What changed in this filing

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Item 1. Financial Statements

2024-05-01 compared with 2023-11-08 · 97 added, 159 removed, 226 unchanged (53% of the section changed)

3 unchanged sentences

(Dollar amounts in thousands, except share data)

September 30,

2024 December 31,

2 unchanged sentences

Accounts receivable 122 40

Inventory 139 74

Prepaid expenses and other current assets 6,559 18,483

Short-term investments 126,703 150,297

Assets held for sale 5,973 —

Total current assets 154,072 181,701

1 unchanged sentence

Operating lease right-of-use assets 6,992 7,070

Intangible assets, net 200 200

Other assets 1,360 1,439

14 unchanged sentences

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

184,016,695 and 183,071,317 shares issued at March 31, 2024 and December 31, 2023, respectively;

175,304,238 and 183,034,255 shares outstanding as of March 31, 2024 and December 31, 2023, respectively

Additional paid-in capital 405,118 404,045

(Accumulated deficit) retained earnings ( 68,634 ) 25,746

Treasury stock, at cost;

8,712,457 and 37,062 shares as of March 31, 2024 and December 31, 2023, respectively

( 11,370 ) ( 33 )

Accumulated deficit ( 113,356 ) ( 97,764 )

Total stockholders’ equity 280,410 306,266

4 unchanged sentences

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

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

2023 2022 2023 2022

Three Months Ended March 31,

Product sales and other $ — $ 310

7 unchanged sentences

Selling, general and administrative 6,592 10,981

Exit and termination costs 4,431 —

Total operating expenses 18,991 31,899

1 unchanged sentence

Interest income 3,396 3,462

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

Other income, net 26 — 14 —

Gain on disposal of assets 3 2

Other expense, net — ( 15 )

Net loss $ ( 15,592 ) $ ( 28,831 )

5 unchanged sentences

(Dollar amounts in thousands, except share data)

Nine Months Ended September 30, 2023

Common Stock Additional

Capital (Accumulated Deficit) Retained Earnings Total

Three Months Ended March 31, 2024

Common Stock Treasury Stock Additional

Capital Accumulated Deficit Total

Stockholders’

Shares Amount

Shares Amount Shares Amount

Balance at December 31, 2023 183,071,317 $ 18 ( 37,062 ) $ ( 33 ) $ 404,045 $ ( 97,764 ) $ 306,266

1 unchanged sentence

Share-based compensation — — — — 1,320 — 1,320

Repurchase of treasury stock — — ( 8,675,395 ) ( 11,337 ) — — ( 11,337 )

Net loss — — — — — ( 15,592 ) ( 15,592 )

Balance at March 31, 2024 184,016,695 $ 18 ( 8,712,457 ) $ ( 11,370 ) $ 405,118 $ ( 113,356 ) $ 280,410

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

Capital Retained Earnings Total

Three Months Ended March 31, 2023

Common Stock Treasury Stock Additional

Capital (Accumulated Deficit) Retained Earnings Total

Stockholders’

Shares Amount

Shares Amount Shares Amount

Balance at December 31, 2022 179,826,309 $ 18 — $ — $ 397,810 $ 25,746 $ 423,574

3 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

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

5 unchanged sentences

Inventory write-down — 231

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

Gain on disposal of assets ( 572 ) ( 2 )

Share-based compensation 1,320 2,040

Acquired in-process research and development — 28,752

Carrying value adjustment to assets held for sale 5,564 —

Changes in operating assets and liabilities:

9 unchanged sentences

Proceeds from sale of property and equipment 572 2

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

Payments for security deposit, net ( 45 ) —

Purchase of investments ( 23,707 ) ( 31,394 )

4 unchanged sentences

Taxes paid related to net share settlement of equity awards ( 295 ) ( 195 )

Repurchase of treasury stock ( 11,043 ) —

Net cash used in financing activities ( 11,290 ) ( 176 )

3 unchanged sentences

Supplemental disclosure of noncash investing and financing activities:

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

Repurchase of treasury stock included in accrued expenses $ 294 $ —

Acquisitions of property and equipment included in accounts payable and other $ 468 $ 255

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.

3 unchanged sentences

Hyliion Holdings Corp.

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

is a Delaware corporation headquartered in Cedar Park, Texas, with research and development facilities near Cincinnati, Ohio, that designs and develops power generators for stationary and mobile applications.

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.

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.

Strategic Plan Wind Down

On November 7, 2023, the Board of the Company approved a strategic plan to wind down its powertrain business and preserve the related intellectual property (the “Plan”).

