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Item 7. Management’s Discussion and Analysis

2025-02-27 compared with 2024-02-27 · 85 added, 83 removed, 201 unchanged (46% of the section changed)

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The following discussion and analysis provides information that our management believes is relevant to an assessment and understanding of our consolidated results of operations and financial condition.

The discussion should be read together with our consolidated financial statements and related notes appearing elsewhere in this Annual Report on Form 10-K.

The discussion should be read together with our consolidated financial statements and related notes appearing elsewhere in this Annual Report.

We have elected to omit discussion on the earliest of the three years covered by the consolidated financial statements presented.

Refer to Item 7.

Management's Discussion and Analysis of Financial Condition and Results of Operations located in our Annual Report on Form 10-K for the year ended December 31, 2022, filed on March 1, 2023, for reference to discussion of the fiscal year ended December 31, 2021, the earliest of the three fiscal years presented.

Management's Discussion and Analysis of Financial Condition and Results of Operations located in our annual report on Form 10-K for the year ended December 31, 2023, filed on February 27, 2024, for reference to discussion of the fiscal year ended December 31, 2022, the earliest of the three fiscal years presented.

This discussion and analysis includes forward looking statements that involve risks and uncertainties.

Please see the section of this Annual Report on Form 10-K titled “Special Note Regarding Forward-Looking Statements.”

Please see the section of this Annual Report titled “Special Note Regarding Forward-Looking Statements.”

We have spent more than a decade designing and testing a piloted all-electric, vertical take-off and landing (“eVTOL”) aircraft that we intend to operate as part of a fast, quiet and convenient service in cities around the world.

The aircraft is quiet when taking off, near silent when flying overhead and is designed to transport a pilot and four passengers at speeds of up to 200 mph, with a range optimized for urban markets of 100 miles on a single charge.

The aircraft is quiet when taking off, near silent when flying overhead and is being designed to transport a pilot and up to four passengers - or an expected payload of up to 1,000 pounds - at speeds of up to 200 mph.

The aircraft is optimized for urban routes, with a target range of up to 100 miles on a single charge.

According to our modeling, more than 99% of urban routes in cities such as New York City and Los Angeles are significantly shorter than this, enabling higher utilization through faster turnaround times of our aircraft.

By combining the freedom of air travel with the efficiency of our aircraft, we expect to deliver journeys that are up to 10 times faster than driving, and it is our goal to steadily drive down end-user pricing in the years following commercial launch to make the service widely accessible.

The low noise enabled by the all-electric powertrain will allow the aircraft to operate around dense, urban areas while blending into the background noise of cities.

With more than 1,000 successful test flights already completed, and as the first eVTOL aircraft developer to receive a signed, stage 4 G-1 certification basis, we believe we are well positioned to be the first eVTOL manufacturer to earn airworthiness certification from the Federal Aviation Administration (“FAA”).

With thousands of successful test flights already completed, and as the first eVTOL aircraft developer to receive a signed, stage 4 G-1 certification basis which was subsequently published in final form in the Federal Register, we believe we are well positioned to be the first eVTOL manufacturer to earn airworthiness certification from the Federal Aviation Administration (“FAA”).

We do not currently intend to sell these aircraft to independent third parties or individual consumers as a primary business model.

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Air Force (“USAF”) through sales or contracted operations, and to individual end-users through a convenient app-based aerial ridesharing service.

We delivered our first aircraft for initial service operations with the U.S Department of Defense (“DOD”) in September 2023 and are targeting commercial passenger operations in 2025.

We believe this vertically-integrated business model will generate the greatest economic returns, while providing us with end-to-end control over the customer experience to optimize for customer safety, comfort and value.

We are targeting initial passenger operations in 2025 or 2026.

We believe this vertically-integrated business model will generate the greatest economic returns over time, while providing us with end-to-end control over the customer experience to optimize for customer safety, comfort and value.

There may be circumstances in which it is either required (for example, due to operating restrictions on foreign ownership in other countries) or otherwise desirable to sell aircraft in the future.

