Hyliion Holdings Corp. 10-Q

ITEM 1. FINANCIAL STATEMENTS HYLIION HOLDINGS CORP. CONDENSED CONSOLIDATED BALANCE SHEETS (Dollar amounts in thousands, except share data) September 30, 2023 December 31, 2022 (Unaudited) Assets Current assets Cash and cash equivalents $ 28,600 $ 119,468 Accounts receivable 140 1,136 Inventory 139 74 Prepaid expenses and other current assets 11,509 9,795 Short-term investments 153,625 193,740 Total current assets 194,013 324,213 Property and equipment, net 11,076 5,606 Operating lease right-of-use assets 7,494 6,470 Intangible assets, net 200 200 Other assets 2,038 1,686 Long-term investments 141,324 108,568 Total assets $ 356,145 $ 446,743 Liabilities and stockholders’ equity Current liabilities Accounts payable $ 3,507 $ 2,800 Current portion of operating lease liabilities 807 347 Accrued expenses and other current liabilities 8,867 11,535 Total current liabilities 13,181 14,682 Operating lease liabilities, net of current portion 7,354 6,972 Other liabilities 1,248 1,515 Total liabilities 21,783 23,169 Commitments and contingencies (Note 11) Stockholders’ equity Common stock, $ 0.0001 par value; 250,000,000 shares authorized; 182,716,445 and 179,826,309 shares issued and outstanding at September 30, 2023 and December 31, 2022, respectively 18 18 Additional paid-in capital 402,978 397,810 (Accumulated deficit) retained earnings ( 68,634 ) 25,746 Total stockholders’ equity 334,362 423,574 Total liabilities and stockholders’ equity $ 356,145 $ 446,743 The accompanying notes are an integral part of these unaudited condensed consolidated financial statements. 1 Table of Contents HYLIION HOLDINGS CORP. UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (Dollar amounts in thousands, except share and per share data) Three Months Ended September 30, Nine Months Ended September 30, 2023 2022 2023 2022 Revenues Product sales and other $ 96 $ 499 $ 672 $ 1,011 Total revenues 96 499 672 1,011 Cost of revenues Product sales and other 677 2,916 1,675 7,160 Total cost of revenues 677 2,916 1,675 7,160 Gross loss ( 581 ) ( 2,417 ) ( 1,003 ) ( 6,149 ) Operating expenses Research and development 25,115 52,678 73,472 88,543 Selling, general and administrative 8,186 10,264 30,265 32,255 Total operating expenses 33,301 62,942 103,737 120,798 Loss from operations ( 33,882 ) ( 65,359 ) ( 104,740 ) ( 126,947 ) Interest income 3,534 1,926 10,345 3,066 Gain (loss) on disposal of assets — 46 1 ( 89 ) Other income, net 26 — 14 — Net loss $ ( 30,322 ) $ ( 63,387 ) $ ( 94,380 ) $ ( 123,970 ) Net loss per share, basic and diluted $ ( 0.17 ) $ ( 0.36 ) $ ( 0.52 ) $ ( 0.71 ) Weighted-average shares outstanding, basic and diluted 181,641,060 174,345,022 180,914,250 173,945,156 The accompanying notes are an integral part of these unaudited condensed consolidated financial statements. 2 Table of Contents HYLIION HOLDINGS CORP. UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY (Dollar amounts in thousands, except share data) Nine Months Ended September 30, 2023 Common Stock Additional Paid-In Capital (Accumulated Deficit) Retained Earnings Total Stockholders’ Equity Shares Amount Balance at December 31, 2022 179,826,309 $ 18 $ 397,810 $ 25,746 $ 423,574 Exercise of common stock options and vesting of restricted stock units, net 869,263 — ( 176 ) — ( 176 ) Share-based compensation — — 2,040 — 2,040 Net loss — — — ( 28,831 ) ( 28,831 ) 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 456,579 — 44 — 44 Share-based compensation — — 1,721 — 1,721 Net loss — — — ( 35,227 ) ( 35,227 ) Balance at June 30, 2023 181,152,151 18 401,439 ( 38,312 ) 363,145 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 Paid-In Capital Retained Earnings Total Stockholders’ Equity Shares Amount Balance at December 31, 2021 173,468,979 $ 17 $ 374,795 $ 179,103 $ 553,915 Exercise of common stock options and vesting of restricted stock units, net 336,155 — ( 92 ) — ( 92 ) Share-based compensation — — 1,563 — 1,563 Net loss — — — ( 27,108 ) ( 27,108 ) 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 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 The accompanying notes are an integral part of these unaudited condensed consolidated financial statements. 