What changed in this filing

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Item 8. Financial Statements and Supplementary Data

2025-02-25 compared with 2024-02-13 · 181 added, 177 removed, 468 unchanged (43% of the section changed)

13 unchanged sentences

We have audited the accompanying consolidated balance sheets of Hyliion Holdings Corp.

a Delaware corporation and subsidiaries (the “Company”) as of December 31, 2023 and 2022, the related consolidated statements of operations, changes in stockholders’ equity, and cash flows for each of the two years in the period ended December 31, 2023, and the related notes (collectively referred to as the “financial statements”).

In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2023 and 2022, and the results of its operations and its cash flows for each of the two years in the period ended December 31, 2023, in conformity with accounting principles generally accepted in the United States of America.

a Delaware corporation and subsidiaries (the “Company”) as of December 31, 2024 and 2023, the related consolidated statements of operations, changes in stockholders’ equity, and cash flows for each of the two years in the period ended December 31, 2024, and the related notes (collectively referred to as the “consolidated financial statements”).

In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2024 and 2023, and the results of its operations and its cash flows for each of the two years in the period ended December 31, 2024, in conformity with accounting principles generally accepted in the United States of America.

Change in accounting principle

As discussed in Note 3 to the consolidated financial statements, the Company has adopted new accounting guidance in 2024 related to the disclosure of segment information in accordance with ASU 2023-07, Segment Reporting (Topic 280) .

The adoption was retrospectively applied to 2023.

Basis for opinion

These financial statements are the responsibility of the Company’s management.

Our responsibility is to express an opinion on the Company’s financial statements based on our audits.

These consolidated financial statements are the responsibility of the Company’s management.

Our responsibility is to express an opinion on the Company’s consolidated financial statements based on our audits.

We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (“PCAOB”) and are required to be independent with respect to the Company in accordance with the U.S.

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Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud.

The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting.

As part of our audits we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting.

Accordingly, we express no such opinion.

Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks.

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Accounts receivable, net 1,923 40

Inventory — 74

Prepaid expenses and other current assets 6,401 18,483

Short-term investments 110,918 150,297

Assets held for sale 2,563 —

Total current assets 131,032 181,701

1 unchanged sentence

Operating lease right-of-use assets 5,431 7,070

Intangible assets, net — 200

Other assets 1,079 1,439

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250,000,000 shares authorized;

183,071,317 and 179,826,309 shares issued and outstanding at December 31, 2023 and 2022, respectively

184,428,472 and 183,071,317 shares issued as of December 31, 2024 and 2023, respectively;

173,818,402 and 183,034,255 shares outstanding as of December 31, 2024 and 2023, respectively

Additional paid-in capital 408,315 404,045

Treasury stock, at cost;

37,062 and no shares as of December 31, 2023 and 2022, respectively

(Accumulated deficit) retained earnings ( 97,764 ) 25,746

10,610,070 and 37,062 shares as of December 31, 2024 and 2023, respectively

( 14,132 ) ( 33 )

Accumulated deficit ( 149,812 ) ( 97,764 )

Total stockholders’ equity 244,389 306,266

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Product sales and other $ — $ 672

Research and development services 1,509 —

Total revenues 1,509 672

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Product sales and other — 1,716

Research and development services 1,415 —

Total cost of revenues 1,415 1,716

Gross loss ( 1,044 ) ( 6,672 )

Gross profit (loss) 94 ( 1,044 )

Operating expenses

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Interest income 12,216 13,808

Gain (loss) on impairment and disposal of assets 1 ( 19 )

Other income (expense), net 50 ( 32 )

Gain on disposal of assets 3 1

Other income, net 32 50

Net loss $ ( 52,048 ) $ ( 123,510 )

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

Issuance of common stock for acquisition 5,500,000 1 — — 16,114 — 16,115

Exercise of common stock options and vesting of restricted stock units, net 3,245,008 — — — 18 — 18

Share-based compensation — — — — 6,217 — 6,217

Repurchase of treasury stock — — ( 37,062 ) ( 33 ) — — ( 33 )

Net loss — — — — — ( 123,510 ) ( 123,510 )

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Inventory write-down — 1,139

(Gain) loss on impairment and disposal of assets ( 1 ) 19

Gain on disposal of assets, including assets held for sale ( 2,850 ) ( 1 )

Share-based compensation 4,615 6,217

Provision for doubtful accounts — 114

Acquired in-process research and development (Note 2)

Change in operating assets and liabilities, net of effects of business acquisition:

Carrying value adjustment to assets held for sale 6,464 —

Change in operating assets and liabilities:

Accounts receivable ( 1,883 ) 1,096

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Cash flows from investing activities

Purchase of property and equipment and other ( 7,401 ) ( 2,885 )

Purchase of property and equipment ( 16,525 ) ( 7,401 )

Proceeds from sale of property and equipment 5,385 2

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

Payments for security deposit, net ( 45 ) —

Payments for security deposit — ( 45 )

Purchase of investments ( 96,253 ) ( 189,670 )

Proceeds from sale and maturity of investments 166,886 215,422

Net cash provided by (used in) investing activities 18,308 ( 22,022 )

Net cash provided by investing activities 59,493 18,308

Cash flows from financing activities

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Hyliion Holdings Corp.

