~~VectoIQ Acquisition Corp.~~

NIKOLA CORPORATION

CONSOLIDATED FINANCIAL STATEMENTS

TABLE OF CONTENTS

	~~Page~~
			Page
PART I-I - FINANCIAL INFORMATION
Item 1.		~~Interim~~ Financial Statements	3
		~~Condensed~~Consolidated Balance Sheets as of ~~March 31,~~September 30, 2020 (unaudited) and December 31, 2019	32
		~~Condensed~~Consolidated Statements of Operations ~~for the three months ended March 31, 2020 and 2019 (unaudited)~~	43
		~~Condensed Statement~~Consolidated Statements of Stockholders’ ~~Equity for the three months ended March 31, 2020 and 2019 (unaudited)~~Equity	54
		~~Condensed~~Consolidated Statements of Cash Flows ~~for the three months ended March 31, 2020 and 2019 (unaudited)~~	7
		Notes to ~~Condensed~~Consolidated Financial Statements ~~(unaudited)~~	8
Item 2.		Management’s Discussion and Analysis of Financial Condition and Results of Operations	2027
Item 3.		Quantitative and Qualitative Disclosures About Market Risk	2440
Item 4.		~~Controls~~Control and Procedures	2440
PART ~~II-~~II - OTHER INFORMATION
Item 1.		Legal Proceedings	2541
Item 1A.		Risk Factors	2541
Item 2.		Unregistered Sales of Equity Securities and Use of Proceeds	2563
Item 3.		Defaults Upon Senior ~~securities~~Securities	2563
Item 4.		Mine Safety Disclosures	2563
Item 5.		Other Information	2564
Item 6.		Exhibits	2664
Signatures
~~SIGNATURES~~	27

PART I —- FINANCIAL ~~INFORMATION:~~

~~ITEM~~INFORMATION

Item 1. ~~Interim~~ Financial Statements

~~VectoIQ Acquisition Corp.~~

~~Condensed Balance Sheets~~

March 31, 2020
(Unaudited)

December 31,
2019

Assets
Current assets:
Cash and cash equivalents $ 1,150,163 $ 751,640
Prepaid expenses and other current assets 7,813 23,438
Total current assets 1,157,976 775,078

Non-current assets:
Cash and cash equivalents held in Trust account 238,377,571 10,316
Investments held in Trust account - 238,372,960

Total assets $ 239,535,547 $ 239,158,354

Liabilities and Stockholders’ Equity
Current liabilities:
Accounts payable $ 139,452 $ 80,042
Accrued liabilities 79,911 244,644
Accrued income tax payable 694,852 408,275
Note payable 422,000 -
Total current liabilities 1,336,215 732,961

Deferred tax liability - 101,521

Total liabilities 1,336,215 834,482

Commitments and Contingencies

Common shares subject to possible redemption, 22,509,588 and 22,552,141 shares at redemption value of $10.36 at March 31, 2020 and December 31, 2019 233,199,331 233,323,871

Stockholders’ Equity:
Preferred stock, $0.0001 par value; 1,000,000 shares authorized; none issued and outstanding at March 31, 2020 and December 31, 2019 - -
Common stock, $0.0001 par value; 100,000,000 shares authorized; 7,130,412 and 7,087,859 shares issued and outstanding (excluding 22,509,588 and 22,552,141 shares subject to possible redemption) at March 31, 2020 and December 31, 2019, respectively 713 709
Additional paid-in capital 4,999,288 4,999,292
Retained earnings - -
Total stockholders’ equity 5,000,001 5,000,001
Total Liabilities and Stockholders’ Equity $ 239,535,547 $ 239,158,354

NIKOLA CORPORATION

CONSOLIDATED BALANCE SHEETS

(In thousands, except share and per share data)


	September 30,		December 31,
	2020		2019
	(Unaudited)
Assets
Current assets
Cash and cash equivalents	$	907,530	$	85,688
Restricted cash and cash equivalents	10,952		0
Accounts receivable, net	249		770
Prepaid in-kind services	63,358		0
Prepaid expenses and other current assets	3,800		4,423
Total current assets	985,889		90,881
Restricted cash and cash equivalents	4,000		4,144
Long-term deposits	17,303		13,223
Property and equipment, net	61,313		53,378
Intangible assets, net	62,466		62,513
Goodwill	5,238		5,238
Other assets	19		53
Total assets	$	1,136,228	$	229,430
Liabilities and stockholders' equity
Current liabilities
Accounts payable	10,277		5,113

Accrued expenses and other current liabilities	22,579		11,425

Customer deposits	6,913		0
Term note, current	4,100		0
Total current liabilities	43,869		16,538
Term note	0		4,100
Other long-term liabilities	11,577		12,212
Deferred tax liabilities, net	1,076		1,072
Total liabilities	56,522		33,922
Commitments and contingencies (Note 12)
Stockholders' equity
Preferred stock, $0.0001 par value, 150,000,000 shares authorized, 0 shares issued and outstanding as of September 30, 2020 and December 31, 2019, respectively	0		0
Common stock, $0.0001 par value, 600,000,000 shares authorized, 384,083,110 and 270,826,092 shares issued and outstanding as of September 30, 2020 and December 31, 2019, respectively	39		27
Additional paid-in capital	1,505,422		383,961
Accumulated deficit	(425,755)		(188,480)
Total stockholders' equity	1,079,706		195,508
Total liabilities and stockholders' equity	$	1,136,228	$	229,430

See accompanying notes to ~~condensed~~the consolidated financial statements.

~~VectoIQ Acquisition Corp.~~

~~CONDENSED STATEMENT~~

NIKOLA CORPORATION

CONSOLIDATED STATEMENTS OF OPERATIONS

(In thousands, except share and per share data)

(Unaudited)

For the three months ended
March 31,
2020 2019
Expenses:
General and administrative expenses $ 698,512 $ 254,228

Loss from operations (698,512 ) (254,228 )

Other income:
Investment income in Trust account 759,028 1,350,021

Income before income tax expense 60,516 1,095,793

Income tax expense 185,056 286,002

Net (loss) income $ (124,540 ) $ 809,791

Weighted average shares outstanding, basic and diluted 29,640,000 29,640,000
Basic and diluted net (loss) income per share $ (0.00 ) $ 0.03


	Three Months Ended September 30,				Nine Months Ended September 30,
	2020		2019		2020		2019



Solar revenues	$	0	$	296	$	95	$	433
Cost of solar revenues	0		141		72		227
Gross profit	0		155		23		206
Operating expenses:
Research and development	51,473		9,482		118,092		44,733
Selling, general, and administrative	65,826		3,693		117,886		15,538
Total operating expenses	117,299		13,175		235,978		60,271
Loss from operations	(117,299)		(13,020)		(235,955)		(60,065)
Other income (expense):
Interest income, net	172		411		259		1,082
Revaluation of Series A redeemable convertible preferred stock warrant liability	0		(2,844)		0		(3,339)
Loss on forward contract liability	0		0		(1,324)		0
Other income (expense), net	(340)		85		(251)		95
Loss before income taxes	(117,467)		(15,368)		(237,271)		(62,227)
Income tax expense	2		146		4		150
Net loss	$	(117,469)	$	(15,514)	$	(237,275)	$	(62,377)
Premium paid on repurchase of redeemable convertible preferred stock	$	0	$	0	$	(13,407)	$	0
Net loss attributable to common stockholders, basic and diluted	$	(117,469)	$	(15,514)	$	(250,682)	$	(62,377)
Net loss per share attributable to common stockholders, basic and diluted	$	(0.31)	$	(0.06)	$	(0.79)	$	(0.24)
Weighted-average shares used to compute net loss per share attributable to common stockholders, basic and diluted	377,660,477		260,534,724		318,315,891		260,449,607

See accompanying notes to ~~condensed~~the consolidated financial statements.

~~VectoIQ Acquisition Corp.~~

~~CONDENSED STATEMENT~~

NIKOLA CORPORATION

CONSOLIDATED STATEMENTS OF ~~CHANGES IN~~ STOCKHOLDERS’ EQUITY

~~For the three months ended March 31, 2020~~

(In thousands, except share data)

(Unaudited)

Additional Total
Common stock Paid-in Retained Stockholders’
Shares Amount Capital Earnings Equity
Balance at December 31, 2019 7,087,859 $ 709 $ 4,999,292 $ - $ 5,000,001
Common stock subject to possible redemption 42,553 4 (4 ) 124,540 124,540
Net loss - - - (124,540 ) (124,540 )
Balance at March 31, 2020 7,130,412 $ 713 $ 4,999,288 $ - $ 5,000,001


	Three Months Ended September 30, 2020
		Common Stock			Additional Paid-in Capital		Accumulated Deficit		Total Stockholders' Equity
		Shares	Amount
Balance as of June 30, 2020		360,910,639	$	36	$	1,189,845	$	(308,286)	$	881,595
Exercise of stock options		294,665	—		320		—		320
Common stock issued for warrants exercised		22,877,806	3		263,061		—		263,064
Stock-based compensation		—	—		52,196		—		52,196
Net loss		—	—		—		(117,469)		(117,469)
Balance as of September 30, 2020		384,083,110	$	39	$	1,505,422	$	(425,755)	$	1,079,706


	Nine Months Ended September 30, 2020
	Redeemable Convertible Preferred Stock			Common Stock			Additional Paid-in Capital		Accumulated Deficit		Total Stockholders' (Deficit) Equity
	Shares	Amount		Shares	Amount
Balance as of December 31, 2019	82,297,742	$	383,987	60,167,334	$	1	$	0	$	(188,480)	$	(188,479)
Retroactive application of recapitalization	(82,297,742)	(383,987)		210,658,758	26		383,961		0		383,987
Adjusted balance, beginning of period	0	0		270,826,092	27		383,961		(188,480)		195,508
Issuance of Series D redeemable convertible preferred stock, net of $8,403 issuance costs (1)	—	—		6,581,340	1		56,249		—		56,250
Issuance of Series D redeemable convertible preferred stock for in-kind contribution (1)	—	—		9,443,353	1		91,998		—		91,999
Business Combination and PIPE financing	—	—		72,272,942	7		616,213		—		616,220
Exercise of stock options	—	—		2,081,577	—		2,204		—		2,204
Stock-based compensation	—	—		—	—		91,736		—		91,736
Common stock issued for warrants exercised	—	—		22,877,806	3		263,061		—		263,064
Net loss	—	—		—	—		—		(237,275)		(237,275)
Balance as of September 30, 2020	0	0		384,083,110	39		1,505,422		(425,755)		1,079,706

See accompanying notes to ~~condensed~~the consolidated financial statements.

~~VectoIQ Acquisition Corp.~~

~~CONDENSED STATEMENT OF CHANGES IN STOCKHOLDERS’ EQUITY~~

~~For~~

(1) Issuance of Series D redeemable convertible preferred stock has been retroactively restated to give effect to the ~~three months ended March 31, 2019~~

~~(Unaudited)~~

Additional Total
Common stock Paid-in Retained Stockholders’
Shares Amount Capital Earnings Equity
Balance at December 31, 2018 6,808,970 $ 681 $ 3,086,285 $ 1,913,035 $ 5,000,001
Common stock subject to possible redemption (80,177 ) (8 ) (809,783 ) - (809,791 )
Net income - - - 809,791 809,791
Balance at March 31, 2019 6,728,793 $ 673 $ 2,276,502 $ 2,722,826 $ 5,000,001

recapitalization transaction.


	Three Months Ended September 30, 2019
	Redeemable Convertible Preferred Stock			Common Stock			Additional Paid-in Capital		Accumulated Deficit		Total Stockholders' (Deficit) Equity
	Shares	Amount		Shares	Amount
Balance as of June 30, 2019	76,817,224	$	278,062	60,166,667	$	1	$	9,491	$	(145,590)	$	(136,098)
Retroactive application of recapitalization	(76,817,224)	(278,062)		200,239,676	25		278,037		0		278,062
Adjusted balance, beginning of period	0	0		260,406,343	26		287,528		(145,590)		141,964
Issuance of Series D redeemable convertible preferred stock, net of $4,375 issuance costs (1)	—	—		6,671,998	1		60,624		—		$	60,625
Issuance of Series D redeemable convertible preferred stock for in-kind contribution (1)	—	—		5,132,291	—		50,000		—		$	50,000
Exercise of stock options	—	—		563	—		—		—		$	0
Stock-based compensation	—	—		—	—		1,185		—		1,185
Net loss	—	—		—	—		—		(15,514)		(15,514)
Balance as of September 30, 2019	0	$	0	272,211,195	$	27	$	399,337	$	(161,104)	$	238,260

(1) Issuance of Series D redeemable convertible preferred stock has been retroactively restated to give effect to the recapitalization transaction.

See accompanying notes to ~~condensed~~the consolidated financial statements.

~~VectoIQ Acquisition Corp.~~

~~CONDENSED~~

Nine Months Ended September 30, 2019
Redeemable Convertible Preferred Stock Common Stock Additional Paid-in
Capital Accumulated
Deficit Total Stockholders'
(Deficit) Equity
Shares Amount Shares Amount
Balance as of December 31, 2018 76,817,224 $ 278,062 60,166,667 $ 1 $ 6,742 $ (98,565) $ (91,822)
Retroactive application of recapitalization (76,817,224) (278,062) 200,239,676 25 278,037 0 278,062
Adjusted balance, beginning of period 0 0 260,406,343 26 284,779 (98,565) 186,240
Issuance of Series D redeemable convertible preferred stock, net of $4,375 issuance costs (1)
— — 6,671,998 1 60,624 — $ 60,625
Issuance of Series D redeemable convertible preferred stock for in-kind contribution (1)
— — 5,132,291 — 50,000 — $ 50,000
Exercise of stock options — — 563 — — — $ 0
Stock-based compensation — — — — 3,772 — 3,772
Cumulative effect of ASU 2018-07 adoption
— — — — 162 (162) 0
Net loss — — — — — (62,377) (62,377)
Balance as of September 30, 2019 0 $ 0 272,211,195 $ 27 $ 399,337 $ (161,104) $ 238,260

(1) Issuance of Series D redeemable convertible preferred stock has been retroactively restated to give effect to the recapitalization transaction.
See accompanying notes to the consolidated financial statements.
6

NIKOLA CORPORATION

CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)

(Unaudited)

For the three months ended March 31,
2020 2019
Cash Flows from operating activities:
Net (loss) income $ (124,540 ) $ 809,791

Adjustments to reconcile net (loss) income to net cash used in operating activities:
Investment income earned on marketable securities held in Trust account (507,040 ) (1,350,021 )
Deferred income taxes (101,521 ) 98,273
Change in operating assets and liabilities:
Decrease in prepaid expenses 15,625 15,625
Decrease in accounts payable and accrued liabilities (105,323 ) (57,312 )
Increase in accrued income tax payable 286,577 187,729
Net cash used in operating activities (536,222 ) (295,915 )

Cash flows from investing activities:
Purchases of investments held in Trust account - (236,038,264 )
Maturities of marketable securities held in Trust account 238,880,000 236,000,000
Net cash provided by (used in) investing activities 238,880,000 (38,264 )

Cash Flows from financing activities:
Proceeds from note payable 422,000 -
Net cash provided by financing activities 422,000 -

Net change in cash and cash and equivalents held in Trust account 238,765,778 (334,179 )
Cash and cash equivalents held in Trust account - beginning of period 761,956 1,216,579
Cash and cash equivalents held in Trust account - end of period $ 239,527,734 $ 882,400


	Nine Months Ended September 30,
	2020		2019
Cash flows from operating activities
Net loss	$	(237,275)	$	(62,377)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization	4,255		1,104
Stock-based compensation	91,736		3,772
Revaluation of Series A redeemable convertible preferred stock warrant liability	0		3,339
Deferred income taxes	4		150
Non-cash in-kind services	28,642		0
Loss on forward contract liability	1,324		0
Changes in operating assets and liabilities:
Accounts receivable, net	521		(495)
Prepaid expenses and other current assets	(334)		38
Accounts payable, accrued expenses and other current liabilities	19,402		(10,627)


Customer deposits	6,823		0
Other long-term liabilities	0		148
Net cash used in operating activities	(84,902)		(64,948)
Cash flows from investing activities
Purchases of property and equipment	(5,855)		(6,328)
Deposits for property and equipment	(9,325)		(8,135)
Investment in joint venture	(15)		0
Cash paid towards build-to-suit lease	0		(18,186)
Net cash used in investing activities	(15,195)		(32,649)
Cash flows from financing activities
Proceeds from issuance of Series D redeemable convertible preferred stock, net of issuance costs paid	50,349		65,000
Business Combination and PIPE financing, net of issuance costs paid	616,726		0
Proceeds from the exercise of stock options	2,204		0
Proceeds from the exercise of stock warrants, net of issuance costs paid	263,064		0
Proceeds from landlord of finance lease	889		0
Payments to landlord for finance lease	(485)		0
Proceeds from note payable	4,134		0
Payment of note payable	(4,134)		0
Net cash provided by financing activities	932,747		65,000
Net increase (decrease) in cash and cash equivalents, including restricted cash	832,650		(32,597)
Cash and cash equivalents, including restricted cash, beginning of period	89,832		173,956
Cash and cash equivalents, including restricted cash, end of period	$	922,482	$	141,359
Supplementary cash flow disclosures:
Cash paid for interest	$	617	$	83
Cash interest received	$	887	$	1,156
Supplementary disclosures for noncash investing and financing activities:
Accrued purchases and deposits of property and equipment	$	2,136	$	5,251

Accrued Series D redeemable convertible preferred stock issuance costs	$	0	$	4,375
Non-cash prepaid in-kind services	$	63,358	$	0

Accrued Business Combination and PIPE transaction costs	$	285	$	0
Net liabilities assumed from VectoIQ in Business Combination	$	221	$	0
Non-cash acquisition of license	$	0	$	50,000
Property acquired through build-to-suit lease	$	0	$	3,243
Settlement of forward contract liability	$	1,324	$	0

See accompanying notes to ~~condensed~~the consolidated financial statements.

~~VectoIQ Acquisition Corp.~~

NIKOLA CORPORATION

NOTES TO ~~CONDENSED~~CONSOLIDATED FINANCIAL STATEMENTS

~~(Unaudited)~~

~~Note 1 — Description~~

(UNAUDITED)

1.BASIS OF PRESENTATION

(a)Basis of ~~Organization and Business Operations~~

Presentation

On June 3, 2020 (the "Closing Date"), VectoIQ Acquisition Corp. ("VectoIQ"), consummated the previously announced merger pursuant to the Business Combination Agreement, dated March 2, 2020 (the ~~“Company”~~"Business Combination Agreement") ~~was~~, by and among the VectoIQ, VCTIQ Merger Sub Corp., a wholly-owned subsidiary of VectoIQ incorporated in the State of Delaware ~~on January 23, 2018. The Company was formed for~~("Merger Sub"), and Nikola Corporation, a Delaware corporation ("Legacy Nikola"). Pursuant to the ~~purpose~~terms of ~~effecting~~the Business Combination Agreement, a ~~merger, share exchange, asset acquisition, stock purchase, recapitalization reorganization or similar~~ business combination ~~with one or more businesses (the “Business Combination”). Although~~between the Company ~~is not limited to a particular industry or sector for purposes~~and Legacy Nikola was effected through the merger of ~~consummating a Business Combination,~~Merger Sub with and into Legacy Nikola, with Legacy Nikola surviving as the ~~Company intends to focus its search on the industrial technology, transportation and smart mobility industries. The Company is an emerging growth~~surviving company and as a wholly-owned subsidiary of VectoIQ (the "Business Combination").

On the Closing Date, and in connection with the closing of the Business Combination, VectoIQ changed its name to Nikola Corporation (the "Company" or "Nikola"). Legacy Nikola was deemed the accounting acquirer in the Business Combination based on an analysis of the criteria outlined in Accounting Standards Codification ("ASC") 805. This determination was primarily based on Legacy Nikola's stockholders prior to the Business Combination having a majority of the voting interests in the combined company, Legacy Nikola's operations comprising the ongoing operations of the combined company, Legacy Nikola's board of directors comprising a majority of the board of directors of the combined company, and Legacy Nikola's senior management comprising the senior management of the combined company. Accordingly, for accounting purposes, the Business Combination was treated as the equivalent of Legacy Nikola issuing stock for the net assets of VectoIQ, accompanied by a recapitalization. The net assets of VectoIQ are stated at historical cost, with no goodwill or other intangible assets recorded.

While VectoIQ was the legal acquirer in the Business Combination, because Legacy Nikola was deemed the accounting acquirer, the historical financial statements of Legacy Nikola became the historical financial statements of the combined company, upon the consummation of the Business Combination. As a result, the financial statements included in this report reflect (i) the historical operating results of Legacy Nikola prior to the Business Combination; (ii) the combined results of the Company and Legacy Nikola following the closing of the Business Combination; (iii) the assets and liabilities of Legacy Nikola at their historical cost; and (iv) the Company’s equity structure for all periods presented.

In accordance with guidance applicable to these circumstances, the equity structure has been restated in all comparative periods up to the Closing Date, to reflect the number of shares of the Company's common stock, $0.0001 par value per share issued to Legacy Nikola's stockholders in connection with the recapitalization transaction. As such, the ~~Company is subject~~shares and corresponding capital amounts and earnings per share related to ~~all~~Legacy Nikola redeemable convertible preferred stock and Legacy Nikola common stock prior to the Business Combination have been retroactively restated as shares reflecting the exchange ratio established in the Business Combination Agreement. Activity within the statement of stockholders' equity for the issuances and repurchases of Legacy Nikola's redeemable convertible preferred stock, were also retroactively converted to Legacy Nikola common stock.

The accompanying unaudited consolidated financial statements have been prepared in accordance with U.S. Generally Accepted Accounting Principles (“GAAP”) and pursuant to the regulations of the ~~risks associated with emerging growth companies.~~

InU.S. Securities and Exchange Commission (“SEC”). The unaudited financial information reflects, in the opinion of management, ~~the unaudited condensed consolidated financial statements furnished in this Form 10-Q include~~ all adjustments, consisting of normal recurring adjustments, considered necessary for a fair ~~presentation~~statement of the Company's financial position, results of operations and cash flows for the ~~interim~~ periods ~~presented. All such adjustments are of a normal recurring nature.~~

~~As of March 31, 2020, the Company had not commenced operations. All activity~~indicated. The results reported for the interim period ~~from January 23, 2018 (inception) through March 31, 2020 relates to~~presented are not necessarily indicative of results that may be expected for the ~~Company’s formation~~full year. These consolidated financial statements should be read in conjunction with the audited consolidated financial statements and its initial public offering described below, and since the closing of its initial public offering, a search for a Business Combination candidate. The Company will not generate any operating revenues until after the completion of its initial Business Combination, at the earliest. The Company will generate non-operating incomenotes thereto included in the ~~form~~Company's audited consolidated financial statements as of ~~interest income on cash~~ and ~~cash equivalents and investments from~~for the ~~proceeds derived from its initial public offering. The Company has a~~year ended December 31, ~~year end.~~

~~The Company’s sponsor is VectoIQ Holdings, LLC,~~2019 included in the Prospectus which constituted a ~~Delaware limited liability company (the “Sponsor”).~~

~~The registration statement for~~part of the ~~Company’s initial public offering~~Company's Registration Statement on Form S-1 (File No. 333-239940), which was declared effective ~~May 15, 2018. On May 18, 2018,~~by the SEC on July 27, 2020 (the "Prospectus").

The consolidated financial statements include the accounts of the Company ~~consummated~~and its wholly-owned subsidiaries. Intercompany accounts and transactions have been eliminated.

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

NIKOLA CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

All dollar amounts are in thousands, unless otherwise noted. Share and per share amounts are presented on a post-conversion basis for all periods presented, unless otherwise specified.

(b)Funding Risks and Going Concern

As an ~~initial~~early stage growth company, Nikola’s ability to access capital is critical. Management plans to raise additional capital through a combination of public ~~offering of 20,000,000 units (each, a “Unit”~~equity, debt financings, strategic alliances, and ~~collectively, the “Units”) at $10.00 per Unit, which~~licensing arrangements.

Additional stock financing may not be available on favorable terms and could be dilutive to current stockholders. Debt financing, if available, may involve restrictive covenants and dilutive financing instruments.

The Company’s ability to access capital when needed is ~~discussed in Note 3. Simultaneously with the closing of the initial public offering,~~not assured and, if capital is not available to the Company ~~consummated the sale of 800,000 units (each, a “Private Placement Unit”~~when, and collectively, the “Private Placement Unit”) at a price of $10.00 per Private Placement Unit in a private placement to the Sponsor, Cowen Investments, LLC (collectively with the Sponsor, the “Founders”) and certain funds and accounts managed by subsidiaries of BlackRock, Inc. (collectively, the “Anchor Investor”).

~~Following the closing of the initial public offering on May 18, 2018, an amount of $202,000,000 ($10.10 per Unit) from the net proceeds of the sale of the Units~~ in the initial public offering and the Private Placement Units was placed in a trust account (“Trust Account”) which was invested in U.S. government securities, within the meaning set forth in Section 2(a)(16) of the Investment Company Act of 1940, as amended (the “Investment Company Act”), with a maturity of 180 days or less or in any open-ended investment company that holds itself out as a money market fund selected byamounts needed, the Company ~~meeting the conditions of Rule 2a-7 of the Investment Company Act, as determined by the Company, until the earlier of: (i) the consummation of a Business Combination~~could be required to delay, scale back, or ~~(ii) the distribution of the Trust Account, as described below.~~

On May 24, 2018, the underwriters notified the Company of their exercise of the over-allotment option in full and, on May 29, 2018, purchased 3,000,000 additional Units (the “Additional Units”) at $10.00 per Additional Unit upon the closing of the over-allotment option, generating total gross proceeds of $30,000,000. On May 29, 2018, simultaneously with the sale of the Additional Units, the Company consummated the sale of an additional 90,000 Private Units at $10.00 per additional Private Unit (the “Additional Private Units”), generating total gross proceeds of $900,000. Following the closing of the over-allotment option, an additional $30,300,000 ($10.10 per Unit) was placed in the Trust Account, resulting in $232,300,000 ($10.10 per Unit) held in the Trust Account.

Transaction costs amounted to $5,244,622, consisting of $4,600,000 of underwriting fees, including underwriting fees resulting from the exercise of the underwriters’ over-allotment, and $644,622 of initial public offering costs.

The Company’s management has broad discretion with respect to the specific application of the net proceeds of the initial public offering and the sale of Private Placement Units, although substantiallyabandon some or all of its development programs and other operations, which could materially harm the ~~net proceeds are intended to be applied generally toward consummating a Business Combination. There is no assurance~~Company’s business, financial condition and results of operations.

These financial statements have been prepared by management in accordance with GAAP and this basis assumes that the Company will be able to complete a Business Combination successfully. The Company must complete its initial Business Combination with one or more target businesses having an aggregate fair market value of at least 80% of the assets held in the Trust Account (excluding taxes payable on income earned on the Trust Account) at the time of the agreement to enter into the initial Business Combination. However, the Company will only complete a Business Combination if the post-transaction company owns or acquires 50% or more of the outstanding voting securities of the target or otherwise acquires a controlling interest in the target business sufficient for it not to be required to register as an investment company under the Investment Company Act.

The Company will provide its holders of the outstanding shares of its common stock, par value $0.0001, sold in the initial public offering (the “public stockholders”) with the opportunity to redeem all or a portion of their Public Shares (as defined below in Note 3) upon the completion of a Business Combination either (i) in connection with a stockholder meeting called to approve the Business Combination or (ii) by means of a tender offer. The decision as to whether the Company will seek stockholder approval of a Business Combination or conduct a tender offer will be made by the Company, solely in its discretion. The public stockholders will be entitled to redeem their Public Shares for a pro rata portion of the amount then in the Trust Account (initially anticipated to be $10.10 per Public Share). These Public Shares are recorded at a redemption value and classified as temporary equity in accordance with the Financial Accounting Standards Board’s (“FASB”) Accounting Standards Codification (“ASC”) Topic 480 “Distinguishing Liabilities from Equity.” The Company will proceed with a Business Combination only if the Company has net tangible assets of at least $5,000,001 upon such consummation of a Business Combination and, if a stockholder vote is held to approve such transaction, only if a majority of the shares voted are voted in favor of the Business Combination. If a stockholder vote is not required by law and the Company does not decide to hold a stockholder vote for business or other legal reasons, the Company will, pursuant to its Amended and Restated Certificate of Incorporation (the “Amended and Restated Certificate of Incorporation”), conduct the redemptions pursuant to the tender offer rules of the U.S. Securities and Exchange Commission (“SEC”) and file tender offer documents with the SEC prior to completing a Business Combination. If, however, stockholder approval of the transactions is required by law, or the Company decides to obtain stockholder approval for business or legal reasons, the Company will offer to redeem shares in conjunction with a proxy solicitation pursuant to the proxy rules and not pursuant to the tender offer rules. Additionally, each public stockholder may elect to redeem their Public Shares without voting, and if they do vote, irrespective of whether they vote for or against the proposed transaction. If the Company seeks stockholder approval in connection with a Business Combination, the initial stockholders (as defined below) have agreed to vote their Founder Shares (as defined below in Note 4) and any Public Shares purchased during or after the initial public offering in favor of a Business Combination. In addition, the initial stockholders have agreed to waive their redemption rights with respect to their Founder Shares and Public Shares in connection with the completion of a Business Combination or any amendment to the provisions of the Company’s Amended and Restated Certificate of Incorporation relating to its pre-initial business combination activity and related stockholders’ rights.

