What changed in this filing

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Item 2. Management’s Discussion and Analysis

2024-11-14 compared with 2024-08-06 · 88 added, 82 removed, 254 unchanged (40% of the section changed)

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These and other factors could cause our results to differ materially from those expressed in this Quarterly Report on Form 10-Q.

Hyliion is committed to creating innovative solutions that enable clean, flexible and modular electricity production while contributing positively to the environment in the energy economy.

The KARNO generator is a fuel-agnostic power generation solution, enabled by additive manufacturing, that leverages a linear heat engine to generate electricity with significant improvements in efficiency, emissions and cost compared to conventional generators.

The Company’s primary focus is to provide distributed power generators that operate on various fuel sources to adapt to an ever-changing energy economy.

Hyliion is committed to creating innovative solutions that enable clean, efficient, and flexible electricity production while contributing positively to the environment in the energy economy.

The KARNO generator is a modular, fuel-agnostic power generating solution, enabled by additive manufacturing, that leverages a linear heat engine to generate electricity with significant improvements in efficiency, emissions and lifecycle operating cost compared to conventional generators.

The Company’s primary focus is to provide distributed power generators that operate on a wide range of fuel sources to adapt to an ever-changing energy economy.

Hyliion is initially targeting the commercial sector with a locally-deployable generator designed to meet a wide range of power generation needs.

This versatile generator can operate on both conventional fuels and waste fuels such as landfill and flare gas.

In the future, the Company plans to scale up its generator solution to address larger utility-scale power needs and to develop variants for household use and mobile applications such as vehicles and marine vessels.

This versatile generator is designed to operate on both conventional fuels and waste fuels such as landfill and flare gas.

The Company plans to scale up its generator solution to address larger utility-scale power needs and to develop future variants for household use and mobile applications such as vehicles and marine vessels.

Additionally, the generator technology is well-suited to provide combined heat and power (“CHP”) in various stationary applications.

Business Update - United States Government Contract

In September 2024, Hyliion was awarded a cost-plus-fixed-fee contract of up to $16 million by the United States Department of the Navy’s Office of Naval Research (“ONR”) to assess the applicability of its KARNO generator for navy vessels and stationary power applications.

The contract aligns with ONR’s objective of leveraging advanced technology to reduce its carbon footprint while enhancing operating capabilities.

Hyliion believes the KARNO generator can provide a versatile, efficient, and

reliable power solution to meet the unique demands of U.S.

naval operations in maritime environments.

Upon successful validation and demonstration, the KARNO generator could be used as an electric power system in future platforms and for stationary power needs.

Market Opportunity

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The electrification of transportation, particularly the growing adoption of electric vehicles, is adding substantial load to the grid.

Additionally, the integration of renewable energy sources such as solar and wind

power introduces variability and necessitates grid modernization and storage solutions for stability.

Additionally, the integration of renewable energy sources such as solar and wind power introduces variability and necessitates grid modernization and storage solutions for stability.

Hyliion believes that localized grid generation will become an increasing part of the solution to these challenges.

Hyliion also believes that the KARNO generator is suitable for a wide range of electrical power generating applications and can address many concerns with conventional generators that inhibit consumers from adopting onsite generating systems today, including cost versus grid power, reliability, maintenance needs, noise, inflexibility and emissions.

Hyliion also believes that the KARNO generator is suitable for a wide range of electrical power generating stationary and mobile applications and can address many concerns with conventional generators that inhibit consumers from adopting onsite generating systems today, including cost versus grid power, reliability, maintenance needs, noise, inflexibility and emissions.

Additionally, the KARNO generator is expected to be able to operate using a wide range of fuel sources including carbon-free fuels such as hydrogen and ammonia.

The planned initial KARNO generator variant is both power dense and easy to deploy.

It is expected to consist of a single four-shaft 200 kW generating unit along with essential balance-of-plant components, all arranged within a space-efficient, rectangular configuration occupying approximately three cubic meters.

Later planned developments are expected to include a greater-than 2 MW system with multiple KARNO generators inside the footprint of a 20-foot shipping container.

It consists of a single four-shaft 200 kW generating unit along with essential balance-of-plant components, all arranged within a space-efficient, rectangular configuration occupying approximately three cubic meters.