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As of December 31, 2024, we had an accumulated deficit of $1,855.7 million.

We have funded our operations primarily with proceeds from the issuance of stock, convertible notes and the proceeds from our February 2021 merger with Reinvent Technology Partners, a special purpose acquisition company (the “Merger”).

We have funded our operations primarily with proceeds from the issuance of stock, convertible notes and the proceeds from our merger in August 2021 with Reinvent Technology Partners (“RTP”), a special purpose acquisition company, through which we became a publicly-traded company.

Key Factors Affecting Operating Results

See the section entitled “ Risk Factors ” for a further discussion of these considerations.

Development of the Urban Air Mobility (“UAM”) Market

Development of the Global Urban Air Mobility (“UAM”) Market

Our revenue will be directly tied to the continued development of short distance aerial transportation.

While we believe the market for UAM will be large, it remains undeveloped and there is no guarantee of future demand.

We delivered our first aircraft for initial service operations with the DOD in September 2023 and are targeting commercial passenger operations in 2025.

While we believe the global market for UAM will be large, it remains undeveloped and there is no guarantee of future demand.

We delivered our first aircraft for initial service operations with the DOD in September 2023 and are targeting initial passenger operations in 2025 or 2026.

Our business will require significant investment leading up to launching these services, including, but not limited to, final engineering designs, prototyping and testing, manufacturing, software development, certification, pilot training, infrastructure and commercialization.

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the development of adequate infrastructure;

consumers’ perception about the safety, convenience and cost

of transportation using eVTOL relative to ground-based alternatives;

consumers’ perception about the safety, convenience and cost of transportation using eVTOL relative to ground-based alternatives;

and increases in fuel efficiency, autonomy, or electrification of cars.

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Government Certification

We agreed to a signed, stage 4 “G-1” certification basis for our aircraft with the FAA in 2020.

We signed a revised, stage 4 “G-1” certification basis for our aircraft with the FAA in July 2022, which was published in final form in the Federal Register in March 2024.

This agreement lays out the specific requirements that need to be met by our aircraft for it to be certified for commercial operations.

Reaching this milestone marks a key step towards certifying any new aircraft in the U.S.

Our aircraft was originally intended to be certified in line with the FAA’s existing Part 23 requirements for Normal Category Airplanes, with special conditions introduced to address requirements specific to our unique aircraft.

In May 2022, the FAA indicated that they were revisiting the decision to certify all eVTOLs under Part 23 and would, instead, require certification under the “powered lift” classification.

Based on the FAA’s revised certification requirements, we re-signed an updated stage 4 "G-1" certification basis in July 2022, which was published in the federal register in November 2022.

In 2022, we received our Part 135 operating certificate, which is required for us to operate an on-demand air service.

While that currently allows us to operate the service with conventional aircraft, the FAA will need to publish operational regulations related to eVTOLs before we add our aircraft to our Part 135 operating certificate.

The FAA has indicated that they do not expect the relevant operational regulations, or Special Federal Aviation Regulations (“SFARs”), for eVTOL aircraft to be finalized until late 2024.

If the publication of the SFARs is further delayed, if the FAA requires further modifications to our existing G-1 certification basis, or if there are other regulatory changes or revisions, this could delay our ability to obtain type certification, and could delay our ability to launch our commercial passenger service.

We think of the FAA type certification process in five stages and have made significant progress towards certification.

We have completed or substantially completed three of these five stages.

In 2022, we received our Part 135 operating certificate, which is required for us to operate an on-demand air service and allows us to operate the service with conventional aircraft.

In October 2024, the FAA published the Special Federal Aviation Regulations (“SFARs”), which include operational regulations related to eVTOLs.

We will need to comply with these SFARs as we add our aircraft to our Part 135 operating certificate.

If the FAA requires further modifications to our existing G-1 certification basis, makes subsequent modifications to the SFARs, or if there are other regulatory changes or revisions, this could delay our ability to obtain type certification, and could delay our ability to launch our commercial passenger service.

