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What changed in AEye, Inc.'s 10-K — 2023 vs 2024

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Paragraph-level year-over-year comparison of AEye, Inc.'s 2023 and 2024 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2024 report.

+402 added−404 removedSource: 10-K (2025-02-24) vs 10-K (2024-03-27)

Top changes in AEye, Inc.'s 2024 10-K

402 paragraphs added · 404 removed · 312 edited across 8 sections

Item 1. Business

Business — how the company describes what it does

51 edited+20 added−23 removed37 unchanged
Biggest changeThe main markets for lidar, primarily Automotive and Industrial, are projected to see significant growth in both the near and long term. We believe this expected growth will allow us to capture market share as well as pursue specialized opportunities like highway autonomous driving applications that benefit from our products.
Biggest changeWe believe this expected growth will allow us to capture market share as well as pursue specialized opportunities like highway autonomous driving applications that benefit from our products. We expect that lidar will be a required sensing solution across many end markets, and we intend to be one of the leading solutions providers in these spaces.
For vehicles to achieve greater autonomous functionality and perform those functions at higher speeds, we believe long-range lidar will be necessary. Our sensors were designed to search, detect, acquire, and track small objects at long distances. In the future, we may also introduce other mid- and short-range lidar systems based on the same 4Sight Intelligent Sensing Platform.
For vehicles to achieve greater autonomous functionality and perform those functions at higher speeds, we believe long-range lidar will be necessary. Our sensors were designed to search, detect, acquire, and track small objects at long distances. In the future, we may also introduce other mid- and short-range lidar systems based on the same 4Sight TM Intelligent Sensing Platform.
We own a portfolio of intellectual property which includes 8 patents (issued and pending), registered trademarks, copyrights, trade secrets, and know-how in the development of our lidar solutions. We have filed patent and trademark applications in order to further secure these rights and strengthen our ability to defend against third parties who may infringe on our rights.
We own a portfolio of intellectual property which includes patents (issued and pending), registered trademarks, copyrights, trade secrets, and know-how in the development of our lidar solutions. We have filed patent and trademark applications in order to further secure these rights and strengthen our ability to defend against third parties who may infringe on our rights.
Item 1. Business General We are a provider of high-performance, active lidar systems for vehicle autonomy, advanced driver-assistance systems, or ADAS, and robotic vision applications. We have developed an artificial intelligence technology that enables adaptive “intelligent sensing,” differentiating us in the marketplace from our competition.
Item 1. Business General We are a provider of high-performance, active lidar systems for vehicle autonomy, advanced driver-assistance systems (ADAS), and robotic vision applications. We have developed an artificial intelligence technology that enables adaptive “intelligent sensing,” differentiating us in the marketplace from our competition.
We expect the result 3 will be a high-quality, high-performance product at the right price point, which we believe to be a key enabler in accelerating adoption of lidar across various markets in Automotive and beyond. In pursuing this strategy, we have partnered, and will continue seeking partnerships, with leading Tier 1 automotive suppliers.
We expect the result will be a high-quality, high-performance product at the right price point, which we believe to be a key enabler in accelerating adoption of lidar across various markets in Automotive and beyond. In pursuing this strategy, we have partnered, and will continue seeking partnerships, with leading Tier 1 automotive suppliers.
As a result, our adaptive lidar is designed to enable higher levels of autonomy and functionality — SAE Levels 2 through 5 — with the goal of optimizing performance, power, and reducing cost. Our 4Sight Intelligent Sensing Platform is software-definable and network-optimized, and leverages deterministic artificial intelligence at the edge.
As a result, our adaptive lidar is designed to enable higher levels of autonomy and functionality — SAE Levels 2 through 5 — with the goal of optimizing performance, power, and reducing cost. Our 4Sight TM Intelligent Sensing Platform is software-definable and network-optimized, and leverages deterministic artificial intelligence at the edge.
The obligations of motor vehicle equipment manufacturers include regular reporting under the Transportation Recall Enhancement, Accountability and Documentation Act, or TREAD, as well as strict recall and reporting requirements 9 for any defects related to highway safety or any non-compliance with the Federal Motor Vehicle Safety Standards. Similar such reporting and recall requirements exist in foreign markets.
The obligations of motor vehicle equipment manufacturers include regular reporting under the Transportation Recall Enhancement, Accountability and Documentation Act, or TREAD, as well as strict recall and reporting requirements for any defects related to highway safety or any non-compliance with the Federal Motor Vehicle Safety Standards. Similar such reporting and recall requirements exist in foreign markets.
Legal Proceedings From time to time, we may become involved in actions, claims, suits, and other legal proceedings arising in the ordinary course of our business, including assertions by third parties relating to intellectual property infringement, breaches of contract or warranties, or employment-related matters.
In addition, from time to time, we may become involved in actions, claims, suits, and other legal proceedings arising in the ordinary course of our business, including assertions by third parties relating to intellectual property infringement, breaches of contract or warranties, or employment-related matters.
Flexible sensor location within the car Our 4Sight Flex next-generation design allows for unique flexibility with respect to sensor placement. The unit’s power requirements and small form factor makes it easier for OEM designers to integrate our sensors into a variety of locations in a vehicle, such as behind the windshield, on the roof, or in the grille.
Flexible sensor location within the car Our 4Sight™ Flex next-generation design allows for unique flexibility with respect to sensor placement. The unit’s performance level, power requirements, and small form factor makes it easier for OEM designers to integrate our sensors into a variety of locations in a vehicle, such as behind the windshield, on the roof, or in the grille.
We believe that this is essential to maintain our position as a provider of one of the most advanced lidar solutions in the market. While our R&D activities occur primarily at our headquarters in Dublin, California, we work with technology developers on a worldwide basis. Our engineers located in Dublin, California focus on developing sensor hardware, firmware, and software.
We believe that this is essential to maintain our position as a provider of one of the most advanced lidar solutions in the market. While our R&D activities occur primarily at our headquarters in Pleasanton, California, we work with technology developers on a worldwide basis. Our engineers located in Pleasanton, California focus on developing sensor hardware, firmware, and software.
In connection with the Reverse Stock Split, there was no change to the shares authorized or in the par value per share of common stock of $0.0001.
In connection with the Reverse Stock Split, there was no change to the number of shares authorized or in the par value per share of common stock of $0.0001.
In the past, we also maintained direct sales channels but expect sales and marketing costs associated with this to be reduced as a result of our revised strategic plan which significantly reduced our workforce and consolidated our global footprint to leverage our Tier 1 partners sales channels.
In the past, we also maintained direct sales channels but expect sales and marketing costs associated with this to be reduced as a result of our revised strategic plan which significantly reduced our workforce and consolidated our global footprint to leverage our Tier 1 partners’ sales channels.
The MEMS that we use are extremely small when compared to competing MEMS-based lidar solutions, and when coupled with the extremely high resonant frequency at which they can operate, our MEMS meet and exceed shock and vibration requirements for both the Automotive and Industrial markets.
The MEMS that we use are extremely small when compared to competing MEMS-based lidar solutions, and when coupled with the extremely high resonant frequency at which they can operate, our MEMS meet and exceed shock and vibration requirements for both the Automotive and Non-Automotive markets.
Reverse Stock Split On December 27, 2023, we effected a 1-for-30 reverse stock split of its issued and outstanding shares of common stock (the "Reverse Stock Split"). Pursuant to the Reverse Stock Split, every thirty (30) shares of issued and outstanding shares of common stock were combined into one (1) share of common stock.
Reverse Stock Split On December 27, 2023, we effected a 1-for-30 reverse stock split of our issued and outstanding shares of common stock (the "Reverse Stock Split"). Pursuant to the Reverse Stock Split, every thirty (30) shares of issued and outstanding shares of our common stock were combined into one (1) share of common stock.
As a result, we believe that we are able to compete favorably in the lidar market, particularly in market segments such as passenger vehicle ADAS highway pilot applications that can benefit from our active, long-range, high-resolution capabilities.
As a result, we believe that we are able to compete favorably on product cost in the lidar market, particularly in market segments such as passenger vehicle ADAS highway pilot applications that can benefit from our active, long-range, high-resolution capabilities.
We are not currently a party to any actions, claims, suits, or other legal proceedings the outcome of which, if determined adversely to us, would individually or in the aggregate have a material effect on our business, financial condition, or results of operations.
Other than as stated above, we are not currently a party to any actions, claims, suits, or other legal proceedings the outcome of which, if determined adversely to us, would individually or in the aggregate have a material effect on our business, financial condition, or results of operations.
The information on our website (or any webpages referenced in this Annual Report on Form 10-K) is not part of this or any other report we file with, or furnish to, the SEC. 10
The information on our website (or any webpages referenced in this Annual Report on Form 10-K) is not part of this or any other report we file with, or furnish to, the SEC. 11 Table of Contents
For the Industrial market, we may either sell directly to the customer or employ a licensing model through systems integrators. Contract manufacturers with whom we have agreements assemble, test, and deliver these products. Systems integrators will build our technology into mass produced systems, such as autonomous mining haulers, locomotives, or intelligent transportation systems.
For the Non-Automotive market, we may either sell directly to the customer or work through systems integrators. Contract manufacturers with whom we have agreements assemble, test, and deliver these products. Systems integrators will build our technology into mass produced systems, such as autonomous mining haulers, locomotives, or intelligent transportation systems.
We have made substantial investments in our R&D processes and deliver value to our customers through our manufacturing partners. We perform the majority of our R&D activities in our 56,549 square foot corporate headquarters in Dublin, California.
We have made substantial investments in our R&D processes and deliver value to our customers through our manufacturing partners. We perform the majority of our R&D activities in our 6,522 square foot corporate headquarters located in Pleasanton, California.
We believe the unique combination of features of 4Sight include: • Active lidar enables user’s choice of deterministic scan patterns catered to specific use cases and applications, such as highway autopilot; • Feature-specific Fixed Regions of Interest (ROIs) designed to detect objects from various locations; • Lidar perception made available through a software partner; • Windshield, grill, and other discreet vehicle integration options that are optimized by software configurability; • Size, Weight, and Power (“SWaP”) optimized; and • Functional Safety (“FuSa”)/Safety of the Intended Functionality (“SOTIF” or ISO 21448) compliant for signal path — providing necessary determinism for testing and validation. 4Sight for Industrial Built on our unique 4Sight Intelligent Sensing Platform, 4Sight meets the diverse array of performance and functional requirements for the Industrial market with our industry-leading lidar performance, integrated intelligence, advanced vision capabilities, and unmatched reliability and safety.
We believe the unique combination of features of 4Sight™ include: • Active lidar enables user’s choice of deterministic scan patterns catered to specific use cases and applications, such as highway autopilot; • Feature-specific ROIs designed to detect objects from various locations; • Lidar perception made available through a software partner; • Windshield, grille, and other discreet vehicle integration options that are optimized by software configurability; • Size, Weight, and Power (“SWaP”) optimized; and • Designed with Functional Safety (“FuSa” or ISO26262) requirements in mind - providing necessary determinism for testing and validation for wide variety of edge cases. 4Sight TM for Non-Automotive Built on our unique 4Sight™ Intelligent Sensing Platform, 4Sight™ meets the diverse array of performance and functional requirements for the Non-Automotive market with our industry-leading lidar performance, integrated intelligence, advanced vision capabilities, and unmatched reliability and safety.
The result mimics how the human visual cortex conceptually focuses on and evaluates the environment around the vehicle, driving conditions, and road hazards, enabling smarter, more accurate decision making — radically improving the probability of detection and the accuracy of classification. The sensor captures more intelligent information with less data, enabling faster, more accurate and more reliable perception.
The result mimics how the human visual cortex conceptually focuses on and evaluates the environment around the vehicle, driving conditions, and road hazards, enabling smarter, more accurate decision making — radically improving the probability of detection and the accuracy of classification.
Like all companies operating in similar industries, we are subject to environmental regulation, including water use; air emissions; use of recycled materials; energy sources; the storage, handling, treatment, transportation, and disposal of hazardous materials; and the remediation of environmental contamination. Compliance with these rules may include permits, licenses, and inspections of our facilities and products.
Like all companies operating in similar industries, we are subject to environmental regulation, including water use; air emissions; use of recycled materials; energy sources; the storage, handling, treatment, transportation, and disposal of hazardous materials; and the remediation of environmental contamination.
Once we achieve economies of scale in the Automotive market, we anticipate that 4Sight will be a cost-effective, customizable perception solution in 7 Industrial markets that may leverage the complete 4Sight software platform and will include a comprehensive software development kit for an extensible roadmap to autonomous functionality. 4Sight for the Industrial market may utilize any of the four software levels described above: 4Sight at Design, Triggered 4Sight, Responsive 4Sight, or Predictive 4Sight.
Once we achieve economies of scale in the Automotive market, we anticipate that 4Sight™ will be a cost-effective, customizable perception solution in Non-Automotive markets that may leverage the complete 4Sight™ software platform and will include a comprehensive software development kit for an extensible roadmap to autonomous functionality.
We have made substantial progress in our collaboration efforts withe Nvidia, demonstrating significant advances in the high-speed and long range detection performance of our lidar systems, which we believe puts us on track for future integration with their Hyperion platform. 4Sight Intelligent Sensing Platform 4Sight is our proprietary intelligent sensing lidar platform.
We have made substantial progress in our collaboration efforts with Nvidia, demonstrating significant advances in the high-speed and long range detection performance of our lidar systems, which we believe puts us on track for future integration with their Hyperion platform. In June, 2024, we launched Apollo, the first product in our 4Sight™ Flex family of next-generation lidar sensors.
As of March 1, 2024, we owned 78 U.S. and foreign issued patents and we had 83 pending U.S. and foreign patent applications, with three patent applications in the drafting stage. In addition, we have two registered and one pending trademark applications.
As of February 1, 2025, we owned 94 U.S. and foreign issued patents and we had 44 pending U.S. and foreign patent applications, with one patent application in the drafting stage. In addition, we have two registered trademarks and one pending trademark application.
Road traffic accidents cost most countries 3% of their gross domestic product on an annual basis. We believe the current technology solutions in the market are insufficient for mitigating this issue and that lidar, incorporated as a component of ADAS and fully autonomous driving or self-driving systems, could play a critical role in addressing this issue in the future.
We believe the current technology solutions in the market are insufficient for mitigating this issue and that lidar, incorporated as a component of ADAS and fully autonomous driving or self-driving systems, could play a critical role in addressing this issue in the future.
Final rules are expected soon, and these may require additional hardware and software to meet performance requirements. With that in mind, passenger and commercial vehicle OEMs are expected to introduce lidar sensors to add ADAS features and improve safety for passengers and pedestrians. Applications for the Automotive end market include lidar sensors and software for passenger and commercial vehicles.
With that in mind, passenger and commercial vehicle OEMs are expected to introduce lidar sensors to enhance ADAS features and improve safety for passengers and pedestrians. Applications for the Automotive end market include lidar sensors and software for passenger and commercial vehicles.
To date, we have not experienced any work stoppages. Facilities Our corporate headquarters is located in Dublin, California, where we lease 56,549 square feet pursuant to a lease that initially expires on December 1, 2026 unless we choose to exercise a five year renewal option. The Dublin facility contains engineering, R&D, operations, customer support, marketing, and administrative functions.
Facilities Our corporate headquarters is located in Pleasanton, California, where we lease approximately 6,522 square feet pursuant to a lease that initially expires on November 30, 2027 unless we choose to exercise a five-year renewal option. The Pleasanton facility contains engineering, R&D, operations, customer support, marketing, and administrative functions.
The European Union, China, and other foreign markets are also developing standards to define the requirements for deploying higher levels of autonomy. The National Highway Traffic Safety Administration, or NHTSA, is the principal legal and regulatory authority that has oversight of vehicles equipped with our sensors as they are deployed on public roadways.
The National Highway Traffic Safety Administration, or NHTSA, is the principal legal and regulatory authority that has oversight of vehicles equipped with our sensors as they are deployed on public roadways.
Our Tier 1 partners will add value with OEM customers through industrialization, manufacturing, integration, sales, marketing, product liability, and warranty. Our Tier 2 partners will provide automotive-grade sub-components, which are used not only in automotive lidar for ADAS use cases, but could also be used for products we may sell into the Industrial market.
We anticipate our Tier 2 partners will provide automotive-grade sub-components, which are used not only in automotive lidar for ADAS use cases, but could also be used for products we may sell into the Non-Automotive market.
In 2023, the National Highway Traffic Safety Administration, or NHTSA, introduced proposed rulemaking to mandate that passenger vehicles have automatic emergency braking, or AEB, and pedestrian AEB, and the Federal Motor Carrier 4 Safety Administration introduced proposed rulemaking to mandate AEB in heavy trucks.
In 2024, the National Highway Traffic Safety Administration, or NHTSA, adopted a new rule which mandates that passenger vehicles have automatic emergency braking, or AEB, and pedestrian AEB, and the Federal Motor Carrier Safety Administration introduced proposed rulemaking to mandate AEB in heavy trucks. These rules may require additional hardware and software to meet these requirements.
Our modular design facilitates product hardware updates as technologies evolve, and its small size and modest heat dissipation enable very flexible placement options on the interior or exterior of a vehicle. 4Sight also leverages a common architecture to create application-specific products across different markets.
Our modular design facilitates product hardware updates as technologies evolve, and its small size and modest heat generation enable very flexible placement options on the interior or exterior of a vehicle. 4Sight TM also leverages a common architecture to create application-specific products across different markets. 3 Table of Contents Our systems-based approach encourages partnerships from the well-established automotive supply chain, including original equipment manufacturers (OEMs), as well as Tier 1 and Tier 2 OEM suppliers.
In the Industrial market, we anticipate using the same supply chain to manufacture through global contract manufacturers, and we will sell our products primarily through system integrator channel partners that may integrate our lidar sensor and software as part of a larger solution for an end customer.
Our technical team still remains in direct contact with these OEMs, which better enables us to understand the OEMs’ specific product requirements and facilitate the implementation of our product design into their vehicles. 9 Table of Contents In the Non-Automotive market, we anticipate using the same supply chain to manufacture through global contract manufacturers, and we will sell our products primarily through system integrator channel partners that may integrate our lidar sensor and software as part of a larger solution for an end customer.
We still believe there will be a broad range of use cases for lidar in Industrial markets, including but not limited to rail, construction, mining, agriculture, aerospace, defense, and intelligent transportation systems.
We believe there is a broad range of use cases for lidar in Non-Automotive markets, including but not limited to rail, construction, mining, agriculture, aerospace, defense, security/foreign object detection, and intelligent transportation systems. We anticipate that our Apollo product will be well-suited to address the Non-Automotive markets without significant additional modifications.
Human Capital Resources We believe that our culture is one of our competitive advantages. We have emphasized a collaborative, team-oriented, performance-based culture with a strong focus on both the development of differentiated technology and the success of our customers. Our leadership team comes from sectors including automotive, aerospace and defense, semiconductors, software, and computer hardware.
Compliance with these rules may include permits, licenses, and inspections of our facilities and products. 10 Table of Contents Human Capital Resources We believe that our culture is one of our competitive advantages. We have emphasized a collaborative, team-oriented, performance-based culture with a strong focus on both the development of differentiated technology and the success of our customers.
We expect to utilize those same components to be used to address the Industrial market, which enables us to leverage our volume in automotive, and drive costs down for the products made by our contract manufacturing partners.
We expect to utilize those same components to address the Non-Automotive market, which enables us to leverage our volume in Automotive and drive costs down for the products made by our contract manufacturing partners. In May, 2024, we announced our partnership with Accelight Technologies, Inc. (“ATI”) and LighTekton Co., Ltd. to deliver AEye’s 4Sight™ lidar solutions to the China market.
We believe our existing facility is in good condition and suitable for the conduct of our business.
We believe our existing facility is in good condition and suitable for the conduct of our business. Legal Proceedings In or about July of 2024, AEye, Inc.’s wholly owned subsidiary, AEye Technologies, Inc.
The payments may take the 5 form of a fixed amount per unit, a percentage of the average selling price of the sensor, profit-sharing, or some combination of these methods. We are currently engaged in partnership discussions with other Tier 1 suppliers.
We expect that we will receive royalty or other payments from those Tier 1 suppliers for each unit they sell to their OEM customers. The payments may take the form of a fixed amount per unit, a percentage of the average selling price of the sensor, profit-sharing, or some combination of these methods.
We believe that our modular, patented design, our embedded deterministic artificial intelligence, which is inherently enabled by our unique product, and our strong R&D capabilities will enable us to remain a technology leader in the lidar market.
We believe that our modular, patented design, our embedded deterministic artificial intelligence, which is inherently enabled by our unique product, and our strong R&D capabilities will enable us to remain a technology leader in the lidar market. 8 Table of Contents Research and Development We have made substantial investments into our R&D efforts historically, but with a reduced workforce and consolidated global footprint, we plan to be more focused on investments that support our strategy and product development goals in the near-term.
We do not expect any federal rules or regulations in the near future that would impact the use or demand for our lidar technology. Some states, such as California and New York, do enforce operational or registration requirements for some autonomous functions. U.S. federal regulations generally allow higher levels of safe and responsible autonomous functionality to be deployed.
Some states, such as California and New York, do enforce operational or registration requirements for some autonomous functions. U.S. federal regulations generally allow higher levels of safe and responsible autonomous functionality to be deployed. The European Union, China, and other foreign markets are also developing standards to define the requirements for deploying higher levels of autonomy.
Since inception, we have incurred net losses and negative cash flows from operations and expect to continue incurring losses in the near-term. We plan to improve our liquidity position through securing additional financing and finding a replacement Tier 1 partner.
Since inception, we have incurred net losses and negative cash flows from operations and expect to continue incurring losses in the near-term. As a result, it remains critical for us to preserve cash and manage spending to extend our liquidity.
As of December 31, 2023, we had over 60 employees worldwide. The majority of our employees are in the R&D function. We also engage consultants and contractors to supplement our regular full-time workforce. None of our employees are represented by a labor union, and we consider our employee relations to be good.
Our leadership team comes from sectors including automotive, aerospace and defense, semiconductors, software, and computer hardware. As of December 31, 2024, we had over 45 employees worldwide. The majority of our employees are in the R&D function. We also engage consultants and contractors to supplement our regular full-time workforce.
Such use cases may include: • Rail — detecting and acquiring railway debris at long distances to stop the train to prevent derailment; assessing tracks for maintenance needs; and monitoring platform safety. • Construction, Mining, & Agriculture — detecting and acquiring obstacles, pedestrians, and animals in the path of large, autonomous construction and mining vehicles and agricultural equipment. • Aerospace & Defense — detecting wires or other obstacles above ground for helicopters; automating logistics vehicles for the military; enabling mid-air refueling. • Intelligent Transportation Systems (ITS) — intersection traffic management, highway monitoring, tolling automation, smart mobility infrastructure, autonomous/smart parking, and work zone safety.
Such use cases in the Non-Automotive market may include: • Rail — detecting and acquiring railway debris at long distances to stop the train to prevent derailment; assessing tracks for maintenance needs; and monitoring platform safety. • Construction, Mining, & Agriculture — detecting and acquiring obstacles, pedestrians, and animals in the path of large, autonomous construction and mining vehicles and agricultural equipment. • Aerospace & Defense — detecting airborne threats and automating logistics vehicles for the military. • Security and Foreign Object Detection (FOD) — Identifying and detecting unwanted objects or debris in various environments which can pose significant safety hazards and cause damage to equipment, products, or even people.
We solicit feedback directly from partners and customers in order to identify opportunities to improve our product design. We work with industry analysts, universities, and independent labs to conduct studies and performance tests, which provides third-party validation of our solutions to current and potential customers and partners.
We work with industry analysts, universities, and independent labs to conduct studies and performance tests, which provides third-party validation of our solutions to current and potential customers and partners. We also drive our brand management and increase our public visibility through news releases, advertising campaigns, events, industry panels, and other public relations programs.
Those Tier 1 suppliers will industrialize, manufacture, and sell lidar sensor solution units to OEMs that incorporate our proprietary design and software. We expect that we will receive royalty or other payments from those Tier 1 suppliers for each unit they sell to their OEM customers.
We employ a channel model in the traditional Automotive market by working through Tier 1 suppliers that sell products to OEM customers. We anticipate those Tier 1 suppliers will industrialize, manufacture, and sell lidar sensor solution units to OEMs that incorporate our proprietary design and software.
Automotive According to the World Health Organization, the number of fatalities globally on roadways exceeds one million annually, road traffic injuries are the leading cause of death for children and young adults aged 5 to 29 years and in the U.S. pedestrian fatalities have increased by over 80% in the last ten years.
We broadly define our two key end markets as Automotive and Non-Automotive. 4 Table of Contents Automotive According to the World Health Organization, the number of fatalities globally on roadways exceeds one million annually, road traffic injuries are the leading cause of death for children and young adults aged 5 to 29 years, and road traffic accidents cost most countries 3% of their gross domestic product on an annual basis.
This is possible, in part, because we utilize 1550nm lasers that enable our lidar solutions to achieve a higher photon budget than many of our competitors that rely upon 905nm lasers. While 1550nm lasers are more costly than 905nm lasers on a per unit basis, 1550nm lasers have much higher performance and our product only requires one such laser.
This is possible, in part, because we utilize 1550nm lasers that enable our lidar solutions to achieve a higher photon budget than many of our competitors that rely upon 905nm lasers. Our channel-based model with Tier 1 automotive suppliers also enable us to uniquely capitalize on Tier 1 supply chain leverage.
Market Outlook/Overview We believe that lidar will be a required sensing solution across many end markets. We broadly define our two key end markets as Automotive and Industrial, although at the current time we are almost exclusively focused on the Automotive market.
Market Outlook/Overview We believe that lidar will be a required sensing solution across many end markets.
Our systems-based approach encourages partnerships from the well-established automotive supply chain, including original equipment manufacturers, or OEMs, as well as Tier 1 and Tier 2 OEM suppliers. There is strong alignment between us and our partners given what is required to produce high-performance automotive grade products at scale, including quality, reliability, and affordability.
There is strong alignment between us and our partners given what is required to produce high-performance automotive grade products at scale, including quality, reliability, and affordability. We anticipate our Tier 1 partners will add value with OEM customers through industrialization, manufacturing, integration, sales, marketing, product liability, and warranty.
We also drive our brand management and increase our public visibility through news releases, advertising campaigns, events, industry panels, and other public relations programs. Government Regulation We believe that the U.S. has provided a constructive legal environment to enable the testing and development of autonomous capabilities.
Government Regulation We believe that the U.S. has provided a constructive legal environment to enable the testing and development of autonomous capabilities. We do not expect any federal rules or regulations in the near future that would impact the use or demand for our lidar technology.
The 4Sight Intelligent Sensing Platform enables the integration of various types of sensor inputs, including camera, lidar, and radar. Our 4Sight products are developed on this framework and incorporate both camera and lidar sensors. The 4Sight Intelligent Sensing Platform leverages a bistatic architecture, allowing for physically separated transmit and receive paths.
The 4Sight™ Intelligent Sensing platform captures more information with less data, facilitating faster, more accurate, and more reliable perception of the environment. The 4Sight™ Intelligent Sensing Platform leverages a bistatic architecture, allowing for physically separated transmit and receive paths.
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Our proprietary software-definable 4Sight TM Intelligent Sensing Platform combines solid-state active lidar, an optionally fused low-light HD camera, and integrated deterministic artificial intelligence to capture more intelligent information with less data, enabling faster, more accurate, and more reliable perception of the surroundings.
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Our proprietary 4Sight TM 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.
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For example, in late 2023, Continental informed us that they intended to discontinue our joint lidar development program due to corporatewide restructuring and expense reduction efforts.
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If we fail to remain engaged with one or more Tier 1 automotive suppliers, it may have an adverse effect on our business. The markets for lidar are projected to see significant growth in both the near and long term.
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If we fail to find a replacement Tier 1 automotive supplier, it will have a material and adverse effect on our business, which is predicated on licensing our lidar designs and other intellectual property to our Tier 1 partners.
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We also plan to improve our liquidity position through securing additional financing, engaging with partners and OEMs, and executing on our critical milestones. However, successfully raising capital is outside of our control and there can be no assurance that we will be able to obtain additional financing on terms acceptable to us, on a timely basis, or at all.
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We expect that lidar will be a required sensing solution across many end markets, and we intend to be one of the leading solutions provider in these spaces.
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According to the Insurance Institute for Highway Safety, in the U.S. pedestrian fatalities have increased by over 80% since 2009.
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Should we not be able to achieve these goals, we have a plan to further reduce operating expenses and cash outlays. The Company believes that these plans are probable of being successfully implemented, which will result in adequate cash flows to support our ongoing operations for at least one year following the date these financial statements are issued.
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Non-Automotive In 2023, we decided to wind down our legacy Non-Automotive product line and we dialed back support for this end market. Since the launch of our new product, Apollo, in 2024, we have seen renewed interest from Non-Automotive customers across a broad range of sectors and are actively engaged on multiple opportunities.
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Industrial In 2023, we decided to wind down our existing industrial product line and will be dialing back support for this end market until we have sufficient scale in the Automotive market, which is our largest and highest priority market.
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FOD is crucial in industries such as aviation, aerospace, manufacturing, and perimeter security. • Intelligent Transportation Systems (ITS) — intersection traffic management, highway monitoring, tolling automation, smart mobility infrastructure, autonomous/smart parking, and work zone safety. 5 Table of Contents Commercial Overview We employ two different go-to-market models: one model addresses the traditional Automotive end market and the other model addresses the Non-Automotive end market.
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Commercial Overview We employ two different go-to-market models: one model addresses the traditional Automotive end market and the other model addresses the Industrial end market. We employ a channel model in the traditional Automotive market by working through Tier 1 suppliers that sell products to OEM customers.
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China is leading the market in lidar adoption, where the TAM is expected to grow to $2.5 billion over the next 3 years.
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Technology We developed the 4Sight Intelligent Sensing Platform, to combine solid-state active lidar, an optionally fused low-light HD camera, and integrated deterministic artificial intelligence to capture more intelligent information with less data, enabling faster, more accurate, and more reliable perception of the surroundings.
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Technology AEye's 4Sight™ 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.
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We have identified four increasingly complex levels of software which differentiate our system: 1. 4Sight at Design: 4Sight at Design (software configured scan patterns) enables customers to create a single, deterministic scan pattern to deliver optimal information for any specific use case.
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Apollo delivers best-in-class range and resolution in a compact, power-efficient, and cost-effective form factor, making it suitable for both automotive and non-automotive applications. Apollo supports integration behind the windshield, on the roof, or in the grille, enabling OEMs to implement critical safety features with minimal impact on vehicle design.
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This level is particularly beneficial for repetitive motion applications, such as power line or pipeline inspection (which cameras alone cannot achieve), or robots in a closed-loop environment that is unlikely to experience 6 anything unexpected. Through 4Sight at Design, the customers’ unique, deterministic scan pattern will give them precisely the information they need for their repetitive pattern application. 2.
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This innovative sensor leverages AEye's 4Sight™ Intelligent Sensing Platform, offering a highly programmable and customizable lidar solution that can be reconfigured through software updates. With a horizontal field of view up to 120° and long-range detection capabilities of up to 1 km.
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Triggered 4Sight: With Triggered 4Sight, customers can create a library of deterministic, software-configurable scan patterns at design time, each one addressing a specific use case. Maps, IMU, speed, tilt, weather, and direction of the vehicle can all trigger the sensor to switch from one scan pattern to another.
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Apollo, we believe, is positioned as a key player in advancing vehicle safety and autonomy, as well as smart infrastructure and logistics applications. 6 Table of Contents 4Sight TM Intelligent Sensing Platform 4Sight™ is our proprietary intelligent sensing lidar platform.
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For example, a customer can create different scan patterns for highway, urban, and suburban driving, as well as an “exit ramp” pattern. In addition, the customer can create scan patterns for those same driving environments, but optimized for bad weather (e.g., “highway rain scan pattern” vs “highway sunlight scan pattern”). 3.
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The sensor captures more intelligent information with less data, enabling faster, more accurate and more reliable perception. 7 Table of Contents 4Sight TM for Automotive Built on this 4Sight™ platform, the Apollo lidar is specifically designed to address system requirements for advanced driver-assistance systems (ADAS) and autonomous vehicles (AV) applications.
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Responsive 4Sight: With Responsive 4Sight, scan patterns can be created at design and run time. In this level, the entire platform is completely software-configurable and situationally aware, adjusting, in real time, how it scans the scene, where to apply density and extra power, and what scan rate to employ.
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It delivers best-in-class long-range and resolution in a small, power-efficient, low-cost form factor. Apollo’s design supports integration behind the windshield, on the roof, or in the grille, enabling automotive OEMs to implement safety features with minimal impact on vehicle design. Apollo is industrialized, manufactured, tested, and validated by our Tier 1 partners keeping in mind supply chain resiliency goals.
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In this level, deterministic feedback loops or other sensors, such as camera and radar, inform the lidar to interrogate objects discretely or via dense, dynamic regions of interest, or ROIs, at various points throughout the scene. It can also dynamically alter its scan pattern on the fly.
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We anticipate that our Automotive product will be well-suited to address the Non-Automotive markets without significant additional modifications. We solicit feedback directly from partners and customers in order to identify opportunities to improve our product design.
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The system is intelligent, with the ability to interrogate the scene, and perpetually optimize its own scan patterns and data collection to focus on the information that matters most and respond based on firmware feedback. 4. Predictive 4Sight: Predictive 4Sight (motion forecasting) can take what is offered in Responsive 4Sight but look ahead enabling even smarter interrogation.

