What changed in this filing

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Item 1. Financial Statements

2022-11-09 compared with 2022-08-09 · 88 added, 52 removed, 274 unchanged (34% of the section changed)

3 unchanged sentences

(Dollar amounts in thousands, except share data)

September 30,

2022 December 31,

25 unchanged sentences

250,000,000 shares authorized;

173,998,968 and 173,468,979 shares issued and outstanding at June 30, 2022 and December 31, 2021, respectively

179,645,873 and 173,468,979 shares issued and outstanding at September 30, 2022 and December 31, 2021, respectively

Additional paid-in capital 396,085 374,795

6 unchanged sentences

(Dollar amounts in thousands, except share and per share data)

Three Months Ended June 30, Six Months Ended June 30,

Three Months Ended September 30, Nine Months Ended September 30,

2022 2021 2022 2021

11 unchanged sentences

Interest income 1,926 195 3,066 561

Loss on disposal of assets ( 133 ) — ( 135 ) —

Gain (Loss) on disposal of assets 46 — ( 89 ) —

Net loss $ ( 63,387 ) $ ( 26,615 ) $ ( 123,970 ) $ ( 66,421 )

5 unchanged sentences

(Dollar amounts in thousands, except share data)

Six Months Ended June 30, 2022

Nine Months Ended September 30, 2022

Common Stock Additional

11 unchanged sentences

Balance at June 30, 2022 173,998,968 17 378,203 118,520 496,740

Six Months Ended June 30, 2021

Issuance of common stock for acquisition 5,500,000 1 16,114 — 16,115

Exercise of common stock options and vesting of restricted stock units, net 146,905 — ( 15 ) — ( 15 )

Share-based compensation — — 1,783 — 1,783

Net loss — — — ( 63,387 ) ( 63,387 )

Balance at September 30, 2022 179,645,873 $ 18 $ 396,085 $ 55,133 $ 451,236

Nine Months Ended September 30, 2021

Common Stock Additional

12 unchanged sentences

Balance at June 30, 2021 172,798,338 20 373,209 235,345 608,574

Exercise of common stock options and vesting of restricted stock units, net 322,650 — 50 — 50

Share-based compensation — — 545 — 545

Net loss — — — ( 26,615 ) ( 26,615 )

Balance at September 30, 2021 173,120,988 $ 20 $ 373,804 $ 208,730 $ 582,554

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

2 unchanged sentences

(Dollar amounts in thousands)

Six Months Ended June 30,

Nine Months Ended September 30,

Cash flows from operating activities

7 unchanged sentences

Share-based compensation 5,268 3,972

Acquired in-process research and development (Note 3)

Changes in operating assets and liabilities:

7 unchanged sentences

Cash flows from investing activities

Purchase of property and equipment ( 559 ) ( 965 )

Purchase of property and equipment and other ( 2,621 ) ( 2,213 )

Proceeds from sale of property and equipment 33 —

Purchase of in-process research and development ( 14,428 ) —

Payments for security deposit, net — ( 29 )

11 unchanged sentences

Cash and cash equivalents and restricted cash, end of period $ 154,826 $ 290,184

Supplemental disclosure of noncash investing information:

Supplemental disclosure of noncash investing and financing activities:

Common stock issued for purchase of assets $ 16,115 $ —

Acquisitions of property and equipment included in accounts payable and other $ 66 $ 20

8 unchanged sentences

The Company designs and develops hybrid and fully electric powertrain systems for Class 8 semi-trucks which modify semi-tractors into hybrid and range-extending electric vehicles, respectively.

The Company’s hybrid ("Hybrid") system utilizes intelligent electric drive axles with advanced algorithms and battery technology to optimize vehicle performance, enabling fleets to access an easy, efficient way to decrease fuel expenses, lower emissions and/or improve vehicle performance.

The Company’s hybrid system utilizes intelligent electric drive axles with advanced algorithms and battery technology to optimize vehicle performance, enabling fleets to access an easy, efficient way to decrease fuel expenses, lower emissions and/or improve vehicle performance (“Hybrid”).