We expect the FAA type certificate will be reciprocated in certain international markets pursuant to bilateral agreements between the FAA and its counterpart civil aviation authorities.

In 2022, we applied for aircraft certification in the United Kingdom and Japan.

In 2023, we signed an agreement with Road and Transport Authority of Dubai (“RTA”) for Joby to provide air taxi services in Dubai.

The RTA agreement includes a roadmap for local approval by the UAE General Civil Aviation Authority that could precede type certification by the FAA.

These arrangements provide a means of efficient international expansion as we develop commercial operations around the world.

In addition to certifying our aircraft, we will also need to obtain authorizations and certifications related to the production of our aircraft and the deployment of our aerial ridesharing service.

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If we fail to obtain any of the required authorizations or certifications, or do so in a timely manner, or if any of these authorizations or certifications are modified, suspended or revoked after we obtain them, we may be unable to launch our commercial service or do so on the timelines we project, which would have adverse effects on our business, prospects, financial condition and/or results of operations.

U.S.Government Contracts

In December 2020, we became, to our knowledge, the first company to receive airworthiness approval for an eVTOL aircraft from the USAF, and in the first quarter of 2021 we officially began on-base operations under contract pursuant to the USAF’s Agility Prime program.

Government Contracts

In December 2020, we became the first company to receive airworthiness approval for an eVTOL aircraft for a flight clearance from the USAF to conduct a government test, and in the first quarter of 2021 we officially began on-base

operations under contract pursuant to the USAF’s Agility Prime program.

Our multi-year relationship with the DOD and other U.S.

government agencies provides us with a compelling opportunity to more thoroughly understand the operational capabilities and maintenance profiles of our aircraft in advance of commercial launch.

In addition to the operational learnings and advanced research support, our contracts, which we expanded in July 2022 and again in April 2023, have a total potential value of more than $131 million through 2026.

We are actively pursuing additional contracts and relationships that would further secure these on-base operations going forward.

government contracting parties may modify, curtail or terminate its contracts with us without prior notice, either at its convenience or for default based on performance, or may decline to accept

performance or exercise subsequent option years.

We may also be unable to secure additional contracts or continue to grow our relationship with the U.S.

government agencies has provided us with a compelling opportunity to more thoroughly understand the operational capabilities and maintenance profiles of our aircraft in advance of commercial launch.

We believe that the DOD is potentially shifting its priorities under the Agility Prime program towards hybrid aircraft and autonomous flight technologies and as a result our existing contracts may be reduced or modified.

We are actively pursuing additional contracts with the DOD and other government agencies in these areas and believe that our investments in hydrogen-electric and autonomous technology will position us well to capitalize on these opportunities, but we may be unable to secure additional contracts or continue to grow our relationship with the U.S.

government and/or DOD.

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We intend to maintain a high daily aircraft utilization rate, and reductions in utilization will adversely impact our financial performance.

High daily aircraft utilization is achieved in part by reducing turnaround times at skyports.

High daily aircraft utilization is achieved in part by reducing turnaround times at vertiports.

Aircraft utilization is reduced by delays and cancellations from various factors, many of which are beyond our control, including adverse weather conditions, security requirements, air traffic congestion and unscheduled maintenance events.

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Research and Development Expenses

Research and development expenses consist primarily of personnel expenses, including salaries, benefits, and stock-based compensation, costs of consulting, equipment and materials, depreciation and amortization and allocations of overhead, including rent, information technology costs and utilities.

including rent, information technology costs and utilities.

Research and development expenses are partially offset by payments we received in the form of government grants, including those received under the Agility Prime program.

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We expect our selling, general and administrative expenses to increase as we hire additional personnel and consultants to support our operations and comply with applicable regulations, including the Sarbanes-Oxley Act (“SOX”) and other SEC rules and regulations.

Investment in SummerBio, LLC

Following the outbreak of the COVID-19 pandemic, our management determined that certain previously developed technology that was accessible to us could be repurposed and applied to providing high-volume, rapid COVID-19 diagnostic testing through its investment in SummerBio, LLC (“SummerBio”), a related party.

