Hyliion Holdings Corp. 10-Q

ITEM 1. FINANCIAL STATEMENTS HYLIION HOLDINGS CORP. CONDENSED CONSOLIDATED BALANCE SHEETS (Dollar amounts in thousands, except share data) June 30, 2025 December 31, 2024 (Unaudited) Assets Current assets Cash and cash equivalents $ 15,591 $ 9,227 Accounts receivable 1,192 1,923 Prepaid expenses and other current assets 4,784 6,401 Short-term investments 92,964 110,918 Assets held for sale — 2,563 Total current assets 114,531 131,032 Property and equipment, net 32,563 25,920 Operating lease right-of-use assets 4,439 5,431 Other assets 932 1,079 Long-term investments 76,745 99,584 Total assets $ 229,210 $ 263,046 Liabilities and stockholders’ equity Current liabilities Accounts payable $ 2,689 $ 5,243 Current portion of operating lease liabilities 2,570 2,426 Accrued expenses and other current liabilities 5,000 6,622 Total current liabilities 10,259 14,291 Operating lease liabilities, net of current portion 3,040 4,366 Other liabilities 41 — Total liabilities 13,340 18,657 Commitments and contingencies (Note 10) Stockholders’ equity Common stock, $ 0.0001 par value; 250,000,000 shares authorized; 186,046,206 and 184,428,472 shares issued at June 30, 2025 and December 31, 2024, respectively; 175,436,136 and 173,818,402 shares outstanding as of June 30, 2025 and December 31, 2024, respectively 19 18 Additional paid-in capital 410,463 408,315 Treasury stock, at cost; 10,610,070 and 10,610,070 shares as of June 30, 2025 and December 31, 2024, respectively ( 14,132 ) ( 14,132 ) Accumulated deficit ( 180,480 ) ( 149,812 ) Total stockholders’ equity 215,870 244,389 Total liabilities and stockholders’ equity $ 229,210 $ 263,046 The accompanying notes are an integral part of these unaudited condensed consolidated financial statements. 1 Table of Contents HYLIION HOLDINGS CORP. UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (Dollar amounts in thousands, except share and per share data) Three Months Ended June 30, Six Months Ended June 30, 2025 2024 2025 2024 Revenues Research and development services $ 1,515 $ — $ 2,004 $ — Total revenues 1,515 — 2,004 — Cost of revenues Research and development services 1,384 — 1,861 — Total cost of revenues 1,384 — 1,861 — Gross profit 131 — 143 — Operating expenses Research and development 10,137 8,311 22,367 16,279 Selling, general and administrative 5,963 6,262 12,044 12,854 Exit and termination costs (benefits) ( 346 ) ( 556 ) 1,077 3,875 Total operating expenses 15,754 14,017 35,488 33,008 Loss from operations ( 15,623 ) ( 14,017 ) ( 35,345 ) ( 33,008 ) Interest income 2,209 3,129 4,677 6,525 Gain on disposal of assets — — — 3 Other income, net — 32 — 32 Net loss $ ( 13,414 ) $ ( 10,856 ) $ ( 30,668 ) $ ( 26,448 ) Net loss per share, basic and diluted $ ( 0.08 ) $ ( 0.06 ) $ ( 0.18 ) $ ( 0.15 ) Weighted-average shares outstanding, basic and diluted 175,308,965 173,829,107 174,829,257 176,156,001 The accompanying notes are an integral part of these unaudited condensed consolidated financial statements. 2 Table of Contents HYLIION HOLDINGS CORP. UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY (Dollar amounts in thousands, except share data) Six Months Ended June 30, 2025 Common Stock Treasury Stock Additional Paid-In Capital Accumulated Deficit Total Stockholders’ Equity Shares Amount Shares Amount Balance at December 31, 2024 184,428,472 $ 18 ( 10,610,070 ) $ ( 14,132 ) $ 408,315 $ ( 149,812 ) $ 244,389 Exercise of common stock options and vesting of restricted stock units, net 1,414,392 1 — — ( 444 ) — ( 443 ) Share-based compensation — — — — 1,295 — 1,295 Net loss — — — — — ( 17,254 ) ( 17,254 ) Balance at March 31, 2025 185,842,864 $ 19 ( 10,610,070 ) $ ( 14,132 ) $ 409,166 $ ( 167,066 ) $ 227,987 Exercise of common stock options and vesting of restricted stock units, net 203,342 — — — ( 89 ) — ( 89 ) Share-based compensation — — — — 1,386 — 1,386 Net loss — — — — — ( 13,414 ) ( 13,414 ) Balance at June 30, 2025 186,046,206 $ 19 ( 10,610,070 ) $ ( 14,132 ) $ 410,463 $ ( 180,480 ) $ 215,870 Six Months Ended June 30, 2024 Common Stock Treasury Stock Additional Paid-In Capital Accumulated Deficit Total Stockholders’ Equity Shares Amount Shares Amount Balance at December 31, 2023 183,071,317 $ 18 ( 37,062 ) $ ( 33 ) $ 404,045 $ ( 97,764 ) $ 306,266 Exercise of common stock options and vesting of restricted stock units, net 945,378 — — — ( 247 ) — ( 247 ) Share-based compensation — — — — 1,320 — 1,320 Repurchase of treasury stock — — ( 8,675,395 ) ( 11,337 ) — — ( 11,337 ) Net loss — — — — — ( 15,592 ) ( 15,592 ) Balance at March 31, 2024 184,016,695 $ 18 ( 8,712,457 ) $ ( 11,370 ) $ 405,118 $ ( 113,356 ) $ 280,410 Exercise of common stock options and vesting of restricted stock units, net 138,419 — — — ( 68 ) — ( 68 ) Share-based compensation — — — — 1,125 — 1,125 Repurchase of treasury stock — — ( 1,897,613 ) ( 2,771 ) — — ( 2,771 ) Net loss — — — — — ( 10,856 ) ( 10,856 ) Balance at June 30, 2024 184,155,114 $ 18 ( 10,610,070 ) $ ( 14,141 ) $ 406,175 $ ( 124,212 ) $ 267,840 The accompanying notes are an integral part of these unaudited condensed consolidated financial statements. 