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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 2022

OR
 
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from ________ to ________

Commission file number 333-259554
https://cdn.kscope.io/462b41319c9fa04abe4e8df364a52e52-lidr-20220331_g1.jpg
AEye, Inc.
(Exact name of registrant as specified in its charter)
Delaware
37-1827430
(State or other jurisdiction of incorporation or organization)
(I.R.S. Employer Identification No.)
One Park Place, Suite 200, Dublin, CA
94568
(Address of Principal Executive Offices)
(Zip Code)
(925) 400-4366
Registrant’s telephone number, including area code
Not Applicable
(Former name, former address and former fiscal year, if changed since last report)
Securities registered pursuant to Section 12(b) of the Act:
Title of each classTrading Symbol(s)Name of each exchange on which registered
Common stock, $0.0001 par value per shareLIDRThe Nasdaq Stock Market LLC
Warrants to purchase one share of common stockLIDRWThe Nasdaq Stock Market LLC

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports); and (2) has been subject to such filing requirements for the past 90 days.     Yes  ☒    No  ☐ 

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).     Yes  ☒    No  ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company, or an emerging growth company.. See the definitions of “large accelerated filer,” “accelerated filer”, “smaller reporting company”, and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer
Accelerated filer
Non-accelerated filer  
Smaller reporting company
Emerging growth company
                
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes ☐ No
As of May 11, 2022, the registrant had 157,354,806 shares of common stock, $0.0001 par value per share, outstanding.






1




AEye, Inc.
Quarterly Report on Form 10-Q
For the Quarterly Period Ended March 31, 2022


TABLE OF CONTENTS

Page









2




CAUTIONARY NOTE REGARDING FORWARD LOOKING STATEMENTS

This Quarterly Report on Form 10-Q (this “Form 10-Q”) contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934, which involve substantial risks and uncertainties. These statements reflect the current views of management with respect to future events and our financial performance. In some cases, you can identify these statements by forward-looking words such as “outlook,” “believes,” “expects,” “potential,” “continues,” “may,” “will,” “should,” “could,” “seeks,” “approximately,” “predicts,” “intends,” “plans,” “estimates,” “anticipates” or the negative version of these words or other comparable words or phrases, but the absence of these words does not mean that a statement is not forward-looking. These forward-looking statements, which are subject to risks, uncertainties and assumptions about us, may include projections of our future financial performance, our anticipated growth strategies and anticipated trends in our business.

These statements are only predictions based on our current expectations and projections about future events. These statements involve known and unknown risks, uncertainties and other important factors that could cause our actual results, level of activity, performance or achievements to differ materially from the results, level of activity, performance or achievements expressed or implied by the forward-looking statements. Given these risks, uncertainties and other factors, you should not place undue reliance on these forward-looking statements. These factors include the information set forth in Part 1, Item 1A, of our Annual Report on Form 10-K for the fiscal year ended December 31, 2021 under the heading “Risk Factors” and Part II, Item 1A, of this Quarterly Report under the heading “Risk Factors”, which we encourage you to carefully read. Although we believe the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee future results, level of activity, performance or achievements. We undertake no obligation to update any forward-looking statements made in this Form 10-Q to reflect events or circumstances after the date of this Form 10-Q or to reflect new information or the occurrence of unanticipated events, except as required by law.



































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PART 1. FINANCIAL INFORMATION
Item 1. Financial statements
AEYE, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands, except share and par value)
March 31, 2022December 31, 2021
(Unaudited)
ASSETS
CURRENT ASSETS:
Cash and cash equivalents$11,177 $14,183 
Marketable securities132,674 149,824 
Accounts receivable, net 292 4,222 
Inventories, net4,254 4,085 
Prepaid and other current assets4,541 5,051 
Total current assets152,938 177,365 
Right-of-use assets15,968 — 
Property and equipment, net5,685 5,129 
Restricted cash2,150 2,150 
Other noncurrent assets1,109 1,509 
Total assets$177,850 $186,153 
LIABILITIES AND STOCKHOLDERS’ EQUITY
CURRENT LIABILITIES:
Accounts payable$1,952 $2,542 
Accrued expenses and other current liabilities8,995 8,739 
Contract liabilities1,852 2,287 
Total current liabilities12,799 13,568 
Operating lease liabilities, noncurrent17,323 — 
Deferred rent, noncurrent— 3,032 
Other noncurrent liabilities485 786 
Total liabilities30,607 17,386 
COMMITMENTS AND CONTINGENCIES (Note 19)
STOCKHOLDERS’ EQUITY:
Preferred stock—$0.0001 par value: 1,000,000 shares authorized; no shares issued and outstanding
  
Common stock—$0.0001 par value: 300,000,000 shares authorized; 156,364,924 and 155,137,237 shares issued and outstanding at March 31, 2022 and December 31, 2021
16 16 
Additional paid-in capital325,350 320,937 
Accumulated other comprehensive loss(1,447)(391)
Accumulated deficit(176,676)(151,795)
Total stockholders’ equity147,243 168,767 
Total liabilities and stockholders’ equity$177,850 $186,153 
The accompanying notes are an integral part of these condensed consolidated financial statements.