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

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

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

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

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

On November 7, 2023, the board of directors (the “Board”) determined that the Company would wind down operating the powertrain business.

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

Basis of Presentation and Principles of Consolidation

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Any reference in these footnotes to the applicable guidance is meant to refer to the authoritative GAAP as found in the Accounting Standards Codification and Accounting Standards Updates (“ASU”) of the Financial Accounting Standards Board (“FASB”).

Certain prior period balances have been reclassified to conform to the current period presentation in the consolidated financial statements and the accompanying notes.

These consolidated financial statements have been prepared on a going concern basis, which contemplates the realization of assets and settlement of liabilities in the normal course of business.

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Based on this, the Company has sufficient funds to continue to execute its business strategy for the next twelve months from the issuance date of the financial statements included in this Annual Report on Form 10-K.

Acquisitions and Disposals

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

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

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

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

The Company continues to evaluate opportunities to monetize certain of the tangible assets relating to the Business, but no assurances can be provided that any such opportunities will be realized.

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

We have not accounted for the impacts of the Plan as a discontinued operation through December 31, 2023, and substantial ongoing wind-down activities remain.

The Plan included a reduction of the Company’s workforce by approximately 175 people, or 67 %, with some severance agreements that provide for continued services through various dates of the Company’s fiscal year 2024.

The Plan is expected to result in total charges and expenses of approximately $ 20.4 million including:

(i) $ 1.2 million in employee severance and retention payments, (ii) $ 0.7 million in accelerated non-cash stock-based compensation expense, (iii) $ 14.5 million in contract termination and other cancellation costs, excluding amounts recoverable from resale of tangible assets, and (iv) $ 4.0 million in non-cash charges, including accelerated depreciation and amortization.

Charges and expenses related to the Plan of $ 11.5 million were incurred in the Company’s fourth quarter of fiscal year 2023 included in exit and termination costs in the consolidated statements of operations.

The remaining $ 8.9 million in charges and expenses are expected to be incurred in the first quarter of fiscal 2024, excluding amounts recoverable from resale of tangible assets.

The change in total liabilities associated with the Plan, excluding warranty balances in Note 12, is summarized as follows (in millions).

These balances are included within accrued expenses and other current liabilities, as presented in Note 11, with the remainder included within accounts payable.

We have not accounted for the impacts of the Plan as a discontinued operation through December 31, 2024 as we have not abandoned or sold the underlying intellectual property and continue wind down activities.

We expect to complete wind down activities in the fourth quarter of fiscal year 2025.

Total charges and expenses related to the Plan of $ 3.0 million and $ 11.5 million for the years ended December 31, 2024 and 2023, respectively , inclusive of recoveries from assets sold and charges to assets held for sale discussed below, are included in exit and termination costs in the consolidated statements of operations.

The change in total liabilities associated with the Plan is included within accrued expenses and other current liabilities as presented in Note 10 , and accounts payable, and is summarized as follows (in millions):

December 31, 2023 Charged to Expense (Benefit) Costs Paid or Settled December 31, 2024

Employee severance and retention $ 1.1 $ — $ ( 1.0 ) $ 0.1

Contract terminations 6.5 ( 0.8 ) ( 5.1 ) 0.6

Warranty obligations 0.4 ( 0.3 ) — 0.1

$ 8.0 $ ( 1.1 ) $ ( 6.1 ) $ 0.8

December 31, 2022 Charged to Expense Costs Paid or Settled December 31, 2023

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Contract terminations — 8.2 ( 1.7 ) 6.5

Warranty obligations 0.5 0.1 ( 0.2 ) 0.4

$ 0.5 $ 9.5 $ ( 2.0 ) $ 8.0

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

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

In September 2022, we acquired certain assets (the “Acquired Asset”) of General Electric Company's GE Additive business (the “Acquisition”) including new hydrogen and fuel agnostic capable generator technology.

The Acquisition did not meet the definition of a business combination and was accounted for as an asset acquisition.

No goodwill was recognized and payments allocated to in-process research and development (“IPR&D”) were recorded in research and development expense as there was no alternative future use.

Total consideration for the Acquisition was $ 32.3 million comprised of $ 15.0 million in cash, 5,500,000 shares of common stock valued at $ 16.1 million on the closing date and $ 1.2 million in direct transaction costs.

$ 3.6 million was recorded as property and equipment with expected useful lives of primarily five years and $ 28.8 million was recorded as research and development expense.

All assets were valued using level 3 inputs, with property and equipment valued using a market approach and IPR&D valued using an income approach based on Company management’s projections.

The cash component of the consideration was recorded in the statement of cash flows and allocated between purchase of property and equipment and purchase of IPR&D under investing activities.

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

Assets Held for Sale

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

At the time of initial classification as held for sale, we estimated that the sale of these assets was expected to be completed within one year and it was unlikely that significant changes to the plan of sale would be made.