We have not accounted for the impacts of the Plan as a discontinued operation through March 31, 2024 as we have not abandoned or sold the underlying intellectual property.

We historically provided limited assurance-type warranties under our powertrain contracts and plan to continue to service such warranties through their remaining term, with the majority ending in 2024.

Total charges and expenses related to the Plan of $ 4.4 million, inclusive of charges to assets held for sale discussed below, were incurred in the Company’s first quarter of 2024 and are included in exit and termination costs in the condensed consolidated statements of operations.

The change in total liabilities associated with the Plan is included within accrued expenses and other current liabilities as presented in Note 8, and accounts payable, and is summarized as follows (in millions):

December 31, 2023 Charged to Expense Costs Paid or Settled March 31, 2024

Employee severance and retention $ 1.1 $ — $ ( 0.4 ) $ 0.7

Contract terminations 6.5 ( 0.7 ) ( 3.7 ) 2.1

Warranty obligations 0.4 ( 0.3 ) — 0.1

$ 8.0 $ ( 1.0 ) $ ( 4.1 ) $ 2.9

In addition, the Company may incur other cash expenditures or charges not currently contemplated due to unanticipated events.

Assets Held for Sale

During the quarter ended March 31, 2024 certain assets of our powertrain business including Class 8 semi-trucks and capital equipment were being actively marketed for sale, and we were actively locating buyers, at a price that was reasonable in relation to their current fair value and the assets were available for immediate sale in their present condition.

Further, we estimated that the sale of the disposal groups were expected to be completed within one year and it was unlikely that significant changes to the plan of sale would be made.

We review assets held for sale each reporting period to determine whether the existing carrying amounts are fully recoverable in comparison to their estimated fair values less costs to sell.

We have recorded assets held for sale of $ 6.0 million consisting of property and equipment in connection with the Plan at their fair value less costs to sell at March 31, 2024.

We used fair value hierarchy Level III inputs including comparable assets, adjusted for condition, and recorded charges of $ 5.6 million included in exit and termination costs in the condensed consolidated statements of operations.

The estimates of fair value less costs to sell are subject to a number of assumptions and actual amounts may differ materially from estimates.

Summary of Significant Accounting Policies

5 unchanged sentences

The condensed consolidated balance sheet at December 31, 2023 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

Company’s 2022 Annual Report.

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 2023 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 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.

At March 31, 2024, the Company had total equity of $ 280.4 million, inclusive of cash and cash equivalents of $ 14.7 million and total investments of $ 249.2 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.

1 unchanged sentence

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’s most significant estimates and judgments involve disposals, 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.

1 unchanged sentence

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.

The Company is dependent on certain suppliers, many 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

4 unchanged sentences

Restricted Cash

The Company provided a supplier with a letter of credit for $ 7.9 million in the fourth quarter of 2023 to secure the performance of the Company’s obligations to purchase semi-trucks related to the Founders Program, backed by a restricted cash deposit to pay any draws on the letter of credit by the supplier.

The Company was released from this letter of credit in the first quarter of 2024.

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

March 31, 2024 December 31, 2023 March 31, 2023 December 31, 2022

Cash and cash equivalents $ 14,715 $ 12,881 $ 85,206 $ 119,468

Restricted cash included in prepaid expenses and other current assets — 7,918 — —

Restricted cash included in other assets 665 665 665 665

2 unchanged sentences

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.

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

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 March 31, 2024 and December 31, 2023, there were no accounts receivable due from customers or allowances for doubtful accounts.

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

22 unchanged sentences

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:

Identify the contract(s) with a customer;

Identify the performance obligations in the contract;

Determine the transaction price;

Allocate the transaction price to the performance obligations in the contract;

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.

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 %

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.

Through March 31, 2024, we have not yet commercialized the KARNO generator.

Costs incurred for components acquired prior to our determination of reaching a commercial stage are expensed as research and development costs, resulting in zero cost basis for those components.

As a result, moving-average prices for inventory that is capitalized in future periods may be

significantly affected by those zero cost items.

During the three months ended March 31, 2024 and March 31, 2023, we recorded inventory write-downs of $ 0.0 million and $ 0.2 million, respectively.

Research and Development Expense

1 unchanged sentence

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

Fair Value Measurements at September 30, 2023

Recent Accounting Pronouncements

In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740) , to enhance transparency and decision usefulness of income tax disclosures.

The pronouncement is effective for fiscal years beginning after December 15, 2024 and we expect a material impact to our disclosures as a result of adoption.

