recorded to additional paid-in capital as a reduction of proceeds upon the closing of the Business Combination.

Transaction costs that were not directly related to the Business Combination of approximately $ 2,198 were expensed.

Transaction Proceeds

Upon closing of the Business Combination, the Company received gross proceeds of $ 256,811 from the Business Combination and PIPE financing, offset by offerings costs of $ 52,661 .

The following table reconciles the elements of the Business Combination to the consolidated statements of cash flows and the consolidated statements of changes in stockholders’ deficit for period ended December 31, 2021 (in thousands, except share data):

Cash - CF III's trust and cash (net of redemption) $ 36,811

Cash - Private offering 220,000

transaction costs and advisory fees paid ( 52,661 )

Net Business Combination and private offering $ 204,150

The number of shares of common stock issued immediately following the closing of the Business Combination were:

CF III Class A common stock, outstanding prior to Business Combination 23,000,000

redemption of CF III Class A common stock 19,355,365

Class A common stock of CF III 3,644,635

CF III founder shares 5,750,000

CF III Private Placement shares 500,000

CF III Shares issued in PIPE 22,000,000

Business Combination and PIPE shares 31,894,635

Legacy AEye shares 122,509,667

August 16, 2021 154,404,302

The number of Legacy AEye shares was determined as follows:

AEye shares, effected for Exchange Ratio

Balance at December 31, 2019 11,283,838 41,984,908

Recapitalization applied to Convertible preferred stock outstanding at December 31, 2019 16,383,725 60,960,574

Exercise of common stock options - 2020 504,524 1,877,233

Repurchase of common stock - 2020 ( 950,352 ) ( 3,536,070 )

Exercise of common stock options - 2021 (pre-Closing) 54,859 204,119

Conversion of Convertible Notes and Accrued Interest – 2021 5,584,308 20,778,097

Exercise of common stock and Series A preferred stock warrants - 2021 64,719 240,806

The Company adopted ASU 2016-13 on January 1, 2023 which resulted in an immaterial impact to the consolidated financial statements.

FAIR VALUE MEASUREMENTS

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Level 3 —Unobservable inputs in which there is little or no market data, which require the reporting entity to develop its own assumptions.

The Company's financial instruments that are not re-measured at fair value include accounts receivable, prepaid and other current assets, accounts payable, accrued expenses and other current liabilities, 2020 convertible notes, and long-term debt.

The Company's financial instruments that are not remeasured at fair value include accounts receivable, prepaid and other current assets, accounts payable, accrued expenses, and other current liabilities.

The carrying values of these financial instruments approximate their fair values.

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Fair Value Measured as of December 31, 2023 Using:

Adjusted Cost Unrealized losses Fair Value Cash and Cash Equivalent Marketable Securities

Adjusted Cost Unrealized gains

Fair Value Cash and Cash Equivalent Marketable Securities

Money market funds $ 16,377 $ — $ 16,377 $ 16,377 $ —

Asset-backed securities $ 3,507 $ ( 119 ) $ 3,388 $ — $ 3,388

Corporate bonds 2,880 1 2,881 — 2,881

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Private placement warrant liability $ — $ — $ 7 $ — $ —

Convertible notes — — 8,594 — —

Derivative warrant liability — — 119 — —

Total financial liabilities $ — $ — $ 8,720 $ — $ —

As of December 31, 2022, the Company’s financial assets and liabilities subject to fair value procedures were comprised of the following:

The Company’s financial assets and liabilities subject to fair value procedures were comprised of the following:

Money Market Funds:

The Company holds financial assets consisting of money market funds.

securities are valued using observable inputs, such as quoted prices in active markets for identical assets or liabilities.

These securities are valued using observable inputs, such as quoted prices in active markets for identical assets or liabilities.

Marketable Securities :

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Treasury rates, commensurate with a similar term to the 2022 Note.

The remaining term is calculated as the remaining contractual term of the Note.

The stock price is based on the publicly traded price of our Common Stock as of the measurement date.

The Company estimated the volatility for the Note based on the historical and implied volatilities of the Company's publicly traded common stock under the symbol "LIDR." The changes in fair value are recognized in other income (expense) for each reporting period.

The remaining term is calculated based on the estimated maturity date of the 2022 Note.

The stock price is based on the publicly traded price of the Company's common stock as of the measurement date.

The Company estimated the volatility for the Note based on the historical and implied volatilities of the Company's publicly traded common stock.

The changes in fair value are recognized in other income (expense), net for each reporting period.

Refer to Note 10 for details of the terms and conditions of the 2022 Note.

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Inherent in a Monte-Carlo simulation model are assumptions related to price, volatility, risk-free interest rate, term to expiration, and dividend yield.

The price is based on the publicly traded price of our Common Stock as of the measurement date.

The Company estimated the volatility for the warrants based on the historical and implied volatilities of the Company's publicly traded common stock under the symbol "LIDR." The risk-free interest rate is based on interpolated U.S.

The price is based on the publicly traded price of the Company's common stock as of the measurement date.

The Company estimated the volatility for the warrants based on the historical and implied volatilities of the Company's publicly traded common stock.

The risk-free interest rate is based on interpolated U.S.

Treasury rates, commensurate with a similar term to the warrants.

The term to expiration was calculated as the contractual term of the warrants of 4 years.

Finally, the Company does not anticipate paying a dividend.

Finally, the Company does not currently anticipate paying a dividend.

Any changes in these assumptions can change the valuation significantly.

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The Private Placement Warrants are recorded on the consolidated balance sheets at fair value.

The fair value is based on observable Level 2 inputs, specifically, the observable input of AEye public warrants traded under the symbol "LIDRW".

The fair value is based on observable Level 2 inputs, specifically, the observable input of the Company's public warrants.

Any changes in the fair value of the liability are reflected in other income (expense), net, on the consolidated statements of operations and comprehensive loss.

Private Placement Warrant liability is included within other noncurrent liabilities on the consolidated balance sheets.

The Company measures certain nonfinancial assets at fair value on a nonrecurring basis, primarily property and equipment and ROU assets, whenever events or changes in circumstances indicate that the carrying amount of the assets may not be recoverable.

The fair value of the Company's property and equipment was based upon estimated salvage value or estimated orderly liquidation value, depending on the asset's highest and best use.

As the fair value of property and equipment was estimated using primarily unobservable inputs, these are considered Level 3 fair value measurements.

The fair value of the Company's headquarter ROU asset and associated leasehold improvements were based on a value-in-use approach utilizing market rent comparable information, and is considered a Level 2 fair value measurement.

For more information regarding impairment charges, see Notes 1, 6, 7, and 17.

For the years ended December 31, 2023 and 2022, there were no transfers between Level 1 and Level 2 inputs.