3 Table of Contents HYLIION HOLDINGS CORP. UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Dollar amounts in thousands) Nine Months Ended September 30, 2023 2022 Cash flows from operating activities Net loss $ ( 94,380 ) $ ( 123,970 ) Adjustments to reconcile net loss to net cash used in operating activities: Depreciation and amortization 1,796 823 Amortization and accretion of investments, net ( 1,821 ) 1,300 Noncash lease expense 1,072 922 Inventory write-down 992 5,634 (Gain) loss on disposal of assets ( 1 ) 89 Share-based compensation 5,170 5,268 Acquired in-process research and development — 28,752 Changes in operating assets and liabilities: Accounts receivable 996 ( 824 ) Inventory ( 1,057 ) ( 5,660 ) Prepaid expenses and other assets ( 1,200 ) 3,097 Accounts payable 555 ( 5,201 ) Accrued expenses and other liabilities ( 3,295 ) 7,228 Operating lease liabilities ( 1,254 ) ( 900 ) Net cash used in operating activities ( 92,427 ) ( 83,442 ) Cash flows from investing activities Purchase of property and equipment and other ( 6,755 ) ( 2,621 ) Proceeds from sale of property and equipment 2 33 Purchase of in-process research and development — ( 14,428 ) Payments for security deposit, net ( 45 ) — Purchase of investments ( 170,197 ) ( 160,116 ) Proceeds from sale and maturity of investments 178,556 156,382 Net cash provided by (used in) investing activities 1,561 ( 20,750 ) Cash flows from financing activities Proceeds from exercise of common stock options 230 65 Taxes paid related to net share settlement of equity awards ( 232 ) ( 157 ) Net cash used in financing activities ( 2 ) ( 92 ) Net decrease in cash and cash equivalents and restricted cash ( 90,868 ) ( 104,284 ) Cash and cash equivalents and restricted cash, beginning of period 120,133 259,110 Cash and cash equivalents and restricted cash, end of period $ 29,265 $ 154,826 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 Right-of-use assets obtained in exchange for lease obligations $ 2,096 $ — The accompanying notes are an integral part of these unaudited condensed consolidated financial statements. 4 Table of Contents HYLIION HOLDINGS CORP. NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Dollar amounts in thousands, except as separately indicated) Note 1. Overview Hyliion Holdings Corp. 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 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. Note 2. 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. Note 3. Summary of Significant Accounting Policies 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. 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 5 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. These condensed consolidated financial statements have been prepared on a going concern basis, which contemplates the realization of assets and settlement of liabilities in the normal course of business. The Company is an early-stage growth company and has generated negative cash flows from operating activities since inception. 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. 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. 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 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 The Company considers all highly liquid investments with a maturity date of 90 days or less at the time of purchase to be cash and cash equivalents only if in checking, savings or money market accounts. Cash and cash equivalents include cash held in banks and money market accounts and are carried at cost, which approximates fair value. The Company maintains cash in excess of federally insured limits at financial institutions which it believes are of high credit quality and has not incurred any losses related to these balances to date. The Company believes its credit risk, with respect to these financial institutions to be minimal. Restricted Cash 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 as presented in the condensed consolidated statements of cash flows is summarized as follows: September 30, 2023 December 31, 2022 September 30, 2022 December 31, 2021 Cash and cash equivalents $ 28,600 $ 119,468 $ 154,161 $ 258,445 Restricted cash included in other assets 665 665 665 665 $ 29,265 $ 120,133 $ 154,826 $ 259,110 Accounts Receivable 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, 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. 