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Item 1. Business

2025-02-25 compared with 2024-02-13 · 342 added, 254 removed, 351 unchanged (63% of the section changed)

Hyliion Holdings Corp.

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

is a Delaware corporation headquartered in Cedar Park, Texas, with research and development (“R&D”) facilities in Cincinnati, Ohio, that designs and develops power generators for stationary and mobile applications and provides R&D services.

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 was incorporated on November 7, 2018.

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.

In September 2022, we acquired assets including new hydrogen and fuel-agnostic-capable generator technology from General Electric Company’s GE Additive business (“KARNO generator”).

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 future-proof for an ever-changing energy economy.

Hyliion is addressing the commercial space first with a locally deployable generator that can offer prime power, backup power, peak demand reduction, renewables matching and power generation from 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.

The Company was incorporated on November 7, 2018 and is listed on the NYSE American.

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.

Hyliion’s primary product offering, the KARNO TM generator, is a modular, fuel-agnostic power generating solution, enabled by additive manufacturing.

The KARNO generator leverages a thermal converter coupled to a linear generator to produce electricity with significant improvements in efficiency, emissions and lifecycle cost compared to conventional generators.

Hyliion’s KARNO generators enable effective distributed power generation using a wide range of fuel sources, including conventional fuels, waste fuels such as landfill gas, wellhead gas, and zero carbon fuels such as renewable hydrogen and ammonia.

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

The Company plans to scale up its generator solution to address larger utility-scale power needs and to develop future variants for industrial waste heat, household use and e-mobility 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.

Strategic Business Developments

During the third quarter of fiscal year 2023 and prior, Hyliion offered the Hyliion Hybrid system (“Hybrid”), an electrified powertrain system that augments existing Class 8 semi-trucks to improve vehicle performance or reduce fuel usage, depending on application.

The Hybrid system could be installed on new vehicles prior to entering service, or retrofit onto existing in-service vehicles, allowing customers to use their preferred vehicle brands and maintain their existing fleet maintenance and operations strategies.

The Company began selling the Hybrid system in late 2021, with deployments to fleets in the transportation and logistics sector in a variety of duty cycles, use cases, and geographical regions.

The Company also continued development of its Hypertruck ERX powertrain platform (“Hypertruck ERX”), a complete electrified powertrain system leveraging an onboard compact natural-gas-fueled generator to supplement battery range to transform an OEM platform into a range extended electric vehicle.

Companies in the truck electrification space (including Hyliion) continue to face a number of challenges and headwinds as they develop and scale the production of new clean vehicles, and as customers deploy these vehicles in their fleets.

For Hyliion, these challenges have included, a slower-than-anticipated market transition to electric truck fleets, escalating component and production costs, new and evolving California Air Resources Board (“CARB”) mandates for fleet adoption of electric trucks, the need to reduce the cost and weight of the Hypertruck ERX platform, continued work by OEMs to de-content components that Tier 1 suppliers are providing, and the expectation that the Company will need to raise additional capital to address and overcome these challenges.

In light of these challenges to the business and other considerations, the Company’s board of directors (the “Board”), with the support of its expert advisors, explored a range of strategic alternatives for its electrified powertrain systems business.

At the conclusion of that strategic review in the fourth quarter of fiscal year 2023, the Board determined that discontinuing operating the electrified powertrain systems business and focusing on the development and commercialization of the Company’s fuel-agnostic KARNO generator technology would be the most effective use of the Company’s capital and in the best interests of the Company’s shareholders.

Hyliion intends to retain the powertrain technology, enabling the Company to explore a future use or sale of the technology.

Tangible assets include the first 30 Hypertruck ERX production trucks which Hyliion no longer plans to recognize revenue on, the Hypertruck Fuel Cell prototype truck that Hyliion successfully completed in the third quarter of fiscal 2023 in collaboration with Hyzon Motors, and other development trucks and equipment.

We expect to sell certain of these tangible assets.

Market Opportunity

electrical grid is facing a multitude of challenges as it strives to manage the escalating demand for electricity while adapting to evolving generating resources.

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.

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.

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 200kW 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 2MW system with multiple KARNO generators inside the 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 200kW to 5MW and later extending to larger and smaller power configurations.

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

The primary purpose of these deployments is to further 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.

We also expect that early deployments will demonstrate the effectiveness of the KARNO generator in a wide range of electrical generating applications.

Target markets include:

• Prime Power:

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.

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.

• 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.

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.

A KARNO generator can also modulate power without efficiency loss by activating or deactivating individual generators and by regulating the heat input to each generator.

Finally, KARNO’s high power density allows it to be deployed as a localized power source for vehicle charging without consuming parking space.

• Waste Gas Power Generation:

Natural gas sourced from waste sites like landfills, water treatment plants and dairy farms is a growing market as producers seek to capture sources of methane emissions that would otherwise be released into the atmosphere or flared.

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 will compete effectively as a power generator using waste gas sources.

Its modularity, coupled with its capability to oxidize a variety of fuel sources and mixtures with no or limited prior gas processing, positions it as an efficient and adaptable power generator for waste gas sources.

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.

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

• Peak Shaving:

“Peaking charges” also referred to as “demand charges” are fees imposed by utilities on customers based on their highest recorded electricity usage during a billing cycle, often measured over a short interval, such as 15 minutes.

These charges serve to recuperate the expenses associated with maintaining grid capacity during periods of

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.

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

In this context, distributed generation sources like the KARNO generator can play a pivotal role in mitigating the financial impact of peaking charges and rates by supplementing grid power during peak consumption periods.

• Backup Power:

The market for local backup power generators is well established but also poised for growth due to reduced reliability of the power grid, a greater share of intermittent renewable sources of electricity, the frequency and severity of extreme weather events and the need for continuous power supply in critical applications.

Generator emissions are a growing concern in the backup power market due to increased focus on the health impacts of harmful compounds such as nitrogen oxides (“NOx”), carbon monoxide and volatile organic compounds (“VOCs”).

To address these concerns, emissions control technologies are often incorporated for conventional generators and alternative sources of fuel like natural gas are replacing diesel, which is also a source of particulate matter (“PM”) emissions if exhaust gases are untreated.

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.

Following initial deployments, 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.

In the future we intend to develop KARNO generators of different sizes and configurations to capitalize on KARNO’s unique advantages and extend these advantages across a broader range of market opportunities.

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 suitability 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.

Prior to September 2024, the Company was performing under two contracts as both a prime and subcontractor to the United States government to provide R&D services for up to $2.4 million.

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

In December 2024, Hyliion was awarded a $6 million grant from the U.S.

Department of Energy’s (“DOE”) Methane Emissions Reduction Program which backs projects targeting advancement in monitoring, measuring, and mitigating methane emissions across the oil and gas industry.

The funding awarded to Hyliion is contingent upon the completion of final negotiations and the execution of a definitive agreement with the U.S.

For this project, representing a total of $8.4 million in federal and non-federal funding, Hyliion will install up to 2 megawatts of KARNO generators in collaboration with oil and gas partners.

We expect that the project will demonstrate the KARNO generator’s unique ability to operate on wellhead gas to produce sustainable, near-zero emissions electricity.

In 2023, Hyliion successfully tested gas from the Permian Basin, highlighting the generator’s fuel-agnostic design and its capability to utilize unprocessed gas.

This distinctive capability positions the KARNO generator as a groundbreaking solution for reducing flaring and methane emissions while delivering efficient, scalable power.

We expect that this grant will empower Hyliion to deploy KARNO generators in the oil and gas industry, advancing sustainable energy generation, as well as economic growth and job creation in local communities.

Products and Services

KARNO Generator System

The KARNO generator emerged out of GE’s long-running research and development investments in aerospace engines 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.

We believe that the unique capabilities of the KARNO generator will also 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.

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 125kW ALPHA generator which we are currently testing in our development facility.

Simultaneously, we are in the final stages of designing a 200kW 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.

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.

We expect to achieve efficiencies over time, leading to a reduction in the manufacturing and assembly costs associated with the KARNO generator.

These efficiencies will predominantly stem 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.

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

Lastly, we anticipate that economies of scale will play a pivotal role in reducing system component costs as manufacturing output scales up progressively.

The KARNO generator emerged out of General Electric’s long-running R&D 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 our 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 to the development and commercialization of the KARNO generator as a standalone product and related R&D 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 market for distributed power systems, competing favorably against conventional generating systems and new alternative power systems such as fuel cells and other linear generators.

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.

The Science of the KARNO Generator

The KARNO generator is distinguished from conventional generating systems that rely on reciprocating internal combustion engines or gas turbines to drive a rotating shaft.

In contrast, the KARNO generator harnesses the power of a heat engine to propel a linear generating system.

This innovative generator derives its linear motion from temperature differences inside the engine.

The generation of heat within the system occurs through flameless oxidation of fuels, like natural gas, hydrogen, or propane.

This thermal energy causes helium gas enclosed within a sealed cylinder to expand, thereby propelling linear motion in a connected piston-shaft system which includes a sequence of permanent magnets situated on the shaft passing through electrical coils.