The Hypertruck ERX TM system utilizes an intelligent electric powertrain with advanced algorithms to optimize emissions performance and efficiency with no new infrastructure required.

1 unchanged sentence

The Company recently launched its commercial Hybrid system, and the Hypertruck ERX system is in the design verification phase.

The Company recently acquired new fuel agnostic capable generator technology with which it plans to develop and commercialize the Hypertruck KARNO.

Summary of Significant Accounting Policies

8 unchanged sentences

The Company is an early-stage growth company and has generated negative cash flows from operating activities since inception.

At June 30, 2022, the Company had total equity of $ 496.7 million, inclusive of cash and cash equivalents of $ 199.9 million and investments of $ 300.2 million.

Based on this, the Company has sufficient funds to continue to execute its bus iness strategy for the next twelve months.

At September 30, 2022, the Company had total equity of $ 451.2 million, inclusive of cash and cash equivalents of $ 154.2 million and investments of $ 301.3 million.

Based on this, the Company has sufficient funds to continue to execute its business strategy for the next twelve months.

Use of Estimates and Uncertainty of the Coronavirus Pandemic

The preparation of financial statements in conformity with GAAP requires management to make certain estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities as of the balance sheet date, as well as reported amounts of expenses during the reporting period.

The Company’s most significant estimates and judgments involve revenue recognition, inventory, warranties, income taxes and valuation of share-based compensation.

The Company’s most significant estimates and judgments involve revenue recognition, inventory, warranties, acquisitions, income taxes and valuation of share-based compensation.

The Company bases its estimates on historical experience and on various other assumptions believed to be reasonable, the results of which form the basis for making judgments about the carrying values of assets and liabilities.

5 unchanged sentences

and global economies.

This has required greater use of estimates and assumptions in the preparation of the condensed consolidated financial statements.

As the coronavirus pandemic continues to evolve, the Company believes the extent of the impact to its businesses, operating results, cash flows, liquidity and financial condition will be primarily driven by the severity and duration of the coronavirus pandemic, the pandemic’s impact on the U.S.

and global economies and the timing, scope and effectiveness of federal, state and local governmental responses to the pandemic.

Those primary drivers are beyond the Company’s knowledge and control, and as a result, at this time the Company is unable to predict the cumulative impact, both in terms of severity and duration, that the coronavirus pandemic will have on its business, operating results, cash flows and financial condition, but it could be material if the current circumstances continue to exist for a prolonged period.

Although the Company has made its best estimates based

upon current information, actual results could materially differ from the estimates and assumptions.

If so, the Company may be subject to future impairment charges as well as changes to recorded reserves and valuations.

The lingering impacts of the coronavirus pandemic primarily include ongoing shortages in the transportation industry supply chain.

Concentration of Supplier Risk

The Company is dependent on certain suppliers, the majority of which are single source suppliers, and the inability of these suppliers to deliver necessary components of the Company’s products in a timely manner at prices, quality levels and volumes that are acceptable, or the Company’s inability to efficiently manage these components from these suppliers, could have a material adverse effect on the Company’s business, prospects, financial condition and operating results.

that are acceptable, or the Company’s inability to efficiently manage these components from these suppliers, could have a material adverse effect on the Company’s business, prospects, financial condition and operating results.

Cash and Cash Equivalents

4 unchanged sentences

Restricted Cash

The Company has provided its corporate headquarters lessor with a letter of credit for $ 0.7 million to secure the performance of lease obligations, backed by a restricted cash deposit to pay any draws on the letter of credit by the lessor.

The Company has provided its corporate headquarters lessor with a letter of credit for $ 0.7 million to secure the performance of the Company's lease obligations, backed by a restricted cash deposit to pay any draws on the letter of credit by the lessor.