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

We had assets held for sale of $ 2.6 million and nil consisting of property and equipment in connection with the Plan at their fair value less costs to sell at December 31, 2024 and 2023, respectively.

We used fair value hierarchy Level III inputs including comparable assets, adjusted for condition, and recorded charges of $ 6.5 million and nil included in exit and termination costs in the consolidated statements of operations f or the years ended December 31, 2024 and 2023, respectively.

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

We recorded net benefits for recoveries related to asset sales of $ 2.8 million and nil included in exit and termination costs in the consolidated statements of operations f or the years ended December 31, 2024 and 2023, respectively and included in gain on disposal of assets in the consolidated statements of cash flows for the years ended December 31, 2024 and 2023, respectively.

Summary of Significant Accounting Policies

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The preparation of financial statements in conformity with GAAP requires management to make certain estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities as of the balance sheet date, as well as reported amounts of expenses during the reporting period.

The Company’s most significant estimates and judgments involve inventory, acquisitions, disposals, income taxes, valuation of share-based compensation, and probability-weighted future cash flows associated with long-lived asset impairment reviews .

Management bases its estimates on historical experience and on various other assumptions believed to be reasonable, the results of which form the basis for making

judgments about the carrying values of assets and liabilities.

The Company’s most significant estimates and judgments involve revenue, assets held for sale, income taxes and valuation of share-based compensation.

Management bases its estimates on historical experience and on various other assumptions believed to be reasonable, the results

of which form the basis for making judgments about the carrying values of assets and liabilities.

Actual results could differ from those estimates, and such differences could be material to the Company’s consolidated financial statements.

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ASC 280, Segment Reporting , defines operating segments as components of an enterprise where discrete financial information is available that is evaluated regularly by the chief operating decision-maker (“CODM”) in deciding how to allocate resources and in assessing performance.

The Company operates as a single operating segment.

The Company operates as a single operating segment from which all revenue and net income (loss) is derived and for which all assets are attributed.

The Company’s CODM is the chief executive officer, who has ultimate responsibility for the operating performance of the Company and the allocation of resources.

The CODM uses cash flows as the primary measure to manage the business and does not segment the business for internal reporting or decision making.

The CODM uses net income (loss) to manage the business and does not segment the business for internal reporting or decision making.

The significant expense categories and amounts that are regularly provided to the CODM and included in the reported measure of segment loss for the years ended December 31, 2024 and 2023 are summarized as follows (in millions):

Year Ended December 31,

Total revenues $ 1.5 $ 0.7

Total cost of revenues 1.4 1.7

Gross profit (loss) 0.1 ( 1.0 )

Administrative and office 7.7 12.4

Depreciation and amortization 3.1 2.4

Facilities 5.1 5.0

Personnel 24.3 46.7

Product development, exclusive of other costs presented 15.0 34.0

Professional services 5.2 21.7

Exit and termination costs 3.0 11.5

Other operating expense 1.0 2.6

Total operating expenses 64.4 136.3

Other income, net 12.3 13.8

Net loss $ ( 52.0 ) $ ( 123.5 )

Concentration of Supplier Risk

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Restricted Cash

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

The Company provided a supplier with a letter of credit for $ 7.9 million in the fourth quarter of 2023 to secure the performance of the Company, backed by a restricted cash deposit to pay any draws on the letter of credit by the supplier.

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

The Company has provided its corporate headquarters lessor with a letter of credit for $ 0.7 million to secure the performance of the Company’s lease obligations, backed by a restricted cash deposit to pay any draws on the letter of credit by the lessor.

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The allowance for doubtful accounts is maintained at a level considered adequate to provide for potential account losses on the balance based on the Company’s evaluation of the anticipated impact of current economic conditions, changes in the character and size of the balance, past and expected future loss experience and other pertinent factors.

At December 31, 2023 and 2022, accounts receivable included amounts receivable from customers of $ 0.0 million and $ 1.1 million, respectively.

At December 31, 2023 and 2022, allowance for doubtful accounts on customer receivables were $ 0.0 million and $ 0.1 million, respectively.

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

Customer A — % 82 %

Customer C — 12

At December 31, 2024 and 2023, accounts receivable included amounts receivable from customers of $ 1.5 million and nil , respectively.

At December 31, 2024 and 2023 there was no allowance for doubtful accounts on customer receivables.

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

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As a result, investments are classified within Level II of the fair value hierarchy.

Inventory is comprised of raw materials, work in process and finished goods and includes the cost of raw materials, freight, direct and indirect labor and allocations of other conversion costs and overhead.

Semi-truck inventory is valued using the specific identification cost method and all other inventory is valued using the moving-average cost method.

Inventory is stated at the lower of cost or net realizable value.

We review our inventory to determine whether its carrying value exceeds the net amount realizable we expect to receive upon the ultimate sale of the inventory.

This requires us to determine the estimated

selling price of inventory less the estimated cost to convert the inventory on-hand into a finished product and other costs, which we determined includes the cost of installation and validation, to align with the transfer of control to customers in our revenue policy.

Inventory write-downs are first allocated to all other inventory with any residual allocated to semi-truck inventory.