Subsequently, the counter-motion generated by a piston at the opposite end of the shaft flows the helium gas to the cold side of a piston in an adjacent shaft, where excess heat is efficiently dissipated.

This cyclical process continues, resulting in a continuous source of electrical power for so long as heat is supplied to the generator.

Linear generators present several advantages over conventional generators, with key benefits including reduced maintenance, attributable to their simplified design with few moving parts.

Additionally, they can exhibit higher efficiency by circumventing the mechanical losses linked to rotating components such as bearings and gears while producing less noise and vibration.

Instead, the KARNO generator uses an innovative thermal converter to power a linear electricity generating system.

The generator produces linear motion from temperature differences within the system.

Heat is generated through flameless oxidation of fuels, such as natural gas, hydrogen, or propane.

The thermal energy heats helium gas enclosed within a sealed cylinder, causing it to expand and drive linear motion in a connected piston-shaft system.

The shaft includes a sequence of permanent magnets that pass through electrical coils as the system oscillates, generating electricity.

Subsequently, the countermotion generated by a piston at the opposite end of the shaft flows the helium gas to the cold side of a piston in an adjacent shaft, where excess heat is efficiently dissipated.

This cyclical process continues, resulting in a continuous source of electrical power as long as heat is supplied to the generator.

Linear generators present several advantages over conventional generators, including higher thermal efficiency, lower emissions and reduced maintenance, benefits that are partly attributable to the generator’s simplified design with few moving parts.

Additionally, they exhibit high power density and higher efficiency by circumventing the mechanical losses linked to rotating components such as bearings and gears while producing less noise and vibration.

In the case of the KARNO generator, each shaft of the generator relies on a single moving part and utilizes a pressurized helium bearing system in place of oil-based lubricants.

The KARNO generator also stands out for its ability to achieve exceptional efficiency and power density by maximizing heat transfer between components and working fluids.

Enabled by advances in additive manufacturing systems, parts are designed with a large number of intricate flow channels for the movement of heat, cooling water, helium and exhaust gases such that contact surface areas for heat transfer are maximized.

The KARNO generator is expected to surpass the efficiency of conventional reciprocating generating systems of a similar size when employing various fuel sources and even outperform fuel cells at high power levels when using hydrogen.

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

Thermal converters offer the advantages of fuel flexibility and high operating efficiency.

The KARNO generator stands out for its ability to maximize heat transfer between components and working fluids.

Enabled by advances in additive manufacturing systems, parts are designed with many intricate flow channels for the movement of heat, coolant, helium and exhaust gases such that contact surface areas for heat transfer are maximized.

This enables the KARNO generator to achieve high levels of efficiency.

The KARNO generator is expected to surpass the efficiency of conventional generating systems when employing various fuel sources and its high efficiency is expected to remain 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 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.

The KARNO generator offers a distinct advantage in power adjustment by modulating operating parameters and the rate of heat introduction, enabling seamless power adjustments without compromising the generator’s efficiency.

We anticipate that the KARNO generator will achieve an electrical generating efficiency of nearly 50%, calculated by considering the usable output power in relation to the energy from the fuel source.

High efficiency is expected to remain consistent across a wide range of output power levels, spanning from tens of kilowatts to multiple megawatts.

The KARNO generator offers a distinct advantage in power adjustment by modulating the rate of heat introduction, enabling seamless power adjustments without compromising the generator’s efficiency.

We anticipate that the KARNO generator will achieve an electrical generating efficiency of approximately 45%, calculated by considering the usable output power in relation to the energy from the fuel source.

High efficiency is expected to remain relatively consistent across a wide range of output power levels, spanning from tens of kilowatts to multiple megawatts.

In contrast, internal combustion diesel generators typically operate within an efficiency range of 25% to 40% over a similar power spectrum, while the U.S.

electrical power grid is estimated to operate at an efficiency between 33% and 40%.

Notably, best-in-class grid-level gas turbine powerplants can obtain efficiencies ranging between 45% to 55%.

However, these powerplants have a much larger minimum power level (typically 10MW+) and incur transmission and distribution losses between 5% and 10% which the KARNO generator can circumvent by being strategically located near the point of power consumption.

Conventional generators emit pollutants as a result of incomplete combustion of fuel-air mixtures, with the formation of nitrous-oxide compounds being particularly prominent.

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.

As a result, the KARNO generator is anticipated to achieve low levels of emissions, with CO 2 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.

One of the notable advantages of the KARNO generator, in comparison to traditional generating units, is the expected significant reduction in maintenance requirements and cost.

Notably, best-in-class grid-level gas turbine powerplants can obtain efficiencies above 50% but often incur transmission and distribution losses between 5% and 10% which the KARNO generator is expected to circumvent by being strategically located near the point of power consumption.

Conventional generators emit pollutants because of incomplete combustion of fuel-air mixtures and operating conditions, with the formation of nitrous-oxide (“NOx”) and carbon monoxide (“CO”) compounds being particularly prominent.

Unlike conventional generators, the KARNO generator is designed for continuous flameless oxidation of the fuel at lower temperatures and extended reaction times.

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

As a result, the KARNO generator is anticipated to achieve ultra-low levels of emissions, with NOx and CO emissions expected to be reduced by over 95% compared to best-in-class diesel engines and targeting California’s Air Resources Board (“CARB”) 2027 standards without the need for aftertreatment.

One of the notable advantages of the KARNO generator in comparison to traditional generating units is the expected reduction in maintenance requirements and cost.

Conventional generators typically incur periodic and usage-based maintenance expense that can range between 5% to 20% of their total operating cost throughout their lifespan, influenced by factors such as utilization and operating parameters.

The KARNO generator’s primary advantage arises from having only a single moving linear actuator per shaft (4 shafts per 200kW generator), which glides linearly on low friction helium bearings.

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 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.

The KARNO generator, functioning as a heat engine, derives advantages from its expected capability to operate across a diverse spectrum of over 20 available fuel sources and fuel mixtures.

These include natural gas, propane, gasoline, jet fuel, and alternative fuels like bio-diesel, hydrogen and ammonia.

Moreover, the generator will be able to seamlessly transition between these fuels or fuel blends, requiring no physical modifications to its flameless oxidation system.

This versatility will enable a single generator to adapt to different use cases.

For example, the generator may operate on natural gas for prime power generation when a pipeline connection is available and on waste gas near a landfill or dairy farm with some modifications.

Furthermore, as hydrogen becomes more widely available, the KARNO generator will be able to seamlessly adapt to this cleaner fuel.

As the energy landscape evolves, the KARNO generator’s fuel-agnostic nature positions it as a future-proof solution to a range of electricity generation needs.

The KARNO generator’s primary advantage arises from having only a single moving linear actuator per shaft (4 shafts per 200 kW generator), which glides on low friction helium bearings.

This innovative design significantly mitigates efficiency losses attributed to friction, enhancing the system’s operational longevity and eliminating the need for oil-based lubricants.

The KARNO generator derives advantages from its expected capability to operate across a diverse spectrum of over 20 available fuel sources and fuel mixtures.

These include natural gas, propane, gasoline, jet fuel, and alternative fuels like biodiesel, hydrogen and ammonia.

Moreover, the generator can transition between these fuels or fuel blends.

This versatility

enables a single generator to adapt to different use cases.

For example, the generator may operate on natural gas for prime power generation when a pipeline connection is available and on waste gas near a landfill or dairy farm.

Furthermore, as hydrogen becomes more widely available, the KARNO generator will be able to adapt to this cleaner fuel.

As the energy landscape evolves, the KARNO generator’s fuel-agnostic nature positions it as a flexible solution to electricity generation needs.

Benefits of the KARNO Generator Versus Conventional Competitors

We believe the versatility and operating characteristics of the KARNO generator make it an ideal system for a variety of conventional and emerging electrical generating applications.

We believe the versatility and operating characteristics of the KARNO generator will make it an effective system for a variety of conventional and emerging electricity generating applications.

Key attributes of the KARNO generator distinguish it from its conventional generator counterparts, which may open new market opportunities:

• 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 marginal cost of electricity generation versus conventional generating systems and, in some markets, grid power.

• Low Maintenance :

With only a single moving part per shaft, the simplicity of the KARNO generator is expected to reduce both periodic maintenance expenses and expected overhaul costs.

With only a single moving part per shaft, the simplicity of the KARNO generator is expected to reduce both periodic maintenance expenses, overhaul costs and longer uptime.

• Fuel Agnostic :

While many traditional generators operate on a single fuel source or require system modification to achieve fuel flexibility, the KARNO generator is truly fuel-agnostic, and can switch between fuel choices during operation with some modifications.

While many traditional generators operate on a single fuel source or require system modification to achieve fuel flexibility, the KARNO generator is truly fuel-agnostic and can switch between fuel choices during operation with few or no modifications.