Later planned developments include a 2 MW system with multiple KARNO generators inside the approximate footprint of a 20-foot shipping container.

Over time, we expect larger and smaller capacity versions of the KARNO generator will be offered with power levels varying based on the number of generator shafts included or the size of component parts.

We expect the KARNO generator to initially compete effectively in the market for power applications between 200 kW to 5 MW and later extend to larger and smaller power configurations.

We are currently working with potential customers for initial generator deployments in late 2024.

These deployments will test and validate KARNO generator product attributes including efficiency, emissions, maintenance requirements, durability, control systems and other parameters.

The KARNO generator will initially compete in the market for power applications between 200 kW to 5 MW and later extend to larger and smaller power configurations.

We currently expect initial generator deployments to customers in late 2024 and 2025.

These early deployments will test and validate KARNO generator product attributes including efficiency, emissions, maintenance requirements, durability, control systems and other parameters.

We expect to receive compensation for these initial deployments as we believe the generator will provide tangible benefits to customers.

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Most consumers prefer the grid versus generating power locally due to the grid’s inherent advantages of simplicity, convenience, scalability and cost effectiveness.

For critical applications such as hospitals, data centers and refrigerated warehouses, local generators are indispensable in case of a grid power failure.

For critical applications such as data centers, hospitals and refrigerated warehouses, local generators are needed in case of a grid power failure.

The KARNO generator introduces the opportunity for certain power consumers to rethink their primary and secondary power sources.

Due to its unique attributes in comparison to conventional generators, including consistently high efficiency across power levels, minimal maintenance requirements, and reduced level of noise and emissions, the KARNO generator stands as a potentially more cost-effective base load power source for consumers, who could then utilize the electric grid as a backup source of power.

This arrangement holds particular appeal for consumers facing high grid electrical costs and low fuel costs, such as for natural gas.

Due to its unique attributes in comparison to conventional generators, including high efficiency across power levels, minimal maintenance requirements, and reduced noise and emissions, the KARNO generator is a potentially more cost-effective base load power source for consumers, who could then utilize the electric grid as a backup source of power.

This arrangement holds particular appeal for consumers facing high grid electrical costs and low fuel costs, such as natural gas.

• Vehicle Charging:

The rapid growth of consumer electric vehicles is increasingly straining grid capacity and reliability, both domestically and internationally.

The introduction of commercial EVs, such as buses, delivery vans and large trucks is expected to intensify this challenge in the future given their substantial power requirements during charging.

The rapid growth of consumer electric vehicles is increasingly straining grid capacity and reliability.

The introduction of commercial EVs, such as buses, delivery vans and large trucks is expected to intensify this challenge given their substantial power requirements during charging.

Many commercial operators cite the lack of electrical capacity access as the primary obstacle to expanding their electric vehicle fleets.

Here, we believe the KARNO generator offers a unique solution for vehicle charging.

Its flexibility in fuel sources, including the ability to use hydrogen, along with its superior environmental performance and low emissions and noise levels offer advantages over internal combustion generators.

In this regard, we believe the KARNO generator offers a unique solution for vehicle charging.

Its flexibility in fuel sources, including the ability to use hydrogen, along with its low emissions and noise levels offer advantages over internal combustion generators.

A KARNO generator can also modulate power with minimal efficiency loss by activating or deactivating individual generators and by regulating the heat input to each generator.

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Also known as renewable natural gas (“RNG”), most sources are typically treated to remove impurities such as carbon dioxide, hydrogen sulfide and moisture before the gas can be utilized or injected into natural gas pipelines.

We believe the KARNO generator can compete effectively as a power generator fueled by waste gases.

We believe the KARNO generator can compete effectively as a power generator fueled by waste gases with minimal pre-treatment of the fuels.

Similarly, natural gas extracted from gas or oil wells frequently requires processing to remove natural gas liquids and impurities.

At remote well sites, gas may be flared, or burned, due to insufficient pipeline capacity for transmission to consuming markets.

The KARNO generator creates a new opportunity – to transform flare gas into valuable electricity, destined either for integration into the electric grid or for localized consumption.

The KARNO generator creates a new opportunity – to transform flare gas into

valuable electricity, destined either for integration into the electric grid or for localized consumption.

As with RNG, the KARNO generator is anticipated to use flare gas with limited need for pre-treatment at a gas processing facility.