Once inventory is written-down based on a lower of cost or net realizable value analysis, that amount establishes the new carrying value of inventory if written-down at year end, and subsequent changes in facts and circumstances do not result in the restoration or increase in that newly established cost basis.

Interim impairments are reversed and reassessed at each reporting period.

During the fourth quarter of 2021, we changed from a research and development phase to a production phase for our Hybrid system product.

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

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

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

As a result, moving-average prices for inventory that is capitalized in future periods may be significantly affected by those zero cost items.

Inventory is consumed in the performance of contracts for R&D services in the quarter in which it is purchased, including certain allocations of overhead costs, and we therefore do not record inventory at each reporting period pertaining to these contracts.

Prepaid Expenses and Other Current Assets

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Leasehold improvements shorter of lease term or 7 years

Demo fleet systems 2 to 3 years

Furniture and fixtures 3 years

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When property and equipment is retired or otherwise disposed of, the related cost and accumulated depreciation are removed from the accounts, and any gain or loss on the disposition is recorded in the consolidated statement of operations as a component of other income (expense).

All long-lived assets are located in the United States.

All long-lived assets are located in the U.S.

Impairment of Long-Lived Assets

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

As a result of factors including the events surrounding the Plan discussed in Note 2, the Company performe d a test of recoverability of its long-lived assets and determined that all long-lived assets were recoverable as of September 30, 2023.

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

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

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

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

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Recognize revenue when (or as) a performance obligation is satisfied.

Revenue was historically comprised of sales of Hybrid systems for Class 8 semi-trucks, Class 8 semi-trucks outfitted with Hybrid systems and specific other features and services that met the definition of a performance obligation, including internet connectivity and data processing.

We provided installation services for the Hybrid system onto the customers’ vehicle.

The Company’s products were marketed and sold to end-user fleet customers in North America.

When our contracts with customers contained multiple performance obligations and where material, the contract transaction price was allocated on a relative standalone selling price basis to each performance obligation.

We recognized revenue on Hybrid system sales and Class 8 semi-trucks outfitted with Hybrid systems upon delivery to, and acceptance of the vehicle by, the customer, which is when control transfers.

Product Sales

The Company has historically generated revenues from sales of hybrid systems for Class 8 semi-trucks and limited quantities of Class 8 semi-trucks outfitted with the hybrid system.

We recognized revenue on Hybrid system sales and Class 8 semi-trucks outfitted with Hybrid systems upon delivery to, and acceptance of the vehicle by, the customer, which is when control transferred.

Contracts were reviewed for significant financing components and payments were typically received within 30 days of delivery.

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We did not offer any sales returns.

Amounts billed to customers related to shipping and handling were classified as revenue, and we have elected to recognize the cost for freight and shipping when control has transferred to the customer as a cost of revenue.

Our policy is to exclude taxes collected from customers from the transaction price of contracts.

When a Class 8 semi-truck outfitted with a Hybrid system was resold to a customer, judgment was required to determine if we were the principal or agent in the arrangement.

We considered factors such as, but not limited to, which entity had the primary responsibility for fulfilling the promise to provide the specified good or service, which entity had inventory risk before the specified good or service has been transferred to a customer and which entity had discretion in establishing the price for the specified good or service.

We have determined that we were the principal in transactions involving the resale of Class 8 semi-trucks outfitted with the Hybrid system.

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

Year Ended December 31,

Hybrid systems and other $ 416 $ 1,082

Class 8 semi-truck prepared for Hybrid system upfit 256 1,024

Total product sales and other $ 672 $ 2,106

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

Amounts billed to customers related to shipping and handling were classified as revenue, and we elected to recognize the cost for freight and shipping when control transferred to the customer as a cost of revenue.

Our policy was to exclude taxes collected from customers from the transaction price of contracts.

The Company has discontinued the electrified powertrain systems business and shifted to focus on the development and commercialization of the fuel-agnostic KARNO generator technology.

Government Contracts

The Company was performing under two contracts as both a prime and subcontractor to the United States government to provide R&D services.

The larger of these two contracts was modified and accounted for as a new contract in the quarter ending December 31, 2024.

These contracts were not accounted for as revenue prior to September 30, 2024 as they were not in the ordinary course of business and the counterparties were not customers under GAAP.

In September 2024, the Company was awarded a best effort cost-plus-fixed fee contract up to $ 16.0 million by the United States Department of the Navy’s Office of Naval Research (“ONR”) to research the suitability of its KARNO generator for Navy ships and stationary power applications.

Under the agreement, the Company will provide R&D services through September 2026, including delivery of up to seven KARNO generators.

The ONR contract represented a significant change in business strategy toward providing R&D activities in the ordinary course of business in addition to developing power generators for stationary and mobile applications.

The Company now accounts for all three contracts under ASC 606 beginning in the quarter ending December 31, 2024.

The remaining amounts of revenue that we may recognize under these contracts was up to $ 15.7 million as of December 31, 2024, which is expected to be recognized in 2025 and 2026.

There is a single research and development services performance obligation in each of these contracts that is measured over time as the services are performed.