• Low Noise and Vibration :

Unlike conventional generators, the KARNO generator operates without internal combustion, resulting in a significantly lower noise level of approximately 67 decibels at six feet, which is approximately equivalent to a typical conversation.

Unlike conventional generators, the KARNO generator operates without internal combustion, resulting in a significantly lower noise level of approximately 67 decibels at six feet.

• Higher Power Density :

The unique architecture and features of the KARNO generator that are enabled by advances in additive manufacturing, enable the generator to achieve a high level of power density.

For example, a 200kW generator occupies less than a cubic meter of volume, excluding the balance-of-plant.

The unique architecture and features of the KARNO generator that are achieved by advances in additive manufacturing are expected to enable the generator to achieve a high power density.

• Modularity :

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 200kW, 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.

• Fast Startup Time :

It is anticipated that the KARNO generator will be able to begin generating electricity from a cold start in approximately 30 to 60 seconds.

Additionally, full power can be achieved in a matter of minutes.

Conversely, some generating systems, such as solid oxide fuel cells, require a warm-up period of up to 30 minutes.

Production, Assembly, Installation, Suppliers and Distribution

Hyliion plans to begin deploying initial KARNO generator BETA units with customers in late 2024 after design and initial testing of the generator and balance-of-plant system components are complete.

Key generator components will initially be sourced internally using additive manufacturing processes and technologies that were both developed by Hyliion and purchased from GE in 2022.

Other components will be manufactured internally or purchased from suppliers based on proprietary Hyliion designs.

Hyliion is developing a base of suppliers for other generator systems, including linear motor components, support systems and generator enclosure materials.

Suppliers are assessed for quality based on rigorous standards and processes that were established for Hyliion’s former powertrain systems.

Assembly, installation and maintenance of KARNO generator systems is expected to be performed by Hyliion for initial customer deployments.

Additive manufacturing is a key enabler of KARNO generator technology and performance characteristics and is considered a core competency of the Company and a source of competitive advantage versus other linear power generating systems.

Rapid innovation is another core Hyliion capability extending beyond generator design to include print processes and materials, including high-speed parameter development to increase equipment availability, print yield, and design effectiveness.

We are also investing engineering resources to enable the use of alternative metal materials in certain components to optimize performance while reducing print time and cost.

Hyliion has purchased state-of-the-art laser sintering machines (3-D additive printers) from GE and has secured additional machine capacity which we expect to be delivered in 2024 and early 2025 to support early generator production and deliveries.

Hyliion currently plans to print all key generator components in-house for early system deployments in order to optimize production parameters, component quality, printing innovation and system throughput.

The standalone generator set, or genset system, includes the KARNO generator along with an enclosure that houses key balance-of-plant elements such as the cooling system, generator controls, a battery system and high voltage electrical components.

Prior to shipment, the entire stationary genset system will undergo rigorous testing to validate performance.

Initial deployments of BETA units will further help validate genset system quality, performance and reliability before commercial ramp-up of production and sales.

Hyliion technicians will be available to support installation and monitoring of system performance, aided by the ability to remotely monitor critical system parameters.

We have begun printing the first BETA units of the KARNO generator at our facility in Cincinnati, Ohio and expect to complete assembly and testing of deployments units in 2024 at that facility.

We also plan to begin acquiring additive printing capacity for our Cedar Park, Texas facility later in 2024.

Future print capacity additions as well as generator assembly functions are expected to begin shifting to Cedar Park beginning in 2025.

As production volumes rise, we may consider outsourcing certain production and assembly functions including the printing, manufacturing and assembly of specific components or the entire generator to third parties.

In our initial deployment phase, we intend to collaborate closely with customers, identifying a broad range of use cases and improvement opportunities for the KARNO generator.

Over time, we will consider options for integrating our products into existing sales and distribution channels and forging partnerships with established manufacturers, vendors, developers and distributors.

The DC output of the KARNO generator allows multiple generators to be connected on a single bus to achieve higher power outputs without impacting other performance characteristics.

Market Opportunity

As economies and industries evolve, the demand for electricity is accelerating, driven by the electrification of society, urbanization, increasing industrial output and technological growth.

Electricity powers factories, drives the digital revolution, supports healthcare, education, and financial services, and serves as the foundation of economic productivity.

Additional growth drivers include the widespread adoption of automation, artificial intelligence, expanding data centers and the electrification of transportation.

However, as global energy demand rises, traditional centralized power generation and distribution models face mounting challenges.

Aging grid transmission infrastructure across the world faces growing challenges as it strives to balance the availability of affordable, reliable power with maintaining grid stability and integrating new sources of clean power generation.

The addition of intermittent renewable power generation further complicates grid management, emphasizing the need for resilient and adaptive electricity systems.

Distributed power generation offers a solution by decentralizing electricity production, reducing transmission needs and delivering power closer to consumption points.

Hyliion’s KARNO generator is an innovative solution in the emerging distributed generation space, offering a reliable power generator that combines high efficiency, fuel flexibility, and low emissions.

Designed for both stationary and mobile applications, the KARNO generator addresses many of the challenges that have traditionally limited the widespread adoption of onsite power solutions.

These include high operating costs, reliability issues, complex maintenance, noise pollution, space constraints, and dependency on limited fuel sources.

Hyliion’s initial KARNO generator product is a 200 kW system that is power-dense and easy to deploy.

It features a compact, space-efficient rectangular design with a footprint of approximately 25 square feet, housing a single four-shaft linear generating unit and integrated balance-of-plant components.

The KARNO generator supports fuel switching during operation without power loss, while flexible deployment options allow it to operate in grid-following, grid-forming, or islanded configurations (when paired with an external inverter), making it suitable for a wide range of applications.

Additionally, the KARNO generator features real-time monitoring of over 1,000 operational parameters through its KARNO Cloud ® platform, enabling proactive diagnostics, predictive maintenance, and performance optimization, ensuring maximum uptime.

With cloud connectivity, users gain instant access to remote monitoring and control features, providing insights into system performance, fuel efficiency, and system health.

Beyond the 200 kW variant, Hyliion is advancing the development of a larger 2 MW KARNO system, which integrates multiple 200 kW generator units operating in tandem within a compact 160 square-foot footprint - approximately the size of a 20’ shipping container.

We believe that this modular and scalable approach enables seamless power expansion while maintaining high efficiency and reliability.

Scheduled for commercialization in 2026, the 2 MW solution will target key market

segments such as data centers and industrial prime power applications.

By utilizing multiple 200 kW generating blocks, the system offers built-in redundancy and the flexibility for customers to customize capacity to match their power needs.

Hyliion also plans to expand the KARNO product line with both larger and smaller capacity versions, adjusting power levels by varying the number of generator shafts and component sizes.

Initially, the KARNO generator will address power applications ranging from 200 kW to the low hundreds of megawatts, addressing a broad spectrum of distributed generation needs.

With its ability to deliver reliable, fuel-flexible, and highly efficient power, the KARNO generator is uniquely positioned to serve a variety of key market segments, including:

• Data Centers:

As cloud computing, artificial intelligence, machine learning, and edge computing continue to expand, data centers are projected to grow rapidly, consuming an increasing share of global energy demand.

Onsite generation is an emerging solution to power new data center installations.

Hyliion’s 2 MW KARNO generator is being designed to address the needs of data center developers by providing a scalable, fuel-flexible onsite power solution with best-in-class power density.

Capable of operating on more than 20 different fuels, the KARNO generator enables data center developers to minimize onsite generation infrastructure.

Its ability to easily transition between pipeline-supplied fuels, such as hydrogen or natural gas, and onsite stored fuels, like methanol or diesel, eliminates the need for separate backup generation systems, reducing capital and operational costs.

Furthermore, the KARNO generator maintains high efficiency across broad range of load factors.

• Vehicle Charging:

The rapid adoption of electric vehicles (“EVs”) is placing increasing strain on grid capacity, a challenge expected to grow with the introduction of commercial EVs, including buses, delivery vans, and heavy-duty trucks.

These vehicles require substantial power for charging, intensifying grid demands.

While Direct Current (“DC”) fast charging technology and infrastructure are evolving to meet this need, many commercial operators cite limited grid capacity and high electricity costs as barriers to scaling their EV fleets.

Hyliion’s KARNO generator offers an advantaged solution for commercial EV charging.

Its native DC output integrates seamlessly with DC fast charging infrastructure, eliminating power losses associated with conversion.

Additionally, the KARNO generator’s compact footprint and quiet operation make it ideal for deployment in space-constrained locations, such as urban charging hubs, fleet depots, and remote charging stations where grid access is limited or expensive.

When paired with onsite energy storage systems and renewable energy sources like solar or wind, KARNO generators can enable resilient and sustainable microgrids for EV charging.

• Biogas (Landfill, Waste Water & Digester Gas):

Biogas sourced from landfills, wastewater treatment plants, and dairy digesters represents a rapidly growing market as industries and municipalities seek to convert methane-rich waste gases into electricity and prevent methane, a potent greenhouse gas, from escaping into the environment or being flared.

