AEye Inc

AEYE,** INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(in thousands, except share and per share data or otherwise stated)

AEye, Inc. and its wholly owned subsidiaries (the “Company” or “AEye”) is a provider of high-performance, active lidar systems for vehicle autonomy, advanced driver-assistance systems, or ADAS, and robotic vision applications. AEye's4Sight™ Intelligent Sensing Platform includes a solid-state software definable active lidar sensor, an adaptive sensing SmartScan architecture to scan dynamic scenes/targets, and a sophisticated signal processing capability that provides precise measurements and imaging for various safety-critical applications. The4Sight™ Intelligent Sensing platform captures more information with less data, facilitating faster, more accurate, and more reliable perception of the environment.

AEye, formerly known as CF Finance Acquisition Corp. III, (“CF III”), was originally incorporated in Delaware on* March 15, 2016under 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 of1934,* 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. and its wholly owned subsidiaries.

Principle of Consolidation and Liquidity

The accompanying consolidated financial statements include the accounts of AEye, Inc. and its wholly owned subsidiaries. All intercompany balances and transactions have been eliminated in consolidation.

The Company has funded its operations primarily through the business combination and issuances of stock. As of* December 31, 2024*, the Company’s existing sources of liquidity included cash, cash equivalents and marketable securities of $22,278.

ASC205-40, Presentation of Financial Statements - Going Concern, requires management to assess an entity’s ability to continue as a going concern withinone 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 willnot meet its financial obligations withinone 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 related to liquidity.

Since its inception, the Company has incurred net losses and negative cash flows from operations. As of* December 31, 2024*, the Company had an accumulated deficit of $373,095. For the years ended* December 31, 2024and2023*, the Company incurred a net loss of $35,460 and $87,126, respectively, and the Company had net cash outflows from operating activities of $26,620 and $50,725, respectively. As of* December 31, 2024*, the Company had $22,278 of cash, cash equivalents, 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. It remains critical for the Company to preserve cash and manage spending to extend its liquidity.

70

[

The Company is dependent upon raising additional capital to provide the cash necessary to continue its ongoing operations and execute against its strategic objectives. During thetwelve months ended* December 31, 2024*, the Company issued shares through stock purchase agreements and a convertible note totaling $12,905. Subsequent to year-end, the Company raised an additional $11,055 in gross proceeds through financing activities (see Note23, Subsequent Events.) However, successfully raising capital is outside of management's control and there can beno assurance that the Company will be able to obtain additional financing on terms acceptable to the Company, on a timely basis, or at all. Based on cash, cash equivalents and marketable securities at* December 31, 2024,together with the net proceeds from financing activities subsequent to year-end, cash, available cash equivalents and marketable securities is sufficient to fund the Company’s operations for at least the next12* months from the filing date of these consolidated financial statements. At some point after that time, the Company anticipates it will require additional financing to fund its future operations.

Based upon the results of Management’s assessment, which has been performed as of* February 24, 2025*, these consolidated financial statements have been prepared on a going concern basis.

On* December 27, 2023*, the Company effected a1-for-30 reverse stock split of its issued and outstanding shares of common stock (the "Reverse Stock Split"). Pursuant to the Reverse Stock Split, everythirty (30) shares of issued and outstanding shares of common stock were combined intoone (1) share of common stock. The Company didnot 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 wasno change to the number of 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.

Emerging Growth Company

The Company is an “emerging growth company,” as defined in Section2(a) of the Securities Act, as modified by the Jumpstart Our Business Startups Act of2012 (the “JOBS Act”), and it* maytake advantage of certain exemptions from various reporting requirements that are applicable to other public companies that arenot* emerging growth companies including, butnot limited to,not being required to comply with the independent registered public accounting firm attestation requirements of Section404 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 paymentsnot previously approved.

Further, Section102(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 havenot had a Securities Act registration statement declared effective or donot 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. The Company has elected to take advantage of the benefits of the extended transition period for new or revised financial accounting standards. This* maymake it difficult or impossible to compare the Company’s financial results with the financial results of another public company that is eithernot* an emerging growth company or is an emerging growth company that has chosennot to take advantage of the extended transition period exemptions because of the potential differences in accounting standards used.

Use of Estimates

The preparation of consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Significant items subject to such estimates and assumptions include lease termination liability, write-downs of inventory to the lower of cost or net realizable value, investments, embedded derivative and warrant liabilities, stock-based compensation, impairment of long-lived assets, and fair value of the2022 convertible note.

71

Cash, Cash Equivalents, and Marketable Securities

The Company considers all highly liquid investments, such as treasury bills, commercial paper, certificates of deposit, and money market instruments with maturities ofthree months or less at the time of acquisition to be cash equivalents. Cash equivalents primarily consist of amounts held in interest-bearing money market accounts that are readily convertible to cash. Cash equivalents are stated at cost, which approximates fair market value.

Marketable securities have been classified as available-for-sale and are carried at estimated fair value as determined based upon quoted market prices or pricing models for similar securities. Unrealized gains and losses in fair value of the available-for-sale (“AFS”) debt securities are reported in other comprehensive income (loss). When the AFS debt securities are sold, cost is based on the specific identification method, and the realized gains and losses are included in other income (expense), net in the consolidated statements of operations and comprehensive loss. The Company determines the appropriate classification of its investments at the time of purchase and reevaluates such designation at each balance sheet date. The Company considers all AFS debt securities as available for use to support current operations, including those with maturity dates beyondone year and are classified as current assets under marketable securities in the accompanying consolidated balance sheets. AFS debt securities included in marketable securities on the consolidated balance sheets consist of securities with original maturities greater thanthree months at the time of purchase. 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 as of* December 31, 2023*, consisted of funds that were contractually restricted as to usage or withdrawal due to a contractual agreement. The Company had 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* August 2024,the former landlord drew down on the letter of credit and the restricted cash was used to offset the letter of credit draw (see further discussion in Note6*). The Company hadno restricted cash as of* December 31, 2024*.

Concentration of Credit Risk

Financial instruments which potentially subject the Company to concentration of credit risk consist primarily of cash, cash equivalents, and marketable securities, and accounts receivable. The Company places its cash and cash equivalents with major financial institutions, which management assesses to be of high credit quality, to limit the exposure of each investment. The Company’s marketable securities have investment grade ratings when purchased which mitigates risk.

The Company’s accounts receivable are derived from customers located in the U.S. and Europe. The Company mitigates its credit risks by performing ongoing credit evaluations of its customers’ financial conditions. The Company generally doesnot require collateral.