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For customers with substantial peak demand, such as large industrial facilities and data centers, peaking charges can significantly inflate their electric bills.

Additionally, time-based electricity rates are now common to

reduce demand on the grid during peak times.

Additionally, time-based electricity rates are now common to reduce demand on the grid during peak times.

Peak rates can be two to three times higher than base rates, increasing electricity charges even further for consumers.

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The backup power market is another opportunity for the KARNO generator which is particularly attractive for its low level of emissions and low noise level while in operation.

The KARNO generator is expected to reduce CO and NOx emissions by over 95% compared to diesel generators, and potentially without the need for exhaust aftertreatment.

We therefore believe that KARNO presents an opportunity to provide solutions for end users that desire a lower emissions profile and in the event emissions regulations are further tightened.

We also plan to develop variants for mobile applications such as vehicles including rail (locomotives) and marine vessels.

Longer-term, we also believe KARNO can be a viable solution for on-highway applications.

The KARNO generator is expected to reduce CO and NOx emissions by over 95% compared to diesel generators, and potentially without the need for exhaust after-treatment.

We therefore believe that KARNO generator presents an opportunity to provide solutions for end users that desire a lower emissions profile and in the event emissions regulations are further tightened.

Longer-term, we plan to develop variants for mobile applications including on-highway applications, rail (locomotives) and marine vessels.

Following initial deployments in late 2024, we expect to ramp up commercialization of the KARNO generator including expansion of production capacity and establishment of sales and distribution channels, potentially including market collaborations and extending our reach outside of the U.S.

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KARNO Generator System

The KARNO generator emerged out of GE’s long-running research and development investments in aerospace and metal additive manufacturing across multiple industries and in areas such as generator thermal and performance design.

The KARNO generator emerged out of General Electric’s long-running research and development investments in aerospace and metal additive manufacturing across multiple industries and in areas such as generator thermal and performance design.

We initially envisioned utilizing the KARNO generator as new range-extending power source for the Hypertruck powertrain system, given its ability to operate on a wide range of fuel sources, including natural gas and hydrogen.

After the previously announced wind down of our powertrain operations, we shifted our focus exclusively to the development and commercialization of the KARNO generator.

After the previously announced wind down of our powertrain operations, we shifted our focus to the development and commercialization of the KARNO generator and related research and development services that we have undertaken pursuant to contracts with the United States government.

We believe that the unique capabilities of the KARNO generator will make it competitive in the stationary power market, competing favorably against conventional electrical generating systems and opening up potential new markets to enhance grid power availability and reliability.

The KARNO generator technology, including the technology that was acquired from GE and the technology developed by Hyliion subsequent to the acquisition, is protected by numerous patents and trademarks which we believe provide Hyliion extensive and lasting protection for its intellectual property.

The KARNO generator technology, including the technology that we acquired from General Electric and the technology developed by Hyliion subsequent to the acquisition, is protected by numerous patents and trademarks which we believe provide Hyliion extensive and lasting protection for its intellectual property.

KARNO Generator Development

Our ongoing efforts with the KARNO generator encompass activities such as its design, development and rigorous testing, along with the development of essential balance-of-plant systems including cooling and controls systems.

Notably, we have reached a significant milestone by constructing the 125 kW ALPHA generator which we are currently testing in our development facility.

Simultaneously, we are in the final stages of designing and assembling a 200 kW BETA generator, which is expected to serve as our design for initial commercial deployments.

We have also showcased KARNO integrated as an on-board generator for our Hypertruck ERX powertrain system and with potential stationary power customers.

Moreover, we successfully demonstrated the generator’s capability to feed power back to the electric grid from our Cincinnati, Ohio facility and confirmed through testing the capability of the generator’s oxidation system to be fueled using untreated natural gas from a Permian Basin well site.

As we progress toward our anticipated initial stationary generator deployments, scheduled for late 2024, pivotal development activities are underway, including enhancements to the linear generator system and its controls, rigorous validation of essential operating parameters, including efficiency, emissions and reliability, and build-out of balance-of-plant systems and controls.

Notably, we have reached a significant milestone by constructing the 125 kW ALPHA generator which we have been testing in our development facility.

Simultaneously, we are designing and assembling a 200 kW BETA generator, which is expected to serve as our design for initial commercial deployments.