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Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

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Biggest changeThese initiatives may prove more costly than we currently anticipate and we may not succeed in increasing our revenue in an amount sufficient to offset the costs of these initiatives and to achieve and maintain profitability. • If our deterministic artificial intelligence-driven sensing system is not selected for inclusion in advanced driver-assistance systems, or ADAS, by any automotive OEMs or their suppliers, our business will be materially and adversely affected. • Our business could be materially and adversely affected by the lingering and continuing impacts of the global COVID-19 pandemic, other epidemics or outbreaks, as well as other global events and macroeconomic factors, such as the wars in Ukraine and the Middle East. • We heavily rely on third-party suppliers and because some of the raw materials and key components in our products come from limited or single source suppliers, our ability to control the costs of such components and raw materials is uncertain; moreover, regardless of cost, we are susceptible to supply shortages, longer than anticipated lead times for components, and supply changes, any of which could disrupt our supply chain, could delay deliveries of our products to customers, and could negatively impact the adoption of our products and accordingly, our financial condition and operating results. • We expect to continue investing in R&D, albeit at a reduced amount compared to prior years and commercializing new products, which could significantly reduce our profitability and may never result in revenue to us. 11 • Although we believe that lidar is an essential technology for autonomous vehicles and other emerging applications, market adoption of lidar is uncertain.
Biggest changeSuch risks include, but are not limited to: • We are an early stage company with a history of losses and we expect to incur significant expenses and continuing losses for at least the next several years. • We substantially rely on relationships with Tier 1 automotive suppliers and our business could be materially and adversely affected if we cannot establish or maintain relationships with one or more Tier 1 partners, or if we, through our relationship with various Tier 1 partners, are unable to obtain a sufficient number of design wins and successfully enter into definitive agreements or other commercial arrangements with automotive OEMs with respect to such design wins. • We will need to raise additional capital in order to execute our business plan and to respond to changing market conditions, which additional capital may not be available on terms acceptable to us, or at all. • If our deterministic artificial intelligence-driven sensing system is not selected for inclusion in advanced driver-assistance systems, or ADAS, by any automotive OEMs or their suppliers, our business will be materially and adversely affected. • We heavily rely on third-party suppliers and because some of the raw materials and key components in our products come from limited or single source suppliers, our ability to control the costs of such components and raw materials is uncertain; moreover, regardless of cost, we are susceptible to supply shortages, longer than anticipated lead times for components, and supply changes, any of which could disrupt our supply chain, could delay deliveries of our products to customers, and could negatively impact the adoption of our products and accordingly, our financial condition and operating results. 12 Table of Contents • Although we believe that lidar is an essential technology for autonomous vehicles and other emerging applications, market adoption of lidar is uncertain.
Adoption of lidar products, including our products, will depend on numerous factors, including whether the technological capabilities of lidar and lidar-based products meet users’ current or anticipated needs, whether the benefits associated with designing lidar into larger sensing systems outweighs the costs, complexity, and time needed to deploy such technology or replace or modify existing systems that may have used other modalities, such as cameras and radar, whether users in other applications can move beyond the testing and development phases and proceed to commercializing systems supported by lidar technology and whether lidar developers such as us can keep pace with the expected rapid technological change in certain developing markets, and the global response to the 19 lingering effects of the COVID-19 pandemic, and other macroeconomic factors, and the length of any associated economic recovery.
Adoption of lidar products, including our products, will depend on numerous factors, including whether the technological capabilities of lidar and lidar-based products meet users’ current or anticipated needs, whether the benefits associated with designing lidar into larger sensing systems outweighs the costs, complexity, and time needed to deploy such technology or replace or modify existing systems that may have used other modalities, such as cameras and radar, whether users in other applications can move beyond the testing and development phases and proceed to commercializing systems supported by lidar technology and whether lidar developers such as us can keep pace with the expected rapid technological change in certain developing markets, and the global response to the lingering effects of the COVID-19 pandemic, and other macroeconomic factors, and the length of any associated economic recovery.
Should these third-party components, which our products are intended to be combined with, fail or require action to correct defects or errors, it would likely delay the sale of the larger system in which our products are to be incorporated, thereby adversely affecting our financial results.
Should these third-party components, in which our products are intended to be combined with, fail or require action to correct defects or errors, it would likely delay the sale of the larger system in which our products are to be incorporated, thereby adversely affecting our financial results.
Defending a lawsuit, regardless of our merit, could be costly and may divert management’s attention and adversely affect the market’s perception of us and our products. In addition, our business liability insurance coverage could prove inadequate with respect to any claim and future coverage may be unavailable on acceptable terms, or at all.
Defending a lawsuit, regardless of merit, could be costly and may divert management’s attention and adversely affect the market’s perception of us and our products. In addition, our business liability insurance coverage could prove inadequate with respect to any claim and future coverage may be unavailable on acceptable terms, or at all.
Volatility in the stock price of our common stock or other reasons has caused, and may continue in the future to cause, us to become the target of securities litigation or stockholder activism.
Volatility in the price of our common stock or other reasons has caused, and may continue in the future to cause, us to become the target of securities litigation or stockholder activism.
These risks are 22 particularly prevalent in the highly competitive autonomous driving and ADAS markets. Some errors or defects in our products may only be discovered after they have been tested, commercialized, and deployed by customers. If that is the case, we may incur significant additional development costs and product recall, repair, or replacement costs.
These risks are particularly prevalent in the highly competitive autonomous driving and ADAS markets. Some errors or defects in our products may only be discovered after they have been tested, commercialized, and deployed by customers. If that is the case, we may incur significant additional development costs and product recall, repair, or replacement costs.
Despite careful security and controls design, our information technology systems and the systems used by our third-party vendors, may be subject to security breaches and cyberattacks the result of which could include disrupted operations, misstated or unreliable financial data, liability for stolen assets or information, increased cybersecurity 31 protection and insurance costs, litigation, and damage to business relationships.
Despite careful security and controls design, our information technology systems and the systems used by our third-party vendors, may be subject to security breaches and cyberattacks the result of which could include disrupted operations, misstated or unreliable financial data, liability for stolen assets or information, increased cybersecurity protection and insurance costs, litigation, and damage to business relationships.
We risk negative stockholder reaction, including from proxy advisory services, as well as damage to our brand and reputation, if we do not act responsibly in a number of key 39 areas, including diversity and inclusion, environmental stewardship, support for local communities, corporate governance and transparency, and considering ESG and human capital factors in our operations.
We risk negative stockholder reaction, including from proxy advisory services, as well as damage to our brand and reputation, if we do not act responsibly in a number of key areas, including diversity and inclusion, environmental stewardship, support for local communities, corporate governance and transparency, and considering ESG and human capital factors in our operations.
In regard to any action arising under the Securities Act or the rules and regulations promulgated thereunder, our Charter provides 40 that, unless we consent in writing to the selection of an alternative forum, the federal district courts of the United States of America will, to the fullest extent permitted by law, be the sole and exclusive forum.
In regard to any action arising under the Securities Act or the rules and regulations promulgated thereunder, our Charter provides that, unless we consent in writing to the selection of an alternative forum, the federal district courts of the United States of America will, to the fullest extent permitted by law, be the sole and exclusive forum.
As such, historical comparisons of our operating results may not be meaningful. In particular, because our sales to date have primarily been to customers making purchases for their own R&D, sales in any given quarter can fluctuate 13 based on the timing and success of our customers’ development projects.
As such, historical comparisons of our operating results may not be meaningful. In particular, because our sales to date have primarily been to customers making purchases for their own R&D, sales in any given quarter can fluctuate based on the timing and success of our customers’ development projects.
Additionally, the Internal Revenue Service, or IRS, and several foreign tax authorities have increasingly focused attention on intercompany transfer pricing with respect to sales of products and services and the 29 use of intangibles. Tax authorities could disagree with our future intercompany charges, cross-jurisdictional transfer pricing, or other matters and assess additional taxes.
Additionally, the Internal Revenue Service, or IRS, and several foreign tax authorities have increasingly focused attention on intercompany transfer pricing with respect to sales of products and services and the use of intangibles. Tax authorities could disagree with our future intercompany charges, cross-jurisdictional transfer pricing, or other matters and assess additional taxes.
We currently have a number of agreements in effect pursuant to which we have agreed to defend, 37 indemnify, and hold harmless our customers, suppliers, and channel partners and other partners from damages and costs which may arise from the infringement of our products by third-party patents or other intellectual property rights.
We currently have a number of agreements in effect pursuant to which we have agreed to defend, indemnify, and hold harmless our customers, suppliers, and channel partners and other partners from damages and costs which may arise from the infringement of our products by third-party patents or other intellectual property rights.
Each of these markets presents distinct risks and, in many cases, requires that we expend resources to address the particular requirements of that market. Addressing these requirements can be time-consuming and costly. The market for lidar technology is relatively new, rapidly developing, and unproven in many markets or industries.
Each of these markets presents distinct risks and, in many cases, requires that we expend our resources to address the particular requirements of that market. Addressing these requirements can be time-consuming and costly. The market for lidar technology is relatively new, rapidly developing, and unproven in many markets or industries.
We may face unexpected delays in obtaining the requisite permit and 34 approvals in connection with our planned production facilities that could require significant time and financial resources and delay our ability to operate these facilities, which would adversely impact our business, prospects, financial condition, and operating results.
We may face unexpected delays in obtaining the requisite permit and approvals in connection with our planned production facilities that could require significant time and financial resources and delay our ability to operate these facilities, which would adversely impact our business, prospects, financial condition, and operating results.
In early 2023, we discovered that there may have been some uncertainty with respect to the validity of our Second Amended and Restated Certificate of Incorporation, which was approved by our stockholders at the special meeting of stockholders held on August 12, 2021.
Additionally, in early 2023, we discovered that there may have been some uncertainty with respect to the validity of our Second Amended and Restated Certificate of Incorporation, which was approved by our stockholders at the special meeting of stockholders held on August 12, 2021.
As a public company, we will be subject to the reporting requirements of the Exchange Act, the Sarbanes-Oxley Act, and the Dodd-Frank Act, as well as rules adopted, and to be adopted, by the SEC and Nasdaq. Our management and other personnel will need to devote a substantial amount of time to these compliance initiatives.
As a public company, we are subject to the reporting requirements of the Exchange Act, the Sarbanes-Oxley Act, and the Dodd-Frank Act, as well as rules adopted, and to be adopted, by the SEC and Nasdaq. Our management and other personnel will need to devote a substantial amount of time to these compliance initiatives.
To date, we have very limited experience with acquisitions and the integration of acquired technology and 32 personnel. Failure to successfully identify, complete, manage, and integrate acquisitions could materially and adversely affect our business, financial condition, and results of operations and could cause our stock price to decline.
To date, we have very limited experience with acquisitions and the integration of acquired technology and personnel. Failure to successfully identify, complete, manage, and integrate acquisitions could materially and adversely affect our business, financial condition, and results of operations and could cause our stock price to decline.
We expect to incur significant legal, accounting, and other expenses that we did not incur as a private company, and these expenses will likely increase more after we are no longer an emerging growth company, as defined in Section 2(a) of the Securities Act.
We expect to incur significant legal, accounting, and other expenses that we did not incur as a private company, and these expenses will likely increase after we are no longer an emerging growth company, as defined in Section 2(a) of the Securities Act.
There is also a risk that one or more of our major customers could be unable to pay our invoices as they become due or that a customer will simply refuse to make such payments if it experiences financial difficulties.
There is also a risk that one or more of our major customers could be unable to pay our invoices as they become due or that a customer will simply refuse to make such payments if it experiences financial difficulties, or otherwise.
Our future success will depend on our ability to achieve a leadership position in our targeted 26 markets by continuing to develop, and protect from infringement, advanced lidar technology in a timely manner and to stay ahead of existing and new competitors.
Our future success will depend on our ability to achieve a leadership position in our targeted markets by continuing to develop, and protect from infringement, advanced lidar technology in a timely manner and to stay ahead of existing and new competitors.
As the production of third-party components are largely outside of our control, we are subject to such third parties investing sufficient time and resources to manufacture their products without minimal defects.
As the production of third-party components is largely outside of our control, we are subject to such third parties investing sufficient time and resources to manufacture their products without minimal defects.
These new obligations and constituents will require significant attention from our senior management and could divert their attention away from the day-to-day management of our business, which could adversely affect our business, financial condition, and operating results.
These obligations and constituents will require significant attention from our senior management and could divert their attention away from the day-to-day management of our business, which could adversely affect our business, financial condition, and operating results.
We and our customers’ and suppliers’ response to the lingering effects of the COVID-19 pandemic may prove to be inadequate and they may be unable to continue their respective operations in the manner they had prior to the outbreak or the worsening of the outbreak, and we may consequently endure interruptions, reputational harm, delays in our product development, and shipments, all of which could have an adverse effect on our business, operating results, and financial condition.
We and our customers’ and suppliers’ response to the lingering effects of the COVID-19 pandemic may prove to be inadequate and they may be unable to continue their respective operations in the manner they had prior to the outbreak, and we may consequently endure interruptions, reputational harm, delays in our product development, and shipments, all of which could have an adverse effect on our business, operating results, and financial condition.
The new legislation had no effect on our 2023 or 2022 provision for income taxes because we generated net tax losses and offset our deferred tax assets on the consolidated balance sheets with a full valuation allowance due to our current loss position and forecasted losses for the near future.
The new legislation had no effect on our 2024 or 2023 provision for income taxes because we generated net tax losses and offset our deferred tax assets on the consolidated balance sheets with a full valuation allowance due to our current loss position and forecasted losses for the near future.
The occurrence of any of the following risks, or others specified below, could materially and adversely affect our business, strategies, prospects, financial condition, results of operations and cash flows. In such case, the market price of our common stock could decline, and you could lose all or part of your investment.
The occurrence of any of the following risks, or others specified below, could materially and adversely affect our business, strategies, prospects, financial condition, results of operations and cash flows. In such cases, the market price of our common stock could decline, and you could lose all or part of your investment.
Additional risks associated with the continuing impact of the revised strategic plan include employee attrition beyond our intended reduction-in-force and adverse effects on employee morale, diversion of management attention, adverse effects to our reputation as an employer (which could make it more difficult for us to hire employees in the future), and potential failure or delays to meet our shift in focus from research and development to commercialization of our automotive products.
Additional risks associated with the continuing impact of a revised strategic plan include, employee attrition beyond our intended reduction-in-force and adverse effects on employee morale, diversion of management attention, adverse effects to our reputation as an employer (which could make it more difficult for us to hire employees in the future), and potential failure or delays to meet our shift in focus from research and development to commercialization.
We are subject to, and must remain in compliance with, numerous laws and governmental regulations concerning the manufacturing, use, distribution, and sale of our products. Some of our customers also require that we comply with the customers’ own unique requirements relating to these matters.
We are subject to, and must remain in compliance with, numerous laws and governmental regulations concerning the manufacturing, use, distribution, and sale of our products. Some of our customers also require that we comply with the customers ’ own unique requirements relating to these matters.
Over the long term, we expect to experience significant growth in the scope and nature of our operations. Our ability to manage our operations and future growth will require us to continue to improve our operational, financial, and management controls, legal and compliance programs, and reporting systems.
Over the long term, we may experience significant growth in the scope and nature of our operations. Our ability to manage our operations and future growth will require us to continue to improve our operational, financial, and management controls, legal and compliance programs, and reporting systems.
We may be subject to damages resulting from claims that we or our employees have wrongfully used or disclosed alleged trade secrets of our employees’ former employers . We may be subject to claims that we or our employees have inadvertently or otherwise used or disclosed trade secrets or other proprietary information of an employee’s former employer.
We may be subject to damages resulting from claims that we or our employees have wrongfully used or disclosed alleged trade secrets of our employees ’ former employers . We may be subject to claims that we or our employees have inadvertently or otherwise used or disclosed trade secrets or other proprietary information of an employee’s former employer.
This relatively limited operating history makes it difficult to evaluate our future prospects and the risks and challenges we may encounter, which include our ability to: • develop and commercialize our products; • produce and deliver lidar and software products meeting acceptable performance metrics; • forecast our revenue and budget for and manage our expenses; • attract new customers and retain existing customers; • develop, obtain, or progress strategic partnerships; • comply with existing and new or modified laws and regulations applicable to our business; • plan for and manage capital expenditures for our current and future products, and manage our supply chain and supplier relationships related to our current and future products; • anticipate and respond to macroeconomic changes as well as changes in the markets in which we operate; • maintain and enhance the value of our reputation and brand; • effectively manage our growth and business operations, including the lingering impacts of the COVID-19 pandemic on our business as well as other macroeconomic factors, such as the wars in Ukraine and in the Middle East; • develop and protect our intellectual property; • hire, integrate, and retain talented people at all levels of our organization; and • successfully develop new solutions to enhance the experience of customers.
This relatively limited operating history makes it difficult to evaluate our future prospects and the risks and challenges we may encounter, which include our ability to: • develop and commercialize our products; 16 Table of Contents • produce and deliver lidar and software products meeting acceptable performance metrics; • forecast our revenue and budget for and manage our expenses; • attract new customers and retain existing customers; • develop, obtain, or progress strategic partnerships; • comply with existing and new or modified laws and regulations applicable to our business; • plan for and manage capital expenditures for our current and future products, and manage our supply chain and supplier relationships related to our current and future products; • anticipate and respond to macroeconomic changes as well as changes in the markets in which we operate; • maintain and enhance the value of our reputation and brand; • effectively manage our growth and business operations, including the lingering impacts of macroeconomic factors on our business, such as the wars in Ukraine and in the Middle East; • develop and protect our intellectual property; • hire, integrate, and retain talented people at all levels of our organization; and • successfully develop new solutions to enhance the experience of customers.
International operations are subject to a number of other risks, including: • exchange rate fluctuations; • political and economic instability, international terrorism, and anti-American sentiment, particularly in emerging markets; • global or regional health crises, such as the lingering effects of the COVID-19 pandemic or other epidemics or outbreaks of other contagions; • increasing military conflicts in Ukraine and the Middle East; • potential for violations of anti-corruption laws and regulations, such as those related to bribery and fraud; • preference for locally branded products, and laws and business practices favoring local competition; • potential consequences of, and uncertainty related to, the “Brexit” process in the United Kingdom, which could lead to additional expense and complexity in doing business there; • increased difficulty in managing inventory; • delayed revenue recognition; • the potential for less effective protection of intellectual property; • stringent regulation of autonomous driving or other systems or products using our products and stringent consumer protection and product compliance regulations, including, but not limited, to the General Data Protection Regulation, or GDPR, in the European Union, European competition law, the Restriction of Hazardous Substances Directive, or RoHS, the Waste Electrical and Electronic Equipment Directive, or WEEE, and the European Ecodesign Directive, all of which are costly to comply with and may vary from country to country; • difficulties and costs of staffing and managing foreign operations; • import and export laws and the impact of tariffs; • changes in local tax and customs duty laws or changes in the enforcement, application, or interpretation of such laws; and • the U.S. government’s restrictions on technology transfers to certain countries.
In general, international operations are subject to a number of other risks, including: • the impact of tariffs and any escalation of a trade war between the U.S. and its trading partners; • exchange rate fluctuations; • political and economic instability, international terrorism, and anti-American sentiment, particularly in emerging markets; • global or regional health crises, such as the lingering effects of the COVID-19 pandemic or other epidemics or outbreaks of other contagions; • military conflicts in Ukraine and the Middle East; • potential for violations of anti-corruption laws and regulations, such as those related to bribery and fraud; • preference for locally branded products, and laws and business practices favoring local competition; • potential consequences of, and uncertainty related to, the “Brexit” process in the United Kingdom, which could lead to additional expense and complexity in doing business there; • increased difficulty in managing inventory; • delayed revenue recognition; • the potential for less effective protection of intellectual property; • stringent regulation of autonomous driving or other systems or products using our products and stringent consumer protection and product compliance regulations, including, but not limited, to the General Data Protection Regulation, or GDPR in the European Union, European competition law, the Restriction of Hazardous Substances Directive, or RoHS, the Waste Electrical and Electronic Equipment Directive, or WEEE, and the European Ecodesign Directive, all of which are costly to comply with and may vary from country to country; • difficulties and costs of staffing and managing foreign operations; • import and export laws and associated regulations; • changes in local tax and customs duty laws or changes in the enforcement, application, or interpretation of such laws; and • the U.S. government’s restrictions on technology transfers to certain countries.
In 2023, we have implemented multiple restructuring actions aimed at focusing the organization on the commercialization of our automotive products, while reducing fixed operating costs, including the elimination of our internal sales and marketing teams.
Since 2023, we have implemented multiple restructuring actions aimed at focusing the organization on the commercialization of our automotive products, while reducing fixed operating costs, including the elimination of our internal sales and marketing teams.
To the extent the lingering effects of the COVID-19 pandemic results in continuation or worsening of manufacturing and shipping delays and constraints, our suppliers will continue to have challenges obtaining the materials necessary for the production of our products.
To the extent the lingering effects of the COVID-19 pandemic result in continuation or worsening of manufacturing and shipping delays and constraints, our suppliers will continue to have challenges obtaining the materials necessary for the production of our products.
If lidar technology does not achieve commercial success, or if adoption of lidar is deferred or the market otherwise develops at a pace slower than we expect, our business, results of operations, and financial condition will be materially and adversely affected. We may experience difficulties in managing our growth and expanding our operations.
If lidar technology does not achieve commercial success, or if adoption of lidar is deferred or the market otherwise develops at a pace slower than we expect, our business, results of operations, and financial condition will be materially and adversely affected. 21 Table of Contents We may experience difficulties in managing our growth and expanding our operations.
Our ability to accurately forecast demand for our products could be affected by many factors, including the accuracy of the forecasts that we receive from our customers, the rapidly changing nature of the autonomous driving and ADAS markets in which we operate, the uncertainty surrounding the market acceptance and commercialization of lidar technology, the emergence of new markets, an increase or decrease in customer demand for our products or for products and services of our competitors, product introductions by competitors, the lingering effects of the COVID-19 pandemic, 23 other epidemics or outbreaks of other contagions should they materialize, any work stoppages or interruptions, unanticipated changes in general market conditions, and the general weakening of economic conditions or consumer confidence, which may be exacerbated by the on-going military actions in Ukraine and the Middle East.
Our ability to accurately forecast demand for our products could be affected by many factors, including the accuracy of the forecasts that we receive from our customers, the rapidly changing nature of the autonomous driving and ADAS markets in which we operate, the uncertainty surrounding the market acceptance and commercialization of lidar technology, the emergence of new markets, an increase or decrease in customer demand for our products or for products and services of our competitors, product introductions by competitors, the lingering effects of the COVID-19 pandemic, other epidemics or outbreaks of other contagions, such as “bird flu,” should they materialize, any work stoppages or interruptions, unanticipated changes in general market conditions, and the general weakening of economic conditions or consumer confidence, which may be exacerbated by the on-going military actions in Ukraine and the Middle East.
If we cannot rapidly address any safety concerns or defects with our products, our business, results of operations, and financial condition may be adversely affected. The adoption of autonomous and ADAS features by automotive OEMs may be delayed and our business impacted, as additional emissions and safety requirements are imposed on vehicle manufacturers.
If we cannot rapidly address any safety concerns or defects with our products, our business, results of operations, and financial condition may be adversely affected. 39 Table of Contents The adoption of autonomous and ADAS features by automotive OEMs may be delayed and our business impacted, as additional emissions and safety requirements are imposed on vehicle manufacturers.
Over the longer term, we believe that our overall revenue growth, if any, will depend in part on our ability to expand within new markets such as aerospace and defense, shuttle, delivery vehicle, drone, railway, intelligent transport, mining and other markets as they emerge.
Over the longer term, we believe that our overall revenue growth, if any, will depend in part on our ability to expand within Non-Automotive markets such as aerospace and defense, shuttle, delivery vehicle, drone, railway, intelligent transport, mining and other markets as they emerge.
For example, in 2023, we impaired $9.9 million of long-lived assets, wrote down $8.6 million of inventory and other current assets, and incurred $3.3 million of one-time termination benefit costs, primarily relating to our decision to wind down our existing Industrial product line and reduce support for this end market until we have sufficient scale in the Automotive market, which is our largest and highest priority market.