72

The Company’s concentration of risk related to accounts receivable and accounts payable was determined by evaluating the number of customers and vendors accounting for10% or more of accounts receivable (“AR”) and accounts payable (“AP”). As of* December 31, 2024*, the Company hadthree customers, each accounting for 10% or more of AR andone vendor accounting for 10% or more of AP. As of* December 31, 2023*, the Company hadfour customers, each accounting for 10% or more of AR andone vendor accounting for 10% or more of AP.

For the years ended* December 31, 2024and2023*, revenue from the Company’s major customers representing10% or more of total revenue was as follows:

Customer accounted for less than10%* of total revenue in the period.

Fair Value of Financial Instruments

The Company defines fair value as an exit price, representing the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. As such, fair value is a market-based measurement that is determined based on assumptions that market participants would use in pricing an asset or liability. For additional discussion on fair value of financial instruments, see Note2.

Derivatives

The Company accounts for derivative instruments in accordance with Financial Accounting Standards Board's (FASB) Accounting Standards Codification (ASC) Topic815, Derivatives and Hedging(“ASC815”). The Company’s objectives and strategies for using derivative instruments, and how the derivative instruments and related hedged items are accounted for affect the financial statements.

The Company doesnot use derivative instruments to hedge exposures to cash flow, market, or foreign currency risk. Terms of convertible debt instruments are reviewed to determine whether they contain embedded derivative instruments that are required under ASC815 to be accounted for separately from the host contract and recorded on the consolidated balance sheets at fair value.

An evaluation of specifically identified conditions is made to determine whether the fair value of the derivative issued is required to be classified as equity or as a derivative liability. The fair value of derivative liabilities is required to be revalued at each reporting date, with corresponding changes in fair value recorded in current period operating results. For additional discussion of derivatives, see Note2.

Accounts Receivable, net

Accounts receivable are recorded at the invoiced amount and donot bear interest. 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, 2024and2023*, the Company had write-offs of $70 and $0, respectively. As of* December 31, 2023,the Company recorded a $35 provision for expected credit losses. There isno provision for credit losses as of December 31, 2024.*

Inventories, net

Inventories consist of raw materials, work in progress, and finished goods. Inventories are stated at the lower of cost and net realizable value and costs are computed under the standard cost method. Inventories that arenot expected to be consumed in the next12 months are classified within Other noncurrent assets. Prototype inventory cost consists of the associated raw material, direct labor, indirect labor and other overhead costs. 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 current and noncurrent inventory held as of* December 31, 2024and2023* was written down by $4,659 and $5,062, respectively, in order to record inventory at its estimated net realizable value.

73

Property and Equipment, net

Property and equipment are stated at cost, less accumulated depreciation and amortization. Depreciation is computed using the straight-line method over the estimated useful lives of the assets, which range from 2 to 7 years. Leasehold improvements are amortized over the shorter of the lease term or expected useful life of the improvements. Construction in progress is the construction or development of property and equipment that havenot yet been placed in service. Maintenance and repairs are charged to expense as incurred, and improvements are capitalized. When assets are retired or otherwise disposed of, the cost and accumulated depreciation and amortization are removed from the consolidated balance sheet and any resulting gain or loss is reflected in the consolidated statements of operations and comprehensive loss in the period realized.

Impairment of Long-Lived Assets

The Company evaluates its long-lived assets for impairment whenever events or changes in circumstances indicate that the carrying amount of such assets* may**not* be recoverable. 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 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. The Company recorded $9,988 of non-cash impairment charges 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, 2024.*

Warrant Liability

The Company accounts for warrants as either equity-classified or liability-classified instruments based on an assessment of the warrant's specific terms and applicable authoritative guidance. The warrants assumed in connection with the2022 convertible note are accounted for in accordance with ASC815-40, Derivatives and Hedging—Contracts in Entity’s Own Equity, under which the warrants donot meet the criteria for equity treatment and must be recorded 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. The warrant liabilities are subject to remeasurement at each balance sheet date until exercised, and any change in fair value is recognized in the consolidated statements of operations.

Leases

The Company determines if an arrangement is or contains a lease at inception. The Company evaluates the classification of leases at commencement, and, as necessary, at modification. Operating leases, consisting of office leases, are included in Right-of-use ("ROU") assets, Accrued expenses and other current liabilities, and Operating lease liabilities, noncurrent, on the Company's consolidated balance sheets. The Company didnot have any finance leases as of* December 31, 2024.ROU assets represent the Company's right to an underlying asset for the lease term, and lease liabilities represent the Company's obligation to make lease payments arising from the lease. Operating lease ROU assets and liabilities are recognized at the commencement date based on the present value of lease payments over the lease term. The operating lease ROU asset also includes any lease payments made prior to lease commencement and initial direct costs and excludes lease incentives. Variable lease paymentsnot* dependent on an index or a rate are expensed as incurred and arenot included within the ROU asset and lease liability calculation. Variable lease payments primarily include reimbursements of costs incurred by lessors for common area maintenance and utilities. As most of the Company's leases donot include an implicit rate, the Company uses the incremental borrowing rate based on the estimated rate of interest for collateralized borrowing over a similar term of the lease payments at commencement date in determining the present value of future payments. The incremental borrowing rate is a hypothetical rate based on the Company's understanding of what its credit rating would be for a secured borrowing when the lease was executed. 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. 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. The Company elected to exclude from its balance sheets recognition of leases having a term of12 months or less (short-term leases) and elected tonot separate lease components and non-lease components for its long-term real estate leases.

74

Convertible Notes

The Company adopted Accounting Standards Update (“ASU”)2020-06, Debt—Debt with Conversion and Other Options (Subtopic470-20) and Derivatives and Hedging—Contracts in Entity’s Own Equity (Subtopic815-40): Accounting for Convertible instruments and Contracts in an Entity’s Own Equity (“ASU2020-06”). The Company has elected to apply the fair value measurement option to the2022 convertible note on the date that the Companyfirst recognized the convertible note on* September 15, 2022.The Company acknowledges that its election to apply the fair value option is irrevocable. As of December 31, 2024*, the2022 convertible note hasno 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

The Company generates revenues from the sale of prototypes and from development arrangements with automakers and suppliers to automakers. Under FASB ASC Topic606, Revenue from Contracts with Customers (“ASC606”), the Company accounts for such arrangements as contracts with customers and accordingly recognizes revenue by applying the following steps:

Revenue from the sale of prototypes is generally recognized at a point in time when control of the goods is transferred. Certain prototype sales contracts include services to install and commission or customize the prototypes for customers. Revenues from these services are categorized as prototype revenue and recognized either over time as the services are being performed, or at a point in time, depending on the nature of the services and whether the criteria for recording revenue over time are met in accordance with ASC606.