The Company accounted for its investment in SummerBio under the equity method of accounting with an ownership interest of approximately 44.5% as of December 31, 2022.

In June 2022, SummerBio notified us of its decision to wind down testing operations and close the business, which SummerBio substantially executed by the end of December 2022.

The Company recognized income of nil and $19.5 million (net of impairment loss) for the years ended December 31, 2023 and 2022, respectively.

Gain (Loss) from changes in Fair Value of Warrants and Earnout Shares Liabilities

Publicly-traded warrants (“Public Warrants”), private placement warrants issued to Sponsor (“Private Placement Warrants”), warrants issued to Delta Air Lines, Inc.

Publicly-traded warrants (“Public Warrants”), private placement warrants issued to Sponsor (“Private Placement Warrants”) and warrants issued to Delta Air Lines, Inc.

(“Delta Warrants”) and shares of common stock owned by Sponsor subject to certain terms on vesting, lock-up and transfer (“Earnout Shares”) are recorded as liabilities and subject to remeasurement to fair value at each balance sheet date.

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2024 Acquisitions

On March 9, 2022, we completed the acquisition of an aerospace composite manufacturing company, whereby we acquired all the purchased assets and assumed selected liabilities in exchange for a total consideration consisting of (i) $1.5 million in cash, and (ii) RSUs with the aggregate acquisition date value of $0.1 million.

The acquisition was accounted for as a business combination as the assets acquired and liabilities assumed constituted a business in accordance with ASC 805 Business Combinations .

The purchase consideration of $1.5 million was allocated to the following:

$1.1 million in favorable lease assets, $0.4 million of acquired machinery and equipment, $0.1 million of acquired current assets, and $0.1 million of acquired current liabilities.

On May 17, 2022, we completed the acquisition of an aerospace software engineering company that specializes in full-lifecycle software and firmware development and verification to aviation regulatory standards, in exchange for total cash consideration of $7.2 million.

The acquisition was accounted for as a business combination as the assets acquired and liabilities assumed constituted a business in accordance with ASC 805 Business Combinations .

Part of the cash consideration in an amount of $2.2 million was temporarily retained by us to satisfy our post-closing indemnification claims, if any, against the seller.

This retained amount of $2.2 million was released and paid to the seller during the three month ended June 30, 2023.

In relation to the acquisition, we issued 790,529 RSUs with an aggregate acquisition date value of approximately $4.5 million.

We also paid $0.5 million to the employees of the acquired company, and settled accounts payable to the acquired company of $0.2 million.

The RSUs vest contingent upon each employee’s continued employment with the Company or its subsidiaries, and are recognized as stock-based compensation expense over the RSUs’ vesting terms, commencing on the acquisition date.

The purchase consideration of $7.2 million was, preliminary, allocated to $3.3 million of goodwill, primarily resulting from the combined workforce and expected increased regulatory efficiencies, $2.5 million of total intangible assets comprising of $2.4 million of acquired customer relationships intangible asset and $0.1 million of acquired developed technology intangible asset, $1.5 million of acquired current assets, primarily cash and accounts receivable, $0.3 million of acquired

fixed assets, and $0.4 million of acquired current liabilities.

Amounts recognized as of the acquisition date are provisional and subject to change within the measurement period as the Company’s fair value assessments are finalized.

In September 2022, the company made certain measurement period adjustments, which included a working capital adjustment with the seller in accordance with the agreement terms, resulting in an increase to the purchase consideration of $0.1 million which was paid during the three months ended December 31, 2022.

No other adjustments were made through the end of the measurement period which ended on May 16, 2023.

On November 30, 2022, the Company completed the purchase of certain real property, improvements and other assets (“Property”) from Frederick Electronics Corporation, a Maryland corporation and Plantronics, Inc., a Delaware corporation (“Sellers”) for a cash purchase price of $25.5 million.