Current power generation technologies often struggle to process biogas due to contaminants such as hydrogen sulfide (“H₂S”) and siloxanes, as well as moisture and fluctuating gas compositions, necessitating preconditioning and purification before the fuel can be utilized.

The KARNO generator’s advanced architecture and corrosion-resistant materials enable it to operate with minimal gas preconditioning, making it a cost-effective, high-performance solution for converting waste gas into reliable power.

• Oil & Gas and Syngas Gas:

The oil and gas industry is rapidly electrifying due to growing power needs across drilling, production, refining, and transportation operations.

However, wellhead and flare gas, byproducts of oil and gas extraction, are often wasted due to insufficient pipeline capacity or poor gas quality, leading to lost energy and increased emissions.

The KARNO generator enables conversion of waste gas into usable electricity with minimal pre-treatment, enabling onsite power generation and grid integration.

Its fuel flexibility, use of corrosion-resistant materials, and ability to handle variable fuel quality make it an ideal technology of choice for oilfield electrification while significantly reducing emissions.

Additionally, the KARNO generator’s fuel-agnostic capability allows it to generate clean electricity from hydrogen-rich syngas, a valuable byproduct of gasification or industrial processes.

• Prime Power & Microgrids:

As electricity demand increases and grid infrastructure struggles, microgrids and prime power solutions are becoming essential for industries facing high consumption charges, peak demand pricing, and grid reliability concerns.

Businesses, industrial sites, and remote facilities increasingly seek localized power generation to mitigate rising energy costs, monetize assets, and improve operational resilience.

With relatively high efficiency, fuel adaptability and low maintenance needs, KARNO generators provide a cost-effective alternative to grid electricity, allowing businesses to optimize energy costs while ensuring uninterrupted operations.

Its ability to seamlessly integrate with energy storage and renewable sources enables installation of effective hybrid energy solutions.

Additionally, the KARNO generator’s cogeneration capabilities allow industries to utilize both electricity and thermal energy, improving overall system efficiency and recovering usable waste heat.

• Backup Power:

The market for local backup power generators is well established and positioned to grow due to decreasing grid reliability, the increasing share of intermittent renewable energy sources, rising extreme weather events, and the need for uninterrupted power.

Also, the grid balancing and servicing market is expanding as utilities

and independent power producers seek fast-ramping, distributed generation assets to balance supply and demand fluctuations.

Innovative business models such as Resiliency-as-a-Service and Virtual Power Plants have emerged to leverage distributed generation assets for grid resilience.

With growing concerns over emissions from internal combustion engine-powered generators in the backup power market we believe the 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.

The KARNO generator is particularly suitable for applications that require a source of electric power in mobile applications such as electric vehicles, railroad locomotives, remote power generation and marine vessels.

Compared to conventional power sources the KARNO generator is expected to offer higher efficiency, lower emissions, quieter operation, reduced maintenance needs and the flexibility to operate on a wider range of fuel sources.

Additionally, the generator’s high power density, modularity and native DC power output offers an added advantage where space constraints and integration are considerations.

• Waste Heat:

In hard-to-decarbonize industrial sectors such as cement, glass, and primary metals production, vast amounts of high-grade waste heat (1000°C+) are released during manufacturing processes.

Traditionally, much of this thermal energy is lost due to limited efficient recovery solutions.

Since the KARNO generator uses heat as its primary energy source to generate electricity, high-temperature industrial waste heat is expected to be able to be directly utilized to produce clean electricity, enabling industries to recover wasted energy, improve efficiency, and reduce emissions.

KARNO Generator Development

Research and Development

Our research and development activities primarily take place at our headquarters in Cedar Park, Texas and our facility in Cincinnati, Ohio.

Our research and development is primarily focused on:

Most of our current activities are focused on the R&D of our KARNO generator.

We undertake significant testing and validation of our products and components to ensure that they will meet the demands of our customers.

Our R&D activities primarily take place at our facility in Cincinnati, Ohio and at our headquarters in Cedar Park, Texas.

Our R&D is primarily focused on:

• development of the KARNO generator including testing and validation;

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• alternative products for existing and in-development components and technology.

The majority of our current activities are focused on the research and development of our KARNO generator.

We undertake significant testing and validation of our products and components to ensure that they will meet the demands of our customers.

Since acquiring the KARNO generator technology from GE in September 2022, Hyliion has made significant R&D investments to support an expected commercial launch of the 200 kW product in 2025.

Early efforts focused on the development of a 125 kW generator, which has been successfully operated in our Ohio facility and utilized for extensive testing and further advancements.

Through this system, we validated the ability of the generator’s fuel oxidation system to operate on a wide range of fuel sources, including natural gas, hydrogen, gas mixtures, and untreated landfill and Permian Basin well gas.

Additionally, testing of the oxidation system demonstrated very low levels of pollutant emissions in the exhaust stream.

The 125 kW generator also served as platform for developing and validating key components that are now incorporated into the larger 200 kW KARNO generator slated for market launch.

These advancements include improved helium bearings for greater durability, a magnetic encoder for precise shaft position detection and optimized printed components to increase generator efficiency and manufacturing speed.

The higher powered 200 kW generator also incorporates a larger Hyliion-designed linear electric motor.

Development activities in 2024 included developing production processes for this new motor as well as testing and validation of design parameters.

During 2024, we completed the design and sourcing of components for the balance-of-plant systems that support linear generator operation for the 200 kW system, including the system enclosure.

The balance of plant includes cooling, pressure control, fuel and air, battery, high and low voltage, inlet air and exhaust systems.

Development work also includes control software, safety systems, the human-to-machine interface and the physical integration of systems.

Validation of essential operating parameters, including efficiency, emissions and reliability, were also part of R&D activities.

Initial generator

deployments, coupled with our ongoing testing and development efforts, will continue to help validate other critical design specifications, including the generator’s projected operating life, maintenance requirements and durability.

Research and Development Services

We provide R&D services to third parties, including the U.S.

In September 2024, Hyliion was awarded a cost-plus-fixed-fee contract of up to $16 million by the ONR to assess the suitability 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.

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

We will continue to provide R&D services to third parties under existing contracts and, based on interest from current and prospective customers, anticipate entering into additional R&D agreements in the future.

Customers engage Hyliion to explore and validate the KARNO generator’s capabilities tailored to their specific requirements.

Key areas of interest include testing its low-emissions flameless oxidation system and evaluating applications that leverage the KARNO generator’s high power output and compact configuration.

Customers are also drawn to the generator’s fuel versatility including the ability to easily transition between fuels.

R&D services may also involve testing the generator under various operating conditions, including harsh environments, and in mobile applications to assess its performance.

Certain customers seek to measure and validate its low emissions profile and test different power configurations to ensure the technology aligns with their operational and environmental needs.

Commercial Deployment

We expect to deliver initial KARNO generators and generator systems to early deployment customers during 2025.

These deployments, combined with our ongoing internal R&D efforts, will serve to test and validate the product’s attributes while identifying potential design and software enhancement opportunities.

We expect to receive compensation for these deployments as outlined in customer contracts subject to achievement of certain key-performance-indicators, given the tangible benefits the KARNO generator is expected to deliver.

Initial KARNO generators may not be able to utilize all fuels anticipated in subsequently commercialized units.

Initial deployment applications will include vehicle charging, waste gas-to-power generation, and mobility-focused R&D activities.

These early deployments are also likely to highlight opportunities for addressing hardware and software deficiencies, as well as potential enhancements to further refine and optimize the product.

In 2025, additional development activities will focus on implementing identified improvement opportunities to enhance the KARNO generator.

These efforts may include design modifications, including for additively-manufactured parts, adjustments to and procurement of purchased components, and further software development.

We plan to address these enhancements in parallel with the rollout of early deployment units and the ongoing testing of in-house engineering development generators.

While the full scope of additional development work is difficult to predict at this stage, we currently anticipate completing these improvements in the second half of the year, leading to our ability to achieve product commercialization, at which point we will ramp up delivery of KARNO generators to customers.

Following the commercialization of the KARNO generator, we anticipate sales growth in 2026, as we address the backlog of customer interest based on signed letters-of-intent at the end of 2024.

This growth will be supported by the commissioning of new additive printers installed at the end of 2024 and expected to be delivered in 2025.

Additionally, we plan to deliver and commercialize the 2 MW KARNO generator system during 2026, following the completion of development work under way in 2025.

In parallel, we plan to expand our sales, distribution and service networks to support the generator’s expected growing market presence.

Currently, these functions are managed in-house to ensure efficient delivery and service for our customers;

however, we may explore outsourcing or partnerships with established sales, service and distribution channels as we scale operations.

Production, Assembly, Installation and Suppliers

The standalone generator set, or genset system, integrates the KARNO generator with an enclosure housing key balance-of-plant components such as the cooling system, generator controls, a battery system and high voltage electrical elements.

The planned 2 MW KARNO system is expected to feature ten 200 kW KARNO generators combined with shared balance-of-plant systems in a compact configuration approximately the size of a 20’ shipping container.