Revenue from development arrangements is either recognized at a point in time or over time depending on the performance obligations in the contract. For performance obligations that are satisfied over time, such as services which require engineering and development based on customer requirements, the Company recognizes revenue using an input method based on contract costs incurred to date compared to total estimated contract costs.

See Note17, Revenue, for additional information related to the application of ASC606 to the Company’s primary revenue streams.

Sales taxes collected from customers and remitted to governmental authorities are accounted for on a net basis and therefore are excluded from revenues in the consolidated statements of operations and comprehensive loss.

75

Arrangements with Multiple Performance Obligations

When a contract involves multiple performance obligations, the Company accounts for individual products and services separately if the customer can benefit from the product or service on its own or with other resources that are readily available to the customer and the product or service is separately identifiable from other promises in the arrangement. 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. If the selling price isnot directly observable, the Company determines SSP using information that* mayinclude other observable inputs, such as the cost plus margin approach, to estimate SSP. In instances where SSP isnot* directly observable, the Company determines SSP using information that* may*include other observable inputs such as expected costs plus margin, or uses the residual approach for performance obligations whose SSP is highly variable or uncertain.

The Company provides standard product warranties for a term of typically 30 days toone year to ensure that its products comply with agreed-upon specifications. Standard warranties are considered to be assurance type warranties and arenot accounted for as separate performance obligations. Estimated future warranty costs are accrued and charged to cost of sales in the period that the related revenue is recognized. These estimates are based on historical warranty experience and any known or expected changes in warranty exposure, such as trends of product reliability and costs of repairing and replacing defective products. The Company assesses the adequacy of its recorded warranty liabilities on a quarterly basis and adjusts the amounts as necessary. Warranty costs are included within accrued expenses and other liabilities on the consolidated balance sheets. Refer to Note9 for further information on warranty reserve amounts.

Other Policies, Judgments and Practical Expedients

Contract assets and liabilities.Contract assets primarily represent revenues recognized for performance obligations that have been satisfied but for which amounts havenot been billed. Contract liabilities relate to deferred revenue. Deferred revenue consists of amounts that have been invoiced and/or cash received but for which revenue hasnot been earned. This generally includes unrecognized revenue balances for development arrangements. Deferred revenue that will be realized during the succeeding12-month period is recorded within current liabilities and the remaining deferred revenue is recorded as noncurrent liabilities. The Company didnot have any contract assets or contract liabilities as of* December 31, 2024*.

Right of return.The Company’s general terms and conditions for its contracts donot contain a right of return that allows the customer to return products and receive a credit. Therefore, the Company doesnot estimate returns and generally recognizes revenue at contract price upon product shipment or delivery.

Significant financing component.In certain arrangements, the Company receives payment from a customer either before or after the performance obligation has been satisfied. The expected timing difference between the payment and satisfaction of performance obligations for all of the Company’s contracts isone year or less; therefore, the Company applies a practical expedient and doesnot consider the effects of the time value of money on transaction price. The Company’s contracts with customer prepayment terms donot include a significant financing component because the primary purpose isnot to receive financing from the customers. The Company didnot have any outstanding receivables with financing components as of* December 31, 2024*.

Contract modifications.The Company maymodify contracts to offer customers additional products or services. Each of the additional products and services are generally considered distinct from those products or services transferred to the customer before the modification. The Company evaluates whether the contract price for the additional products and services reflects the standalone selling price as adjusted for facts and circumstances applicable to that contract. In these cases, the Company accounts for the additional products or services as a separate contract. In other cases where the pricing in the modification doesnot reflect the standalone selling price as adjusted for facts and circumstances applicable to that contract, the Company accounts for the additional products or services as part of the existing contract primarily on a prospective basis.

Judgments and estimates.Accounting for contracts recognized over time under ASC606 involves the use of various techniques to estimate total contract revenue and costs. Due to uncertainties inherent in the estimation process, it is possible that estimates of costs to complete a contract will be revised in the near term. The Company reviews and updates its contract-related estimates quarterly, and records adjustments as needed. For those performance obligations for which revenue is recognized using a cost-to-cost input method, changes in total estimated costs, and related progress towards complete satisfaction of the performance obligation, are recognized in the period in which the revisions to the estimates are made.

Cost of Revenue

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, 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.

76

Research and Development 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 extentno 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. They are expensed as incurred and included in the consolidated statements of operation and comprehensive loss.

Stock-Based Compensation

The Company accounts for stock-based compensation by measuring and recognizing compensation expense for all share-based awards based on estimated grant-date fair values. The Company uses the straight-line attribution method to allocate compensation cost to reporting periods over each awardee’s requisite service period, which is generally the vesting period of the award. The Company measures nonemployee awards at the date of grant, which generally is the date at which a grantor and a grantee reach a mutual understanding of the key terms and conditions of a share-based payment award. The Company’s policy is to recognize the effect of forfeitures in the period they occur. The grant-date fair value of the restricted stock units, or “RSUs,” is equal to the fair market value of the Company’s common stock on the grant date. 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 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

Income taxes are accounted for under the asset and liability method. Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statements carrying amounts of existing assets and liabilities and their respective tax bases, as well as net operating loss and tax credit carryforwards. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date.

The Company recognizes deferred tax assets to the extent that these assets are more likely thannot to be realized. 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.

The Company records uncertain tax positions in accordance with FASB ASC Topic740, Income Taxes (“ASC740”) on the basis of atwo-step process in which determinations are made (1) whether it is more likely thannot 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 than50% likely to be realized upon ultimate settlement with the related tax authority.

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, 2024and2023*, there wereno interest or penalties recorded.

77

Net Loss per Share

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 wouldnot 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 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 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* December 2023,the Financial Accounting Standards Board (“FASB”), issued Accounting Standards Update ("ASU")2023-09, Income Taxes (Topic740) - 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.

In* November 2024,the FASB issued ASU2024*-03, Disaggregation of Income Statement Expenses, which requires annual and interim disclosure of disaggregated disclosures of certain costs and expenses on the income statement. The standard is effective for fiscal years beginning after* December 15, 2026,and interim periods within fiscal years beginning after December 15, .2027,*with early adoption permitted. Amendments are applied on a prospective basis with retrospective application permitted. The Company is currently evaluating the impact of this guidance.