The Company generally invoices monthly which corresponds directly with the value to the customers of the performance completed to date, and recognizes revenue in the amount that it has a right to invoice.

Payment is ordinarily due within 90 days of invoice submission.

Cost of R&D services revenue includes labor, allocated fringe and overhead, and inventory.

All revenue in the year ended December 31, 2024 was recognized over time and all revenue in the year ended December 31, 2023 was recognized at a point in time.

The portion of our revenues from significant customers is summarized as follows and is attributable to the U.S.:

Year Ended December 31,

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Customer B 12 —

Customer G 25 —

Customer C — 65

Customer D — 25

We determine if an arrangement is a lease at inception of the contract.

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Interest expense is recognized using the effective interest rate method, and the ROU asset is amortized over the useful life of the underlying asset.

We have historically provided limited assurance-type warranties under our contracts and do not offer extended warranties or maintenance contracts.

The warranty period typically extends for the lesser of two years or 200,000 miles following transfer of control and solely relates to correction of product defects during the warranty period.

We recognize the cost of the warranty upon transfer of control based on estimated and historical claims rates and fulfillment costs, which are variable.

Should product failure rates and fulfillment costs differ from these estimates, material revisions to the estimated warranty liability would be required.

Warranty expense is recorded as a component of cost of revenue.

Marketing, Promotional and Advertising Costs

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Research and Development Expense

Research and development costs did not meet the requirements to be recognized as an asset as the associated future benefits were at best uncertain and there was no alternative future use at the time the costs were incurred.

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

R&D costs did not meet the requirements to be recognized as an asset as the associated future benefits were at best uncertain and there was no alternative future use at the time the costs were incurred.

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

Share-Based Compensation

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

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

Share-based compensation cost primarily affects our R&D and selling, general and administrative expenses.

The Company accounts for income taxes in accordance with ASC 740, Income Taxes , under which deferred tax liabilities and assets are recognized for the expected future tax consequences of temporary differences between financial statement carrying amounts and the tax basis of assets and liabilities and net operating loss and tax credit carryforwards.

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Basic loss per share (“EPS”) is computed by dividing net loss (the numerator) by the weighted average number of common shares outstanding for the period (the denominator).

Diluted EPS attributable to common shareholders is computed by adjusting net loss by the weighted average number of common shares and potential common shares outstanding (if dilutive) during each

Potential common shares include shares issuable upon exercise of stock options and vesting of restricted stock awards (see Note 8).

Diluted EPS attributable to common shareholders is computed by adjusting net loss by the weighted average number of common shares and potential common shares outstanding (if dilutive) during each period.

Potential common shares include shares issuable upon exercise of stock options and vesting of restricted stock awards

(see Note 7).

The number of potential common shares outstanding are calculated using the treasury stock or if-converted method.

Recent Accounting Pronouncements

In November 2024, the FASB issued ASU 2024-03, Income Statement—Reporting Comprehensive Income—Expense Disaggregation Disclosures (Subtopic 220-40), and clarified by ASU 2025-01, to enable investors to better understand the major components of an entity’s income statement.

The pronouncement is effective for fiscal years beginning after December 15, 2026 and interim periods beginning after December 15, 2027 and we expect a material impact to our disclosures as a result of adoption.

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

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

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

In November 2021, the FASB issued ASU 2021-10, Government Assistance (Topic 832):

Disclosures by Business Entities about Government Assistance , to increase transparency of government assistance which requires annual disclosures about transactions with a government entity that are accounted for by applying a grant or contribution accounting model by analogy.

The pronouncement is effective for fiscal years beginning after December 15, 2021.

The Company adopted ASU 2021-10 for the year ended December 31, 2022 with no material impact and updated its related disclosures.

The pronouncement is effective for fiscal years beginning after December 15, 2023 and interim periods within fiscal years beginning after December 15, 2024.

The Company adopted ASU 2023-07 for the year ended December 31, 2024 and updated its related disclosures.

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

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$ 21,464 $ 278,574 $ — $ 300,038

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

Raw materials $ — $ —

Work in process — —

Finished goods — 74

We write-down inventory for any excess or obsolete inventories or when we believe that the net realizable value of inventories is less than the carrying value.

During the years ended December 31, 2023 and 2022, we recorded write-downs of $ 1.1 million and $ 5.6 million, respectively, included primarily in cost of revenues.

Capital Structure

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At December 31, 2024, the following shares of common stock were reserved for future issuance:

Stock options issued and outstanding 522,971

Unexercised stock options outstanding under 2016 Equity Incentive Plan 188,229

Shares granted and unvested under 2020 Equity Incentive Plan 6,090,445

Authorized for future grant under 2024 Equity Incentive Plan 11,015,317

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2024 Equity Incentive Plan

The Hyliion Inc.

2016 Equity Incentive Plan (the “2016 Plan”), as amended in August 2017 and approved by the Board, permitted the granting of various awards including stock options (including both nonqualified options and incentive options), stock appreciation rights (“SARs”), stock awards, phantom stock units, performance awards and other share-based awards to employees, outside directors and consultants and advisors of the Company.