3 Table of Contents HYLIION HOLDINGS CORP. UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Dollar amounts in thousands) Six Months Ended June 30, 2025 2024 Cash flows from operating activities Net loss $ ( 30,668 ) $ ( 26,448 ) Adjustments to reconcile net loss to net cash used in operating activities: Depreciation and amortization 2,428 1,285 Amortization and accretion of investments, net ( 992 ) ( 1,839 ) Noncash lease expense 992 849 Gain on disposal of assets, including assets held for sale ( 585 ) ( 1,078 ) Share-based compensation 2,681 2,445 Carrying value adjustment to assets held for sale 1,590 5,564 Changes in operating assets and liabilities: Accounts receivable 764 ( 333 ) Prepaid expenses and other assets 1,920 ( 5,131 ) Accounts payable 1,015 ( 3,239 ) Accrued expenses and other liabilities ( 1,962 ) ( 4,427 ) Operating lease liabilities ( 1,182 ) ( 1,044 ) Net cash used in operating activities ( 23,999 ) ( 33,396 ) Cash flows from investing activities Purchase of property and equipment ( 11,575 ) ( 8,054 ) Proceeds from sale of property and equipment 800 3,470 Receipt of security deposit 41 — Purchase of investments ( 18,397 ) ( 32,623 ) Proceeds from sale and maturity of investments 60,026 83,234 Net cash provided by investing activities 30,895 46,027 Cash flows from financing activities Proceeds from exercise of common stock options — 50 Taxes paid related to net share settlement of equity awards ( 532 ) ( 365 ) Repurchase of treasury stock — ( 13,982 ) Net cash used in financing activities ( 532 ) ( 14,297 ) Net increase (decrease) in cash and cash equivalents and restricted cash 6,364 ( 1,666 ) Cash and cash equivalents and restricted cash, beginning of period 9,892 21,464 Cash and cash equivalents and restricted cash, end of period $ 16,256 $ 19,798 Supplemental disclosure of noncash investing and financing activities: Repurchase of treasury stock included in accrued expenses $ — $ 126 Acquisitions of property and equipment included in accounts payable and accrued expenses and other current liabilities $ 447 $ 150 The accompanying notes are an integral part of these unaudited condensed consolidated financial statements. 4 Table of Contents HYLIION HOLDINGS CORP. NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Dollar amounts in thousands, except as separately indicated) Note 1. Overview Hyliion Holdings Corp. is a Delaware corporation headquartered in Cedar Park, Texas, with research and development (“R&D”) facilities in Cincinnati, Ohio, that designs and develops the KARNO TM Power Module 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 KARNO Power Module is a complete, fully integrated, enclosed, fuel agnostic power generating solution, including balance of plant such as cooling system, controls, fuel handling, and air handling systems, that generates electricity on command in stationary power generation applications powered by KARNO Cores. The KARNO Core is a linear generator that generates its own heat, and converts thermal energy generated from oxidization of fuels into electrical energy. It uses linear electric motors in a four-shaft system to generate electricity via a flameless oxidation process, achieving near zero emissions without emissions treatment systems. Note 2. Disposals 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 Power Module technology. We have not accounted for the impacts of the Plan as a discontinued operation through June 30, 2025 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 (benefits) related to the Plan of $( 0.3 ) million and $( 0.6 ) million for the three months ended June 30, 2025 and 2024, respectively , and $ 1.1 million and $ 3.9 million for the six months ended June 30, 2025 and 2024, 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 condensed consolidated statements of operations. The change in total liabilities