Recently Adopted Accounting Pronouncements

The Company adopted ASU2023-07, Segment Reporting (Topic280):Improvements to Reportable Segment Disclosures, in thefourth quarter of2024. The amendments in this update require public entities to disclose, on an annual and interim basis, significant segment expenses that are regularly provided to the chief operating decision maker (the “CODM”) and which are included within each reported measure of segment profit or loss as well as disclosure of other segment items and a description of their composition. The amendments also require public entities to disclose the title and position of the CODM and an explanation of how the CODM uses the reported measure(s) of segment profit or loss in assessing segment performance and deciding how to allocate resources. The adoption of this guidance resulted in incremental disclosures in the Company’s consolidated financial statements.

.

The fair value of the Company’s financial assets and liabilities is determined in accordance with the fair value hierarchy established in FASB ASC Topic820, Fair Value Measurements and Disclosures (“ASC820”). ASC820 defines fair value as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. The fair value hierarchy of ASC820 requires an entity to maximize the use of observable inputs when measuring fair value and classifies those inputs intothree levels:

Level 1—Observable inputs, such as quoted prices in active markets for identical assets or liabilities.

Level 2—Observable inputs, other than Level1 inputs, which are observable either directly or indirectly or can be corroborated by observable market data using quoted prices for similar assets or liabilities.

Level 3—Unobservable inputs in which there is little orno market data, which require the reporting entity to develop its own assumptions.

78

The Company's financial instruments that arenot remeasured at fair value include accounts receivable, prepaid and other current assets, accounts payable, accrued expenses, other current and noncurrent liabilities, and convertible note. The carrying values of these financial instruments approximate their fair values.

The Company’s financial assets and liabilities measured at fair value on a recurring basis and the level of inputs used for such measurements were as follows (in thousands):

79

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

Marketable Securities: The Company holds financial assets consisting of fixed-income U.S. government agency securities, corporate bonds, and commercial paper. The securities are valued using prices from independent pricing services based on quoted prices of identical instruments in less active or inactive markets. Additionally, quoted prices of similar instruments in active market or industry models using data inputs such as interest rates and prices that can be directly observed or corroborated in active markets are used to value marketable securities.

Derivative Warrant Liability: On* September 15, 2022,the Company entered into a convertible note agreement with a face value of $10,500 (the"2022* Note"). The Company’s derivative warrant liability includes the warrants that were issued by the Company as part of the2022 Note. The warrants are recorded on the consolidated balance sheets at fair value. The fair value is based on unobservable inputs, which represent Level3 measurements within the fair value hierarchy. The fair value estimate of the warrants was based on a Monte-Carlo simulation model. 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 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 offour years. Finally, the Company doesnot currently anticipate paying a dividend. Any changes in these assumptions can change the valuation significantly. Changes in fair value are recognized in other income (expense) for each reporting period. Derivative Warrant Liability is included within other noncurrent liabilities on the consolidated balance sheets.

80

Private Placement Warrant Liability: The Private Placement Warrants are recorded on the consolidated balance sheets at fair value. The fair value is based on observable Level2 inputs, specifically, the observable input of the Company's public warrants, as terms of both warrants are substantially similar. 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 Level3 fair value measurements. The fair value of the Company’s headquarters ROU asset and associated leasehold improvements were based on a value-in-use approach utilizing market rent comparable information, and is considered a Level2 fair value measurement. For more information regarding impairment charges, see Notes1, 6, 7, and18.

For the years ended* December 31, 2024and2023*, there wereno transfers between Level1 and Level2 inputs.

81

Cash, cash equivalents, and restricted cash as of* December 31, 2024and2023* were as follows (in thousands):

Restricted cash of $2,150 as of* December 31, 2023consisted of funds that were contractually restricted as to usage or withdrawal due to a contractual agreement. The Company had a letter of credit in the amount of $2,150 with Citibank N.A. as security for the payment of rent on its headquarters. In August 2024,the landlord drew down on the letter of credit and the restricted cash was used to offset the letter of credit draw (see further discussion in Note6,* Leases).

Inventory, net of write-downs, as of* December 31, 2024and2023* were as follows (in thousands):

The Company also had $209 and $208 of noncurrent inventory (raw materials), net of write-downs, classified within other noncurrent assets on the consolidated balance sheet as of* December 31, 2024and December 31, 2023*, respectively.

Prepaid and other current assets as of* December 31, 2024and2023* were as follows (in thousands):

The Company's advances to suppliers as of* December 31, 2024and2023* were written down by $1,041 and $1,385, respectively, associated with the winding down of its legacy Non-Automotive product as part of its revised strategic plan in2023. See Note18, Restructuring, for further details.

82

The Company leases office facilities in Northern California under non-cancelable operating leases. In* July 2024,*the Company entered intotwo new long-term leases, one of which the Company uses as its headquarters.

Some of the Company's leases include options to renew, with renewal terms that, if exercised by the Company, extend the lease term fromtwo tofive years. The exercise of these renewal options is at the Company's discretion. The Company's lease agreements donot contain any material terms and conditions of residual value guarantees or material restrictive covenants. The Company's short-term lease expense was determined tonot be material.

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 2.7 years as of December 31, 2024*with the Company serving as guarantor for the remaining term. The resulting maximum exposure includes $265 of undiscounted future minimum lease payments plus potential additional payments to satisfy maintenance, taxes, and insurance requirements for the remainder of the lease term.

In* August 2024,one of the Company's existing leases, originally set to expire on November 30, 2026,was terminated early. In conjunction with the early termination, the Company recorded a net gain of $491 on termination of the operating lease during the year ended December 31, 2024.The net gain included a gain of $5,954, comprised of a $16,325 net liability reduction, partially offset by a $10,371 decrease in its remaining right of use asset. Additionally, in accordance with terms in the lease agreement and based on certain assumptions, the Company recorded a lease termination loss of $5,463, representing estimated unpaid rent for the remaining term. The net gain was recorded in general and administrative expenses in the condensed consolidated statement of operations and comprehensive loss. The lease termination liability was reduced by the draw-down of the $2,150 letter of credit by the landlord in August 2024;the remaining lease termination liability of $3,313 is recorded in accrued expenses and other current liabilities in the consolidated balance sheets. See Note18,* Restructuring, and Note21, Commitments and Contingencies, for further discussion.

The Company recorded a gain of $35 on early lease termination forone of its leases, originally set to expire in* August 2027,within interest income and other on the consolidated statements of operations during thetwelve* months ended* December 31, 2023.*

During the year 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. See Note18,* Restructuring.No impairment charges were recorded for the year ended* December 31, 2024.*

The components of operating lease expenses, excluding the gain on lease termination, for the years ended* December 31, 2024and2023* were as follows (in thousands):

Supplemental cash flow information for the years ended* December 31, 2024and2023* were as follows (in thousands):

Supplemental balance sheet information related to operating leases as of* December 31, 2024and2023* was as follows (in thousands):

83

Maturities of lease liabilities, excluding the lease termination liability, were as follows (in thousands).