Only stock options have been awarded to employees, consultants and advisors under the 2016 Plan.

No further grants can be made under the 2016 Plan.

Employee and nonemployee stock options generally vest over four years , with a maximum term of ten years from the date of grant.

These awards become available to the recipient upon the satisfaction of a vesting condition based on a period of service.

On May 21, 2024, the Company’s shareholders approved a new long-term incentive award plan (the “2024 Plan”).

The 2024 Plan is administered by the Board and the compensation committee.

The selection of participants, allotment of shares, determination of price and other conditions are approved by the Board and the compensation committee at its sole discretion in order to attract and retain personnel instrumental to the success of the Company.

Under the 2024 Plan, the Company may grant awards covering up to 8,000,000 shares of common stock, plus the amount of authorized but unissued shares under the 2020

Plan, the number of shares relating to awards under the 2020 Plan that are cancelled, lapsed, or are forfeited, and the number of shares withheld to satisfy a holder’s tax obligations.

Grants under the 2024 Plan may be in the form of incentive stock options, nonstatutory stock options, stock appreciation rights, restricted stock awards, restricted stock unit awards, performance awards, and other awards to our employees, directors, and consultants.

No stock options have been granted under the 2024 Plan.

Employee and director restricted stock units (“RSUs”) for which a grant date has been established generally vest over one to three years from the date of grant.

These awards generally become available to the recipient upon the satisfaction of a vesting condition based on a period of service.

Activity in the 2024 Plan for the years ended December 31, 2024 and 2023 is summarized as follows:

Number of Options Weighted Average

Exercise Price (in Dollars) Weighted Average

Contractual Term

Outstanding at December 31, 2021 3,157,889 $ 0.16 6.6 years

Exercised ( 563,617 ) 0.17

Forfeited ( 52,833 ) 0.20

Outstanding at December 31, 2022 2,541,439 0.15 3.7 years

Exercised ( 1,936,018 ) 0.13

Forfeited ( 82,450 ) 0.22

Outstanding at December 31, 2023 522,971 $ 0.20 4.3 years

Exercisable at December 31, 2023 473,239 $ 0.20 4.1 years

At December 31, 2023, the options outstanding and exercisable had an intrinsic value of $ 0.3 million and $ 0.3 million, respectively.

There were no options with an exercise price greater than the market price on December 31, 2023 to exclude from the intrinsic value computation.

The intrinsic value of options exercised during the years ended December 31, 2023 and 2022 was $ 2.4 million and $ 2.4 million, respectively.

Share-based compensation expense under the 2016 Plan for the years ended December 31, 2023 and 2022 was nil and $ 0.1 million, respectively.

There was no unrecognized compensation expense related the 2016 Plan at December 31, 2023.

Number of Units Weighted Average Grant Date Fair Value (in Dollars)

Unvested at December 31, 2023 — $ —

Granted 232,176 1.81

Unvested at December 31, 2024 232,176 $ 1.81

Share-based compensation expense under the 2024 Plan for the years ended December 31, 2024 and 2023 was nil .

The fair value of RSUs that vested during the years ended December 31, 2024 and 2023 was nil .

There was $ 0.4 million of unrecognized compensation expense related to the 2024 Plan at December 31, 2024, which is expected to be recognized over the remaining vesting periods, subject to forfeitures, with a weighted-average period of 2.7 years.

2020 Equity Incentive Plan

On October 1, 2020, the Company’s shareholders approved a new long-term incentive award plan (the “2020 Plan”) in connection with the Business Combination.

On October 1, 2020, the Company’s shareholders approved a new long-term incentive award plan (the “2020 Plan”) in connection with the business combination agreement and plan of reorganization, pursuant to which SHLL Merger Sub Inc., a Delaware corporation and wholly owned subsidiary of Tortoise Acquisition Corp., a Delaware corporation, merged with and into the Company on June 18, 2020.

The 2020 Plan is administered by the Board and the compensation committee.

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No stock options have been granted under the 2020 Plan.

Employee and director RSUs for which a grant date has been established generally vest over three to four years from the date of grant.

These awards become available to the recipient upon the satisfaction of a vesting condition based on a period of service, and performance conditions (for certain awards to employees).

No further grants can be made under the 2020 Plan.

We granted 2.7 million market-conditioned restricted stock units in 2024 that vested between February 13, 2025 and December 31, 2026 contingent upon achieving underlying closing stock price thresholds.

Through December 31, 2024, there was achievement of underlying closing stock price thresholds on 100 % of these awards which will vest between August 2025 and December 2026.

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

Employee and director RSUs generally vest over one to three years from the date of grant.

These awards become available to the recipient upon the satisfaction of a vesting condition based on a period of service, and performance and market conditions (for certain awards to employees).

Activity in the 2020 Plan for the years ended December 31, 2024 and 2023 is summarized as follows:

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2,751,323 3.59

2,192,900 2.57

Granted 5,878,591 1.05

Vested ( 1,267,658 ) 3.87

( 860,505 ) 4.53

Forfeited ( 1,271,811 ) 2.61

Unvested at December 31, 2024 6,090,445 $ 1.28

2,751,323 $ 3.59

1 Excludes 1,336,667 shares underlying RSU awards with performance conditions, which have not been accounted for because no accounting grant date has been established.