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AEYE, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS
(In thousands, except share and per share data)
(Unaudited)
Three Months Ended March 31,
20222021
REVENUE:
Prototype sales$335 $233 
Development contracts747 96 
Total revenues1,082 329 
Cost of revenue1,482 617 
Gross loss(400)(288)
OPERATING EXPENSES:
Research and development8,576 5,836 
Sales and marketing4,616 1,587 
General and administrative11,330 3,010 
Total operating expenses24,522 10,433 
LOSS FROM OPERATIONS(24,922)(10,721)
OTHER INCOME (EXPENSE):
Change in fair value of embedded derivative liability and warrant liabilities(32)(103)
Interest income and other424 3 
Interest expense and other(343)(688)
Total other income (expense), net49 (788)
Provision for income tax expense8  
Net loss$(24,881)$(11,509)
PER SHARE DATA
Net loss per common share (basic and diluted)$(0.16)$(0.11)
Weighted average common shares outstanding (basic and diluted)155,515,093 101,362,036 
COMPREHENSIVE LOSS:
Net loss$(24,881)$(11,509)
Net unrealized loss on available-for-sale securities(1,056) 
Comprehensive loss$(25,937)$(11,509)

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






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AEYE, INC.
CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY (DEFICIT)
For the three months ended March 31, 2022 and 2021
(In thousands, except share data)
(Unaudited)
Preferred StockCommon StockAdditional Paid-in CapitalAccumulated Other Comprehensive LossAccumulated DeficitTotal Stockholders’ Equity
SharesAmountSharesAmount
Balance as of December 31, 2021
  155,137,237 16 320,937 (391)(151,795)168,767 
Stock-based compensation— — — — 5,340 — — 5,340 
Issuance of common stock upon exercise of stock options— — 656,303 — 222 — — 222 
Issuance of common stock upon vesting of restricted stock units— — 856,917 — — — — — 
Taxes related to net share settlement of equity awards— — (285,533)— (1,149)— — (1,149)
Unrealized loss on available-for-sale securities— — — — — (1,056)— (1,056)
Net Loss— — — — — — (24,881)(24,881)
BALANCE—March 31, 2022
 $ 156,364,924 $16 $325,350 $(1,447)$(176,676)$147,243 

Preferred StockCommon StockAdditional Paid-in CapitalAccumulated DeficitTotal Stockholders’ Equity (Deficit)
SharesAmountSharesAmount
BALANCE—December 31, 2020 (as previously reported)16,383,725 $62,639 10,838,010 $ $5,920 $(86,784)$(18,225)
Retroactive application of recapitalization (Note 2)(16,383,725)(62,639)90,448,635 10 62,629   
Balance as of December 31, 2020, as adjusted  101,286,645 10 68,549 (86,784)(18,225)
Stock-based compensation— — — — 1,610 — 1,610 
Issuance of common stock upon exercise of stock options— — 171,724 — 85 — 85 
Net loss— — — — — (11,509)(11,509)
BALANCE—March 31, 2021  $ 101,458,369 $10 $70,244 $(98,293)$(28,039)

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






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AEYE, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
(Unaudited)
Three Months Ended March 31,
20222021
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss$(24,881)$(11,509)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization 208 245 
Noncash lease expense relating to operating lease right-of-use assets317 — 
Noncash interest expense related to bank loans 114 
Inventory write-downs, net of scrapped inventory267  
Change in fair value of embedded derivative liability and warrant liabilities32 (17)
Stock-based compensation5,340 1,610 
Amortization of debt issuance costs 283 
Amortization of premiums on marketable securities, net of change in accrued interest594  
Changes in operating assets and liabilities:
Accounts receivable, net3,930 (205)
Inventories, net (436)(235)
Prepaid and other current assets510 332 
Other noncurrent assets 400 (2,785)
Accounts payable (567)2,494 
Accrued expenses and other current liabilities(645)873 
Operating lease liabilities(325)— 
Deferred rent— (133)
Contract liabilities(767)119 
Net cash used in operating activities(16,023)(8,814)
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of property and equipment(774)(121)
Proceeds from redemption of marketable securities15,500  
Net cash provided by (used in) operating activities14,726 (121)
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from exercise of stock options222 85 
Proceeds from the issuance of convertible notes 8,045 
Principal payments - bank loan (333)
Taxes paid related to the net share settlement of equity awards(1,931) 
Net cash provided by (used in) financing activities(1,709)7,797 
NET DECREASE IN CASH, CASH EQUIVALENTS AND RESTRICTED CASH(3,006)(1,138)
CASH, CASH EQUIVALENTS AND RESTRICTED CASH—Beginning of period16,333 16,497 
CASH, CASH EQUIVALENTS AND RESTRICTED CASH—Ending$13,327 $15,359 
SUPPLEMENTAL CASH FLOW INFORMATION:
Cash paid for interest$ $44 
SUPPLEMENTAL DISCLOSURE OF NONCASH INVESTING AND FINANCING ACTIVITIES:
Purchases of property and equipment included in accounts payable and accrued liabilities$260 $35 
Taxes related to net settlement of restricted stock units included in accrued liabilities$53 $ 
Operating lease right-of-use assets obtained in exchange for lease obligations upon adoption of ASC 842$16,284 $— 
The accompanying notes are an integral part of these condensed consolidated financial statements.
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AEYE, INC.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(in thousands, except share and per share data or otherwise stated)

1.ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

AEye, Inc. (the “Company” or “AEye”) is a provider of high-performance, active lidar systems for vehicle autonomy, advanced driver-assistance systems (ADAS), and robotic vision applications. AEye’s software-definable 4SightTM 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.

On February 17, 2021, AEye Technologies, Inc., then known as AEye, Inc. (“AEye Technologies”), entered into the Agreement and Plan of Merger (the “Merger Agreement”) with CF Finance Acquisition Corp. III, a Delaware corporation (“CF III”), now known as AEye, Inc., and Meliora Merger Sub, Inc., a Delaware corporation and a wholly owned subsidiary of CF III (“Merger Sub”). Based on CF III’s business activities, it was a “shell company” as defined under the Securities Exchange Act of 1934, as amended (the “Exchange Act”). On August 16, 2021 (the “Closing Date”), CF III closed the business combination (the “Business Combination,” and together with the other transactions contemplated by the Merger Agreement, the “Transactions”) pursuant to the Merger Agreement, and Merger Sub was merged with and into AEye Technologies with AEye Technologies surviving the merger as a wholly owned subsidiary of CF III. On the Closing Date, and in connection with the closing of the Transactions (the “Closing”), CF III changed its name to AEye, Inc.