For example, in 2023, we impaired $9.9 million of long-lived assets, wrote down $8.6 million of inventory and other current assets, and incurred $3.3 million of one-time termination benefit costs, primarily relating to our decision to wind down our legacy Non-Automotive product line and reduce support for this end market until we have sufficient scale in the Automotive market, which is our largest and highest priority market.
We intend to raise additional capital either by issuing equity, debt, or a combination of the two, in order to respond to market timing delays, technological advancements, competition, competitive technologies, customer demands, business opportunities, other challenges, potential acquisitions, unforeseen circumstances, or other reasons.
We will need to raise additional capital either by issuing equity, debt, or a combination of the two, in order to respond to market timing delays, technological advancements, competition, competitive technologies, customer demands, business opportunities, other challenges, potential acquisitions, unforeseen circumstances, or other reasons.
We rely on trade secrets, designs, manufacturing know-how, and confidential information to protect intellectual property that may not be patentable or subject to copyright, trademark, trade dress, or service mark protection, or that we believe is best protected by means that do not require public disclosure.
We rely on trade secrets, designs, know-how, and other confidential information to protect our intellectual property that may not be patentable or subject to copyright, trademark, trade dress, or service mark protection, or that we believe is best protected by means that do not require public disclosure.
The development cycles for our products with new customers varies widely depending on the application, market, customer, and the complexity of the product. In the Automotive market, for example, this development cycle can be five to seven years (or more). The development cycle in certain other markets can be months to one or two years (or more).
The development cycles for our products with new customers varies widely depending on the application, market, customer, and the complexity of the product. In the Automotive market, for example, this development cycle can be five to seven years (or more). The development cycle in Non-Automotive markets can be months to one or two years (or more).
Our limited operating history makes it difficult to evaluate our future prospects and the risks and challenges we may encounter. We have been focused on developing our deterministic artificial intelligence-driven sensing system for vehicle autonomy, ADAS, and industrial applications since 2013.
Our limited operating history makes it difficult to evaluate our future prospects and the risks and challenges we may encounter. We have been focused on developing our deterministic artificial intelligence-driven sensing system for vehicle autonomy, ADAS, and Non-Automotive applications since 2013.
Any of these events could adversely affect our brand, relationships with customers, operating results, or financial condition. Suppliers to automotive OEMs may require that we provide a warranty, either directly or indirectly, on our products, including our embedded software.
Any of these events could adversely affect our brand, relationships with customers, operating results, or financial condition. 25 Table of Contents Suppliers to automotive OEMs may require that we provide a warranty, either directly or indirectly, on our products, including our embedded software.
Export Administration Regulations, other regulations issued by U.S. Customs and Border Protection, and various economic and trade sanctions administered by the U.S. Treasury Department’s Office of Foreign Assets Control. U.S. export control laws and regulations and economic sanctions prohibit the shipment of certain products and services to U.S. embargoed or sanctioned countries, and specified persons and entities.
Customs and Border Protection, and various economic and trade sanctions administered by the U.S. Treasury Department’s Office of Foreign Assets Control. U.S. export control laws and regulations and economic sanctions prohibit the shipment of certain products and services to U.S. embargoed or sanctioned countries, and specified persons and entities.
Factors that may cause these quarterly fluctuations include, without limitation, those listed below: • the timing and magnitude of orders and shipments of our products in any quarter; • decreases in pricing we may adopt to drive market adoption or in response to competitive pressure; • our ability to retain our existing customers and strategic partners and attract new customers and strategic partners; • our ability to develop, introduce, manufacture, and ship, in a timely manner, products that meet customer requirements; • disruptions in our sales channels or termination of our relationships with important channel partners; • delays in customers’ purchasing cycles or deferments of customers’ purchases in anticipation of new products or updates from us or our competitors; • the timing of charges related to impairments of long-lived assets; • non-routine write-downs of inventory; • one time termination benefits and other restructuring costs; • fluctuations in demand for our products; • the mix of products sold or licensed by us in any given quarter; • the duration of the lingering effects of the global COVID-19 pandemic and the time it takes for economic recovery; • the duration or worsening of the military conflicts in Ukraine and the Middle East, and the time it will take for the economic recovery for such impact to occur; • the timing and rate of broader market adoption of ADAS or autonomous systems utilizing our solutions across the automotive and other market sectors; • the timing and scale of the market acceptance of lidar generally; • further technological advancements by our competitors and other market participants; • the ability of our customers and strategic partners to commercialize systems that incorporate our products; • any change in the competitive dynamics of our markets, including consolidation of competitors, regulatory developments, and new market entrants; • our ability to effectively manage or outsource management of our inventory; 14 • changes in the source, cost, availability of, and regulations pertaining to components and materials we use in our products; • impact of foreign currency fluctuations; • adverse litigation, judgments, settlements, or other litigation-related costs, or claims that may give rise to such costs; and • general economic, industry, and market conditions, including trade disputes.
Factors that may cause these quarterly fluctuations include, without limitation: • the timing and magnitude of orders and shipments of our products in any quarter; • decreases in pricing we may adopt to drive market adoption or in response to competitive pressure; • our ability to retain our existing customers and strategic partners and attract new customers and strategic partners; 15 Table of Contents • our ability to develop, introduce, manufacture, and ship, in a timely manner, products that meet customer requirements; • disruptions in our sales channels or termination of our relationships with important channel partners; • delays in customers’ purchasing cycles or deferments of customers’ purchases in anticipation of new products or updates from us or our competitors; • the timing of charges related to impairments of long-lived assets; • non-routine write-downs of inventory; • one time termination benefits and other restructuring costs; • fluctuations in demand for our products; • the mix of products sold or licensed by us in any given quarter; • the duration or worsening of the military conflicts in Ukraine and the Middle East, and the time it will take for the economic recovery for such impact to occur; • the timing and rate of broader market adoption of ADAS or autonomous systems utilizing our solutions across the Automotive and other market sectors; • the timing and scale of the market acceptance of lidar generally; • further technological advancements by our competitors and other market participants; • the ability of our customers and strategic partners to commercialize systems that incorporate our products; • any change in the competitive dynamics of our markets, including consolidation of competitors, regulatory developments, and new market entrants; • our ability to effectively manage or outsource management of our inventory; • changes in the source, cost, availability of, and regulations pertaining to components and materials we use in our products; • impact of foreign currency fluctuations; • adverse litigation, judgments, settlements, or other litigation-related costs, or claims that may give rise to such costs; and • general economic, industry, and market conditions, including trade disputes.
Our transition to being a public company subjects us to significant regulatory oversight and reporting obligations under federal securities laws and the continuous scrutiny of securities analysts and investors.
Being a public company subjects us to significant regulatory oversight and reporting obligations under federal securities laws and the continuous scrutiny of securities analysts and investors.
If we are unable to buy these components in quantities sufficient to meet our requirements on a timely basis, we will not be able to deliver products to our customers, which may result in such customers using competitive products instead of our products. We may face risks associated with our reliance on certain artificial intelligence and machine learning models.
If we are unable to buy these components in quantities sufficient to meet our requirements on a timely basis, we will not be able to deliver products to our customers, which may result in such customers using competitive products instead of our products. 22 Table of Contents We may face risks associated with our reliance on certain deterministic artificial intelligence and machine learning models.
We rely on deterministic artificial intelligence and machine learning models in the development of our solutions for vehicle autonomy, ADAS, and industrial applications. The models that we use are developed or trained using various data sets.
We rely on deterministic artificial intelligence and machine learning models in the development of our solutions for vehicle autonomy, ADAS, and Non-Automotive applications. The models that we use are developed or trained using various data sets.
If any of our third-party manufacturers experience interruptions, delays, or disruptions in supplying our products, including by natural disasters, the lingering effects of the global COVID-19 pandemic, or if other epidemics or outbreaks of other contagions materialize, increased military conflict, especially in Ukraine and the Middle East, or work stoppages or capacity constraints, our ability to ship products would be delayed.
If any of our third-party manufacturers experience interruptions, delays, or disruptions in supplying our products, including by natural disasters, the lingering effects of the global COVID-19 pandemic, or if other epidemics or outbreaks of other contagions materialize, such as “bird flu,” increased military conflict, especially in Ukraine and the Middle East, or work stoppages or capacity constraints, our ability to ship products would be delayed.
A significant natural disaster, such as an earthquake, fire, flood, hurricane, or significant power outage or 30 other similar events, such as infectious disease outbreaks or pandemic events, including the lingering effects of the COVID-19 pandemic, could have an adverse effect on our business and operating results.
A significant natural disaster, such as an earthquake, fire, flood, hurricane, or significant power outage or other similar events, such as infectious disease outbreaks or pandemic events, including the lingering effects of the COVID-19 pandemic or a potential “bird-flu” pandemic, could have an adverse effect on our business and operating results.
We intend to raise additional capital in order to execute our business plan and to respond to changing market conditions, which additional capital may not be available on terms acceptable to us, or at all.
We will need to raise additional capital in order to execute our business plan and to respond to changing market conditions, which additional capital may not be available on terms acceptable to us, or at all.
In the past, including in the fourth quarter of 2023, we took inventory write-downs for obsolete and excess components associated with our decision to wind-down our industrial product line.
In the past, including in the fourth quarter of 2023, we took inventory write-downs for obsolete and excess components associated with our decision to wind-down our Non-Automotive product line.
No assurances can be given that any proceedings or claims will not have a material adverse impact on our operating results and consolidated financial position or that our established reserves or our available insurance will mitigate this impact. 33 Unforeseen issues could result in damage to certain property which could result in adverse effects on our business and reputation.
No assurances can be given that any proceedings or claims will not have a material adverse impact on our operating results and consolidated financial position or that our established reserves or our available insurance will mitigate this impact. 37 Table of Contents Unforeseen issues could result in damage to certain property which could result in adverse effects on our business and reputation.
However, lidar products remain relatively new and it is possible that other sensing modalities, or a new disruptive modality based on new or existing technologies, including a combination of technologies, will achieve acceptance or leadership in the ADAS and autonomous driving space.
However, lidar products for use in the Automotive market remain relatively new and it is possible that other sensing modalities, or a new disruptive modality based on new or existing technologies, including a combination of technologies, will achieve acceptance or leadership in the ADAS and autonomous driving space.
Additionally, under current SEC regulations, if at the time we file this Annual Report on Form 10-K our public float is less than $75 million, and for so long as our public float remains less than $75 million, the amount we can raise through primary public offerings of securities in any twelve-month period using shelf registration statements is limited to an aggregate of one-third of our public float, which is referred to as the “baby shelf” rules.
Additionally, under current SEC regulations, if at the time we file this Annual Report on Form 10-K our public float is less than $75 million, and for so long as our public float remains less than $75 million, the amount we can raise through primary public offerings of securities in any twelve-month period using shelf registration statements on Form S-3 is limited to an aggregate of one-third of our public float, which is referred to as the “baby shelf” rules. 14 Table of Contents As of the date of this Annual Report on Form 10-K, our public float is below $75 million.
The longer the Russia-Ukraine conflict continues and the more damage to Ukrainian infrastructure that occurs, the greater the impact could be on the supply of such raw materials, and the failure to have access to such raw materials could have an adverse effect on our business and results of operations.
The longer the Russia-Ukraine conflict continues and the more damage to Ukrainian infrastructure that occurs, the greater the impact could be on the supply of such raw materials, and the failure to have access to such raw materials could have an adverse effect on our business and results of operations. In addition, the U.S.
Of the approximately $248 million in U.S. federal operating loss carryforwards, approximately $236 million will be carried forward indefinitely for U.S. federal tax purposes and approximately $12 million will begin to expire in 2033. All of our U.S. state net operating loss carryforwards will begin to expire in 2029.
Of the approximately $284 million in U.S. federal operating loss carryforwards, approximately $272 million will be carried forward indefinitely for U.S. federal tax purposes and approximately $12 million will begin to expire in 2033. All of our U.S. state net operating loss carryforwards will begin to expire in 2029.
If we do not prevail in any such disagreements, our profitability may be affected. Our ability to use our net operating loss carryforwards and certain other tax attributes may be limited. As of December 31, 2023, we had approximately $248 million of U.S. federal, and approximately $203 million of state net operating loss carryforwards available to reduce future taxable income.
If we do not prevail in any such disagreements, our profitability may be affected. Our ability to use our net operating loss carryforwards and certain other tax attributes may be limited. As of December 31, 2024, we had approximately $284 million of U.S. federal, and approximately $242 million of state net operating loss carryforwards available to reduce future taxable income.
To the extent autonomous vehicle and ADAS become accepted by major automotive OEMs, we expect that we will rely increasingly for our revenue on Tier 1 suppliers through which automotive OEMs procure components.
To the extent vehicle autonomy and ADAS become accepted by major automotive OEMs, we expect that we will rely increasingly for our revenue on Tier 1 suppliers through which automotive OEMs procure products.
Maintaining such confidence may be particularly complicated by certain factors including those that are largely outside of our control, such as our limited operating history, our ability to continue funding the business through to profitability, customer familiarity with our lidar solutions, any delays in scaling production, delivery, and service operations to meet demand, competition, uncertainty regarding the future of autonomous vehicles, and our production and sales performance compared with market expectations.
Maintaining such confidence may be particularly complicated by certain factors including those that are largely outside of our control, such as our limited operating history, our ability to continue to raise funding for ourselves until we reach profitability, customer familiarity with our lidar solutions, any delays in scaling production, delivery, and service operations to meet demand, competition, uncertainty regarding the future of autonomous vehicles, and our production and sales performance compared with market expectations.
The loss of business from any of our major customers (whether by lower overall demand for our products, component shortages that impact our customers’ production plans or product development plans, cancellation of existing contracts or product orders, or the failure to design in our products, or an award of initial or new business) could have a material adverse effect on our business.
The loss of business from any of our potential customers (whether by lower overall demand for our products, component shortages that impact our customers’ production plans or product development plans, cancellation of existing contracts or product orders, or the failure to design in our products could have a material adverse effect on our business.
You should carefully consider the following risk factors, as well as all of the other information contained in this Annual Report, including “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and our consolidated financial statements and related notes thereto included elsewhere in this Annual Report.
You should carefully consider the following risk factors, as well as all of the other information contained in this Annual Report, including “ Management ’ s Discussion and Analysis of Financial Condition and Results of Operations ” and our consolidated financial statements and related notes thereto included elsewhere in this Annual Report.
Automotive production and sales are highly cyclical and depend on general economic conditions and other factors, including consumer spending and preferences, changes in interest rates (which have recently seen significant increases) and credit availability, changes in inflation rates (which the U.S. has recently experienced), consumer confidence, fuel costs, fuel availability, environmental impact, governmental incentives and regulatory requirements, and political volatility, especially in energy-producing countries and growth markets.
Automotive production and sales are highly cyclical and depend on general economic conditions and other factors, including consumer spending and preferences, changes in interest rates (which significantly increased beginning in 2022) and credit availability, changes in inflation rates (which the U.S. has recently experienced), consumer confidence, fuel costs, fuel availability, environmental impact, tariffs, governmental incentives and regulatory requirements, and political volatility, especially in energy-producing countries and growth markets.
In addition, the recent outbreak of hostilities between Russia and Ukraine, the war in the Middle East, and global reactions thereto have increased U.S. domestic and global energy prices.
In addition, the ongoing hostilities between Russia and Ukraine, the war in the Middle East, and global reactions thereto have increased U.S. domestic and global energy prices.
If our assumptions regarding these risks and uncertainties, which we use to plan and operate our business, are incorrect or change, or if we do not address these risks successfully, our results of operations could differ materially from our expectations and our business, financial condition, and results of operations could be adversely affected. 15 We continue to implement strategic initiatives designed to grow our business.
If our assumptions regarding these risks and uncertainties, which we use to plan and operate our business, are incorrect or change, or if we do not address these risks successfully, our results of operations could differ materially from our expectations and our business, financial condition, and results of operations could be adversely affected.
Therefore, the actual number of shares we will be able to sell to Tumim Stone, the amount of dilution our stockholders will experience upon the sale of our common stock under the CSPA, and the total proceeds that we will derive from such sales, cannot be determined at this time.
Therefore, the actual number of shares we will be able to sell to New Circle, the amount of dilution our stockholders will experience upon the sale of our common stock under the Purchase Agreement, and the total proceeds that we will derive from such sales, cannot be determined at this time.
As a result of the revised automotive-first strategic plan, we have incurred additional costs in the near term, including cash expenditures for separation payments, employee benefits, and related costs.
As a result of revising any strategic plan, we have incurred additional costs in the near term, including cash expenditures for separation payments, employee benefits, and related costs.
We expect that we will continue to incur significant losses through at least the next few years as we: • continue to utilize our third-party partners for design, testing and commercialization; • expand our operations and supply chain capabilities to produce our lidar components and systems, including costs associated with outsourcing the production which, in some instances, requires significant upfront payments by us; • expand our design, development and commercialization; • build up inventories of parts and components for our lidar solutions; and • maintain a level of general and administrative spending to meet the requirements of operating as a public company.
We expect that we will continue to incur significant losses through at least the next few years as we: • continue to utilize our third-party partners for design, testing, and commercialization; • expand our operations and supply chain capabilities to produce our lidar components and systems, including costs associated with outsourcing the production which, in some instances, requires significant upfront payments by us; • expand our design, development, and commercialization; • build up inventories of parts and components for our lidar solutions; and • maintain a level of general and administrative spending to meet the requirements of operating as a public company. 13 Table of Contents As of December 31, 2024, we had an accumulated deficit of approximately $373.1 million.
These initiatives may prove more costly than we currently anticipate and we may not succeed in increasing our revenue in an amount sufficient to offset the costs of these initiatives or to achieve and maintain profitability.
We continue to implement strategic initiatives designed to grow our business. These initiatives may prove more costly than we currently anticipate and we may not succeed in increasing our revenue in an amount sufficient to offset the costs of these initiatives or to achieve and maintain profitability.
These factors include, without limitation: • the extent to which we meet contractual terms and conditions; • the extent to which our technology is successfully integrated into our customers’ vehicles; • the timing of when our customers adopt our technology into their vehicles on a commercial basis which could be delayed for regulatory, safety, or reliability issues unrelated to our technology; • undetected or unknown errors, defects, or reliability issues in our hardware or software which could reduce the market adoption of our existing or new products; 17 • loss of business with respect to, the failure or lack of commercial success of a vehicle model for which we are a significant supplier for reasons unrelated to our technology; • a decline, for any reason, in the production levels of our customers, particularly with respect to models which incorporate our technology; • customer cancellations of their contracts; • if our products are included as part of a vehicle option package, the extent to which end customers select it; and • other risk factors set forth in this Annual Report.
These factors include, without limitation: • the extent to which we meet contractual terms and conditions; • the extent to which our technology is successfully integrated into our customers’ vehicles; • the timing of when our customers adopt our technology into their vehicles on a commercial basis which could be delayed for regulatory, safety, or reliability issues unrelated to our technology; • undetected or unknown errors, defects, or reliability issues in our hardware or software which could reduce the market adoption of our existing or new products; • loss of business with respect to, the failure or lack of commercial success of a vehicle model for which we are a significant supplier for reasons unrelated to our technology; • a decline, for any reason, in the production levels of our customers, particularly with respect to models which incorporate our technology; • customer cancellations of their contracts; • if our products are included as part of a vehicle option package, the extent to which end customers select it; and • other risk factors set forth in this Part I, Item 1A of this Annual Report on Form 10-K. 19 Table of Contents The period of time from a design win to implementation is long and we are subject to the risks of cancellation or postponement of the contract or unsuccessful implementation.
Our R&D expenses were approximately $26.2 million and $37.6 million during the twelve months ended December 31, 2023 and 2022, respectively, and may increase in the future. Because we account for R&D as an operating expense, these expenditures will adversely affect our results of operations in the future.
Our R&D expenses were approximately $16.4 million and $26.2 million during the years ended December 31, 2024 and 2023, respectively, and may increase in the future. Because we account for R&D as an operating expense, these expenditures will adversely affect our results of operations in the future.
If market adoption of lidar does not continue to develop, or adoption is deferred, or otherwise develops more slowly than we expect, our business will be adversely affected. • The complexity of our products could result in unforeseen delays or expenses from undetected defects, errors, or reliability issues in our hardware or software which could reduce the market adoption of our products, damage our reputation with current or prospective customers, and expose us to product liability and other claims, thereby adversely affecting our operating costs. • The average selling prices of our products or our fees or royalties from technology licenses could decrease rapidly over the life of the product or license term, which may negatively affect our revenue and gross margin. • Shareholder activism could cause us to incur significant expense, disrupt our business, result in a proxy contest or litigation, and impact our stock price.
If market adoption of lidar does not continue to develop, or adoption is deferred, or otherwise develops more slowly than we expect, our business will be adversely affected. • The complexity of our products could result in unforeseen delays or expenses from undetected defects, errors, or reliability issues in our hardware or software which could reduce the market adoption of our products, damage our reputation with current or prospective customers, and expose us to product liability and other claims, thereby adversely affecting our operating costs. • Shareholder activism could cause us to incur significant expense, disrupt our business, result in a proxy contest or litigation, and impact our stock price.
At the end of 2023, Continental informed us of its decision to end our existing arrangement as our Tier 1 supplier.
At the end of 2023, Continental informed us of their decision to end our existing arrangement as our Tier 1 partner.
The lingering effects of the COVID-19 pandemic, including associated business interruptions and recovery, as well as other possible epidemics or outbreaks of other contagions could result in a material adverse impact on our or our business operations, or the business operations of our current or anticipated customers and suppliers, including the potential reduction or suspension of operations in the U.S. or other parts of the world.
The lingering effects of the COVID-19 pandemic, including associated business interruptions and recovery, as well as other possible epidemics or outbreaks of other contagions, such as avian influenza, which is more commonly known as “bird flu,” could result in a material adverse impact on our business operations, or the business operations of our current or anticipated customers and suppliers, including the potential reduction or suspension of operations in the U.S. or other parts of the world.
Dussan as of November 15, 2023, who, until that time, was our Chief Technology Officer and Chief Product Strategist, but continues as a member of our Board of Directors, and T.R. Ramachandran, who resigned, effective April 5, 2024, as our Chief Operating Officer.
Dussan as of November 15, 2023, who, until that time, was our Chief Technology Officer and Chief Product Strategist, but continues as a member of our Board of Directors, and T.R.
Since December 6, 2022, our stock had closed below $1.00 per share. As previously disclosed, on January 20, 2023, we received notice from Nasdaq that we were no longer in compliance with the $1.00 per share minimum bid price requirement for continued listing on Nasdaq.
As previously disclosed, on January 20, 2023, we received notice from Nasdaq that we were no longer in compliance with the $1.00 per share minimum bid price requirement for continued listing on Nasdaq.
If the models are incorrectly designed, the data we use to train them is incomplete, inadequate, or biased in some way, or if we do not have sufficient rights to use the data on which our models rely, the performance of our products, services, and business, as well as our reputation, could suffer or we could incur liability through the violation of laws, third-party privacy or other rights, or contracts to which we are a party. 20 Our outsourced manufacturing business model for the industrial market may not be successful, which could harm our ability to deliver products and recognize revenue in the industrial market.
If the models are incorrectly designed, the data we use to train them is incomplete, inadequate, or biased in some way, or if we do not have sufficient rights to use the data on which our models rely, the performance of our products, services, and business, as well as our reputation, could suffer or we could incur liability through the violation of laws, third-party privacy or other rights, or contracts to which we are a party.
An adverse determination also could invalidate our intellectual property rights and could adversely affect our ability to offer our products to our customers and may require that we procure or develop substitute products that do not infringe, which could require significant effort and expense. Any of these events could adversely affect our business, operating results, financial condition, and prospects.
An adverse determination also could invalidate our intellectual property rights and could adversely affect our ability to offer our products to our customers and may require that we procure or develop substitute products that do not infringe, which could require significant effort and expense.
Should we decide to sell our common stock to Tumim Stone, stockholders will experience dilution of their interest in us, which dilution will be heightened if the price at which we sell common stock is low, as there is no minimum price at which we can sell our common stock under the CSPA.
Should we decide to sell our common stock to New Circle, existing stockholders at such time will experience dilution of their interest in us, which dilution will be heightened if the price at which we sell common stock is low, as there is no minimum price at which we can sell our common stock under the Purchase Agreement.
Our management team has limited experience managing a public company. Most of the members of our management team have limited experience managing a publicly traded company, interacting with public company investors, and complying with the increasingly complex laws pertaining to public companies.
Our management team has limited experience managing a public company. Most of the members of our management team have limited experience managing a publicly traded company, interacting with public company investors, and complying with the increasingly complex laws pertaining to public companies. Our management team may not successfully or efficiently manage their roles and responsibilities.