Property and equipment, net as of* December 31, 2024and2023* consists of the following (in thousands):

During 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, 2024*.

Depreciation and amortization expense related to property and equipment amounted to $129 and $1,547 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, 2024and2023*, respectively. The Company recorded disposals of gross property and equipment of $59 and $1,041 in the years ended* December 31, 2024and2023*, respectively. The carrying amounts of the property and equipment disposed in the years ended* December 31, 2024and2023* were $32 and $342, respectively.

84

Other noncurrent assets as of* December 31, 2024and2023* were as follows (in thousands):

Accrued expenses and other current liabilities as of* December 31, 2024and2023* were as follows (in thousands):

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 up totwo 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 thetwo issuances (each, a "Note Closing"). Thefirst 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 investorone convertible note ("2022 Note") with a principal balance of $10,500 for net cash proceeds of $9,850. As part of the First Closing, the Company also issued warrants to the investor see Note12 for further details. Thesecond Note Closing ("Second Closing") lapsed on* March 15, 2024*, upon which the Company's right to effect a Second Closing automatically terminated.

The2022 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*.

Beginning* December 14, 2022*, and thefirst trading day of each subsequent month (each a "Monthly Redemption Date" or an "Installment Date"), the Company was required to redeem the Monthly Redemption Amount until the2022 Note was fully redeemed. The Monthly Redemption Amount, in most instances, was1/15th of the original principal amount, plus any amount accelerated pursuant to the2022 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 and at the option of the Company, shares of common stock, which was payable together with the Monthly Redemption Amount.

If the Company elected to settle the Monthly Redemption Amount 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 thefive trading days immediately preceding the applicable Monthly Redemption Date. If the Company elected to settle the Monthly Redemption Amount in cash, the Monthly Redemption Amount would have included a 5% premium.

85

The investor was permitted to accelerate up tofour 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 thefive trading days immediately preceding the Acceleration Date.

If either the relevant Installment Conversion Price or Acceleration Conversion Price, as applicable, was less than $9.00 per share, then a Conversion Floor Price Condition existed and the Company must deliver to the investor the Conversion Installment Floor Amount in cash, in addition to the required number of shares, which were valued at $9.00 regardless of the actual trading price of the Company's shares. The Conversion Installment Floor Amount was an amount in cash equal to the product obtained by multiplying (A) the higher of (i) the highest price that the common stock traded at on the Trading Day immediately preceding the relevant Share Delivery Date and (ii) the applicable Installment Conversion Price 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 were also trued-up in cash when the value of the Company's shares was below $9.00 per share.

The Company elected to apply the fair value option to the measurement of the2022 Note. As a result of adopting the fair value option,no embedded derivatives were bifurcated from the2022 Note. The Company classified the2022 Note as a liability at fair value and remeasured the2022 Note to fair value at each reporting period. The fair value measurement included the assumption of accrued interest and expense and thus a separate amount wasnot reflected on the consolidated statement of operations.

The2022 Note was fully settled through Monthly Redemptions and Accelerations in2023. 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 and comprehensive loss.

The Company evaluated the Second Closing and associated warrants to be a contingently issuable financial asset with a fair value ofzero at inception in accordance with ASC815-40 Contracts in an Entity's own Equity. The contingently issuable warrants are considered issued for accounting purposes - see Note12 for further details.

2024 Convertible Note

On* May 10, 2024*, the Company entered into a Securities Purchase Agreement with an investor for the sale and issuance of 330,823 shares of common stock and a 5-year promissory note with a principal balance of $146 (* “May 2024Note”) for total gross cash proceeds of $1,000. The May 2024Note bears interest at an annual rate equal to the Secured Overnight Financing Rate plus 1.0%, which is compounded quarterly in arrears, and has a maturity date of June 4, 2029*. At maturity, the principal balance and accrued, unpaid and uncapitalized interest can be settled in cash, shares of common stock based on the closing price of the common stock as of the immediately preceding trading day, or any combination of the foregoing at the option of the investor.

Interest expense and other for the years ended* December 31, 2024and2023* consisted of the following (in thousands):

86

The Company is authorized to issue 600,000,000 shares of common stock, par value $0.0001 per share. As of* December 31, 2024*, the Company had 13,734,160 shares of common stock issued and outstanding.

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

Voting rights: Each holder of Class A common stock will be entitled toone (1) vote in person or by proxy for each share of the Class A common stock held of record by such holder. The holders of shares of the Class A common stock willnot have cumulative voting rights. Except as otherwise required in the Charter or by applicable law, the holders of the Class A common stock vote together as a single class on all matters on which stockholders are generally entitled to vote.

Dividend rights: Subject to any other provisions of the 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.

Rights upon liquidation: In the event of any liquidation, dissolution or winding up (either voluntary or involuntary) of the Company, after payments to creditors of the Company that* mayat the time be outstanding, and subject to the rights of any holders of the Company preferred stock that may*then be outstanding, holders of shares of the Class A common stock will be entitled to receive ratably, in proportion to the number of shares of the Class A common stock held by them, all remaining assets of the Company available for distribution.

Preferred Stock— The Company has the authority, without stockholder approval, to issue shares of preferred stock from time to time on terms it* maydetermine, to divide shares of preferred stock intoone* or more class or series and to fix for each such class or series the designations, preferences, privileges, and restrictions of preferred stock, including dividend rights, conversion rights, voting rights, terms of redemption, liquidation preference, and the number of shares constituting any series or the designation of any series to the fullest extent permitted by the Delaware General Corporation Law. The issuance of the Company’s preferred stock could have the effect of decreasing the trading price of the Class A common stock, restricting dividends on the capital stock of the Company, diluting the voting power of the Class A common stock, impairing the liquidation rights of the capital stock of the Company, or delaying or preventing a change in control of the Company. Although the Company doesnot currently intend to issue any shares of preferred stock, the Company* may*choose to do so in the future.

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. As of* December 31, 2024*, no shares of preferred stock were issued and outstanding.

Warrants—** As of December 31, 2024, the Company had 5,555 Private Placement warrants and 255,555 Public warrants outstanding. Each warrant entitles the registered holder to purchaseone share of the Company's common stock at a price of $345.00 per share.

On* September 15, 2022*, in connection with the issuance of the2022 Note, the Company issued warrants to the investor. The warrants are immediately exercisable and entitle the investor to purchase up to 58,333 shares of common stock at a price of $105.00 per share, subject to afour year term. As of* December 31, 2024*,no shares were exercised pursuant to the warrants.