The Company’s common stock and public warrants are now listed on the Nasdaq Stock Market LLC (“Nasdaq”) under the symbols “LIDR” and “LIDRW”, respectively. Unless otherwise specified, “we,” “us,” “our,” “AEye,” and the “Company” refers to AEye, Inc., the combined entity following the Business Combination. Refer to Note 2 for further discussion of the Business Combination.

Unaudited Condensed Consolidated Financial Statements

The accompanying condensed consolidated financial statements are unaudited and have been prepared in accordance with accounting principles generally accepted in the United States of America ("U.S. GAAP") and include all adjustments necessary to the fair presentation of the Company’s condensed consolidated financial position, results of operations, and cash flows for the period presented under the rules and regulations of the Securities and Exchange Commission ("SEC") for interim financial reporting. The accompanying interim unaudited condensed consolidated financial statements and accompanying notes have been prepared in accordance with U.S. GAAP along with instructions to Form 10-Q and Article 10 of SEC Regulation S-X.

Principle of Consolidation and Liquidity

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

The Company has funded its operations primarily through the Business Combination and issuances of stock. As of March 31, 2022, the Company’s existing sources of liquidity included cash, cash equivalents and marketable securities of $143.9 million. The Company has incurred losses and negative cash flows from operations. If the Company incurs additional losses in the future, it may need to raise additional capital through issuances of equity and debt. However, management believes that the Company’s existing sources of liquidity are adequate to fund its operations for at least the next 12 months.

Emerging Growth Company

The Company is an “emerging growth company,” as defined in Section 2(a) of the Securities Act, as modified by the Jumpstart Our Business Startups Act of 2012 (the “JOBS Act”), and it may take advantage of certain exemptions from various reporting requirements that are applicable to other public companies that are not emerging growth companies including, but not limited to, not being required to comply with the independent registered public accounting firm attestation requirements of Section 404 of the Sarbanes-Oxley Act, reduced disclosure obligations regarding executive compensation in its periodic reports and proxy statements, and exemptions from the requirements of holding a nonbinding advisory vote on executive compensation and stockholder approval of any golden parachute payments not previously approved.
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Further, Section 102(b)(1) of the JOBS Act exempts emerging growth companies from being required to comply with new or revised financial accounting standards until private companies (that is, those that have not had a Securities Act registration statement declared effective or do not have a class of securities registered under the Exchange Act) are required to comply with the new or revised financial accounting standards. The JOBS Act provides that a company can elect to opt out of the extended transition period and comply with the requirements that apply to non-emerging growth companies but any such election to opt out is irrevocable. The Company has elected to take advantage of the benefits of the extended transition period for new or revised financial accounting standards. This may make it difficult or impossible to compare the Company’s financial results with the financial results of another public company that is either not an emerging growth company or is an emerging growth company that has chosen not to take advantage of the extended transition period exemptions because of the potential differences in accounting standards used.

Use of Estimates

The preparation of consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Significant items subject to such estimates and assumptions include investments, embedded derivative and warrant liabilities, fair value of common stock, and stock-based compensation.

Segment Reporting

The Company manages its business on the basis of one reportable and operating segment. Operating segments are defined as components of an enterprise with separate financial information, and are evaluated regularly by the chief operating decision maker, which is our Chief Executive Officer (“CEO”). The CEO decides how to allocate resources and assesses the Company’s performance based upon consolidated financial information. All of the Company's sales were made to customers (in USD) located in the United States, Europe, and Asia through AEye, Inc. Of the $5,685 of net property and equipment as of March 31, 2022, $5,657 is located in the United States and $28 is in Asia.

Concentration of Credit Risk

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

The Company’s accounts receivables are derived from customers located in the U.S., Europe, and Asia. The Company mitigates its credit risks by performing ongoing credit evaluations of its customers’ financial conditions. The Company generally does not require collateral.

The Company’s concentration of risk related to accounts receivable and accounts payable was determined by evaluating the number of customers and vendors accounting for 10% or more of accounts receivable (“AR”) and accounts payable (“AP”). As of March 31, 2022, AEye had four customers each accounting for 10% or more of AR and one vendor accounting for 10% or more of AP. As of December 31, 2021, AEye had one customer accounting for 10% or more of AR and two vendors accounting for 10% or more of AP. During the three months ended March 31, 2022 and 2021, the Company did not have any write-offs and at March 31, 2022 and 2021 did not record an allowance for doubtful accounts as all accounts receivable amounts are expected to be collected.

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For the three months ended March 31, 2022 and 2021, revenue from the Company’s major customers representing 10% or more of total revenue was as follows:

Three months ended March 31,
20222021
Customer A58 %*
Customer B*58 %
Customer C*29 %
Customer D32 %*
*Customer accounted for less than 10% of total revenue in the period.

Significant Accounting Policies

The Company's significant accounting policies are disclosed in its Annual Report on Form 10-K for the year ended December 31, 2021. Other than the accounting policy discussed below related to the adoption of Accounting Standards Codification ("ASC") 842, Leases there have been no material change to the Company's significant accounting policies during the three months ended March 31, 2022.