6 The portion of our net accounts receivable from significant customers is summarized as follows: September 30, 2023 December 31, 2022 Customer A 100 % 82 % Customer C — 12 100 % 94 % Investments The Company’s investments consist of corporate bonds, U.S. treasury and agency securities, state and local municipal bonds and commercial paper, all of which are classified as held-to-maturity, with a maturity date of 36 -months or less at the time of purchase. The Company determines the appropriate classification of investments at the time of purchase and re-evaluates such designation as of each balance sheet date. Investments are classified as held-to-maturity when the Company has the positive intent and ability to hold the securities to maturity. Held-to-maturity securities are stated at amortized cost, adjusted for amortization of premiums and accretion of discounts to maturity. Such amortization, along with interest, is included in interest income. The Company uses the specific identification method to determine the cost basis of securities sold. Investments are impaired when a decline in fair value is judged to be other-than-temporary. 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 (expense) and a new cost basis in the investment is established. Fair Value Measurements 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 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: Level I : Quoted prices (unadjusted) for identical assets or liabilities in active markets that the Company can access at the measurement date; Level II : Significant other observable inputs other than level I prices such as quoted prices for similar assets or liabilities, quoted prices in markets that are not active or other inputs that are observable or can be corroborated by observable market data; and Level III : Significant unobservable inputs that reflect the Company’s own assumptions about the assumptions that market participants would use in pricing an asset or liability. 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 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. 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 7 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. Revenue The Company follows five steps to recognize revenue from contracts with customers under ASC 606, Revenue from Contracts with Customers , which are: • Step 1 : Identify the contract(s) with a customer; • Step 2 : Identify the performance obligations in the contract; • Step 3 : Determine the transaction price; • Step 4 : Allocate the transaction price to the performance obligations in the contract; and • Step 5 : Recognize revenue when (or as) a performance obligation is satisfied. 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. The Company’s products are marketed and sold to end-user fleet customers in North America. 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. 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. The sale of a Hybrid system to an end-use fleet customer consists of a completed modification to the customer vehicle and the installation services involve significant integration of the Hybrid system with the customer’s vehicle. Installation services are not distinct within the context of the contract and together with the sale of the Hybrid system represent a single performance obligation. We do not offer any sales returns. Amounts billed to customers related to shipping and handling are classified as revenue, and we have elected to recognize the cost for freight and shipping when control has transferred to the customer as a cost of revenue. 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 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. 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. 8 The disaggregation of our revenue sources is summarized as follows and is attributable to the U.S.: Three Months Ended September 30, Nine Months Ended September 30, 2023 2022 2023 2022 Hybrid systems and other $ 96 $ 243 $ 416 $ 755 Class 8 semi-truck prepared for Hybrid system upfit — 256 256 256 Total product sales and other $ 96 $ 499 $ 672 $ 1,011 The portion of our revenues from significant customers is summarized as follows: Three Months Ended September 30, Nine Months Ended September 30, 2023 2022 2023 2022 Customer A 94 % 69 % 65 % 43 % Customer B — 6 — 21 Customer G — — 25 — 94 % 75 % 90 % 64 % Warranties 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 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. Should product failure rates and fulfillment costs differ from these estimates, material revisions to the estimated warranty liability would be required. Warranty expense is recorded as a component of cost of revenue. Research and Development Expense Research and development costs did not meet the requirements to be recognized as an asset as the associated future benefits were at best uncertain and there was no alternative future use at the time the costs were incurred. 