What changed in this filing

/stocks — the workspaceLOADING

Item 1. Financial Statements

2023-05-09 compared with 2022-11-09 · 81 added, 108 removed, 254 unchanged (43% of the section changed)

3 unchanged sentences

(Dollar amounts in thousands, except share data)

September 30,

2023 December 31,

25 unchanged sentences

250,000,000 shares authorized;

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

180,695,572 and 179,826,309 shares issued and outstanding at March 31, 2023 and December 31, 2022, respectively

Additional paid-in capital 399,674 397,810

Retained earnings 55,133 179,103

(Accumulated deficit) retained earnings ( 3,085 ) 25,746

Total stockholders’ equity 396,607 423,574

4 unchanged sentences

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

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

2022 2021 2022 2021

Three Months Ended March 31,

Product sales and other $ 310 $ 340

11 unchanged sentences

Gain (loss) on disposal of assets 2 ( 2 )

Other expense, net ( 15 ) —

Net loss $ ( 28,831 ) $ ( 27,108 )

5 unchanged sentences

(Dollar amounts in thousands, except share data)

Nine Months Ended September 30, 2022

Three Months Ended March 31, 2023

Common Stock Additional

Capital Retained Earnings Total

Capital (Accumulated Deficit) Retained Earnings Total

Stockholders’

5 unchanged sentences

Balance at March 31, 2023 180,695,572 $ 18 $ 399,674 $ ( 3,085 ) $ 396,607

Exercise of common stock options and vesting of restricted stock units, net 193,834 — 15 — 15

Share-based compensation — — 1,922 — 1,922

Net loss — — — ( 33,475 ) ( 33,475 )

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

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

Three Months Ended March 31, 2022

Common Stock Additional

3 unchanged sentences

Balance at December 31, 2021 173,468,979 $ 17 $ 374,795 $ 179,103 $ 553,915

Common stock issued for warrants exercised, net of issuance costs 371,535 — 4,282 — 4,282

Exercise of common stock options and vesting of restricted stock units, net 336,155 — ( 92 ) — ( 92 )

2 unchanged sentences

Balance at March 31, 2022 173,805,134 $ 17 $ 376,266 $ 151,995 $ 528,278

Exercise of common stock options and vesting of restricted stock units, net 1,278,527 1 215 — 216

Share-based compensation — — 1,917 — 1,917

Net loss — — — ( 23,244 ) ( 23,244 )

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)

Nine Months Ended September 30,

Three Months Ended March 31,

Cash flows from operating activities

2 unchanged sentences

Depreciation and amortization 524 270

Amortization and accretion of investments 1,300 1,318

Amortization and accretion of investments, net ( 194 ) 578

Noncash lease expense 302 303

Inventory write-down 231 1,325

Loss on disposal of assets 89 —

(Gain) loss on disposal of assets ( 2 ) 2

Share-based compensation 2,040 1,563

Acquired in-process research and development (Note 3)

Changes in operating assets and liabilities:

9 unchanged sentences

Proceeds from sale of property and equipment 2 —

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

Payments for security deposit, net — ( 29 )

Purchase of investments ( 31,394 ) ( 59,234 )

2 unchanged sentences

Cash flows from financing activities

Proceeds from exercise of stock warrants, net of issuance costs — 16,257

Payments for Paycheck Protection Program loan — ( 908 )

Proceeds from exercise of common stock options 19 28

Taxes paid related to net share settlement of equity awards ( 195 ) ( 120 )

Net cash (used in) provided by financing activities ( 92 ) 15,902

Net cash used in financing activities ( 176 ) ( 92 )

Net decrease in cash and cash equivalents and restricted cash ( 34,262 ) ( 31,338 )

2 unchanged sentences

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 $ 255 $ 282

10 unchanged sentences

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

The Hypertruck ERX system enables fleets to reduce the cost of ownership while providing the ability to deliver net-negative carbon emissions and operate fully electric when needed.

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.

The Hypertruck ERX system enables fleets to reduce the cost of ownership while providing the ability to deliver net-negative carbon emissions when fueled by renewable natural gas, and operate fully electric when needed.

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

Additionally, in 2022 the Company acquired new fuel agnostic capable generator technology with which it plans to develop and commercialize as the Hypertruck KARNO.

Finally, the Company recently announced an agreement with Hyzon Motors USA Inc.

(“Hyzon”) to jointly develop a prototype fuel cell powered vehicle, with limited research and development in the first phase.