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. As the Company didnot effect a Second Closing by* March 15, 2024*, these warrants areno longer outstanding and willnot 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 “Purchase Agreement”) and a Registration Rights Agreement with Tumim Stone Capital LLC (“Tumim Stone”). Under the terms and subject to the conditions of the Purchase Agreement, the Company has the right, butnot* 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 Purchase Agreement 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.In all instances, the Company may**not* sell shares of its common stock to Tumim Stone under the Purchase Agreement if doing so would result in Tumim Stone beneficially owning more than 9.99% of its common stock.

87

The purchase price per share to be purchased by Tumim Stone is equal to the volume-weighted average price for common stock on the applicable purchase date multiplied by 0.9615 (to be adjusted for any reorganization, recapitalization, non-cash dividend, stock split, reverse stock split, or similar transaction). The maximum number of shares the Company* maysell to Tumim Stone on any single business day is the lesser of (i) $20,000 divided by the closing sale price of the common stock on the trading day immediately preceding the purchase date, and (ii)0.15 multiplied by the average daily trading volume in common stock for thethree* trading days preceding the purchase date.

In connection with the Purchase Agreement, the Company issued 10,087 restricted common shares in the Company to Tumim Stone. The Company determined that the right to sell additional shares represents a freestanding put option under ASC815 Derivatives and Hedging, and as such, the financial instrument was classified as a derivative asset with a fair value ofzero at inception of the Purchase Agreement on* December 8, 2021.*

During the year ended* December 31, 2024*, the Company issued 939,200 shares of its common stock under the Purchase Agreement for gross proceeds of $2,489. During the year ended* December 31, 2023*, the Company issued 19,500 shares of its common stock under the Purchase Agreement for gross proceeds of $136. In* July 2024*this Purchase Agreement was terminated.

New Circle Principal Investments LLC (“New Circle”) Common Stock Purchase Agreement (the “CSPA”) — On* July 25, 2024,the Company entered into a CSPA and a Registration Rights Agreement with New Circle. Under the terms and subject to the conditions of the CSPA, the Company has the right, butnot* the obligation, to sell to New Circle, and New Circle is obligated to purchase up to the lesser of (i) $50,000 of the Company's common stock, or (ii) the Exchange Cap equal to 1,721,755 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 New Circle equals or exceeds$1.41 per share. The Company has sole discretion to initiate such sales of common stock over a period of 36 months. In all instances, the Company* may**not* sell shares of its common stock to New Circle under the CSPA if doing so would result in New Circle beneficially owning more than 4.99% of the Company's common stock.

The purchase price per share to be purchased by New Circle shall equal either (i) the lowest volume-weighted average price for common stock either over aone-day trading period or 15 minutes after the number of intraday shares traded exceeds500% of the shares included the purchase notice orone hour after the receipt of the purchase notice, or (ii) the volume-weighted average price for common stock for thethree consecutive trading days commencing on the purchase notice date multiplied by 97.5%. The maximum number of shares the Company* maysell to New Circle on any single business day is the lesser of (i) the number of shares equal to100%* of the average daily trading volume of the common stock of the Company during thefive trading days immediately preceding the purchase notice, and (ii)400,000 shares of common stock.

In connection with the CSPA, the Company issued to New Circle 225,563 shares of common stock in the Company as commitment shares for the facility. At issuance, the 225,563 shares of common stock had a fair value of $282 and were recorded to Interest expense and other in the Company's consolidated statement of operations and comprehensive loss. The Company determined that the right to sell additional shares represents a freestanding put option under ASC815, Derivatives and Hedging, and as such, the financial instrument was classified as a derivative asset with a fair value ofzero at inception of the CSPA on* July 25, 2024.*

As of* December 31, 2024*, including the commitment shares, the Company had issued 1,325,713 shares of its common stock to New Circle under the CSPA for gross proceeds totaling $1,679.

Alliance Global Partners (“AGP”) At Market Issuance Sales Agreement (the “ATM Agreement”) — On* September 12, 2024,the Company entered into the ATM and a Registration Rights Agreement with A.G.P. Under the terms and subject to the conditions of the ATM Agreement, the Company mayissue and sell through AGP the Company's common stock having an aggregate value offering price of up to $2,600 ("Placement Shares") from time to time through an "at-the-market" equity offering program. The Company has sole discretion to initiate such sales of common stock over a period of 36 months. Under the terms and subject to the conditions of the ATM Agreement, the Company will set the parameters for the sale of shares, including the number or dollar amount of Placement Shares to be issued, the time period during which sales are requested to be made, any limitation on the number or dollar amount of Placement Shares that maybe sold in anyone* trading day and any minimum price below which sales* may**not* be made. The Company will pay a cash commission rate of up to 3.0% of the gross proceeds from the sale of Placement Shares sold pursuant to the ATM Agreement. In* December 2024,the Company increased the amount of the Company's common stock that it may*issue and sell through AGP, having a new aggregate value offering of up to$5,230.

As of* December 31, 2024,*the Company sold 3,528,617 shares through A.G.P. under the ATM Agreement for gross proceeds totaling $5,229.

Registered Direct Offering — On* May 29, 2024,*the Company entered into a Securities Purchase Agreement with certain institutional investors pursuant to which the Company agreed to issue and sell, in a registered direct offering, an aggregate of 727,706 shares of the Company's common stock, par value $0.0001 per share, at a per share purchase price of $3.4480 for gross proceeds totaling $2,509.

The changes in accumulated other comprehensive income (loss) by component for the years ended* December 31, 2024and2023* are as follows (in thousands):

The amounts reclassified out of accumulated other comprehensive income (loss) in the years ended* December 31, 2024and2023* are included within Interest expense and other on the consolidated statement of operations.

88

The following table sets forth the basic and diluted net loss per share attributable to common stockholders for the periods presented (in thousands, except per share data):

Due to net losses for the years ended* December 31, 2024and2023*, basic and diluted net loss per share were the same, as the effect of all potentially dilutive securities would have been anti-dilutive. The following table sets forth the anti-dilutive common share equivalents for the periods listed:

The Company hasfive equity incentive plans, the2014 US LADAR Inc. Equity Incentive Plan (the*“2014* Plan”), the2016 Stock Plan (the*“2016* Plan”), the2021 Equity Incentive Plan (the “Incentive Plan”), the2022 Employee Stock Purchase Plan (the "ESPP"), and the2023 CEO Inducement Grant Plan (the "CEO Plan"). On* August**16,* 2021, the Company’s2014 Plan and2016 Plan were terminated in connection with the closing of the business combination as defined in Note1, but continue to govern the terms of outstanding equity awards that were granted prior to the termination of the plans.