Total cash and cash equivalents and restricted cash presented in the condensed consolidated statements of cash flows is summarized as follows:

June 30, 2022 December 31, 2021 June 30, 2021 December 31, 2020

September 30, 2022 December 31, 2021 September 30, 2021 December 31, 2020

Cash and cash equivalents $ 154,161 $ 258,445 $ 289,486 $ 389,705

4 unchanged sentences

The allowance for doubtful accounts is maintained at a level considered adequate to provide for potential account losses on the balance based on the Company’s evaluation of the anticipated impact of current economic conditions, changes in the character and size of the balance, past and expected future loss experience and other pertinent factors.

At June 30, 2022 and December 31, 2021, accounts receivable included amounts receivable from customers of $ 0.1 million and $ 45.0 thousand, respectively.

At June 30, 2022 and December 31, 2021, there was no allowance for doubtful accounts required based on the Company's evaluation.

At September 30, 2022 and December 31, 2021, accounts receivable included amounts receivable from customers of $ 0.6 million and $ 45.0 thousand, respectively.

At September 30, 2022 and December 31, 2021, there was no allowance for doubtful accounts required based on the Company's evaluation.

The Company’s investments consist of corporate bonds, U.S.

10 unchanged sentences

ASC 820, Fair Value Measurements , clarifies that fair value is an exit price, representing the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants.

As such, fair value is a market-based measurement that should be determined based upon assumptions that market participants would use in pricing an asset or

As such, fair value is a market-based measurement that should be determined based upon assumptions that market participants would use in pricing an asset or liability.

As a basis for considering such assumptions, ASC 820 establishes a three-tier fair value hierarchy, which prioritizes the inputs used in measuring fair value as follows:

6 unchanged sentences

The Company’s financial instruments consist of cash and cash equivalents and restricted cash, accounts receivable, investments, accounts payable and accrued expenses for which the carrying value approximates fair value, exclusive of any interim unrealized gains or losses, because of the short-term nature of the instruments.

The fair value of investments are based on quoted prices for identical or similar instruments in markets that are not active.

The fair values of investments are based on quoted prices for identical or similar instruments in markets that are not active.

As a result, investments are classified within Level II of the fair value hierarchy.

5 unchanged sentences

Recognize revenue when (or as) a performance obligation is satisfied.

Revenue is comprised of sales of Hybrid systems for Class 8 semi-trucks and specific other features and services that meet the definition of a performance obligation, including internet connectivity and data processing.

Revenue is comprised of sales of Hybrid systems for Class 8 semi-trucks, Class 8 semi-trucks outfitted with Hybrid systems and specific other features and services that meet the definition of a performance obligation, including internet connectivity and data processing.

We provide installation services for the Hybrid system onto the customers’ vehicle.

2 unchanged sentences

There is no meaningful basis on which to disaggregate revenue in the current period.

We recognize revenue on Hybrid system sales upon delivery and acceptance of the vehicle to the customer, which is when control transfers.

We recognize revenue on Hybrid system sales and Class 8 semi-trucks outfitted with Hybrid systems upon delivery and acceptance of the vehicle to the customer, which is when control transfers.

Contracts are reviewed for significant financing components and payments are typically received within 30 days of delivery.

5 unchanged sentences

In the fourth quarter of fiscal 2021, we began taking deposits to secure future Hypertruck ERX production slots.

When a Class 8 semi-truck outfitted with a Hybrid system is resold to a customer, judgment is required to determine if we are the principal or agent in the arrangement.

We consider factors such as, but not limited to, which entity has the primary responsibility for fulfilling the promise to provide the specified good or service, which entity has inventory risk before the specified good or service has been transferred to a customer and which entity has discretion in establishing the price for the specified good or service.

We have determined that we are the principal in transactions involving the resale of Class 8 semi-trucks outfitted with the Hybrid system.