Leases

The Company determines if an arrangement is or contains a lease at inception. The Company evaluates the classification of leases at commencement, and, as necessary, at modification. Operating leases, consisting of office leases, are included in Right-of-use ("ROU") assets, Accrued expenses and other current liabilities, and Operating lease liabilities, noncurrent, on the Company's consolidated balance sheets. The Company did not have any finance leases as of March 31, 2022 and December 31, 2021. ROU assets represent the Company's right to an underlying asset for the lease term and lease liabilities represent the Company's obligation to make lease payments arising from the lease. Operating lease ROU assets and liabilities are recognized at the commencement date based on the present value of lease payments over the lease term. The operating lease ROU asset also includes any lease payments made prior to lease commencement and initial direct costs and excludes lease incentives. Variable lease payments not dependent on an index or a rate are expensed as incurred and are not included within the ROU asset and lease liability calculation. Variable lease payments primarily include reimbursements of costs incurred by lessors for common area maintenance and utilities. As most of the Company's leases do not include an implicit rate, the Company uses the incremental borrowing rate based on the estimated rate of interest for collateralized borrowing over a similar term of the lease payments at commencement date in determining the present value of future payments. The incremental borrowing rate is a hypothetical rate based on the Company's understanding of what its credit rating would be for a secured borrowing when the lease was executed. The Company's lease term includes the noncancelable period, any rent-free periods provided by the lessor, and options to extend or terminate the lease when it is reasonably certain that it will exercise that option. At lease inception, and in subsequent periods as necessary, the Company estimates the lease term based on its assessment of extension and termination options that are reasonably certain to be exercised. Operating lease expense for lease payments is recognized on a straight-line basis over the lease term and is included in operating expenses on the consolidated statements of operations and comprehensive loss. The Company elected to exclude from its balance sheets recognition of leases having a term of 12 months or less (short-term leases) and elected to not separate lease components and non-lease components for its long-term real estate leases.

Recent Accounting Pronouncements

In June 2016, the FASB issued ASU 2016-13, Measurement of Credit Losses on Financial Instruments, which has subsequently been amended by ASU No. 2018-19, ASU No. 2019-04, ASU No. 2019-05, ASU No. 2019-10, and ASU No. 2019-11. The objective of the guidance in ASU 2016-13 is to allow entities to recognize estimated credit losses in the period that the change in valuation occurs. ASU 2016-13 requires an entity to present financial assets measured on an amortized cost basis on the balance sheet net of an allowance for credit losses. Available-for-sale and held to maturity debt securities are also required to be held net of an allowance for credit losses. For public business entities, this standard is effective for fiscal years beginning after December 15, 2019. For smaller reporting companies, the standard is effective for fiscal years beginning after December 15, 2022, including interim periods within those fiscal years. Early adoption is permitted. The Company is currently evaluating the impact this standard will have on its consolidated financial statements and related disclosures and will adopt the guidance on January 1, 2023 as permitted for smaller reporting companies.
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Recently Adopted Accounting Guidance

In February 2016, the FASB established Topic 842, Leases, by issuing Accounting Standards Update (ASU) No. 2016-02. FASB ASC Topic 842, Leases (“ASC 842”) supersedes the previous accounting guidance for leases included within ASC 840. The new guidance generally requires an entity to recognize operating and financing lease liabilities and corresponding right-of-use assets on its balance sheet, as well as recognize the associated lease expenses on its statements of operations in a manner similar to that required under current accounting rules. The guidance requires a modified retrospective transition approach with application in all comparative periods presented (the “Comparative Method”), or alternatively, as of the effective date as the date of initial application without restating comparative period financial statements (the “Effective Date Method”).

The Company adopted the new standard on January 1, 2022 using the Effective Date Method. Upon adoption, the Company recorded net ROU assets and lease liabilities of $16,284 and $19,921, respectively, and a reversal of deferred rent of $3,032 and there were no cumulative effect adjustments as of January 1, 2022. The standard did not have a material effect on the Company's consolidated statements of operations and comprehensive loss and the consolidated statement of cash flows. The Company elected the transition practical expedient package, which among other things, allows the carryforward of historical lease classifications. The Company will continue to apply ASC Topic 840, Leases, prior to January 1, 2022, including Topic 840 disclosure requirements, in the comparative periods presented. The Company did not elect to apply the hindsight practical expedient, which permits entities to use hindsight in determining the lease term and assessing impairment of right-of-use assets.

In December 2019, the FASB issued ASU 2019-12, Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes. This standard simplifies the accounting for income taxes by, among other things, eliminating certain exceptions related to the approach for intra-period tax allocation, the methodology for calculating income taxes in an interim period and the recognition of deferred tax liabilities for outside basis differences. ASU 2019-12 is effective for public business entities for fiscal years beginning after December 15, 2021. We have adopted ASU 2019-12 as of January 1, 2022, and our adoption did not have a material impact on the consolidated financial statements.

2.RECAPITALIZATION

As discussed in Note 1, on August 16, 2021, AEye Technologies and CF III closed the Business Combination, with AEye Technologies surviving the Business Combination as a wholly owned subsidiary of CF III. As part of the closing of the Business Combination, CF III changed its name to AEye, Inc. (the “Combined Entity”).

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

The Business Combination is accounted for as a reverse recapitalization, with no goodwill or other intangible assets recorded, in accordance with US GAAP. Under this method of accounting, AEye Technologies was treated as the accounting acquirer and CF III was treated as the acquired company for financial reporting purposes under FASB ASC Topic 805, Business Combinations (“ASC 805”). This determination is primarily based on AEye Technologies’ stockholders comprising a relative majority of the voting power of the combined entity, and having the ability to nominate the majority of the governing body of the combined entity, AEye Technologies’ senior management comprising the senior management of the Combined Entity and AEye Technologies’ operations comprising the ongoing operations of the combined entity. Accordingly, for accounting purposes, the financial statements of the combined entity represented a continuation of the financial statements of AEye Technologies and the Business Combination was treated as the equivalent of AEye Technologies issuing stock for the net assets of CF III, accompanied by a recapitalization. The net assets of CF III are stated at historical cost, with no goodwill or other intangible assets recorded. Operations prior to the Business Combination will be those of AEye Technologies in future reports of the combined entity. Loss per share and stockholders’ equity (deficit), prior to the Business Combination, have been retroactively converted into 3.7208 shares (the “Exchange Ratio”).

Immediately prior to the closing of the Business Combination, all outstanding principal and unpaid accrued interest of the 2020 Notes were ultimately converted into 5,584,308 shares of AEye Technologies’ common stock and subsequently converted to Class A common stock of the Company (see Note 11). Separately, each issued and outstanding share of AEye Technologies’ 16,383,725 redeemable convertible preferred stock was converted into
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shares of AEye Technologies’ common stock based on a one-to-one ratio. The consolidated financial statements are accounted for with a retrospective application of the Business Combination that results in 16,383,725 shares of redeemable convertible preferred stock converting into common stock of the Company. Upon the closing of the Business Combination, each share of AEye Technologies common stock issued and outstanding was canceled and converted into the right to receive 3.7208 shares of CF III’s common stock (the “Per Share Merger Consideration”).