The following table presents a summary of the changes in fair value of the Company’s Level 3 financial

instruments for the year ended December 31, 2022:

The following table presents a summary of the changes in fair value of the Company’s Level 3 financial instruments for the year ended December 31, 2023 (in thousands):

2022 Convertible Note Derivative Warrant Liability Total

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Payments or conversions ( 9,573 ) — ( 9,573 )

Change in fair value included in other income (expense) 531 ( 369 ) 162

Change in fair value included in other income (expense), net 958 ( 93 ) 865

Change in fair value due to instrument specific credit risk included in other comprehensive income 21 — 21

Balance at December 31, 2023 $ — $ 26 $ 26

The key inputs into the binomial-lattice model for the convertible note valued at December 31, 2022 are as follows:

December 31, 2022

Remaining term (years) 1.2

Expected volatility 90.4 %

Risk-free interest rate 4.6 %

Dividend yield — %

Estimated credit spread 37.7 %

The key inputs into the Monte-Carlo simulation model for the derivative warrant liability valued at December 31, 2023 are as follows:

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Similarly, a higher volatility assumption would increase the value of the liability, and a lower volatility assumption would decrease the value of the liability.

The value of the Company's convertible note liability would increase if a lower discount rate was used, and would decrease if a higher discount rate was used.

CASH, CASH EQUIVALENTS, AND RESTRICTED CASH

Cash, cash equivalents (which consists entirely of money market funds) and restricted cash as of December 31, 2022 and 2021 were as follows (in thousands):

Cash, cash equivalents, and restricted cash as of December 31, 2023 and 2022 were as follows (in thousands):

As of December 31,

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Total inventory, net $ 583 $ 4,553

The Company also had $ 1,491 and $ 0 of non-current inventory (raw materials) classified within Other noncurrent assets on the consolidated balance sheet as of December 31, 2022 and December 31, 2021, respectively.

The Company also had $ 208 and $ 1,491 of non-current inventory (raw materials), net of write-downs, classified within Other noncurrent assets on the consolidated balance sheet as of December 31, 2023 and December 31, 2022, respectively.

PREPAID AND OTHER CURRENT ASSETS

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Advances to suppliers 79 984

Other 713 102

Total prepaid and other current assets $ 2,517 $ 6,181

The Company primarily leases office facilities in Northern California under noncancelable operating leases expiring at various dates through November 2026.

During the twelve months ended December 31, 2023, the Company recorded a loss on advances to suppliers of $ 1,385 associated with the winding down of its existing industrial product as part of its revised strategic plan.

See Note 17, Restructuring, for further details.

The Company primarily leases office facilities in Northern California under non-cancelable operating leases expiring at various dates through November 2026.

Some of the Company's leases include options to renew, with renewal terms that, if exercised by the Company, extend the lease term from two to five years .

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The Company's short-term lease expense was determined to not be material.

The components of operating lease expenses for the twelve months ended December 31, 2022 were as follows (in thousands):

Twelve months ended

December 31, 2022

The Company recorded a gain of $ 35 on early lease termination within Interest income and other on the consolidated statements of operations for the twelve months ended December 31, 2023.

During the twelve months ended December 31, 2023, the Company recorded an impairment charge on right-of-use assets of $ 2,570 , included within impairment of long-lived assets within the Company's consolidated statements of operations.

No impairment charges were recorded for the twelve months ended December 31, 2022.

On November 14, 2023, the Company assigned an operating lease resulting in the Company being relieved of its primary obligation under this lease.

As a result of the lease assignment, a new tenant assumed the primary obligation under the lease, with the Company becoming secondarily liable.

If the new tenant should fail to perform under the lease, the Company could be liable to fulfill any remaining lease obligations.

The lease had a remaining term of 3.7 years as of December 31, 2023 with the Company serving as guarantor for the remaining term.

The resulting maximum exposure includes $ 360 of undiscounted future minimum lease payments plus potential additional payments to satisfy maintenance, taxes, and insurance requirements for the remainder of the lease term.

The components of operating lease expenses for the twelve months ended December 31, 2023 and 2022 were as follows (in thousands):

Twelve months ended December 31,

Operating lease cost $ 2,379 $ 2,382

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Total operating lease cost $ 2,719 $ 2,623

Supplemental cash flow information for the twelve months ended December 31, 2022 were as follows (in thousands):

December 31, 2022

Supplemental cash flow information for the twelve months ended December 31, 2023 and 2022 were as follows (in thousands):

Twelve months ended December 31,

Cash paid for operating leases included in operating cash flows $ ( 2,500 ) $ ( 1,341 )

Supplemental balance sheet information related to operating leases was as follows (in thousands):

December 31, 2022

Supplemental balance sheet information related to operating leases as of December 31, 2023 and 2022 was as follows (in thousands):

As of December 31,

Operating lease right-of-use assets $ 11,226 $ 15,502

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Total operating lease liabilities $ 17,273 $ 19,136

December 31, 2022

As of December 31,

Weighted average remaining lease term (in years) 7.89 9.26

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Maturities of lease liabilities were as follows (in thousands).

Years ended - December 31:

Years ending - December 31:

Thereafter 8,400

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Present value of lease liabilities $ 17,273

Disclosures under ASC 840, Leases

The company recognizes rent expense on a straight-line basis over the lease period.

Rent expense is principally the leased office space and was $ 1,876 within operating expenses in the consolidated statements of operations and comprehensive loss for the twelve months ended December 31, 2021.

Deferred rent liabilities, including unamortized leasehold improvement incentives was $ 3,637 as of December 31, 2021 within the consolidated balance sheet.

Future minimum payments as of December 31, 2021 under the noncancellable operating leases are as follows (in thousands):

Operating Leases

2026 and after 2,340

Total minimum lease payments 11,970

PROPERTY AND EQUIPMENT, NET

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Property and equipment, net $ 281 $ 7,665

Depreciation and amortization expense related to property and equipment amounted to $ 1,422 and $ 1,014 recognized within research and development, sales and marketing, and general and administrative expenses within the consolidated statements of operations and comprehensive loss for the years ended December 31, 2022 and 2021.

$ 604 of property and equipment was disposed in the year ended December 31, 2022.

Disposals of property and equipment were not material the year ended December 31, 2021.

For the year ended December 31, 2023, the Company recorded impairment charges on assets classified as property and equipment of $ 7,418 , included within impairment of long-lived assets within the Company's consolidated statements of operations.

No impairment charges were recorded for the year ended December 31, 2022.

Depreciation and amortization expense related to property and equipment amounted to $ 1,547 and $ 1,422 recognized within research and development, sales and marketing, and general and administrative expenses within the consolidated statements of operations and comprehensive loss for the years ended December 31, 2023 and 2022, respectively.