In November 2023, the FASB issued ASU 2023-07, Segment Reporting (Topic 280):

Improvements to Reportable Segment Disclosures , to improve the disclosures about a public entity’s reportable segments.

The pronouncement is effective for fiscal years beginning after December 15, 2023 and interim periods within fiscal years beginning after December 15, 2024 and we expect a material impact to our disclosures as a result of adoption.

The amortized cost, unrealized gains and losses, fair value and maturities of our held-to-maturity investments at March 31, 2024 and December 31, 2023 are summarized as follows:

Fair Value Measurements at March 31, 2024

Amortized Cost Gross Unrealized Gains Gross Unrealized Losses Fair Value

11 unchanged sentences

$ 278,483 $ 590 $ ( 499 ) $ 278,574

September 30, 2023 December 31, 2022

March 31, 2024 December 31, 2023

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, 2023 and December 31, 2022 are summarized as follows:

Fair Value Measurements at September 30, 2023

The fair value measurements of our financial assets at March 31, 2024 and December 31, 2023 are summarized as follows:

Fair Value Measurements at March 31, 2024

Level I Level II Level III Total

17 unchanged sentences

$ 21,464 $ 278,574 $ — $ 300,038

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

September 30, 2023 December 31, 2022

Property and equipment, net at March 31, 2024 and December 31, 2023 is summarized as follows:

March 31, 2024 December 31, 2023

Production machinery and equipment $ 14,032 $ 10,376

3 unchanged sentences

Computers and related equipment 1,983 1,963

20,096 16,811

accumulated depreciation ( 7,395 ) ( 6,824 )

1 unchanged sentence

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.

During the three months ended March 31, 2024 and 2023, the Company granted 5.9 million and 2.1 million, respectively, restricted stock units which will vest over a period of one to three years .

During the three months ended March 31, 2024 and 2023, 0.9 million and 0.2 million, respectively, of restricted stock units and options were forfeited.

Share-based compensation expense for the three months ended March 31, 2024 and 2023 was $ 1.3 million and $ 2.0 million, respectively.

Of the restricted stock units granted during the three months ended March 31, 2024, 2.7 million units may vest between February 13, 2025 and December 31, 2026 contingent upon achieving underlying closing stock price thresholds.

These awards were valued at $ 0.83 per unit using fair value hierarchy Level III inputs including an underlying share volatility of 90 % and a risk-free rate of 4.35 %.

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 expenses and other current liabilities at March 31, 2024 and December 31, 2023 are summarized as follows:

March 31, 2024 December 31, 2023

Accrued professional services and other $ 1,409 $ 2,606

1 unchanged sentence

Other accrued liabilities 1,237 1,922

$ 8,867 $ 11,535

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,

Accrued severance, contract termination, and other charges 1,895 4,013

$ 6,948 $ 10,051

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

Commitments and Contingencies

Economic Incentive Agreement

During the quarter ended March 31, 2024, in connection with our operations in Cedar Park, Texas, the Company entered into an agreement with the Cedar Park Economic Development Corporation (“EDC”) that superseded prior agreements, whereby the Company would receive cash grants up to $ 1.1 million from the EDC at various measurement dates during the term of the agreement contingent upon the Company fulfilling and maintaining certain occupancy, investment, and employment requirements.

The requirements must be met on or before specific measurement dates and maintained throughout the term of the agreement, which expires effective December 31, 2029.

The Company is further required to refund $ 0.7 million and allowed to retain $ 0.4 million, subject to performance of above requirements, of grant funding previously received which was been included within a ccrued expenses and other current liabilities and other liabilities, respectively, as of March 31, 2024.

Under the agreement, the EDC has the right to file a security interest to all assets of the Company.

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 is periodically involved in legal proceedings, legal actions and claims arising in the nor mal 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.

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

The computation of basic and diluted net loss per share for the three months ended March 31, 2024 and 2023 is summarized as follows (in thousands, except share and per share data):

Three Months Ended March 31,

Net loss attributable to common stockholders $ ( 15,592 ) $ ( 28,831 )

1 unchanged sentence

Net loss per share, basic and diluted $ ( 0.09 ) $ ( 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, 2023 and 2022 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, 2024 and 2023 are summarized as follows:

Three Months Ended March 31,

Unexercised stock options 293,410 2,444,263

1 unchanged sentence

7,057,320 7,008,122

* 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.

* Potential common shares from unvested restricted stock units for the periods ended March 31, 2024 and 2023 include no and 687,084 shares, respectively, where no accounting grant date had 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