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4 Excludes 633,750 shares underlying RSU awards with performance conditions, which have not been accounted for because no accounting grant date has been established.

5 Excludes 25,000 shares underlying RSU awards with performance conditions, which have not been accounted for because no accounting grant date has been established.

6 Excludes 59,584 shares underlying RSU awards with performance conditions, which have not been accounted for because no accounting grant date has been established.

7 Excludes 633,750 shares underlying RSU awards with performance conditions, which have not been accounted for because no accounting grant date has been established.

These excluded shares were not granted during the year ended December 31, 2024.

Share-based compensation expense under the 2020 Plan for the years ended December 31, 2024 and 2023 was $ 4.6 million and $ 6.2 million, respectively.

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There was $ 4.6 million of unrecognized compensation expense related to the 2020 Plan at December 31, 2024, which is expected to be recognized over the remaining vesting periods, subject to forfeitures, with a weighted-average period of 1.8 years.

As a result of execution of the Plan and failure to meet fiscal 2023 performance conditions for certain awards to employees, we expect 0.8 million RSU awards to be forfeited in the first quarter of fiscal 2024.

2016 Equity Incentive Plan

The Hyliion Inc.

Only stock options have been awarded to employees, consultants and advisors under the 2016 Plan.

No further grants can be made under the 2016 Plan.

Employee and nonemployee stock options generally vest over four years , with a maximum term of ten years from the date of grant.

These awards become available to the recipient upon the satisfaction of a vesting condition based on a period of service.

Activity in the 2016 Plan for the years ended December 31, 2024 and 2023 is summarized as follows:

Number of Options Weighted Average

Exercise Price (in Dollars) Weighted Average

Contractual Term

Outstanding at December 31, 2022 2,541,439 $ 0.15 3.7 years

Exercised ( 1,936,018 ) 0.13

Forfeited ( 82,450 ) 0.22

Outstanding at December 31, 2023 522,971 0.20 4.3 years

Exercised ( 325,175 ) 0.21

Forfeited ( 9,567 ) 0.23

Outstanding at December 31, 2024 188,229 $ 0.20 4.7 years

Exercisable at December 31, 2024 188,229 $ 0.20 4.7 years

At December 31, 2024, the options outstanding and exercisable had an intrinsic value of $ 0.5 million and $ 0.3 million, respectively.

There were no options with an exercise price greater than the market price on December 31, 2024 to exclude from the intrinsic value computation.

The intrinsic value of options exercised during the years ended December 31, 2024 and 2023 was $ 0.4 million and $ 2.4 million, respectively.

Share-based compensation expense under the 2016 Plan for the years ended December 31, 2024 and 2023 was nil and there was no unrecognized compensation expense related the 2016 Plan at December 31, 2024.

Employee Stock Purchase Plan

The Company has an authorized employee stock purchase plan (the “ESPP”) that would enable employees to contribute up to 15 % of their base compensation toward the purchase of the Company’s common stock at 85 % of its market value on the first or last day of each offering period.

The ESPP has not been implemented through December 31, 2023.

The ESPP was not implemented through December 31, 2024.

The Company enters into operating leases for its corporate office, temporary offices, vehicles and equipment.

In addition, the Company may enter into arrangements whereby portions of the leased premises are subleased to third parties and are classified as operating leases.

In May 2023, the Company executed a lease for its facility in Milford, Ohio, with a term through 2028 including the option to extend the term for up to two consecutive terms of three years , which was not reasonably certain to be exercised at the commencement date.

In December 2021, the Company amended the lease for its corporate office.

This amendment increased the amount of space under the original lease, adjusted the monthly lease payments, and decreased the term of the lease through 2027.

The Company accounted for this extension as a lease modification and recorded a decrease to the operating lease ROU asset and lease liability.

The lease amendment includes the option to extend the term for up to two consecutive terms of five years , which was not reasonably certain to be exercised at the modification date.

The following table provides a summary of the components of lease income, costs and rent, which are included within research and development and selling, general and administrative expense:

This amendment increased the amount of space under the original lease, adjusted the monthly lease payments, and decreased the term of the lease to April 2027.

The lease amendment includes the option to extend the term for up to two consecutive terms of three years , which was not reasonably certain to be exercised at the modification date.

The Company’s corporate office lease has a term through 2027 and includes the option to extend the term for up to two consecutive terms of five years , which was not reasonably certain to be exercised at the commencement date.

The following table provides a summary of the components of lease operating costs which are primarily included within R&D and selling, general and administrative expense:

Year Ended December 31,

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Computers and related equipment 2,113 1,963

34,921 16,811

accumulated depreciation ( 9,001 ) ( 6,824 )

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Depreciation expense for the years ended December 31, 2024 and 2023 totaled approximately $ 3.1 million and $ 3.2 million, respectively.