Notwithstanding the foregoing, the Amended and Restated Certificate of Incorporation provides that a public stockholder, together with any affiliate of such stockholder or any other person with whom such stockholder is acting in concert or as a “group” (as defined under Section 13 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”)), will be restricted from redeeming its shares with respect to more than an aggregate of 15% of the common stock sold in the initial public offering, without the prior consent of the Company.

The Company’s Founders, officers and directors (the “initial stockholders”) have agreed not to propose an amendment to the Amended and Restated Certificate of Incorporation that would affect the substance or timing of the Company’s obligation to redeem 100% of its Public Shares if the Company does not complete a Business Combination, unless the Company provides the public stockholders with the opportunity to redeem their shares of common stock in conjunction with any such amendment.

If the Company does not consummate a Business Combination by May 18, 2020 (the “Combination Period”), it will (i) cease all operations except for the purpose of winding up, (ii) as promptly as reasonably possible but not more than ten business days thereafter, redeem the Public Shares, at a per-share price, payable in cash, equal to the aggregate amount then on deposit in the Trust Account including interest (less up to $100,000 of interest to pay dissolution expenses, and taxes that were not previously released from the trust and paid), divided by the number of then outstanding Public Shares, which redemption will completely extinguish public stockholders’ rights as stockholders (including the right to receive further liquidating distributions, if any), subject to applicable law, and (iii) as promptly as reasonably possible following such redemption, subject to the approval of the Company’s remaining stockholders and the Company’s board of directors, dissolve and liquidate, subject in each case to the Company’s obligations under Delaware law to provide for claims of creditors and the requirements of other applicable law.

The initial stockholders have agreed to waive their liquidation rights with respect to the Founder Shares if the Company fails to complete a Business Combination within the Combination Period. However, if the initial stockholders should acquire Public Shares in or after the initial public offering, they will be entitled to liquidating distributions from the Trust Account with respect to such Public Shares if the Company fails to complete a Business Combination within the Combination Period. In the event of such distribution, it is possible that the per share value of the residual assets remaining available for distribution (including Trust Account assets) will be only $10.10 per share initially held in the Trust Account (or potentially less in certain circumstances). In order to protect the amounts held in the Trust Account, the Sponsor has agreed to be liable to the Company if and to the extent any claims by a vendor for services rendered or products sold to the Company, or a prospective target business with which the Company has discussed entering into a transaction agreement, reduce the amount of funds in the Trust Account. This liability will not apply with respect to any claims by a third party who executed a waiver of any right, title, interest or claim of any kind in or to any monies held in the Trust Account or to any claims under the Company’s indemnity of the underwriters of the initial public offering against certain liabilities, including liabilities under the Securities Act. Moreover, in the event that an executed waiver is deemed to be unenforceable against a third party, the Sponsor will not be responsible to the extent of any liability for such third-party claims. The Company will seek to reduce the possibility that the Sponsor will have to indemnify the Trust Account due to claims of creditors by endeavoring to have all vendors (other than the Company’s independent auditors), service providers, prospective target businesses or other entities with which the Company does business, execute agreements with the Company waiving any right, title, interest or claim of any kind in or to monies held in the Trust Account.

On March 2, 2020, the Company entered into a business combination agreement (the “Business Combination Agreement”) with VCTIQ Merger Sub Corp., a Delaware corporation and wholly-owned subsidiary of the Company (“Merger Sub”), and Nikola Corporation, a Delaware corporation (“Nikola”), pursuant to which the Company will effect a business combination with Nikola (the “Proposed Transaction”). See Note 3 for further discussion of the Proposed Transaction.

~~Going Concern~~

~~In connection with the Company's assessment of going concern considerations in accordance with Financial Accounting Standard Board's Accounting Standards Update (“ASU”) 2014-15, “~~~~Disclosures of Uncertainties about an Entity's Ability to Continue as a Going Concern~~~~”, management has determined that the mandatory liquidation and subsequent dissolution raises substantial doubt about the Company's ability to~~ continue as a going ~~concern. Management plans to address this uncertainty through~~concern, which contemplates the ~~consummation of a Business Combination. No adjustments have been made to the carrying amounts~~realization of assets orand the satisfaction of liabilities ~~should~~and commitments in the ~~Company be required to liquidate after May 18, 2020.~~

~~Note 2 — Summary~~normal course of ~~Significant Accounting Policies~~

~~Basis of Presentation~~

~~The accompanying~~business. These financial statements ~~are presented in U.S. dollars in conformity with accounting principles generally accepted in~~do not include any adjustments that may result from the ~~United States~~outcome of ~~America (“U.S. GAAP”) and pursuant to the rules and regulations~~this uncertainty.

As of the ~~SEC.~~

~~Emerging Growth Company~~

~~Section 102(b)(1)~~date of the Jumpstart Our Business Startups Act of 2012 (the “JOBS Act”) exempts emerging growth companies from being required to comply with new or revised financial accounting standards until private companies (that is, those that have not had a Securities Act registration statement declared effective or do not have a class of securities registered under the Exchange Act) are required to comply with the new or revised financial accounting standards. The JOBS Act provides that an emerging growth company can elect to opt out of the extended transition period and comply with the requirements that apply to non-emerging growth companies but any such election to opt out is irrevocable. The Company has elected not to opt out of such extended transition period, which means that when a standard is issued or revised, and it has different application dates for public or private companies, the Company, as an emerging growth company, can adopt the new or revised standard at the time private companies adopt the new or revised standard.

~~This may make comparison of~~this report, the Company’s ~~financial statement with another public company that is neither an emerging growth company nor an emerging growth company that has opted out of using~~existing cash resources and existing borrowing availability are sufficient to support planned operations for the ~~extended transition period difficult or impossible because of the potential differences in accounting standards used.~~

~~Net (Loss) Income Per Common Share~~

Net (loss) income per common share is computed by dividing net (loss) income applicable to common stockholders by the weighted average number of shares of common stock outstanding during the period, plus to the extent dilutive the incremental number of shares of common stock to settle warrants, as calculated using the treasury stock method. As of March 31, 2020 and December 31, 2019, the Company had outstanding warrants to purchase 23,890,000 shares of common stock. These shares were excluded from the calculation of diluted net (loss) income per share of common stock because their inclusion would have been anti-dilutive.next 12 months. As a result, ~~diluted~~management believes that the Company's existing financial resources are sufficient to continue operating activities for at least one year past the issuance date of the financial statements.

NIKOLA CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

2.SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

(a)Comprehensive Loss

Comprehensive loss includes all changes in equity during a period from non-owner sources. Through September 30, 2020, there are no components of comprehensive loss which are not included in net ~~(loss) income per common share~~loss; therefore, a separate statement of comprehensive loss has not been presented. The Company does not have any foreign currency translation adjustments as a component of other comprehensive loss through September 30, 2020, as the functional currency of all subsidiaries is the ~~same as basic net (loss) income per common share for the periods presented.~~

U.S. Dollar.

(b)Concentration of Credit Risk

Financial instruments that potentially subject the Company to concentrations of credit risk consist of cash, ~~accounts~~cash equivalents, and ~~a trust account held at~~restricted cash and cash equivalents. The Company's cash is placed with high-credit-quality financial institutions ~~which,~~and issuers, and at times ~~may~~ exceed federally insured limits. The Company limits its concentration of risk in cash equivalents by diversifying its investments among a variety of industries and issuers. The Company has not experienced any credit loss relating to its cash equivalents.

(c)Concentration of Supplier Risk

The Company is not currently in the ~~Federal Depository Insurance Coverage~~commercial production stage and generally utilizes suppliers for outside development and engineering support. The Company does not believe that there is any significant supplier concentration risk during the periods ended September 30, 2020 and 2019.

(d)Cash, Cash Equivalents and Restricted Cash and Cash Equivalents

The Company considers all highly liquid investments purchased with a remaining maturity of ~~$250,000.~~three months or less to be cash equivalents. Additionally, the Company considers investments in money market funds with a floating net asset value to be cash equivalents. As of ~~March 31,~~September 30, 2020 and December 31, 2019, the Company ~~has not experienced losses on these accounts~~had $907.5 million and ~~management believes~~$85.7 million of cash and cash equivalents, which included cash equivalents of $662.3 million and $73.0 million of highly liquid investments at September 30, 2020 and December 31, 2019, respectively.

As of September 30, 2020 and December 31, 2019, the Company ~~is not exposed~~had $4.1 million in an escrow account related to ~~significant risks~~the securitization of the term loan with JP Morgan Chase included in restricted cash and cash equivalents. Additionally, as of September 30, 2020 and December 31, 2019, the Company had $4.0 million and 0, respectively, included in non-current restricted cash and cash equivalents for the required deposit to Pinal Land Holdings, LLC ("PLH") during construction of the manufacturing facility in Coolidge, Arizona. Further, as of September 30, 2020 and December 31, 2019, the Company had $6.9 million and 0, respectively, in refundable customer deposits included in current restricted cash and cash equivalents. The customer deposits range from $100 to $5,000, depending on ~~such accounts.~~

the reservation package and are primarily related to the Badger truck pre-orders.

The reconciliation of cash and cash equivalents and restricted cash and cash equivalents to amounts presented in the consolidated statements of cash flows are as follows:

As of
September 30, 2020 December 31, 2019
Cash and cash equivalents $ 907,530 $ 85,688
Restricted cash and cash equivalents – current 10,952 0
Restricted cash and cash equivalents – non-current 4,000 4,144
Cash, cash equivalents and restricted cash and cash equivalents $ 922,482 $ 89,832

(e)Fair Value of Financial Instruments

The carrying value and fair value of the Company’s financial instruments are as follows:

NIKOLA CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)


	As of September 30, 2020
	Level 1		Level 2		Level 3		Total
Assets
Cash equivalents – money market	$	662,275	$	0	$	0	$	662,275
Restricted cash equivalents – money market	$	4,100	$	0	$	0	$	4,100


	As of December 31, 2019
	Level 1		Level 2	Level 3	Total
Assets
Cash equivalents – money market	$	73,005	0	0	$	73,005
Restricted cash equivalents – money market	4,144		0	0	4,144

In September 2019, Legacy Nikola entered into an agreement that required Legacy Nikola to issue, and the investor to purchase, Series D redeemable convertible preferred stock at a fixed price in April 2020 (the “Forward Contract Liability”), which was accounted for as a liability. The liability was remeasured to its fair value each reporting period and at settlement, which occurred in April 2020 with the issuance of Series D redeemable convertible preferred stock. The change in fair value was recognized in other income (expense) on the consolidated statements of operations. The change in fair value of the Forward Contract Liability was as follows:


Balance as of December 31, 2019	0
Change in fair value	1,324
Settlement of forward contract liability	$	(1,324)
Balance as of September 30, 2020	$	0

In determining the fair value of the forward contract liability, estimates and assumptions impacting fair value included the estimated future value of the Company's Series D redeemable convertible preferred stock, discount rates and estimated time to liquidity. The following reflects the significant quantitative inputs used:


	As of
	April 10, 2020			December 31, 2019
Estimated future value of Series D redeemable convertible preferred stock	$	10.00		$	9.74
Discount rate	0		%	1.56		%
Time to liquidity (years)	0			0.3

(f)Investments

Variable Interest Entities

The Company may enter into investments in entities that are considered variable interest entities ("VIE") under ASC 810. A VIE is an entity that has either insufficient equity to permit the entity to finance its activities without additional subordinated financial support or equity investors who lack the characteristics of a controlling financial interest. If the Company is a primary beneficiary of a VIE, it is required to consolidate the entity. To determine if the Company is the primary beneficiary of a VIE, the Company evaluates whether it has both the power to direct the activities that most significantly impact the VIE’s economic performance and the obligation to absorb losses or the right to receive benefits from the VIE that could potentially be significant to the Company. If the Company is not the primary beneficiary and an ownership interest is held in the entity, the interest is accounted for under the equity method of accounting. The Company continuously assesses whether it is the primary beneficiary of a VIE as changes to existing relationships or future transactions may result in changing conclusions.

Equity Method

NIKOLA CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

Investments in which the Company can exercise significant influence, but do not control, are accounted for using the equity method and are presented on the consolidated balance sheets.The Company’s share of the net earnings or losses of the investee is presented within the consolidated statements of operations. The Company evaluates its equity method investments whenever events or changes in circumstance indicate that the carrying amounts of such investments may be impaired. If a decline in the value of an equity method investment is determined to be other than temporary, a loss is recorded in earnings in the current period. Distributions received from equity method investees are presented in the consolidated statements of cash flows based on the cumulative earnings approach, whereby distributions received from equity method investments are classified as cash flows from operations to the extent of equity earnings and then as cash flows from investing activities thereafter.

(g)Recent Accounting Pronouncements

As an emerging growth company (“EGC”), the Jumpstart Our Business Startups Act of 2012 (the “JOBS Act”), allows the Company to delay adoption of new or revised accounting pronouncements applicable to public companies until such pronouncements are applicable to private companies. The Company elected to use this extended transition period under the JOBS Act until such time the Company is no longer considered to be an EGC. The adoption dates discussed below reflect this election. The Company expects to become a large accelerated filer on the last day of its fiscal year 2020 and will no longer qualify as an EGC and plans to revise the adoption dates accordingly in subsequent filings.

In February 2016, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") 2016-02, Leases (Topic 842), to increase transparency and comparability among organizations by recognizing lease assets and lease liabilities on the balance sheet and disclosing key information about leasing arrangements. In July 2018, ASU 2018-10, Codification Improvements to Topic 842, Leases, was issued to provide more detailed guidance and additional clarification for implementing ASU 2016-02. Furthermore, in July 2018, the FASB issued ASU 2018-11, Leases (Topic 842): Targeted Improvements, which provides an optional transition method in addition to the existing modified retrospective transition method by allowing a cumulative effect adjustment to the opening balance of retained earnings in the period of adoption. These new leasing standards are effective for the Company beginning January 1, 2021, with early adoption permitted. The Company expects to adopt utilizing the modified retrospective transition method without restating comparative periods. In addition, the Company expects to elect certain practical expedients, including the package of practical expedients to not reassess prior conclusions related to contracts containing leases, lease classification and initial direct costs. While the Company continues to assess the impact of this guidance, the Company expects the most significant effects will relate to the recognition of right of use assets and lease liabilities on the consolidated balance sheet, enhanced disclosures, and the derecognition of existing build-to-suit assets and liabilities ~~which qualify as financial instruments under~~for the Company's lease of its Phoenix headquarters.

In June 2016, the FASB ~~ASC 820, “Fair Value Measurements~~issued ASU 2016-13, Financial Instruments-Credit Losses (Topic 326): Measurement of Credit Losses of Financial Instruments, which, together with subsequent amendments, amends the requirement on the measurement and ~~Disclosures,” approximates the carrying amounts represented in the balance sheet due to their short-term nature.~~

~~Use~~recognition of ~~Estimates~~

~~The preparation of~~expected credit losses for financial ~~statements in conformity with U.S. GAAP requires the Company’s management to make estimates and assumptions that affect the reported amounts of~~ assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of expenses during the reporting period. Actual results could differ from those estimates.

~~Cash and cash equivalents~~

~~The Company considers all short-term investments with an original maturity of three months or less when purchased to be cash equivalents.~~

~~Cash and cash equivalents held in Trust Account~~

The Company considers all short-term investments with an original maturity of three months or less when purchased to be that are held in the Trust Account to be cash equivalents. As of March 31, 2020, the cash equivalents held in the Trust Account were held in 30-day U.S. Treasury bills. As of December 31, 2019, the cash equivalents held in the Trust Account were held in money market funds.

~~Investments held in Trust Account~~

~~As of March 31, 2020 ,the Company had no investments held in the Trust Account. As of December 31, 2019, the assets held in the Trust Account were held in 90-day U.S. Treasury bills.~~

~~Common stock subject to possible redemption~~

The Company accounts for its common stock subject to possible redemption in accordance with the guidance in ASC Topic 480 “Distinguishing Liabilities from Equity.” Common stock subject to mandatory redemption (if any)held. ASU 2016-13 is classified as a liability instrument and is measured at fair value. Conditionally redeemable common stock (including common stock that features redemption rights that are either within the control of the holder or subject to redemption upon the occurrence of uncertain events not solely within the Company’s control) is classified as temporary equity. At all other times, common stock is classified as stockholders’ equity. The Company’s common stock features certain redemption rights that are considered to be outside of the Company’s control and subject to occurrence of uncertain future events. Accordingly, common stock subject to possible redemption is presented as temporary equity, outside of the stockholders’ equity section of the Company’s condensed balance sheet.

~~Offering costs~~

~~Offering costs consist of underwriting, legal, accounting, and other expenses incurred through the balance sheet date that are directly related to the initial public offering.~~

~~Income Taxes~~

~~The Company follows the asset and liability method of accounting for income taxes under FASB ASC 740, “Income Taxes.” Deferred tax assets and liabilities are recognized~~effective for the estimated future tax consequences attributable to differences between the financial statements carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that included the enactment date. Valuation allowances are established, when necessary, to reduce deferred tax assets to the amount expected to be realized.

FASB ASC 740 prescribes a recognition threshold and a measurement attribute for the financial statement recognition and measurement of tax positions taken or expected to be taken in a tax return. For those benefits to be recognized, a tax position must be more likely than not to be sustained upon examination by taxing authorities. There were no unrecognized tax benefits as of March 31, 2020 or December 31, 2019. The Company recognizes accrued interest and penalties related to unrecognized tax benefits as income tax expense. No amounts were accrued for the payment of interest and penalties as of March 31, 2020 or December 31, 2019.beginning January 1, 2023, with early adoption permitted. The Company is currently not aware of any issues under review that could result in significant payments, accruals or material deviation from its position. The Company is subject to income tax examinations by major taxing authorities since inception.

~~The Company may be subject to potential examination by federal, state and city taxing authorities~~ in the ~~areas~~process of ~~income taxes. These potential examinations may include questioning~~evaluating the ~~timing and amount~~effects of deductions, the nexus of income among various tax jurisdictions and compliance with federal, state and city tax laws. The Company has recorded deferred tax liabilities relating to expenses deferred for income tax purposes as of March 31, 2020 and December 31, 2019 amounting to $0 and $101,521, respectively.

~~Recent Accounting Pronouncements~~

~~The Company’s management does not believe that there are any recently issued, but not yet effective, accounting pronouncements, if currently adopted, would have a material effect~~this pronouncement on the Company’s financial ~~statements.~~

~~Coronavirus (COVID-19) Pandemic~~.

~~On March 11, 2020~~statements and does not expect it to have a material impact on the ~~World Health Organization declared~~consolidated financial statements.

In December 2019, the ~~novel strain of coronavirus (“COVID-19”) a global pandemic and recommended containment and mitigation measures worldwide. As~~FASB issued ASU 2019-12, Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes, which is intended to simplify various aspects related to accounting for income taxes. ASU 2019-12 is effective for the Company ~~is located in New York, the~~beginning January 1, 2022, with early adoption permitted. The Company is currently ~~under~~in the process of evaluating the effects of this pronouncement on the Company’s financial statements and does not expect it to have a ~~shelter-in-place mandate~~material impact on the consolidated financial statements.

In January 2020, the FASB issued ASU No. 2020-01, Investments – Equity Securities (Topic 321), Investments - Equity Method and ~~many of our business partners are similarly impacted. The global outbreak of COVID-19 continues to rapidly evolve,~~Joint Ventures (Topic 323), and Derivative and Hedging (Topic 815), which addresses accounting for the ~~extent to which COVID-19 may impact the Company's business will depend on future developments, which are highly uncertain~~transition into and ~~cannot be predicted with confidence, such as the ultimate geographic spread~~out of the ~~disease, the duration~~equity method and provides clarification of the ~~outbreak, travel restrictions~~interaction of rules for equity securities, the equity method of accounting, and ~~social distancing~~forward contracts and purchase options on certain types of securities. ASU 2020-01 is effective for the Company beginning January 1, 2022, with early adoption permitted. The Company is currently in the ~~United States and other countries, business closures or business disruptions, and~~process of evaluating the ~~effectiveness~~effects of ~~actions taken in the United States and other countries to contain and treat the disease. The Company continues to vigilantly monitor the situation with its primary focus~~this pronouncement on the ~~health~~Company’s financial statements and ~~safety of its business partners.~~

~~Note 3—Proposed Business Combination~~

~~Business Combination Agreement~~

~~Pursuant~~does not expect it to have a material impact on the consolidated financial statements.

3. BUSINESS COMBINATION

NIKOLA CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

On June 3, 2020, the Company and VectoIQ consummated the merger contemplated by the Business Combination Agreement, atwith Legacy Nikola surviving the merger as a wholly-owned subsidiary of VectoIQ. Immediately prior to the closing of the Proposed Transaction (the “Closing”), Merger Sub will be merged with and into Nikola (the “Merger”), with Nikola surviving the Merger as a wholly-owned direct subsidiary of the Company. Immediately prior to the effective time of the Merger (the “Effective Time”), Nikola will cause theBusiness Combination, all shares of ~~Nikola’s~~outstanding redeemable convertible preferred stock ~~issued and outstanding immediately prior to the Effective Time to be~~of Legacy Nikola were automatically converted into shares of ~~Nikola~~the Company's common ~~stock, and~~stock. Upon the consummation of the Business Combination, each ~~converted~~ share of ~~Nikola preferred stock will no longer be outstanding and will cease to exist. At the Effective Time, by virtue of the Merger, all shares of~~Legacy Nikola common stock issued and outstanding ~~immediately prior to the Effective Time will be~~was canceled and converted into the right to receive 1.901 shares (the "Exchange Ratio") of the Company's common stock (the "Per Share Merger Consideration").

Upon the closing of the Business Combination, VectoIQ's certificate of incorporation was amended and restated to, among other things, increase the total number of authorized shares of all classes of capital stock to 750,000,000 shares, of which 600,000,000 shares were designated common stock, $0.0001 par value per share, and of which 150,000,000 shares were designated preferred stock, $0.0001 par value per share.

In connection with the execution of the Business Combination Agreement, VectoIQ entered into separate subscription agreements (each, a "Subscription Agreement") with a number of investors (each a "Subscriber"), pursuant to which the Subscribers agreed to purchase, and VectoIQ agreed to sell to the Subscribers, an aggregate of 52,500,000 shares of the Company's common stock (the "PIPE Shares"), for a purchase price of $10.00 per share and an aggregate purchase price of $525.0 million, in a private placement pursuant to the subscription agreements (the "PIPE"). The PIPE investment closed simultaneously with the consummation of the Business Combination.

Prior to the closing of the Business Combination, Legacy Nikola repurchased 2,850,930 shares of Legacy Nikola's Series B redeemable convertible preferred stock at the price of $8.77 per share for an aggregate purchase price of $25.0 million pursuant to a Series B preferred stock repurchase agreement (the "Repurchase Agreement") with Nimbus Holdings LLC ("Nimbus"). The repurchase is retrospectively adjusted in the statement of stockholders' equity to reflect the Company’s equity structure for all periods presented.

Immediately following the Business Combination, pursuant to a redemption agreement, Nikola redeemed 7,000,000 shares of common stock from M&M Residual, LLC at a purchase price of $10.00 per share. See Note 7 “Related Party Transactions” for further details on the transaction.

The Business Combination is accounted for as a reverse recapitalization in accordance with GAAP. Under this method of accounting, VectoIQ was treated as the "acquired" company for financial reporting purposes. See Note 1 "Basis of Presentation" for further details. Accordingly, for accounting purposes, the Business Combination was treated as the equivalent of Nikola issuing stock for the net assets of VectoIQ, accompanied by a recapitalization. The net assets of VectoIQ are stated at historical cost, with no goodwill or other intangible assets recorded.

Prior to the Business Combination, Legacy Nikola and VectoIQ filed separate standalone federal, state and local income tax returns. As a result of the Business Combination, structured as a reverse acquisition for tax purposes, Legacy Nikola, which was renamed Nikola Subsidiary Corporation in connection with the Business Combination (f/k/a Nikola Corporation), became the parent of the consolidated filing group, with Nikola Corporation (f/k/a VectoIQ Acquisition Corp.) as a subsidiary.

The following table reconciles the elements of the Business Combination to the consolidated statement of cash flows and the consolidated statement of changes in equity for the nine months ended September 30, 2020:

NIKOLA CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)


	Recapitalization
Cash - VectoIQ's trust and cash (net of redemptions)	$	238,358
Cash - PIPE	525,000
Less: transaction costs and advisory fees paid	(51,210)
Less: VectoIQ loan payoff in conjunction with close	(422)
Less: M&M Residual redemption	(70,000)
Less: Nimbus repurchase	(25,000)
Net Business Combination and PIPE financing	616,726
Less: non-cash net liabilities assumed from VectoIQ	(221)
Less: accrued transaction costs and advisory fees	(285)
Net contributions from Business Combination and PIPE financing	$	616,220

The number of shares of ~~the Company’s~~ common stock ~~equal to~~issued immediately following the ~~exchange ratio~~consummation of ~~1.901 set forth in~~ the Business ~~Combination Agreement (the “Exchange Ratio”). Each~~Combination:


						Number of Shares
Common stock, outstanding prior to Business Combination						22,986,574
Less: redemption of VectoIQ shares						(2,702)
Common stock of VectoIQ						22,983,872
VectoIQ Founder Shares						6,640,000
Shares issued in PIPE						52,500,000
Less: M&M Residual redemption						(7,000,000)
Less: Nimbus repurchase						(2,850,930)
Business Combination and PIPE financing shares						72,272,942
Legacy Nikola shares (1)						288,631,536
Total shares of common stock immediately after Business Combination						360,904,478

(1) The number of Legacy Nikola shares was determined from the 151,831,441 shares of Legacy Nikola common stock ~~option that is~~ outstanding immediately prior to the ~~Effective Time,~~closing of the Business Combination converted at the Exchange Ratio of 1.901. All fractional shares were rounded down.

4.BALANCE SHEET COMPONENTS

Prepaid Expenses and Other Current Assets

Prepaid expenses and other current assets consisted of the following at September 30, 2020 and December 31, 2019, respectively:


	As of
	September 30, 2020		December 31, 2019

Materials and supplies	$	0	$	1,872
Prepaid expenses and current assets	3,800		2,551
Total prepaid expenses and other current assets	$	3,800	$	4,423

During the three and nine months ended September 30, 2020, the Company expensed $1.9 million of materials and supplies previously reflected in other current assets to research and development.

NIKOLA CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

Property and Equipment

Property and equipment consist of the following at September 30, 2020 and December 31, 2019, respectively:


	As of
	September 30, 2020		December 31, 2019
Machinery and equipment	$	14,467	$	13,483
Furniture and fixtures	1,480		1,228
Leasehold improvements	1,447		1,437
Software	2,871		1,909
Building	33,248		33,248
Construction-in-progress	13,693		4,264
Other	1,815		1,309
Property and equipment, gross	69,021		56,878
Less: accumulated depreciation and amortization	(7,708)		(3,500)
Total property and equipment, net	$	61,313	$	53,378

Depreciation expense for the three months ended September 30, 2020 and 2019 was $1.5 million and $0.6 million, respectively. Depreciation expense for the nine months ended September 30, 2020 and 2019 was $4.2 million and $1.1 million, respectively.

Accrued Expenses and Other Current Liabilities

Accrued expenses and other current liabilities consisted of the following at September 30, 2020 and December 31, 2019, respectively:


	As of
	September 30, 2020		December 31, 2019
Accrued payroll and payroll related expenses	$	1,679	$	1,385
Accrued stock issuance and transaction costs	285		4,695
Accrued outsourced engineering services	8,979		3,205
Accrued legal expenses	5,978		243
Other accrued liabilities	4,931		1,237
Current portion of lease financing liability	727		660
Total accrued expenses and other current liabilities	$	22,579	$	11,425

5.INTANGIBLE ASSETS, NET

The gross carrying amount and accumulated amortization of separately identifiable intangible assets are as follows:


	As of September 30, 2020
	Gross Carrying Amount		Accumulated Amortization		Net Carrying Amount
In-process R&D	$	12,110	$	—	$	12,110
Trademarks	394		(96)		298
Licenses	50,150		(92)		50,058
Total intangible assets	$	62,654	$	(188)	$	62,466

NIKOLA CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)


	As of December 31, 2019
	Gross Carrying Amount		Accumulated Amortization		Net Carrying Amount
In-process R&D	$	12,110	$	—	$	12,110
Trademarks	394		(71)		323
Licenses	50,150		(70)		50,080
Total intangible assets	$	62,654	$	(141)	$	62,513

Amortization expense for the three and nine months ended September 30, 2020 and 2019 was immaterial. The Company will begin amortization of the $50.0 million intellectual property license for the S-WAY platform obtained from Iveco (see Note 7) at the start of production. As of September 30, 2020, production has not commenced.