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Item 1C. Cybersecurity

Cybersecurity — threats and controls disclosure

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Biggest changeFor more information about these risks, see the risk factor within Item 1A "Risk Factors" in this Annual Report on Form 10-K, entitled "We, as well as our suppliers and partners, are subject to cybersecurity risks to operational systems, infrastructure, integrated software in our lidar solutions, and the data processed by those solutions, and any material failure, weakness, interruption, cyber event, incident, or breach of security could adversely affect our business by causing a disruption of our operations, a compromise or corruption of our confidential or other business-critical information, and/or damage our business relationships, all of which could negatively impact our business financial condition, and operating results." Cybersecurity Governance Cybersecurity risks are among the enterprise risks that our Board of Directors oversees, primarily through delegation to the Audit Committee of the Board.
Biggest changeFor more information about these risks, see the risk factor within Item 1A "Risk Factors" in this Annual Report on Form 10-K, entitled "We, as well as our suppliers and partners, are subject to cybersecurity risks to operational systems, infrastructure, integrated software in our lidar solutions, and the data processed by those solutions, and any material failure, weakness, interruption, cyber event, incident, or breach of security could adversely affect our business by causing a disruption of our operations, a compromise or corruption of our confidential or other business-critical information, and/or damage our business relationships, all of which could negatively impact our business financial condition, and operating results." 48 Table of Contents Cybersecurity Governance Cybersecurity risks are among the enterprise risks that our Board of Directors oversees, primarily through delegation to the Audit Committee of the Board.
However, despite our efforts, we cannot eliminate all risks from cybersecurity 42 threats, or provide assurances that we have not experienced an undetected cybersecurity incident.
However, despite our efforts, we cannot eliminate all risks from cybersecurity threats, or provide assurances that we have not experienced an undetected cybersecurity incident.
Our Director of IT has served in this position for 5 years. He has over 38 years of IT experience, including over 10 years of experience in security compliance.
Our Director of IT has served in this position for 6 years. He has over 39 years of IT experience, including over 10 years of experience in security compliance.