Key generator components will initially be produced internally using advanced additive manufacturing processes, while other components will either be manufactured in-house or sourced from suppliers following proprietary Hyliion designs.

Hyliion is actively developing a base of suppliers for generator systems, including linear motor components, support systems and enclosure materials.

Initially, the assembly, installation and maintenance of KARNO generator systems will be performed by Hyliion, from our Cincinnati, Ohio facility for our early production units.

Additive manufacturing is a key enabler of KARNO generator technology and performance characteristics and is considered a core competency of Hyliion as well as a source of competitive advantage versus other linear power generating systems.

In 2024, Hyliion procured state-of-the-art laser sintering machines (3-D additive printers) manufactured by GE to begin building

out print capacity.

Hyliion’s R&D facility in Cincinnati also houses additive printers that support R&D activities and commercial production needs.

Hyliion has placed orders with GE for additional additive printing machines, which are expected to be delivered in 2025, providing a growing base of print production capacity.

Advancements in additive printer technology are expected to grow over time, driven by improvements in laser technology and other printing innovations.

New printer models are expected to offer progressively greater printing speed, with some enhancements potentially available as retrofits for existing machine platforms.

In parallel, we are pursuing design modifications to enable the production of components with less complex geometry using conventional manufacturing processes, reducing reliance on additive printing where feasible.

For less critical components, we are exploring utilization of lower-cost and lightweight materials like aluminum and stainless steel.

Additionally, as production volumes increase, we expect economies of scale to contribute to reduced system component costs, enhancing the overall competitiveness of the KARNO generator system.

Hyliion currently plans to print all key generator components in-house for early system deployments to optimize production parameters, component quality, printing innovation and system throughput.

Suppliers of generator components include fabricators, machine shops, suppliers of mechanical and electrical components like pumps, blowers, tubing and wiring harnesses, as well as metal powder manufacturers.

The majority of these components are sourced domestically, supported by a large network of available vendors.

We source some components from overseas suppliers, including magnets and battery cells, due to cost advantages or limited domestic availability.

While domestic alternatives may exist, they are often available in more limited quantities or at a higher cost.

As we scale up product capacity, we plan to expand our supplier base to achieve cost efficiencies and mitigate supply chain risk.

Intellectual Property

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patent applications, and 22 foreign patent applications.

Of the foregoing patent and application totals, 40 pertain to our KARNO generator with the remainder, which primarily relate to powertrain technology, retained for potential future use or sale.

Of the foregoing patent and application totals, 61 pertain to our KARNO generator and the remainder primarily relate to powertrain technology, which we may retain for potential future use or sale.

We pursue the registration of our domain names, trademarks and service marks in the United States and in some locations abroad.

In an effort to protect our brand, as of December 31, 2023, we had three registered and seven pending trademarks in the United States and 44 registered and four pending trademarks internationally.

In an effort to protect our brand, as of December 31, 2024, we had three registered and six pending trademarks in the United States and 44 registered and three pending trademarks internationally.

We regularly review our development efforts to assess the existence and patentability of new intellectual property.

To that end, we are prepared to file additional patent applications as we consider appropriate under the circumstances relating to the new technologies that we develop.

Generally, our patents have a term of 20 years from the date the application is filed.

We cannot be sure that patents will be granted with respect to any of our pending patent applications or with respect to any patent applications we may own or license in the future, nor can we be sure that any of our existing patents or any patents we may own or license in the future will be useful in protecting our technology.

Human Capital

As of December 31, 2023, we had approximately 85 full-time employees, excluding employees working on the wind-down of our powertrain operations whose positions are expected to be eliminated by the end of the first quarter of 2024.

As of December 31, 2024, we had approximately 93 full-time employees.

All full-time employees are located within the United States.

In connection with the discontinuation of the electrified powertrain systems business, we reduced our workforce by approximately 175 people, or 67%, with some severance agreements that provide for continued services through various dates in 2024.

Our people are integral to our business, and we are highly dependent on our ability to attract, engage, develop and retain key employees while hiring qualified management, technical, and vehicle engineering personnel.

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By fostering an inclusive culture, we enable every member of the workforce to leverage their unique talents and deliver high-performance standards to drive innovation and success.

While we are currently still a small company in terms of headcount, we have plans to grow, and expect that our practices and programs with respect to human capital management will grow as we do.

Government Regulations

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• Institute of Electrical and Electronics Engineers (“IEEE”) 1547 and 519 requirements over grid interconnection and harmonic control, respectively;

• South Coast Air Quality Management District (“SCAQMD”) in California Rule 1110.3, the first of its kind regulation focused on linear generators, “Emissions for Linear Generators.” This rule governs, among other things, the steady state emissions from technologies such as KARNO.

We worked jointly with SCAQMD to establish the various criteria and as a result, believe that KARNO will comply with this regulation.

We have experienced, and expect to continue to experience, intense competition from a number of companies.

We work closely with SCAQMD to help evaluate the various criteria and as a result, believe that the KARNO generator will comply with this regulation;

• Environmental Protection Agency Clean Air Act regulatory standards which mandate strict controls on emissions to ensure compliance with environmental protection guidelines;

• CARB Distributed Generation Certification standards which impose stringent emission limits and performance criteria to protect air quality and public health standards;

• National Fire Protection Association (“NFPA”) 37, Standard for the installation and Use of Stationary Combustion Engines and Gas Turbines.

We have experienced, and expect to continue to experience, competition from a number of companies.

We face competition from many different sources, including utility-scale grid power and manufacturers of fixed and portable generator equipment.

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Additionally, our competitors also have greater name recognition, longer operating histories, larger sales forces, broader customer and industry relationships and other tangible and intangible resources than us.

These competitors also compete with us in recruiting and retaining qualified research and development, sales, marketing and management personnel, as well as in acquiring technologies complementary to, or necessary for, our products.

Additional mergers and acquisitions may result in even more resources being concentrated in our competitors.

These competitors also compete with us in recruiting and retaining qualified R&D, sales, marketing and management personnel, as well as in acquiring technologies complementary to, or necessary for, our products.

Additional mergers and acquisitions may

result in even more resources being concentrated in our competitors.

We cannot provide assurances that our stationary generators will be broadly adopted or will provide benefits that overcome their capital costs.

We also face competition in the market for R&D services from companies that specialize in the design, development and testing of electric generator systems and components and other engineering services.

However, we believe that we are well-positioned to compete effectively in this space, as our R&D customers engage us specifically to deliver and perform testing and validation work on the KARNO generator.

Unlike our competitors, who lack access to the KARNO generator’s technology and capabilities, we can provide a combination of product delivery and specialized testing services that our customers are seeking.

Legal Proceedings

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58 Chief Financial Officer

Dennis Gallagher (3)

58 Chief Operating Officer

Cheri Lantz (3)

49 Chief Strategy Officer

Joshua Mook (4)

43 Chief Technology Officer

Jose Oxholm (5)

58 Chief Legal & Compliance Officer

Govindaraj Ramasamy (6)

44 Chief Commercial Officer

Healy has served as our Chief Executive Officer since October 2020 and prior to this, served as Chief Executive Officer of Hyliion Inc., (“Legacy Hyliion”) since January 26, 2016.

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in electrical engineering from the University of Nebraska, Lincoln and an MBA from Carnegie Mellon.

Gallagher has served as Chief Operating Officer since August 2021.

Gallagher has extensive background in strategic planning, growth initiatives, and process implementation in the commercial vehicle and automation industries.

From October 2017 to August 2021, Mr.

Gallagher worked at Jacobs Vehicle Systems, where he served as President of the industry-leading supplier to the heavy-duty commercial truck market.

Prior to that, he served as Vice President and General Manager for EMEA & India of Kollmorgen, a Danaher company, from August 2014 to December 2017.

Previously in his career, he has held executive roles within Danaher and Fortive where he successfully led a number of global business units.

Gallagher graduated from the University of Lowell with a B.S.

in electrical engineering.

Lantz has served as Chief Strategy Officer since 2022.

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Prior to joining the Company, Ms.

Lantz served as the Vice President of Strategy for the Transportations Solution Segment at TE Connectivity, an electronics

manufacturer.

Lantz served as the Vice President of Strategy for the Transportations Solution Segment at TE Connectivity, an electronics manufacturer.

Prior to that role, Ms.

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in chemical engineering.

Mook has served as Chief Technology Officer since March 2024 and prior to this, served as Chief Engineer since January 2023.

Mook has extensive experience with engineering, new product development, and executive leadership for companies in the aerospace and power generation sector.

From 2005 to 2023, Mr.

Mook served in multiple engineering positions for General Electric Company and served as an executive starting in 2018.

Mook holds a master’s degree in aerospace engineering from the University of Cincinnati and a bachelor’s degree in Aeronautical and Astronautical Engineering from Purdue University.

Oxholm has served as Chief Legal & Compliance Officer since February 2024 and prior to this, served as Vice President, General Counsel, and Chief Compliance Officer since 2020.