associated with the Plan is included within accrued expenses and other current liabilities as presented in Note 9 , and accounts payable, and is summarized as follows (in millions): March 31, 2025 Charged to Expense Costs Paid or Settled June 30, 2025 Contract terminations $ 0.1 $ 0.1 $ ( 0.1 ) $ 0.1 Warranty obligations 0.1 ( 0.1 ) — — $ 0.2 $ — $ ( 0.1 ) $ 0.1 December 31, 2024 Charged to Expense Costs Paid or Settled March 31, 2025 Employee severance and retention $ 0.1 $ — $ ( 0.1 ) $ — Contract terminations 0.6 — ( 0.5 ) 0.1 Warranty obligations 0.1 — — 0.1 $ 0.8 $ — $ ( 0.6 ) $ 0.2 March 31, 2024 Charged to Expense Costs Paid or Settled June 30, 2024 Employee severance and retention $ 0.7 $ — $ ( 0.3 ) $ 0.4 Contract terminations 2.1 — ( 1.1 ) 1.0 Warranty obligations 0.1 — — 0.1 $ 2.9 $ — $ ( 1.4 ) $ 1.5 December 31, 2023 Charged to Expense Costs Paid or Settled March 31, 2024 Employee severance and retention $ 1.1 $ — $ ( 0.4 ) $ 0.7 Contract terminations 6.5 ( 0.7 ) ( 3.7 ) 2.1 Warranty obligations 0.4 ( 0.3 ) — 0.1 $ 8.0 $ ( 1.0 ) $ ( 4.1 ) $ 2.9 5 Table of Contents HYLIION HOLDINGS CORP. NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Dollar amounts in thousands, except as separately indicated) 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. Assets Held for Sale Certain assets of our powertrain business, including Class 8 semi-trucks and capital equipment, continue to be actively marketed for sale, and we are actively locating buyers for these assets. At the time of initial classification as held for sale at March 31, 2024, 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. Due to increased uncertainty regarding the timing of the disposition, driven by deteriorating market conditions in the electric vehicle industry, we reclassified assets previously recorded as held for sale totaling $ 1.0 million to property and equipment, net, on the condensed consolidated balance sheets, and recognized charges of $ 1.6 million during the three months ended March 31, 2025. We had assets held for sale of nil and $ 2.6 million consisting of property and equipment in connection with the Plan at their fair value less costs to sell on the condensed consolidated balance sheets at June 30, 2025 and December 31, 2024, respectively. We used fair value hierarchy Level III inputs including comparable assets, adjusted for condition, and recorded charges of $ 0.0 million , as discussed above, and $ 0.0 million for the three months ended June 30, 2025 and 2024, respectively, and $ 1.6 million and $ 5.6 million for the six months ended June 30, 2025 and 2024, respectively, included in exit and termination costs in the condensed consolidated statements of operations. We recorded net benefits for recoveries related to asset sales of $ 0.3 million and $ 0.6 million for the three months ended June 30, 2025 and 2024, respectively, and $ 0.6 million and $ 1.2 million for the six months ended June 30, 2025 and 2024, respectively, included in exit and termination costs in the condensed consolidated statements of operations a nd in gain on disposal of assets, including assets held for sale in the condensed consolidated statements of cash flows. Note 3. Summary of Significant Accounting Policies Basis of Presentation and Principles of Consolidation The accompanying condensed consolidated financial statements include the accounts of Hyliion Holdings Corp. and its wholly owned subsidiary. Intercompany transactions and balances have been eliminated upon consolidation. The condensed consolidated financial statements and accompanying notes have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) and in accordance with the rules and regulations of the United States Securities and Exchange Commission (“SEC”), which permit reduced disclosure for interim periods. The condensed consolidated balance sheet at December 31, 2024 was derived from audited financial statements for the fiscal year then ended, but does not include all necessary disclosures required with respect to annual financial statements. In the opinion of the Company, these condensed consolidated financial statements include all recurring adjustments and normal accruals necessary for a fair presentation of the Company’s financial position, results of operations and cash flows for the dates and periods presented. These condensed consolidated financial statements and accompanying notes should be read in conjunction with the Company’s 2024 Annual Report. Results for interim periods are