6.INVESTMENTS

Unconsolidated VIE

In April 2020, the Company and Iveco entered into a series of agreements which established a joint venture in Europe, Nikola Iveco Europe B.V. All assets and liabilities of Nikola Iveco Europe B.V. were transferred to Nikola Iveco Europe GmbH during the third quarter of 2020. The operations of the joint venture are located in Ulm, Germany, and consist of manufacturing the battery-electric ("BEV") and fuel cell electric ("FCEV") Class 8 trucks for the European market, as well as for the North American market while the Company's greenfield manufacturing facility in Coolidge, Arizona, is being completed.

The agreements provide for a 50/50 ownership of the joint venture and a 50/50 allocation of the joint venture's production volumes and profits between Nikola and Iveco. Both parties are entitled to appoint an equal number of members to the shareholders' committee of the joint venture. Pursuant to the terms of the agreements, the Company and Iveco each contributed intellectual property licenses to their respective technology and agreed to contribute approximately 7.4 million Euros (approximately $8.7 million) in cash for a 50% interest in the joint venture. The cash contribution is expected to be funded by October 31, 2020 in accordance with the amended contribution agreement. The intellectual property licenses contributed to the joint venture by Nikola are related to intellectual property related to Nikola-developed BEV and FCEV technology for the use in the European market. Iveco contributed to the joint venture a license for the S-WAY technology for use in the European market.

Nikola Iveco Europe GmbH is considered a VIE due to insufficient equity to finance its activities without additional subordinated financial support. The Company is not considered the primary beneficiary as it does not have the power to direct the activities that most significantly impact the economic performance based on the terms of the agreements. Accordingly, the VIE is accounted for under the equity method.

As of September 30, 2020, the carrying amount of the Company's equity interest was $0.02 million and is included in other assets on the consolidated balance sheets. The Company does not guarantee debt for, or have other financial support obligations to the entity and its maximum exposure to loss in connection with its continuing involvement with the entity is limited to the carrying value of the investment.

7.RELATED PARTY TRANSACTIONS

Related Party Aircraft Charter Agreement

In 2019, the Company entered into an aircraft charter arrangement with the Company’s former Executive Chairman of the board of directors of the Company and Legacy Nikola's former Chief Executive Officer to reimburse him for the flight hours incurred for Company use on his personal aircraft. These flight hours were related to business travel by the former Executive Chairman and other members of the executive team to business meetings and trade conferences, as well as the former Executive Chairman's commute between the Company’s headquarters in Phoenix, Arizona, and his residence in Utah. During the three

NIKOLA CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

months ended September 30, 2020 and 2019, the Company recognized expenses of $1.07 million and $0.06 million, respectively, for the business use of the aircraft. During the nine months ended September 30, 2020 and 2019, the Company recognized expenses of $1.31 million and $0.10 million, respectively, for business use of the aircraft. As of September 30, 2020 and December 31, 2019 the Company had $0.97 million and $0.03 million, respectively, outstanding in accounts payable and accrued expenses to the former Executive Chairman for the business use of the aircraft. The aircraft charter arrangement was terminated effective October 2020.

Related Party Income and Accounts Receivable

During the three and nine months ended September 30, 2020 and 2019 the Company recorded immaterial amounts for the provision of solar installation services to the former Executive Chairman, which are billed on time and materials basis. As of September 30, 2020 and December 31, 2019, the Company had 0 and $0.05 million, respectively, outstanding in accounts receivable related to solar installation services to the former Executive Chairman. Solar installation services were terminated effective October 2020.

Related Party Stock Options

In December 2018, the former Executive Chairman issued 6,005,139 performance-based stock options to recognize the performance and contribution of specific employees, including certain executive officers, pursuant to Legacy Nikola's Founder Stock Option Plan (the "Founder Stock Option Plan"). The underlying common stock of these option awards are owned by M&M Residual, a Nevada limited liability company that is wholly-owned by the former Executive Chairman and are considered to be issued by the Company for accounting purposes. These performance-based stock options vest based on the Company's achievement of a liquidation event, such as a private sale or an initial public offering on a U.S. stock exchange. An additional award of 180,153 shares was made under the plan in May 2020, to replace a forfeited grant. The weighted average grant date fair value of the performance-based stock options was $1.20 per share for the period ended September 30, 2020. The performance conditions were met upon the closing of the Business Combination and the Company recognized stock-based compensation expense related to these option awards for $7.2 million in June 2020.

Related Party Redemption of Common Stock

Immediately following the Business Combination, pursuant to a redemption agreement, the Company redeemed 7,000,000 shares of common stock from M&M Residual at a purchase price of $10.00 per share, payable in immediately available funds. The number of shares to be redeemed and the redemption price were determined and agreed upon during negotiations between the various parties to the Business Combination, including the former Executive Chairman and representatives of VectoIQ, Legacy Nikola and the Subscribers.

Former Related Party License and Service Agreements

In September 2019, Legacy Nikola entered into a Master Industrial Agreement (“CNHI Services Agreement”) and S-WAY Platform and Product Sharing Agreement (“CNHI License Agreement”) with CNH Industrial N.V. ("CNHI") and Iveco S.p.A ("Iveco"), a former related party, in conjunction with the Company’s Series D redeemable convertible preferred stock offering. Under these agreements, CNHI and Iveco were issued 25,661,448 shares of Legacy Nikola Series D redeemable convertible preferred stock in exchange for an intellectual property license valued at $50.0 million, $100.0 million in-kind services and $100.0 million in cash.

During the three and nine months ended September 30, 2019, the Company issued 5,132,291 shares of Series D redeemable convertible preferred stock to Iveco in exchange for the licensed Iveco technology. Additionally, the Company issued 5,132,291 Series D preferred redeemable convertible preferred shares in exchange for $50.0 million in cash.

During the three and nine months ended September 30, 2020, the Company issued 0 and 9,443,353 shares of Series D redeemable convertible preferred stock, respectively, to Iveco, in exchange for 0 and $92.0 million of prepaid in-kind services, respectively. During the three and nine months ended September 30, 2020, $11.4 million and $28.6 million of in-kind services, respectively, were recognized in research and development on the consolidated statements of operations. As of September 30, 2020 and December 31, 2019, $63.4 million and 0 prepaid in-kind services, respectively, were reflected on the consolidated balance sheets.

NIKOLA CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

Additionally, during the three and nine months ended September 30, 2020, the Company issued 0 and 5,132,289 shares of Series D redeemable convertible preferred stock to Iveco in exchange for 0 and $50.0 million in cash, respectively.

As of June 3, 2020, Iveco was no longer considered a related party under ASC 850.

Former Related Party Research and Development and Accounts Payable

During the three months ended September 30, 2020 and 2019, the Company recorded research and development expenses of $4.1 million and $2.3 million, respectively, from a former related party. During the nine months ended September 30, 2020 and 2019, the Company recorded research and development expenses of $10.6 million and $13.0 million, respectively, from a former related party. As of September 30, 2020, the Company had $0.4 million of accounts payable due to the former related party and $7.4 million of accrued expenses due to the former related party. As of December 31, 2019, the Company had $0.6 million of accounts payable due to the former related party and $0.5 million of accrued expenses due to the former related party. As of June 3, 2020, the entity is no longer considered a related party.

Former Related Party Stock Repurchase

In September 2019, in contemplation of Legacy Nikola’s proposed Series D preferred stock financing, Legacy Nikola entered into an amendment of the letter agreement by and between Legacy Nikola and Nimbus, dated August 3, 2018 (the “Nimbus Redemption Letter Agreement” and as amended, the “Nimbus Amendment”). Pursuant to the terms of the Amendment and the Nimbus Repurchase Agreement, Legacy Nikola agreed to repurchase 3,575,750 shares of Series B redeemable convertible preferred stock held by Nimbus, a former related party, at the share price of $8.77 which is equal to 90% of the share price in the Series D redeemable convertible preferred stock financing of $9.74 per share. The number of shares to be repurchased exceeded five percent (5%) of the contemplated Series D round of financing. This was negotiated by Legacy Nikola in order to reduce the total number of shares of Series B redeemable convertible preferred stock held by Nimbus, to such an extent that Nimbus would no longer be entitled to elect a member of Legacy Nikola's board of directors as a result of Nimbus' Series B preferred stock holdings. The repurchase was completed in October 2019, for an aggregate repurchase amount of $31.4 million. The Amendment also provided Nimbus with additional redemption rights based on various capital raise thresholds, none of which were met as of December 31, 2019.

In March 2020, Legacy Nikola entered into an additional letter agreement with Nimbus in which Nimbus agreed to terminate the Nimbus Redemption Letter Agreement. Concurrently, Legacy Nikola entered into an agreement with Nimbus, whereby Legacy Nikola agreed to repurchase an additional 2,850,930 shares of Series B preferred stock from Nimbus at a share price of $8.77 for an aggregate repurchase price of $25.0 million. The parties agreed that the repurchase price constituted the price that Nimbus would otherwise be entitled to under the Nimbus Redemption Letter Agreement. The number of shares to be repurchased was negotiated by Legacy Nikola and Nimbus as a mechanism to compensate Nimbus for agreeing to relinquish its previous redemption rights granted in the Nimbus Redemption Letter Agreement.

The repurchase was contingent on completion of the Business Combination which occurred during the quarter ending June 30, 2020, and the Company repurchased the shares in conjunction with the closing of the Business Combination. The Company recorded a reduction to additional paid in capital for the repurchase price in excess of the carrying value of the redeemable convertible preferred stock of $13.4 million. The carrying value of the shares repurchased were recorded as a reduction to redeemable convertible preferred stock, which has been retrospectively adjusted in the statement of stockholders' equity to reflect the Company’s equity structure for all periods presented. For the computation of net loss per share for the nine months ended September 30, 2020, the repurchase price in excess of the carrying value of the redeemable convertible preferred stock of $13.4 million is reflected as a decrease to net loss attributable to common stockholders (see Note 13).

As of June 3, 2020, Nimbus is no longer considered a related party.

8.DEBT

Term Note

Debt consisted of a term note for $4.1 million as of September 30, 2020 and December 31, 2019.

NIKOLA CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

In January 2018, the Company entered into a term note with JP Morgan Chase, pursuant to which, the Company borrowed $4.1 million to fund equipment purchases. The term note accrued interest at 2.43% per annum and was payable on or before January 31, 2019. The term note is secured by restricted cash.

In February 2019, the Company amended the term note to extend its term by one year and increased the interest rate to 3.00% per annum. In February 2020, the Company further amended the term note and extended its term for one year, to January 31, 2021. The term note accrues interest at a rate equal to the LIBOR rate for the applicable interest period multiplied by the statutory reserve rate as determined by the Federal Reserve Board. The term loan has a financial covenant that requires the Company to maintain a minimum amount of liquidity with the bank. As of September 30, 2020, the Company was in compliance with the financial covenant.

Payroll Protection Program Note

In April 2020, the Company entered into a Note with JP Morgan Chase under the Small Business Administration Paycheck Protection Program established under Section 1102 of the Coronavirus Aid, Relief and Economic Security (CARES) Act, pursuant to which the Company borrowed $4.1 million (the "Note"). The Note accrues interest at rate of 0.98% per annum and matures in 24 months. On April 30, 2020, the Company returned the $4.1 million in proceeds from the Note to JP Morgan Chase.

9.CAPITAL STRUCTURE

Shares Authorized

As of September 30, 2020, the Company had authorized a total of 750,000,000 shares for issuance with 600,000,000 shares designated as common stock and 150,000,000 shares designated as preferred stock.

Warrants

As of September 30, 2020, the Company had 890,000 private warrants outstanding. Each private warrant entitles the registered holder to purchase 1 share of common stock at a price of $11.50 per share, subject to adjustment, at any time commencing 30 days after the completion of the Business Combination.

The exercise price and number of common stock issuable upon exercise of the private warrants may be adjusted in certain circumstances including in the event of a share dividend, or recapitalization, reorganization, merger or consolidation. However, the private warrants will not be adjusted for issuance of common stock at a price below its exercise price.

On July 22, 2020, the Company issued a notice of redemption of all of its outstanding public warrants on a cash basis which was completed in September 2020. The Company issued 22,877,806 shares of common stock pursuant to the exercise of public warrants and received approximately $263.1 million of proceeds from such exercises. The 122,194 public warrants not exercised by the end of the redemption period were redeemed for a price of $0.01 per public warrant, and subsequently cancelled by the Company. The private warrants held by the initial holders thereof or permitted transferees of the initial holders were not subject to this redemption.

10. STOCK BASED COMPENSATION EXPENSE

2017 and 2020 Stock Plans

Legacy Nikola's 2017 Stock Option Plan (the “2017 Plan”) provides for the grant of incentive and nonqualified options to purchase Legacy Nikola common stock to officers, employees, directors, and consultants of Legacy Nikola. Options are granted at a price not less than the fair market value on the date of grant and generally become exercisable between one and four years after the date of grant. Options generally expire ten years from the date of grant. Outstanding awards under the 2017 Plan continue to be subject to the terms and conditions of the 2017 Plan.

NIKOLA CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

Each Legacy Nikola option from the 2017 Plan that was outstanding immediately prior to the Business Combination, whether vested or unvested, ~~will be~~was converted into an option to purchase a number of shares of ~~the Company’s~~ common stock (each such option, an "Exchanged Option") equal to the product (rounded down to the nearest whole number) of (i) the number of shares of Legacy Nikola common stock subject to such Legacy Nikola option immediately prior to the ~~Effective Time~~Business Combination and (ii) the Exchange Ratio, at an exercise price per share (rounded up to the nearest whole cent) equal to (A) the exercise price per share of such Legacy Nikola option immediately prior to the ~~Effective Time~~consummation of the Business Combination, divided by (B) the Exchange Ratio.

Except as specifically provided in the Business Combination Agreement, following the Business Combination, each Exchanged Option will continue to be governed by the same terms and conditions (including vesting and exercisability terms) as were applicable to the corresponding former Legacy Nikola option immediately prior to the consummation of the Business Combination. All stock option activity was retroactively restated to reflect the Exchanged Options.

At the Company's special meeting of stockholders held on June 2, 2020, the stockholders approved the Nikola Corporation 2020 Stock Incentive Plan (the "2020 Plan") and the Nikola Corporation 2020 Employee Stock Purchase Plan (the "2020 ESPP"). The ~~Closing is~~2020 Plan and the 2020 ESPP were previously approved, subject to stockholder approval, by the Company's board of directors on May 6, 2020. The aggregate number of shares authorized for issuance under the 2020 Plan will not exceed 42,802,865, plus the number of shares subject to outstanding awards as of the closing of the Business Combination under the 2017 Plan that are subsequently forfeited or terminated. In addition, the shares authorized for the 2020 Plan may be increased on an annual basis for a period of up to ten years, beginning with the fiscal year that begins January 1, 2021, in an amount equal up to 2.5% of the outstanding shares of common stock on the last day of the immediately preceding fiscal year. The aggregate number of shares available for issuance under the 2020 ESPP is 4,000,000, which may be increased on an annual basis of up to 1.0% of the outstanding shares of common stock as of the first day of each such fiscal year.

The 2020 Plan provides for the grant of incentive and nonqualified stock option, restricted stock units ("RSUs"), restricted share awards, stock appreciation awards, and cash-based awards to employees, outside directors, and consultants of the Company. The 2020 Plan and the 2020 ESPP became effective immediately upon the closing of the Business Combination. No offerings have been authorized to date by the Company's board of directors under the ESPP.

Common Stock Valuation

Prior to the completion of the Business Combination the fair value of Legacy Nikola common stock that underlies the stock options was determined by Legacy Nikola's board of directors based upon information available at the time of grant. Because such grants occurred prior to the exchange of Legacy Nikola common stock into the Company's common stock, Legacy Nikola's board of directors determined the fair value of Legacy Nikola common stock with assistance of periodic valuation studies from an independent third-party valuation firm. The valuations were consistent with the guidance and methods outlined in the AICPA Practice Aid, Valuation of Privately-Held-Company Equity Securities Issued as Compensation, or AICPA Practice Aid.

Stock Option Valuation

The Company utilizes the Black-Scholes option pricing model for estimating the fair value of options granted, which requires the input of highly subjective assumptions.

The Company calculates the fair value of each option grant on the grant date using the following assumptions:

Expected Term - The Company uses the simplified method when calculating expected term due to insufficient historical exercise data.

Expected Volatility - As the Company’s shares have limited history, the volatility is based on a benchmark of comparable companies within the automotive and energy storage industries.

Expected Dividend Yield - The dividend rate used is 0 as the Company does not have a history of paying dividends on its common stock and does not anticipate doing so in the foreseeable future.

Risk-Free Interest Rate - The interest rates used are based on the implied yield available on U.S. Treasury zero-coupon issues with an equivalent remaining term equal to the expected life of the award.

NIKOLA CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)


	As of
	September 30, 2020	December 31, 2019
Exercise price	$3.58 - $9.66	$1.05 – $3.58
Risk-free interest rate	0.2% - 1.7%	1.4% – 2.7%
Expected term (in years)	0.5 – 6.3	5.0 – 6.3
Expected dividend yield	0	0
Expected volatility	83.6% - 85.8%	70.0% – 85.1%

The unrecognized compensation cost of stock options as of September 30, 2020 was $3.0 million, which is expected to be recognized over the weighted average remaining period of 1.9 years.

Performance Based Stock Options

As of September 30, 2020 and December 31, 2019, the outstanding performance-based options issued by the Company were 5,153,485. NaN performance-based options were granted during the nine months ended September 30, 2020. The performance-based provision, related to specified amount of equity capital raised, was achieved for all of the outstanding performance-based awards in 2018 and the Company began recognizing expense related to these awards in 2018.

The 5,153,485 outstanding performance-based options as of September 30, 2020 do not include the performance-based options issued by a related party. See Note 7, “Related Party Transactions” for additional information regarding the related party performance-based options issued.

Stock Option Activity

Changes in stock options are as follows:


	Options	Weighted Average Exercise Price Per share		Weighted Average Remaining Contractual Term (Years)
Outstanding at December 31, 2019	40,012,825	$	1.08	8.78
Granted	1,582,496	$	5.30
Exercised	2,081,577	$	1.06
Cancelled	177,504	$	1.44
Outstanding at September 30, 2020	39,336,240	$	1.26	8.09
Vested and exercisable as of September 30, 2020	36,542,071	$	1.20	8.06

The weighted-average grant date fair value of stock options issued for the nine months ended September 30, 2020 were $6.92. There were 2,081,577 stock options exercised during the nine months ended September 30, 2020 and Company received $2.2 million in cash proceeds from the exercise of options.

As a result of the Business Combination, vesting of certain stock options and performance-based options accelerated in accordance with terms of the related award agreements, resulting in additional stock-based compensation expense of $8.1 million in June 2020.

Related Party Performance-based Stock Options Activity

In December 2018, the former Executive Chairman issued 6,005,139 performance-based awards to certain early-stage employees and advisors. An additional award of 180,153 Legacy Nikola options was made under the Founder Stock Option Plan in May 2020, to replace a forfeited grant. As of September 30, 2020 the weighted average exercise price per share was $1.39, the weighted-average grant date fair value was $1.20 per share, and the weighted average remaining contractual term of these awards is 8.26 years. As a result of the Business Combination, the performance conditions were met and awards were fully vested and the Company recorded stock-based compensation expense of $7.2 million in the second quarter of 2020.

NIKOLA CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

Restricted Stock Units

In June 2020, in connection with the closing of the Business Combination, the Company granted 2,163,000 time-based RSUs to several executive officers and directors of the Company. The RSUs have a vesting cliff of one year for directors and three years for executive officers after the grant date. In August 2020, the Company granted 1,230,970 time-based RSUs to various employees that vest semi-annually over a three year period or cliff vest over a three or six month period. In addition, for certain technical engineering employees the awards cliff vest after a three year period or vest on the achievement of certain operational milestones. Changes in RSUs are as follows:


						RSUs
Non-vested RSUs at December 31, 2019						0
Granted						3,393,970
Released						0
Cancelled						2,170
Non-vested RSUs at September 30, 2020						3,391,800

During the third quarter of 2020, the Company entered into a separation agreement with its former Executive Chairman which resulted in a modification of his time-based RSUs. Prior to the modification, the RSUs were not likely to vest and as a result $0.5 million of previously recorded stock-based compensation expense was reversed during the three months ended September 30, 2020. Subsequent to modification, the RSUs were considered fully vested and the Company recorded stock-based compensation of $16.5 million during the three months ended September 30, 2020.

The fair value of RSUs is based on the closing price of the Company’s common stock on the grant date. The unrecognized compensation cost of the RSUs as of September 30, 2020 was $111.7 million, which is expected to be recognized over the weighted average remaining service period of 2.58 years.

Market Based RSUs

In June 2020, in connection with the closing of the Business Combination, the Company granted 16,356,000 market based RSUs ("Market Based RSUs") to several executive officers of the Company. The Market Based RSUs contain a stock price index as a benchmark for vesting. These awards have 3 milestones that each vest depending upon a consecutive 20-trading day stock price target of the Company’s common stock. The shares vested are transferred to the award holders upon the completion of the requisite service period of three years, and upon achievement certification by the Company's board of directors. If the target price for the tranche is not achieved by the end of third anniversary of the grant date, the Market Based RSUs are forfeited.

The grant date fair value of the Market Based RSUs was determined using a Monte Carlo simulation model that utilizes significant assumptions, including volatility, that determine the probability of satisfying the market condition stipulated in the award to calculate the fair value of the award. The expected volatility in the model of 70% was estimated on the basis of historical volatility of a group of peers, given the limited trading history of the Company. The risk-free interest rate of 0.26% was based on the United States Treasury rate for a term commensurate with the expected life of the grant. The total grant date fair value of the Market Based RSUs was determined to be $466.7 million and will be recognized over the requisite service period of 3 years.

During the three months ended September 30, 2020, 4,859,000 Market Based RSUs originally issued to the Company's former Executive Chairman were cancelled as a part of the former Executive Chairman's separation agreement and $3.5 million of previously recorded stock-based compensation was reversed. As of September 30, 2020, there are 11,497,000 non-vested Market Based RSUs with unrecognized compensation cost of $292.4 million and will be recognized over the remaining weighted average remaining service period of 2.75 years.

Stock Compensation Expense

NIKOLA CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

The following table presents the impact of stock-based compensation expense on the consolidated statements of operations for the three and nine months ended September 30, 2020 and 2019:


	Three Months Ended September 30,				Nine Months Ended September 30,
	2020		2019		2020		2019
Research and development	$	4,612	$	157	$	7,850	$	462
Selling, general, and administrative	47,584		1,028		83,886		3,310
Total stock-based compensation expense	$	52,196	$	1,185	$	91,736	$	3,772

11. INCOME TAXES

To calculate the interim tax provision, at the end of each interim period the Company estimates the annual effective tax rate and applies that to its ordinary quarterly earnings. The effect of changes in the enacted tax laws or rates is recognized in the interim period in which the change occurs. The computation of the annual estimated effective tax rate at each interim period requires certain estimates and judgments including, but not limited to, the ~~approval~~expected operating income for the year, projections of the ~~Company’s stockholders~~proportion of income earned and taxed in foreign jurisdictions, permanent differences between book and tax amounts, and the likelihood of recovering deferred tax assets generated in the current year. The accounting estimates used to compute the provision for income taxes may change as new events occur, additional information is obtained, or the tax environment changes.

Income tax expense was immaterial for the three and nine months ended September 30, 2020 and 2019.

12. COMMITMENTS AND CONTINGENCIES

Legal Proceedings

The Company is subject to legal and regulatory actions that arise from time to time in the ordinary course of business. The assessment as to whether a loss is probable or reasonably possible, and as to whether such loss or a range of such loss is estimable, often involves significant judgment about future events, and the outcome of litigation is inherently uncertain. Other than as described below, there is no material pending or threatened litigation against the Company that remains outstanding as of September 30, 2020.

Regulatory and Governmental Investigations

On September 14, 2020, the Company and five of its officers and employees received subpoenas from the SEC as part of a fact-finding inquiry related to aspects of the Company's business as well as certain matters described in a report issued on September 10, 2020 by Hindenburg Research LLC (the “Hindenburg Report”). The SEC issued subpoenas to another three of the Company's officers and employees on September 21, 2020. The SEC issued subpoenas to Nikola’s ~~stockholders~~directors on September 30, 2020. The Company and Trevor Milton also received grand jury subpoenas from the U.S. Attorney’s Office for the Southern District of New York on September 19, 2020. The Company also received a grand jury subpoena from the N.Y. County District Attorney’s Office on September 21, 2020. The Company has cooperated, and will continue to cooperate, with these and any other regulatory or governmental requests.

Shareholder Securities Litigation

Beginning on September 15, 2020, five putative class action lawsuits were filed against the Company and certain of its current and former officers and directors, asserting violations of federal securities laws under Section 10(b) and Section 20(a) of the Securities Exchange Act of 1934 and, in one case, violations of the Unfair Competition Law under California law (the “Shareholder Securities Litigation”). The complaints generally allege that the Company and certain of its officers and directors made false and/or misleading statements in press releases and public filings regarding the Company's business plan and prospects. The actions are: Borteanu v. Nikola Corporation, et al. (Case No. 2:20-cv-01797-JZB), filed by Daniel Borteanu in the United States District Court of the District of Arizona on September 15, 2020; Salem v. Nikola Corporation, et al. (Case No. 1:20-cv-04354), filed by Arab Salem in the United States District Court for the Eastern District of New York on September 16,

NIKOLA CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

2020; Wojichowski v. Nikola Corporation, et al. (Case No. 2:20-cv-01819-DLR), filed by John Wojichowski in the United States District Court for the District of Arizona on September 17, 2020; Malov. Nikola Corporation, et al. (Case No. 5:20-cv-02168), filed by Douglas Malo in the United States District Court for the Central District of California on October 16, 2020; and Holzmacher, et al. v. Nikola Corporation, et al. (Case No. 2:20-cv-2123-JJT), filed by Albert Holzmacher, Michael Wood and Tate Wood in the United States District Court for the District of Arizona on November 3, 2020. On October 14, 2020 and October 21, 2020, respectively, stipulations by and among the parties to extend the time for defendants to respond to the complaints until a lead plaintiff, lead counsel, and an operative complaint are identified were entered as orders in the Wojichowski and Salem actions. Plaintiffs seek an unspecified amount in damages, attorneys’ fees, and other relief. The Company intends to vigorously defend against the foregoing complaints. The Company is unable to estimate the potential loss or range of loss, if any, associated with these lawsuits.

Derivative Litigation

Beginning on September 23, 2020, two purported Nikola stockholder derivative actions were filed in the United States District Court for the District of Delaware (Byun v. Milton, et al., Case No. 1:20-cv-01277-UNA; Salguocar v. Girsky et. al., Case No. 1:20-cv-01404-UNA), purportedly on behalf of Nikola, against certain of the Company's current and former directors alleging breaches of fiduciary duties, violations of Section 14(a) of the Securities Exchange Act of 1934, and gross mismanagement. The Byun action also brings claims for unjust enrichment and abuse of control, while the Salguocar action brings a claim for waste of corporate assets. On October 19, 2020, the Byun action was stayed until the earlier of (a) the Shareholder Securities Litigation being dismissed in their entirety with prejudice; (b) defendants filing an answer to any complaint in the Shareholder Securities Litigation; or (c) a joint request by plaintiff and defendants to lift the stay. The Company has been served with both stockholder derivative actions as of the date of this Quarterly Report on Form 10-Q. The complaints seek unspecified monetary damages, costs and fees associated with bringing the actions, and reform of the Company's corporate governance, risk management and operating practices. The Company intends to vigorously defend against the foregoing complaints. The Company is unable to estimate the potential loss or range of loss, if any, associated with these lawsuits.

Commitments and Contingencies on Land Conveyance

In February 2019, the Company was conveyed 430 acres of land in Coolidge, Arizona, by PLH. The purpose of the land conveyance was to incentivize the Company to locate its manufacturing facility in Coolidge, Arizona, and provide additional jobs to the region. The Company is required to commence construction, as defined within the agreement, of the manufacturing facility within two years of February 2019 (the “Manufacturing Facility Commencement Deadline”), and is required to complete construction of the manufacturing facility within five years of February 2019 (the “Manufacturing Facility Deadline”).

Upon the earlier of the Manufacturing Facility Commencement Deadline or the commencement of construction the Company will deposit $4.0 million in escrow to PLH. The amount in escrow will be returned to the Company upon completion of construction. The Company broke ground on the manufacturing facility during the third quarter of 2020 and met the definition of commencement of construction as of September 30, 2020. The required deposit is included within non-current restricted cash and cash equivalents on the consolidated balance sheets.

If the Company fails to meet the Manufacturing Facility Deadline, the Company may extend the completion deadline by paying PLH $0.2 million per month, until construction is completed (the "Monthly Payment Option"). The extension of the Manufacturing Facility Deadline beyond two years will require express written consent of PLH. If the Company does not exercise the Monthly Payment Option, fails to make timely payments on the Monthly Payment Option, or fails to complete construction by the extended Manufacturing Facility Deadline, PLH is entitled to either the $4.0 million security deposit or may reacquire the land and property at the appraised value to be determined by independent appraisers selected by the Company and PLH.