Item 2. Properties

Properties — owned and leased real estate

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Biggest changeItem 2. Properties Our corporate headquarters is located in Dublin, California, where we lease 56,549 square feet pursuant to a lease that initially expires on December 1, 2026, unless we choose to exercise a five-year renewal option. The Dublin facility contains engineering, R&D, operations, customer support, marketing, and administrative functions.
Biggest changeItem 2. Properties Our corporate headquarters is located in Pleasanton, California, where we lease 6,522 square feet pursuant to a lease that initially expires on November 30, 2027, unless we choose to exercise a five-year renewal option. The Pleasanton facility contains engineering, R&D, operations, customer support, marketing, and administrative functions.

Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

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Biggest changeWe are not currently a party to any actions, claims, suits or other legal proceedings the outcome of which, if determined adversely to us, would individually or in the aggregate have a material effect on our business, financial condition, and results of operations.
Biggest changeOther than as stated above, we are not currently a party to any actions, claims, suits or other legal proceedings the outcome of which, if determined adversely to us, would individually or in the aggregate have a material effect on our business, financial condition, and results of operations.
Item 3. Legal Proceedings From time to time, we may become involved in actions, claims, suits, and other legal proceedings arising in the ordinary course of our business, including assertions by third parties relating to intellectual property infringement, breaches of contract or warranties, or employment-related matters.
In addition, from time to time, we may become involved in actions, claims, suits, and other legal proceedings arising in the ordinary course of our business, including assertions by third parties relating to intellectual property infringement, breaches of contract or warranties, or employment-related matters.
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Item 3. Legal Proceedings In or about July of 2024, AEye, Inc.’s wholly owned subsidiary, AEye Technologies, Inc.
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(“AEye Tech,” formerly known as AEye, Inc.) surrendered possession of the premises as described in that certain Office Lease dated April 26, 2019 (the “Lease”), entered into by and between the predecessor-in-interest to IGEP Park Place, LLC, as landlord (the “Landlord”) and AEye Tech, as tenant.
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A copy of the Lease was filed as Exhibit 10.8 to the Registration Statement on Form S-4 filed with the U.S. Securities and Exchange Commission on May 13, 2021.
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In connection with AEye Tech’s surrender of possession, AEye Tech was purported to be served with a complaint that was filed in the Superior Court of California for the County of Alameda on August 26, 2024 (the “Complaint”) that (1) alleges AEye Tech is in breach of the Lease because of, among other things, AEye Tech’s failure to pay rent as required by the Lease and (2) provides notice to AEye Tech that the Lease had been terminated by the Landlord.
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The Complaint does not quantify the damages sought thereunder, however, as discovery in the litigation has only recently commenced, the only quantification of damages is the Landlord’s informal demand at the outset of the litigation of approximately $4.35 million, which is net of the $2.15 million security deposit retained by the Landlord.
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If we are unable to resolve the purported default under the Lease and AEye, Inc. is subsequently found liable for the amounts claimed by the Landlord that are allegedly owed to it by AEye Tech, it could have a material adverse effect on AEye, Inc.’s liquidity, financial condition, and results of operations.

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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Biggest changeStockholders As of March 20, 2024, we had approximately 61 holders of record of our common stock and thousands of additional beneficial holders. Because many of our shares of common stock are held by brokers and other institutions on behalf of stockholders, we are unable to estimate the total number of stockholders represented by these record holders.
Biggest changeStockholders As of February 18, 2025, we had approximately 57 holders of record of our common stock and thousands of additional beneficial holders. Because many of our shares of common stock are held by brokers and other institutions on behalf of stockholders, we are unable to estimate the total number of stockholders represented by these record holders.
Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities Market Information for Common Stock Our common stock has been listed on The Nasdaq Global Select Market under the symbol “LIDR” since we started trading on the public markets following the close of the business combination on August 16, 2021.
Item 5. Market for Registrant ’ s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities Market Information for Common Stock Our common stock has been listed on The Nasdaq Global Select Market under the symbol “LIDR” since we started trading on the public markets following the close of the business combination on August 16, 2021.