Immediately prior to the closing of the Business Combination, the Board approved the net exercise of common stock warrants and Series A preferred warrants which provides for the cashless exercise of 61,612 common stock warrants into 57,770 shares of AEye Technologies common stock and 7,353 Series A preferred warrants into 6,949 shares of AEye Technologies common stock at the Transaction Price of 37.21 per share. Upon the Closing, the combined 64,719 shares were cancelled and exchanged for 240,806 shares of the Company’s Class A common stock, after giving effect to the Exchange Ratio.

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

PIPE Subscription Agreement

Contemporaneously with the execution of the Merger Agreement, CF III entered into separate PIPE Subscription Agreements in a private placement with a number of PIPE investors, pursuant to which the PIPE Investors agreed to purchase, and CF III agreed to sell to the PIPE Investors, an aggregate of 22,000,000 shares of common stock, for a purchase price of $10.00 per share and an aggregate purchase price of $220,000. CF III also entered into a PIPE Subscription Agreement for 500,000 shares of common stock, for a purchase price of $10.00 per share and an aggregate purchase price of $5,000 with an investor who defaulted on the Closing under the PIPE Subscription Agreement. The Company plans to pursue its available remedies with respect to such investor.

Redemption

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

Public and Private Placement Warrants

CF III Warrants issued in connection with the IPO (“Public Warrants”) and in connection with the private placement units held by the Sponsor (“Private Placement Warrants”) to purchase shares of the Company’s common stock, at an exercise price of $11.50 per share, remained outstanding after the closing of the Business Combination. The warrants became exercisable 30 days after the completion of the Business Combination, subject to other conditions, including with respect to the effectiveness of a registration statement covering the shares of common stock underlying such warrants, and will expire 5 years after the completion of the Business Combination or earlier upon redemption or liquidation. The Public Warrants are classified as equity and valued based on the instrument’s publicly listed trading price. The Private Placement Warrants are classified as liabilities and measured at fair value, with changes in fair value each period reported in the consolidated statements of operations and comprehensive loss. The Company uses the Public Warrants listed trading price to value the Private Placement Warrants each reporting period.

Transaction Costs

In connection with the Business Combination, the Company incurred direct and incremental costs of approximately $52,661 related to the equity issuance, consisting primarily of investment banking, legal, accounting, and other professional fees, which were recorded to additional paid-in capital as a reduction of proceeds upon the closing of the Business Combination. Transaction costs that were not directly related to the Business Combination of approximately $2,198 were expensed.

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Transaction Proceeds

Upon closing of the Business Combination, the Company received gross proceeds of $256,811 from the Business Combination and PIPE financing, offset by offerings costs of $52,661. The following table reconciles the elements of the Business Combination to the consolidated statements of cash flows and the consolidated statements of changes in stockholders’ deficit for period ended December 31, 2021 (in thousands, except share data):

Cash - CF III's trust and cash (net of redemption)$36,811 
Cash - Private offering220,000 
Less: transaction costs and advisory fees paid(52,661)
Net Business combination and private offering$204,150 

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

CF III Class A common stock, outstanding prior to Business Combination23,000,000 
Less: redemption of CF III Class A common stock19,355,365 
Class A common stock of CF III3,644,635 
CF III founder shares5,750,000 
CF III Private Placement shares500,000 
CF III Shares issued in PIPE22,000,000 
Business Combination and PIPE shares31,894,635 
Legacy AEye shares122,509,667 
August 16, 2021154,404,302 

The number of Legacy AEye shares was determined as follows:

AEye shares
AEye shares, effected for Exchange Ratio
Balance at December 31, 201911,283,838 41,984,908 
Recapitalization applied to Convertible preferred stock outstanding at December 31, 201916,383,725 60,960,574 
Exercise of common stock options - 2020504,524 1,877,233 
Repurchase of common stock - 2020(950,352)(3,536,070)
Exercise of common stock options - 2021 (pre-Closing)54,859 204,119 
Conversion of Convertible Notes and Accrued Interest – 20215,584,308 20,778,097 
Exercise of common stock and Series A preferred stock warrants - 202164,719 240,806 
Total
122,509,667 
3.FAIR VALUE MEASUREMENTS

The fair value of the Company’s financial assets and liabilities is determined in accordance with the fair value hierarchy established in FASB ASC Topic 820, Fair Value Measurements and Disclosures (“ASC 820”). ASC 820 defines fair value as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. The fair value hierarchy of ASC 820 requires an entity to maximize the use of observable inputs when measuring fair value and classifies those inputs into three levels:

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

Level 2—Observable inputs, other than Level 1 inputs, which are observable either directly or indirectly or can be corroborated by observable market data using quoted prices for similar assets or liabilities.

Level 3—Unobservable inputs in which there is little or no market data, which require the reporting entity to develop its own assumptions.
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The Company's financial instruments that are not re-measured at fair value include accounts receivable, prepaid and other current assets, accounts payable, accrued expenses and other current liabilities, convertible notes, and long-term debt. The carrying values of these financial instruments approximate their fair values.