Contingent Fee for Advisory Services

In January 2020, the Company entered into an agreement to obtain advisory services for the potential Business Combination. The fee for the services was contingent upon completion of the Business Combination, ~~Agreement.~~which occurred on June 3, 2020. The ~~Business Combination~~ contingent fee of $3.0 million was paid during the second quarter of 2020.

NIKOLA CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

Agreement ~~may~~with General Motors

On September 3, 2020, the Company entered into a series of agreements with General Motors Holdings LLC and its affiliates (collectively, “GM”), which provide for issuance of 47,698,545 shares of the Company's common stock in exchange for in-kind consideration valued at $2 billion. As a part of the in-kind consideration, GM would provide in-kind engineering services for the design and development of light-duty electric and hydrogen fuel cell powered trucks and for the integration of GM's hydrogen fuel cell system into the Company's Class 7/8 vehicles, access to GM’s validated parts and components, supply of battery cells and intellectual property license to permit the sale of the Company's vehicles incorporating such technology.

The agreements require the Company to reimburse GM for up to $700 million of capital expenses to make available manufacturing capacity for its light-duty trucks, which would be manufactured by GM and supplied to the Company based on a cost-plus model.

In connection with its investment, GM would be entitled to nominate one individual for election to the Company’s board of directors at the Company’s annual meeting of stockholders. GM would also be ~~terminated by either party under certain circumstances. Nikola has agreed to customary “no shop” obligations~~ subject to a ~~customary “fiduciary out,” and Nikola would be required to pay a termination fee in the amount of $82 million if the Business Combination Agreement is terminated under certain circumstances.~~

The Closing will occur as promptly as practicable, but in no event later than three business days following the satisfaction or waiver of all of the closing conditions contained in the Business Combination Agreement. Because the Company and Nikola have determined that the Closing will not occur on or before May 18, 2020, the Company has called a special meeting of its stockholders to request approval to extend the date by which the Company must complete an initial business combination from May 18, 2020 to July 31, 2020, as described below.

~~Stockholder~~~~Support~~~~Agreement~~

Also on March 2, 2020, certain stockholders of Nikola holding the votes necessary to approve the Proposed Transaction entered into a Stockholder Support Agreement with the Company (the “Stockholder Support Agreement”), pursuant to which such stockholders agreed to vote all of their shares of Nikola capital stock in favor of the approval and adoption of the Proposed Transaction. Additionally, such stockholders agreed not to (i) transfer any of their shares of Nikola capital stock (or enter into any arrangement with respect thereto) or (ii) enter into any voting arrangement that is inconsistent with the Stockholder Support Agreement.

~~Registration Rights and Lock-Up Agreement~~

Pursuant to the Business Combination Agreement and as a condition to the Closing, the Company, certain persons and entities holding the Founder Shares and Private Placement Units (the “Original Holders”) and certain stockholders of Nikola (the “New Holders” and, collectively with the Original Holders, the “Holders”) will enter into a Registration Rights and Lock-Up Agreement at the Closing (the “Registration Rights and Lock-Up Agreement”). Pursuant to the terms of the Registration Rights and Lock-Up Agreement, the Company will be obligated to file a registration statement to register the resale of certain securities of the Company held by the Holders. In addition, pursuant to the terms of the Registration Rights and Lock-Up Agreement and subject to certain requirements and customary conditions, including with regard to the number of demand rights that may be exercised, the Holders may demand at any time or from time to time, that the Company file a registration statement on Form S-3 (or on Form S-1 if Form S-3 is not available) to register the Company’s securities held by such Holders. The Registration Rights and Lock-Up Agreement will also provide the Holders with “piggy-back” registration rights, subject to certain requirements and customary conditions.

~~The Registration Rights and Lock-Up Agreement further provides for the securities of the Company held by the Holders to be locked-up~~lock-up restriction for a period of ~~time following the Closing, as described below,~~up to four-and half years, releasing in several tranches during that period. GM would also be subject to ~~certain exceptions. The securities held by the Original Holders will be locked-up~~a standstill restriction for ~~one year following the Closing, subject~~a period of three years or until such time GM ceases to earlier release if (i) the reported last sale price of the Company’s common stock equals or exceeds $12.00 per share (as adjusted for stock splits, stock dividends, reorganizations, recapitalizations and the like) for any 20 trading days within any 30-trading day period commencingbeneficially own at least ~~150 days after the Closing or (ii) if the Company consummates a liquidation, merger, stock exchange or other similar transaction after the Closing which results in all~~ten percent (10%) of the Company’s stockholders having the right to exchange their shares of common stock for cash, securities or other property. The securities held by the New Holders, other than certain entities controlled by Trevor Milton, the current Chief Executive Officer of Nikola, will be locked-up for 180 days after the Closing. The securities held by certain entities controlled by Trevor Milton will be locked up for one year following the Closing, except that they would be permitted to sell or otherwise transfer an aggregate of $70.0 million shares of the Company’s common stock.

The closing of the transaction is subject to regulatory approvals and other closing conditions. The closing has not occurred as of the date of this Quarterly Report on Form 10-Q. Discussions between the Company and GM are ongoing, and terms of the agreements are subject to change.

13. NET LOSS PER SHARE

The following table sets forth the computation of the basic and diluted net loss per share attributable to common stockholders for the three and nine months ended September 30, 2020 and 2019.


	Three Months Ended September 30,				Nine Months Ended September 30,
	2020		2019		2020		2019
Numerator:
Net loss	$	(117,469)	$	(15,514)	$	(237,275)	$	(62,377)
Less: Premium on repurchase of redeemable convertible preferred stock	0		0		(13,407)		0
Net loss attributable to common stockholder, basic and diluted	(117,469)		(15,514)		(250,682)		(62,377)
Denominator:
Weighted average shares outstanding, basic and diluted	377,660,477		260,534,724		318,315,891		260,449,607
Net loss per share to common stockholder, basic and diluted	$	(0.31)	$	(0.06)	$	(0.79)	$	(0.24)

Since the Company was in a loss position for all periods presented, basic net loss per share is the same as diluted net loss per share for all periods as the inclusion of all potential common stock ~~commencing 180 days~~outstanding would have been anti-dilutive.

The following outstanding common stock equivalents were excluded from the computation of diluted net loss per share attributable to common stockholders for the periods presented because including them would have been anti-dilutive.

NIKOLA CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)


	Three Months Ended September 30,		Nine Months Ended September 30,
	2020	2019	2020	2019
Outstanding warrants	890,000	0	890,000	0
Stock options, including performance stock options	39,336,240	39,528,924	39,336,240	39,528,924
Restricted stock units, including market based RSUs	14,888,800	0	14,888,800	0
Total	55,115,040	39,528,924	55,115,040	39,528,924

14. SUBSEQUENT EVENTS

Modification of Market Based RSUs

At the request of the Company's executive officers, in October 2020, the Company's board of directors approved a modification of the Market Based RSUs originally granted to certain executive officers of the Company after the ~~Closing.~~

~~Subscription Agreements~~

completion of the Business Combination. The modification reset the start date to achieve the consecutive 20-day trading common stock price target from July 20, 2020 to September 21, 2020, in conjunction with the Company's board leadership transition. As a result, the first stock price milestone achieved prior to September 21, 2020 is no longer to be considered earned. The accounting impact of the modification will be reflected during the fourth quarter of 2020.

Grant of RSUs

In November 2020, the Company granted 1,068,808 RSUs to approximately 340 designated employees ("Eligible Employees") in accordance with the terms of the former Executive Chairman’s separation agreement. These RSUs will cliff vest on June 3, 2023, assuming continued service of the Eligible Employees through this date. Any RSUs that are forfeited by any such Eligible Employee will be reallocated pro rata to the other Eligible Employees who remain employed through June 3, 2023. The stock-based compensation expense for these RSUs will be recognized over the service period starting in the fourth quarter of 2020.

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

This report contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. When used in this report, the words “anticipate,” “believe,” “expect,” “estimate,” “intend,” “plan,” and similar expressions are intended to identify forward looking statements. These are statements that relate to future periods and include our financial and business performance; expected timing with respect to the buildout of our manufacturing facilities, joint venture with Iveco and production of our BEV and FCEV trucks; expectations regarding our hydrogen fuel station rollout plan; timing of completion of prototypes, validation testing, volume production and other milestones; the planned collaboration with General Motors; changes in our strategy, future operations, financial position, estimated revenues and losses, projected costs, prospects and plans; our future capital requirements and sources and uses of cash; the potential outcome of investigations, litigation, complaints, product liability claims and/or adverse publicity; the implementation, market acceptance and success of our business model; developments relating to our competitors and industry; the impact of health epidemics, including the COVID-19 pandemic, on our business and the actions we may take in response thereto; our expectations regarding our ability to obtain and maintain intellectual property protection and not infringe on the rights of others; our ability to obtain funding for our operations; the outcome of any known and unknown regulatory proceedings; our business, expansion plans and opportunities; changes in applicable laws or regulations; and anticipated trends and challenges in our business and the markets in which we operate.

Forward-looking statements are subject to risks and uncertainties that could cause actual results to differ materially from those expected. These risks and uncertainties include, but are not limited to, those risks discussed in Item 1A of this report, as well as our ability to execute our business model, including market acceptance of our planned products and services; changes in applicable laws or regulations; risks associated with the outcome of any legal proceeding; the effect of the COVID-19 pandemic on our business; our ability to raise capital; our ability to compete; the success of our collaborations; the possibility that we may be adversely affected by other economic, business, and/or competitive factors; and our history of operating losses. These forward-looking statements speak only as of the date hereof. We expressly disclaim any obligation or undertaking to update any forward-looking statements contained herein to reflect any change in our expectations with regard thereto or any change in events, conditions or circumstances on which any such statement is based.

In this report, all references to “Nikola,” “we,” “us,” or “our” mean Nikola Corporation.

Nikola™ is a trademark of Nikola Corporation. We also refer to trademarks of other corporations and organizations in this report.

Overview

We are a vertically integrated zero emissions transportation systems provider that designs and manufactures state of the art battery electric and hydrogen electric vehicles, electric vehicle drivetrains, energy storage systems, and hydrogen fueling stations. To date, we have been primarily focused on delivering zero emission Class 8 trucks to the commercial transportation sector in the U.S. and in Europe. Our core product offering includes battery electric and hydrogen fuel cell electric trucks and hydrogen fuel.

We operate in three business units: Truck, Energy and Powersports. The Truck business unit is developing and commercializing BEV and FCEV Class 8 trucks that provide environmentally friendly, cost effective solutions to the short haul and long haul trucking sector. The Energy business unit is developing and constructing a network of hydrogen fueling stations to meet hydrogen fuel demand for our FCEV customers. The Powersports business unit is developing electric vehicle solutions for military and outdoor recreational applications.

In 2019, we partnered with Iveco, a subsidiary of CNHI, a leading European industrial vehicle manufacturing company. Together, Nikola and Iveco are jointly developing cab over BEV and FCEV trucks for sale in the European market which will be manufactured through a 50/50 owned joint venture in Europe. In April 2020, we entered into a series of agreements with Iveco which established the joint venture, Nikola Iveco Europe B.V. Our joint venture with Iveco provides us with the manufacturing infrastructure to build BEV trucks for the North American market in addition to that of our greenfield manufacturing facility in Coolidge, Arizona. The operations of the joint venture commenced during the fourth quarter of 2020.

We expect both our capital and operating expenditures will increase significantly in connection with our ongoing activities, as we:

• construct manufacturing facilities and purchase related equipment;

• commercialize our heavy duty trucks and other products;

• develop hydrogen fueling stations;

• continue to invest in our technology;

• increase our investment in marketing and advertising, sales, and distribution infrastructure for our products and services;

• maintain and improve our operational, financial and management information systems;

• hire additional personnel;

• obtain, maintain, expand, and protect our intellectual property portfolio; and

• operate as a public company.

Recent Developments

•During the third quarter of 2020, we began assembling the first five Nikola Tre BEV prototypes at Iveco's industrial complex in Ulm, Germany, and have recently completed the assembly of the first Nikola Tre. The first truck is undergoing systems commissioning and is being prepared for validation testing in the first quarter of 2021. We anticipate that the remaining four Nikola Tre prototypes will be completed by the end of 2020. The second batch of prototype assembly is expected to begin in the first quarter of 2021.

•During the third quarter of 2020, Nikola and Iveco made progress in refurbishing the joint venture manufacturing facility dedicated to the Nikola Tre at Iveco’s Ulm, Germany campus. The civil works and building infrastructure have been completed, including the floor, heating system, and walls.

•In July 2020, we broke ground on Phase 1 of our greenfield manufacturing facility in Coolidge, Arizona and Iveco will contribute technical engineering and production support. The manufacturing facility’s master site plan has been completed and approved by the City of Coolidge. Site construction, permitting, and manufacturing process engineering activities are ongoing, and the facility is expected to manufacture trial volume production starting in 2021, and may be as early as mid-2021. The full completion of Phase 1 is expected by the end of 2021, followed by a ramp up to a full production volume for the BEV in 2022 and FCEV in 2023.

•In September 2020, we entered into a series of agreements with GM. See Note 12, Commitments and Contingencies, to our Unaudited Consolidated Financial Statements for further information.

•In November, 2020, members of our board of directors, executive officers, their affiliates and certain entities associated with those individuals voluntarily agreed to extend the lock-up provision on an aggregate of approximately 136,500,000 shares of our common stock, including vested stock options and warrants, through April 30, 2021.

Comparability of Financial Information

Our results of operations and statements of assets and liabilities may not be comparable between periods as a result of the Business Combination and becoming a public company.

Business Combination and Public Company Costs

On June 3, 2020, we consummated the merger contemplated by the Business Combination Agreement with VectoIQ, with Legacy Nikola surviving the merger as a wholly-owned subsidiary of VectoIQ. Immediately prior to the closing of the Business Combination, all shares of outstanding redeemable convertible preferred stock of Legacy Nikola were automatically converted into shares of VectoIQ's common stock. Upon the consummation of the Business Combination, each share of Legacy Nikola common stock issued and outstanding was canceled and converted into the right to receive the Per Share Merger Consideration.

In connection with the execution of the Business Combination Agreement, ~~effective as of March 2, 2020, the Company~~VectoIQ entered into separate subscription agreements ~~(each, a “Subscription Agreement”)~~ with a number of investors, ~~(each a “Subscriber”),~~ pursuant to which the Subscribers agreed to purchase, and the Company agreed to sell to the Subscribers, an aggregate of 52,500,000 shares of the Company’s common stock (the “PIPE Shares”), for a purchase price of $10.00 per share and an aggregate purchase price of $525 million, in a private placement (the “PIPE”).

The closing of the sale of the PIPE Shares pursuant to the Subscription Agreements is contingent upon, among other customary closing conditions, the substantially concurrent consummation of the Proposed Transaction. The purpose of the PIPE is to raise additional capital for use by the combined company following the Closing.

Pursuant to the Subscription Agreements, the Company granted certain registration rights to the Subscribers, including the Company’s agreement that, within 45 calendar days after the Closing (the “Filing Deadline”), the Company will file with the SEC a registration statement registering the resale of the PIPE Shares (the “Resale Registration Statement”), and will use its commercially reasonable efforts to have the Resale Registration Statement declared effective as soon as practicable after the filing thereof. Under certain circumstances described in the Subscription Agreements, including if the Resale Registration Statement has not been filed with the SEC by the Filing Deadline, additional payments by the Company may be assessed with respect to the PIPE Shares The additional payments by the Company would accrue on the applicable registrable securities at a rate of 0.5% of the aggregate purchase price paid for such registrable securities per month, subject to certain terms and limitations (including a cap of 5.0% of the aggregate purchase price).

~~Registration Statement~~

On March 13, 2020, the Company filed a registration statement on Form S-4 with respect to the Proposed Transaction. The Form S-4 was declared effective on May 8, 2020. The Company has set May 8, 2020 as the record date for the special meeting in lieu of an annual meeting of the Company’s stockholders to approve the Proposed Transaction and related matters, and has set June 2, 2020 as the date for such meeting.

The Company has called a special meeting of its stockholders, scheduled to be held on May 12, 2020, to request approval to amend the Company’s amended and restated certificate of incorporation to extend the date by which the Company must complete an initial business combination from May 18, 2020 to July 31, 2020, in order to allow the Company more time to complete the Proposed Transaction.

~~Note 4—Initial Public Offering~~

Pursuant to the initial public offering, the Company sold 23,000,000 Units (including 3,000,000 Units subject to the underwriters’ over-allotment option) at a price of $10.00 per Unit. Each Unit consists of one share of common stock (such shares of common stock included in the Units sold in the initial public offering, the “Public Shares”), and one redeemable warrant (each such warrant included in the Units sold in the initial public offering, a “Public Warrant”). Each Public Warrant entitles the registered holder to purchase one share of our common stock at a price of $11.50 per share, subject to adjustment, at any time commencing on the later of 12 months from the closing of the initial public offering or 30 days after the completion of the initial Business Combination. The Public Warrants will expire on the fifth anniversary of the Company’s completion of an initial Business Combination, or earlier upon redemption or liquidation. As of March 31, 2020 and December 31, 2019, the Company had 23,890,000 warrants outstanding.

~~The Company is accounting for its warrants and the forward purchase agreement (as defined below) under ASC 815 and is including them in Shareholders’ Equity.~~

No Public Warrants will be exercisable for cash unless the Company has an effective and current registration statement covering the shares of Common Stock issuable upon exercise of the Public Warrants and a current prospectus relating to such shares. Notwithstanding the foregoing, if a registration statement covering the issuance of the shares issuable upon exercise of the Public Warrants is not effective within 90 days from the closing of the initial Business Combination, warrant holders may, until such time as there is an effective registration statement and during any period when the Company shall have failed to maintain an effective registration statement or a current prospectus, exercise Public Warrants on a cashless basis pursuant to an available exemption from registration under the Securities Act. If an exemption from registration is not available, holders will not be able to exercise their Public Warrants on a cashless basis.

The Private Warrants (as defined below) are identical to the Public Warrants underlying the Units sold in the initial public offering, except that the Private Warrants and the common stock issuable upon exercise of the Private Warrants will not be transferable, assignable or salable until 30 days after the completion of a Business Combination, subject to certain limited exceptions. Additionally, the Private Warrants will be non-redeemable so long as they are held by the initial purchasers or such purchasers’ permitted transferees and Private Warrants held by Cowen Investments LLC will not be exercisable more than five years after the effective date of the registration statement related to the initial public offering in accordance with FINRA Rule 5110(f)(2)(G)(i). If the Private Warrants are held by someone other than the initial shareholders or their permitted transferees, the Private Warrants will be redeemable by the Company and exercisable by such holders on the same basis as the Public Warrants.

~~The Company may call the Public Warrants for redemption:~~

~~in whole and not in part;~~

~~at a price of $0.01 per warrant;~~

~~upon a minimum of 30 days’ prior written notice of redemption; and~~

if, and only if, the last reported closing price of the ordinary shares equals or exceeds $18.00 per share for any 20 trading days within a 30-trading day period ending on the third trading day prior to the date on which the Company sends the notice of redemption to the warrant holders.

If the Company calls the Public Warrants for redemption, management will have the option to require all holders that wish to exercise the Public Warrants to do so on a “cashless basis,” as described in the warrant agreement.

The exercise price and number of common stock issuable upon exercise of the warrants may be adjusted in certain circumstances including in the event of a share dividend, or recapitalization, reorganization, merger or consolidation. However, the warrants will not be adjusted for issuance of common stock at a price below its exercise price. Additionally, in no event will the Company be required to net cash settle the warrant shares. If the Company is unable to complete a Business Combination within the Combination Period and the Company liquidates the funds held in the Trust Account, holders of warrants will not receive any of such funds with respect to their warrants, nor will they receive any distribution from the Company’s assets held outside of the Trust Account with respect to such warrants. Accordingly, the warrants may expire worthless.

~~Note 5—Related Party Transactions~~

~~Founder Shares~~

On February 15, 2018, the Founders purchased an aggregate of 5,750,000 shares (the “Founder Shares”) of the Company’s common stock, par value $0.0001, for an aggregate purchase price of $25,000, or approximately $0.004 per share. The Sponsor and Cowen Investments purchased 4,301,000 and 1,449,000 of the Founder Shares, respectively. In March 2018, the Sponsor transferred 15,000 Founder Shares to each of its initial director nominees. In April 2018, the sponsor forfeited 435,606 Founder Shares and the Anchor Investor purchased 435,606 Founder Shares for an aggregate purchase price of $1,894, or approximately $0.004 per share. In May 2018, Cowen Investments forfeited 287,500 Founder Shares, which were subsequently purchased by the Sponsor and the Anchor Investor. Additionally, in May 2018, the Sponsor purchased 254,829 Founder Shares for an aggregate purchase price of $1,108, or approximately $0.004 per share, and the Anchor Investor purchased 32,671 Founder Shares for an aggregate purchase price of $142, or approximately $0.004 per share.

The initial stockholders have agreed, subject to limited exceptions, not to transfer, assign or sell any of its Founder Shares until the earlier to occur of: (A) one year after the completion of the initial Business Combination and (B) subsequent to the initial Business Combination, (x) if the last sale price of the common stock equals or exceeds $12.00 per share (as adjusted for stock splits, stock dividends, reorganizations, recapitalizations and the like) for any 20 trading days within any 30-trading day period commencing at least 150 days after the initial Business Combination, or (y) the date on which the Company completes a liquidation, merger, capital stock exchange or other similar transaction that results in all of the Company’s stockholders having the right to exchange their shares of common stock for cash, securities or other property.

~~Private Placement Units~~

Simultaneously with the initial public offering, the Founders and Anchor Investor purchased an aggregate of 890,000 Private Placement Units (including 90,000 Private Placement Units in connection with the exercise of the over-allotment option) at a price of $10.00 per Private Placement Unit ($8,900,000 in the aggregate) in a private placement. Each Private Placement Unit consists of one share of common stock (such shares of common stock included in the Private Placement Units, the “Private Shares”) and one redeemable warrant (each, a “Private Warrant”). Each Private Warrant entitles the holder to purchase one share of common stock at a price of $11.50 per share, subject to adjustment (see Note 6). Proceeds from the Private Placement Units were added to the proceeds from the initial public offering held in the Trust Account. If the Company does not complete a Business Combination within the Combination Period, the proceeds from the sale of the Private Placement Units held in trust will be part of the liquidating distribution to the public stockholders, and the Private Warrants will expire worthless. The Private Warrants will be non-redeemable and exercisable on a cashless basis so long as they are held by the Founders or their permitted transferees.

The Founders and the Company’s officers and directors have agreed, subject to limited exceptions, not to transfer, assign or sell any of their Private Placement Units or the securities underlying the Private Placement Units until the earlier to occur of: (A) one year after the completion of the initial Business Combination and (B) subsequent to the initial Business Combination, (x) if the last sale price of the common stock equals or exceeds $12.00 per share (as adjusted for stock splits, stock dividends, reorganizations, recapitalizations and the like) for any 20 trading days within any 30-trading day period commencing at least 150 days after the initial Business Combination, or (y) the date on which the Company completes a liquidation, merger, capital stock exchange or other similar transaction that results in all of the Company’s stockholders having the right to exchange their shares of common stock for cash, securities or other property.

A fund affiliated with P. Schoenfeld Asset Management LP, which is referred to as the “forward purchase investor,” is a member of the Sponsor and has entered into a contingent forward purchase agreement with the Company (the “forward purchase agreement”) which provides for the purchase by the forward purchase investor of 2,500,000 forward purchase shares, plus one of the Company’s redeemable warrants for each forward purchase share, for total gross proceeds of up to $25,000,000. These shares and warrants will be purchased in a private placement to close simultaneously with the consummation of the Company’s initial business combination. These issuances will be made pursuant to the exemption from registration contained in Section 4(a)(2) of the Securities Act.

While the Company may elect to have the forward purchase investor purchase no securities under the contingent forward purchase agreement, if the Company requests that the forward purchase investor purchase securities and the forward purchase investor defaults on such purchase or the forward purchase investor exercises its right of refusal contained in the forward purchase agreement, the forward purchase investor will forfeit up to all of its ownership interest in the Sponsor related to Founder Shares, and the Sponsor will have the right to redeem the forward purchase investor’s remaining ownership interest in the Sponsor at the original purchase price.

~~Related Party Loans~~

On March 12, 2020, Cowen Investments II, LLC agreed to loan the Company an aggregate of up to $422,000 to cover expenses related to the Proposed Business Combination pursuant to a promissory note (the “Promissory Note”). The Promissory Note is non-interest bearing and is due in full on the earlier of September 12, 2020 or the date the Company completes or terminates the Business Combination Agreement. As of March 31, 2020, the Company had an outstanding balance of $422,000 under the Promissory Note. As of December 31, 2019, there was no related party loan outstanding.

In addition, in order to finance transaction costs in connection with a Business Combination, the Sponsor or an affiliate of the Sponsor, or certain of the Company’s officers and directors may, but are not obligated to, loan the Company funds as may be required (“Working Capital Loans”). If the Company completes a Business Combination, the Company would repay the Working Capital Loans out of the proceeds of the Trust Account released to the Company. Otherwise, the Working Capital Loans would be repaid only out of funds held outside the Trust Account. In the event that a Business Combination does not close, the Company may use a portion of proceeds held outside the Trust Account to repay the Working Capital Loans, but no proceeds held in the Trust Account would be used to repay the Working Capital Loans. The Working Capital Loans would either be repaid upon consummation of a Business Combination, without interest, or, at the lender’s discretion, up to $1,500,000 of such Working Capital Loans may be convertible into additional units of the post Business Combination entity at a price of $10.00 per unit. The securities would be identical to the Private Placement Units. To date, the Company had no borrowings under the Working Capital Loans. Except for the foregoing, the terms of such Working Capital Loans, if any, have not been determined and no written agreements exist with respect to such loans.

~~Administrative Support Agreement~~

The Company entered into an agreement, commencing on the effective date of the initial public offering through the earlier of the Company’s consummation of a Business Combination and its liquidation, to pay the Sponsor a total of $10,000 per month for office space and general administrative services. The Company accrued $30,000 and $195,000 for office space and general administrative services as of March 31, 2020 and December 31, 2019, respectively. During the three months ended March 31, 2020, the Company paid $195,000 for office space and general administrative services included in general and administrative expenses in the condensed statement of operations.

The Sponsor, executive officers and directors, or any of their respective affiliates, will be reimbursed for any out-of-pocket expenses incurred in connection with activities on the Company’s behalf such as identifying potential target businesses and performing due diligence on suitable Business Combinations. The Company’s audit committee will review on a quarterly basis all payments that were made to the Sponsor, officers, directors or their affiliates and will determine which expenses and the amount of expenses that will be reimbursed. There is no cap or ceiling on the reimbursement of out-of-pocket expenses incurred by such persons in connection with activities on the Company’s behalf.

~~Note 6—Commitments & Contingencies~~

~~Registration Rights~~

Pursuant to a registration rights agreement entered into on May 15, 2018, the Founders, anchor investor, and the Company’s executive officers, directors and director nominees and their permitted transferees will be entitled to demand that the Company register for resale the Founder Shares, the Private Placement Units and underlying securities and any securities issued upon conversion of Working Capital Loans. The holders of these securities will be entitled to make up to three demands, excluding short form demands, that the Company register such securities. In addition, the holders will have certain “piggy-back” registration rights with respect to registration statements filed subsequent to the Company’s consummation of the initial Business Combination. The Company will bear the expenses incurred in connection with the filing of any such registration statements. Notwithstanding the foregoing, Cowen Investments may not exercise its demand and “piggyback” registration rights after five and seven years, respectively, after the effective date of the initial public offering and may not exercise its demand rights on more than one occasion.

~~Business Combination Marketing Agreement~~

The Company engaged the underwriters as advisors in connection with its Business Combination pursuant to a business combination marketing agreement. Pursuant to that agreement, the Company will pay such advisors a cash fee for such services upon the consummation of an initial Business Combination in an amount equal to 3.5% of the gross proceeds of the initial public offering, including any proceeds from the full or partial exercise of the over-allotment option.

~~Note 7—Stockholders’ Equity~~

~~Common Stock~~—The Company is currently authorized to issue 100,000,000 shares of common stock with a par value of $0.0001 per share. Holders of common stock are entitled to one vote for each share. As of March 31, 2020 and December 31, 2019, there were 29,640,000 shares of common stock issued and outstanding including 22,509,588 and 22,552,141 shares subject to redemption, respectively.

~~Preferred Stock~~—The Company is authorized to issue 1,000,000 shares of preferred stock with such designations, voting and other rights and preferences as may be determined from time to time by the Company’s board of directors. As of March 31, 2020 and December 31, 2019, there were no shares of preferred stock issued or outstanding.