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. 9 Note 4. Investments 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 Commercial paper $ 51,420 $ — $ ( 74 ) $ 51,346 U.S. government agency bonds 22,606 — ( 356 ) 22,250 State and municipal bonds 15,221 — ( 215 ) 15,006 Corporate bonds and notes 205,702 7 ( 1,705 ) 204,004 $ 294,949 $ 7 $ ( 2,350 ) $ 292,606 Fair Value Measurements at December 31, 2022 Amortized Cost Gross Unrealized Gains Gross Unrealized Losses Fair Value Commercial paper $ 36,675 $ 2 $ ( 161 ) $ 36,516 U.S. government agency bonds 12,441 6 ( 328 ) 12,119 State and municipal bonds 40,104 28 ( 628 ) 39,504 Corporate bonds and notes 213,088 76 ( 3,344 ) 209,820 $ 302,308 $ 112 $ ( 4,461 ) $ 297,959 September 30, 2023 December 31, 2022 Amortized Cost Fair Value Amortized Cost Fair Value Due in one year or less $ 153,625 $ 152,826 $ 193,740 $ 191,094 Due after one year through five years 141,324 139,780 108,568 106,865 $ 294,949 $ 292,606 $ 302,308 $ 297,959 Note 5. Fair Value Measurements 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 Cash and cash equivalents $ 28,600 $ — $ — $ 28,600 Restricted cash 665 — — 665 Held-to-maturity investments: Commercial paper — 51,346 — 51,346 U.S. government agency bonds — 22,250 — 22,250 State and municipal bonds — 15,006 — 15,006 Corporate bonds and notes — 204,004 — 204,004 $ 29,265 $ 292,606 $ — $ 321,871 10 Fair Value Measurements at December 31, 2022 Level I Level II Level III Total Cash and cash equivalents $ 119,468 $ — $ — $ 119,468 Restricted cash 665 — — 665 Held-to-maturity investments: Commercial paper — 36,516 — 36,516 U.S. government agency bonds — 12,119 — 12,119 State and municipal bonds — 39,504 — 39,504 Corporate bonds and notes — 209,820 — 209,820 $ 120,133 $ 297,959 $ — $ 418,092 Note 6. Inventory 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 $ 139 $ 74 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. Note 7. Property and Equipment, Net 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 Vehicles 2,013 817 Leasehold improvements 2,124 1,002 Office furniture and fixtures 223 162 Computers and related equipment 1,947 1,367 16,384 9,245 Less: accumulated depreciation ( 5,308 ) ( 3,639 ) Total property and equipment, net $ 11,076 $ 5,606 Note 8. Share-Based Compensation 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. 11 Note 9. Accrued Expenses and Other Current Liabilities 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 Accrued compensation and related benefits 3,448 4,773 Other accrued liabilities 809 928 $ 8,867 $ 11,535 Note 10. Warranties 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 Balance at beginning of period $ 566 $ 348 $ 527 $ 44 Accrual for warranties issued 65 186 218 517 Net changes in accrual related to pre-existing warranties ( 131 ) — ( 154 ) — Warranty charges ( 64 ) ( 122 ) ( 155 ) ( 149 ) Balance at end of period $ 436 $ 412 $ 436 $ 412 Note 11. Commitments and Contingencies Legal Proceedings The Company is periodically involved in legal proceedings, legal actions and claims arising in the normal course of business, including proceedings relating to product liability, intellectual property, safety and health, employment and other matters. The Company believes that the outcome of such legal proceedings, legal actions and claims will not have a significant adverse effect on the Company’s financial position, results of operations or cash flows. Note 12. Net Loss Per Share 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 Numerator: Net loss attributable to common stockholders $ ( 30,322 ) $ ( 63,387 ) $ ( 94,380 ) $ ( 123,970 ) Denominator: Weighted average shares outstanding, basic and diluted 181,641,060 174,345,022 180,914,250 173,945,156 Net loss per share, basic and diluted $ ( 0.17 ) $ ( 0.36 ) $ ( 0.52 ) $ ( 0.71 ) 12 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, 2023 2022 Unexercised stock options 683,090 2,682,228 Unvested restricted stock units* 3,976,223 3,808,665 4,659,313 6,490,893 * 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. 13 Table of Contents