Oxholm has extensive experience with complex business transactions, litigation, and new market entries for companies in the automotive and transportation sectors.

Oxholm has extensive experience with complex business

transactions, litigation, and new market entries for companies in the automotive and transportation sectors.

From January 2017 to February 2020, Mr.

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Oxholm was Senior Vice President, General Counsel and Secretary for LoJack Corporation from 2012 to 2016.

He has a J.D.

Oxholm holds a J.D.

from the University of Pennsylvania and a bachelor’s degree from the University of Michigan.

Ramasamy has served as Chief Commercial Officer at Hyliion since February 2024, bringing extensive expertise in sales, business strategy, product marketing, engineering, project development, execution, and supply chain management within the power generation sector.

Prior to joining Hyliion, Mr.

Ramasamy spent over 17 years at Cummins Inc.

from 2006 to 2024, where he held several senior leadership roles across multiple global markets.

Most recently, he served as Executive Director for Global Datacenter Business, leading one of Cummins’ fastest-growing power generation segments.

Before that, he held key leadership positions, including Managing Director for Cummins Arabia in the Middle East and General Manager for Power Generation in East Asia, overseeing business growth, operational strategy, and market expansion.

Before his tenure at Cummins, he held supply chain leadership roles at Kimball International, where he played a critical role in streamlining operations and optimizing supply chain strategies.

Ramasamy holds a B.S.

in mechanical engineering from Anna University, India, a M.S.

in Industrial & Systems Engineering from Auburn University, and a MBA from Northwestern University, Chicago.

Available Information

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References to our website do not constitute incorporation by reference of the information contained in such website, and such information is not part of this Form 10-K.

RISK FACTORS.

Investing in our securities involves risks.

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We may experience significant delays in the design, production and launch of the KARNO generator which could harm our business, prospects, financial condition and operating results.

The KARNO generator is still in the development and testing phase, and commercial deliveries are not expected to begin until late 2024 or later, and may not occur at all.

Initial deployments may not be recognized as revenue, or there may be a need to deploy units at a decreased price or for free to obtain initial customers.

The KARNO generator is still in the development and testing phase, and commercial deliveries are not expected to begin until 2025 or later, and may not occur at all.

Initial deployments may not be recognized as revenue, or there may be a need to deploy units at a decreased price or for free for initial customers.

Some of our target customers may be expecting to receive government incentives for deployments and may not purchase our KARNO generators in the event those incentives are delayed or not received.

Any delay in the financing, design, production and launch of the KARNO generator would materially damage our brand, business, prospects, financial condition and operating results.

We depend on government funding, which if lost or reduced, could have a material adverse effect on our research and development activities and our ability to begin recognizing revenue.

Our largest contract is with ONR and is the largest single source of revenue for us.

Our ONR contract may not be guaranteed to be extended beyond its current scope.

We have not made any commercial sales of our KARNO generator to date and our ONR contract is the largest single source of revenue for us.

In September 2024 we were awarded a cost-plus-fixed-fee contract of up to $16 million by ONR to assess the suitability of our KARNO generator for Navy vessels and stationary power applications.

We currently receive almost all of our revenue from fees and costs payable by ONR pursuant to our R&D contracts.

While we believe we have a good working relationship with ONR, the loss of our contracts with ONR may have an adverse impact on our business, prospects, results of operations and financial condition.

While we expect to sell our KARNO generator to commercial customers beginning with initial deployments in 2025, for the time being we are substantially dependent on funding from ONR.

We are an early-stage company with a history of losses, and expect to incur significant expenses and continuing losses for the foreseeable future.

The Company is undertaking a significant shift in its business strategy by winding down operations related to the electrified powertrain systems business and focusing on the development and commercialization of the Company's fuel-agnostic KARNO generator technology.

We have historically incurred net losses ( $52.0 million and $123.5 million for the years ended December 31, 2024 and 2023, respectively).

We believe that we will continue to incur significant operating and net losses each quarter until we are generating sufficient positive gross margins from sales of KARNO generator products.

We do not expect to achieve this level of financial performance through 2024, and we may never achieve such performance.

Additionally, in connection with our new business strategy, we expect to adop t initiatives in an effort to improve operating efficiencies and lower our cost structure.

We believe that we will continue to incur signif icant operating and net losses each quarter until we are generating sufficient positive gross margins from sales of KARNO generator products or R&D services, and we may never achieve such

Additionally, we expect to adop t initiatives in an effort to improve operating efficiencies and lower our cost structure.

There may be unanticipated difficulties in implementing one or more of these initiatives, and we may not ultimately realize the full benefits of, or be able to sustain the benefits anticipated by, these initiatives.

We will require significant capital to develop and grow our business, including developing, producing and servicing KARNO generators and our brand.

We expect to incur significant expenses, which will impact our profitability and available capital,

including costs for research and development efforts, component and service procurement, sales, general and administrative costs, and production, distribution and support.

We require significant capital to develop and grow our business, including developing, producing and servicing KARNO generators and our brand and investing in additive printing machines.

We expect to incur significant expenses, which will impact our profitability and available capital, including costs for R&D efforts, component and service procurement, sales, general and administrative costs, and production, distribution and support.

Our ability to become profitable in the future will require us to complete the design, development and testing of our KARNO generator while achieving projected performance criteria.

We must also successfully market our KARNO generator and related services to customers, sell our systems at prices needed to achieve positive gross margins, and control operating and production costs.

We must also successfully market our KARNO generator and related services to customers, sell our systems at prices needed to achieve positive gross margins, and reduce production costs.

We may need to sell our products at a loss or discounted prices in the short term in order to win initial customer orders and gain the confidence of potential customers.

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We have no experience manufacturing the KARNO generator on a large-scale basis and if we do not develop adequate manufacturing processes and capabilities to do so, or if we fail to identify qualified outsourced manufacturing partners, in a timely manner, we will be unable to achieve our growth and profitability objectives.

We have not yet manufactured the KARNO generator on a large scale but in order to produce the generator at affordable prices, we will have to manufacture at scale which may require future printer throughput increases, reduction of printer or material costs, and volume-driven cost reductions on other generator components.

We do not know whether we will timely receive the printers we need to manufacture KARNO at scale or whether the printers we intend to use will be able to adequately accommodate capacity needs.

We have not yet manufactured the KARNO generator on a large scale but in order to produce the generator at affordable prices, we will have to manufacture at scale which may require future printer throughput increases, reduction of printer and material costs, and lower purchased component and services costs, enabled by volume-driven cost reductions and design changes for generator components.

We do not know whether we will timely receive the printers we need to manufacture KARNO generators at scale or whether the printers we intend to use will be able to adequately accommodate capacity needs.

We do not know whether our plans to scale the product will be implemented such that they will satisfy the requirements of our customers and the anticipated markets for the KARNO generator.

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government support by way of legislation, tax incentives, policies or otherwise, relating to our technology;

the manufacturing and supply costs for components and systems for the KARNO generator;

the manufacturing and supply costs for components and systems for the

KARNO generator;

the perceptions of consumers regarding the safety of our products;

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If we are unable to meet our customers’ performance requirements or industry specifications, identify target customers or convert early-stage products into meaningful orders, our business, prospects, financial condition and operating results would be materially adversely affected.

we or our customers find that our KARNO generator does not perform as expected or if our orders for KARNO generators do not materialize in large numbers, we may cease to distribute our KARNO generators, or recall some or all of our product, and future distributions may be delayed or cease for some period of time or indefinitely.

Moreover, if we or our customers find that our KARNO generator does not perform as expected or if our orders for KARNO generators do not materialize in large numbers, we may cease to distribute our KARNO generators, or recall some or all of our product, and future distributions may be delayed or cease for some period of time or indefinitely.

Our products may not be suitable for defense applications.

Our ability to generate revenue from ONR and other United States government contracts in the future could depend on the viability of our KARNO generator in maritime and other applications for which they have not yet been tested.

If we are unable to demonstrate the viability of the KARNO generator for naval and stationary applications under our government research contracts, it may have a material effect on revenues and operations.

Demand for our products will ultimately depend on end user customers, some of whom operate in highly cyclical industries, which may subject us to the performance of their industries and can result in uncertainty and significantly impact the demand for our products, which could have a material adverse effect on our business, prospects, financial condition and operating results.

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If we are unable to obtain components and materials used in our generator solution from our suppliers or if our suppliers decide to create or supply a competing product, our business could be adversely affected.

While we believe that we may be able to establish alternate supply relationships and can obtain or engineer replacement components for our single source components, we may be unable to do so in the short term (or at all) at prices or quality levels that are favorable to us, which could have a material adverse effect on our business, prospects, financial condition and operating results.

While we believe that we may be able to establish alternate supply relationships and can obtain or engineer replacement components for our single source

components, we may be unable to do so in the short term (or at all) at prices or quality levels that are favorable to us, which could have a material adverse effect on our business, prospects, financial condition and operating results.