The Company recorded disposals of gross property and equipment of $ 1,041 and $ 604 in the years ended December 31, 2023 and 2022, respectively.

The carrying amounts of the property and equipment disposed in the years ended December 31, 2023 and 2022 were $ 342 and $ 0 , respectively.

OTHER NONCURRENT ASSETS

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Accrued payroll 540 1,122

Accrued severance 402 26

Accrued payroll taxes 317 526

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Income tax payable 75 41

Deferred rent - current — 605

Total accrued expenses and other current liabilities $ 6,585 $ 9,764

Silicon Valley Bank Financing Facility

On April 26, 2021, the Company entered into a loan and security agreement (the “Loan Agreement”) with an affiliate of Silicon Valley Bank (“SVB” or the “Lender”) in connection with the non-binding term sheet for a financing facility of up to $ 10,000 entered into on March 18, 2021.

Under the Loan Agreement, the Lender was obligated to make a term loan advance to the Company of $ 4,000 .

Subject to the terms and conditions of the Loan Agreement and, upon the Company’s request, the Lender was obligated to make one term loan advance to the Company of $ 6,000 .

The interest rate on the term loan advance is calculated at 8 % per annum and payable monthly, in arrears.

Upon entering the Loan Agreement, $ 4,000 was drawn.

On May 13, 2021, the additional $ 6,000 was drawn.

The balance of $ 10,540 for the financing facility, including interest, was repaid on August 20, 2021.

Silicon Valley Bank Credit Facility

On August 16, 2019, the Company entered into a loan and security agreement with SVB.

Borrowings under this facility are secured by substantially all the Company’s assets, excluding intellectual property.

The term loan’s borrowings are subject to certain financial covenants and restrictions.

The Company complied with all financial covenants and restrictions.

The balance of $ 2,333 for the term loan was repaid on September 7, 2021.

Paycheck Protection Program (PPP) Loan

On June 19, 2021, the Company received notice of the Paycheck Protection Program (PPP) forgiveness payment made to SVB by the Small Business Administration in the amount of $ 2,270 in principal and $ 27 in interest.

This amount represents the forgiveness of the total PPP loan the Company received in 2020 under the PPP Loan provisions of the Coronavirus Aid, Relief and Economic Security (CARES) Act.

As of December 31, 2022 and 2021, there were no borrowings outstanding.

CONVERTIBLE NOTES

2020 Convertible Notes

During 2020, the Company entered into various convertible note agreements (“2020 Notes”) under which the Company may issue convertible equity instruments having an aggregate principal amount of up to $ 40,000 , a 3 % accruing dividend (“accrued interest”) and a maturity date of October 31, 2021.

In connection with the Business Combination on August 16, 2021, all outstanding principal of $ 38,045 and unpaid accrued interest on the 2020 Notes were converted into AEye Technologies’ preferred stock and

subsequently were converted into 20,778,097 shares of the Company’s Class A common stock.

Accordingly, at December 31, 2022 and December 31, 2021, the convertible notes balance was $ 0 .

2022 Convertible Note

On September 14, 2022, the Company entered into a Securities Purchase Agreement with an investor allowing for the sale and issue of two convertible notes, each with a principal balance of $ 10,500 and cash proceeds of $ 10,000 , for a total of $ 20,000 in proceeds between the two issuances (each, a "Note Closing").

The first Note Closing ("First Closing") occurred on September 15, 2022, and the Company entered into a Senior Unsecured Convertible Note with the investor pursuant to which the Company issued to the investor one convertible note ("2022 Note") with a principal balance of $ 10,500 for cash proceeds of $ 10,000 .

On September 14, 2022, the Company entered into a Securities Purchase Agreement, or SPA, with an investor allowing for the sale and issue of two convertible notes, each with a principal balance of $ 10,500 and gross cash proceeds of $ 10,000 , for a total of $ 20,000 in proceeds between the two issuances (each, a "Note Closing").

As part of the First Closing, the Company also issued warrants to the investor - see Note 12 for further details.

The second Note Closing ("Second Closing") may occur, at the Company's option, no earlier than the ninetieth ( 90 th) calendar day after the First Closing, provided that the Company meets certain equity conditions.

Additional warrants would be issued to the investor upon the Second Closing.

The 2022 Note bears interest at an annual rate of 5.0 %, in addition to an original issue discount of 4.76 %, and has a maturity date of March 15, 2024 ("Maturity Date").

The interest may be settled in cash or shares at the option of the Company and is payable together with monthly redemptions of the outstanding principal amount of the Note.

Beginning December 15, 2022, and the first of each subsequent month (each a "Monthly Redemption Date" or an "Installment Date"), the Company shall redeem the Monthly Redemption Amount until the 2022 Note is fully redeemed, payable in cash or, so long as certain equity conditions are met, shares of Common Stock at the option of the Company.

The equity conditions that must be met in order for the Company to settle the Monthly Redemption Amount in shares include requirements for the daily volume weighted average price of the Company's Common Stock to exceed $ 0.33 and the average daily trading volume of the Company's Common Stock to exceed $ 500,000 for the twenty ( 20 ) trading days prior to the applicable Installment Notice Date (which is the sixth ( 6 th ) trading day prior to each Installment Date).

The Monthly Redemption Amount, in most instances, will be 1/15 th of the original principal amount, plus any amount accelerated pursuant to the 2022 Note, accrued but unpaid interest, and late fees, if any.

If the Company elects to settle such redemptions in shares of Common Stock, the number of shares to be settled shall be based on an Installment Conversion Price equal to the lower of (i) $ 2.50 or (ii) 95 % of the lowest daily volume weighted average price of the Common Stock during the five ( 5 ) trading days immediately preceding the applicable Monthly Redemption Date.

If the Company elects to settle redemptions in cash, the Monthly Redemption Amount shall include a 5 % premium.

The investor is permitted to accelerate up to four ( 4 ) Monthly Redemption Amounts in any calendar month (each, an "Acceleration," and each such amount, an "Acceleration Amount", and the Conversion Date of any such Acceleration, each an "Acceleration Date") at the Acceleration Conversion Price, subject to a $ 2,800 limit per month.

The Acceleration Conversion Price shall be the lower of (i) the Installment Conversion Price for such current Installment Date or (ii) the greater of $ 0.30 and 95 % of the lowest daily volume weighted average price of the Common Stock during the five (5) trading days immediately preceding the Acceleration Date.

If, at any time while the 2022 Note is outstanding, the Company carries out one or more capital raises in excess of $ 5,000 in gross proceeds each, the investor shall have the right to require the Company to first use up to 30 % of the gross proceeds of each capital raise to redeem all or a portion of the 2022 Note for an amount in cash (such amount, the "Mandatory Redemption Amount") equal to the sum of (a) 1.05 multiplied by the sum of the principal amount subject to the Mandatory Redemption and accrued but unpaid interest and (b) 1.00 multiplied by the sum of the Make-Whole amount, if any, and any other amounts, if any, then owing to the investor in respect of the 2022 Note (a "Mandatory Redemption").