The disaggregation of our revenue sources for the three and nine months ended September 30, 2022 and 2021 is summarized as follows:

Three Months Ended September 30, Nine Months Ended September 30,

2022 2021 2022 2021

Hybrid systems and other $ 243 $ — $ 755 $ —

Class 8 semi-truck prepared for Hybrid system upfit 256 — 256 —

Total product sales and other $ 499 $ — $ 1,011 $ —

We provide limited assurance-type warranties under our contracts and do not offer extended warranties or maintenance contracts.

The warranty period typically extends for the lesser of two years or 200,000 miles following transfer of control and

solely relate to correction of product defects during the warranty period.

The warranty period typically extends for the lesser of two years or 200,000 miles following transfer of control and solely relate to correction of product defects during the warranty period.

We recognize the cost of the warranty upon transfer of control based on estimated and historical claims rates and fulfillment costs, which are variable.

1 unchanged sentence

Warranty expense is recorded as a component of cost of revenue.

The amortized cost, unrealized gains and losses, fair value and maturities of our held-to-maturity investments at June 30, 2022 and December 31, 2021 are summarized as follows:

Fair Value Measurements at June 30, 2022

In September 2022, we acquired certain assets (the "Acquired Assets") of General Electric Company's GE Additive business (the "Acquisition").

The Acquired Assets include new hydrogen and fuel agnostic capable generator technology (“KARNO”).

The Acquisition did not meet the definition of a business combination and was accounted for as an asset acquisition.

No goodwill was recognized and payments allocated to in-process research and development ("IPR&D") were recorded in research and development expense as there was no alternative future use.

Total consideration for the Acquisition was $ 32.3 million comprised of $ 15.0 million in cash, 5,500,000 shares of common stock valued at $ 16.1 million on the closing date and $ 1.2 million in direct transaction costs.

$ 3.6 million was recorded as property and equipment with expected useful lives of primarily five years and $ 28.8 million was recorded as research and development expense.

All assets were valued using level 3 inputs, with property and equipment valued using a market approach and IPR&D valued using an income approach based on Company management’s projections.

The cash component of the consideration was recorded in the statement of cash flows and allocated between purchase of property and equipment and purchase of IPR&D under investing activities.

The amortized cost, unrealized gains and losses, fair value and maturities of our held-to-maturity investments at September 30, 2022 and December 31, 2021 are summarized as follows:

Fair Value Measurements at September 30, 2022

Amortized Cost Gross Unrealized Gains Gross Unrealized Losses Fair Value

11 unchanged sentences

$ 299,004 $ 5 $ ( 1,106 ) $ 297,903

June 30, 2022 December 31, 2021

September 30, 2022 December 31, 2021

Amortized Cost Fair Value Amortized Cost Fair Value

3 unchanged sentences

Fair Value Measurements

The fair value measurements of our financial assets at June 30, 2022 and December 31, 2021 are summarized as follows:

Fair Value Measurements at June 30, 2022

The fair value measurements of our financial assets at September 30, 2022 and December 31, 2021 are summarized as follows:

Fair Value Measurements at September 30, 2022

Level I Level II Level III Total

17 unchanged sentences

$ 259,110 $ 297,903 $ — $ 557,013

The carrying value of our inventory at June 30, 2022 and December 31, 2021 is summarized as follows:

June 30, 2022 December 31, 2021

The carrying value of our inventory at September 30, 2022 and December 31, 2021 is summarized as follows:

September 30, 2022 December 31, 2021

Raw materials $ — $ —

1 unchanged sentence

Finished goods 135 110

During the three and six months ended June 30, 2022, we recorded inventory write-downs of $ 2.0 million and $ 3.3 million, respectively.

During the three and six months ended June 30, 2021, we recorded no inventory write-downs.

During the three and nine months ended September 30, 2022, we recorded inventory write-downs of $ 2.3 million and $ 5.6 million, respectively.

During the three and nine months ended September 30, 2021, we recorded no inventory write-downs.

These write-downs are included in cost of revenues.