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

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Biggest changeThe following table sets forth our consolidated results of operations data for the years ended December 31, 2023 and 2022 (in thousands, except for percentages): Year ended December 31, Change Change 2023 2022 $ % Prototype sales $ 477 $ 1,743 $ (1,266) (73) % Development contracts 987 1,904 (917) (48) % Total revenue 1,464 3,647 (2,183) (60) % Cost of revenue 15,319 8,732 6,587 75 % Gross loss (13,855) (5,085) (8,770) 172 % Research and development 26,171 37,644 (11,473) (30) % Sales and marketing 12,528 19,317 (6,789) (35) % General and administrative 25,234 36,762 (11,528) (31) % Impairment of long-lived assets 9,988 — 9,988 100 % Total operating expenses 73,921 93,723 (19,802) (21) % Loss from operations (87,776) (98,808) 11,032 (11) % Change in fair value of convertible note and warrant liabilities (858) (14) (844) 6,029 % Interest income and other 1,317 1,545 (228) (15) % Interest expense and other 248 (1,379) 1,627 (118) % Total other income (expense), net 707 152 555 365 % Provision for income tax expense 57 58 (1) (2) % Net loss $ (87,126) $ (98,714) $ 11,588 (12) % Revenue Prototype Sales Prototype sales decreased by $1,266, or 73%, to $477 for the year ended December 31, 2023 from $1,743 for the year ended December 31, 2022.
Biggest changeThe following table sets forth our consolidated results of operations data for the years ended December 31, 2024 and 2023 (in thousands, except for percentages): Year ended December 31, Change Change 2024 2023 $ % Prototype sales $ 97 $ 477 $ (380 ) (80 )% Development contracts 105 987 (882 ) (89 )% Total revenue 202 1,464 (1,262 ) (86 )% Cost of revenue 778 15,319 (14,541 ) (95 )% Gross loss (576 ) (13,855 ) 13,279 (96 )% Research and development 16,389 26,171 (9,782 ) (37 )% Sales and marketing 551 12,528 (11,977 ) (96 )% General and administrative 18,312 25,234 (6,922 ) (27 )% Impairment of long-lived assets — 9,988 (9,988 ) (100 )% Total operating expenses 35,252 73,921 (38,669 ) (52 )% Loss from operations (35,828 ) (87,776 ) 51,948 (59 )% Change in fair value of convertible note and warrant liabilities — (858 ) 858 (100 )% Interest income and other 799 1,317 (518 ) (39 )% Interest expense and other (433 ) 248 (681 ) (275 )% Total other income (expense), net 366 707 (341 ) (48 )% Loss before income tax (35,462 ) (87,069 ) 51,607 (59 )% (Benefit) provision for income tax (2 ) 57 (59 ) (104 )% Net loss $ (35,460 ) $ (87,126 ) $ 51,666 (59 )% Revenue Prototype Sales Prototype sales decreased by $380, or 80%, to $97 for the year ended December 31, 2024 from $477 for the year ended December 31, 2023.
We consider design wins to be critical to our future success, although the revenue that may be generated by each design win and the time necessary to achieve such a win can vary significantly, making it difficult to predict our financial performance.
We consider design wins to be critical to our future success, although the revenue that may be generated by each design win and the time necessary to achieve such a design win can vary significantly, making it difficult to predict our financial performance.
Change in Fair Value of Convertible Note and Warrant Liabilities Changes in fair value of the 2022 Note and warrant liabilities are the result of the change in fair value at each reporting date.
Change in Fair Value of Convertible Note and Warrant Liabilities The changes in fair value of the 2022 Note and warrant liabilities are the result of the change in fair value at each reporting date.
Given the current macroeconomic environment, OEMs appear to be more cautious about their capital spending and investments into new technologies and as a result we have seen the timelines delayed for certain opportunities which may negatively impact the time for us to reach positive cash flows from operations.
Given the current macroeconomic environment, OEMs appear to be more cautious about their capital spending and investments into new technologies and as a result we have seen the timelines for certain opportunities delayed which may negatively impact the time for us to reach positive cash flows from operations.
If we fail to do this, our market position and revenue may be adversely affected, and our investments in that area will not be recovered. Basis of Presentation We currently conduct our business through one operating segment. 47 Components of Results of Operations Total Revenues We categorize our revenue as (1) prototype sales and (2) development contracts.
If we fail to do this, our market position and revenue may be adversely affected, and our investments in that area will not be recovered. Basis of Presentation We currently conduct our business through one operating segment. Components of Results of Operations Total Revenues We categorize our revenue as (1) prototype sales and (2) development contracts.
S&M expenses include: • personnel-related expenses, including salaries, benefits, bonuses, one time termination benefits, and stock-based compensation expense; • demonstration equipment; • trade shows expenses, advertising, and promotions expenses for press releases and other public relations services; and 48 • allocated overhead expenses.
S&M expenses include: • personnel-related expenses, including salaries, benefits, bonuses, one time termination benefits, and stock-based compensation expense; • demonstration equipment; • trade shows expenses, advertising, and promotions expenses for press releases and other public relations services; and • allocated overhead expenses.
The number of outstanding warrants were also proportionately adjusted. In connection with the Reverse Stock Split, there was no change to the shares authorized or in the par value per share of $0.0001.
The number of outstanding warrants was also proportionately adjusted. In connection with the Reverse Stock Split, there was no change to the number of shares authorized or in the par value per share of $0.0001.
All dollar amounts expressed in this Management’s Discussion and Analysis of Financial Condition and Results of Operations are in thousands of dollars, except for per share amounts and unless otherwise specified. Reverse Stock Split On December 27, 2023, we effected a 1-for-30 reverse stock split of its issued and outstanding shares of common stock (the "Reverse Stock Split").
All dollar amounts expressed in this Management’s Discussion and Analysis of Financial Condition and Results of Operations are in thousands of dollars, except for per share amounts and unless otherwise specified. Reverse Stock Split On December 27, 2023, we effected a 1-for-30 reverse stock split of our issued and outstanding shares of common stock (the "Reverse Stock Split").
Overview This overview provides a high-level discussion of our operating results and some of the trends that affect our business. We believe that an understanding of these trends is important to understanding our financial results for fiscal year 2023, as well as our future prospects.
Overview This overview provides a high-level discussion of our operating results and some of the trends that affect our business. We believe that an understanding of these trends is important to understanding our financial results for fiscal year 2024, as well as our future prospects.
In the Industrial market, our strategy has been to sell our lidar solutions to customers utilizing components that are sourced, in part, from the Tier 2 automotive supply chain and assembled by our contract manufacturing partners.
In the Non-Automotive market, our strategy has been to sell our lidar solutions to customers utilizing components that are sourced, in part, from the Tier 2 automotive supply chain and assembled by our contract manufacturing partners.
In the fourth quarter of 2023 we determined that an accumulation of triggering events, including the winding down of our existing industrial product as a result of the implementation of our automotive-first strategic plan to focus on commercialization of our automotive product, the termination of our partnership with a large Tier 1 automotive supplier, and a current period and history of cash flow losses, required an impairment review of our long-lived assets, resulting in our long-lived assets being written down to their fair values.
In the fourth quarter of 2023 we determined that an accumulation of triggering events, including the winding down of our legacy Non-Automotive product as a result of the implementation of our automotive-first strategic plan to focus on commercialization of our automotive product, the termination of our partnership with a large Tier 1 automotive supplier, and a current period and history of cash flow losses, required an impairment review of our long-lived assets, resulting in our long-lived assets being written down to their fair values.
In December 2021, we entered into a Common Stock Purchase Agreement, or CSPA, with Tumim Stone Capital LLC, or Tumim Stone, pursuant to which we have the right, but not the obligation, to issue and sell to Tumim Stone over a 36-month period up to $125,000 of our common stock.
In December 2021, we entered into a Purchase Agreement, with Tumim Stone Capital LLC, or Tumim Stone, pursuant to which we had the right, but not the obligation, to issue and sell to Tumim Stone over a 36-month period up to $125,000 of our common stock.
We performed an impairment review of our long-lived assets as of December 31, 2023 and wrote down our property and equipment and the ROU asset and leasehold improvements related to our headquarters to fair value.
We performed an impairment review of our long-lived assets as of December 31, 2023 and wrote down our property and equipment and the ROU asset and leasehold improvements related to the prior headquarters lease to its fair value.
In September 2022, we entered into a Securities Purchase Agreement, or SPA, with an investor allowing for the sale and issuance of two convertible notes, each with cash proceeds of $10,000, for a total of $20,000 in proceeds between the two issuances (each, a "Note Closing").
In September 2022, we entered into a Securities Purchase Agreement with an investor allowing for the sale and issuance of up to two convertible notes, each with cash proceeds of $10,000, for a total of $20,000 in proceeds between the two issuances (each, a "Note Closing").
For additional information regarding our cash requirements from lease obligations and contractual obligations, see Notes 6 and 20 in the Notes to the Consolidated Financial Statements in Item 8 of Part II of this Annual Report on Form 10-K.
For additional information regarding our cash requirements from lease obligations, lease termination liability, and contractual obligations, see Notes 6 and 21 in the Notes to the Consolidated Financial Statements in Item 8 of Part II of this Annual Report on Form 10-K.
Sales and Marketing Our sales and marketing, or S&M, efforts are focused primarily on sales, business development, and marketing programs in pursuit of revenue contracts from potential and existing customers.
Sales and Marketing Historically, our sales and marketing, or S&M, efforts were focused primarily on sales, business development, and marketing programs in pursuit of revenue contracts from potential and existing customers.
As a result of the implementation of both phases of our revised strategic plan and the impairment review, we recorded restructuring charges of $19,153 in the twelve months ended December 31, 2023 primarily relating to one-time employee termination benefits, inventory and other current asset write-downs, losses on purchase commitments, and impairment and disposal charges on our long-lived assets.
As a result of the implementation of our revised strategic plan and the impairment review of our long-lived assets, we recorded restructuring charges of $19,153 for the year ended December 31, 2023 primarily relating to one-time employee termination benefits, inventory and other current asset write-downs, losses on purchase commitments, and impairment and disposal charges on our long-lived assets.
To date, our revenue has been generated through development contracts with OEMs and Tier 1 suppliers, as well as unit sales of our products to Industrial customers.
To date, our revenue has primarily been generated through development contracts with OEMs and Tier 1 suppliers, as well as unit sales of our products to Non-Automotive customers.
The primary factors affecting net cash provided by investing activities during this period were proceeds from redemptions and maturities of marketable securities of $76,350, partially offset by the purchases of marketable securities of $19,331 and purchases of property and equipment of $1,951. For the year ended December 31, 2022, net cash provided by investing activities was $68,463.
The primary factors affecting net cash provided by investing activities during this period were proceeds from redemptions and maturities of marketable securities of $76,350, partially offset by the purchases of marketable securities of $19,331 and purchases of property and equipment of $1,951. Financing Activities For the year ended December 31, 2024, net cash provided by financing activities was $10,060.
Recent Accounting Pronouncements See Note 1 to our consolidated f inancial statements included elsewhere in this Annual Report on Form 10-K for recently adopted accounting pronouncements and recently issued accounting pronouncements not yet adopted as of the date of this Annual Report on Form 10-K.
Recent Accounting Pronouncements See Note 1 to our consolidated financial statements included elsewhere in this Annual Report on Form 10-K for recently adopted accounting pronouncements and recently issued accounting pronouncements not yet adopted as of the date of this Annual Report on Form 10-K. 61 Table of Contents
Because of the size and complexity of these OEM programs, having Tier 1 partnerships would provide a substantial competitive advantage over our competitors given their large scale, mass-production capabilities, and existing OEM customer relationships.
Because of the size and complexity of these OEM programs, having Tier 1 partnerships should provide a substantial competitive advantage over our competitors given their large scale, mass-production capabilities, and existing OEM relationships held by our Tier 1 partners.
It is essential that we continually identify and respond to rapidly evolving customer requirements, develop and introduce innovative new products, enhance and service existing products, lower BOM costs, industrialize, and generate strong market demand for our products.
It is essential that we continually identify and respond to rapidly evolving customer requirements, develop and introduce innovative new products, enhance and service existing products, lower bill of materials, or BOM costs, industrialize, the manufacturing process, and generate strong market demand for our products.
Management’s Discussion and Analysis of Financial Condition and Results of Operations Please read the following discussion and analysis of our financial condition and results of operations together with “Note about Forward-Looking Statements,” Part I, Item 1 “Business,” Part I, Item 1A “Risk Factors,” and our consolidated financial statements and related notes included under Item 8 of this Annual Report on Form 10-K.
Management ’ s Discussion and Analysis of Financial Condition and Results of Operations Please read the following discussion and analysis of our financial condition and results of operations together with “ Note about Forward-Looking Statements, ” Part I, Item 1 “ Business, ” Part I, Item 1A “ Risk Factors, ” and our consolidated financial statements and related notes included under Item 8 of this Annual Report on Form 10-K.
In the Automotive market, we will utilize a licensing model with Tier 1 suppliers which is intended to generate a royalty for us and, hence, can be more easily replicated with multiple Tier 1 suppliers.
In the Automotive market, we will utilize a licensing model with Tier 1 suppliers that would generate a royalty for us and, hence, can be more easily replicated with multiple Tier 1 suppliers.
Cash used was offset by cash provided by decreases in prepaid and other current assets, accounts receivable, and other noncurrent assets of $2,279, $451 and $284, respectively, and an increase in accounts payable of $252. For the year ended December 31, 2022, net cash used in operating activities was $71,649.
Cash used was offset by cash provided by decreases in prepaid and other current assets, accounts receivable, and other noncurrent assets of $2,279, $451, and $284, respectively, and an increase in accounts payable of $252. Investing Activities For the year ended December 31, 2024, net cash provided by investing activities was $7,744.
The winding down of our existing industrial product, combined with an accumulation of other triggering events such as the termination of our partnership with a large Tier 1 automotive supplier, and a current period and history of cash flow losses, indicated that the carrying amount of our long-lived assets may not be recoverable.
The winding down of our legacy Non-Automotive product, combined with an accumulation of other triggering events such as the termination of our partnership with Continental, and a current period and history of cash flow losses, indicated that the carrying amount of our long-lived assets may not be recoverable.
Delays of autonomy programs by OEMs that we are currently or will be working with through our Tier 1 partners could result in us being unable to achieve our revenue and profitability targets in the timeframe we anticipate.
Delays in autonomy programs by OEMs that we are currently or plan to be working with through our Tier 1 partners could result in us being unable to achieve our revenue and profitability targets in the time frame we anticipate, or at all.
In the Automotive market for example, which accounted for 70% and 52% of revenue in 2023 and 2022, respectively, our growth and financial performance will be heavily influenced by our ability to successfully integrate into OEM programs that require years of development, testing, and validation.
In the Automotive market for example, which accounted for an insignificant portion of our revenues in 2024 and 70% of our revenues in 2023, our growth and financial performance will be heavily influenced by our ability to successfully integrate into OEM programs that require years of development, testing, and validation.
Liquidity and Capital Resources Sources of Liquidity Our capital requirements will depend on many factors, including, but not exclusively, sales volume and timing of revenue, our efforts to find a replacement Tier 1 automotive supplier and the timing of an OEM design win, our ability to extend our cash runway based on the restructuring initiatives announced this year, the timing and extent of spending to support R&D efforts, how quickly we can commercialize our products , and market adoption of new and enhanced products and features.
Liquidity and Capital Resources Sources of Liquidity Our capital requirements will depend on many factors, including, but not exclusively, sales volume and timing of revenue, our efforts to establish and maintain relationship with one or more Tier 1 automotive suppliers and the timing of an OEM design win, our ability to extend our cash runway based on the restructuring initiatives announced in the previous year, the timing and extent of spending to support R&D efforts, how quickly we can commercialize our products, and market adoption of new and enhanced products and features.
In 2023 and 2022, our prototype sales revenue primarily related to unit sales of our 4Sight product. Revenue from prototype sales is typically recognized at a point in time when the control of goods is transferred to the customer, generally upon delivery or shipment to the customer. Development contracts represented the majority of our total revenues in 2023 and 2022.
In 2024 and 2023, our prototype sales revenue primarily related to unit sales of our 4Sight TM product. Revenue from prototype sales is typically recognized at a point in time when the control of goods is transferred to the customer, generally upon delivery or shipment to the customer.
Change in Fair Value of Convertible Note and Warrant Liabilities Change in fair value of convertible note and warrant liabilities decreased by $844, or 6,029%, to a loss of $858 for the year ended December 31, 2023, from a loss of $14 for the year ended December 31, 2022.
Change in Fair Value of Convertible Note and Warrant Liabilities Change in fair value of convertible note and warrant liabilities decreased by $858, or 100%, to zero for the year ended December 31, 2024, from a loss of $858 for the year ended December 31, 2023.
This decrease was primarily due to less interest earned on our marketable securities in the current period. Interest Expense and Other Interest expense and other decreased by $1,627, or 118%, to a gain of $248 for the year ended December 31, 2023, from a loss of $1,379 for the year ended December 31, 2022.
This decrease was primarily due to less interest earned on our marketable securities in the current period. Interest Expense and Other Interest expense and other increased by $681, or 275%, to a loss of $433 for the year ended December 31, 2024, from a gain of $248 for the year ended December 31, 2023.
The 2022 Note and warrant liabilities are recorded at fair value for each reporting period, and the changes in fair value are reported within other income (expense), net during the period. We also elected to record interest expense on the 2022 Note as changes in fair value.
The 2022 Note and warrant liabilities are recorded at fair value for each reporting period, and the changes in fair value are reported within other income (expense), net during the period.
Provision for Income Tax Expense Provision for income tax expenses decreased to $57 for the year ended December 31, 2023, from $58 for 51 the year ended December 31, 2022. This change is due to changes in pretax income (loss) in the U.S. and certain foreign entities and changes in tax rates.
(Benefit) Provision for Income Tax (Benefit) provision for income tax decreased to a benefit of $2 for the year ended December 31, 2024, from a provision of $57 for the year ended December 31, 2023. This change is due to changes in pretax income (loss) in the U.S. and certain foreign entities and changes in tax rates.
Because our technology must be integrated into a broader solution by our customers, it is critical that we achieve design wins with these customers. The time to achieve a design wins varies based on the market and application.
Partnerships and Commercialization Our technology is designed to be a key enabler in certain Automotive and Non-Automotive market applications. Because our technology must be integrated into a broader solution by our customers, it is critical that we achieve design wins with these customers. The time to achieve a design win varies based on the market and application.
This decrease was primarily driven by the implementation of our revised strategic plan, with decreases in personnel costs of $2,250, stock-based compensation of $1,703, marketing and consultant spend of $1,507, travel and entertainment expense of $721, and information technology and facilities expense of $550.
This decrease was primarily driven by the implementation of our revised strategic plan, with decreases in personnel costs of $5,853, stock-based compensation of $2,746, marketing and consultant spend of $2,090, travel and entertainment expenses of $446, and information technology and facilities expense of $642.
We believe price is becoming a critical differentiator in the marketplace and OEMs are favoring companies that have the infrastructure to build lower cost products at higher volumes.
This is further dependent on the investments we make in research and development and our ability to commercialize our products. We believe price is becoming a critical differentiator in the marketplace and OEMs are favoring companies that have the infrastructure to build lower cost products at higher volumes.
On May 6, 2022, we filed a Registration Statement on Form S-1, which related to the offer and resale of up to 1,028,847 shares of our common stock to be purchased by Tumim Stone, pursuant to the CSPA. As of December 31, 2023, 67,754 shares have been issued under this CSPA.
On May 6, 2022, we filed a Registration Statement on Form S-1, which related to the offer and resale of up to 1,028,847 shares of our common stock to be purchased by Tumim Stone, pursuant to the Purchase Agreement.
We may also be unable to raise additional capital through the sale of securities and debt financing, or to do so on terms that are favorable to us, particularly given current capital market and overall macroeconomic conditions.
We may also be unable to raise additional capital through the sale of securities and debt financing, or to do so on terms that are favorable to us, particularly given current capital market and overall macroeconomic conditions. We are dependent upon raising additional capital to provide the cash necessary to continue our ongoing operations and execute against our strategic objectives.
Impairment of Long-Lived Assets Impairment of long-lived assets increased to $9,988 for the year ended December 31, 2023, from $0 for the year ended December 31, 2022 primarily as a result of the non-cash impairment of property and equipment and right-of-use assets.
Impairment of Long-Lived Assets Impairment of long-lived assets decreased to zero for the year ended December 31, 2024, from $9,988 for the year ended December 31, 2023, primarily as a result of the non-cash impairment of property and equipment and right-of-use assets that occurred in 2023, but no similar event in 2024.
Key Factors Affecting AEye’s Operating Results We believe that our future performance and success depends to a substantial extent on our ability to capitalize on the opportunities described herein, which in turn are subject to significant risks and challenges, including those discussed below and the risk factors described in the section of this Annual Report on Form 10-K entitled “Risk Factors.” We are subject to those risks common in the technology industry and also those risks common to early stage companies including, but not limited to: • the possibility of not being able to successfully develop or commercialize our products; • securing additional capital in a timely manner in order to meet operating cash flow needs; doing so on terms that are favorable to us, or at all, may be challenging given the current capital markets and overall macroeconomic conditions; • maintain and establish relationships with one or more Tier 1 automotive suppliers to facilitate "design wins" with potential end customers, which in our case are automotive OEMs; • develop and protect our intellectual property; • comply with existing and new or modified laws and regulations applicable to our business; • maintain and enhance the value of our reputation and brand; • hire, integrate, and retain talented people at all levels of our organization; and • successfully develop new solutions to enhance the experience of, and deliver value to, our customers.