The Make-Whole amount is defined as an amount equal to the additional interest that would accrue under the 2022 Note assuming for calculation purposes that the principal of the 2022 Note remained outstanding through the Maturity Date.

The 2022 Note may not be converted into Common Stock to the extent such conversion would result in the investor and its affiliates having beneficial ownership of more than 9.99 % of our then outstanding shares of Common Stock.

The Company and investor entered into a registration rights agreement (the “Registration Rights Agreement”) to which the Company is required to file a registration statement registering the resale by the investor of any shares of the Company’s common stock issuable upon conversion, including the resale of shares issuable upon exercise of the associated warrants.

The Company is required to meet certain obligations with respect to the timeliness of the filing and effectiveness of the registration statement.

The Company filed such registration statement on October 19, 2022, which was declared effective by the U.S.

Securities and Exchange Commission on October 27, 2022.

The second Note Closing ("Second Closing") may occur, at the Company's option, until March 15, 2024, upon which the Company's right to effect a Second Closing shall automatically terminate.

As of March 15, 2024, the Company did not effect a Second Closing.

The 2022 Note bore interest at an annual rate of 5.0 %, in addition to an original issue discount of 4.76 %, and had an initial a maturity date of March 15, 2024 ("Maturity Date").

Beginning December 15, 2022, and the first of each subsequent month (each a "Monthly Redemption Date" or an "Installment Date"), the Company was required to redeem the Monthly Redemption Amount until the 2022 Note was fully redeemed.

The Monthly Redemption Amount, in most instances, was 1/15 th of the original principal amount, plus any amount accelerated pursuant to the 2022 Note, accrued but unpaid interest, and late fees, if any.

The principal and interest could be settled in cash or, so long as certain equity conditions were met, shares of common stock at the option of the Company and was payable together with the monthly redemptions of the outstanding principal amount of the Note.

If the Company elected to settle such redemptions in shares of Common Stock, the number of shares to be settled was based on an Installment Conversion Price equal to the lower of (i) $ 75.00 or (ii) 95 % of the lowest daily volume weighted average price of the Common Stock during the five ( 5 ) trading days immediately preceding the applicable Monthly Redemption Date.

If the Company elected to settle redemptions in cash, the Monthly Redemption Amount included a 5 % premium.

The investor was permitted to accelerate up to four ( 4 ) Monthly Redemption Amounts in any calendar month (each, an "Acceleration," and each such amount, an "Acceleration Amount", and the Conversion Date of any such Acceleration, each an "Acceleration Date") at the Acceleration Conversion Price, subject to a $ 2,800 limit per month.

The Acceleration Conversion Price was the lower of (i) the Installment Conversion Price for such current Installment Date or (ii) the greater of $ 9.00 and 95 % of the lowest daily volume weighted average price of the Common Stock during the five ( 5 ) trading days immediately preceding the Acceleration Date.

As these terms are defined in the 2022 Note, if either the relevant Installment Conversion Price or Acceleration Conversion Price, as applicable, is less than $ 9.00 per share, then a Conversion Floor Price Condition exists and the Company must deliver to the lender the Conversion Installment Floor Amount in cash, in addition to the required number of shares, which are valued at $ 9.00 regardless of the actual trading price of the Company's shares.

The Conversion Installment Floor Amount is an amount in cash equal to the product obtained by multiplying

(A) the higher of (i) the highest price that the Common Stock trades at on the Trading Day immediately preceding the relevant Share Delivery Date and (ii) the applicable Installment or Acceleration Conversion Price and (B) the difference obtained by subtracting (i) the number of shares of Common Stock delivered to the investor on the applicable Share Delivery Date with respect to such Conversion from (ii) the quotient obtained by dividing (x) the applicable Installment or Acceleration amount subject to such Conversion, by (y) the applicable Installment Conversion Price.

Interest payments are also trued-up in cash when the value of the Company's shares is below $ 9.00 per share.

The Company elected to apply the fair value option to the measurement of the 2022 Note.

As a result of adopting the fair value option no embedded derivatives should be bifurcated from the 2022 Note.

The Company classifies the 2022 Note as a liability at fair value and will remeasure the 2022 Note to fair value at each reporting period.

The total proceeds received from the investor of $ 10,000 should be allocated between the 2022 Note and the related warrants issued using the relative fair value method at issuance date.

This resulted in an initial fair value of $ 9,512 being allocated to the 2022 Note, and $ 488 allocated to the associated warrants (see Note 3 for further details).

The Company recorded total issuance costs of $ 474 , representing placement agent and legal fees, within Interest expense and other on the consolidated statement of operations.

As a result of adopting the fair value option, no embedded derivatives are bifurcated from the 2022 Note.

The Company classifies the 2022 Note as a liability at fair value and remeasures the 2022 Note to fair value at each reporting period.

The fair value measurement includes the assumption of accrued interest and expense and thus a separate amount is not reflected on the consolidated statement of operations.

As of December 31, 2022, the 2022 Note has outstanding principal of $ 9,200 and is recorded as a current liability at fair value of $ 8,594 .

As of December 31, 2023, the 2022 Note has no outstanding principal balance as all outstanding principal and accrued interest has been fully settled through Monthly Redemptions and Accelerations.

As part of the debt extinguishment, the Company reclassified the accumulated change in fair value due to instrument-specific credit risk out of accumulated other comprehensive loss on the consolidated balance sheet and into interest expense and other on the consolidated statement of operations.

The Company evaluated the Second Closing and associated warrants to be a contingently issuable financial asset with a fair value of zero at inception in accordance with ASC 815-40 Contracts in an Entity's own Equity.

The contingently issuable warrants are considered issued for accounting purposes - see Note 12 for further details.

Embedded Derivative Liability

As outlined in the indenture governing the 2020 Notes, the 2020 Notes are automatically convertible, contingent upon the occurrence of certain events, most notably a financing (a “Next Financing”), defined as the issuance and sale of additional preferred stock (“Financing Stock”).

The redemption price is defined as a price per share equal to 90 % of the price per share paid by the other purchasers of the Financing Stock sold in the Next Financing.

The 2020 Notes are redeemable into the number of shares of Financing Stock needed to settle the aggregate amount of principal and unpaid interest owed to the holder of such notes, which is based on the ultimate price per share associated with the Financing Stock.

Consequently, the 2020 Notes are considered stock settled debt.

This redemption feature embedded in the 2020 Notes is considered to be a derivative that is required to be separately accounted for at fair value and subsequently remeasured to fair value at each reporting date.