not necessarily indicative of the results to be expected for a full fiscal year or for any future period. These condensed consolidated financial statements have been prepared on a going concern basis, which contemplates the realization of assets and settlement of liabilities in the normal course of business. The Company is an early-stage growth company and has generated negative cash flows from operating activities since inception. At June 30, 2025, the Company had total equity of $ 215.9 million, inclusive of cash and cash equivalents of $ 15.6 million and total investments of $ 169.7 million. Based on this, the Company has sufficient funds to continue to execute its business strategy for the next twelve months from the issuance date of the financial statements included in this Quarterly Report on Form 10-Q. Use of Estimates The preparation of financial statements in conformity with GAAP require s 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 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 condensed consolidated financial statements. 6 Segment Information 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 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 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 three and six months ended June 30, 2025 and 2024 are summarized as follows (in millions): Three Months Ended June 30, 2025 2024 Total revenues $ 1.5 $ — Total cost of revenues 1.4 — Gross profit 0.1 — Administrative and office 1.6 2.1 Depreciation and amortization 1.3 0.7 Facilities 1.5 1.2 Personnel 6.3 6.1 Product development, exclusive of other costs presented 3.4 3.0 Professional services 1.5 1.3 Exit and termination costs ( 0.3 ) ( 0.6 ) Other operating expense 0.4 0.3 Total operating expenses 15.7 14.1 Other income, net 2.2 3.2 Net loss $ ( 13.4 ) $ ( 10.9 ) Six Months Ended June 30, 2025 2024 Total revenues $ 2.0 $ — Total cost of revenues 1.9 — Gross profit 0.1 — Administrative and office 3.2 3.9 Depreciation and amortization 2.4 1.3 Facilities 2.9 2.5 Personnel 12.6 13.0 Product development, exclusive of other costs presented 9.7 5.3 Professional services 2.9 2.5 Exit and termination costs 1.1 3.9 Other operating expense 0.7 0.6 Total operating expenses 35.5 33.0 Other income, net 4.7 6.6 Net loss $ ( 30.7 ) $ ( 26.4 ) 7 Concentration of Supplier Risk The Company is dependent on certain suppliers, many of which are single source suppliers, and the inability of these suppliers to deliver necessary components of the Company’s products in a timely manner at prices, quality levels and volumes that are acceptable, or the Company’s inability to efficiently manage these components from these suppliers, could have a material adverse effect on the Company’s business, prospects, financial condition and operating results. Cash and Cash Equivalents The Company considers all highly liquid investments with a maturity date of 90 days or less at the time of purchase to be cash and cash equivalents only if in checking, savings or money market accounts. Cash and cash equivalents include cash held in banks and money market accounts and are carried at cost, which approximates fair value. The Company maintains cash in excess of federally insured limits at financial institutions which it believes are of high credit quality and has not incurred any losses related to these balances to date. The Company believes its credit risk, with respect to these financial institutions to be minimal. Restricted Cash The Company has provided its corporate headquarters lessor with a letter of credit for $ 0.7 million to secure the performance of the Company’s lease obligations, backed by a restricted cash deposit to pay any draws on the letter of credit by the lessor. Total cash and cash equivalents and restricted cash as presented in the condensed consolidated statements of cash flows is summarized as follows: June 30, 2025 December 31, 2024 June 30, 2024 December 31, 2023 Cash and cash equivalents $ 15,591 $ 9,227 $ 19,133 $ 12,881 Restricted cash included in prepaid expenses and other current assets — — — 7,918 Restricted cash included in other assets 665 665 665 665 $ 16,256 $ 9,892 $ 19,798 $ 21,464 Accounts Receivable Accounts receivable are stated at a gross invoice amount, net of an allowance for doubtful accounts. The allowance for doubtful accounts is maintained at a level considered adequate to provide for potential account losses on the balance based on the Company’s evaluation of the anticipated impact of current