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

Fair Value Measured as of March 31, 2022 Using:
Adjusted CostUnrealized lossesFair ValueCash and Cash EquivalentMarketable Securities
Assets
Level 1
Money market funds$141 $— $141 $141 $— 
Level 2
Asset-backed securities$26,384 $(217)$26,167 $— $26,167 
Corporate bonds35,636 (479)35,157 — 35,157 
Commercial paper42,166  42,166 — 42,166 
U.S. Government securities29,935 (751)29,184 — 29,184 
Total financial assets$134,262 $(1,447)$132,815 $141 $132,674 
Liabilities
Level 2
Private placement warrant liability$— $— $187 $— $— 
Total financial liabilities$— $— $187 $— $— 

Fair Value Measured as of December 31, 2021 Using:
Adjusted CostUnrealized lossesFair ValueCash and Cash EquivalentMarketable Securities
Assets
Level 1
Money market funds$4,863 $— $4,863 $4,863 $— 
Level 2
Asset-backed securities$26,491 $(68)$26,423 $— $26,423 
Corporate bonds48,643 (150)48,493 — 48,493 
Commercial paper45,145  45,145 — 45,145 
U.S. Government securities29,936 (173)29,763 — 29,763 
Total financial assets$155,078 $(391)$154,687 $4,863 $149,824 
Liabilities
Level 2
Private placement warrant liability$— $— $155 $— $— 
Total financial liabilities$— $— $155 $— $— 

As of March 31, 2022 and December 31, 2021, the Company’s financial assets and liabilities subject to fair value procedures were comprised of the following:

Money Market Funds: The Company holds financial assets consisting of money market funds. These securities are valued using observable inputs, such as quoted prices in active markets for identical assets or liabilities.

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

Private Placement Warrant Liability: As of March 31, 2022 Level 2 fair value measurements were used for Private Placement Warrant liabilities. Any changes in the fair value of the liability are reflected in Change in fair value of embedded derivative liability and warrant liabilities on the consolidated statements of operations and comprehensive loss. Private Placement Warrant liability is included within other noncurrent liabilities on the consolidated balance sheets.

For the three months ended March 31, 2022 and year ended December 31, 2021, there were no transfers between Level 1 and Level 2 inputs.

4.CASH, CASH EQUIVALENTS, AND RESTRICTED CASH

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

March 31, 2022December 31, 2021
(unaudited)
Cash and cash equivalents$11,177 $14,183 
Restricted cash2,150 2,150 
Total cash, cash equivalents, and restricted cash$13,327 $16,333 


5. INVENTORIES

Inventory, net of write-downs, as of March 31, 2022 and December 31, 2021 were as follows (in thousands):

March 31, 2022December 31, 2021
(unaudited)
Raw materials$1,810 $1,544 
Work in-process2,432 2,447 
Finished goods12 94 
Total inventory, net$4,254 $4,085 

The Company's inventory as of March 31, 2022 and December 31, 2021 was written down by $966 and $1,122, respectively, in order to reduce inventory to the lower of cost or to its net realizable value.


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6.PREPAID AND OTHER CURRENT ASSETS

Prepaid and other current assets as of March 31, 2022 and December 31, 2021 were as follows (in thousands):

March 31, 2022December 31, 2021
(unaudited)
Prepaid expenses$3,203 $3,980 
Demonstration units311 224 
Other1,027 847 
Total prepaid and other current assets$4,541 $5,051 


7.     LEASES

The Company primarily leases office facilities in Northern California under noncancelable operating leases expiring at various dates through November 2026. Some of the Company's leases include options to renew, with renewal terms that, if exercised by the Company, extend the lease term from two to five years. The exercise of these renewal options is at the Company's discretion. The Company's lease agreements do not contain any material terms and conditions of residual value guarantees or material restrictive covenants. The Company's short-term lease expense was determined to not be material.

The components of operating lease expenses for the three months ended March 31, 2022 are as follows (in thousands):

March 31, 2022
(Unaudited)
Operating lease cost$577 
Variable lease cost63 
Total operating lease cost$640 

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

March 31, 2022
(Unaudited)
Cash paid for operating leases included in operating cash flows$586 

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

As of March 31, 2022
(Unaudited)
Operating lease right-of-use assets$15,968 
Operating lease liabilities:
Operating lease liabilities, current$2,273 
Operating lease liabilities, non-current17,323 
Total operating lease liabilities$19,596 

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March 31, 2022
(Unaudited)
Weighted average remaining lease term (in years)9.65
Weighted average discount rate5.31 %

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

Years ended: Operating leases
2022 (remaining nine months)$1,745 
20232,342 
20242,412 
20252,484 
20262,559 
Thereafter13,752 
Total lease payments25,294 
Less amount to discount to present value(5,698)
Present value of lease liabilities $19,596 

Disclosures under ASC 840, Leases

The Company recognizes rent expense on a straight-line basis over the lease period. Rent expense is principally for leased office space and was $473 within operating expenses in the consolidated statements of operations and comprehensive loss for the three months ended March 31, 2021. Deferred rent liabilities, including unamortized leasehold improvement incentives was $3,637 as of December 31, 2021 within the consolidated balance sheet.

Future minimum payments as of March 31, 2021 under the noncancellable operating leases are as follows (in thousands):
Operating
Leases
Years ended:
2021 (remaining nine months)$1,713 
20222,331 
20232,342 
20242,412 
2025 and after 4,824 
Total minimum lease payments$13,622 

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8. PROPERTY AND EQUIPMENT, NET

Property and equipment, net as of March 31, 2022 and December 31, 2021 consists of the following (in thousands):

March 31, 2022December 31, 2021
(unaudited)
Machinery and Equipment$1,648 $1,444 
Computers, software and related equipment503 268 
Office furniture and equipment367 341 
Vehicles435 342 
Leasehold improvements4,725 4,725 
Construction in progress419 213 
Total property and equipment8,097 7,333 
Less accumulated depreciation and amortization(2,412)(2,204)
Property and equipment, net$5,685 $5,129 

Depreciation and amortization expense related to property and equipment amounted to $208 and $245 for the three months ended March 31, 2022 and 2021. Disposals of property and equipment were not material for the three months ended March 31, 2022 and 2021.