Accordingly, upon issuance of the 2020 Notes, the Company recognized the fair value associated with the embedded derivative which resulted in an embedded derivative liability of approximately $ 1,520 , with an equal and offsetting debt discount.

Upon the closing of the Business Combination on August 16, 2021, the embedded derivative was settled.

Accordingly, at December 31, 2022 and December 31, 2021 , the fair value of the embedded derivative liability wa s $ 0 .

INTEREST EXPENSE AND OTHER

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Twelve months ended December 31,

Interest on term loan debt $ — $ 630

Interest on PPP loan — 11

Interest on 2020 convertible note — 700

Amortization of debt issuance costs — 725

Amortization of premiums (accretion of discounts) on marketable securities, net $ ( 474 ) $ 778

Convertible note issuance costs — 474

Amortization of debt discount — 752

Amortization of premiums on marketable securities, net of accretion of discounts 778 456

Loss on disposal of assets 111 —

Realized loss on instrument-specific credit risk 46 —

Expected credit losses 35 —

Realized losses on redemptions of marketable securities — 77

Common stock purchase agreement transaction costs 29 1,583

Common Stock Purchase Agreement costs — 29

Interest expense and other $ ( 248 ) $ 1,379

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The Company is authorized to issue 600,000,000 shares of common stock, par value $ 0.0001 per share.

As of December 31, 2022, the Company had 163,099,124 shares of common stock issued and outstanding.

As of December 31, 2023, the Company had 6,310,090 shares of common stock issued and outstanding, post the reverse stock split.

Class A Common Stock — Class A common stock has the following rights:

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Dividend rights:

Subject to any other provisions of the Amended Charter, each holder of Class A common stock will be entitled to receive, in proportion to the number of shares of the Class A common stock held, such dividends and other distributions in cash, stock or property of the Company when, as and if declared thereon by the Board from time to time out of assets or funds of the Company legally available therefor.

Board from time to time out of assets or funds of the Company legally available therefor.

Rights upon liquidation:

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Although the Company does not currently intend to issue any shares of preferred stock, the Company may choose to do so in the future.

As discussed in Note 2, Recapitalization, the Company has retroactively adjusted the preferred shares issued and outstanding prior to August 16, 2021 to give effect to the Exchange Ratio established in the Merger Agreement to determine the number of shares of common stock into which they were converted.

Upon the Closing on August 16, 2021, all of the outstanding shares of preferred stock were cancelled and exchanged for shares of the surviving Company’s Class A common stock at the Exchange Ratio of 3.7208 , the exchange rate established in the Merger Agreement.

August 16, 2021

Preferred stock shares Exchange ratio Common stock shares

Series A Convertible preferred stock (pre-combination) 9,226,734 3.7208 34,330,838

Series B Convertible preferred stock (pre-combination) 7,156,991 3.7208 26,629,736

Total 16,383,725 60,960,574

The Company is authorized to issue up to 1,000,000 shares of preferred stock, each with a par value of $ 0.0001 per share.

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Contingent Warrants - As of December 31, 2023, the Company had 58,333 contingently issuable warrants outstanding associated with the potential Second Closing under the Securities Purchase Agreement.

These warrants will become exercisable by the investor if and when the Second Closing occurs.

They will entitle the investor to purchase up to 1,750,000 shares of Common Stock at a price of $ 3.50 per share, subject to a four ( 4 ) year term.

As the Company did not effect a Second Closing by March 15, 2024, these warrants are no longer outstanding and will not be issued to the investor.

Tumim Stone Common Stock Purchase Agreement — On December 8, 2021, the Company entered into a Common Stock Purchase Agreement (the “CSPA”) and a Registration Rights Agreement with Tumim Stone Capital LLC (“Tumim Stone”).

Under the terms and subject to the conditions of the CSPA, the Company has the right, but not the obligation, to sell to Tumim Stone, and Tumim Stone is obligated to purchase up to the lesser of (i) $ 125,000 of the Company’s common stock, or (ii) the Exchange Cap equal to 19.99 % of the shares of the Company’s common stock outstanding immediately prior to the execution of the CSPA, unless the Company’s stockholders approve the issuance of shares in excess of the Exchange Cap, or the average price of all applicable sales of common stock to Tumim Stone under the CSPA equals or exceeds $ 4.9485 .

Under the terms and subject to the conditions of the CSPA, the Company has the right, but not the obligation, to sell to Tumim Stone, and Tumim Stone is obligated to purchase up to the lesser of (i) $ 125,000 of the Company’s common stock, or (ii) the Exchange Cap equal to 1,028,847 shares of the Company's common stock, unless the Company’s stockholders approve the issuance of shares in excess of the Exchange Cap, or the average price of all applicable sales of common stock to Tumim Stone under the CSPA equals or exceeds $ 148.46 per share.

Upon the satisfaction of various commencement conditions, such as the filing of the registration statement which provides for the resale of such shares pursuant to the Registration Rights Agreement, the Company has sole discretion to initiate such sales of common stock over the period of 36 months commencing December 8, 2021.

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In connection with the CSPA, the Company issued to Tumim Stone 10,087 restricted common shares in the Company.

At issuance, the 302,634 shares of common stock had a fair value of $ 1,583 and were recorded to Interest expense and other in the Company’s consolidated statements of operations and comprehensive loss.

The Company determined that the right to sell additional shares represents a freestanding put option under ASC 815 Derivatives and Hedging , and as such, the financial instrument was classified as a derivative asset with a fair value of zero at inception of the CSPA on December 8, 2021.

On May 6, 2022, the Company filed a Registration Statement on Form S-1, which relates to the offer and resale of up to 30,865,419 shares of AEye's common stock by to Tumim Stone, the selling stockholder.

During the twelve months ended December 31, 2022, the company issued 1,145,000 shares of its common stock under the CSPA for proceeds of $ 2,891 .

ACCUMULATED OTHER COMPREHENSIVE LOSS

The changes in accumulated other comprehensive loss by component for the twelve months ended December 31, 2022 and 2021 are as follows (in thousands):

During the twelve months ended December 31, 2023, the Company issued 19,500 shares of its common stock under the CSPA for gross proceeds of $ 136 .

During the twelve months ended December 31, 2022, the Company issued 38,167 shares of its common stock under the CSPA for gross proceeds of $ 2,891 .

As of December 31, 2023, 961,093 shares remain available for issuance under the CSPA.

ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS)

The changes in accumulated other comprehensive income (loss) by component for the twelve months ended December 31, 2023 and 2022 are as follows (in thousands):

Unrealized gains (losses) on available-for-sale securities Change in fair value due to instrument-specific credit risk Total

Balance at December 31, 2021 $ ( 391 ) $ — $ ( 391 )

Other comprehensive loss, net of tax ( 391 ) — ( 391 )

Balance at December 31, 2021 ( 391 ) — ( 391 )

Other comprehensive loss before reclassifications, net of tax ( 940 ) ( 25 ) ( 965 )

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Balance at December 31, 2022 $ ( 1,254 ) $ ( 25 ) $ ( 1,279 )

The $ 77 reclassified out of accumulated other comprehensive loss in the twelve months ended December 31, 2022 is included within Interest expense and other on the consolidated statement of operations.

Other comprehensive income (loss) before reclassifications, net of tax 1,264 ( 21 ) 1,243

Amounts reclassified from accumulated other comprehensive loss, net of tax — 46 46

Net other comprehensive income 1,264 25 1,289

Balance at December 31, 2023 $ 10 $ — $ 10

The amounts reclassified out of accumulated other comprehensive income (loss) in the twelve months ended December 31, 2023 and 2022 are included within Interest expense and other on the consolidated statement of operations.

NET LOSS PER SHARE

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STOCK-BASED COMPENSATION

The Company has four equity incentive plans, the 2014 US LADAR Inc.

Equity Incentive Plan (the “2014 Plan”), the 2016 Stock Plan (the “2016 Plan”), the 2021 Equity Incentive Plan (the “Incentive Plan”) and the 2022 Employee Stock Purchase Plan (the "ESPP").

The Company has five equity incentive plans, the 2014 US LADAR Inc.

Equity Incentive Plan (the “2014 Plan”), the 2016 Stock Plan (the “2016 Plan”), the 2021 Equity Incentive Plan (the “Incentive Plan”), the 2022 Employee Stock Purchase Plan (the "ESPP"), and the 2023 CEO Inducement Grant Plan (the "CEO Plan").

On August 16, 2021, the Company’s 2014 Plan and 2016 Plan were terminated in connection with the closing of the business combination as defined in Note 1, but continue to govern the terms of outstanding equity awards that were granted prior to the termination of the plans.

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Under each plan, the options expire ten years from the date of grant.

In connection with the Closing on August 16, 2021, $ 1,500 was paid to a former executive as consideration for repurchasing 542,615 of his vested options under the Company's 2016 Plan.

2021 Equity Incentive Plan

The Incentive Plan became effective immediately upon the Closing on August 16, 2021 and initially reserved 15,440,430 shares of common stock for issuance thereunder.

The Incentive Plan became effective immediately upon the closing of the business combination on August 16, 2021 and initially reserved 514,681 shares of common stock for issuance thereunder.

The Incentive Plan includes an evergreen provision that provides for an annual increase in the number of shares of common stock available for issuance thereunder beginning on January 1, 2022 and ending on January 1, 2032, equal to 5 % of the shares of the Company’s common stock outstanding on December 31, 2021 for the first year and by 3 % of the total number of shares of common stock outstanding on December 31 of the preceding calendar year for each year thereafter, or a lesser number of shares as determined by the Board of Directors.

After January 1, 2022, the Board of Directors authorized the addition of 7,743,413 shares of common stock to be added to the Incentive Plan for issuance.

Since January 1, 2022, the Board of Directors have authorized the addition of 954,545 shares of common stock to be added to the Incentive Plan for issuance.

Under the Incentive plan, RSU’s vest depending on their vesting schedule.

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On May 10, 2022, the Company's stockholders approved the 2022 Employee Stock Purchase Plan (the "ESPP"), authorizing 66,666 shares of common stock to be reserved for issuance under the ESPP.

The number of shares reserved and available for issuance under the ESPP shall be cumulatively increased by the 1 % of the number of shares issued and outstanding on December 31 of the preceding calendar year for each year thereafter, or a lesser number of shares as determined by the Board of Directors.

The number of

shares reserved and available for issuance under the ESPP shall be cumulatively increased by the 1 % of the number of shares issued and outstanding on December 31 of the preceding calendar year for each year thereafter, or a lesser number of shares as determined by the Board of Directors.

During 2023, the Board of Directors have authorized the addition of 54,366 shares of common stock to be added to the ESPP for issuance.

The ESPP provides an offering period of 24 months, with four purchase periods that are generally six months long and end on April 30 and October 31 of each year.

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Each employee who is a participant in the ESPP may purchase shares by authorizing contributions at a minimum of 1 % up to a maximum of 10 % of his or her compensation for each pay period, to a maximum of $ 15 per purchase period and $ 25 per year, which will then be used to purchase shares on the last business day of the purchase period at a price equal to 85 % of the fair market value of common stock on the offering date or the exercise date whichever is less.

During the year ended December 31, 2023, 64,773 shares were purchased under the ESPP.

During the year ended December 31, 2022, no shares were purchased under the ESPP.

As of December 31, 2022, the Company has withheld $ 188 of contributions from its employees.

As of December 31, 2023, the Company has withheld $ 58 of contributions from its employees within accrued expenses and other current liabilities on the consolidated balance sheets.

2023 CEO Inducement Grant Plan

The CEO Plan became effective on February 13, 2023 with 233,332 shares of common stock initially reserved for issuance.

In connection with the appointment of the Company's CEO on February 13, 2023, the Company granted 166,666 service-based RSUs and 66,666 market-based RSUs to the CEO.

The service-based RSUs will vest over three years .

The market-based RSUs would have vested quarterly over six ( 6 ) calendar quarters following the satisfaction of the market condition.

The market condition would have been satisfied if the closing price of the Company's common stock, as reported by NASDAQ, met or exceeded $ 36.00 per share for any ten ( 10 ) consecutive trading days prior to March 1, 2024.

As the market condition was not satisfied by March 1, 2024, the market-based RSUs were forfeited.

As of December 31, 2023, 233,332 RSUs were granted under the CEO Plan.

A summary of stock option activity related to the Plans as of December 31, 2023 is as follows:

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The total fair value of RSUs that vested during the year ended December 31, 2023 was $ 3,596 .

Stock-Based Compensation Expense — The following table summarizes stock-based compensation expense recorded in each component of operating expenses in the Company’s consolidated statements of operations and comprehensive loss for the year ended December 31, 2022 and 2021 (in thousands):

Stock-Based Compensation Expense — The following table summarizes stock-based compensation expense recorded in each financial statement line item in the Company’s consolidated statements of operations and comprehensive loss for the year ended December 31, 2023 and 2022 (in thousands):

Twelve months ended December 31,

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The total unrecognized compensation expense for RSUs was $ 16,669 as of December 31, 2023 which is expected to be recognized over an estimated weighted average period of 1.93 years.

The total unrecognized compensation expense for the ESPP was $ 1,152 as of December 31, 2022 which is expected to be recognized over an estimated

weighted average period of 1.83 years.