We have also showcased a KARNO generator integrated as an on-board generator for our Hypertruck ERX powertrain system and with potential stationary power customers.

Moreover, we successfully demonstrated the generator’s capability to feed power back to the electric grid from our Cincinnati, Ohio facility and confirmed through

testing the capability of the generator’s oxidation system to be fueled using untreated natural gas from a Permian Basin well site.

As we progress toward our anticipated initial stationary generator deployments, scheduled for late 2024, pivotal development activities are underway, including enhancements to the linear generator system and its controls, validation of essential operating parameters, including efficiency, emissions and reliability, and build-out of balance-of-plant systems and controls.

These initial generator deployments, coupled with our ongoing testing and development endeavors, will play a vital role in the validation of other critical design specifications, including the generator’s projected operating life, maintenance requirements and durability.

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These efficiencies will stem in part from advancements in the speed and capacity of additive manufacturing machines offered by GE and other vendors.

The pace of advancements in additive technology are expected to improve over time, with the output of machines we intend to acquire over the next three to four years projected to increase compared to

machines available today.

Additionally, we are actively pursuing design modifications that will enable specific components to be produced through conventional manufacturing processes.

The pace of advancements in additive technology are expected to improve over time, with the output of machines we intend to acquire over the next three to four years projected to increase compared to machines available today.

Additionally, we are actively pursuing design modifications that will enable specific components with simple geometry to be produced through conventional manufacturing processes.

Moreover, for less critical components, we are exploring utilization of lower-cost and lightweight materials like aluminum.

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Notably, its high efficiency remains consistent across a broad range of output power levels.

In contrast, fuel cells reach peak efficiency at low power levels but experience diminishing efficiency as output increase towards full power.

In contrast, fuel cells reach peak efficiency at low power levels but experience diminishing efficiency as output increases towards full power.

Internal combustion engines typically achieve peak efficiency within a limited operational output range and may suffer increased wear at low power levels.

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Unlike conventional generators, which often employ internal combustion engines operating at high temperatures with rapid and incomplete fuel combustion, the KARNO generator is designed for continuous fuel oxidation at lower temperatures than internal combustion engines and extended burn times.

This is achieved partly through the recirculation of exhaust gases, which serves to prolong combustion duration and by pre-heating incoming air.

This is achieved partly through

the recirculation of exhaust gases, which serves to prolong combustion duration and by pre-heating incoming air.

As a result, the KARNO generator is anticipated to achieve low levels of emissions, with CO and NOx emissions expected to be reduced by over 95% compared to best-in-class diesel engines and targeting CARB 2027 standards without the need for aftertreatment.

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This innovative design significantly mitigates efficiency losses attributed to friction, enhances the system’s operational longevity and eliminates the need for oil-based lubricants commonly found in conventional generators.

Furthermore, internal combustion engines require extensive overhauls after specific operating periods which are costly, require specialized expertise, and result in prolonged

Furthermore, internal combustion engines require extensive overhauls after specific operating periods which are costly, require specialized expertise, and result in prolonged downtime.

Conversely, the KARNO generator is projected to require less costly and simplified maintenance service than internal combustion engines, translating into both cost savings and reduced downtime.

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• Generator Efficiency :

The anticipated operating efficiency of the KARNO generator results in lower cost of electricity versus conventional generating systems and, in many markets, grid power.

The anticipated operating efficiency of the KARNO generator could result in lower cost of electricity versus conventional generating systems and, in many markets, grid power.

• Low Maintenance :

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The power output of a KARNO generator can be modulated by changing the level of heat applied to the system.

For larger power applications above 200 kW, systems with six or more shafts can be utilized or, multiple KARNO generators can be assembled to operate as a single unit.

For megawatt applications, individual generators can be turned on or off to adjust the total power output of the system.

For larger power applications above 200 kW, multiple KARNO generators can be assembled to operate as a single unit and individual generators can be turned on or off to adjust the total power output of the system.

• Fast Startup Time :

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Commercialization of KARNO Generator

Our focus in the first half of 2024 was on continuing development and testing of our fuel-agnostic KARNO stationary generator and planning for the deployment of initial revenue-generating units with customers in late 2024.