~~Note 8— Investment Valuation~~

FASB ASC 820 establishes a single definition of fair value, creates a three-tier hierarchy as a framework for measuring fair value based on inputs used to value the Company’s investments and requires additional disclosure about fair value. Fair value is an estimate of the price the Company would receive to sell an asset or pay to transfer a liability in an orderly arm’s length transaction between market participants at the measurement date and sets out a fair value hierarchy. The valuation hierarchy is based upon the transparency of inputs used to measure fair value. In accordance with U.S. GAAP, investments measured and reported at fair value are classified and disclosed in one of the following categories:

Level 1: Quoted prices (unadjusted) are available in active markets for identical investments as of the reporting date. The types of financial instruments in Level 1 include listed equities and listed derivatives. The Company’s investments in the Trust Account are 30-day U.S. government treasury bills and therefore are level 1 investments, since the Company is able to value the investments based on quoted prices in an active market.

Level 2: Pricing inputs are other than quoted prices in active markets for identical investments, which are either directly or indirectly observable as of the reporting date, and fair value is determined through the use of models or other valuation methodologies. Financial instruments in this category generally include corporate bonds and loans, less liquid and restricted equity securities, certain over-the-counter derivatives. A significant adjustment to a Level 2 input could result in the Level 2 measurement becoming a Level 3 measurement.

Level 3: Pricing inputs include those that are generally less observable or unobservable and include situations where there is little, if any, market activity for the investment. Financial instruments in this category generally include equity and debt positions in private companies. Fair value for these investments is determined using valuation methodologies that consider a range of factors, including but not limited to the price at which the investment was acquired, the nature of the investment, local markets conditions, current and projected operating performance, and financing transactions subsequent to the acquisition of the investment. The inputs into the determination of fair value require significant management judgment. Due to the inherent uncertainty of these estimates, these values may differ materially from the values that would have been used had a ready market for these investments existed.

In certain cases, the inputs used to measure fair value may fall into different levels of the fair value hierarchy. In such cases, an investment’s level within the fair value hierarchy is based on the lowest level of input that is significant to the fair value measurement. The Company’s assessment of the significance of a particular input to the fair value measurement in its entirety requires judgment, and considers factors specific to the investment.

Upon the closing of the initial public offering and the private placement, a total of $202,000,000 was deposited into the Trust Account at May 18, 2018. In connection with the exercise of the overallotment option, an additional $30,300,000 was deposited. All proceeds in the Trust Account may be invested in either U.S. government treasury bills with a maturity of 180 days or less or in money market funds meeting certain conditions under Rule 2a-7 under the Investment Company Act of 1940, as amended, and that invest solely in U.S. government treasury obligations.

The proceeds of the Trust account were invested in in 30-day U.S. government treasury bills maturing in April 2020 as of March 31, 2020, yielding interest of approximately (.025%). The Company considers all short-term investments with an original maturity of three months or less when purchased to be that are held in the Trust Account to be cash equivalents.

As of December 31, 2019, the proceeds of the Trust Account were invested in U.S. government treasury bills maturing in February 2020, yielding interest of approximately 1.5%. The Company classifies its U.S. government treasury bills and equivalent securities as held-to-maturity in accordance with FASB ASC 320, “Investments — Debt and Equity Securities.” Held-to-maturity securities are those securities which the Company has the ability and intent to hold until maturity. Held-to-maturity U.S. government treasury bills are recorded at amortized cost on the accompanying December 31, 2019 condensed balance sheets and adjusted for the amortization or accretion of premiums or discounts.

The following tables present information about the Company’s assets that are measured on a recurring basis as of March 31, 2020 and December 31, 2019 and indicate the fair value hierarchy of the valuation techniques the Company utilized to determine such fair value. Since all of the Company’s permitted investments at March 31, 2020 and December 31, 2019 consist of U.S. government treasury bills, fair values of its investments are determined by Level 1 inputs utilizing quoted prices (unadjusted) in active markets for identical assets or liabilities as follows:

Carrying value
at March 31, 2020 Gross Unrealized
Holding Gain Quoted Prices
in Active Markets
(Level 1)
Assets:
Cash $ 384,710 $ - $ 384,710
Cash equivalents 237,992,861 - 237,992,861
Total $ 238,377,571 $ - $ 238,377,571

Carrying value
at December 31, 2019 Gross Unrealized
Holding Gain Quoted Prices
in Active Markets
(Level 1)
Assets:
Cash $ 10,316 $ - $ 10,316
U.S. government treasury bills 238,372,960 5,702 238,378,662
Total $ 238,383,276 $ 5,702 $ 238,388,978

~~Transfers to/from Levels 1, 2, and 3 are recognized at the end of the reporting period. There were no transfers between levels for the three months ended March 31, 2020 or 2019.~~

~~Note 9 – Income Taxes~~

The Company’s financial statements include total net income before taxes of $60,516 and $1,095,793 for the three months ended March 31, 2020 and 2019. The Company made no tax payments during the three months ended March 31, 2020 and 2019. The income tax provision consists of the following:

For the three months ended March 31,
2020 2019
Federal:
Current $ 230,470 $ 151,046
Deferred (81,710 ) 79,070
State and Local:
Current 56,107 36,683
Deferred (19,811 ) 19,203
Income tax provision $ 185,056 $ 286,002

~~The table below presents the Company’s deferred income taxes as of:~~

March 31, 2020 December 31, 2019
Deferred tax asset (liability):
Unrealized gains on marketable securities $ - $ (101,521 )
Start-up costs 357,750 241,613
Less: Valuation Allowance (357,750 ) (241,613 )
Deferred tax liability $ - $ (101,521 )

The Company files income tax returns in the U.S. federal jurisdiction and in New York and is subject to examination by the taxing authorities. The Company considered New York to be a significant state tax jurisdiction. Its income tax returns are open for audit for tax years 2018 and forward.

~~Item 2.~~

~~Management’s Discussion and Analysis of Financial Condition and Results of Operations~~

~~References to the “Company,” “us,” “our” or “we” refer~~ VectoIQ Acquisition Corp., except where the context requires otherwise. The following discussion and analysis of our financial condition and results of operations should be read in conjunction with our unaudited condensed financial statements and related notes included herein.

~~Cautionary Note Regarding Forward-Looking Statements~~

All statements other than statements of historical fact included in this Form 10-Q including, without limitation, statements under “Management’s Discussion and Analysis of Financial Condition and Results of Operations” regarding the Company’s financial position, business strategy and the plans and objectives of management for future operations, are forward- looking statements. When used in this Form 10-Q, words such as “anticipate,” “believe,” “estimate,” “expect,” “intend” and similar expressions, as they relate to us or the Company’s management, identify forward-looking statements. Such forward-looking statements are based on the beliefs of management, as well as assumptions made by, and information currently available to, the Company’s management. Actual results could differ materially from those contemplated by the forward-looking statements as a result of certain factors detailed in our filings with the SEC. All subsequent written or oral forward-looking statements attributable to us or persons acting on the Company’s behalf are qualified in their entirety by this paragraph.

~~Overview~~

We were incorporated as a Delaware corporation on January 23, 2018 and formed for the purpose of effecting a merger, capital stock exchange, asset acquisition, stock purchase, recapitalization, reorganization or similar business combination with one or more businesses (the “Initial Business Combination”). We intend to effectuate our Initial Business Combination using cash from the proceeds of our initial public offering (the “Public Offering”) and the sale of private placement units that occurred simultaneously with the consummation of the Public Offering.

~~The issuance of additional shares of our stock in a business combination:~~

~~may significantly dilute the equity interest of investors in the Public Offering;~~

~~may subordinate the rights of holders of our common stock if preferred stock is issued with rights senior to those afforded our common stock;~~

could cause a change in control if a substantial number of shares of our common stock is issued, which may affect, among other things, our ability to use our net operating loss carry forwards, if any, and could result in the resignation or removal of our present officers and directors;

~~may have the effect of delaying or preventing a change of control of us by diluting the stock ownership or voting rights of a person seeking to obtain control of us; and~~

~~may adversely affect prevailing market prices for our common stock and/or warrants.~~

As indicated in the accompanying financial statements, we had $1,150,163 and $751,640 in cash, $238,377,571 and $10,316 of cash and cash equivalents held in the trust account established for the benefit of the Company’s public stockholders at J.P. Morgan Chase Bank, N.A. (the “Trust Account”), and investments held in the Trust Account of $0 and $238,372,960 at March 31, 2020 and December 31, 2019, respectively. We expect to continue to incur significant costs in the pursuit of our acquisition plans. We cannot assure you that our plans to complete our Initial Business Combination will be successful.

~~Proposed Business Combination~~

~~Business Combination Agreement~~

On March 2, 2020, we entered into a business combination agreement (the “Business Combination Agreement”) with VCTIQ Merger Sub Corp., a Delaware corporation and wholly-owned subsidiary of our Company (“Merger Sub”), and Nikola Corporation, a Delaware corporation (“Nikola”), pursuant to which we will effect a business combination with Nikola (the “Proposed Transaction”).

Pursuant to the Business Combination Agreement, at the Closing, Merger Sub will be merged with and into Nikola, with Nikola surviving the Merger as a wholly-owned direct subsidiary of us. Immediately prior to the Effective Time of the Merger), Nikola will cause the shares of Nikola’s preferred stock issued and outstanding immediately prior to the Effective Time to be automatically converted into shares of Nikola common stock, and each converted share of Nikola preferred stock will no longer be outstanding and will cease to exist. At the Effective Time, by virtue of the Merger, all shares of Nikola common stock issued and outstanding immediately prior to the Effective Time will be canceled and converted into the right to receive the number of shares of our common stock equal to the Exchange Ratio of 1.901 set forth in the Business Combination Agreement. Each Nikola stock option that is outstanding immediately prior to the Effective Time, whether vested or unvested, will be converted into an option to purchase a number of shares of our common stock equal to the product (rounded down to the nearest whole number) of (i) the number of shares of Nikola common stock subject to such option immediately prior to the Effective Time and (ii) the Exchange Ratio, at an exercise price per share (rounded up to the nearest whole cent) equal to (A) the exercise price per share of such option immediately prior to the Effective Time divided by (B) the Exchange Ratio.

The Closing is subject to certain conditions, including but not limited to the approval of our stockholders and Nikola’s stockholders of the Business Combination Agreement. The Business Combination Agreement may also be terminated by either party under certain circumstances. Nikola has agreed to customary “no shop” obligations subject to a customary “fiduciary out,” and Nikola would be required to pay a termination fee in the amount of $82 million if the Business Combination Agreement is terminated under certain circumstances.

~~Stockholder Support Agreement~~

Also on March 2, 2020, certain stockholders of Nikola holding the votes necessary to approve the Proposed Transaction entered into the Stockholder Support Agreement with us, pursuant to which such stockholders agreed to vote all of their shares of Nikola capital stock in favor of the approval and adoption of the Proposed Transaction. Additionally, such stockholders agreed not to (i) transfer any of their shares of Nikola capital stock (or enter into any arrangement with respect thereto) or (ii) enter into any voting arrangement that is inconsistent with the Stockholder Support Agreement.

~~Registration Rights and Lock-Up Agreement~~

Pursuant to the Business Combination Agreement and as a condition to the Closing, we and the Holders will enter into the Registration Rights and Lock-Up Agreement at the Closing. Pursuant to the terms of the Registration Rights and Lock-Up Agreement, we will be obligated to file a registration statement to register the resale of certain securities of VectoIQ held by the Holders. In addition, pursuant to the terms of the Registration Rights and Lock-Up Agreement and subject to certain requirements and customary conditions, including with regard to the number of demand rights that may be exercised, the Holders may demand at any time or from time to time, that we file a registration statement on Form S-3 (or on Form S-1 if Form S-3 is not available) to register our securities held by such Holders. The Registration Rights and Lock-Up Agreement will also provide the Holders with “piggy-back” registration rights, subject to certain requirements and customary conditions.

The Registration Rights and Lock-Up Agreement further provides for the securities of VectoIQ held by the Holders to be locked-up for a period of time following the Closing, as described below, subject to certain exceptions. The securities held by the Original Holders will be locked-up for one year following the Closing, subject to earlier release if (i) the reported last sale price of our common stock equals or exceeds $12.00 per share (as adjusted for stock splits, stock dividends, reorganizations, recapitalizations and the like) for any 20 trading days within any 30-trading day period commencing at least 150 days after the Closing or (ii) if we consummate a liquidation, merger, stock exchange or other similar transaction after the Closing which results in all of our stockholders having the right to exchange their shares of common stock for cash, securities or other property. The securities held by the New Holders, other than certain entities controlled by Trevor Milton, the current Chief Executive Officer of Nikola, will be locked-up for 180 days after the Closing. The securities held by certain entities controlled by Trevor Milton will be locked up for one year following the Closing, except that they would be permitted to sell or otherwise transfer an aggregate of $70.0 million shares of our common stock commencing 180 days after the Closing.

~~Subscription Agreements~~

In connection with the execution of the Business Combination Agreement, effective as of March 2, 2020, we entered into separate Subscription Agreements with the Subscribers, pursuant to which the Subscribers agreed to purchase, and we agreed to sell to the Subscribers, an aggregate of 52,500,000 PIPE Shares, for a purchase price of $10.00 per share and an aggregate purchase price of ~~$525~~$525.0 million, in the PIPE.

The ~~closing of~~PIPE investment closed simultaneously with the ~~sale of the PIPE Shares pursuant to the Subscription Agreements is contingent upon, among other customary closing conditions, the substantially concurrent~~ consummation of the ~~Proposed Transaction. The purpose of the PIPE is to raise additional capital for use by the combined company following the Closing.~~

Pursuant to the Subscription Agreements, we granted certain registration rights to the Subscribers, including our agreement that, by the Filing Deadline, we will file with the SEC the Resale Registration Statement registering the resale of the PIPE Shares, and will use our commercially reasonable efforts to have the Resale Registration Statement declared effective as soon as practicable after the filing thereof. Under certain circumstances described in the Subscription Agreements, including if the Resale Registration Statement has not been filed with the SEC by the Filing Deadline, additional payments by us may be assessed with respect to the PIPE Shares The additional payments by us would accrue on the applicable registrable securities at a rate of 0.5% of the aggregate purchase price paid for such registrable securities per month, subject to certain terms and limitations (including a cap of 5.0% of the aggregate purchase price).

Business Combination.

~~Recent Developments~~

On March 11, 2020 the World Health Organization declared the novel strain of coronavirus (“COVID-19”) a global pandemic and recommended containment and mitigation measures worldwide. As the Company is located in New York, the Company is currently under a shelter-in-place mandate and many of our business partners are similarly impacted. The global outbreak of COVID-19 continues to rapidly evolve, and the extent to which COVID-19 may impact the Company's business will depend on future developments, which are highly uncertain and cannot be predicted with confidence, such as the ultimate geographic spread of the disease, the duration of the outbreak, travel restrictions and social distancing in the United States and other countries, business closures or business disruptions, and the effectiveness of actions taken in the United States and other countries to contain and treat the disease. The Company continues to vigilantly monitor the situation with its primary focus on the health and safety of its business partners.

On March 13, 2020, we filed a registration statement on Form S-4 with respect to the Proposed Transaction. The Form S-4 was declared effective on May 8, 2020. The Company has set May 8, 2020 as the record date for the special meeting in lieu of an annual meeting of the Company’s stockholders to approve the Proposed Transaction and related matters, and has set June 2, 2020 as the date for such meeting.

On January 7, 2020, the Company received a written notice from the Listing Qualifications Department of Nasdaq indicating that the Company is not in compliance with listing Rule 5620(a), due to the Company’s failure to hold an annual meeting of stockholders within twelve months of the end of its fiscal year end. The notice was only a notification of deficiency, not of imminent delisting, and had no effect on the listing or trading of the Company’s securities on the NASDAQ Capital Market. The notice stated that the Company had until February 21, 2020 to submit a plan to regain compliance with Listing Rule 5620(a). The Company submitted a plan to regain compliance with Listing Rule 5620(a) within the required timeframe. Nasdaq accepted the Company’s plan and granted the Company an extension until June 29, 2020, to evidence compliance with Listing Rule 5620(a). The annual meeting of stockholders is currently scheduled for June 2, 2020.

~~Results of Operations~~

Our entire activity from January 23, 2018 (inception) through May 18, 2018, consisted of formation and preparation for the initial public offering, and as such, we had no operations and no significant operating expenses. Subsequent

Prior to the closing of the ~~initial~~Business Combination, Legacy Nikola repurchased 2,850,930 shares of Legacy Nikola's Series B redeemable convertible preferred stock at the price of $8.77 per share for an aggregate purchase price of $25.0 million pursuant to the Nimbus Repurchase Agreement. The repurchase is retrospectively adjusted in the statement of stockholders' equity to reflect our equity structure for all periods presented.

Immediately following the Business Combination, pursuant to a redemption agreement, Nikola redeemed 7,000,000 shares of common stock from M&M Residual at a purchase price of $10.00 per share.

The Business Combination is accounted for as a reverse merger in accordance with GAAP. While VectoIQ was the legal acquirer, because Legacy Nikola was deemed the accounting acquirer, the historical financial statements of Legacy Nikola became the historical financial statements of the combined company, upon the consummation of the Business Combination.

As a consequence of the Business Combination, we became a Nasdaq-listed company, which will require us to hire additional personnel and implement procedures and processes to address public company regulatory requirements and customary practices. We expect to incur additional annual expenses as a public company for, among other things, directors' and officers' liability insurance, director fees and additional internal and external accounting, legal and administrative resources, including increased audit, compliance, and legal fees.

Key Factors Affecting Operating Results

We believe that our performance and future success depend on several factors that present significant opportunities for us but also pose risks and challenges, including those discussed below and in the section titled “Risk Factors.”

Commercial launch of heavy duty trucks and other products

We expect to derive revenue from our BEV trucks in late 2021 and FCEV trucks in the second half 2023. Prior to commercialization, we must complete modification or construction of required manufacturing facilities, purchase and integrate related equipment and software, and achieve several research and development milestones. As a result, we will require substantial additional capital to develop our products and services and fund operations for the foreseeable future. Until we can generate sufficient revenue from product sales and hydrogen FCEV leases, we expect to finance our operations through a combination of existing cash on hand, public offerings, private placements, debt financings, collaborations, and licensing arrangements. The amount and timing of our future funding requirements will depend on many factors, including the pace and results of our development efforts. Any delays in the successful completion of our manufacturing facility will impact our ability to generate revenue.

Customer Demand

While not yet commercially available, we have received significant interest from potential customers. Going forward, we expect the size of our committed backlog to be an important indicator of our future performance.

Basis of Presentation

Currently, we conduct business through one operating segment. All long-lived assets are maintained in, and all losses are attributable to, the United States of America.

Components of Results of Operations

Revenue

To date, we have primarily generated revenue from services related to solar installation projects that are completed in one year or less. Solar installation projects are not a part of our primary operations and were concluded in 2020.

Following the anticipated introduction of our products to the market, we expect the significant majority of our revenue to be derived from direct sales of BEV trucks starting in 2021 and from the bundled leases of FCEV trucks beginning in 2023. Our bundled lease offering is inclusive of the cost of the truck, hydrogen fuel and regularly scheduled maintenance. We expect the bundled leases to qualify for the sales type lease accounting under GAAP, with the sale of the truck recognized upon the transfer of the title, and hydrogen fuel and maintenance revenues recognized over time as they are being provided to the customer.

Cost of Revenue

To date, our cost of revenue has included materials, labor, and other direct costs related to solar installation projects.

Once we have reached commercial production, cost of revenue will include direct parts, material and labor costs, manufacturing overhead, including amortized tooling costs and depreciation of our greenfield manufacturing facility, depreciation of our hydrogen fueling stations, cost of hydrogen production, shipping and logistics costs and reserves for estimated warranty expenses.

Research and Development Expense

Research and development expenses consist primarily of costs incurred for the discovery and development of our vehicles, which include:

• Fees paid to third parties such as consultants and contractors for outside development;

• Expenses related to materials, supplies and third party services;

• Personnel related expenses, including salaries, benefits, and stock-based compensation expense, for personnel in our engineering and research functions;

• Depreciation for prototyping equipment and R&D facilities.

During the nine months ended September 30, 2020, our research and development expenses have primarily been incurred in the development of the BEV and FCEV trucks.

As a part of its in-kind investment, Iveco agreed to provide us with $100.0 million in advisory services (based on ~~inception,~~pre negotiated hourly rates), including project coordination, drawings, documentation support, engineering support, vehicle integration, and product validation support. During the nine months ended September 30, 2020, we utilized $28.6 million of advisory services which were recorded as research and development expense. As of September 30, 2020, we have $63.4 million of prepaid in-kind advisory services remaining which is expected to be consumed primarily in 2020 and 2021 and will be recorded as research and development expense until we reach commercial production.

We expect our research and development costs to increase for the foreseeable future as we continue to invest in research and develop activities to achieve our technology and product roadmap goals.

Selling, General, and Administrative Expense

Selling, general, and administrative expenses consist of personnel related expenses for our corporate, executive, finance, and other administrative functions, expenses for outside professional services, including legal, audit and accounting services, as well as expenses for facilities, depreciation, amortization, travel, and marketing costs. Personnel related expenses consist of salaries, benefits, and stock-based compensation.

We expect our selling, general, and administrative expenses to increase for the foreseeable future as we scale headcount with the growth of our business, and as a result of operating as a public company, including compliance with the rules and regulations of the Securities Exchange Commission, legal, audit, additional insurance expenses, investor relations activities, and other administrative and professional services.

Interest Income (Expense), net

Interest income (expense) consists primarily of interest received or earned on our cash and cash equivalents balances. Interest expense consists of interest paid on our term loan and ~~dividend~~financing lease.

Loss on Forward Contract Liability

The loss on forward contract liability includes losses from the remeasurement of Legacy Nikola's Series D redeemable convertible preferred stock forward contract liability. In April 2020, we fulfilled the forward contract liability and, therefore, subsequent to June 30, 2020, there will not be any impact from the remeasurement of the forward contract liability.

Other Income, net

Other income ~~earned~~consists primarily of other miscellaneous non-operating items, such as government grants, subsidies, solar installations and merchandising.

Income Tax Expense

Our income tax provision consists of an estimate for U.S. federal and state income taxes based on enacted rates, as adjusted for allowable credits, deductions, uncertain tax positions, changes in deferred tax assets and liabilities, and changes in the ~~investments in~~tax law. Due to cumulative losses, we maintain a valuation allowance against our ~~trust account~~U.S. and state deferred tax assets. Cash paid for income taxes, net of refunds during the nine months ended September 30, 2020 and 2019 was not material.

Results of Operations

Comparison of Three Months Ended September 30, 2020 to Three Months Ended September 30, 2019

The following table sets forth our historical operating ~~costs include costs associated with obtaining directors~~results for the periods indicated:


	Three Months Ended September 30,				$		%
	2020		2019		Change		Change
	(dollar amounts in thousands)



Solar revenues	$	—	$	296	(296)		NM
Cost of solar revenues	$	—	141		(141)		NM
Gross profit	—		155		(155)		NM
Operating expenses:
Research and development	$	51,473	9,482		41,991		442.8%
Selling, general, and administrative	$	65,826	3,693		62,133		1682.5%
Total operating expenses	117,299		13,175		104,124		790.3%
Loss from operations	(117,299)		(13,020)		(104,279)		800.9%
Other income (expense):
Interest income, net	$	172	411		(239)		(58.1)%
Revaluation of Series A redeemable convertible preferred stock warrant liability	$	—	(2,844)		2,844		NM

Other income (expense), net	$	(340)	85		(425)		NM
Loss before income taxes	(117,467)		(15,368)		(102,099)		NM
Income tax expense	$	2	146		(144)		NM
Net loss	$	(117,469)	$	(15,514)	(101,955)		NM
Net loss attributable to common stockholders, basic and diluted	$	(117,469)	$	(15,514)	$	(101,955)	NM
Net loss per share attributable to common stockholders, basic and diluted	$	(0.31)	$	(0.06)	$	(0.25)	NM
Weighted-average shares used to compute net loss per share attributable to common stockholders, basic and diluted	377,660,477		260,534,724		117,125,753		NM

Solar Revenues and ~~officers insurance~~Cost of Solar Revenues

Revenues and ~~other general and administrative costs.~~

~~For~~cost of revenues for the three months ended ~~March 31,~~September 30, 2020 and 2019 were related to solar installation service projects. Solar installation projects are related to legacy projects that were not related to our primary operations and were concluded in 2020. Solar revenues and costs of solar revenues were immaterial for the three months ended September 30, 2020.

Research and Development

Research and development expenses increased by $42.0 million, or 442.8%, from $9.5 million during the three months ended September 30, 2019 to $51.5 million during the three months ended in September 30, 2020. This increase was primarily due to $30.8 million in higher spend on purchased components and outside engineering services as we focus primarily on the development, build, and testing of our BEV truck platform, as well as continuing the development of our FCEV truck platform. In addition, we incurred higher stock-based compensation expense of $4.5 million and increased personnel costs of $5.6 million driven by growth in our in-house engineering headcount. We also had an increase in depreciation and occupancy costs associated with our new headquarters and R&D facility and related capital equipment and software. This was partially offset by a reduction in travel due to COVID-19.

Selling, General, and Administrative

Selling, general, and administrative expenses increased by $62.1 million, or 1682.5%, from $3.7 million during the three months ended September 30, 2019 to $65.8 million during the three months ended September 30, 2020. The increase was primarily related to higher stock-based compensation expense of $46.6 million for grants to executive officers in connection with the Business Combination and increased headcount. In addition, there was an increase in legal expenses of $5.9 million primarily related to regulatory and legal matters incurred in connection with the short-seller analyst report from September 2020. Further, there was an increase in personnel expenses driven by growth in headcount and higher general corporate expenses, professional services, marketing, and depreciation of our headquarters.

Interest Income, net

Interest income, net ~~loss of $124,540, which consisted of $759,028~~decreased by $0.2 million, or 58.1%, from $0.4 million during the three months ended September 30, 2019 to $0.2 million during the three months ended September 30, 2020. The decrease was primarily due to interest expense from the financing lease on our headquarters and a decrease in average interest rate earned on cash and cash ~~equivalents and investments and marketable securities held in the Trust Account,~~equivalents. This was offset by ~~$648,512~~an increase in ~~general~~average cash and ~~administrative costs, $50,000 in franchise tax expense, and $185,056 in~~cash equivalents during the period.

Other Income (Expense), net

Other income ~~tax expense.~~

~~For~~(expense) was immaterial for the three months ended ~~March 31,~~September 30, 2020 and 2019.

Income Tax Expense

Income tax expense was immaterial for the three months ended September 30, 2020 and 2019. We have accumulated net operating losses at the federal and state level and maintain a full valuation allowance against our net deferred taxes.

Comparison of Nine Months Ended September 30, 2020 to Nine Months Ended September 30, 2019

The following table sets forth our historical operating results for the periods indicated:


	Nine Months Ended September 30,				$		%
	2020		2019		Change		Change
	(dollar amounts in thousands)



Solar revenues	$	95	$	433	(338)		NM
Cost of solar revenues	$	72	227		(155)		NM
Gross profit	23		206		(183)		NM
Operating expenses:
Research and development	118,092		44,733		73,359		164.0%
Selling, general, and administrative	117,886		15,538		102,348		658.7%
Total operating expenses	235,978		60,271		175,707		291.5%
Loss from operations	(235,955)		(60,065)		(175,890)		292.8%
Other income (expense):
Interest income, net	259		1,082		(823)		NM
Revaluation of Series A redeemable convertible preferred stock warrant liability	—		(3,339)		3,339		NM
Loss on forward contract liability	(1,324)		—		(1,324)		NM
Other income (expense), net	(251)		95		(346)		NM
Loss before income taxes	(237,271)		(62,227)		(175,044)		(281.3)%
Income tax expense	4		150		(146)		NM
Net loss	$	(237,275)	$	(62,377)	$	(174,898)	(280.4)%
Premium paid on repurchase of redeemable convertible preferred stock	(13,407)		—		(13,407)		NM
Net loss attributable to common stockholders, basic and diluted	$	(250,682)	$	(62,377)	$	(188,305)	NM
Net loss per share attributable to common stockholders, basic and diluted	$	(0.79)	$	(0.24)	$	(0.55)	NM
Weighted-average shares used to compute net loss per share attributable to common stockholders, basic and diluted	318,315,891		260,449,607		57,866,284		NM

Solar Revenues and Cost of Solar Revenues

Revenues and cost of revenues for the nine months ended September 30, 2020 and 2019 were related to solar installation service projects. Solar installation projects are related to legacy projects that were not related to our primary

operations and were concluded in 2020. Solar revenues and costs of solar revenues were immaterial for the nine months ended September 30, 2020.

Research and Development

Research and development expenses increased by $73.4 million, or 164.0%, from $44.7 million during the nine months ended September 30, 2019 to $118.1 million during the nine months ended September 30, 2020. This increase was primarily due to $49.7 million in higher spend on purchased components and outside engineering services as we ~~had net income~~focus primarily on the development, build, and testing of ~~$809,791, which consisted~~our BEV truck platform, as well as continuing the development of ~~$1,350,021~~our FCEV truck platform. We have incurred higher stock-based compensation of $7.4 million primarily in ~~interest earned on investments~~connection with the Business Combination and ~~marketable securities held~~additional headcount and increased personnel costs of $14.0 million driven by growth in ~~the Trust Account,~~our in-house engineering headcount. In addition, we incurred increased depreciation and occupancy costs associated with our new headquarters and R&D facility and related capital equipment and software. This was partially offset by ~~$216,196~~a reduction in travel due to COVID-19.