Summary of Significant Accounting Policies

Basis of Presentation

These condensed consolidated statements include the accounts of the Company and have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) and pursuant to the rules and regulations of the United States Securities and Exchange Commission (“SEC”), which permit reduced disclosure for interim periods.

All intercompany transactions and balances have been eliminated upon consolidation.

Basis of Presentation and Principles of Consolidation

The accompanying condensed consolidated financial statements include the accounts of Hyliion Holdings Corp.

and its wholly-owned subsidiary.

Intercompany transactions and balances have been eliminated upon consolidation.

The condensed consolidated financial statements and accompanying notes have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) and in accordance with the rules and regulations of the United States Securities and Exchange Commission (“SEC”), which permit reduced disclosure for interim periods.

The condensed consolidated balance sheet at December 31, 2022 was derived from audited financial statements for the fiscal year then ended, but does not include all necessary disclosures required with respect to annual financial statements.

4 unchanged sentences

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

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

At March 31, 2023, the Company had total equity of $ 396.6 million, inclusive of cash and cash equivalents of $ 85.2 million and total investments of $ 300.2 million.

Based on this, the Company has sufficient funds to continue to execute its business strategy for the next twelve months from the issuance date of the financial statements included in this Quarterly Report on Form 10-Q.

Use of Estimates

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, 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.

Actual results could differ from those estimates, and such differences could be material to the Company’s financial statements.

On January 30, 2020, the World Health Organization declared the coronavirus outbreak a “Public Health Emergency of International Concern” and on March 11, 2020, declared the coronavirus outbreak a pandemic.

In mid-March 2020, U.S.

State Governors, local officials and leaders outside of the U.S.

began ordering various “shelter-in-place” orders, which have had various impacts on the U.S.

and global economies.

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

Management 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.

Actual results could differ from those estimates, and such differences could be material to the Company’s condensed consolidated financial statements.

Concentration of Supplier Risk

8 unchanged sentences

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:

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

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

March 31, 2023 December 31, 2022 March 31, 2022 December 31, 2021

Cash and cash equivalents $ 85,206 $ 119,468 $ 227,107 $ 258,445

Restricted cash included in other non-current assets 665 665 698 —

Restricted cash included in other assets 665 665 665 665

$ 85,871 $ 120,133 $ 227,772 $ 259,110

Accounts Receivable

Accounts receivable are stated at gross invoice amount, net of an allowance for doubtful accounts.

Accounts receivable are stated at a gross invoice amount, net of an allowance for doubtful accounts.

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 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.

At March 31, 2023 and December 31, 2022, accounts receivable included amounts receivable from customers of $ 0.4 million and $ 1.1 million, respectively.

At March 31, 2023 and December 31, 2022, allowance for doubtful accounts on customer receivables was $ 0.1 million and $ 0.1 million, respectively.

The portion of our net accounts receivable from significant customers is summarized as follows:

March 31, 2023 December 31, 2022

Customer A 87 % 82 %

Customer C — 12

Customer F 13 —

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

7 unchanged sentences

The Company evaluates investments for impairment by considering the length of time and extent to which market value has been less than cost or amortized cost, the financial condition and near-term prospects of the issuer as well as specific events or circumstances that may influence the operations of the issuer and the Company’s intent to sell the security or the likelihood that it will be required to sell the security before recovery of the entire amortized cost.

Once a decline in fair value is determined to be other-than-temporary, an impairment charge is recorded to other income and a new cost basis in the investment is established.

Once a decline in fair value is determined to be other-than-temporary, an impairment charge is recorded to other income (expense) and a new cost basis in the investment is established.

Fair Value Measurements

6 unchanged sentences

An asset’s or liability’s fair value measurement level within the fair value hierarchy is based on the lowest level of any input that is significant to the fair value measurement.

Valuation techniques used maximize the use of observable inputs and minimize the use of unobservable inputs.

Valuation techniques used need to maximize the use of observable inputs and minimize the use of unobservable inputs.

The Company believes its valuation methods are appropriate and consistent with other market participants, however the use of different methodologies or assumptions to determine the fair value of certain financial instruments could result in a different fair value measurement at the reporting date.

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

The Company’s financial instruments consist of cash and cash equivalents and restricted cash, accounts receivable, investments, accounts payable and accrued expenses.

The carrying value of cash and cash equivalents and restricted cash, accounts receivable, accounts payable and accrued expenses approximates fair value because of the short-term nature of those instruments.

The fair value 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.

9 unchanged sentences

When our contracts with customers contain multiple performance obligations and where material, the contract transaction price is allocated on a relative standalone selling price basis to each performance obligation.

