What changed in this filing

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Item 1. Financial Statements

2023-11-08 compared with 2023-08-09 · 88 added, 60 removed, 297 unchanged (33% 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;

181,152,151 and 179,826,309 shares issued and outstanding at June 30, 2023 and December 31, 2022, respectively

182,716,445 and 179,826,309 shares issued and outstanding at September 30, 2023 and December 31, 2022, respectively

Additional paid-in capital 402,978 397,810

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,

2023 2022 2023 2022

11 unchanged sentences

Interest income 3,534 1,926 10,345 3,066

(Loss) gain on disposal of assets ( 1 ) ( 133 ) 1 ( 135 )

Other income (expense), net 3 — ( 12 ) —

Gain (loss) on disposal of assets — 46 1 ( 89 )

Other income, net 26 — 14 —

Net loss $ ( 30,322 ) $ ( 63,387 ) $ ( 94,380 ) $ ( 123,970 )

5 unchanged sentences

(Dollar amounts in thousands, except share data)

Six Months Ended June 30, 2023

Nine Months Ended September 30, 2023

Common Stock Additional

11 unchanged sentences

Balance at June 30, 2023 181,152,151 18 401,439 ( 38,312 ) 363,145

Six Months Ended June 30, 2022

Exercise of common stock options and vesting of restricted stock units, net 1,564,294 — 130 — 130

Share-based compensation — — 1,409 — 1,409

Net loss — — — ( 30,322 ) ( 30,322 )

Balance at September 30, 2023 182,716,445 $ 18 $ 402,978 $ ( 68,634 ) $ 334,362

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

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

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 5,170 5,268

Acquired in-process research and development — 28,752

Changes in operating assets and liabilities:

9 unchanged sentences

Proceeds from sale of property and equipment 2 33

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

Payments for security deposit, net ( 45 ) —

1 unchanged sentence

Proceeds from sale and maturity of investments 178,556 156,382

Net cash used in investing activities ( 7,542 ) ( 2,864 )

Net cash provided by (used in) investing activities 1,561 ( 20,750 )

Cash flows from financing activities

6 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 $ 512 $ 66

5 unchanged sentences

Hyliion Holdings Corp.

is a Delaware corporation headquartered in Cedar Park, Texas.

is a Delaware corporation headquartered in Cedar Park, Texas, that designs and develops stationary power applications and electric powertrain systems.

References to the “Company,” “Hyliion,” “we,” or “us” in this report refer to Hyliion Holdings Corp.

and its wholly owned subsidiary, unless expressly indicated or the context otherwise requires.

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 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 when fueled by renewable natural gas, and operate fully electric when needed.

We have begun the build of our first production unit of the Hypertruck ERX system 12-liter variant as of mid-2023.

Additionally, in 2022 the Company acquired new fuel agnostic capable generator technology with which it plans to develop and commercialize as the Hypertruck KARNO system and a KARNO generator to be used in stationary power applications.

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.

The Company is currently selling its hybrid system, which 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 Company plans to develop and commercialize a fuel-agnostic generator (the “KARNO generator”) to be used in stationary power applications.

The Company believes the KARNO generator is well positioned to address the rising strain on electrical infrastructure, notably from electric vehicles.

The Company announced a strategic review of alternatives for its electric powertrain business (the “Powertrain Business”) on October 10, 2023 citing lower than expected industry adoption of electric trucks, significant increases in component costs, changing regulatory requirements, and uncertainty about its ability to raise additional needed capital for ongoing investment in the business as reason for undertaking this strategic review.

On November 7, 2023, our board of directors determined that the Company would discontinue operating the Powertrain Business.

Hyliion intends to retain the technology of the Powertrain Business technology and will continue to explore potential sales or future use of both the technology and tangible assets from the Powertrain Business.

Subsequent Events

O n November 7, 2023, the board of directors (the “Board”) of the Company approved a strategic plan to wind down its Powertrain Business and preserve technology relating to the Powertrain Business, to better align its workforce with the Company’s future needs, and to reduce the Company’s operating costs (the “Plan”).

As part of the Plan, the Company will continue to focus on commercialization of its KARNO generator technology.

Following completion of the Plan, we no longer expect to recognize revenue on products not related to KARNO technology, including the Company’s Hypertruck ERX system (“Hypertruck ERX”) and Hyliion Hybrid system (“Hybrid”).

The Company is evaluating opportunities to monetize certain of the assets and technology relating to the Business, but no assurances can be provided that any such opportunities will be realized.

The Company expects the wind-down to be completed by the end of the Company’s first quarter of fiscal year 2024.

In connection with the Plan, the Company expects to incur total charges and expenses of approximately $ 18.4 million.