Our focus is on continuing development and testing of our fuel-agnostic KARNO stationary generator and planning for the deployment of initial revenue-generating units with customers in late 2024.

We anticipate that a substantial portion of our capital resources and efforts in the near future will be focused these activities.

The amount and timing of our future funding requirements, if any, will depend on many factors, including but not limited to the pace of completing initial KARNO generator design, testing and validation, the pace at which we introduce initial generator units to the market, our strategies for manufacturing KARNO generator components (whether in-house or through outsourcing to third parties), the range of product offerings we plan to bring to market and external market factors beyond our control.

The amount and timing of our future funding requirements, if any, will depend on many factors, including but not limited to the pace of completing initial KARNO generator design, testing and validation, the pace at which we invest in generator additive printing capacity, our plans for manufacturing KARNO generator components (whether in-house or through outsourcing to third parties), the range of product offerings we plan to bring to market and external market factors beyond our control.

Key Components of Statements of Operations

We historically generated revenues from sales of Hybrid systems for Class 8 semi-trucks and limited quantities of Class 8 semi-trucks outfitted with the Hybrid system.

As a result of the discontinuation of the electrified powertrain systems business and the shift to focus exclusively on the development and commercialization of the Company’s fuel-agnostic KARNO generator technology, we do not anticipate generating future revenues until we begin commercialization of our KARNO generators.

As a result of the discontinuation of the electrified powertrain systems business and the shift to focus on the development and commercialization of the Company’s fuel-agnostic KARNO generator technology, we anticipate generating revenue after commercialization of our KARNO generator.

Additionally, we anticipate generating revenue from research and development services under the contracts described in Note 3 — “Summary of Significant Accounting Policies.”

Cost of Revenue

Cost of revenue includes all direct costs such as labor and materials, overhead costs, warranty costs and any write-down of inventory to net realizable value.

Cost of revenue includes all direct costs such as labor and materials, overhead costs, warranty costs and any write-down of inventory to net realizable value, and costs associated with research and development services revenue.

Research and Development Expense

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Exit and Termination Costs

Exit and termination costs consist of employee severance and retention payments, accelerated non-cash stock-based compensatio n expense, contract termination and other cancellation costs, non-cash charges including accelerated depreciation and amortization, and recoveries from resale of assets.

Exit and termination costs consist of employee severance and retention payments, accelerated non-cash stock-based compensation expense, contract termination and other cancellation costs, non-cash charges including accelerated depreciation and amortization, carrying value adjustment to assets held for sale, and recoveries from resale of assets.

These costs are a result of the Plan approved on November 7, 2023 to wind down our powertrain business.

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Other income currently consists primarily of interest income earned on our investments.

Since the acquisition of our KARNO generator technology, we have continued to perform as a subcontractor on a contract with the Office of Naval Research (“ONR”).

We may reassess the classification of such contracts as revenue based on business strategy.

Since the acquisition of our KARNO generator technology, we have continued to perform as a subcontractor on a contract with the ONR and recorded such amounts, net of costs incurred, as other income (expense).

Beginning in the quarter ending December 31, 2024, we expect to no longer record receipts associated with research and development activities as other income (expense).

Results of Operations

Comparison of Three Months Ended June 30, 2024 to Three Months Ended June 30, 2023

Our results of operations for the three months ended June 30, 2024 (the “current quarter”) and 2023 on a consolidated basis are summarized as follows (in thousands, except share and per share data):

Three Months Ended June 30,

Comparison of Three Months Ended September 30, 2024 to Three Months Ended September 30, 2023

Our results of operations for the three months ended September 30, 2024 (the “current quarter”) and 2023 on a consolidated basis are summarized as follows (in thousands, except share and per share data):

Three Months Ended September 30,

2024 2023 $ Change % Change

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Interest income 2,979 3,534 (555) (15.7) %

Loss on disposal of assets — (1) 1 (100.0) %

Other income, net — 26 (26) (100.0) %

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Revenue and Cost of Revenues

Revenue associated with our Hybrid products decreased $0.3 million and associated cost of revenues decreased $0.3 million .

As a result of our strategic review and decision to wind down our powertrain business, we do not anticipate further revenue or cost of revenues until we begin commercialization of our KARNO generator.

Revenue associated with our Hybrid products decreased $0.1 million and associated cost of revenues decreased $0.7 million as a result of our strategic review and decision to discontinue our powertrain business.