9. OTHER NONCURRENT ASSETS

Other noncurrent assets as of March 31, 2022 and December 31, 2021 were as follows (in thousands):

March 31, 2022December 31, 2021
(unaudited)
Long-term prepaid expenses950 1,376 
Security deposits159 133 
Total other noncurrent assets$1,109 $1,509 

10. ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES

Accrued expenses and other current liabilities as of March 31, 2022 and December 31, 2021 were as follows (in thousands):

March 31, 2022December 31, 2021
(unaudited)
Accrued purchases and other2,840 1,947 
Operating lease liabilities - current2,273 — 
Accrued bonuses1,763 3,408 
Accrued payroll$1,277 $957 
Accrued payroll taxes498 1,547 
Warranty reserve336 275 
Income tax payable8  
Deferred rent - current— 605 
Accrued expenses and other current liabilities$8,995 $8,739 

11. BORROWINGS

Silicon Valley Bank Financing Facility

On April 26, 2021, the Company entered into a loan and security agreement (the “Loan Agreement”) with an affiliate of Silicon Valley Bank (“SVB” or the “Lender”) in connection with the non-binding term sheet for a financing facility of up to $10,000 entered into on March 18, 2021. Under the Loan Agreement, the Lender was
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obligated to make a term loan advance to the Company of $4,000. Subject to the terms and conditions of the Loan Agreement, and upon the Company’s request, the Lender was obligated to make one term loan advance to the Company of $6,000. The interest rate on the term loan advance is calculated at 8% per annum and payable monthly, in arrears. Upon entering the Loan Agreement, $4,000 was drawn. On May 13, 2021, an additional $6,000 was drawn. The balance of $10,540 for the financing facility, including interest, was repaid on August 20, 2021.

Silicon Valley Bank Credit Facility

On August 16, 2019, the Company entered into a loan and security agreement with SVB. Borrowings under this facility are secured by substantially all the Company’s assets, excluding intellectual property. The term loan’s borrowings are subject to certain financial covenants and restrictions. The Company complied with all financial covenants and restrictions. The balance of $2,333 for the term loan was repaid on September 7, 2021.

Paycheck Protection Program (PPP) Loan

On June 19, 2021, the Company received notice of the Paycheck Protection Program (PPP) forgiveness payment made to SVB by the Small Business Administration in the amount of $2,270 in principal and $27 in interest. This amount represents the forgiveness of the total PPP loan the Company received in 2020 under the PPP Loan provisions of the CARES act.

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

12. CONVERTIBLE NOTES

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

In connection with the Business Combination on August 16, 2021, all outstanding principal of $38,045 and unpaid accrued interest of the 2020 Notes were converted into AEye Technologies’ preferred stock and subsequently were converted into 20,778,097 shares of the Company’s Class A common stock. Accordingly, at March 31, 2022 and December 31, 2021, the convertible notes balance was $0.

Embedded Derivative Liability

As outlined in the indenture governing the 2020 Notes, the 2020 Notes are automatically convertible, contingent upon the occurrence of certain events, most notably a financing (a “Next Financing”), defined as the issuance and sale of additional preferred stock (“Financing Stock”). The redemption price is defined as a price per share equal to 90% of the price per share paid by the other purchasers of the Financing Stock sold in the Next Financing. The 2020 Notes are redeemable into the number of shares of Next Financing Stock needed to settle all of the aggregate amount of principal and unpaid interest owed to the holder of such notes, which is based on the ultimate price per share associated with the Financing Stock. Consequently, the 2020 Notes are considered stock settled debt.

This redemption feature embedded in the 2020 Notes is considered to be a derivative that is required to be separately accounted for at fair value and subsequently remeasured to fair value at each reporting date. Accordingly, upon issuance of the 2020 Notes, the Company recognized the fair value associated with the embedded derivative which resulted in an embedded derivative liability of approximately $1,520, with an equal and offsetting debt discount. Upon the closing of the Business Combination on August 16, 2021, the embedded derivative was settled. Accordingly, at March 31, 2022 and December 31, 2021, the fair value of the embedded derivative liability was $0.

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13. INTEREST EXPENSE AND OTHER

Interest expense and other for the three months ended March 31, 2022 and 2021 consisted of the following (in thousands):

Three months ended March 31,
20222021
Interest on term loan debt$ $137 
Interest on PPP loan 6 
Interest on convertible note 278 
Amortization of debt discount 267 
Amortization of premiums on marketable securities, net of accretion of discounts336  
Other7  
Interest expense and other$343 $688 

14. STOCKHOLDERS’ EQUITY

Class A Common Stock The Company is authorized to issue 300,000,000 shares of common stock, par value $0.0001 per share. As of March 31, 2022, the Company had 156,364,924 issued and outstanding.

Preferred Stock — The Company is authorized to issue up to 1,000,000 shares of preferred stock, each with a par value of $0.0001 per share. As of March 31, 2022, no shares of preferred stock were issued and outstanding.

Upon the Closing on August 16, 2021, all of the outstanding shares of preferred stock were cancelled and exchanged for shares of the surviving Company’s Class A common stock at the Exchange Ratio of 3.7208, the exchange rate established in the Merger Agreement.
August 16, 2021
(Closing)
Preferred stock sharesExchange ratioCommon stock shares
Series A Convertible preferred stock (pre-combination)9,226,734 3.7208 34,330,838 
Series B Convertible preferred stock (pre-combination)7,156,991 3.7208 26,629,736 
Total16,383,725 60,960,574 

Private and Public Warrants As of March 31, 2022, the Company had 166,666 Private Placement warrants and 7,666,666 Public warrants outstanding. Each warrant entitles the registered holder to purchase one share of Class A common stock at a price of $11.50 per share.