The Plan includes a reduction of the Company’s workforce by approximately 175 people, or 67 %, with some expected to be provided transition packages that will provide for continued services through various dates of the Company’s fiscal year 2024.

The Company expects the Plan will result in (i) charges consisting of approximately $ 1.4 million in employee severance and retention payments and $ 0.9 million in non-cash stock-based compensation expense related to vesting of share-based awards, and (ii) cash expenditures of approximately $ 13.9 million for contract terminations, with up to an additional $ 9.0 million depending on the outcome of supplier negotiations and other estimates and uncertainties.

The Company expects the majority of the charges and expenses related to the Plan to be incurred in the Company’s fourth quarter of fiscal year 2023.

The above estimates of the cash expenditures and charges that the Company expects to incur in connection with the Plan, and the timing thereof, are subject to a number of assumptions and actual amounts may differ m aterially from estimates.

For example, potential employee reductions are subject to legal requirements, which may extend the reduction process beyond that expected in certain cases.

In addition, the Company may incur other cash expenditures or charges not currently contemplated due to unanticipated events that may occur, including in connection with the implementation of the Plan or otherwise.

Summary of Significant Accounting Policies

6 unchanged sentences

In the opinion of the Company, these condensed consolidated financial statements include all recurring adjustments and normal accruals necessary for a fair presentation of the Company’s financial position, results of operations and cash flows for the dates and periods presented.

These condensed consolidated financial statements and accompanying notes should be read in conjunction with the Company’s 2022 Annual Report.

These condensed consolidated financial statements and accompanying notes should be read in conjunction with the

Company’s 2022 Annual Report.

Results for interim periods are not necessarily indicative of the results to be expected for a full fiscal year or for any future period.

1 unchanged sentence

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

At June 30, 2023, the Company had total equity of $ 363.1 million, inclusive of cash and cash equivalents of $ 48.2 million and total investments of $ 306.1 million.

At September 30, 2023, the Company had total equity of $ 334.4 million, inclusive of cash and cash equivalents of $ 28.6 million and total investments of $ 294.9 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.

5 unchanged sentences

Concentration of Supplier Risk

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.

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.

Cash and Cash Equivalents

6 unchanged sentences

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

June 30, 2023 December 31, 2022 June 30, 2022 December 31, 2021

September 30, 2023 December 31, 2022 September 30, 2022 December 31, 2021

Cash and cash equivalents $ 28,600 $ 119,468 $ 154,161 $ 258,445

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, 2023 and December 31, 2022, accounts receivable included amounts receivable from customers of $ 0.3 million and $ 1.1 million, respectively.

At June 30, 2023 and December 31, 2022, allowance for doubtful accounts on customer receivables was $ 0.1 million and $ 0.1 million, respectively.

At September 30, 2023 and December 31, 2022, accounts receivable included amounts receivable from customers of $ 0.1 million and $ 1.1 million, respectively.

At September 30, 2023 and December 31, 2022, allowance for doubtful accounts on customer receivables was nil and $ 0.1 million, respectively.

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

June 30, 2023 December 31, 2022

September 30, 2023 December 31, 2022

Customer A 100 % 82 %

Customer C — 12

Customer G 24 —

Customer H 21 —

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

19 unchanged sentences

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.

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

The fair value of investments is 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.

Impairment of Long-Lived Assets

The Company reviews long-lived assets, including property and equipment and intangible assets with definite lives, for impairment whenever events or changes in circumstances indicate that an asset group’s carrying amount may not be recoverable.

The Company conducts its long-lived asset impairment analysis in accordance with ASC 360-10, Impairment or

Disposal of Long-Lived Assets , which requires the Company to group assets and liabilities at the lowest level for which identifiable cash flows are largely independent of the cash flows of other assets and liabilities and evaluate the asset group against the sum of the undiscounted future cash flows.

If the undiscounted cash flows do not indicate the carrying amount of the asset group is recoverable, an impairment charge is measured as the amount by which the carrying amount of the asset group exceeds its fair value.

The Company performed a test of recoverability of its long-lived assets and determined that all long-lived assets were recoverable as of September 30, 2023.

As of September 30, 2023, long-lived assets associated with the powertrain business had a recorded amount of $ 4.2 million and associated probability-weighted estimated future cash flows of $ 4.4 million.

If the Company is unable to sell long-lived assets associated with the powertrain business at a sufficient price, it will record associated impairment charges in future periods.

Estimated future cash flows for all other long-lived assets substantially exceeded recorded amounts.

The Company follows five steps to recognize revenue from contracts with customers under ASC 606, Revenue from Contracts with Customers , which are:

15 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.

Such deposits were immaterial at June 30, 2023 and December 31, 2022.

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

Such deposits were immaterial at September 30, 2023 and December 31, 2022.