The Property consists of approximately 162,000 square feet across five buildings located at 333 Encinal Street, Santa Cruz, California and will be used as the Company’s corporate headquarters.

The acquisition was accounted for as an asset acquisition as substantially all of the fair value of the gross assets acquired was represented by a group of similar assets.

The purchase consideration was allocated to $6.3 million of land, $17.7 million of buildings and site improvements and $1.5 million of equipment, fixtures and furniture.

On May 31, 2024, we completed the acquisition of certain assets of an aerospace company that develops modular autonomy technology for aviation in exchange for 1,944,990 shares of our common stock with an aggregate acquisition date fair value of $9.5 million.

The transaction is expected to contribute to development of autonomous capabilities of our aircraft and to accelerate the execution of our contract deliverables with the U.S.

Department of Defense.

The acquisition was accounted for as a business combination as the assets acquired constituted a business in accordance with ASC 805 Business Combinations .

As part of the acquisition, we also issued 1,375,245 shares of the Company common stock subject to lock-up period of twelve month following the acquisition date (“Holdback Equity”).

The number of shares of Holdback Equity to be released at the end of the lock-up period depends on the continuing employment of selected employees of the aerospace company, whose employment transitioned to us as a result of the acquisition, and the weighted volume average price of our common stock at the end of the lock-up period.

The number of shares of Holdback Equity to be released may additionally be reduced to satisfy certain indemnification obligations, if any, of the seller.

We accounted for the Holdback Equity under ASC 718 Compensation — Stock Compensation as a compensation arrangement separate from the business combination and will recognize $8.7 million as stock-based compensation expense over the lock-up period, commencing on the acquisition date.

The purchase consideration of $9.5 million was preliminarily allocated to $7.4 million of total intangible assets comprising of $6.9 million of acquired developed technology and $0.5 million of contract assets, $1.6 million of acquired fixed assets comprising of aircraft, related equipment and other long lived assets, $0.3 million of acquired goodwill, and $0.2 million of acquired current assets.

The acquired goodwill is not tax deductible.

It represents the excess of the acquisition price over the preliminary fair value of identifiable assets acquired at the acquisition date and is primarily attributable to the assembled workforce and expected synergies at the time of the acquisition.

The fair values of the acquired assets are still provisional and subject to change within the measurement period.

The final determination of the fair values of the acquired assets is expected to be completed as soon as practicable, but no later than one year from the acquisition date.

Interest and Other Income, Net

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Interest and other income, net 42,822 45,561 (2,739) (6) %

Income from equity method investment — 19,463 (19,463) (100) %

Gain/(loss) from change in fair value of warrants and earnout shares

Loss from change in fair value of warrants and earnout shares

(53,973) (86,378) 32,405 (38) %

Total other income (loss), net

Total other loss, net

(11,151) (40,817) 29,666 (73) %

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Research and development expenses increased by $110.1 million, or 30%, to $477.2 million during the year ended December 31, 2024 from $367.0 million during the year ended December 31, 2023.

The increase was primarily attributable to increases in personnel to support aircraft engineering, software development, manufacturing process development, and certification, as well as increased quantity of materials used in prototype development and testing.

These costs were partially offset by government research and development grants earned through operations as part of our Department of Defense contracts.

The increase was primarily attributable to increases in personnel to support aircraft engineering, software development, prototype manufacturing, and certification,

as well as increased quantity of materials used in prototype development and testing, partially offset by increase in expense reduction due to higher grants earned as part of our government contracts.

Selling, General and Administrative Expenses

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The increase was primarily attributable to increased headcount to support operations growth, including IT, legal, facilities, HR, and finance, as well as an increase in professional services cost related to legal, accounting and recruiting support.

Total Other Income (loss), Net

Total other income (loss), net decreased by $175.1 million, or 130%, to a loss of $40.8 million during the year ended December 31, 2023 from a gain of $134.3 million during the year ended December 31, 2022.