We are subject to the risk of manufacturer concentration in the additive printer market

The manufacture and production of our KARNO Generator is heavily dependent on the use of state-of-the-art additive printers which are manufactured by a small number of specialized vendors.

We currently purchase all of our additive printing machines from Colibrium Additive (formerly GE Additive).

The partial or complete loss of these key manufacturers, or a significant adverse change in our relationship with Colibrium Additive or any other manufacturer, could have a material adverse effect on our ability to manufacture, test and deploy the KARNO generator.

We are in the early stages of developing key commercial relationships with suppliers, and our ability to predict the outcome of those relationships is limited.

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However, all of our commercial relationships are in the early stages of development and we do not have the ability to predict with certainty the outcome of those relationships.

As we begin sourcing generator components, we are initially relying on a limited number of suppliers for each component, which increases the risk of supplier concentration.

This reliance could expose us to higher costs, possible quality issues and supply interruption.

Our suppliers may face delays or be unable to meet our business requirements and standards at the quantity, quality, timeliness and price levels needed for our business.

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Any such increase or supply interruption could materially negatively impact our business, prospects, financial condition and operating results.

The prices for our components fluctuate depending on

market conditions and global demand and could adversely affect our business, prospects, financial condition and operating results.

The prices for our components fluctuate depending on market conditions and global demand and could adversely affect our business, prospects, financial condition and operating results.

Risks Related to our Products

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Servicing distributed generators requires specialized skills, including high voltage training and servicing techniques.

We may partner with one or more third party service providers to perform some or all of the servicing on our electrified powertrain solutions, and there can be no assurance that we will be able to enter into an acceptable arrangement with any such third-party provider.

We may partner with one or more third-party service providers to perform some or all of the servicing on our generators, and there can be no assurance that we will be able to enter into an acceptable arrangement with any such third-party provider.

Our ability to provide effective customer support is largely dependent on our ability to attract, train and retain qualified personnel with experience in supporting customers on platforms such as ours.

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A successful product liability claim against us could require us to pay a substantial monetary award.

In some jurisdictions, we may self-insure against the risk of product liability claims for vehicle exposure, meaning that any product liability claims will likely have to be paid from company funds, not by insurance.

In some jurisdictions, we may self-insure against the risk of product liability claims, meaning that any product

liability claims will likely have to be paid from company funds, not by insurance.

Product liability claims could have a material adverse effect on our brand, business and financial condition.

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• changes in manufacturing costs;

• the timing and cost of and level of investment in, research and development relating to our technologies and our current or future facilities;

• the timing and cost of and level of investment in, R&D relating to our technologies and our current or future facilities;

• relationships, partnerships, contracts and other agreements with suppliers and development partners;

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• changes in governmental regulations or applicable law;

• changes in the macroeconomic environment.

As a result of these factors, we believe that period-to-period comparisons of our financial results, especially in the short term, are not necessarily meaningful and that these comparisons cannot be relied upon as indicators of future performance.

Moreover, our financial results may not meet expectations of equity research analysts, ratings agencies or investors, who may be overly

focused on quarterly financial results or financial valuation models that do not match our expected growth plan.

Moreover, our financial results may not meet expectations of equity research analysts, ratings agencies or investors, who may be overly focused on quarterly financial results or financial valuation models that do not match our expected growth plan.

If any of this occurs, the trading price of our common stock could fall substantially, either suddenly or over time.

Risks Related to Our Industry and Competitive Landscape

We expect to face significant competition in the distributed generation market.

We expect to face significant competition in the distributed generation and R&D markets.

Our KARNO generators will compete with a broad range of companies and technologies, including traditional energy suppliers, such as public utilities, and other energy providers utilizing traditional co-generation systems, nuclear, hydro, coal or geothermal power, companies utilizing intermittent solar or wind power paired with storage, and other commercially available stationary power generation technologies, including fuel cells and diesel generators.

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If we fail to adapt to changing market conditions and to compete successfully with grid electricity or new competitors, our growth will be limited, which would adversely affect our business results.

We also face competition in the R&D services market from companies that specialize in the design, development and testing of electric generator systems, military equipment and broader engineering R&D services.

Many of our competitors, including conventional generator manufacturers, engineering firms and military contractors, possess broader R&D capabilities, longer operating histories, established relationships with U.S.

military procurement organizations and greater financial resources.

Additionally, there is no guarantee that we will successfully extend our existing R&D contracts or secure new business from current or prospective customers.

Failure to deliver satisfactory R&D results or to compete effectively with established competitors could limit our future R&D opportunities and adversely affect our business performance.

Developments in alternative technology or improvements in distributed generation products may adversely affect the demand for our KARNO generators.

Significant developments in alternative technologies, such as battery cells, advanced diesel, improved natural gas engines, new power generation technology or alternate fuel sources or improvements in the fuel economy of the internal combustion engine, may materially and adversely affect our business, prospects, financial condition and operating results in ways we do not currently anticipate.

Existing and other battery cell technologies, fuels or sources of energy may emerge as customers’ preferred alternative to our electrified powertrain solutions.

Any failure by us to develop new or enhanced technologies or processes, or to react to changes in existing technologies, could materially delay our development and introduction of new and enhanced alternative fuel and electric vehicles, which could result in the loss of competitiveness of our electrified powertrain solutions, decreased revenue and a loss of market share to competitors.

Our research and development efforts may not be sufficient to adapt to changes in alternative fuel and electric vehicle technology.

Significant developments in alternative technologies, such as battery cells, advanced diesel, improved natural gas engines, fuel cells, new power generation technology or alternate fuel sources or improvements in the fuel economy of the internal combustion engine, may materially and adversely affect our business, prospects, financial condition and operating results in ways we do not currently anticipate.

Existing and other battery cell technologies, fuels or sources of energy may emerge as customers’ preferred alternative to grid power.

Any failure by us to develop new or enhanced technologies or processes, or to react to changes in existing technologies, could adversely affect our business results.

Risks Related to Technology, Data and Privacy-Related Matters

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A significant cyber incident could impact production capability, harm our reputation, cause us to breach our contracts with other parties or subject us to regulatory actions or litigation, any of which could materially affect our business, prospects, financial condition and operating results.

Any unauthorized control or manipulation of the information technology systems in our electrified powertrain solutions could result in loss of confidence in us and our electrified powertrain solutions and harm our business.

Our electrified powertrain solutions contain complex information technology systems and built-in data connectivity to accept and install periodic remote updates to improve or update functionality.

We have designed, implemented and tested security measures intended to prevent unauthorized access to our information technology networks, our electrified powertrain solutions and related systems.

Any unauthorized access to or control of our electrified powertrain solutions, or any loss of customer data,

could result in legal claims or proceedings and remediation of such problems could result in significant, unplanned capital expenditures.

Any unauthorized control or manipulation of the information technology systems in our KARNO generator systems could result in loss of confidence in us and our power generation solutions and harm our business.

Our KARNO generators contain complex information technology systems and built-in data connectivity to accept and install periodic remote updates to improve or update functionality.

We have designed, implemented and tested security measures intended to prevent unauthorized access to our information technology networks.

Any unauthorized access to or control of our KARNO generator systems, or any loss of customer data, could result in legal claims or proceedings and remediation of such problems could result in significant, unplanned expenditures.

We may need to defend ourselves against patent, copyright or trademark infringement claims or trade secret misappropriation claims, which may be time-consuming and cause us to incur substantial costs.

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Some foreign countries do not protect intellectual property rights to the same extent as do the laws of the U.S.

Further, policing the unauthorized use of our intellectual property in foreign jurisdictions may be difficult.

Further, policing the unauthorized use of our intellectual property

in foreign jurisdictions may be difficult.

Therefore, our intellectual property rights may not be as strong or as easily enforced outside of the U.S.

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Such challenges can be expensive and may adversely affect our ability to maintain the goodwill gained in connection with a particular trademark.

Risks Related to Environmental and Regulatory Matters

Risks Related to Regulatory Matters

Our success in generating revenues from governmental contracts depends our ability to comply with governmental regulations related to defense spending and procurement.

Contracts with governmental organizations, including the United States government, have not been a major source of our revenues in the past.

However, we anticipate such sources becoming a more significant portion of our business in the future.

Our ability to comply with governmental regulations applicable to United States defense contractors, including procurement procedures, could have a material impact on our future results of operations.

In addition, as a provider for the United States government, we may be subject to numerous laws and regulations relating to the award, administration and performance of United States government contracts.

Non-compliance found by any one agency could result in fines, penalties, debarment, or suspension from receiving additional contracts with all United States government agencies.

Given our potential dependence on US government business, suspension or debarment could have a material adverse effect on our business and results of operations.

We, our outsourcing partners and our suppliers are or may be subject to substantial regulation and unfavorable changes to, or failure by us, our outsourcing partners or our suppliers to comply with, these regulations could substantially harm our business and operating results.

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We expect to incur significant costs in complying with these regulations.

To the extent the laws change, our products may not comply with applicable international, federal, state or local laws, which would have an adverse effect on our business.