We are subject to those risks common in the technology industry and also those risks common to early stage companies including, but not limited to: • the possibility of not being able to successfully develop or commercialize our products; • securing additional capital in a timely manner in order to meet operating cash flow needs; doing so on terms that are favorable to us, or at all, which may be challenging given the current capital markets and overall macroeconomic conditions; • maintain and establish relationships with one or more Tier 1 automotive suppliers to facilitate "design wins" with potential end customers, which in our case are automotive OEMs; • develop and protect our intellectual property; • comply with existing and new or modified laws and regulations applicable to our business; • maintain and enhance the value of our reputation and brand; • hire, integrate, and retain talented people at all levels of our organization; and • successfully develop new solutions to enhance the experience of, and deliver value to, our customers. 51 Table of Contents Market Trends and Uncertainties We anticipate growing demand for our 4Sight TM Intelligent Sensing Platform across two major markets, Automotive and Non-Automotive.
Revenue from development and/or collaboration arrangement contracts are earned from R&D activities and collaboration with OEMs and Tier 1 suppliers. These contracts primarily focus on customization of our proprietary 4Sight capabilities to our customers’ applications, typically involving software implementation to assist with sensor connection and control, customization of scan patterns, and enhancement of perception capabilities to meet specific customer needs.
These contracts primarily focus on customization of our proprietary 4Sight TM capabilities to our customers’ applications, typically involving software implementation to assist with sensor connection and control, customization of scan patterns, and enhancement of perception capabilities to meet specific customer needs.
This was primarily due to a decrease in units sold of our 4Sight™-based industrial product due to bid delays from various customers and our focus on key automotive milestones. Development Contracts Development contracts decreased by $917, or 48%, to $987 for the year ended December 31, 2023, from $1,904 for the year ended December 31, 2022.
This was primarily due to a decrease in units sold of our 4Sight™-based Non-Automotive product due to our focus in 2024 on executing key automotive product development milestones. Development Contracts Development contracts decreased by $882, or 89%, to $105 for the year ended December 31, 2024, from $987 for the year ended December 31, 2023.
This decrease was primarily driven by the implementation of our revised strategic plan, with decreases in third party research and development work of $4,459, personnel costs of $2,974, engineering parts and lab equipment expense of $2,419, information technology and facilities expense of $707, stock-based compensation expense of $379, and travel and entertainment expense of $292.
This decrease was primarily driven by the implementation of our revised strategic plan in 2023, with decreases in personnel costs of $4,055, stock-based compensation expense of $3,388, information technology and facilities expense of $778, engineering parts and lab equipment expense of $639, depreciation expense of $567, and third party research and development work of $534.
Operating Expenses Research and Development Our research and development, or R&D, efforts are focused primarily on hardware, software, and system engineering related to the design and development of our advanced lidar solutions.
Costs associated with development contracts include the direct costs and allocation of overhead costs involved in the execution of the contracts. 54 Table of Contents Operating Expenses Research and Development Our research and development, or R&D, efforts are focused primarily on hardware, software, and system engineering related to the design and development of our advanced lidar solutions.
As is common in early-stage companies with limited operating histories, we are subject to risks and uncertainties such as those described in Part I, Item 1A of this Annual Report on Form 10-K. Since inception, we have incurred net losses and negative cash flows from operations and expect to continue incurring losses until after we reach commercialization.
As is common in early-stage companies with limited operating histories, we are subject to risks and uncertainties such as those described in Part I, Item 1A of this Annual Report on Form 10-K.
We expect development contracts to remain a significant part of our business in the near-term, but represent a smaller share of our total revenue over time, as we increase our focus on technology licensing in the Automotive market and over time leverage the economies of scale we achieve to move into other markets.
We expect development contracts to remain a significant part of our business in the near-term, but represent a smaller share of our total revenue over time, as we increase our focus on technology licensing in the Automotive market and over time leverage the economies of scale we achieve to move into other markets including the Non-Automotive market. 53 Table of Contents Investment and Innovation Our proprietary adaptive, intelligent lidar technology delivers industry-leading performance, addressing the toughest challenges in achieving partial or full autonomy.
Such costs for prototypes include direct materials, direct labor, indirect labor, inventory write downs, losses on purchase commitments, warranty expense, and allocation of overhead. Costs associated with development contracts include the direct costs and allocation of overhead costs involved in the execution of the contracts. We expect our 2024 costs of revenue to fluctuate in line with 2024 revenues.
Cost of Revenue Cost of revenue includes the costs directly associated with the production of prototypes and certain costs associated with development contracts. Such costs for prototypes include direct materials, direct labor, indirect labor, inventory write downs, losses on purchase commitments, warranty expense, and allocation of overhead.
Sales and Marketing Total sales and marketing expenses decreased by $6,789, or 35%, to $12,528 for the year ended December 31, 2023, from $19,317 for the year ended December 31, 2022.
Sales and Marketing Total sales and marketing expenses decreased by $11,977, or 96%, to $551 for the year ended December 31, 2024, from $12,528 for the year ended December 31, 2023.
General and Administrative Total general and administrative expenses decreased by $11,528, or 31%, to $25,234 for the year ended December 31, 2023, from $36,762 for the year ended December 31, 2022.
General and Administrative Total general and administrative expenses decreased by $6,922, or 27%, to $18,312 for the year ended December 31, 2024, from $25,234 for the year ended December 31, 2023.
The decrease was primarily due to less revenue recognized in the current year from a Tier 1 automotive supplier contract as we fulfilled our obligations in the fourth quarter of 2023. Cost of Revenue Cost of revenue increased by $6,587, or 75%, to $15,319 for the year ended December 31, 2023, from $8,732 for the year ended December 31, 2022.
The decrease was primarily due to lower development contract revenue as we fulfilled our obligations under a Tier 1 automotive supplier contract in the fourth quarter of 2023. 56 Table of Contents Cost of Revenue Cost of revenue decreased by $14,541, or 95%, to $778 for the year ended December 31, 2024, from $15,319 for the year ended December 31, 2023.
This decrease was primarily due to changes in fair value of the 2022 Note between the periods partially offset by a favorable change in fair value on warrant liabilities. Interest Income and Other Interest income and other decreased by $228, or 15%, to $1,317 for the year ended December 31, 2023, from $1,545 for the year ended December 31, 2022.
This decrease was primarily due to settlement of the 2022 Note in 2023 and an immaterial change in the fair value of warrant liabilities in 2024. 57 Table of Contents Interest Income and Other Interest income and other decreased by $518, or 39%, to $799 for the year ended December 31, 2024, from $1,317 for the year ended December 31, 2023.
This provides us with multiple opportunities for sustained growth by enabling new applications and product features across these market segments. However, as our customers continue their R&D projects to commercialize solutions that rely on lidar technology, it is difficult to estimate the timing of ultimate end markets and customer adoption.
However, as our customers continue their R&D projects to commercialize solutions that rely on lidar technology, it is difficult to estimate the timing of ultimate end market demand and customer adoption.
During the third and fourth quarters of 2023, we recorded inventory write-downs of $7,005 relating to the transition to certain higher grade components in our automotive products as well as the winding down of our existing product line for the Industrial market.
Our gross margins have in the past and may continue to be negatively impacted by inventory write-downs. As an example, in 2023, we recorded inventory write-downs of $7,005 relating to the transition to certain higher grade components in our automotive products as well as the winding down of our legacy product line for the Non-Automotive market.
On September 15, 2022, we closed the first Note Closing with the investor and received cash proceeds of $9,850 (net of fees paid to the investor). On September 26, 2023, the U.S. Securities and Exchange Commission declared our registration statement on Form S-3 to be effective (the "Shelf Registration").
On September 15, 2022, we closed the first Note Closing with the investor and received cash proceeds of $9,850 (net of fees paid to the investor). On March 15, 2024, our right to effect a Second Closing under the Securities Purchase Agreement terminated. On September 26, 2023, the U.S.
The primary factors affecting net cash provided by investing activities during this period were proceeds from redemptions and maturities of marketable securities of $96,592, offset by the purchases of available-for-sale debt securities of $23,929 and property and equipment purchases of $4,200. 53 Financing Activities For the year ended December 31, 2023, net cash used in financing activities was $6,758.
The primary factors affecting net cash provided by investing activities during this period were proceeds from redemptions and maturities of marketable securities of $32,426, partially offset by the purchases of marketable securities of $24,241 and purchases of property and equipment of $486. For the year ended December 31, 2023, net cash provided by investing activities was $55,351.
Within operating activities, the net changes in operating assets and liabilities were cash used of $1,980, primarily driven by increases in inventories and prepaid and other current assets of $2,634 and $1,130, respectively, and decreases in operating lease liabilities and contract liabilities of $1,341 and $1,931, respectively.
Within operating activities, the net changes in operating assets and liabilities were cash used of $1,498, primarily driven by decreases in accrued expenses and other liabilities, operating lease liabilities and other noncurrent liabilities of $2,389, $955 and $345, respectively.
Interest expense and other consists primarily of convertible note issuance costs, and amortization of premiums and accretion of discounts on marketable securities, net. 49 Results of Operations Comparison of the Years Ended December 31, 2023 and 2022 The results of operations presented below should be reviewed in conjunction with the consolidated financial statements and notes included elsewhere in this report.
Results of Operations Comparison of the Years Ended December 31, 2024 and 2023 The results of operations presented below should be reviewed in conjunction with the consolidated financial statements and notes included elsewhere in this report.
Net Loss Net loss decreased by $11,588, or 12%, to $87,126 for the year ended December 31, 2023, from $98,714 for the year ended December 31, 2022.
Net Loss Net loss decreased by $51,666, or 59%, to $35,460 for the year ended December 31, 2024, from $87,126 for the year ended December 31, 2023.
The second phase of the plan was intended to align our operations with evolving business needs by focusing on our transition from research and development to the commercialization of our automotive products, while winding down our existing industrial product and reducing fixed operating costs.
Restructuring In 2023, we implemented a revised strategic plan, which focused on key products and critical customer engagements and aligned our operations with evolving business needs by focusing on our transition from research and development to the commercialization of our automotive products, while winding down our legacy Non-Automotive product and reducing fixed operating costs.
Interest Income, Interest Expense and Other Interest income and other consists primarily of interest earned on our cash, cash equivalents, and marketable securities. These amounts will vary based on our cash and cash equivalents balances and market rates. Interest income and other also includes gains on sale of property and equipment.
We also elected to record interest expense on the 2022 Note as changes in fair value. 55 Table of Contents Interest Income, Interest Expense and Other Interest income and other consists primarily of interest earned on our cash, cash equivalents, and marketable securities. These amounts will vary based on our cash and cash equivalents balances and market rates.
This decrease was primarily driven by the implementation of our revised strategic plan, with decreases in stock-based compensation of $3,811, accounting, legal, and consulting fees of $3,419, personnel costs of $2,114, insurance, tax, and license expense of $1,952, travel and entertainment expense of $571 , and stock-related expenses of $236.
This decrease was primarily driven by the implementation of our revised strategic plan, with decreases in stock-based compensation of $2,754, accounting, legal, and consulting fees of $1,036, insurance of $947, facility and information technology, net of allocations, of $853, depreciation expense of $644 and personnel costs of $547.
While traditional sensing systems passively collect data, our active 4Sight TM Intelligent Sensing Platform leverages principles from automated targeting systems and biomimicry to scan the environment, while intelligently focusing on what matters most in order to enable safer, smarter, and faster decisions in complex scenarios.
Unlike traditional sensing systems that passively collect data, our active 4Sight™ Intelligent Sensing Platform employs principles from automated targeting systems and biomimicry to actively scan the environment, intelligently focusing on critical elements to enable safer, smarter, and faster decisions in complex scenarios. In June 2024, we introduced Apollo, the first product in our 4Sight™ Flex family of next-generation lidar sensors.
We believe our revenue and profitability will also be dependent upon our success in licensing our technology to Tier 1 automotive suppliers, such as our previous partner Continental, which represented 70% and 51% of 2023 and 2022 revenue, respectively, that intend to use our technology in volume production of lidar sensors for OEMs.
Given these engagements are relatively recent, there is no guarantee that these endeavors will be successful. 52 Table of Contents We believe our revenue and profitability will also be dependent upon our success in licensing our technology to Tier 1 automotive suppliers, such as our current Tier 1 partner, LITEON, or our previous partner Continental, which represented 70% of 2023 revenue, and these partners securing program awards from OEMS and scaling to high volume production of our lidar sensors.
This increase was primarily due to non-routine inventory write-downs associated with transitioning to certain higher-grade components in our automotive products in the third quarter of 2023 as well as the implementation of the second phase of our revised strategic plan in the fourth quarter of 2023 which focuses on the commercialization of our automotive product and the winding down of our existing industrial product.
The decrease was also due to non-routine inventory write-downs associated with transitioning to certain higher-grade components in our automotive products as well as the implementation of our revised strategic plan which resulted in further inventory write-downs and losses related to purchase commitments.
As of December 31, 2023, our cash, cash equivalents, and marketable securities totaled $36,523. For the years ended December 31, 2023 and 2022, we had a net loss of $87,126 and $98,714, respectively. We anticipate that we will continue to incur losses for at least the next several years.
As of December 31, 2024, our cash, cash equivalents, and marketable securities totaled $22,278. For the years ended December 31, 2024 and 2023, we had a net loss of $35,460 and $87,126, respectively.
Cash used was offset by cash provided by decreases in accounts receivable and other noncurrent assets of $3,605 and $527, respectively, and increases in accounts payable of $839. Investing Activities For the year ended December 31, 2023, net cash provided by investing activities was $55,351.
Cash used was offset by cash provided by decreases in prepaid and other current assets, inventories, and other noncurrent assets of $1,490, $245 and $215, respectively, and an increase in accounts payable of $156. For the year ended December 31, 2023, net cash used in operating activities was $50,725.
Factors affecting our operating cash flows during this period were net loss of $98,714, offset by stock-based compensation of $23,959, depreciation and amortization of $1,422, noncash lease expense of $1,338, amortization of premiums on marketable securities, net of change in accrued interest, of $1,086, inventory write-downs of $675, and issuance costs of $474.
Factors affecting our operating cash flows during this period were a net loss of $35,460, amortization of premiums and accretion of discounts on marketable securities, net of change in accrued interest of $611, and gain on termination of operating lease, net, of $491, offset by stock-based compensation of $9,047, common stock purchase agreement costs of $1,124, noncash lease expense of $956, and depreciation and amortization of $129.
As the Tier 2 automotive supply chain matures, we intend to leverage those suppliers, and the volume created for the Automotive market, to participate in the Industrial market.
As the Tier 2 automotive supply chain matures, we intend to leverage those suppliers, and the volume created for the Automotive market, to participate in the Non-Automotive market. With that in mind, in the fourth quarter of 2023, we made the decision to wind down our legacy product line for the Non-Automotive market and curtailed support.
We expect our investment in R&D to be reduced as a result of our revised strategic plan, with a reduced workforce and consolidated global footprint. We also plan to execute more focused spending with vendors in critical areas that support our strategy and product development, in line with our revised strategic plan and manage costs more efficiently.
With a reduced workforce and consolidated global footprint, we plan to be more focused on investments that support our strategy and product development goals in the future. We expect our R&D costs to increase slightly from 2024 as we continue to invest in the development of our Apollo product.
III and PIPE financing, as well as any future funds from the CSPA, SPA, the Shelf Registration, and other potential sources of capital, to fund our near-term cash needs. If we are required to raise additional funds by issuing equity securities, dilution of stockholders will result.
Until we can generate sufficient revenue from the sale of our products to cover operating expenses, working capital, and capital expenditures, we expect the funds raised in the transactions described above, and other potential sources of capital, to fund our near-term cash needs. If we are required to raise additional funds by issuing equity securities, dilution of stockholders will result.
To date, our principal sources of liquidity have been proceeds received from the issuance of equity.
We anticipate that we will continue to incur losses for at least the next several years. 58 Table of Contents To date, our principal sources of liquidity have been proceeds received from the issuance of equity.
For additional discussion of our plans, see Note 1 in the Notes to the Consolidated Financial Statements in Item 8 of Part II of this Annual Report on Form 10-K. If our cash needs are greater than we anticipate, we may be required to reduce our operating expenses even further or raise additional capital sooner.
If our cash needs are greater than we anticipate, we may be required to reduce our operating expenses further or raise additional capital sooner.
Although we continue to maintain an operating account at SVB, we subsequently established operating accounts at other financial institutions to mitigate the risks associated with any one financial institution's potential risk of insolvency or receivership.
Although we continue to maintain an operating account at SVB, we subsequently established operating accounts at other financial institutions to mitigate the risks associated with any one financial institution's potential risk of insolvency or receivership. 59 Table of Contents Cash Flow Summary Year ended December 31, 2024 2023 (in thousands) Net cash provided by (used in): Operating activities $ (26,620 ) $ (50,725 ) Investing activities $ 7,744 $ 55,351 Financing activities $ 10,060 $ (6,758 ) Operating Activities For the year ended December 31, 2024, net cash used in operating activities was $26,620.
III and PIPE financing,, CSPA, SPA, and Shelf Registration, together with our existing cash, cash equivalents, and marketable securities and implementation of our plans should we not be able to secure additional financing in 2024 will sufficiently alleviate the risk of substantial doubt about our ability to continue as a going concern and will enable us to fund our operating expenses, working capital, and capital expenditure requirements for a period of at least twelve months from the date of this Annual Report on Form 10-K.
We believe that our potential liquidity will enable us to fund our operating expenses, working capital, and capital expenditure requirements for a period of at least twelve months from the date of this Annual Report on Form 10-K.
Market Trends and Uncertainties We anticipate future demand for our 4Sight TM Intelligent Sensing Platform will come from two major markets, Automotive and Industrial. In the near term, we anticipate concentrating on the Automotive market by more effectively leveraging our business model, focusing on advanced driver-assistance systems, or ADAS, autonomous driving, and commercial trucking.
We believe this expected growth will allow us to capture market share as well as pursue specialized opportunities like highway autonomous driving applications that benefit from our products. We anticipate concentrating on the Automotive market by more effectively leveraging our business model, focusing on advanced driver-assistance systems, or ADAS, autonomous driving, and commercial trucking.
This decrease was primarily due to a favorable increase in accretion of discounts on marketable securities, resulting in a net decrease within amortization of premiums and accretion of discounts on marketable securities, net, of $1,252, and decreased debt issuance costs of $474.
This increase was primarily due to costs of $1,124 related to financing arrangements executed in the period, partially offset by an increase in accretion of discounts on marketable securities, net of $220.
This increase was partially offset by decreased costs recognized in the current year relating to a Tier 1 automotive supplier contract as the we fulfilled our obligations in the fourth quarter of 2023. 50 Operating Expenses Research and Development Research and development expenses decreased by $11,473, or 30%, to $26,171 for the year ended December 31, 2023, from $37,644 for the year ended December 31, 2022.
This decrease was primarily due to fewer Non-Automotive product units sold in the current year, and also due to lower development contract costs as we completed our obligations under a Tier 1 automotive supplier contract in the fourth quarter of 2023.
This decrease was primarily due to decreases in operating expenses following restructuring and cost reduction efforts as announced during 2023 partially offset by increases in cost of revenues due to write-downs of inventory and losses on purchase commitments as well as impairment of long-lived assets.
This decrease was primarily due to decreases in operating expenses following restructuring and cost reduction efforts in connection with our revised strategic plan as announced during 2023 and decreases in cost of revenues as we completed our obligations related to a Tier 1 automotive supplier contract in the fourth quarter of 2023.
The primary factors affecting our financing cash flows during this period were the net proceeds from the issuance of convertible notes of $9,850, proceeds from issuance of common stock under the CSPA of $2,891, and proceeds from the exercise of stock options of $1,174, offset by taxes paid related to the net share settlement of equity awards of $4,621 and payments for convertible note redemptions of $874.
The primary factors affecting our financing cash flows during this period were proceeds from common stock purchase agreements of $11,080, partially offset by stock issuance costs related to common stock purchase agreements of $1,232. 60 Table of Contents For the year ended December 31, 2023, net cash used in financing activities was $6,758.