The decrease was primarily driven by a $184.4 million loss from changes in fair value of warrants and earnout shares, a $19.5 million decrease in income from equity method investment due to winding down of SummerBio’s business operations, partially offset by $28.8 million increase in interest and other income due to increased interest rates on higher invested funds.

Total Other Loss, Net

Total other loss, net decreased by $29.7 million, or 73%, to a loss of $11.2 million during the year ended December 31, 2024 from a loss of $40.8 million during the year ended December 31, 2023.

The decrease was primarily driven by a $32.4 million reduction in loss from changes in fair value of warrants and earnout shares, partially offset by $2.7 million decrease in interest and other income due to decreased interest rates on lower invested funds.

Liquidity and Capital Resources

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To date, we have funded our operations primarily with proceeds from the Merger and issuance of stock and convertible notes.

From inception through December 31, 2023, we raised net proceeds of $1,067.9 million from the Merger, $843.3 million from the issuances of redeemable convertible preferred stock and convertible notes prior to the Merger, $60.0 million from issuance of shares and warrants to Delta Air Lines, Inc., $180.2 million in net proceeds from our registered direct offering to certain institutional investors and net proceeds of $99.9 million from our issuance of shares to SKT.

In August 2021, we raised net proceeds of $1,067.9 million from the Merger and $843.3 million from the issuances of Legacy Joby’s redeemable convertible preferred stock and convertible notes prior to the Merger.

In October 2022, we raised net proceeds of $60.0 million from the sale of 11,044,232 shares of our common stock and warrants to Delta Air Lines, Inc.

In May 2023, we raised $180.2 million in net proceeds from our issuance and sale, in a registered direct offering to certain institutional investors of 43,985,681 shares of our common stock.

In June 2023, we raised net proceeds of $99.9 million from our issuance and sale of 15,037,594 shares of our common stock to SKT.

In October 2024, we raised $221.8 million in net proceeds from an underwritten public offering (the “Public Offering”) of 46,000,000 shares of our common stock.

In December 2024, we entered into an Equity Distribution Agreement with Morgan Stanley & Co.

LLC and Allen & Company LLC, as sales agents (the “Equity Distribution Agreement”), through which we may offer and sell, from time to time at our sole discretion, up to an aggregate of $300,000,000 of our common stock in an “at-the-market” offering (the “ATM Offering”).

As of December 31, 2024, 16,158,784 shares of our common stock have been sold pursuant to the Equity Distribution Agreement for net proceeds of $128.8 million .

As of December 31, 2024, $167.0 million remain available for sale under the Equity Distribution Agreement.

In addition, on October 1, 2024, we entered a stock purchase agreement with Toyota Motor Corporation pursuant to which Toyota has committed to invest up to $500.0 million, subject to certain closing conditions, as described in Note 9.

Stockholders' Equity (the “Toyota Investment”).

As of December 31, 2024, we had cash, cash equivalents and restricted cash of $200.4 million and short-term investment in marketable securities of $733.2 million.

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Long-Term Liquidity Requirements

We expect our cash and cash equivalents on hand together with the cash we expect to generate from future operations will provide sufficient funding to support us through the initial launch of our commercial operations in 2025.

Until we generate sufficient operating cash flow to fully cover our operating expenses, working capital needs and planned capital expenditures, or if circumstances evolve differently than anticipated, we expect to utilize a combination of equity and debt financing to fund any future remaining capital needs.

We expect our cash and cash equivalents on hand together with the proceeds of future sales under the ATM Offering, the expected proceeds from the Toyota Investment and cash we expect to generate from future operations will provide sufficient funding to support us beyond the initial launch of our commercial operations.

Until we generate sufficient operating cash flow to fully cover our operating expenses, working capital needs and planned capital expenditures, or if

circumstances evolve differently than anticipated, we expect to utilize a combination of equity and debt financing to fund any future remaining capital needs.

If we raise funds by issuing equity securities, dilution to stockholders may result.

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Our principal uses of cash in recent periods were to fund our research and development activities, personnel cost and support services.