2014 Plan and2016 Plan

The2014 and2016 Plan provide for the grant of incentive stock options to employees only and non-statutory stock options and RSUs to employees, directors, and consultants of the Company. As of* August**16,* 2021, the Companyno longer grants equity awards pursuant to the2014 Plan or2016 Plan, and as of* December 31, 2024*,58,056 RSUs were granted.

Under the2016 Plan, options to purchase common stock generally vest over four years with 25% vesting at the end of thefirst year and the rest vesting ratably over the next three years. RSUs generally vest 25% at the end of thefirst year with the remaining RSUs vesting ratably over the nextthree years or they vest ratably over thefour years. Under the2014 Plan, the vesting period for options to purchase common stock range from immediate tofour years. Under each plan, the options expireten years from the date of grant.

89

2021 Equity Incentive Plan

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, 2022and ending on January 1, 2032,equal to 5% of the shares of the Company’s common stock outstanding on December 31, 2021for thefirst* year and by 3% of the total number of shares of common stock outstanding on* December 31of the preceding calendar year for each year thereafter, or a lesser number of shares as determined by the Board of Directors. Since January 1, 2022,*the Board of Directors have authorized the addition of 1,143,844 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. For newly hired employees, RSU’s generally vest 25% during the quarterly release date following the recipient’sone year anniversary of their start date. The remaining amounts generally vest quarterly over the next three years. For existing employees, these RSUs generally vest quarterly over three years. The fair value of the RSU is equal to the fair value of the Company’s common stock on the date of grant.

As of* December 31, 2024*,1,761,881 RSUs were granted to certain individuals under the Incentive Plan.

2022 Employee Stock Purchase Plan

On* May 10, 2022,the Company's stockholders approved the2022* 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 31of the preceding calendar year for each year thereafter, or a lesser number of shares as determined by the Board of Directors. Since January 1, 2023,*the Board of Directors have authorized the addition of 117,465 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 generallysix months long and end on* April 30and October 31of each year. Thefirst* purchase period to the Company's employees to purchase shares under the ESPP began on* November 1, 2022.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 years ended* December 31, 2024* and2023, 107,336 and 64,773 shares, respectively, were purchased under the ESPP. As of* December 31, 2024* and2023, the Company has withheld $41 and $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 oversix* (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 anyten (10) consecutive trading days prior to* March 1, 2024.As the market condition wasnot* satisfied by* March 1, 2024,*the market-based RSUs were forfeited.

90

A summary of stock option activity related to the Plans as of* December 31, 2024* is as follows:

The aggregate intrinsic value is the difference between the current fair value of the underlying common stock and the exercise price for in-the-money stock options. The Company didnot grant any options during the years ended* December 31, 2024and2023*.

The following table summarizes the RSU award activity under the Plans:

The total fair value of RSUs that vested during the year ended* December 31, 2024* was $9,716.

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, 2024and2023* (in thousands):

The total unrecognized compensation expense for RSUs was $5,603 as of* December 31, 2024* which is expected to be recognized over an estimated weighted average period of 1.03 years. The total unrecognized compensation expense for the ESPP was $282 as of* December 31, 2024* which is expected to be recognized over an estimated weighted average period of 1.00 years. There isno unrecognized compensation expense for stock options as of* December 31, 2024*.

91

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 thefour 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. 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 estimating the fair value of the ESPP during the period:

The Company adopted ASU2023-07 during the year ended* December 31, 2024retrospectively to all periods presented in the consolidated financial statements. The Company hasone reportable segment managed on a consolidated basis by the Chief Executive Officer (CEO) who is the chief operating decision maker (“CODM”). In identifyingone* reportable segment, the Company considered the basis of organization for the design and development of high-performance, active lidar systems and applications.

The accounting policies of the segment are the same as those described in the summary of significant accounting policies. The CODM assesses performance and decides how to allocate resources based on consolidated net loss as reported in the consolidated statements of operations and comprehensive loss. There areno other expense categories regularly provided to the CODM that arenot already included in the consolidated statements of operations and comprehensive loss. The measure of segment assets is reported on the balance sheet as cash, cash equivalents and marketable securities.

Sale of Prototypes

The Company recorded revenue for prototype sales of $97 and $477 in2024 and2023 respectively. The Company doesnot incur significant contract costs in fulfilling or obtaining their contracts with customers.

Development Contracts

The Company has entered into research and development contracts as well as a sales, marketing and technical support service contract with companies primarily in the automotive industry. The Company assessed the number of performance obligations associated with the promises under each agreement, primarily the delivery of customized4SightTM perception-related goods and services, and recognized $105 and $987 in revenue for performance obligations satisfied during years ended2024 and2023 respectively, in the consolidated statements of operations and comprehensive loss.

92

Disaggregation of Revenue

The Company recognized the following revenues by geographic area based on the primary billing address of the customer and by the timing of the transfer of goods or services to customers (point in time or over time), as it believes such criteria best depict how the nature, amount, timing and uncertainty of its revenue and cash flows are affected by economic factors. Total revenue based on the disaggregation criteria described above is as follows (in thousands):

Contract Liabilities

The Company hadno contract liabilities as of* December 31, 2024and2023*. The following table shows the significant changes in contract liabilities balance as of* December 31, 2024and2023* (in thousands):

Remaining Performance Obligations

Revenue allocated to remaining performance obligations represents the transaction price allocated to the performance obligations that are unsatisfied, or partially unsatisfied. It includes unearned revenue and amounts that will be invoiced and recognized as revenue in future periods and doesnot include contracts where the customer isnot committed. The customer isnot 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 hasnot disclosed the value of unsatisfied performance obligations for contracts with an original expected length ofone year or less. The contract liabilities balance represents the remaining performance obligations for contracts with an original duration of greater thanone year.

93

In2023, the Company implemented a revised strategic plan, which focused on key products and critical customer engagements in the Automotive market, and aligned the Company's operations with evolving business needs by focusing on a transition from research and development to the commercialization of the Company's automotive products, while winding down the legacy Non-Automotive product, and reducing fixed operating costs. In* August 2024,the Company further reduced fixed operating costs and terminated its headquarters lease. See discussion in Note6,* Leases.