Compliance with changing regulations could be burdensome, time consuming and expensive.

We are exposed to risks related to tariffs, duties, and taxes that can significantly impact our global supply chains and operations, including increasing the costs of components that we purchased from other countries or reducing the availability of such components.

Changes in trade policies, the imposition of new tariffs, or alterations in tax regulations in the jurisdictions where we source our materials or sell our products could lead to increased costs and disruptions in our supply chain.

These added costs may not be easily passed on to customers, thereby affecting our profit margins.

Furthermore, navigating the complexities of international trade regulations requires substantial administrative effort and resources, contributing to potential delays and inefficiencies in our production and distribution processes.

Any significant increase in tariffs, duties, or taxes could have a material adverse effect on our business, financial condition, and operating results.

We and our customers are subject to changes in federal government policies in the energy sector that could impose substantial costs and uncertainty as policies shift over time.

Changes in federal government policies, regulations, and enforcement priorities may have significant impacts on our operations and financial performance.

The energy sector is sensitive to regulatory shifts, which can affect various aspects of our business, including production, distribution, and compliance costs.

As government priorities evolve, the regulatory landscape may undergo substantial changes.

New policies may be introduced to promote renewable energy sources, increase environmental compliance requirements, or impose stricter emissions standards.

Such changes could necessitate substantial modifications to our operations, potentially leading to increased investment requirements and operating costs.

Additionally, changes in tax policies, subsidies, and incentives for the energy sector can influence our financial planning and investment decisions and for our customers.

The introduction or removal of tax credits, incentives, and financing programs can significantly alter the economic benefits of our products for customers.

The legal and regulatory framework in the energy sector is continuously evolving, and we may not always be able to anticipate or react to new developments promptly.

Failure to comply with new regulations or to adapt to changing policies could result in legal liabilities, fines, and penalties, as well as damage to our reputation and customer relationships.

Non-compliance could also lead to operational disruptions, delays in project timelines, and increased scrutiny from regulatory bodies.

Our ability to navigate these regulatory changes effectively will be crucial to maintaining our competitive position and achieving our long-term business objectives.

We will continue to monitor legislative developments and engage with policymakers to advocate for favorable conditions for our industry.

However, compliance with changing regulations could be burdensome, time consuming

and expensive.

To the extent compliance with new regulations is cost prohibitive, our business, prospects, financial condition and operating results would be adversely affected.

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As legislation continues to develop, we will likely be required to expend significant additional resources to continue to modify or enhance our protective measures and internal processes to comply with such legislation.

In addition, non-compliance with these laws or a significant breach of our third-party service providers’ or vendors’ or our own network security and systems could have serious negative consequences for our business and future prospects, including possible fines, penalties and damages, reduced customer demand for our vehicles and harm to our reputation and brand.

We are subject to various environmental laws and regulations that could impose substantial costs upon us and cause delays in building our production facilities.

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This capital may be necessary to fund our ongoing operations, purchase additive printing machines, continue research, development and design efforts, create new products and improve infrastructure.

We may raise additional funds through the issuance of equity, equity related or debt securities or through obtaining credit from government or financial institutions.

We may raise additional funds through the issuance of equity, equity related or debt securities, leasing or through obtaining credit from government or financial institutions.

We cannot be certain that additional funds will be available to us on favorable terms when required, or at all.

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The production of key KARNO generator parts at the scale we need to grow our business requires significant investment in modern additive printer technology as well as production facilities and other equipment needed to support printing and assembly operations.

We intend to finance most of these capital investments through leases or utilize other forms of debt financing.

We intend to finance most of these capital investments through cash on hand, cash from operations, leases

or through other forms of debt financing.

The lease market for additive printer technology is immature and may not support the level of lease capital we need to grow our business.

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We have incurred losses during our history and do not expect to become profitable in the near future, and may never achieve profitability.

To the extent that we continue to generate taxable losses, unused losses will carry forward to offset future taxable

income, if any, until such unused losses expir e, if at all.

To the extent that we continue to generate taxable losses, unused losses will carry forward to offset future taxable income, if any, until such unused losses expir e, if at all.

As of December 31, 2024, we had U.S.

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As a result, our business, prospects, financial condition and operating results may be adversely affected.

We anticipate that we and our potential customers will apply for federal and state grants, loans and tax incentives under government programs designed to stimulate the economy and support the production of alternative fuel and electric vehicles and related technologies.

We anticipate that in the future there will be new opportunities for us and our potential customers to apply for grants, loans and other incentives from federal, state and foreign governments.

We anticipate that in the future there may be new opportunities for us and our potential customers to apply for grants, loans and other incentives from federal, state and foreign governments.

Our, and our potential customers’ ability to obtain funds or incentives from government sources is subject to the availability of funds under applicable government programs and approval of applications to participate in such programs.

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Any such issuances of additional shares of common or preferred stock may cause significant dilution, subordinate the rights to holders of common stock to those of preferred stock, cause a change in control, and adversely affect prevailing market prices.

Our failure to maintain compliance with the NYSE’s continued listing requirements could result in the delisting of our common stock.

Our common stock is listed on the New York Stock Exchange (the “NYSE”).

In order to maintain this listing, we must satisfy minimum financial and other requirements.

On November 2, 2023, we received notice (the “Delisting Notice”) from the NYSE that because the average per share closing price of our common stock (the “Common Stock”) over a 30 consecutive trading-day period ended November 1, 2023 was below $1.00 (the “Minimum Price Requirement”), we were not in compliance with Section 802.01C of the NYSE’s Listed Company Manual.

Pursuant to Section 802.01C, we have a period of six months following the receipt of the Delisting Notice to regain compliance with the Minimum Price Requirement.

In accordance with the NYSE’s rules, we notified the NYSE within 10 business days of our intent to cure the deficiency, which may include effecting a reverse stock split, subject to approval by our Board and stockholders.

We may regain compliance with the Minimum Price Requirement at any time during the cure period if, on the last trading day of any calendar month during the cure period, or on the last day of the cure period, our common stock has (i) a closing share price of at least $1.00, and (ii) an average closing share price of at least $1.00 over the 30 trading-day period

ending on the last trading day of that month or on the last day of the cure period, as applicable.

The Delisting Notice has no immediate impact on the listing of our common stock, which will continue to be listed and traded on the NYSE under the symbol “HYLN” during this period, subject to our compliance with the other continued listing requirements of the NYSE.

Failure to satisfy the conditions of the cure period or to maintain other listing requirements could lead to delisting.

Our failure to maintain compliance with the NYSE American’s continued listing requirements could result in the delisting of our common stock.

On November 2, 2023, we received notice from the New York Stock Exchange (“NYSE”) that because the average per share closing price of our common stock (the “Common Stock”) over a 30 consecutive trading-day period ended November 1, 2023 was below $1.00, we were not in compliance with Section 802.01C of the NYSE’s Listed Company Manual.

On November 5,

2024, the Company voluntarily withdrew the principal listing of the Company’s Common Stock from the NYSE and transferred the Company’s Common Stock listing to the NYSE American stock exchange (“NYSE American”), effective as of November 11, 2024.

The perception among investors that we are at a heightened risk of delisting could negatively affect the market price and trading volume of our common stock.

If our common stock is delisted from the NYSE, the delisting could:

Our continued eligibility for listing may depend on, among other things, the amount of “public float” (equity held by non-affiliates), value of stockholders’ equity and minimum share price of $3.00 per share.

There is no guarantee that we will continue to meet the NYSE American listing requirements in the future.

If our common stock is delisted from the NYSE American, the delisting could:

substantially decrease trading in our common stock;

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Such recalls may involve significant expense and diversion of management attention and other resources, which could adversely affect our brand image, as well as our business, prospects, financial condition and operating results.

We are or may be subject to risks associated with strategic alliances or acquisitions and may not be able to identify adequate strategic relationship opportunities, or form strategic relationships, in the future.

We have entered into strategic alliances and may in the future enter into additional strategic alliances or joint ventures or minority equity investments, in each case with various third parties for the production of our electrified powertrain solutions as well as with other collaborators with capabilities on data and analytics, engineering, installation channels, refueling stations and hydrogen fuel cells.

These alliances subject us to a number of risks, including risks associated with sharing proprietary information, non-performance by the third party and increased expenses in establishing new strategic alliances, any of which may materially and adversely affect our business.

Strategic business relationships will be an important factor in the growth and success of our business.

However, there are no assurances that we will be able to continue to identify or secure suitable business relationship opportunities in the future or our competitors may capitalize on such opportunities before we do.

Moreover, identifying such opportunities could require substantial management time and resources, and negotiating and financing relationships involves significant costs and uncertainties.

If we are unable to successfully source and execute on strategic relationship opportunities in the future, our overall growth could be impaired, and our business, prospects, financial condition and operating results could be materially adversely affected.

We are or may be subject to risks associated with acquisitions.

When appropriate opportunities arise, we may acquire additional assets, products, technologies or businesses that are complementary to our existing business.

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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-K

Item 1. Business