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

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.

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

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

4 unchanged sentences

Our policy is to exclude taxes collected from customers from the transaction price of contracts.

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.

In the fourth quarter of fiscal 2021, we began

taking deposits to secure future Hypertruck ERX production slots.

Such deposits were immaterial at March 31, 2023 and December 31, 2022.

When a Class 8 semi-truck with a Hybrid system upfit 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

The disaggregation of our revenue sources is summarized as follows and is attributable to the U.S.:

Three Months Ended March 31,

Hybrid systems and other $ 54 $ 340

1 unchanged sentence

Total product sales and other $ 310 $ 340

The portion of our revenues from significant customers is summarized as follows:

Three Months Ended March 31,

Customer A 87 % 26 %

Customer B — 22

Customer D — 26

Customer E — 17

Customer F 13 —

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 relates 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.

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

The amortized cost, unrealized gains and losses, fair value and maturities of our held-to-maturity investments at March 31, 2023 and December 31, 2022 are summarized as follows:

Fair Value Measurements at March 31, 2023

Amortized Cost Gross Unrealized Gains Gross Unrealized Losses Fair Value

11 unchanged sentences

$ 302,308 $ 112 $ ( 4,461 ) $ 297,959

September 30, 2022 December 31, 2021

March 31, 2023 December 31, 2022

Amortized Cost Fair Value Amortized Cost Fair Value

3 unchanged sentences

Fair Value Measurements

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

The fair value measurements of our financial assets at March 31, 2023 and December 31, 2022 are summarized as follows:

Fair Value Measurements at March 31, 2023

Level I Level II Level III Total

17 unchanged sentences

$ 120,133 $ 297,959 $ — $ 418,092

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

September 30, 2022 December 31, 2021

The carrying value of our inventory at March 31, 2023 and December 31, 2022 is summarized as follows:

March 31, 2023 December 31, 2022

Raw materials $ 761 $ —

1 unchanged sentence

Finished goods 108 74

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.

During the three months ended March 31, 2023 and 2022, we recorded inventory write-downs of $ 0.2 million and $ 1.3 million, respectively, 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

Property and equipment, net at March 31, 2023 and December 31, 2022 is summarized as follows:

March 31, 2023 December 31, 2022

Production machinery and equipment $ 7,632 $ 5,897

6 unchanged sentences

Share-Based Compensation

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.

During the three months ended March 31, 2023 and 2022, the Company granted 2.1 million and 2.0 million, respectively, restricted stock units which will vest over a period of one to three years , some of which include performance criteria based on the achievement of key Company milestones.

During the three months ended March 31, 2023 and 2022, 0.2 million and 0.4 million , respectively, restricted stock units and options were forfeited.

Share-based compensation expense for the three months ended March 31, 2023 and 2022 was $ 2.0 million and $ 1.6 million, respectively.

Accrued Expenses and Other Current Liabilities

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 expenses and other current liabilities at March 31, 2023 and December 31, 2022 are summarized as follows:

March 31, 2023 December 31, 2022

Accrued professional services and other $ 6,490 $ 5,834

2 unchanged sentences

$ 10,567 $ 11,535

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

The change in warranty liability for the three months ended March 31, 2023 and 2022 is summarized as follows and included within accrued expenses and other current liabilities and other liabilities in the condensed consolidated balance sheets:

Three Months Ended March 31,

Balance at beginning of period $ 527 $ 44

Provision for new warranties 186 — 517 —

Accrual for warranties issued 33 207

Net changes in accrual related to pre-existing warranties — ( 9 )

Warranty costs incurred ( 122 ) — ( 149 ) —

Warranty charges ( 25 ) ( 4 )

Balance at end of period $ 535 $ 238

4 unchanged sentences

Net Loss Per Share

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

The computation of basic and diluted net loss per share for the three months ended March 31, 2023 and 2022 is summarized as follows (in thousands, except share and per share data):

Three Months Ended March 31,

Net loss attributable to common stockholders $ ( 28,831 ) $ ( 27,108 )

1 unchanged sentence

Net loss per share, basic and diluted $ ( 0.16 ) $ ( 0.16 )

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,

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 months ended March 31, 2023 and 2022 are summarized as follows:

Three Months Ended March 31,

Unexercised stock options 2,444,263 2,928,756

1 unchanged sentence

7,008,122 7,189,750

* 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.

* Potential common shares from unvested restricted stock units for the periods ended March 31, 2023 and 2022 include 687,084 and 1,345,000 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