Property and Equipment, Net

Property and equipment, net at September 30, 2022 and December 31, 2021 is summarized as follows:

September 30, 2022 December 31, 2021

Production machinery and equipment $ 5,684 $ 1,717

Vehicles 932 720

Leasehold improvements 1,037 1,077

Office furniture and fixtures 159 155

Computers and related equipment 1,336 1,219

accumulated depreciation ( 3,376 ) ( 2,653 )

Total property and equipment, net $ 5,772 $ 2,235

Share-Based Compensation

During the six months ended June 30, 2022 and 2021, the Company granted 2.1 million and 3.3 million, respectively, restricted stock units which will vest over a period of one to four years , some of which include performance criteria based on the achievement of key Company milestones.

During the six months ended June 30, 2022 and 2021, 0.5 million and 0.3 million , respectively, restricted stock units and options were forfeited.

Share-based compensation expense for the three and six months ended June 30, 2022 was $ 1.9 million and $ 3.5 million, respectively.

Share-based compensation expense for the three and six months ended June 30, 2021 was $ 1.9 million and $ 3.4 million, respectively.

During the nine months ended September 30, 2022 and 2021, the Company granted 2.2 million and 3.8 million, respectively, restricted stock units which will vest over a period of one to four years , some of which include performance criteria based on the achievement of key Company milestones.

During the nine months ended September 30, 2022 and 2021, 0.8 million and 0.4 million , respectively, restricted stock units and options were forfeited.

Share-based compensation expense for the three and nine months ended September 30, 2022 was $ 1.8 million and $ 5.3 million, respectively.

Share-based compensation expense for the three and nine months ended September 30, 2021 was $ 0.5 million and $ 4.0 million, respectively.

Accrued Expenses and Other Current Liabilities

Accrued expenses and other current liabilities at June 30, 2022 and December 31, 2021 are summarized as follows:

June 30, 2022 December 31, 2021

Accrued expenses and other current liabilities at September 30, 2022 and December 31, 2021 are summarized as follows:

September 30, 2022 December 31, 2021

Accrued professional services and other $ 7,819 $ 3,681

2 unchanged sentences

$ 14,168 $ 7,759

The change in warranty liability for the three and six months ended June 30, 2022 and 2021 is summarized as follows:

Three Months Ended June 30, Six Months Ended June 30,

The change in warranty liability for the three and nine months ended September 30, 2022 and 2021 is summarized as follows:

Three Months Ended September 30, Nine Months Ended September 30,

2022 2021 2022 2021

9 unchanged sentences

Net Loss Per Share

The computation of basic and diluted net loss per share for the three and six months ended June 30, 2022 and 2021 is summarized as follows (in thousands, except share and per share data):

Three Months Ended June 30, Six Months Ended June 30,

The computation of basic and diluted net loss per share for the three and nine months ended September 30, 2022 and 2021 is summarized as follows (in thousands, except share and per share data):

Three Months Ended September 30, Nine Months Ended September 30,

2022 2021 2022 2021

2 unchanged sentences

Net loss per share, basic and diluted $ ( 0.36 ) $ ( 0.15 ) $ ( 0.71 ) $ ( 0.39 )

Potential common shares excluded from the computation of diluted net loss per share because including them would have had an anti-dilutive effect for the three and six months ended June 30, 2022 and 2021 are summarized as follows:

Three and Six Months Ended June 30,

Potential common shares excluded from the computation of diluted net loss per share because including them would have had an anti-dilutive effect for the three and nine months ended September 30, 2022 and 2021 are summarized as follows:

Three and Nine Months Ended September 30,

Unexercised stock options 2,682,228 3,551,320

1 unchanged sentence

6,490,893 7,155,934

* Potential common shares from unvested restricted stock units for the periods ended June 30, 2022 and 2021 include 1,361,667 and 1,743,750 shares, respectively, where no accounting grant date has been established.

* Potential common shares from unvested restricted stock units for the periods ended September 30, 2022 and 2021 include 1,261,667 and 1,931,250 shares, respectively, where no accounting grant date has been established.

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

What changed 10-Q

Item 1. Financial Statements