The Company uses the Black-Scholes option-pricing model to estimate the grant-date fair value of ESPP purchase rights, which requires the input of subjective assumptions such as expected term, expected stock price volatility, risk-free interest rate and dividend yield as discussed below.

The total unrecognized compensation expense for the ESPP was $ 458 as of December 31, 2023 which is expected to be recognized over an estimated weighted average period of 1.33 years.

The Company uses the Black-Scholes option-pricing model to estimate the grant-date fair value of ESPP purchase rights.

The fair value of each of the four purchase periods is estimated separately.

The Company uses the Monte-Carlo simulation model to estimate the grant date fair value of awards with a market condition.

Both models require the input of subjective assumptions such as expected term, expected stock price volatility, risk-free interest rate and dividend yield as discussed below.

Expected Term —The expected term for ESPP is the length of time from the grant date to the date on which the stock is purchased by the employees.

Expected Volatility —Expected volatility is estimated using a combination of the average historical volatility of the Company's own stock and those of comparable companies’ stock.

The expected term for awards with a market condition is the length of time from the grant date to the date the market condition expires.

Expected Volatility —Expected volatility is estimated using a combination of the average historical volatility of the Company's own stock and those of comparable companies’ stock at the time of the grant.

Risk-Free Interest Rate —The risk-free interest rates are based on US Treasury yields in effect at the grant date for notes with comparable terms as the awards.

Dividend Yield —The expected dividend-yield assumption is based on the Company’s current expectations about its anticipated dividend policy.

The following table summarizes the range of valuation assumptions used in estimated the fair value of the ESPP during the period:

Year Ended December 31, 2022

The following table summarizes the range of valuation assumptions used in estimating the fair value of the ESPP during the period:

Twelve months ended December 31, 2023

Expected term (years) 0.50 - 2.00

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Dividend yield — %

The following table summarizes the valuation assumptions used in estimating the fair value of awards granted during the period with a market condition:

Twelve months ended December 31, 2023

Expected term (years) 1.05

Expected volatility 104.5 %

Risk-free interest rate 4.8 %

Dividend yield — %

Sale of Prototypes

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United States $ 1,223 $ 2,471

Germany 65 536

Europe 184 920

Asia-Pacific 57 256

$ 1,464 $ 3,647

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Contract liabilities, current $ — $ 987

Contract liabilities, noncurrent — 631

Total $ — $ 987

Contract liabilities, noncurrent are included in other noncurrent liabilities on the consolidated balance sheet.

The following table shows the significant changes in contract liabilities balance as of December 31, 2023 and 2022 (in thousands):

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Revenue recognized that was included in the contract liabilities beginning balance ( 987 ) ( 1,931 )

Increase due to cash received and not recognized as revenue and billings in excess of revenue recognized during the period — 2,828

Ending balance $ — $ 987

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The customer is not considered committed where they are able to terminate for convenience without payment of a substantive penalty under the contract.

Additionally, as a practical expedient, the Company has not disclosed the value of unsatisfied performance obligations for contracts with an original expected length of one year

Additionally, as a practical expedient, the Company has not disclosed the value of unsatisfied performance obligations for contracts with an original expected length of one year or less.

The contract liabilities balance represents the remaining performance obligations for contracts with an original duration of greater than one year.

RESTRUCTURING

In the first quarter of 2023, the Company began the implementation of a revised strategic plan to focus on key products and critical customer engagements it believes will generate the best long-term results for all stakeholders.

In the fourth quarter of 2023, the Company implemented the second phase of its revised strategic plan to align the Company's operations with evolving business needs by focusing on the transition from research and development to the commercialization of its automotive products and winding down its existing industrial product, while reducing fixed operating costs.

The winding down of the Company's existing industrial product, in combination with an accumulation of other triggering events, indicated that the carrying amount of the Company's long-lived assets may not be recoverable.

An impairment review was performed on the Company's long-lived assets as of December 31, 2023, resulting in a write-down of its property and equipment and ROU asset to fair value.

As a result of the implementation of both phases of the revised strategic plan and the impairment review of long-lived assets, the Company recorded restructuring charges of $ 19,153 in the twelve months ended December 31, 2023 primarily relating to one-time employee termination benefits, inventory and other current asset write-downs, losses on purchase commitments, and impairment and disposal charges on its long-lived assets.

The Company did not have any restructuring charges during fiscal year 2022.

Restructuring-related liabilities are included in accrued expenses and other current liabilities in the consolidated balance sheets.

Restructuring charges were included in the consolidated statements of operations and comprehensive loss during the twelve months ended December 31, 2023 as follows (in thousands):

Twelve months ended December 31, 2023

One-time employee termination benefits Inventory and other current asset write-downs Losses on purchase commitments Long-lived asset disposals and impairment charges Other Total

Cost of revenue $ 130 $ 5,231 $ 360 $ — $ — $ 5,721

Research and development 789 — — 152 — 941

Sales and marketing 2,011 30 — 38 — 2,079

General and administrative 294 — — 55 123 472

Impairment of long-lived assets — — — 9,940 — 9,940

Total restructuring charges $ 3,224 $ 5,261 $ 360 $ 10,185 $ 123 $ 19,153

A reconciliation of the beginning and ending balance of cash restructuring charges, including one-time employee termination benefits, losses on purchase commitments, and other restructuring charges, which are included in accrued expenses and other current liabilities in the consolidated balance sheets, is as follows (in thousands):

One-time employee termination benefits Losses on purchase commitments Other

Balance as of December 31, 2022

$ — $ — $ — $ —

Charges 3,224 360 123 3,707

Cash payments ( 2,822 ) ( 127 ) ( 67 ) ( 3,016 )

Balance as of December 31, 2023

$ 402 $ 233 $ 56 $ 691

EMPLOYEE BENEFIT PLAN

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Participating employees may contribute into a traditional plan with pretax salary or into a Roth plan with after tax salary up to statutory limits.

In 2022, the 401(k) Plan provides for Company safe harbor matching contributions of 100 % of the employee contribution, up to 5 % of each employee's earnings, which vest upon the first day of employment.

In 2021, the 401(k) Plan provided for Company safe harbor matching contributions of 100 % of the first 3 % of employee earnings, and 50 % of the next 2 % of earnings.

In 2023 and 2022, the 401(k) Plan provides for Company safe harbor matching contributions of 100 % of the employee contribution, up to 5 % of each employee's earnings, which vest upon the first day of employment.

The Company made contributions of $ 899 and $ 1,177 for the years ended December 31, 2023 and 2022, respectively.

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The provision for the year ended December 31, 2023 was comprised of $ 3 and $ 54 in state and foreign taxes, respectively.