Tumim Stone Common Stock Purchase Agreement — On December 8, 2021, the Company entered into a Common Stock Purchase Agreement (the “CSPA”) and a Registration Rights Agreement with Tumim Stone Capital LLC (“Tumim Stone”). Under the terms and subject to the conditions of the CSPA, the Company has the right, but not the obligation, to sell to Tumim Stone, and Tumim Stone is obligated to purchase up to the lesser of (i) $125,000 of the Company’s common stock, and (ii) the Exchange Cap equal 19.99% of the shares of the Company’s common stock outstanding immediately prior to the execution of the CSPA, unless the Company’s stockholders approve the issuance of shares in excess of the Exchange Cap, or the average price of all applicable sales of common stock to Tumim Stone under the CSPA equals or exceeds $4.9485. Upon the satisfaction of various commencement conditions, such as the filing of the registration statement which provides for the resale of such shares pursuant to the Registration Rights Agreement, the Company has sole discretion to initiate such sales of common stock over the period of 36 months commencing December 8, 2021. In all instances, the Company may not sell shares of its common stock to Tumim Stone under the CSPA if doing so would result in Tumim Stone beneficially owning more than 9.99% of its common stock.
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The purchase price per share to be purchased by Tumim shall equal the volume-weighted average price for common stock on the applicable purchase date multiplied by 0.9615 (to be adjusted for any reorganization, recapitalization, non-cash dividend, stock split, reverse stock split, or similar transaction). The maximum number of shares the Company may sell to Tumim Stone on any single business day is the lesser of (i) $20,000 divided by the closing sale price of the common stock on the trading day immediately preceding the purchase date, and (ii) 0.15 multiplied by the average daily trading volume in common stock for the three trading days preceding the purchase date.

    In connection with the CSPA, the Company issued Tumim Stone commitment shares in the amount of 302,634 restricted common shares in the Company. At issuance, the 302,634 shares of common stock had a fair value of $1,583 and were recorded to Interest expense and other in the Company’s consolidated statements of operations and comprehensive loss. The Company determined that the right to sell additional shares represents a freestanding put option under ASC 815 Derivatives and Hedging, and as such, the financial instrument was classified as a derivative asset with a fair value of zero at inception of the CSPA on December 8, 2021.

As of March 31, 2022 the Company had not sold any shares to Tumim Stone under the CSPA. On May 6, 2022, the Company filed a Form S-1 registration statement, which relates to the offer and resale of up to 30,865,419 shares of AEye's common stock by Tumim Stone, the selling stockholder.

15. NET LOSS PER SHARE

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

Three months ended March 31,
20222021
Numerator:
Net loss attributable to common stockholders$(24,881)$(11,509)
Denominator:
Weighted average common shares outstanding- Basic155,515,093 101,362,036 
Dilutive effect of potential common shares  
Weighted average common shares outstanding- Diluted155,515,093 101,362,036 
Net loss per share attributable to common stockholders - Basic and Diluted$(0.16)$(0.11)

Due to net losses for the three months ended March 31, 2022 and 2021, basic and diluted net loss per share were the same, as the effect of all potentially dilutive securities would have been anti-dilutive. The following table sets forth the anti-dilutive common share equivalents for the periods listed:

Three months ended March 31,
20222021
Common stock options issued and outstanding28,389,111 31,143,641 
Unvested restricted stock units13,801,742  
Warrants7,833,332 256,605 
Conversion of convertible notes 20,774,995 
Total50,024,185 52,175,241 

16. STOCK-BASED COMPENSATION

The Company has three equity incentive plans, the 2014 US LADAR Inc. Equity Incentive Plan (the “2014 Plan”), the 2016 Stock Plan (the “2016 Plan”), and the 2021 Equity Incentive Plan (the “Incentive Plan”). On August 16, 2021, the Company’s 2014 Plan and 2016 Plan were terminated in connection with the closing of the Business Combination as defined in Note 1, but continue to govern the terms of outstanding equity awards that were granted prior to the termination of the plans.

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2014 Plan and 2016 Plan

As of August 16, 2021, the Company no longer grants equity awards pursuant to the 2014 Plan or 2016 Plan. The Company had reserved 33,121,391 shares of common stock for issuance under the 2016 Plan and as of March 31, 2022, 1,741,689 RSUs were granted.

Under the 2016 Plan, options to purchase common stock generally vest over four years with 25% vesting at the end of the first year and the rest vesting ratably over the next three years. RSUs generally vest 25% at the end of the first year with the remaining RSUs vesting ratably over the next three years or they vest ratably over the four years. Under the 2014 Plan, the vesting period for options to purchase common stock range from immediate to four years. Under each plan, the options expire ten years from the date of grant.

In connection with the Business Combination on August 16, 2021, $1,500 was paid to an executive in consideration for repurchasing 542,615 of their vested options under the Company’s 2016 Plan.

2021 Equity Incentive Plan

The Incentive Plan became effective immediately upon the closing of the Business Combination on August 16, 2021 and reserved 15,440,430 shares of common stock for issuance under the plan. The Incentive Plan includes an evergreen provision that provides for an annual increase in the number of shares of common stock available for issuance thereunder beginning on January 1, 2022 and ending on January 1, 2032, equal to 5% of the shares of the Company’s common stock outstanding on December 31, 2021 for the first year and by 3% of the total number of shares of common stock outstanding on December 31 of the preceding calendar year for each year thereafter, or a lesser number of shares as determined by the Board of Directors. On January 1, 2022, 7,743,413 shares of common stock were added to the Plan for issuance.

Under the Incentive Plan, RSUs vest depending on their vesting schedule. For newly hired employees, RSUs vest 25% during the month following the recipient’s one year anniversary of their start date. The remaining amounts vest ratably over the next three years. For existing employees, these RSUs vest quarterly over three years. The fair value of the RSU is equal to the fair value of the Company’s common stock on the date of grant.

As of March 31, 2022, 13,413,987 RSUs were granted to certain individuals under the Incentive Plan.

A summary of stock option activity related to the Plans as of March 31, 2022 is as follows:

Outstanding Stock OptionsWeighted Average Exercise PriceWeighted Average Contractual Life (Years)Aggregate Intrinsic Value
Balance at December 31, 202129,238,432 $0.48 7.4$127,345 
Granted  
Exercised(656,303)0.34 
Forfeited(193,018)0.54 
Expired