The winding down of the Company's legacy non-Automotive product in2023, 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 the revised strategic plan and the impairment review of long-lived assets, the Company recorded restructuring charges of $19,153 for the year ended* December 31, 2023* primarily relating toone-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 recorded a net gain of $368, primarily relating to the net gain on termination of lease, losses on purchase commitments andone-time termination benefits. 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 years ended* December 31, 2024and2023* as follows (in thousands):

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

94

Employees of the Company* mayparticipate in the AEye, Inc.401(k) Plan (the"401*(k) Plan"), a defined contribution plan, which qualifies under Section401(k) of the Internal Revenue Code. Participating employees* maycontribute into a traditional plan with pretax salary or into a Roth plan with after tax salary up to statutory limits. In2024* and2023, the401(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 thefirst day of employment. The Company made contributions of $447 and $899 for the years ended* December 31, 2024and2023*, respectively.

For the years ended* December 31, 2024and2023*, the Company recognized a (benefit) provision for income taxes of $(2) and $57, respectively. The benefit for the year ended* December 31, 2024* was comprised of $2 and $(4) in state and foreign taxes, respectively. The provision for the year ended* December 31, 2023* was comprised of $3 and $54 in state and foreign taxes, respectively.

The following table presents a reconciliation of the federal statutory rate of 21% to the Company's effective tax rate for the periods presented:

For2024 and2023, 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.

95

Significant components of the Company’s deferred tax assets and liabilities as of* December 31, 2024and2023* are presented below (in thousands):

The Company reports income taxes in accordance with ASC740, 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 thannot to be realized.

Realization of deferred tax assets is dependent on future taxable earnings, if any, the timing and amount of which are uncertain. 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 thannot that the net deferred tax assets willnot be realized, and accordingly, a full valuation allowance has been recorded. The valuation allowance as of* December 31, 2024* was $107,734 which increased from $98,840 at* December 31, 2023*. The increase in the valuation allowance is primarily related to additional deferred tax assets recorded for net operating losses and research credits generated during the year ended* December 31, 2024*.

As of* December 31, 2024*, the Company had $284,368 and $241,652 of federal and state net operating losses available to reduce future taxable income, respectively, of which $12,256 will begin to expire in2033 for federal tax purposes and $241,652 will begin to expire in2029 for state tax purposes. Approximately $272,112 of federal net operating loss included above can be carried forward indefinitely.

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, which will begin to expire in2033 for federal and2029 for state tax purposes.

The Company also has federal and state research and development tax credit carryforwards of $8,203 and $6,255 as of* December 31, 2024* and $7,591 and $5,829 as of* December 31, 2023*. The federal credits begin to expire in2034 and the state credits haveno expiration date.

Under Section382 of the Internal Revenue Code of1986, as amended, the Company’s ability to utilize NOL or other tax attributes, such as research tax credits, in any taxable year,* maybe limited if the Company has experienced an “ownership change.” Generally, a Section382* ownership change occurs if there is a cumulative increase of more than50 percentage points in the stock ownership ofone or more stockholders or groups of stockholders who owns at least5% of a corporation’s stock within a specific testing period. Similar rules* mayapply under state tax laws. Based on the Section382* 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 maylimit the ability to use tax attributes under Section382.*

96

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

The Company recognizes interest and penalties related to income tax matters as a component of income tax expense. As of* December 31, 2024and December 31, 2023* there wasno accrued interest nor penalties related to uncertain tax positions.

The Company files income tax returns in the U.S., various state jurisdictions, and foreign jurisdictions. The U.S., state and foreign jurisdictions have statutes of limitations that generally range fromthree tofive years. Due to the Company’s net losses, substantially all of its federal, state and local income tax returns are subject to examination for federal and state purposes since inception. The Company isnot currently under examination for federal or state income tax purposes.

Effective for tax years beginning on or after* January 1, 2022,pursuant to the Tax Cuts and Jobs Act of2017,* companies are required to capitalize Internal Revenue Code ("IRC") Section174 research and experimental expenses paid or incurred during the year. These expenses are amortized over5 years for research and development performed in the United States and over15 years for expenses related to research and development performed outside of the United States. As a result of the IRC Section174 research and development capitalization, the Company recognized a deferred tax asset for the future tax benefit of the amortization deductions.

Legal Matter

The Company* maybe subject to legal proceedings and claims that arise in the ordinary course of business. Litigation can be expensive and disruptive to normal business operations. Moreover, the results of complex legal proceedings are difficult to predict and the Company’s view of these matters may*change in the future as the litigation and events related thereto unfold. The Company expenses legal fees as incurred. The Company records a provision for contingent losses when it is both probable that a liability has been incurred and the amount of the loss can be reasonably estimated.

On* August 28, 2024,the Company was served with a complaint that was filed in the Superior Court of California for the County of Alameda on August 26, 2024that (1) alleges the Company is in breach of the lease for its former headquarters office in Dublin, California because of the Company’s failure to pay rent as required by the lease and (2) provides notice that the lease had been terminated by the landlord effective as of August 23, 2024.The landlord claimed that the amount owed could be up to $8,500. Thereafter, in August 2024,the landlord fully drew down the standby letter of credit of $2,150, which was held as security for the payment of rent, due to the alleged default of the lease. The Company disputes, among other things, that the total damages claimed by the landlord equal the amount claimed. Depending on the outcome of this matter, there could be a material adverse effect on the financial position, results of operations, or cash flows of the Company. An initial trial date has been set for April 2026.*

From* November 2016to 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 during2023.* For the year ended* December 31, 2023,Mr. Dussan’s sibling received total cash compensation of $149 and was granted 2,000 RSUs. In addition, he participated in all other benefits that the Company generally offers to all of its employees. There wereno* related party transactions during the year ended* December 31, 2024.*

Management has evaluated subsequent events through* February 24, 2025* and determined that there wereno such events requiring recognition or disclosure in the financial statements, other than as noted below.

In* January**2025,* the Company entered into a Securities Purchase Agreement to finance an aggregate principal amount of up to $3,240 with a certain institutional investor and issued (i) a senior unsecured convertible promissory note (the "Note") for an aggregate purchase price of $3,000 and (ii) a warrant to purchase up to 805,263 shares of the Company’s common stock. The Note, subject to an original issue discount of 7.4%, has a term ofeighteen months and accrues interest at the rate of 7.0% per annum. The Note is convertible into Common Stock, at a per share conversion price equal to $2.22, subject to adjustments noted in the Note. The Warrant has an initial exercise price of $2.22, and is exercisable after thesix month andone day anniversary of its issuance (the “Initial Exercisability Date”) until forfour years following the Initial Exercisability Date.

In* January 2025,the Company increased the amount of the Company's common stock that it may*issue and sell through A.G.P. under the ATM Agreement, having a new aggregate value offering of up to $15,293 and sold 2,359,023 shares for gross proceeds totaling $3,015. Further, the Company issued 2,155,000 shares of its common stock to New Circle under the CSPA for gross proceeds totaling $4,800.

97