Utilization of net operating loss carryforwards, tax credits, and other attributes may be subject to future annual limitations due to the ownership change limitations provided by Section 382 of the Internal Revenue Code and similar state provisions.

The following table presents a reconciliation of the federal statutory rate of 21.0 % to our effective tax rate for the periods presented:

The provision for the year ended December 31, 2022 was comprised of $ 9 and $ 49 in state and foreign taxes, respectively.

The following table presents a reconciliation of the federal statutory rate of 21.0 % to the Company's effective tax rate for the periods presented:

Twelve months ended December 31,

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Research and development credits 2.3 % 3.5 %

Transaction Cost 0.0 % 3.9 %

Foreign rate differential — % ( 4.1 ) %

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Effective tax rate ( 0.1 ) % ( 0.1 ) %

For 2022 and 2021, our effective tax rate differs from the amount computed by applying the statutory federal and state income tax rates to net loss before income tax, primarily as the result of state income taxes, R&D credits and changes in our valuation allowance.

Significant components of the Company’s deferred tax assets as of December 31, 2022 and December 31, 2021 are presented below:

For 2023 and 2022, the Company's effective tax rate differs from the amount computed by applying the statutory federal and state income tax rates to net loss before income tax, primarily as the result of state income taxes, R&D credits and changes in the Company's valuation allowance.

Significant components of the Company’s deferred tax assets as of December 31, 2023 and 2022 are presented below (in thousands):

As of December 31,

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Total deferred tax assets (liabilities)—net $ — $ —

The Company reports income taxes in accordance with ASC 740, which requires an asset and liability approach in accounting for income taxes.

Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases, as well as net operating loss and tax credit carryforwards.

Deferred tax amounts are determined by using the enacted tax rates expected to be in effect when the 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 reduces the deferred tax assets to the amount that is more likely than not to be realized.

Realization of deferred tax assets is dependent on future earnings, if any, the timing and amount of which are uncertain.

The Company could not conclude that it was more likely than not that tax benefits from operating losses would be realized, and accordingly, has provided a full valuation allowance against its net deferred tax assets.

The Company has a history of operating losses and has incurred cumulative book losses since its formation.

Based upon the history of losses, the Company has determined that it is more likely than not that the net deferred tax assets will not be realized, and accordingly, a full valuation allowance has been recorded.

The valuation allowance as of December 31, 2023 was $ 98,840 which increased from $ 68,868 at December 31, 2022.

The increase in the valuation allowance is primarily due to additional reserve required against net operating losses and research credits generated during the year ended December 31, 2022.

The Company has not provided deferred taxes on unremitted earnings attributable to foreign subsidiaries because these earnings are intended to be reinvested indefinitely.

No deferred tax asset was recognized since the Company does not believe the deferred tax asset will be realized in the foreseeable future.

The accumulated foreign earnings of the Company's foreign subsidiaries totaled $ 111 as of December 31, 2022.

If the Company's foreign earnings were repatriated, additional tax expense might result.

The Company determined that the calculation of the amount of unrecognized deferred tax liability related to these cumulative unremitted earnings attributable to foreign subsidiaries is not practicable.

The increase in the valuation allowance is primarily due to additional reserve required against net operating losses and research

credits generated during the year ended December 31, 2023.

As of December 31, 2023, the Company had $ 247,802 and $ 202,887 of federal and state net operating losses available to reduce future taxable income, respectively, of which $ 12,256 will begin to expire in 2033 for federal tax purposes and $ 202,887 will begin to expire in 2029 for state tax purposes.

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The federal credits begin to expire in 2034 and the state credits have no expiration date.

The Company has completed a Section 382 study through December 31, 2021 to determine whether it had experienced a change in ownership and, if so, whether the tax attributes (NOL and credits) were impaired.

As a result of this study, the Company concluded all of its NOLs and credits would be available to use as of December 31, 2021.

However future change in ownership may limit the ability to use tax attributes under Section 382.

than 50 percentage points in the stock ownership of one or more stockholders or groups of stockholders who owns at least 5% of a corporation’s stock within a specific testing period.

Under Section 382 of the Internal Revenue Code of 1986, as amended, the Company’s ability to utilize NOL or other tax attributes, such as research tax credits, in any taxable year, may be limited if the Company has experienced an “ownership change.” Generally, a Section 382 ownership change occurs if there is a cumulative increase of more than 50 percentage points in the stock ownership of one or more stockholders or groups of stockholders who owns at least 5% of a corporation’s stock within a specific testing period.

Similar rules may apply under state tax laws.

Unrecognized Tax Benefits — The following is a tabular reconciliation of the total amounts of unrecognized tax benefits:

Based on the Section 382 analysis performed through December 31, 2021, the Company concluded all of its NOLs and credits would be available to use as of December 31, 2021, however, future changes in ownership may limit the ability to use tax attributes under Section 382.

The following is a tabular reconciliation of the total amounts of unrecognized tax benefits (in thousands):

Twelve months ended December 31,

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As of December 31, 2023 and December 31, 2022 there was no accrued interest nor penalties related to uncertain tax positions.

The Company reports income taxes in accordance with ASC 740, which requires an asset and liability approach in accounting for income taxes.

Deferred tax amounts are determined by using the enacted tax rates expected to be in effect when the 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 reduces the deferred tax assets to the amount that is more likely than not to be realized.

The Company has a history of operating losses and has incurred cumulative book losses since its formation.

The Company files income tax returns in the U.S., various state jurisdictions, and foreign jurisdictions.

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RELATED PARTIES

Since November 2016, the Company has employed a sibling of Mr.

Dussan, the Company’s Chief Technology Officer, who held the position of Director, Human Resources and Sr.

Manager of Human Resources at December 31, 2022 and 2021, respectively.

From November 2016 to December 2023, the Company had employed a sibling of Mr.

Dussan, a director and the Company’s former Chief Technology Officer, who held the position of Director, Human Resources and Sr.

Manager of Human Resources during 2023 and 2022, respectively.

For the years ended December 31, 2023 and 2022, Mr.

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Dussan’s sibling was granted 2,000 and 750 RSUs, respectively.

In addition, he participates in all other benefits that the Company generally offers to all of its employees.

In addition, he participated in all other benefits that the Company generally offers to all of its employees.

SUBSEQUENT EVENTS

Management has evaluated subsequent events through March 15, 2023 and determined that there were no such events requiring recognition or disclosure in the financial statements other than the below.

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 per depositor, per insured bank, for each account ownership category.

As of March 10, 2023, we had approximately $ 9,600 in deposit accounts at SVB, of which $ 2,150 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.

Management has evaluated subsequent events through March 26, 2024 and determined that there were no such events requiring recognition or disclosure in the financial statements.

Changes in and Disagreements With Accountants on Accounting and Financial Disclosure

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 8. Financial Statements and Supplementary Data