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

2 unchanged sentences

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

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

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

2023 2022 2023 2022

3 unchanged sentences

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

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

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

2023 2022 2023 2022

1 unchanged sentence

Customer B — 6 — 21

Customer D — — — 17

Customer E — — — 11

Customer G — — 25 —

8 unchanged sentences

Research and development costs include, but are not limited to, outsourced engineering services, allocated facilities costs, depreciation on equipment utilized in research and development activities, internal engineering and development expenses, materials, internally developed software and employee related expenses (including salaries, benefits, travel, and share-based compensation) related to development of the Company’s products and services.

The amortized cost, unrealized gains and losses, fair value and maturities of our held-to-maturity investments at June 30, 2023 and December 31, 2022 are summarized as follows:

Fair Value Measurements at June 30, 2023

The amortized cost, unrealized gains and losses, fair value and maturities of our held-to-maturity investments at September 30, 2023 and December 31, 2022 are summarized as follows:

Fair Value Measurements at September 30, 2023

Amortized Cost Gross Unrealized Gains Gross Unrealized Losses Fair Value

11 unchanged sentences

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

June 30, 2023 December 31, 2022

September 30, 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 June 30, 2023 and December 31, 2022 are summarized as follows:

Fair Value Measurements at June 30, 2023

The fair value measurements of our financial assets at September 30, 2023 and December 31, 2022 are summarized as follows:

Fair Value Measurements at September 30, 2023

Level I Level II Level III Total

17 unchanged sentences

$ 120,133 $ 297,959 $ — $ 418,092

The carrying value of our inventory at June 30, 2023 and December 31, 2022 is summarized as follows:

June 30, 2023 December 31, 2022

The carrying value of our inventory at September 30, 2023 and December 31, 2022 is summarized as follows:

September 30, 2023 December 31, 2022

Raw materials $ — $ —

Work in process 47 —

Finished goods 92 74

During the three and six months ended June 30, 2023, we recorded inventory write-downs of nil and $ 0.2 million, respectively.

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 nine months ended September 30, 2023, we recorded inventory write-downs of $ 0.8 million and $ 1.0 million, respectively.

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

These write-downs are included in cost of revenues.

Property and Equipment, Net

Property and equipment, net at June 30, 2023 and December 31, 2022 is summarized as follows:

June 30, 2023 December 31, 2022

Property and equipment, net at September 30, 2023 and December 31, 2022 is summarized as follows:

September 30, 2023 December 31, 2022

Production machinery and equipment $ 10,077 $ 5,897

6 unchanged sentences

Share-Based Compensation

During the six months ended June 30, 2023 and 2022, the Company granted 2.5 million and 2.1 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 six months ended June 30, 2023 and 2022, 0.6 million and 0.5 million , respectively, restricted stock units and options were forfeited.

Share-based compensation expense for the three and six months ended June 30, 2023 was $ 1.7 million and $ 3.8 million, respectively.

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

During the nine months ended September 30, 2023 and 2022, the Company granted 2.2 million and 2.2 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 nine months ended September 30, 2023 and 2022, 0.6 million and 0.8 million, respectively, of restricted stock units and options were forfeited.

Share-based compensation expense for the three and nine months ended September 30, 2023 was $ 1.4 million and $ 5.2 million, respectively.

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

Accrued Expenses and Other Current Liabilities

Accrued expenses and other current liabilities at June 30, 2023 and December 31, 2022 are summarized as follows:

June 30, 2023 December 31, 2022

Accrued expenses and other current liabilities at September 30, 2023 and December 31, 2022 are summarized as follows:

September 30, 2023 December 31, 2022

Accrued professional services and other $ 4,610 $ 5,834

2 unchanged sentences

$ 8,867 $ 11,535

The change in warranty liability for the three and six months ended June 30, 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 June 30, Six Months Ended June 30,

The change in warranty liability for the three and nine months ended September 30, 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 September 30, Nine Months Ended September 30,

2023 2022 2023 2022

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, 2023 and 2022 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, 2023 and 2022 is summarized as follows (in thousands, except share and per share data):

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

2023 2022 2023 2022

2 unchanged sentences

Net loss per share, basic and diluted $ ( 0.17 ) $ ( 0.36 ) $ ( 0.52 ) $ ( 0.71 )

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, 2023 and 2022 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, 2023 and 2022 are summarized as follows:

Three and Nine Months Ended September 30,

Unexercised stock options 683,090 2,682,228

1 unchanged sentence

4,659,313 6,490,893

* Potential common shares from unvested restricted stock units for the periods ended June 30, 2023 and 2022 include 649,584 and 1,361,667 shares, respectively, where no accounting grant date has been established.

* Potential common shares from unvested restricted stock units for the periods ended September 30, 2023 and 2022 include 653,334 and 1,261,667 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