Near-term cash requirements will also include spending on manufacturing facilities, ramping up production and supporting production certification, scaled manufacturing operations for commercialization, infrastructure and skyport development, pilot training facilities, software development and production of aircraft.

Near-term cash requirements will also include spending on manufacturing facilities, ramping up production and supporting production certification, scaled manufacturing operations for commercialization, infrastructure and vertiport development, pilot training facilities, software development and production of aircraft.

We do not have material cash requirements related to current contractual obligations.

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If we are unable to raise additional capital or generate cash flows necessary to continue our research and development and invest in continued innovation, we may not be able to compete successfully, which would harm our business, results of operations, and financial condition.

If adequate funds are not available, we may need to reconsider our investments in production operations, the pace of our production ramp-up, infrastructure investments in skyports, expansion plans or limit our research and development activities, which could have a material adverse impact on our business prospects and results of operations.

If adequate funds are not available, we may need to reconsider our investments in production operations, the pace of our production ramp-up, infrastructure investments in vertiports, expansion plans or limit our research and development activities, which could have a material adverse impact on our business prospects and results of operations.

The following tables set forth a summary of our cash flows for the periods indicated (in thousands, except percentage):

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Net increase (decrease) in cash, cash equivalents, and restricted cash $ (4,390) $ 54,712 $ (59,102) (108) %

Net cash used in operating activities for the year ended December 31, 2023 was $313.8 million, consisting primarily of a net loss of $513.1 million, adjusted for non-cash items and statement of operations impact from investing and financing activities which includes $93.6 million in stock-based compensation expense, a $86.4 million loss from change in the fair value of warrants and earnout shares, $30.5 million in depreciation and amortization expense and a net decrease in our net working capital of $8.9 million, partially offset by $20.2 million net accretion of our investments in marketable securities.

Net cash used in operating activities for the year ended December 31, 2022 was $235.9 million, consisting primarily of a net loss of $258.0 million, adjusted for non-cash items and statement of operations impact from investing and financing activities which includes $69.1 million in stock-based compensation expense, $24.0 million in depreciation and amortization expense and a net decrease in our net working capital of $51.8 million, primarily related to distributions from equity investment in Summerbio, partially offset by a $98.0 million gain from change in the fair value of warrants and

earnout shares, $19.5 million in income from equity method investment and a $5.2 million net accretion and amortization of our investments in marketable securities.

Net Cash Provided by (Used in) Investing Activities

Net Cash Used in Operating Activities

Net cash used in operating activities for the year ended December 31, 2024 was $436.3 million, consisting primarily of a net loss of $608.0 million, adjusted for non-cash items and statement of operations impact from investing and financing activities which includes $104.4 million in stock-based compensation expense, a $54.0 million loss from change in the fair value of warrants and earnout shares, $35.6 million in depreciation and amortization expense, partially offset by $15.8 million net accretion of our investments in marketable securities and $6.4 million net increase in our net working capital.

Net cash used in operating activities for the year ended December 31, 2023 was $313.8 million, consisting primarily of a net loss of $513.1 million, adjusted for non-cash items and statement of operations impact from investing and financing activities which includes $93.6 million in stock-based compensation expense, $86.4 million loss from change in the fair value of warrants and earnout shares, $30.5 million in depreciation and amortization expense and a net decrease in our net working capital of $8.9 million, partially offset by $20.2 million net accretion of our investments in marketable securities.

Net Cash Provided by Investing Activities

Net cash provided by investing activities for the year ended December 31, 2024 of $70.8 million was primarily due to proceeds from the sales and maturities of marketable securities of $715.2 million, partially offset by purchases of marketable securities of $603.8 million and purchases of property and equipment of $40.6 million

Net cash used in investing activities for the year ended December 31, 2022 of $630.8 million was primarily due to purchases of marketable securities of $1,359.0 million, purchases of property and equipment of $54.9 million and acquisition of assets of $5.7 million, partially offset by proceeds from the sales and maturities of marketable securities of $788.8 million.