Selling, General, and Administrative

Selling, general, and administrative expenses increased by $102.3 million, or 658.7%, from $15.5 million during the nine months ended September 30, 2019 to $117.9 million during the nine months ended September 30, 2020. The increase was primarily related to higher stock-based compensation expense of $80.6 million in connection with the Business Combination, grants to executive officers in June 2020, and higher headcount. In addition, there was an increase in legal expenses of $7.2 million primarily related to regulatory and legal matters incurred in connection with the short-seller analyst report from September 2020. Further, we incurred higher personnel expenses driven by growth in headcount and higher general corporate expenses, including professional services and depreciation of our headquarters. Those increases were partially offset by lower marketing costs ~~$38,032~~due to the Nikola World event held in ~~franchise~~April 2019.

Interest Income, net

Interest income, net decreased by $0.8 million from $1.1 million during the nine months ended September 30, 2019 to $0.3 million during the nine months ended September 30, 2020. The decrease is primarily due to interest expense from our financing lease that started in the fourth quarter of 2019 and a decrease in average interest rate earned on cash deposits. This was offset by an increase in average cash and cash equivalents during the period.

Loss on Forward Contract Liability

The loss on the forward contract liability represents a loss from a $1.3 million change in fair value through the settlement date. The forward contract liability was settled in April 2020.

Other Income (Expense), net

Other income, net was immaterial for the nine months ended September 30, 2020 and 2019.

Income Tax Expense

Income tax expense was immaterial for the nine months ended September 30, 2020 and ~~$286,002~~2019. We have cumulative net operating losses at the federal and state level and maintain a full valuation allowance against our net deferred taxes.

Non-GAAP Financial Measures

In addition to our results determined in accordance with GAAP, we believe the following non-GAAP measure is useful in evaluating our operational performance. We use the following non-GAAP financial information to evaluate our ongoing operations and for internal planning and forecasting purposes. We believe that non-GAAP financial information, when taken collectively, may be helpful to investors in assessing our operating performance.

EBITDA and Adjusted EBITDA

“EBITDA” is defined as net loss before interest income or expense, income tax ~~expense.~~

expense or benefit, and depreciation and amortization. “Adjusted EBITDA” is defined as EBITDA adjusted for stock-based compensation and other special items determined by management. Adjusted EBITDA is intended as a supplemental measure of our performance that is neither

required by, nor presented in accordance with, GAAP. We believe that the use of EBITDA and Adjusted EBITDA provides an additional tool for investors to use in evaluating ongoing operating results and trends and in comparing our financial measures with those of comparable companies, which may present similar non GAAP financial measures to investors. However, you should be aware that when evaluating EBITDA and Adjusted EBITDA we may incur future expenses similar to those excluded when calculating these measures. In addition, our presentation of these measures should not be construed as an inference that our future results will be unaffected by unusual or non-recurring items. Our computation of Adjusted EBITDA may not be comparable to other similarly titled measures computed by other companies, because all companies may not calculate Adjusted EBITDA in the same fashion.

Because of these limitations, EBITDA and Adjusted EBITDA should not be considered in isolation or as a substitute for performance measures calculated in accordance with GAAP. We compensate for these limitations by relying primarily on our GAAP results and using EBITDA and Adjusted EBITDA on a supplemental basis. You should review the reconciliation of net loss to EBITDA and Adjusted EBITDA below and not rely on any single financial measure to evaluate our business.

The following table reconciles net loss to EBITDA and Adjusted EBITDA for the three and nine months ended September 30, 2020 and 2019:


	Three Months Ended September 30,				Nine Months Ended September 30,
	2020		2019		2020		2019
	(in thousands)
Net loss	$	(117,469)	$	(15,514)	$	(237,275)	$	(62,377)
Interest income, net	(172)		(411)		(259)		(1,082)
Income tax expense (benefit)	2		146		4		150
Depreciation and amortization	1,498		657		4,255		1,104
EBITDA	(116,141)		(15,122)		(233,275)		(62,205)
Stock-based compensation	52,196		1,185		91,736		3,772
Revaluation of Series A redeemable convertible preferred stock warrant liability	—		2,844		—		3,339
Loss on forward contract liability	—		—		1,324		—
Regulatory and legal matters (1)	$	5,173	$	—	$	5,173	$	—
Adjusted EBITDA	$	(58,772)	$	(11,093)	$	(135,042)	$	(55,094)

(1)Regulatory and legal matters include legal, advisory and other professional service fees incurred in connection with the short-seller analyst report from September 2020, and investigations and litigation related thereto.

Non-GAAP Net Loss and Non-GAAP Net Loss Per Share, Basic and Diluted

Non-GAAP net loss and Non-GAAP net loss per share, basic and diluted are presented as supplemental measures of our performance. Non-GAAP net loss is defined as net loss attributable to common stockholders, basic and diluted adjusted for stock compensation expense and other items determined by management. Non-GAAP net loss per share, basic and diluted, is defined as Non-GAAP net loss divided by weighted average shares outstanding, basic and diluted.


	Three Months Ended September 30,				Nine Months Ended September 30,
	2020		2019		2020		2019
	(in thousands)
Net loss attributable to common stockholders, basic and diluted	$	(117,469)	$	(15,514)	$	(250,682)	$	(62,377)
Stock-based compensation	52,196		1,185		91,736		3,772
Premium paid on repurchase of redeemable convertible preferred stock	—		—		13,407		—
Regulatory and legal matters(1)	5,173		—		5,173		$	—
Non-GAAP net loss	$	(60,100)	$	(14,329)	$	(140,366)	$	(58,605)
Non-GAAP net loss per share, basic and diluted	$	(0.16)	$	(0.05)	$	(0.44)	$	(0.23)
Weighted average shares outstanding, basic and diluted	377,660,477		260,534,724		318,315,891		260,449,607

Liquidity and Capital Resources

~~Prior~~

Since inception, Legacy Nikola financed its operations primarily from the sales of redeemable convertible preferred stock and common stock. As of September 30, 2020, our principal sources of liquidity were our cash and cash equivalents in the amount of $907.5 million, which are primarily invested in money market funds.

On July 22, 2020 we issued a redemption notice to the ~~completion~~warrant holders for a redemption of all of the outstanding warrants, on a cash basis. As a result, we received net cash proceeds of $263.1 million during the third quarter of 2020.

Short-Term Liquidity Requirements

As of the date of this Quarterly Report on Form 10-Q, we have yet to generate revenue from our core business operations. As of September 30, 2020, our current assets were $985.9 million consisting primarily of cash and restricted cash of $918.5 million, and our current liabilities were $43.9 million primarily comprised of accrued expenses, accounts payables, customer deposits and a $4.1 million term note.

We believe our cash and cash equivalents balance will be sufficient to continue to execute our business strategy over the next twelve to eighteen month period by (i) completing the development and industrialization of the Nikola Tre BEV truck, (ii) completing phase one construction of the greenfield manufacturing facility, (iii) completing the construction of a pilot commercial hydrogen station and (iv) hiring of personnel.

However, actual results could vary materially and negatively as a result of a number of factors, including:

•the costs of building Phase 1 of our ~~Initial~~greenfield manufacturing facility and equipment;

•the timing and the costs involved in bringing our vehicles to market, mainly the Nikola Tre BEV truck;

•our ability to manage the costs of manufacturing the Nikola Tre BEV trucks;

•the scope, progress, results, costs, timing and outcomes of our research and development for our fuel cell trucks;

•the costs of maintaining, expanding and protecting our intellectual property portfolio, including potential litigation costs and liabilities;

•revenue received from sales of our Nikola Tre BEV trucks in 2021;

•the costs of additional general and administrative personnel, including accounting and finance, legal and human resources, as a result of becoming a public company;

•our ability to collect revenue; and

•other risks discussed in the section entitled "Risk Factors".

Long-Term Liquidity Requirements

The capital raised in the Business Combination will not be sufficient to cover forecasted capital needs and operating expenditures in fiscal year 2022 through fiscal year 2024. Until we ~~will have available~~can generate sufficient revenue from BEV truck sales and FCEV leases to ~~us the approximately $1,150,163 of proceeds held outside the Trust Account. We will use these funds to identify~~cover operating expenses, working capital and evaluate target businesses, perform business due diligence on prospective target businesses, travel to and from the offices, plants or similar locations of prospective target businesses or their representatives or owners, review corporate documents and material agreements of prospective target businesses, and structure, negotiate and complete a business combination.

~~In order~~capital expenditures, we expect to fund ~~working capital deficiencies~~cash needs through a combination of equity and debt financing, including lease securitization. If we raise funds by issuing equity securities, dilution to stockholders may result. Any equity securities issued may also provide for rights, preferences or ~~finance transaction costs in connection with an intended Initial Business Combination, our sponsor or an affiliate~~privileges senior to those of holders of our ~~sponsor or certain~~common stock. If we raise funds by issuing debt securities, these debt securities would have rights, preferences and privileges senior to those of holders of our officers and directors may, but are not obligated to, loan us funds as may be required. If we complete our Initial Business Combination, we would repay such loaned amounts. In the event that our Initial Business Combination does not close, we may use a portion of the working capital held outside the Trust Account to repay such loaned amounts but no proceeds from our Trust Account would be used for such repayment. Up to $1,500,000 of such loans may be convertible into additional units of the post-business combination entity, at a price of $10.00 per unit at the option of the lender. The units would be identical to the Private Placement Units.common stock. The terms of ~~such loans by~~debt securities or borrowings could impose significant restrictions on our ~~officers~~operations. The credit market and ~~directors, if any,~~financial services industry have in the past, and may in the future, experience periods of upheaval that could impact the availability and cost of equity and debt financing.

If adequate funds are not been determined and no written agreements exist with respect to such loans. We do not expect to seek loans from parties other than our sponsor or an affiliate of our sponsor as we do not believe third parties will be willing to loan such funds and provide a waiver against any and all rights to seek access to funds in our Trust Account.

~~We expect that we have sufficient resources to fund our operations for the 24 months following the closing of the Public Offering. We do not believe~~available, we will need to ~~raise additional funds in order to meet the expenditures required for operating~~curb our ~~business. However, if~~expansion plans or limit our ~~estimates of the costs of identifying a target business, undertaking in-depth due diligence~~research and negotiating an Initial Business Combination are less than the actual amount necessary to do so, we may have insufficient funds available to operate our business prior to our Initial Business Combination. Moreover, we may need to obtain additional financing either to complete our Initial Business Combination or because we become obligated to redeem a significant number of our public shares upon completion of our Initial Business Combination, in which case we may issue additional securities or incur debt in connection with such Initial Business Combination, which may include a specified future issuance. Subject to compliance with applicable securities laws, we would only complete such financing simultaneously with the completion of our Initial Business Combination. If we are unable to complete our Initial Business Combination because we do not have sufficient funds available to us, we will be forced to cease operations and liquidate the Trust Account. In addition, following our Initial Business Combination, if cash on hand is insufficient, we may need to obtain additional financing in order to meet our obligations.

~~In connection with the Company's assessment of going concern considerations in accordance with Financial Accounting Standard Board's Accounting Standards Update (“ASU”) 2014-15, “~~~~Disclosures of Uncertainties about an Entity's Ability to Continue as a Going Concern~~”, management has determined that the mandatory liquidation and subsequent dissolution raises substantial doubt about the Company's ability to continue as a going concern. No adjustments have been made to the carrying amounts of assets or liabilities should the Company be required to liquidate after May 18, 2020.

~~Off-Balance Sheet Financing Arrangements~~

We have no obligations, assets or liabilities which would be considered off-balance sheet arrangements. We do not participate in transactions that create relationships with unconsolidated entities or financial partnerships, often referred to as variable interest entities,development activities, which would have ~~been established~~a material adverse impact on our business prospects and results of operations.

The following table provides a summary of cash flow data (in thousands):


	Nine Months Ended September 30,
	2020		2019

	(in thousands)
Net cash used in operating activities	$	(84,902)	$	(64,948)
Net cash used in investing activities	(15,195)		(32,649)
Net cash provided by financing activities	932,747		65,000

Cash Flows from Operating Activities

Our cash flows from operating activities are significantly affected by the growth of our business primarily related to research and development activities. Our operating cash flows are also affected by our working capital needs to support growth in personnel related expenditures and fluctuations in accounts payable and other current assets and liabilities.

Net cash used in operating activities was $84.9 million for the ~~purpose~~nine months ended September 30, 2020. The most significant component of ~~facilitating off-balance sheet arrangements.~~

~~We have not entered into any off-balance sheet financing arrangements, established any special purpose entities, guaranteed any debt or commitments~~our cash used during this period was net loss of ~~other entities, or entered into any non-financial assets.~~

~~Contractual Obligations~~

~~On March 12, 2020, Cowen Investments II, LLC,~~$237.3 million, which included non-cash expenses of $91.7 million related to stock-based compensation, $28.6 million expense for in-kind services, $4.3 million related to depreciation and amortization, and a ~~related party~~loss of ~~ours, agreed to loan us an aggregate of up to $422,000 to cover expenses~~$1.3 million related to the ~~Proposed Business Combination pursuant~~change in fair value of the forward contract liability, and net cash sources of $26.4 million from changes in operating assets and liabilities primarily driven by increases in accounts payable and accrued expenses and customer deposits.

Net cash used in operating activities was $64.9 million for the nine months ended September 30, 2019. The largest component of our cash used during this period was a net loss of $62.4 million, which included non-cash charges of $3.8 million related to stock-based compensation, loss of $3.3 million related to the revaluation of our Series A redeemable convertible preferred stock warrant liability, and $1.1 million related to depreciation and amortization expense, and net cash outflows of $10.9 million from changes in operating assets and liabilities primarily driven by a ~~promissory note (the “Promissory Note”). The Promissory Note~~decrease in accounts payable and accrued expenses.

Cash Flows from Investing Activities

We continue to experience negative cash flows from investing activities as we expand our business and build our infrastructure. Cash flows from investing activities primarily relate to capital expenditures to support our growth. Net cash used in investing activities is ~~non-interest bearing~~expected to continue to increase substantially as we build out and istool our North American truck

manufacturing facility in Coolidge, Arizona, finance initial operations of our joint venture in Ulm, Germany, and develop the network of hydrogen fueling stations.

Net cash used in investing activities was $15.2 million for the nine months ended September 30, 2020, which was due to purchases of and deposits on capital equipment primarily related to vehicle tooling and testing, as well as purchases of licenses for engineering software.

Net cash used in ~~full~~investing activities was $32.6 million for the nine months ended September 30, 2019, which was primarily due to purchases and deposits on capital equipment of $14.5 million and $18.2 million related to the ~~earlier~~construction of our headquarters and R&D facility.

Cash Flows from Financing Activities

Through September ~~12,~~30, 2020, ~~or the date~~ we ~~complete or terminate~~have financed our operations through proceeds from sales of redeemable convertible preferred stock, the Business Combination, ~~Agreement. As~~the PIPE, and redemption of ~~March 31,~~public warrants.

Net cash provided by financing activities was $932.7 million for the nine months ended September 30, 2020, which was primarily due to net proceeds of $616.7 million from the Business Combination and the PIPE, the proceeds from the exercise of public warrants of $263.1 million, the proceeds from the issuance of Legacy Nikola's Series D redeemable convertible preferred stock, net of issuance costs, of $50.3 million, proceeds from the exercises of stock options of $2.2 million and proceeds from tenant allowances for the construction of our headquarters of $0.9 million, offset by payments on our financing lease of $0.5 million.

Net cash provided by financing activities was $65.0 million for the nine months ended September 30, 2019, which was due to proceeds from the issuance of Legacy Nikola's Series D redeemable convertible preferred stock, net of issuance costs.

Contractual Obligations and Commitments

In April 2020, we ~~had~~entered into a series of agreements which established a joint venture in Europe with Iveco. We will make an ~~outstanding balance~~initial cash contribution of ~~$422,000 under~~approximately 7.4 million Euros (approximately $8.7 million) for a 50% interest in the ~~Promissory Note. As~~joint venture. See Note 6 "Investments" to our Unaudited Consolidated Financial Statements for further information.

During the second quarter of ~~December 31, 2019,~~2020, we entered into a firm purchase order for hydrogen equipment for approximately $32 million through 2022.

During the third quarter of 2020, we entered into a series of agreements with GM. See Note 12 "Commitments and Contingencies" to our Unaudited Consolidated Financial Statements for further information.

For the three and nine months ended September 30, 2020, there ~~was no related party loan outstanding.~~

~~As of March 31, 2020 and December 31, 2019, other than Promissory Note, we had~~have been no other ~~long-term debt, capital lease~~material changes to our significant contractual obligations ~~operating lease obligations or long-term liabilities. We~~as previously disclosed in the Prospectus.

Waitlist and Reservations

On August 10, 2020, we announced that Republic Services, Inc. agreed to order from us 2,500 electrified refuse trucks, with the ability to increase the order to up to 5,000 units.

For the three and nine months ended September 30, 2020, there have ~~entered into an Administrative Support Agreement with~~been no other material changes to our ~~Sponsor, pursuant to which~~waitlist and reservations for our BEV, FCEV, Badger and Powersports vehicles from that previously disclosed.

Off Balance Sheet Arrangements

Since the date of our incorporation, we ~~are billed a total of $10,000 per month for office space~~have not engaged in any off balance sheet arrangements, as defined in the rules and ~~general administrative services. Upon completion~~regulations of the ~~Initial Business Combination or our liquidation, we will cease incurring these monthly fees.~~We accrued $30,000 and $195,000 for office space and general administrative services as of March 31, 2020 and December 31, 2019, respectively. During the three months ended March 31, 2020, we paid $195,000 for office space and general administrative services included in general and administrative expenses in our condensed statement of operations.

SEC.

Critical Accounting Policies and ~~Significant Judgments and~~ Estimates

~~This~~

Our discussion and analysis of our financial condition and results of operations isare based onupon our financial statements, which have been prepared in accordance with ~~generally accepted accounting~~GAAP. These principles ~~in the U.S. (“GAAP”). The preparation of these financial statements requires~~require us to make certain estimates and assumptions. These estimates and assumptions ~~that~~ affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities, ~~at the date~~as of the ~~financial statements and the~~balance sheet date, as well as reported amounts of ~~revenues~~revenue and expenses during the ~~reported~~reporting period. ~~In accordance with GAAP, we base~~Our most significant estimates and judgments involve valuation of our stock-based compensation, including the fair value of common stock, the valuation of warrant liabilities, the valuation of the redeemable convertible preferred stock tranche liability, estimates related to our build-to-suit lease, and contingent liabilities, including litigation reserves. Management bases its estimates on historical experience and on various other assumptions ~~that we believe are~~believed to be reasonable, ~~under~~ the ~~circumstances.~~results of which form the basis for making judgments about the carrying values of assets and liabilities. Actual results ~~may~~could differ from those estimates.

There have been no substantial changes to these estimates, ~~under different assumptions~~ or ~~conditions.~~

the policies related to them during the three and nine months ended September 30, 2020. For a full discussion of these estimates and policies, see “Management’s Discussion and Analysis of Financial Condition and Results of Operations” included in the Prospectus.

Emerging Growth Company

~~Section 102(b)(1)~~ Status

We are an EGC, as defined in the JOBS Act. The JOBS Act permits companies with EGC status to take advantage of ~~the Jumpstart Our Business Startups Act of 2012 (the “JOBS Act”) exempts emerging growth companies from being required~~an extended transition period to comply with new or revised ~~financial~~accounting standards, delaying the adoption of these accounting standards until they would apply to private ~~companies (that is, those that~~companies. We have ~~not had a Securities Act registration statement declared effective or do not have a class of securities registered under the Exchange Act) are required~~elected to use this extended transition period to enable us to comply with ~~the~~ new or revised ~~financial~~ accounting ~~standards. The JOBS Act provides~~standards that have different effective dates for public and private companies until the earlier of the date we (i) are no longer an emerging growth company ~~can elect to~~or (ii) affirmatively and irrevocably opt out of the extended transition period ~~and~~provided in the JOBS Act. As a result, our financial statements may not be comparable to companies that comply with the requirements that apply to non-emerging growth companies but any such an election to opt out is irrevocable. We have elected not to opt out of such extended transition period, which means that when a standard is issued or revised, and it has different application dates for public or private companies, we, as an emerging growth company, can adopt the new or revised ~~standard at the time private companies adopt the new or revised standard.~~

~~This may make comparison~~accounting standards as of ~~our financial statement with another~~ public company ~~that is neither~~effective dates.

In addition, we intend to rely on the other exemptions and reduced reporting requirements provided by the JOBS Act. Subject to certain conditions set forth in the JOBS Act, if, as an ~~emerging growth company nor~~EGC, we intend to rely on such exemptions, we are not required to, among other things: (i) provide an ~~emerging growth company that has opted out~~auditor’s attestation report on our system of ~~using the extended transition period difficult or impossible because~~internal controls over financial reporting pursuant to Section 404(b) of the ~~potential differences in accounting standards used.~~

~~Income Taxes~~

~~We follow~~Sarbanes-Oxley Act of 2002 (the "Sarbanes-Oxley Act"); (ii) provide all of the ~~asset~~compensation disclosure that may be required of non-emerging growth public companies under the Dodd Frank Wall Street Reform and ~~liability method of accounting for income taxes under FASB ASC 740, “Income Taxes.” Deferred tax assets~~Consumer Protection Act; (iii) comply with any requirement that may be adopted by the Public Company Accounting Oversight Board regarding mandatory audit firm rotation or a supplement to the auditor’s report providing additional information about the audit and ~~liabilities are recognized for the estimated future tax consequences attributable to differences between~~ the financial statements ~~carrying amounts~~(auditor discussion and analysis); and (iv) disclose certain executive compensation related items such as the correlation between executive compensation and performance and comparisons of ~~existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using enacted tax rates expected~~the Chief Executive Officer’s compensation to ~~apply to taxable income~~median employee compensation.

We will remain an EGC under the JOBS Act until the earliest of (i) the last day of our first fiscal year following the fifth anniversary of the closing of the first sale of common stock in our initial public offering, (ii) the ~~years~~last date of our fiscal year in which ~~those temporary differences~~we have total annual gross revenue of at least $1.07 billion, (iii) the date on which we are ~~expected~~deemed to be ~~recovered~~a “large accelerated filer” under the rules of the SEC with at least $700.0 million of outstanding securities held by non-affiliates, or ~~settled. The effect~~(iv) the date on ~~deferred tax assets~~which we have issued more than $1.0 billion in non-convertible debt securities during the previous three years. We expect to become a large accelerated filer on the last day of our fiscal year 2020.

Recent Accounting Pronouncements

See Note 2 to our Unaudited Consolidated Financial Statements included elsewhere in this Quarterly Report on Form 10-Q for more information about recent accounting pronouncements, the timing of their adoption, and ~~liabilities of a change in tax rates is recognized in income in the period that included the enactment date. Valuation allowances are established, when necessary, to reduce deferred tax assets~~our assessment, to the ~~amount expected to be realized.~~

~~FASB ASC 740 prescribes a recognition threshold~~extent we have made one, of their potential impact on our financial condition and ~~a measurement attribute for the financial statement recognition and measurement~~our results of tax positions taken or expected to be taken in a tax return. For those benefits to be recognized, a tax position must be more likely than not to be sustained upon examination by taxing authorities. There were no unrecognized tax benefits as of March 31, 2020 or December 31, 2019. We recognize accrued interest and penalties related to unrecognized tax benefits as income tax expense. No amounts were accrued for the payment of interest and penalties during the three months ended March 31, 2020 or 2019. operations.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

We are ~~not aware~~exposed to a variety of ~~any issues under review that could result~~market and other risks, including the effects of changes in ~~significant payments, accruals or material deviation~~interest rates, inflation, and foreign currency exchange rates, as well as risks to the availability of funding sources, hazard events, and specific asset risks.

Interest Rate Risk

The market risk inherent in our financial instruments and our financial position represents the potential loss arising from ~~its position. We are subject to income tax examinations by major taxing authorities since our inception.~~

~~We may be subject to potential examination by federal, state and city taxing authorities~~adverse changes in ~~the areas~~interest rates. As of income taxes. These potential examinations may include questioning the timing and amount of deductions, the nexus of income among various tax jurisdictions and compliance with federal, state and city tax laws. We have recorded deferred tax liabilities relating to expenses deferred for income tax purposes as of March 31, 2020 and December 31, 2019, ~~amounting~~and September 30, 2020 we had cash and cash equivalents of $85.7 million and $907.5 million, respectively, consisting of interest-bearing money market accounts for which the fair market value would be affected by changes in the general level of U.S. interest rates. However, due to $0the short-term maturities and ~~$101,521, respectively.~~

~~Recent Accounting Pronouncements~~

~~Our management does~~the low-risk profile of our investments, an immediate 10% change in interest rates would not ~~believe that there are any recently issued, but not yet effective, accounting pronouncements, if currently adopted, would~~ have a material effect on the fair market value of our ~~financial statements.~~

~~Item 3.~~

~~Quantitative and Qualitative Disclosures About Market Risk~~

~~As of March 31,~~cash and cash equivalents.

Foreign Currency Risk

There was no material foreign currency risk for the nine months ended September 30, 2020 ~~and~~or year ended December 31, 2019, we were not subject to any market or interest rate risk. Following the consummation of our Initial Public Offering, the net proceeds of our Initial Public Offering, including amounts in the Trust Account, were invested in U.S. government treasury bills or in money market funds meeting certain conditions under Rule 2a-7 under the Investment Company Act which invest only in direct U.S. government treasury obligations. Due to the short-term nature of these investments, we believe there will be no associated material exposure to interest rate risk.

~~Item 4.~~

~~Controls and Procedures~~

2019.

ITEM 4. CONTROLS AND PROCEDURES

Evaluation of Disclosure Controls and Procedures

~~Disclosure~~

We maintain a system of disclosure controls and procedures ~~are controls~~(as defined in Rules 13a-15(e) and ~~other procedures that are designed to ensure that information required to be disclosed in our reports filed or submitted~~15d-15(e) under the Securities Exchange Act of 1934 ~~as amended~~ (the ~~“Exchange Act”~~"Exchange Act") designed to ensure that the information required to be disclosed by us in the reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the ~~SEC’s~~ rules and ~~forms. Disclosure controls~~forms of the Securities and ~~procedures include, without limitation, controls~~Exchange Commission, and ~~procedures designed to ensure that information required to be disclosed in company reports filed or submitted under the Exchange Act~~ is accumulated and communicated to our management, including our Chief Executive Officer (our principal executive officer) and Chief Financial Officer (our principal financial officer), as appropriate, to allow timely decisions regarding required disclosure.

~~As required by Rules 13a-15 and 15d-15 under~~

Our management, with the ~~Exchange Act,~~participation of our Chief Executive Officer and our Chief Financial Officer, ~~carried out an evaluation of~~has evaluated the effectiveness ~~of the design and operation~~ of our disclosure controls and procedures under the Exchange Act as of ~~March 31, 2020.~~September 30, 2020, the end of the period covered by this Quarterly Report on Form 10-Q. Based ~~upon their~~on such evaluation, our Chief Executive Officer and our Chief Financial Officer have concluded that, as of such date, our disclosure controls and procedures ~~(as defined in Rules 13a-15 (e) and 15d-15 (e) under the Exchange Act)~~ were effective.

Changes in Internal Control over Financial Reporting

~~During the three months ended March 31, 2020, there~~

There were no changes in our internal control over financial reporting, as identified in connection with the evaluation required by Rule 13a-15(d) and Rule 15d-15(d) of the Exchange Act, that occurred during the three months ended September 30, 2020 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

PART II ~~— PART II —~~- OTHER INFORMATION

~~Item 1.~~

~~Legal Proceedings~~

~~None.~~

~~Item 1A.~~

~~Risk Factors~~

~~Other than~~

Our business is subject to numerous risks, as more fully described in Item 1A of this report. You should read these risks carefully. We may be unable, for many reasons, including those that are beyond our control, to implement our business strategy. In particular, risks associated with our business include, among others:

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

•We may be unable to adequately control the costs associated with our operations.

•Our business model has yet to be tested and any failure to commercialize our strategic plans would have an adverse effect on our operating results and business, harm our reputation and could result in substantial liabilities that exceed our resources.

•Our limited operating history makes evaluating our business and future prospects difficult and may increase the risk ~~factors disclosed~~of your investment.

•We expect to need to raise additional funds and these funds may not be available to us when we need them. If we cannot raise additional funds when we need them, our operations and prospects could be negatively affected.

•If we fail to manage our future growth effectively, we may not be able to market and sell our vehicles successfully.

•Our bundled lease model may present unique problems that may have an adverse effect on our operating results and business and harm our reputation.

•We may face legal challenges in one or more states attempting to sell directly to customers which could materially adversely affect our costs.

•We face risks and uncertainties related to litigation, regulatory actions and government investigations and inquiries.