Research and Development

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• A decrease of $1.1 million in personnel and benefits;

• A decrease of $0.8 million in marketing;

• A decrease of $0.7 million in professional services;

• A decrease of $0.4 million in insurance;

• A decrease of $0.1 million in marketing.

Exit and Termination Costs

Exit and termination benefit was $0.9 million as a result of the adoption of the Plan and items discussed in Note 2 of the notes to the consolidated financial statements, including recoveries from assets sold.

Comparison of Six Months Ended June 30, 2024 to Six Months Ended June 30, 2023

The following table summarizes our results of operations on a consolidated basis for the six months ended June 30, 2024 (the “current six months”) and 2023 (in thousands, except share and per share data):

Six Months Ended June 30,

Interest Income

Interest income decreased $0.6 million primarily due to the decline in investment balance.

Comparison of Nine Months Ended September 30, 2024 to Nine Months Ended September 30, 2023

The following table summarizes our results of operations on a consolidated basis for the nine months ended September 30, 2024 (the “current nine months”) and 2023 (in thousands, except share and per share data):

Nine Months Ended September 30,

2024 2023 $ Change % Change

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Gain on disposal of assets 3 1 2 200.0 %

Other income (expense), net 32 (12) 44 N/A

Other income, net 32 14 18 128.6 %

Net loss $ (37,650) $ (94,380) $ 56,730 (60.1) %

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Revenue and Cost of Revenues

Revenue associated with our Hybrid products decreased $0.6 million and associated cost of revenues decreased $1.0 million .

As a result of our strategic review and decision to wind down our powertrain business, we do not anticipate further revenue or cost o f revenues until we begin commercialization of our KARNO generator.

Revenue associated with our Hybrid products decreased $0.7 million and associated cost of revenues decreased $1.7 million as a result of our strategic review and decision to discontinue our powertrain business.

Research and Development

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Exit and termination costs increased by $2.9 million as a result of the adoption of the Plan and items discussed in Note 2 of the notes to the consolidated financial statements, including recoveries from assets sold.

Interest Income

Interest income decreased $0.8 million primarily due to the decline in investment balance.

Liquidity and Capital Resources

At June 30, 2024, our current assets were $164.6 million, consisting primarily of cash and cash equivalents of $19.1 million, short-term investments of $136.1 million and prepaid expenses of $5.4 million.

At September 30, 2024, our current assets were $161.4 million, consisting primarily of cash and cash equivalents of $28.1 million, short-term investments of $122.9 million and prepaid expenses of $5.7 million.

Our current liabilities were $9.2 million primarily comprised of accounts payable, accrued expenses and operating lease liabilities.

We also had $86.5 million of investments in longer-term liquid securities which we maintain to generate higher income on capital that we do not expect to spend in the next 12 months.

We believe the credit quality and liquidity o f our investment portfolio at June 30, 2024 is strong and will provide sufficient liquidity to satisfy operating requirements, working capital purposes and strategic initiatives.

We believe the credit quality and liquidity of our investment portfolio at September 30, 2024 is strong and will provide sufficient liquidity to satisfy operating requirements, work ing capital purposes and strategic initiatives.

The unrealized gains and losses of the portfolio may remain volatile as changes in the general interest rate environment and supply and demand fluctuations of the securities within our portfolio impact daily market valuations.

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“Risk Factors.”

The amount and timing of our future funding requirements, if any, will depend on many factors, including the pace and results of our research and development efforts, the breadth of product offerings we plan to commercialize, the pace of sales, and our long-term plan manufacturing plan for the KARNO generator including plans for financing additive printer investments, as well as factors that are outside of our control.

The amount and timing of our future funding requirements, if any, will depend on many factors, including the scope and results of our research and development efforts, the breadth of product offerings we plan to commercialize, the growth of sales, and our long-term plan manufacturing plan for the KARNO generator including the pace of investments in additive manufacturing assets, methods of financing these investments, as well as factors that are outside of our control.

During the periods presented, we did not have any relat ionships with unconsolidated organizations or financial partnerships, such as structured finance or special purpose entities, which were established for the purpose of facilitating off-balance sheet arrangements.