economic conditions, changes in the character and size of the balance, past and expected future loss experience and other pertinent factors. At June 30, 2025 and December 31, 2024, accounts receivable included amounts receivable from customers of $ 1.2 million and $ 1.5 million, respectively. At June 30, 2025 and December 31, 2024, there was no allowance for doubtful accounts on customer receivables. Investments The Company’s investments consist of corporate bonds, U.S. treasury and agency securities, state and local municipal bonds and commercial paper, all of which are classified as held-to-maturity, with a maturity date of 36 -months or less at the time of purchase. The Company determines the appropriate classification of investments at the time of purchase and re-evaluates such designation as of each balance sheet date. Investments are classified as held-to-maturity when the Company has the positive intent and ability to hold the securities to maturity. Held-to-maturity securities are stated at amortized cost, adjusted for amortization of premiums and accretion of discounts to maturity. Such amortization, along with interest, is included in interest income. The Company uses the specific identification method to determine the cost basis of securities sold. Investments are impaired when a decline in fair value is judged to be other-than-temporary. The Company evaluates investments for impairment by considering the length of time and extent to which market value has been less than cost or amortized cost, the financial condition and near-term prospects of the issuer as well as specific events or circumstances that may influence the operations of the issuer and the Company’s intent to sell the security or the likelihood that it will be required to sell the security before recovery of the entire amortized cost. Once a decline in fair value is determined to be other-than-temporary, an impairment charge is recorded to other income and a new cost basis in the investment is established. Fair Value Measurements ASC 820, Fair Value Measurements , clarifies that fair value is an exit price, representing the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants. As such, fair value is a market-based measurement that should be determined based upon assumptions that market participants would use in pricing an asset or 8 liability. As a basis for considering such assumptions, ASC 820 establishes a three-tier fair value hierarchy, which prioritizes the inputs used in measuring fair value as follows: Level I : Quoted prices (unadjusted) for identical assets or liabilities in active markets that the Company can access at the measurement date; Level II : Significant other observable inputs other than level I prices such as quoted prices for similar assets or liabilities, quoted prices in markets that are not active or other inputs that are observable or can be corroborated by observable market data; and Level III : Significant unobservable inputs that reflect the Company’s own assumptions about the assumptions that market participants would use in pricing an asset or liability. An asset’s or liability’s fair value measurement level within the fair value hierarchy is based on the lowest level of any input that is significant to the fair value measurement. Valuation techniques used need to maximize the use of observable inputs and minimize the use of unobservable inputs. The Company believes its valuation methods are appropriate and consistent with other market participants, however the use of different methodologies or assumptions to determine the fair value of certain financial instruments could result in a different fair value measurement at the reporting date. The Company’s financial instruments consist of cash and cash equivalents and restricted cash, accounts receivable, investments, accounts payable and accrued expenses. The carrying value of cash and cash equivalents and restricted cash, accounts receivable, accounts payable and accrued expenses approximate fair value because of the short-term nature of those instruments. The fair value of investments is based on quoted prices for identical or similar instruments in markets that are not active. As a result, investments are classified within Level II of the fair value hierarchy. Inventories As of June 30, 2025, the KARNO Power Module has not yet been commercialized. 