•Our success will depend on our ability to economically manufacture our trucks at scale and build our hydrogen fueling stations to meet our customers’ business needs, and our ability to develop and manufacture trucks of sufficient quality and appeal to customers on schedule and at scale is unproven.

•We may experience significant delays in the ~~proxy statement, prospectus~~design, manufacture, launch and ~~information statement filed with~~financing of our trucks, including in the ~~SEC by~~build out of our manufacturing plant, which could harm our business and prospects.

Item 1. Legal Proceedings

For a description of our material pending legal proceedings, see Note 12, Commitments and Contingencies, to the ~~Company on May 8, 2020, which are incorporated herein by reference, as of the date of~~consolidated financial statements included elsewhere in this Quarterly Report on Form ~~10-Q, there have been no material changes~~10-Q.

Item 1A. Risk Factors

Risks Related to OurBusiness and Industry

We are an early stage company with a history of losses, and expect to incur significant expenses and continuing losses for the ~~risk factors disclosed in our Annual Report on Form 10-K~~foreseeable future.

We incurred net losses of $88.7 million and $237.3 million for the year ended December 31, 2019 ~~except~~and for the nine months ended September 30, 2020, respectively, and have incurred net losses of approximately $425.8 million from Legacy Nikola's inception through September 30, 2020. We believe that we will continue to incur operating and net losses each quarter until at least the time we begin significant deliveries of our trucks, which is not expected to begin until late 2021 for our Nikola Tre BEV truck and the second half of 2023 for our Nikola Two FCEV truck, and may occur later. Even if we are able to successfully develop and sell or lease our trucks, there can be no assurance that they will be commercially successful. Our potential profitability is dependent upon the successful development and successful commercial introduction and acceptance of our trucks and our hydrogen station platform, which may not occur.

We expect the rate at which we will incur losses to be significantly high in future periods as we:

•design, develop and manufacture our trucks;

•construct and equip our manufacturing plant to produce our trucks in Arizona;

•modify and equip the Iveco manufacturing plant in Germany to produce our trucks in Europe;

•build up inventories of parts and components for our trucks;

•manufacture an available inventory of our trucks;

•develop and deploy our hydrogen fueling stations;

•expand our design, development, maintenance and repair capabilities;

•increase our sales and marketing activities and develop our distribution infrastructure; and

•increase our general and administrative functions to support our growing operations.

Because we will incur the costs and expenses from these efforts before we receive any incremental revenue with respect thereto, our losses in future periods will be significant. In addition, we may ~~disclose changes~~find that these efforts are more expensive than we currently anticipate or that these efforts may not result in revenue, which would further increase our losses.

We may be unable to adequately control the costs associated with our operations.

We will require significant capital to develop and grow our business, including developing and manufacturing our trucks, building our manufacturing plant and building our brand. We expect to incur significant expenses which will impact our profitability, including research and development expenses, raw material procurement costs, leases, sales and distribution expenses as we build our brand and market our trucks and bundled leasing model, and general and administrative expenses as we scale our operations. In addition, we may incur significant costs in connection with our services, including building our hydrogen fueling stations and honoring our maintenance commitments under our bundled lease package. Our ability to become profitable in the future will not only depend on our ability to successfully market our vehicles and other products and services, but also to control our costs. If we are unable to cost efficiently design, manufacture, market, sell, distribute and service our trucks and services, our margins, profitability and prospects would be materially and adversely affected.

Our business model has yet to be tested and any failure to commercialize our strategic plans would have an adverse effect on our operating results and business, harm our reputation and could result in substantial liabilities that exceed our resources.

Investors should be aware of the difficulties normally encountered by a new enterprise, many of which are beyond our control, including substantial risks and expenses in the course of establishing or entering new markets, organizing operations and undertaking marketing activities. The likelihood of our success must be considered in light of these risks, expenses, complications, delays and the competitive environment in which we operate. There is, therefore, nothing at this time upon which to base an assumption that our business plan will prove successful, and we may not be able to generate significant revenue, raise additional capital or operate profitably. We will continue to encounter risks and difficulties frequently experienced by early commercial stage companies, including scaling up our infrastructure and headcount, and may encounter unforeseen expenses, difficulties or delays in connection with our growth. In addition, as a result of the capital-intensive nature of our business, we can be expected to continue to sustain substantial operating expenses without generating sufficient revenue to cover expenditures. Any investment in our company is therefore highly speculative and could result in the loss of your entire investment.

Our limited operating history makes evaluating our business and future prospects difficult and may increase the risk of your investment.

You must consider the risks and difficulties we face as an early stage company with a limited operating history. If we do not successfully address these risks, our business, prospects, operating results and financial condition will be materially and adversely harmed. We have a very limited operating history on which investors can base an evaluation of our business, operating results and prospects. We intend to derive substantially all of our revenue from the sale and lease of our vehicle platforms, which are still in the early stages of development. Due to our bundled lease model for our FCEV trucks, our revenue will also depend on the sale of hydrogen fuel at our planned hydrogen fueling stations which we do not expect to be operational until 2022 or later. There are no assurances that we will be able to secure future business with the major trucking companies or with independent truck drivers. We also have a Powersports division and in 2020 announced a passenger truck. While we intend to focus on our commercial trucks and bundled leases, our other business lines may distract management’s focus on what we consider our core business.

It is difficult to predict our future revenue and appropriately budget for our expenses, and we have limited insight into trends that may emerge and affect our business. In the event that actual results differ from our estimates or we adjust our estimates in future periods, our operating results and financial position could be materially affected.

We expect to need to raise additional funds and these funds may not be available to us when we need them. If we cannot raise additional funds when we need them, our operations and prospects could be negatively affected.

The design, manufacture, lease, sale and servicing of vehicles and related hydrogen fueling stations is capital-intensive. We expect that we will have sufficient capital to fund our planned operations for the next 12 to 18 months. We will need to raise

additional capital to scale our manufacturing and roll out our hydrogen refueling stations. We may raise additional funds through the issuance of equity, equity related or debt securities, or through obtaining credit from government or financial institutions. This capital will be necessary to fund our ongoing operations, continue research, development and design efforts, improve infrastructure, introduce new vehicles and build hydrogen fueling stations. We cannot be certain that additional funds will be available to us on favorable terms when required, or at all. If we cannot raise additional funds when we need them, our financial condition, results of operations, business and prospects could be materially adversely affected.

If we fail to manage our future growth effectively, we may not be able to market and sell our vehicles successfully.

Any failure to manage our growth effectively could materially and adversely affect our business, prospects, operating results and financial condition. We intend to expand our operations significantly. Our future expansion will include:

•training new personnel;

•forecasting production and revenue;

•controlling expenses and investments in anticipation of expanded operations;

•establishing or expanding design, manufacturing, sales and service facilities; and

•implementing and enhancing administrative infrastructure, systems and processes.

We intend to continue to hire a significant number of additional personnel, including design and manufacturing personnel and service technicians for our trucks. Because our trucks are based on a different technology platform than traditional internal combustion engines, individuals with sufficient training in alternative fuel and electric vehicles may not be available to hire, and as a result, we will need to expend significant time and expense training the employees we do hire.

Our bundled lease model may present unique problems that may have an adverse effect on our operating results and business and harm our reputation.

Our bundled lease model which provides customers with the FCEV truck, hydrogen fuel and maintenance for a fixed price per mile is reliant on our ability to achieve a minimum hydrogen fuel efficiency in our FCEV trucks. If we are unable to achieve or maintain this fuel efficiency, we may be forced to provide our bundled lease customers with fuel at prices below-cost or risk damaging our relationships with our customers. Any such scenario would put our bundled lease model in jeopardy and may have a material adverse effect on our business, prospects, operating results and financial condition.

We may face legal challenges in one or more states attempting to sell directly to customers which could materially adversely affect our costs.

Our business plan includes the direct sale of vehicles to business customers, and potentially, to individual customers. Most, if not all, states require a license to sell vehicles within the state. Many states prohibit manufacturers from directly selling vehicles to customers. In other states, manufacturers must operate a physical dealership within the state to deliver vehicles to customers. As a result, we may not be able to sell directly to customers in each state in the United States.

We are currently not registered as a dealer in any state. In many states, it is unclear if, as a manufacturer, we will be able to obtain permission to sell and deliver vehicles directly to customers. For customers residing in states in which we will not be allowed to sell or deliver vehicles, we may have to arrange alternate methods of delivery of vehicles. This could include delivering vehicles to adjacent or nearby states in which we are allowed to directly sell and ship vehicles, and arranging for the customer to transport the vehicles to their home states. These workarounds could add significant complexity, and as a result, costs, to our business.

We face risks and uncertainties related to litigation, regulatory actions and government investigations and inquiries.

We are subject to, and may become a party to, a variety of litigation, other claims, suits, regulatory actions and government investigations and inquiries. For example, in September 2020, Nikola and our officers and employees received subpoenas from the SEC as part of a fact-finding inquiry related to aspects of our business as well as certain matters described in a report issued on September 10, 2020 by Hindenburg Research LLC, or the Hindenburg Report. The SEC issued subpoenas to our directors on September 30, 2020. In addition, Nikola and Trevor R. Milton also received grand jury subpoenas from the

U.S. Attorney’s Office for the Southern District of New York and the N.Y. County District Attorney’s Office in September 2020. We have cooperated, and will continue to cooperate, with these and any other regulatory or governmental requests. We have incurred significant expenses as a result of the regulatory and legal matters relating to the Hindenburg Report. The total cost associated with these matters will depend on many factors, including the duration of these matters and any related finding.

Additionally, four putative class action lawsuits were filed against us and certain of our current and former officers and directors, asserting violations of federal securities laws under Section 10(b) and Section 20(a) of the Exchange Act and, in one case, violations of the Unfair Competition Law under California law, alleging that Nikola and certain of our officers and directors made false and/or ~~disclose additional factors~~misleading statements in press releases and public filings regarding our business plan and prospects. Separately, two purported Nikola stockholder derivative actions were filed in the United States District Court for the District of Delaware, against certain of our current and former directors, alleging breaches of fiduciary duties, violations of Section 14(a) of the Exchange Act, and gross mismanagement. We are unable to estimate the potential loss or range of loss, if any, associated with these lawsuits.

In addition, from time to time, we may also be involved in legal proceedings and investigations arising in the ordinary course of business, including those relating to employment matters, relationships with collaboration partners, intellectual property disputes, and other business matters. Any such claims or investigations may be time-consuming, costly, divert management resources, or otherwise have a material adverse effect on our business or result of operations.

The results of litigation and other legal proceedings, including the other claims described under Note 12, Commitments and Contingencies, to the consolidated financial statements included elsewhere in this Quarterly Report on Form 10-Q, are inherently uncertain and adverse judgments or settlements in some or all of these legal disputes may result in materially adverse monetary damages or injunctive relief against us. Any claims or litigation, even if fully indemnified or insured, could damage our reputation and make it more difficult to compete effectively or obtain adequate insurance in the future. The litigation and other legal proceedings described under Note 12, Commitments and Contingencies, to the consolidated financial statements included elsewhere in this Quarterly Report on Form 10-Q are subject to future developments and management’s view of these matters may change in the future.

Our success will depend on our ability to economically manufacture our trucks at scale and build our hydrogen fueling stations to meet our customers’ business needs, and our ability to develop and manufacture trucks of sufficient quality and appeal to customers on schedule and at scale is unproven.

Our future business depends in large part on our ability to execute our plans to develop, manufacture, market and sell our Nikola Tre BEV and Nikola Two FCEV trucks and to deploy the associated hydrogen fueling stations for our FCEV trucks at sufficient capacity to meet the transportation demands of our business customers. We plan to initially commence manufacturing our trucks in Europe through our joint venture with CNHI and Iveco, which commenced operations in the fourth quarter of 2020, and in the future at our manufacturing plant in Arizona.

Our continued development of our truck platforms is and will be subject to risks, including with respect to:

•our ability to secure necessary funding;

•the equipment we plan to use being able to accurately manufacture the vehicles within specified design tolerances;

•long-and short-term durability of our hydrogen fuel cell and electric drivetrain technology related components in the day-to-day wear and tear of the commercial trucking environment;

•compliance with environmental, workplace safety and similar regulations;

•securing necessary components on acceptable terms and in a timely manner;

•delays in delivery of final component designs to our suppliers;

•our ability to attract, recruit, hire and train skilled employees;

•quality controls, particularly as we plan to commence manufacturing in-house;

•delays or disruptions in our ~~future filings~~supply chain; and

•other delays and cost overruns.

We have no experience to date in high volume manufacturing of our trucks. We do not know whether we will be able to develop efficient, automated, low-cost manufacturing capabilities and processes, and reliable sources of component supply, that will enable us to meet the quality, price, engineering, design and production standards, as well as the production volumes, required to successfully mass market our trucks. Even if we are successful in developing our high volume manufacturing capability and processes and reliably source our component supply, we do not know whether we will be able to do so in a manner that avoids significant delays and cost overruns, including as a result of factors beyond our control such as problems with suppliers and vendors, or in time to meet our vehicle commercialization schedules or to satisfy the requirements of customers. Any failure to develop such manufacturing processes and capabilities within our projected costs and timelines could have a material adverse effect on our business, prospects, operating results and financial condition.

We may experience significant delays in the design, manufacture, launch and financing of our trucks, including in the build out of our manufacturing plant, which could harm our business and prospects.

Any delay in the financing, design, manufacture and launch of our trucks, including in the build out of our manufacturing plant in Arizona, could materially damage our brand, business, prospects, financial condition and operating results. Vehicle manufacturers often experience delays in the design, manufacture and commercial release of new products. To the extent we delay the launch of our trucks, our growth prospects could be adversely affected as we may fail to grow our market share. Furthermore, we rely on third party suppliers for the provision and development of many of the key components and materials used in our vehicles. To the extent our suppliers experience any delays in providing us with or developing necessary components, we could experience delays in delivering on our timelines.

We will rely on complex machinery for our operations and production involves a significant degree of risk and uncertainty in terms of operational performance and costs.

We will rely heavily on complex machinery for our operations and our production will involve a significant degree of uncertainty and risk in terms of operational performance and costs. Our truck manufacturing plant will consist of large-scale machinery combining many components. The manufacturing plant components are likely to suffer unexpected malfunctions from time to time and will depend on repairs and spare parts to resume operations, which may not be available when needed. Unexpected malfunctions of the manufacturing plant components may significantly affect the intended operational efficiency. Operational performance and costs can be difficult to predict and are often influenced by factors outside of our control, such as, but not limited to, scarcity of natural resources, environmental hazards and remediation, costs associated with decommissioning of machines, labor disputes and strikes, difficulty or delays in obtaining governmental permits, damages or defects in electronic systems, industrial accidents, fire, seismic activity and natural disasters. Should operational risks materialize, it may result in the personal injury to or death of workers, the loss of production equipment, damage to manufacturing facilities, monetary losses, delays and unanticipated fluctuations in production, environmental damage, administrative fines, increased insurance costs and potential legal liabilities, all which could have a material adverse effect on our business, results of operations, cash flows, financial condition or prospects.

Once completed, if our manufacturing plant in Arizona becomes inoperable, we will be unable to produce our trucks and our business will be harmed.

We expect to begin assembly of our trucks at our manufacturing plant in Arizona after completion of the initial phase of the plant in 2021, at the earliest. We expect to produce all of our trucks at our manufacturing plant in Arizona after completion of the second phase of the plant in 2023, at the earliest. Our plant and the equipment we use to manufacture our trucks would be costly to replace and could require substantial lead time to replace and qualify for use. Our plant may be harmed or rendered inoperable by natural or man-made disasters, including earthquakes, flooding, fire and power outages, or by health epidemics, such as the COVID-19 pandemic, which may render it difficult or impossible for us to manufacture our trucks for some period of time. The inability to produce our trucks or the backlog that could develop if our manufacturing plant is inoperable for even a short period of time may result in the loss of customers or harm our reputation. Although we maintain insurance for damage to our property and the disruption of our business, this insurance may not be sufficient to cover all of our potential losses and may not continue to be available to us on acceptable terms, if at all.

Our plan to build a network of hydrogen fueling stations will require significant cash investments and management resources and may not meet our expectations with respect to additional sales of our electric vehicles. In addition, we may not be able to open stations in certain states.

Our plan to build a network of hydrogen fueling stations in the United States will require significant cash investments and management resources and may not meet our expectations with respect to additional sales of our FCEV trucks. This planned construction of hydrogen stations is essential to persuading customers to pay a higher premium for our trucks. While we have constructed a prototype station, we have very limited experience in the actual provision of our refueling solutions to users and providing these services is subject to challenges, which include the logistics of rolling out our network of refueling stations and teams in appropriate areas, inadequate capacity or over capacity in certain areas, security risks, risk of damage to vehicles during charging or refueling and the potential for lack of customer acceptance of our services. We will need to ensure compliance with any regulatory requirements applicable in jurisdictions where our fueling stations will be located, including obtaining any required permits and land use rights, which could take considerable time and expense and is subject to the risk that government support in certain areas may be discontinued. In addition, given our lack of experience building and operating fueling stations, there could be unanticipated challenges which may hinder our ability to provide our bundled lease to customers or make the provision of our bundled leases costlier than anticipated. If we are unable to build, or experience delays in building, our network of hydrogen fueling stations, we may be unable to meet our fueling commitments under our bundled lease arrangements with customers and experience decreased sales or leases of our vehicles, which may negatively impact our business, prospects, financial condition and operating results.

We may not be able to produce or source the hydrogen needed to establish our planned hydrogen fueling stations.

As a key component of our business model, we intend to establish a series of hydrogen fueling stations, and we intend to include the cost of hydrogen in the purchase price of our trucks. We intend to produce the hydrogen needed for these stations on site through electrolysis. To the extent we are unable to produce the hydrogen, we may be unable to establish these fueling stations and severely limit the usefulness of our trucks, or, if we are still able to establish these stations, we may be forced to sell hydrogen at a loss in order to maintain our commitments. We believe that this hydrogen incentive will be a significant driver for purchases of our trucks, and therefore, the failure to establish and roll out these hydrogen fueling stations in accordance with our expectations would materially adversely affect our business.

Our inability to cost-effectively source the energy requirements to conduct electrolysis at our fueling stations may impact the profitability of our bundled leases by making our hydrogen uneconomical compared to other vehicle fuel sources.

Our ability to economically produce hydrogen for our FCEV trucks requires us to secure a reliable source of electricity for each of our fueling stations at a price per kilowatt hour that is below the current retail rates in the geographic areas we target. An increase in the price of energy used to generate hydrogen through electrolysis would likely result in a higher cost of fuel for our FCEV trucks as well as increase the cost of distribution, freight and delivery and other operating costs related to vehicle manufacturing. We may not be able to offset these cost increases or pass such cost increases onto customers in the form of price increases, because of our bundled lease model for FCEV trucks, which could have an adverse impact on our results of operations and financial condition.

Reservations for our trucks are cancellable.

Reservations for our Nikola FCEV trucks are subject to cancellation by the customer until the customer enters into a lease agreement or, in the case of Anheuser Busch LLC ("AB"), to the extent our trucks do not meet the vehicle specifications and delivery timelines specified in the contract with AB, as discussed further below. At times we have indicated that if we are able to sell or lease every truck which has been reserved, we would have approximately $10 billion in projected revenue. On August 10, 2020, we announced that Republic Services, Inc. agreed to order from us 2,500 electrified refuse trucks, with the ~~SEC.~~

~~Item 2.~~

~~Unregistered Sales of Equity Securities and Use of Proceeds~~

~~As previously reported~~ability to increase the order to up to 5,000 units, subject to certain conditions and milestones, as set forth in the ~~Initial Form 8-K,~~master purchase agreement. Because all of our reservations are cancellable, it is possible that a significant number of customers who submitted reservations for our trucks may cancel those reservations.

Given the anticipated lead times between customer reservation and delivery of our trucks, there is a heightened risk that customers that have made reservations may not ultimately take delivery of vehicles due to potential changes in customer preferences, competitive developments and other factors. As a result, no assurance can be made that reservations will not be cancelled, or that reservations will ultimately result in the purchase or lease of a vehicle. Any cancellations could harm our financial condition, business, prospects and operating results.

In addition, the projected revenue is based on ~~May 18, 2018, simultaneously~~a number of assumptions, including a projected purchase price for our trucks. If the purchase price of the trucks ends up being different than anticipated, we may not achieve this level of revenue, even if all of the trucks subject to reservations are sold or leased.

While we currently have a contract with AB to lease up to 800 Nikola Two FCEV trucks, if we are unable to deliver our trucks according to the vehicle specifications and delivery timelines set forth in the contract, AB has the right to cancel its order for trucks. Moreover, the AB contract specifies lease terms and rental rates that may be hard for us to meet depending on our ability to develop our trucks and hydrogen network according to current design parameters and cost estimates. Any of these adverse actions related to the AB order could harm our financial condition, business, prospects and operating results.

While we do not currently have any leasing arrangements finalized, in the future we intend to offer a bundled leasing alternative to customers which exposes us to credit risk.

While we currently intend to offer bundled leasing of our trucks to potential customers through a third-party financing partner, we currently have no agreement in place with any potential financing partner. We can provide no assurance that a third-party financing partner would be able or willing to provide the leasing services on terms that we have stated in our published materials, or to provide financing at all. Furthermore, offering a leasing alternative to customers will expose us to risks commonly associated with the ~~consummation~~extension of credit. Credit risk is the potential loss that may arise from any failure in the ability or willingness of the ~~Public Offering,~~customer to fulfill its contractual obligations when they fall due. Competitive pressure and challenging markets may increase credit risk through leases to financially weak customers, extended payment terms and leases into new and immature markets. This could have a material adverse effect on our business, prospects, financial results and results of operations.

We face significant barriers to produce our trucks, and if we cannot successfully overcome those barriers our business will be negatively impacted.

The trucking industry has traditionally been characterized by significant barriers to entry, including large capital requirements, investment costs of designing and manufacturing vehicles, long lead times to bring vehicles to market from the ~~Company consummated~~concept and design stage, the need for specialized design and development expertise, regulatory requirements, establishing a brand name and image and the need to establish sales, leasing, fueling and service locations. If we are not able to overcome these barriers, our business, prospects, operating results and financial condition will be negatively impacted and our ability to grow our business will be harmed.

Our future growth is dependent upon the trucking industry’s willingness to adopt BEV and FCEV trucks.

Our growth is highly dependent upon the adoption by the trucking industry of alternative fuel and electric trucks. If the market for our BEV and FCEV trucks does not develop at the rate or to the extent that we expect, our business, prospects, financial condition and operating results will be harmed. The market for alternative fuel and electric trucks is new and untested and is characterized by rapidly changing technologies, price competition, numerous competitors, evolving government regulation and industry standards and uncertain customer demands and behaviors.

Factors that may influence the adoption of alternative fuel and electric vehicles include:

•perceptions about BEV or FCEV truck quality, safety, design, performance and cost, especially if adverse events or accidents occur that are linked to the quality or safety of alternative fuel or electric vehicles;

•perceptions about vehicle safety in general, including the use of advanced technology, such as vehicle electronics, hydrogen fueling and storage and regenerative braking systems;

•the decline of vehicle efficiency resulting from deterioration over time in the ability of the battery to hold a charge;

•concerns about the availability of hydrogen stations, including those we plan to develop and deploy, which could impede our present efforts to promote FCEV trucks as a desirable alternative to diesel trucks;

•improvements in the fuel economy of internal combustion engines;

•the availability of service for alternative fuel or electric trucks;

•volatility in the cost of energy, oil, gasoline and hydrogen;

•government regulations and economic incentives promoting fuel efficiency and alternate forms of energy;

•the availability of tax and other governmental incentives to purchase and operate alternative fuel and electric trucks or future regulation requiring increased use of nonpolluting trucks;

•our ability to sell or lease trucks directly to business or customers dependent on state by state unique regulations and dealership laws;

•the availability of tax and other governmental incentives to sell hydrogen;

•perceptions about and the actual cost of alternative fuel; and

•macroeconomic factors.

Additionally, we may become subject to regulations that may require us to alter the design of our trucks, which could negatively impact customer interest in our products.

If our trucks fail to perform as expected, our ability to develop, market and sell or lease our alternative fuel and electric trucks could be harmed.

Once production commences, our trucks may contain defects in design and manufacture that may cause them not to perform as expected or may require repair. We currently have no frame of reference by which to evaluate the performance of our trucks upon which our business prospects depend. For example, our trucks will use a substantial amount of software to operate which will require modification and updates over the life of the vehicle. Software products are inherently complex and often contain defects and errors when first introduced.

There can be no assurance that we will be able to detect and fix any defects in the trucks’ hardware or software prior to commencing customer sales. We may experience recalls in the future, which could adversely affect our brand in our target markets and could adversely affect our business, prospects and results of operations. Our trucks may not perform consistent with customers’ expectations or consistent with other vehicles which may become available. Any product defects or any other failure of our trucks to perform as expected could harm our reputation and result in adverse publicity, lost revenue, delivery delays, product recalls, product liability claims and significant warranty and other expenses, and could have a material adverse impact on our business, financial condition, operating results and prospects.

Although we hope to be among the first to bring BEV and FCEV Class 8 trucks to market, competitors may enter the market before our trucks, which could have an adverse effect on our business.

We face intense competition in trying to be among the first to bring our BEV and FCEV truck platforms to market, including from companies in our target markets with greater financial resources, more extensive development, manufacturing, marketing and service capabilities, greater brand recognition and a larger number of managerial and technical personnel. If competitor’s trucks are brought to market before our trucks, we may experience a reduction in potential market share.

Many of our current and potential competitors, particularly international competitors, have significantly greater financial, technical, manufacturing, marketing and other resources than we do and may be able to devote greater resources to the design, development, manufacturing, distribution, promotion, sale and support of their products.

We compete in a rapidly evolving and highly competitive industry, and a number of private and public companies have announced plans to offer BEV and/or FCEV trucks, including companies such as Daimler, Hyliion, Hyundai, Tesla, Toyota and Volvo. Based on publicly available information, a number of these competitors have displayed prototype trucks and have announced target availability and production timelines, while others have launched pilot programs in some markets. In addition, we are aware that one potential competitor, BYD, is currently manufacturing and selling a Class 8 BEV truck. While some competitors may choose to offer BEV trucks, others such as Hyundai have announced they plan to offer FCEV trucks and invest in hydrogen stations for refueling. In addition, our principal competition for our trucks will also come from manufacturers of trucks with internal combustion engines powered by diesel fuel.

We expect competition in our industry to intensify in the future in light of increased demand and regulatory push for alternative fuel and electric vehicles. We cannot provide assurances that our trucks will be among the first to market, or that competitors will not build hydrogen fueling stations. Even if our trucks are among the first to market, we cannot assure you that customers will choose our vehicles over those of our competitors, or over diesel powered trucks.

Developments in alternative technology improvements in the internal combustion engine may adversely affect the demand for our trucks.

Significant developments in alternative technologies, such as advanced diesel, ethanol, or compressed natural gas or improvements in the fuel economy of the internal combustion engine, may materially and adversely affect our business and prospects in ways we do not currently anticipate. Other fuels or sources of energy may emerge as customers’ preferred alternative to our truck platform. Any failure by us to develop new or enhanced technologies or processes, or to react to changes in existing technologies, could materially delay our development and introduction of new and enhanced alternative fuel and electric trucks, which could result in the loss of competitiveness of our trucks, decreased revenue and a loss of market share to competitors. Our research and development efforts may not be sufficient to adapt to changes in alternative fuel and electric vehicle technology. As technologies change, we plan to upgrade or adapt our trucks and introduce new models in order to continue to provide trucks with the latest technology, in particular battery cell technology.

We have no experience servicing our vehicles. If we are unable to address the service requirements of our customers, our business will be materially and adversely affected.

Because we do not plan to begin production of our trucks until 2021 at the earliest, we have no experience servicing or repairing our vehicles. Servicing alternative fuel and electric vehicles is different than servicing vehicles with internal combustion engines and requires specialized skills, including high voltage training and servicing techniques. We may decide to partner with a third party to perform some or all of the maintenance on our trucks, and there can be no assurance that we will be able to enter into an acceptable arrangement with any such third-party provider. If we are unable to successfully address the service requirements of our customers, our business and prospects will be materially and adversely affected.

In addition, the motor vehicle industry laws in many states require that service facilities be available to service vehicles physically sold from locations in the state. While we anticipate developing a service program that would satisfy regulators in these circumstances, the specifics of our service program are still in development, and at some point may need to be restructured to comply with state law, which may impact on our business, financial condition, operating results and prospects.

Future product recalls could materially adversely affect our business, prospects, operating results and financial condition.

Any product recall in the future may result in adverse publicity, damage our brand and materially adversely affect our business, prospects, operating results and financial condition. In the future, we may voluntarily or involuntarily, initiate a recall if any of our vehicles or electric powertrain components (including the fuel cell or batteries) prove to be defective or noncompliant with applicable federal motor vehicle safety standards. Such recalls involve significant expense and diversion of management attention and other resources, which could adversely affect our brand image in our target markets, as well as our business, prospects, financial condition and results of operations.

Insufficient warranty reserves to cover future warranty claims could materially adversely affect our business, prospects, financial condition and operating results.