Net cash provided by investing activities for the year ended December 31, 2023 of $80.3 million was primarily due to proceeds from the sales and maturities of marketable securities of $920.9 million, partially offset by purchases marketable securities of $810.0 million and purchases of property and equipment of $30.6 million.

Net Cash Provided by Financing Activities

Net cash provided by financing activities for the year ended December 31, 2024 of $361.1 million was primarily due to net proceeds of $221.8 million from issuance of common stock in underwritten public offering and net proceeds of $128.8 million from issuance of common stock in at-the-market public offering, proceeds from the issuance of common stock under the employee stock purchase plan of $11.2 million and $1.7 million proceeds from exercise of stock options and issuance of common stock warrants, partially offset by $2.4 million repayments of obligation under finance leases and tenant improvement loan.

Net cash provided by financing activities for the year ended December 31, 2023 of $288.2 million was primarily due to net proceeds of $180.2 million from our registered direct offering to certain institutional investors and net proceeds of $99.9 million from our issuance of common shares to SKT, proceeds from the issuance of common stock under the employee stock purchase plan of $6.9 million and $2.1 million, proceeds from exercise of stock options and issuance of common stock warrants, partially offset by repayments for finance lease obligations and tenant improvement loan totaling $0.8 million.

Net cash provided by financing activities for the year ended December 31, 2022 of $60.5 million was primarily due to proceeds from the issuance of common stock and warrants of $60.1 million , $1.4 million from exercise of stock options, partially offset by repayments for capital lease obligations and tenant improvement loan totaling $1.0 million.

Critical Accounting Estimates

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Actual results may differ from these estimates under different assumptions or conditions and any such differences may be material.

The significant accounting policies of the Company are described in more detail in Note 2 to our Consolidated Financial Statements included elsewhere in this Annual Report on Form 10-K.

The significant accounting policies of the Company are described in more detail in Note 2 to our Consolidated Financial Statements included elsewhere in this Annual Report.

We believe the following accounting policies and estimates to be critical to the preparation of our Consolidated Financial Statements.

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The Company estimates the probabilities based on available information about the progress made towards performance goals at each reporting period.

Our performance based awards issued under annual Bonus Plan are classified as a liability until such time that the respective milestones have been met, at which point the liability is reclassified to equity.

Our performance based awards issued under annual Bonus Plans are classified as an equity or, initially, as a liability, depending on the terms of the plan.

For liability classified awards, the liability is reclassified to equity when the respective milestones have been met.

If it is determined that the milestone cannot be met, the liability is reversed.

We selected the Black-Scholes-Merton (“Black-Scholes”) option-pricing model as the method for determining the estimated fair value for stock options and awards under our ESPP program.

The Black-Scholes model requires the use of

highly subjective and complex assumptions, which determine the fair value of share-based awards, including the option’s expected term, expected volatility of the underlying stock, risk-free interest rate and expected dividend yield.

The Black-Scholes model requires the use of highly subjective and complex assumptions, which determine the fair value of share-based awards, including the option’s expected term, expected volatility of the underlying stock, risk-free interest rate and expected dividend yield.

Expected volatility - We estimate the expected volatility of our common stock on the date of grant based on the historical stock price volatility of our own common shares within the same length of period as the expected term.

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Our lease terms may include options to extend or terminate the lease when it is reasonably certain that we will exercise that option.

Determining that options are reasonably certain to be exercised requires us to make certain assumptions about our

future operations and space and assets requirements.

Determining that options are reasonably certain to be exercised requires us to make certain assumptions about our future operations and space and assets requirements.

Incorrect assumptions may result in our lease term being incorrect, impacting our right-of-use assets and liabilities.

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Recent Accounting Pronouncements

See Note 2 of our Consolidated Financial Statements included elsewhere in this Annual Report on Form 10-K for more information regarding recently issued accounting pronouncements.

See Note 2 of our Consolidated Financial Statements included elsewhere in this Annual Report for more information regarding recently issued accounting pronouncements.

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 7. Management’s Discussion and Analysis