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. Revenue The Company follows five steps to recognize revenue from contracts with customers under ASC 606, Revenue from Contracts with Customers, which are: • Step 1: Identify the contract(s) with a customer; • Step 2: Identify the performance obligations in the contract; • Step 3: Determine the transaction price; • Step 4: Allocate the transaction price to the performance obligations in the contract; and • Step 5: Recognize revenue when (or as) a performance obligation is satisfied. U.S. 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, modified in March 2025, 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 Power Module for Navy ships and stationary power generation applications. Under the agreement, the Company will provide R&D services through September 2026, including delivery of up to seven KARNO Cores. 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 Modules for stationary and mobile applications. In July 2025, the Company was awarded a Phase II best effort cost-plus-fixed fee contract up to $ 1.5 million by the ONR to demonstrate the conceptual feasibility of the Phase I effort and show development progress towards 9 successful application. Under the agreement, the Company will provide R&D services through July 2026 with an option to extend through July 2027, including design reviews, simulations, and reporting. The Company began accounting for these contracts under ASC 606 beginning in the quart er ending December 31, 2024. The remaining amounts of revenue that we may recognize under these contracts was up to $ 15.2 million as of June 30, 2025, which is expected to primarily 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 three and six months ended June 30, 2025 and 2024 was recognized over time. The portion of our revenues from significant customers is summarized as follows and is attributable to the U.S.: Three Months Ended June 30, 2025 2024 Customer A 87 % — % Customer B 13 — 100 % — % Six Months Ended June 30, 2025 2024 Customer A 77 % — % Customer B 23 — 100 % — % Research and Development Expense 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. 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. The pronouncement is effective for fiscal years beginning after December 15, 2024 and we expect an impact to our disclosures as a result of adoption. 10 Note 4. Investments The amortized cost, unrealized gains and losses, fair value and maturities of our held-to-maturity investments at June 30, 2025 and December 31, 2024 are summarized as follows: Fair Value Measurements at June 30, 2025 Amortized Cost Gross Unrealized Gains Gross Unrealized Losses Fair Value U.S. government agency bonds $ 12,500 $ — $ ( 17 ) $ 12,483 State and municipal bonds 5,977 2 — 5,979 Corporate bonds and notes 151,232 362 ( 39 ) 151,555 $ 169,709 $ 364 $ ( 56 ) $ 170,017 Fair Value Measurements at December 31, 2024 Amortized Cost Gross Unrealized Gains Gross Unrealized Losses Fair Value Commercial paper $ 979 $ 3 $ — $ 982 U.S. government agency bonds 17,490 6 ( 54 ) 17,442 State and municipal bonds 10,924 10 — 10,934 Corporate bonds and notes 181,109 369 ( 152 ) 181,326 $ 210,502 $ 388 $ ( 206 ) $ 210,684 June 30, 2025 December 31, 2024 Amortized Cost Fair Value Amortized Cost Fair Value Due in one year or less $ 92,964 $ 93,092 $ 110,918 $ 111,170 Due after one year through five years 76,745 76,925 99,584 99,514 $ 169,709 $ 170,017 $ 210,502 $ 210,684 Note 5. Fair Value Measurements The fair value measurements of our financial assets at June 30, 2025 and December 31, 2024 are summarized as follows: Fair Value Measurements at June 30, 2025 Level I Level II Level III Total Cash and cash equivalents $ 15,591 $ — $ — $ 15,591 Restricted cash 665 — — 665 Held-to-maturity investments: Commercial paper — — — — U.S. government agency bonds — 12,483 — 12,483 State and municipal bonds — 5,979 — 5,979 Corporate bonds and notes — 151,555 — 151,555 $ 16,256 $ 170,017 $ — $ 186,273 11 Fair Value Measurements at December 31, 2024 Level I Level II Level III Total Cash and cash equivalents $ 9,227 $ — $ — $ 9,227 Restricted cash 665 — — 665 Held-to-maturity investments: Commercial paper — 982 — 982 U.S. government agency bonds — 17,442 — 17,442 State and municipal bonds — 10,934 — 10,934 Corporate bonds and notes — 181,326 — 181,326 $ 9,892 $ 210,684 $ — $ 220,576 Note 6. Leases In February 2025, the Company executed a sublease for a portion of its corporate office through April 2027. The components of lease operating income which are primarily included as reductions to R&D and selling, general and