For the year ended December 31, 2023, $ 0.6 million, $ 1.7 million, and $ 0.9 million was included in selling, general and administrative expenses, research and development expenses and exit and termination costs, respectively, in the consolidated statements of operations.

For the year ended December 31, 2022, $ 0.3 million and $ 0.8 million was included in selling, general and administrative expenses, and research and development expenses, respectively, in the co nsolidated statements of operations.

For the year ended December 31, 2024, $ 0.4 million and $ 2.7 million was included in selling, general and administrative expenses and R&D expenses, respectively, in the consolidated statements of operations.

For the year ended December 31, 2023, $ 0.6 million, $ 1.7 million, and $ 0.9 million was included in selling, general and administrative expenses, R&D expenses and exit and termination costs, respectively, in the co nsolidated statements of operations.

Accrued Expenses and Other Current Liabilities

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$ 6,622 $ 10,051

The change in warranty liability for the years ended December 31, 2023 and 2022 is summarized as follows and included within accrued expenses and other current liabilities and other liabilities in the consolidated balance sheets:

Year ended December 31,

Balance at beginning of period $ 527 $ 44

Accrual for warranties issued 218 644

Net changes in accrual related to pre-existing warranties ( 154 ) ( 7 )

Warranty charges ( 182 ) ( 154 )

Balance at end of period $ 409 $ 527

The income tax provision for the years ended December 31, 2024 and 2023 is summarized as follows:

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Federal $ ( 10,493 ) $ ( 25,328 )

State — ( 40 )

Valuation allowance 10,493 25,328

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Provision at statutory rate of 21% $ ( 10,930 ) $ ( 25,937 )

State tax expense — 492

Stock options 520 533

R&D tax credit — ( 4,021 )

Other 437 609

Change in valuation allowance 10,493 25,328

In assessing the realizability of deferred tax assets, management considered whether it is more likely than not that some portion or all of the deferred tax assets will not be realized.

The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income during the periods in which those temporary differences become deductible.

The ultimate realization of deferred tax assets is dependent upon the

generation of future taxable income during the periods in which those temporary differences become deductible.

Management considere d the scheduled reversal of deferred tax liabilities, projected future taxable income and tax planning strategies in making this assessment.

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At December 31, 2024, $ 10.5 million of this amount will begin to expire in 2036 and the remaining $ 335.7 million has an indefinite carryforward period.

The Company had state net operating loss carryforwards of $ 12.5 million and $ 12.5 million at December 31, 2023 and 2022, respectively, that will begin to expire beginning in 2036 and research and development credits of $ 4.7 million that will begin to expire in 2037.

The Company had state net operating loss carryforwards of $ 12.5 million and $ 12.5 million at December 31, 2024 and 2023, respectively, that will begin to expire beginning in 2036.

The Company had federal and state R&D credits of $ 4.7 million that will begin to expire in 2037.

The Company’s ability to utilize a portion of net operating loss carryforwards and credits to offset future taxable income, and tax, respectively, is subject to certain limitations under Section 382 of the Internal Revenue Code upon changes in equity ownership of the Company.

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Economic Incentive Agreement

During the year ended December 31, 2018, the Company entered into an agreement with the Cedar Park Economic Development Corporation (“EDC”), whereby the Company would receive cash grants from the EDC contingent upon the Company fulfilling and maintaining certain corporate office lease and employment requirements.

The specified requirements must be met on or before specific measurement dates and maintained throughout the term of the agreement, which expires effective December 31, 2025.

As the terms of the EDC grant agreement require the Company to meet and maintain all of the performance requirements throughout the term of the agreement and the Company did not meet the conditions for the grant funding received through December 31, 2023, all amounts received from the EDC are subject to refund.

Accordingly, total grant funding of $ 1.1 million is included within other current accrued liabilities as of December 31, 2023.

Total grant funding of $ 0.9 million was included within other noncurrent liabilities as of December 31, 2022.

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

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

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

The Company has received payments to date of $ 0.4 million which are refundable as applicable performance requirements were not met and are included within accrued expenses and other current liabilities as of December 31, 2024.

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

Legal Proceedings

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6,510,850 3,908,044

* Potential common shares from unvested restricted stock units for the years ended December 31, 2023 and 2022 include 633,750 and 1,336,667 shares, respectively, where no accounting grant date has been established.

Supplemental Cash Flow Information

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Cash paid for amounts included in the measurement of lease liabilities:

Operating cash flows from operating leases $ ( 2,470 ) $ ( 1,921 )

Operating cash flows from operating leases, net $ ( 1,687 ) $ ( 2,470 )

Right-of-use assets obtained in exchange for lease obligations $ — $ 2,096

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Supplemental disclosure of noncash investing and financing activities:

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

Acquisitions of property and equipment and intangible assets included in accounts payable and other $ 292 $ 59

Repurchase of treasury stock included in accrued expenses and other current liabilities $ 117 $ —

Acquisitions of property and equipment and intangible assets included in accounts payable and accrued expenses and other current liabilities $ 3,884 $ 292

Retirement Plan

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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 8. Financial Statements and Supplementary Data