Net cash, cash equivalents and restricted cash provided by or used in operating activities, investing activities and financing activities for the six months ended June 30, 2024 and 2023 is summarized as follows (in thousands):

Six Months Ended June 30,

Net cash, cash equivalents and restricted cash provided by or used in operating activities, investing activities and financing activities for the nine months ended September 30, 2024 and 2023 is summarized as follows (in thousands):

Nine Months Ended September 30,

Cash from operating activities $ (43,291) $ (92,427)

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Cash from Operating Activities

For the six months ended June 30, 2024, cash flows used in operating activities were $33.4 million.

Cash used primarily related to a net loss of $26.4 million, adjusted for a $14.2 million change in working capital accounts and $7.2 million in non-cash expenses (including $7.7 million related to accounts payable, accrued expenses and other liabilities and $5.1 million related to prepaid expenses and other current assets, partially offset by $5.6 million in assets held for sale carrying value adjustments and $2.4 million related to share-based compensation).

For the six months ended June 30, 2023, cash flows used in operating activities were $63.6 million.

Cash used primarily related to a net loss of $64.1 million, adjusted for a $4.5 million change in working capital accounts and $5.0 million in certain non-cash expenses (including $2.7 million related to accounts payable, accrued expenses and other liabilities and $3.8 million related to share-based compensation, partially offset by $5.8 million related to prepaid expenses and other assets and $0.8 million related to inventory purchases).

For the nine months ended September 30, 2024, cash flows used in operating activities were $43.3 million.

Cash used primarily related to a net loss of $37.7 million, adjusted for a $13.6 million change in working capital accounts and $7.9 million in non-cash expenses (including $6.7 million related to accounts payable, accrued expenses and other liabilities, $5.2 million related to prepaid expenses and other current assets, and $2.1 million related to gain on asset sales , partially offset by $5.6 million in assets held for sale carrying value adjustments and $3.5 million related to share-based compensation).

For the nine months ended September 30, 2023, cash flows used in operating activities were $92.4 million.

Cash used primarily related to a net loss of $94.4 million, adjusted for a $5.3 million change in working capital accounts and $7.2 million in certain non-cash expenses (including $5.2 million related to share-based compensation, partially offset by $2.7 million related to accounts payable, accrued expenses and other liabilities and $1.2 million related to prepaid expenses and other assets).

Cash from Investing Activities

For the six months ended June 30, 2024, cash flows provided by investing activities were $46.0 million.

For the nine months ended September 30, 2024, cash flows provided by investing activities were $64.9 million.

Cash provided related to the sale or maturity of investments of $126.7 million and the proceeds from sale of assets of $4.1 million, partially offset by the purchase of investments of $55.4 million and acquired property and equipment of $10.5 million.

For the six months ended June 30, 2023, cash flows used in investing activities were $7.5 million.

Cash used related to the purchase of investments of $99.2 million and acquired property and equipment of $4.0 million, partially offset by the sale or maturity of investments of $95.6 million.

For the nine months ended September 30, 2023, cash flows provided by investing activities were $1.6 million.

Cash provided related to the sale or maturity of investments of $178.6 million, partially offset by the purchase of investments of $170.2 million and acquired property and equipment of $6.8 million.

Cash from Financing Activities

For the six months ended June 30, 2024, cash flows used in financing activities were $14.3 million, primarily due to treasury stock repurchases.

For the six months ended June 30, 2023, cash flows used in financing activities were $0.1 million.

Cash flows were primarily due to payment of taxes related to net share settlement of equity awards of $0.2 million.

For the nine months ended September 30, 2024, cash flows used in financing activities were $14.3 million, primarily due to treasury stock repurchases.

For the nine months ended September 30, 2023, cash flows used in financing activities were nil.

Critical Accounting Policies and Estimates

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If we were to utilize different assumptions including the estimate of underlying share volatility of our market-conditioned awards, share-based compensation cost could be under or overstated.

If there are any modifications or cancellations of the

underlying unvested securities, we may be required to accelerate any remaining unearned share-based compensation cost or incur incremental cost.

If there are any modifications or cancellations of the underlying unvested securities, we may be required to accelerate any remaining unearned share-based compensation cost or

incur incremental cost.

Share-based compensation cost affects our research and development and selling, general and administrative expenses.

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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 2. Management’s Discussion and Analysis