administrative expense in the condensed consolidated statements of operations for the three and six months ended June 30, 2025 and 2024 are summarized as follows: Three Months Ended June 30, Six Months Ended June 30, 2025 2024 2025 2024 Operating lease income $ 27 $ — $ 54 $ — Variable operating lease income 22 — 57 — $ 49 $ — $ 111 $ — Note 7. Property and Equipment, Net Property and equipment, net at June 30, 2025 and December 31, 2024 is summarized as follows: June 30, 2025 December 31, 2024 Production machinery and equipment $ 36,154 $ 27,846 Vehicles 379 379 Leasehold improvements 4,923 4,313 Office furniture and fixtures 287 270 Computers and related equipment 2,227 2,113 43,970 34,921 Less: accumulated depreciation ( 11,407 ) ( 9,001 ) Total property and equipment, net $ 32,563 $ 25,920 Note 8. Share-Based Compensation During the six months ended June 30, 2025 and 2024, the Company granted 4.3 million and 5.9 million, respectively, restricted stock units which will vest over a period of one to three years . During the six months ended June 30, 2025 and 2024, 0.1 million and 1.1 million, respectively, of restricted stock units and options were forfeited. Share-based compensation expense for the three and six months ended June 30, 2025 was $ 1.4 million and $ 2.7 million, respectively. Share-based compensation expense for the three and six months ended June 30, 2024 was $ 1.1 million and $ 2.4 million, respectively. Of the restricted stock units granted in the six months ended June 30, 2025, 2.7 million units may vest between February 18, 2026 and December 31, 2027 contingent upon achieving underlying closing stock price thresholds. These awards were valued at $ 1.46 per unit using fair value hierarchy Level III inputs including an underlying share volatility of 90 % and a risk-free rate of 4.23 %. 12 Note 9. Accrued Expenses and Other Current Liabilities Accrued expenses and other current liabilities at June 30, 2025 and December 31, 2024 are summarized as follows: June 30, 2025 December 31, 2024 Accrued professional services and other $ 2,070 $ 1,823 Accrued compensation and related benefits 2,035 3,280 Other accrued liabilities 791 746 Accrued severance, contract termination, and other charges 104 773 $ 5,000 $ 6,622 Note 10. Commitments and Contingencies Economic Incentive Agreement During the quarter ended March 31, 2024, in connection with our operations in Cedar Park, Texas, the Company entered into an agreement with the Cedar Park Economic Development Corporation (“EDC”) that superseded prior agreements, whereby the Company would receive cash grants up to $ 1.1 million from the EDC at various measurement dates during the term of the agreement contingent upon the Company fulfilling and maintaining certain occupancy, investment, and employment requirements. The requirements must be met on or 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 at June 30, 2025. Under the agreement, th e EDC has the right to file a security interest to all assets of the Company. Legal Proceedings The Company is periodically involved in legal proceedings, legal actions and claims arising in the nor mal course of business, including proceedings relating to product liability, intellectual property, safety and health, employment and other matters. The Company believes that the outcome of such legal proceedings, legal actions and claims will not have a significant adverse effect on the Company’s financial position, results of operations or cash flows. Note 11. Net Loss Per Share The computation of basic and diluted net loss per share for the three and six months ended June 30, 2025 and 2024 is summarized as follows (in thousands, except share and per share data): Three Months Ended June 30, Six Months Ended June 30, 2025 2024 2025 2024 Numerator: Net loss attributable to common stockholders $ ( 13,414 ) $ ( 10,856 ) $ ( 30,668 ) $ ( 26,448 ) Denominator: Weighted average shares outstanding, basic and diluted 175,308,965 173,829,107 174,829,257 176,156,001 Net loss per share, basic and diluted $ ( 0.08 ) $ ( 0.06 ) $ ( 0.18 ) $ ( 0.15 ) 13 Potential common shares excluded from the computation of diluted net loss per share because including them would have had an anti-dilutive effect for the three and six months ended June 30, 2025 and 2024 are summarized as follows: Three and Six Months Ended June 30, 2025 2024 Unexercised stock options 183,975 271,996 Unvested restricted stock units 8,671,144 6,450,052 8,855,119 6,722,048 14 Table of Contents