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

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Biggest changeItem 7A. Quantitative and Qualitative Disclosures About Market Risk We are exposed to market risks in the ordinary course of our business.
Biggest changeItem 7A. Quantitative and Qualitative Disclosures About Market Risk We are exposed to market risks in the ordinary course of our business. Market risk represents the risk of loss that may impact our financial position due to adverse changes in financial market prices and rates.
Foreign Currency Exchange Risk Our foreign currency exchange gains and losses have been generated primarily from fluctuations in the euro versus the US dollar, and the Japanese yen versus the US dollar. The functional currency of all our entities is the US dollar.
Foreign Currency Exchange Risk Our foreign currency exchange gains and losses have been generated primarily from fluctuations in the euro versus the U.S. dollar, and the Japanese yen versus the U.S. dollar. The functional currency of all our entities is the U.S. dollar.
As of December 31, 2023, there were four customers each accounting for 10% or more of our accounts receivable and one vendor accounting for 10% or more of our accounts payable. We perform credit evaluations as needed and generally do not require collateral for our customers.
As of December 31, 2024, there were three customers each accounting for 10% or more of our accounts receivable and one vendor accounting for 10% or more of our accounts payable. We perform credit evaluations as needed and generally do not require collateral for our customers.
Foreign currency exchange gains and losses could have a material adverse effect on our business, operating results and financial condition. To date, we have not engaged in exchange rate hedging activities, and we do not expect to do so in the foreseeable future. 56
Foreign currency exchange gains and losses could have a material adverse effect on our business, operating results and financial condition. To date, we have not engaged in exchange rate hedging activities, and we do not expect to do so in the foreseeable future. 62 Table of Contents
Nonetheless, if our costs were to become subject to significant inflationary pressures, we may not be able to fully offset such higher costs. Our inability or failure to do so could harm our business, results of operations or financial condition.
We do not believe that inflation has had a material effect on our business, results of operations, or financial condition. Nonetheless, if our costs were to become subject to significant inflationary pressures, we may not be able to fully offset such higher costs. Our inability or failure to do so could harm our business, results of operations or financial condition.
We analyze accounts receivable, historical percentages of uncollectible accounts, and changes in payment history when evaluating the adequacy of the allowance for doubtful accounts for potential credit losses on customers’ accounts. For the twelve months ended December 31, 2023 and 2022, we did not have any write-offs and recorded a $35 and $0 provision for expected credit losses, respectively.
We analyze accounts receivable, historical percentages of uncollectible accounts, and changes in payment history when evaluating the adequacy of the allowance for doubtful accounts for potential credit losses on customers’ accounts. For the years ended December 31, 2024 and 2023, we wrote off $70 and $0, respectively, and recorded a $35 and $35 provision for expected credit losses, respectively.
Interest Rate Risk As of December 31, 2023, we had cash, cash equivalents, and marketable securities of $36,523, which consisted primarily of deposits in our bank accounts, money market funds, and marketable securities. Such interest-earning instruments carry a degree of interest rate risk.
Interest Rate Risk As of December 31, 2024, we had cash, cash equivalents, and marketable securities of $22,278, which consisted primarily of deposits in our bank accounts, money market funds, and marketable securities. Such interest-earning instruments carry a degree of interest rate risk. Our investment policy is focused on the preservation of capital and supporting our liquidity needs.
A hypothetical 10% change in interest rates would not have a material impact on our financial condition or results of operations due to the short-term nature of our cash, cash equivalents and marketable securities.
We invest in highly rated securities, while limiting the amount of credit exposure to any one issuer other than the U.S. government. A hypothetical 10% change in interest rates would not have a material impact on our financial condition or results of operations due to the short-term nature of our cash, cash equivalents and marketable securities.
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Market risk represents the risk of loss that may impact our financial position due to adverse changes in financial market prices and rates. 55 We do not believe that inflation has had a material effect on our business, results of operations, or financial condition.
Removed
Our 2022 Convertible Note bore a fixed interest rate, and therefore was not subject to interest rate risk. Our investment policy is focused on the preservation of capital and supporting our liquidity needs. We invest in highly rated securities, while limiting the amount of credit exposure to any one issuer other than the U.S. government.

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