Once our trucks are in production, we will need to maintain warranty reserves to cover warranty-related claims. If our warranty reserves are inadequate to cover future warranty claims on our vehicles, our business, prospects, financial condition and operating results could be materially and adversely affected. We may become subject to significant and unexpected warranty expenses. There can be no assurances that then-existing warranty reserves will be sufficient to cover all claims.

If we are unable to attract and retain key employees and hire qualified management, technical and engineering personnel, our ability to compete could be harmed.

Our success depends, in part, on our ability to retain our key personnel. The unexpected loss of or failure to retain one or more of our key employees could adversely affect our business. For example, in September 2020, our founder and former executive chairman, Trevor R. Milton, stepped down from his positions with us.

Our success also depends, in part, on our continuing ability to identify, hire, attract, train and develop other highly qualified personnel, including management, technical and engineering personnel. Qualified individuals are in high demand, particularly in the vehicle technology industry. Competition for individuals with experience designing, manufacturing and servicing electric vehicles is intense, and we may not be able to attract, integrate, train, motivate or retain additional highly qualified personnel in the future. Competition for these employees can be intense, and our ability to hire, attract and retain them may depend on our ability to provide competitive compensation. We use equity awards to attract talented employees, but if the value of our common stock declines significantly, as it has in the recent past, and remains depressed, it may prevent us from recruiting and retaining qualified employees. We may not be able to attract, integrate, train or retain qualified personnel in the future. Additionally, we may not be able to hire new employees quickly enough to meet our needs. Our failure to do so could adversely affect our business and prospects, including the execution of our global business strategy.

Increases in costs, disruption of supply or shortage of raw materials, particularly lithium-ion battery cells, could harm our business.

Once we begin commercial production of vehicles, we may experience increases in the cost or a sustained interruption in the supply or shortage of raw materials. Any such increase or supply interruption could materially negatively impact our business, prospects, financial condition and operating results. We use various raw materials including aluminum, steel, carbon fiber, non-ferrous metals (such as copper), and cobalt. The prices for these raw materials fluctuate depending on market conditions and global demand and could adversely affect our business and operating results. For instance, we are exposed to multiple risks relating to price fluctuations for lithium-ion cells. These risks include:

•the inability or unwillingness of current battery manufacturers to build or operate battery cell manufacturing plants to supply the numbers of lithium-ion cells required to support the growth of the electric vehicle industry as demand for such cells increases;

•disruption in the supply of cells due to quality issues or recalls by the battery cell manufacturers; and

•an increase in the cost of raw materials, such as cobalt, used in lithium-ion cells.

Any disruption is the supply of battery cells could temporarily disrupt production of the Nikola Tre BEV truck until a different supplier is fully qualified. Moreover, battery cell manufacturers may refuse to supply electric vehicle manufacturers if they determine that the vehicles are not sufficiently safe. Furthermore, fluctuations or shortages in petroleum and other economic conditions may cause us to experience significant increases in freight charges and raw material costs. Substantial increases in the prices for our raw materials would increase our operating costs and could reduce our margins if the increased costs cannot be recouped through increased electric vehicle prices. There can be no assurance that we will be able to recoup increasing costs of raw materials by increasing vehicle prices.

Manufacturing in collaboration with partners is subject to risks.

In 2019, we partnered with Iveco, a subsidiary of CNHI, to manufacture the Nikola Tre BEV truck at the Iveco manufacturing plant in Ulm, Germany through a joint venture with CNHI, which commenced operations in the fourth quarter of 2020. We currently intend to begin production of the Nikola Tre BEV truck at the Iveco plant in 2021, with deliveries beginning late in the same year. We expect that 40 million Euros will be invested in total by Iveco and Nikola into the manufacturing plant to prepare it for assembly.

In September 2020, we entered into a series of agreements with General Motors Holdings LLC and GM Global Technology Operations LLC (collectively, “GM”) for the design, development and manufacturing of certain light-duty electric and fuel cell powered trucks. Refer to Note 12 "Commitments and Contingencies" to our Unaudited Consolidated Financial Statements, for the discussion of the key terms of the arrangement. Discussions with GM are ongoing, and terms of the agreements are subject to change. Consequently, there can be no assurance that we will conclude the agreements on the terms initially contemplated, if at all.

Collaboration with third parties for the manufacturing of trucks is subject to risks with respect to operations that are outside our control. We could experience delays if our partners do not meet agreed upon timelines or experience capacity constraints. There are risks of potential disputes, disagreements or fallouts with partners and failure to perform under contracts or enforce contracts against the other party, and/or the potential terminations of such contracts, and the production of our trucks could be disrupted as a result. We could be affected by adverse publicity related to our partners, whether or not such publicity is related to their collaboration with us, or adverse publicity related to our relationships with our partners. Our ability to successfully build a premium brand could also be adversely affected by perceptions about the quality of our partners’ products. In addition, although we are involved in each step of the supply chain and manufacturing process, because we also rely on our partners and third parties to meet our quality standards, there can be no assurance that we will successfully maintain quality standards.

We may be unable to enter into new agreements or extend existing agreements with manufacturers on terms and conditions acceptable to us and therefore may need to contract with other third parties or significantly add to our own production capacity. There can be no assurance that in such event we would be able to engage other third parties or establish or expand our own production capacity to meet our needs on acceptable terms or at all. The expense and time required to complete any transition, and to assure that vehicles manufactured at facilities of new manufacturers comply with our quality standards and regulatory requirements, may be greater than anticipated. Any of the foregoing could adversely affect our business, results of operations, financial condition and prospects.

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

We have entered into, and may in the future enter into additional, strategic alliances, including joint ventures or minority equity investments with various third parties to further our business purpose. These alliances could subject us to a number of risks, including risks associated with sharing proprietary information, non-performance by the third party and increased expenses in establishing new strategic alliances, any of which may materially and adversely affect our business. We may have limited ability to monitor or control the actions of these third parties and, to the extent any of these strategic third parties suffers negative publicity or harm to their reputation from events relating to their business, we may also suffer negative publicity or harm to our reputation by virtue of our association with any such third party.

When appropriate opportunities arise, we may acquire additional assets, products, technologies or businesses that are complementary to our existing business. In addition to possible stockholder approval, we may need approvals and licenses from relevant government authorities for the acquisitions and to comply with any applicable laws and regulations, which could result in increased delay and costs, and may disrupt our business strategy if we fail to do so. Furthermore, acquisitions and the subsequent integration of new assets and businesses into our own require significant attention from our management and could result in a diversion of resources from our existing business, which in turn could have an adverse effect on our operations. Acquired assets or businesses may not generate the financial results we expect. Acquisitions could result in the use of substantial amounts of cash, potentially dilutive issuances of equity securities, the occurrence of significant goodwill impairment charges, amortization expenses for other intangible assets and exposure to potential unknown liabilities of the acquired business. Moreover, the costs of identifying and consummating acquisitions may be significant.

We are dependent on our suppliers, a significant number of which are single or limited source suppliers, and the inability of these suppliers to deliver necessary components of our vehicles at prices and volumes acceptable to us would have a material adverse effect on our business, prospects and operating results.

While we plan to obtain components from multiple sources whenever possible, many of the components used in our vehicles will be purchased by us from a single source, especially with respect to hydrogen fuel cells and batteries. We refer to these component suppliers as our single source suppliers. While we believe that we may be able to establish alternate supply relationships and can obtain or engineer replacement components for our single source components, we may be unable to do so in the short term (or at all) at prices or quality levels that are favorable to us.

A significant benefit of our collaborations with external manufacturing partners is the ability to leverage their respective existing assortment of parts, thereby decreasing our purchasing expenses. While these relationships give us access to use an existing supplier base with the hopes of accelerating procurement of components at favorable prices, there is no

guarantee that this will be the case. In addition, we could experience delays if our suppliers do not meet agreed upon timelines or experience capacity constraints.

The battery efficiency of electric trucks will decline over time, which may negatively influence potential customers’ decisions whether to purchase our trucks.

We anticipate the range of our BEV and FCEV vehicles to be up to 400 to 750 miles before needing to refuel, but that range will decline over time as the battery deteriorates. We currently expect a 3% to 4% decline in the battery life per year, which will decrease the range of our trucks over 5 years by approximately 20%. Other factors such as usage, time and stress patterns may also impact the battery’s ability to hold a charge, which would decrease our trucks’ range before needing to refuel. Such battery deterioration and the related decrease in range may negatively influence potential customer decisions.

Our trucks will make use of lithium-ion battery cells, which have been observed to catch fire or vent smoke and flame.

The battery packs within our trucks will make use of lithium-ion cells. On rare occasions, lithium-ion cells can rapidly release the energy they contain by venting smoke and flames in a manner that can ignite nearby materials as well as other lithium-ion cells. While the battery pack is designed to contain any single cell’s release of energy without spreading to neighboring cells, once our trucks are commercially available, a field or testing failure of our vehicles or other battery packs that we produce could occur, which could subject us to lawsuits, product recalls, or redesign efforts, all of which would be time consuming and expensive. Also, negative public perceptions regarding the suitability of lithium-ion cells for automotive applications or any future incident involving lithium-ion cells, such as a vehicle or other fire, even if such incident does not involve our trucks, could seriously harm our business and reputation.

In addition, once we begin manufacturing our trucks, we will need to store a significant number of lithium-ion cells at our facility. Any mishandling of battery cells may cause disruption to the operation of our facility. While we have implemented safety procedures related to the handling of the cells, a safety issue or fire related to the cells could disrupt our operations. Such damage or injury could lead to adverse publicity and potentially a safety recall. Moreover, any failure of a competitor’s electric vehicle or energy storage product may cause indirect adverse publicity for us and our products. Such adverse publicity could negatively affect our brand and harm our business, prospects, financial condition and operating results.

Any unauthorized control or manipulation of our vehicles’ systems could result in loss of confidence in us and our vehicles and harm our business.

Our trucks contain complex information technology systems and built-in data connectivity to accept and install periodic remote updates to improve or update functionality. We have designed, implemented and tested security measures intended to prevent unauthorized access to our information technology networks, our trucks and related systems. However, hackers may attempt to gain unauthorized access to modify, alter and use such networks, trucks and systems to gain control of or to change our trucks’ functionality, user interface and performance characteristics, or to gain access to data stored in or generated by the truck. Future vulnerabilities could be identified and our efforts to remediate such vulnerabilities may not be successful. Any unauthorized access to or control of our trucks or their systems, or any loss of customer data, could result in legal claims or proceedings. In addition, regardless of their veracity, reports of unauthorized access to our trucks, systems or data, as well as other factors that may result in the perception that our trucks, systems or data are capable of being “hacked,” could negatively affect our brand and harm our business, prospects, financial condition and operating results.

Interruption or failure of our information technology and communications systems could impact our ability to effectively provide our services.

We plan to outfit our trucks with in-vehicle services and functionality that utilize data connectivity to monitor performance and timely capture opportunities for cost-saving preventative maintenance. The availability and effectiveness of our services depend on the continued operation of information technology and communications systems, which we have yet to develop. Our systems will be vulnerable to damage or interruption from, among others, fire, terrorist attacks, natural disasters, power loss, telecommunications failures, computer viruses, computer denial of service attacks or other attempts to harm our systems. Our data centers could also be subject to break-ins, sabotage and intentional acts of vandalism causing potential disruptions. Some of our systems will not be fully redundant, and our disaster recovery planning cannot account for all

eventualities. Any problems at our data centers could result in lengthy interruptions in our service. In addition, our trucks are highly technical and complex and may contain errors or vulnerabilities, which could result in interruptions in our business or the failure of our systems.

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

Our alternative fuel and electric trucks, and the sale of motor vehicles in general, are subject to substantial regulation under international, federal, state, and local laws. We expect to incur significant costs in complying with these regulations. Regulations related to the electric vehicle industry and alternative energy are currently evolving and we face risks associated with changes to these regulations, including but not limited to:

•increased subsidies for corn and ethanol production, which could reduce the operating cost of vehicles that use ethanol or a combination of ethanol and gasoline; and

•increased sensitivity by regulators to the needs of established automobile manufacturers with large employment bases, high fixed costs and business models based on the internal combustion engine, which could lead them to pass regulations that could reduce the compliance costs of such established manufacturers or mitigate the effects of government efforts to promote alternative fuel vehicles.

To the extent the laws change, our trucks may not comply with applicable international, federal, state or local laws, which would have an adverse effect on our business. Compliance with changing regulations could be burdensome, time consuming, and expensive. To the extent compliance with new regulations is cost prohibitive, our business, prospects, financial condition and operating results would be adversely affected.

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

Our operations will be subject to international, federal, state, and/or local environmental laws and regulations, including laws relating to the use, handling, storage, disposal and human exposure to hazardous materials. Environmental and health and safety laws and regulations can be complex, and we expect that we will be affected by future amendments to such laws or other new environmental and health and safety laws and regulations which may require us to change our operations, potentially resulting in a material adverse effect on our business, prospects, financial condition, and operating results. These laws can give rise to liability for administrative oversight costs, cleanup costs, property damage, bodily injury and fines and penalties. Capital and operating expenses needed to comply with environmental laws and regulations can be significant, and violations may result in substantial fines and penalties, third party damages, suspension of production or a cessation of our operations.

Contamination at properties we will own and operate, we formerly owned or operated or to which hazardous substances were sent by us, may result in liability for us under environmental laws and regulations, including, but not limited to the Comprehensive Environmental Response, Compensation and Liability Act, which can impose liability for the full amount of remediation-related costs without regard to fault, for the investigation and cleanup of contaminated soil and ground water, for building contamination and impacts to human health and for damages to natural resources. The costs of complying with environmental laws and regulations and any claims concerning noncompliance, or liability with respect to contamination in the future, could have a material adverse effect on our financial condition or operating results. We may face unexpected delays in obtaining the required permits and approvals in connection with our manufacturing facilities that could require significant time and financial resources and delay our ability to operate these facilities, which would adversely impact our business prospects and operating results.

We intend to retain certain personal information about our customers and may be subject to various privacy laws.

We intend to use our trucks’ electronic systems to log information about each vehicle’s use in order to aid us in vehicle diagnostics, repair and maintenance. Our customers may object to the use of this data, which may increase our vehicle maintenance costs and harm our business prospects. Possession and use of our customers’ information in conducting our business may subject us to legislative and regulatory burdens in the United States and the European Union that could require

notification of data breaches, restrict our use of such information and hinder our ability to acquire new customers or market to existing customers. Non-compliance or a major breach of our network security and systems could have serious negative consequences for our business and future prospects, including possible fines, penalties and damages, reduced customer demand for our vehicles, and harm to our reputation and brand.

We face risks associated with our international operations, including unfavorable regulatory, political, tax and labor conditions, which could harm our business.

We face risks associated with our international operations, including possible unfavorable regulatory, political, tax and labor conditions, which could harm our business. We anticipate having international operations and subsidiaries in Germany, Austria, and Italy that are subject to the legal, political, regulatory and social requirements and economic conditions in these jurisdictions. Additionally, as part of our growth strategy, we intend to expand our sales, maintenance and repair services internationally. However, we have no experience to date selling and servicing our vehicles internationally and such expansion would require us to make significant expenditures, including the hiring of local employees and establishing facilities, in advance of generating any revenue. We are subject to a number of risks associated with international business activities that may increase our costs, impact our ability to sell our alternative fuel and electric trucks and require significant management attention. These risks include:

•conforming our trucks to various international regulatory requirements where our trucks are sold, or homologation;

•development and construction of our hydrogen refueling network;

•difficulty in staffing and managing foreign operations;

•difficulties attracting customers in new jurisdictions;

•foreign government taxes, regulations and permit requirements, including foreign taxes that we may not be able to offset against taxes imposed upon us in the United States, and foreign tax and other laws limiting our ability to repatriate funds to the United States;

•fluctuations in foreign currency exchange rates and interest rates, including risks related to any interest rate swap or other hedging activities we undertake;

•United States and foreign government trade restrictions, tariffs and price or exchange controls;

•foreign labor laws, regulations and restrictions;

•changes in diplomatic and trade relationships;

•political instability, natural disasters, war or events of terrorism; and

•the strength of international economies.

If we fail to successfully address these risks, our business, prospects, operating results and financial condition could be materially harmed.

Our ability to use net operating losses to reduce future tax payments may be limited by provisions of the Internal Revenue Code and may be subject to further limitation as a result of future transactions.

Sections 382 and 383 of the Internal Revenue Code of 1986, as amended, contain rules that limit the ability of a company that undergoes an ownership change, which is generally any cumulative change in ownership of more than 50% of its stock over a three-year period, to utilize its net operating loss and tax credit carryforwards and certain built-in losses recognized in the years after the ownership change. These rules generally operate by focusing on ownership changes involving stockholders who directly or indirectly own 5% or more of the stock of a company and any change in ownership arising from a new issuance of stock by the company. Generally, if an ownership change occurs, the yearly taxable income limitation on the use of net operating loss and tax credit carryforwards is equal to the product of the applicable long-term tax exempt rate and the value of the company's stock immediately before the ownership change. As a result, we may be unable to offset our taxable income with net operating losses, or our tax liability with credits, before these losses and credits expire.

In addition, it is possible that future transactions (including issuances of new shares of our common stock and sales of shares of our common stock) will cause us to undergo one or more additional ownership changes. In that event, we generally would not be able to use our net operating losses from periods prior to this ownership change to offset future taxable income in excess of the annual limitations imposed by Sections 382 and 383 and those attributes that are already subject to limitations (as a result of our prior ownership changes) may be subject to more stringent limitations.

Due to cumulative losses, we maintain a valuation allowance against U.S. and state deferred tax assets.

We face risks related to health epidemics, including the COVID-19 pandemic, which could have a material adverse effect on our business and results of operations.

We face various risks related to public health issues, including epidemics, pandemics, and other outbreaks, including the pandemic of respiratory illness caused by a novel coronavirus known as COVID-19. The impact of COVID-19, including changes in consumer and business behavior, pandemic fears and market downturns, and restrictions on business and individual activities, has created significant volatility in the global economy and led to reduced economic activity. The spread of COVID-19 has also created a disruption in the manufacturing, delivery and overall supply chain of vehicle manufacturers and suppliers, and has led to a global decrease in vehicle sales in markets around the world.

The pandemic has resulted in government authorities implementing numerous measures to try to contain the virus, such as travel bans and restrictions, quarantines, stay-at-home or shelter-in-place orders, and business shutdowns. These measures may adversely impact our employees and operations and the operations of our customers, suppliers, vendors and business partners, and may negatively impact our sales and marketing activities, the construction schedule of our hydrogen fueling stations and our manufacturing plant in Arizona, and the production schedule of our trucks. For example, the headquarters of our partner, Iveco, located in Italy, was shut down for two months due to COVID-19, and as a result, pilot builds for the Nikola Tre BEV truck were delayed. In addition, various aspects of our business, manufacturing plant and hydrogen fueling station building process, cannot be conducted remotely. These measures by government authorities may remain in place for a significant period of time and they are likely to continue to adversely affect our manufacturing and building plans, sales and marketing activities, business and results of operations.

The spread of COVID-19 has caused us to modify our business practices (including employee travel, recommending that all non-essential personnel work from home and cancellation or reduction of physical participation in sales activities, meetings, events and conferences), and we may take further actions as may be required by government authorities or that we determine are in the best interests of our employees, customers, suppliers, vendors and business partners. There is no certainty that such actions will be sufficient to mitigate the risks posed by the virus or otherwise be satisfactory to government authorities. If significant portions of our workforce are unable to work effectively, including due to illness, quarantines, social distancing, government actions or other restrictions in connection with the COVID-19 pandemic, our operations will be impacted.

The extent to which the COVID-19 pandemic impacts our business, prospects and results of operations will depend on future developments, which are highly uncertain and cannot be predicted, including, but not limited to, the duration and spread of the pandemic, its severity, the actions to contain the virus or treat its impact, and how quickly and to what extent normal economic and operating activities can resume. The COVID-19 pandemic could limit the ability of our customers, suppliers, vendors and business partners to perform, including third party suppliers’ ability to provide components and materials used in our trucks. We may also experience an increase in the cost of raw materials used in our commercial production of trucks. Even after the COVID-19 pandemic has subsided, we may continue to experience an adverse impact to our business as a result of its global economic impact, including any recession that has occurred or may occur in the future.

Specifically, difficult macroeconomic conditions, such as decreases in per capita income and level of disposable income, increased and prolonged unemployment or a decline in consumer confidence as a result of the COVID-19 pandemic, as well as reduced spending by businesses, could have a material adverse effect on the demand for our trucks. Under difficult economic conditions, potential customers may seek to reduce spending by forgoing our trucks for other traditional options, and cancel reservations for our trucks. Decreased demand for our trucks, particularly in the United States and Europe, could negatively affect our business.

There are no comparable recent events which may provide guidance as to the effect of the spread of COVID-19 and a pandemic, and, as a result, the ultimate impact of the COVID-19 pandemic or a similar health epidemic is highly uncertain and subject to change. We do not yet know the full extent of COVID-19’s impact on our business, our operations, or the global economy as a whole. However, the effects could have a material impact on our results of operations, and we will continue to monitor the situation closely.

The unavailability, reduction or elimination of government and economic incentives could have a material adverse effect on our business, prospects, financial condition and operating results.

We currently, and expect to continue to, benefit from certain government subsidies and economic incentives that support the development and adoption of our vehicles, particularly our battery-electric vehicles and fuel cell electric vehicles. Any reduction, elimination or discriminatory application of government subsidies and economic incentives because of policy changes, the reduced need for such subsidies and incentives due to the perceived success of the electric vehicle or other reasons may result in the diminished competitiveness of the alternative fuel and electric vehicle industry generally or our battery-electric vehicles and fuel cell electric vehicles trucks in particular. This could materially and adversely affect the growth of the alternative fuel automobile markets and our business, prospects, financial condition and operating results.

These incentives include tax credits, rebates and other incentives for alternative energy production, alternative fuel and electric vehicles, including greenhouse gas emissions credits under the U.S. Environmental Protection Agency’s Greenhouse Gas Rule and the California Air Resources Board. While these benefits have been available in the past, there is no guarantee these programs will be available in the future. If these tax incentives and other benefits are not available or are reduced or otherwise limited in the future, our financial position could be harmed.

We may not be able to obtain or agree on acceptable terms and conditions for all or a significant portion of the government grants, loans and other incentives for which we may apply. As a result, our business and prospects may be adversely affected.

We anticipate applying for federal and state grants, loans and tax incentives under government programs designed to stimulate the economy and support the production of alternative fuel and electric vehicles and related technologies, as well as the sale of hydrogen. For example, we intend to initially build our hydrogen fueling stations in California, in part because of the incentives that are available. We anticipate that in the future there will be new opportunities for us to apply for grants, loans and other incentives from the United States, state and foreign governments. Our ability to obtain funds or incentives from government sources is subject to the availability of funds under applicable government programs and approval of our applications to participate in such programs. The application process for these funds and other incentives will likely be highly competitive. We cannot assure you that we will be successful in obtaining any of these additional grants, loans and other incentives. If we are not successful in obtaining any of these additional incentives and we are unable to find alternative sources of funding to meet our planned capital needs, our business and prospects could be materially adversely affected.

Further, accepting funding from governmental entities or in-licensing patent rights from third parties that are co-owned with governmental entities may result in the U.S. government having certain rights, including so-called march-in rights, to such patent rights and any products or technology developed from such patent rights. When new technologies are developed with U.S. government funding, the U.S. government generally obtains certain rights in any resulting patents, including a nonexclusive license authorizing the U.S. government to use the invention for noncommercial purposes. These rights may permit the U.S. government to disclose our confidential information to third parties and to exercise march-in rights to use or to allow third parties to use our licensed technology. The U.S. government can exercise its march-in rights if it determines that action is necessary because we fail to achieve the practical application of government-funded technology, because action is necessary to alleviate health or safety needs, to meet requirements of federal regulations, or to give preference to U.S. industry. In addition, our rights in such inventions may be subject to certain requirements to manufacture products embodying such inventions in the United States. Any exercise by the U.S. government of such rights could harm our competitive position, business, financial condition, results of operations and prospects.

We may need to defend ourselves against patent or trademark infringement , or other intellectual property claims, which may be time-consuming and cause us to incur substantial costs.

Companies, organizations or individuals, including our competitors, may own or obtain patents, trademarks or other proprietary rights that would prevent or limit our ability to make, use, develop or sell our vehicles or components, which could make it more difficult for us to operate our business. We may receive inquiries from patent or trademark owners inquiring whether we infringe their proprietary rights. Companies owning patents or other intellectual property rights relating to battery packs, electric motors, fuel cells or electronic power management systems may allege infringement of such rights. In response to

a determination that we have infringed upon a third party’s intellectual property rights, we may be required to do one or more of the following:

•cease development, sales, or use of vehicles that incorporate the asserted intellectual property;

•pay substantial damages;

•obtain a license from the owner of the asserted intellectual property right, which license may not be available on reasonable terms or at all; or

•redesign one or more aspects or systems of our trucks.

A successful claim of infringement against us could materially adversely affect our business, prospects, operating results and financial condition. Any litigation or claims, whether valid or invalid, could result in substantial costs and diversion of resources.

We also plan to license patents and other intellectual property from third parties, including suppliers and service providers, and we may face claims that our use of this in-licensed technology infringes the intellectual property rights of others. In such cases, we will seek indemnification from our licensors. However, our rights to indemnification may be unavailable or insufficient to cover our costs and losses.

We may also face claims challenging our use of open source software and our compliance with open source license terms. While we monitor our use of open source software and try to ensure that none is used in a manner that would require us to disclose or license our proprietary source code or that would otherwise breach the terms of an open source agreement, such use could inadvertently occur, or could be claimed to have occurred. Any breach of such open source license or requirement to disclose or license our proprietary source code could harm our business, financial condition, results of operations and prospects.

Our business may be adversely affected if we are unable to protect our intellectual property rights from unauthorized use by third parties.

Failure to adequately protect our intellectual property rights could result in our competitors offering similar products, potentially resulting in the loss of some of our competitive advantage, and a decrease in our revenue which would adversely affect our business, prospects, financial condition and operating results. Our success depends, at least in part, on our ability to protect our core technology and intellectual property. To accomplish this, we will rely on a combination of patents, trade secrets (including know-how), employee and third-party nondisclosure agreements, copyright, trademarks, intellectual property licenses and other contractual rights to establish and protect our rights in our technology. We cannot guarantee that we have entered into such agreements with each party that may have or have had access to our trade secrets or proprietary information, including our technology and processes. In connection with our collaboration, partnership and license agreements, our rights to use licensed or jointly owned technology and intellectual property under such agreements may be subject to the continuation of and compliance with the terms of those agreements. In some cases, we may not control the prosecution, maintenance or filing of licensed or jointly owned patent rights, or the enforcement of such patents against third parties.

The protection of our intellectual property rights will be important to our future business opportunities. However, the measures we take to protect our intellectual property from unauthorized use by others may not be effective for various reasons, including the following:

•any patent applications we submit may not result in the issuance of patents;

•the scope of our issued patents may not be broad enough to protect our proprietary rights;

•our issued patents may be challenged and/or invalidated by our competitors;

•the costs associated with enforcing patents, confidentiality and invention agreements or other intellectual property rights may make aggressive enforcement impracticable;

•current and future competitors may circumvent our patents; and

•our in-licensed patents may be invalidated, or the owners of these patents may breach our license arrangements.

For example, we are currently enforcing certain of our issued U.S. patents and other intellectual property rights against Tesla. Such litigation could result in such patents being challenged and/or invalidated, expose us to counterclaims of intellectual property infringement and result in a substantial diversion of our management’s attention and resources.

Patent, trademark, and trade secret laws vary significantly throughout the world. Some foreign countries do not protect intellectual property rights to the same extent as do the laws of the United States. Further, policing the unauthorized use of our intellectual property in foreign jurisdictions may be difficult. Therefore, our intellectual property rights may not be as strong or as easily enforced outside of the United States.

Our patent applications may not issue as patents, which may have a material adverse effect on our ability to prevent others from commercially exploiting products similar to ours.

We cannot be certain that we are the first inventor of the subject matter to which we have filed a particular patent application, or if we are the first party to file such a patent application. If another party has filed a patent application to the same subject matter as we have, we may not be entitled to the protection sought by the patent application. Further, the scope of protection of issued patent claims is often difficult to determine. As a result, we cannot be certain that the patent applications that we file will issue, or that our issued patents will afford protection against competitors with similar technology. In addition, our competitors may design around our issued patents, which may adversely affect our business, prospects, financial condition or operating results.

We may be subject to risks associated with autonomous driving technology.

Our trucks will be designed with connectivity for future installation of an autonomous hardware suite and we plan to partner with a third-party software provider in the future to implement autonomous capabilities. However, we cannot guarantee that we will be able to identify a third party to provide the necessary hardware and software to enable driverless Level 4 or Level 5 autonomy in an acceptable timeframe, on terms satisfactory to us, or at all. Autonomous driving technologies are subject to risks and there have been accidents and fatalities associated with such technologies. The safety of such technologies depends in part on user interaction and users, as well as other drivers on the roadways, may not be accustomed to using or adapting to such technologies. To the extent accidents associated with our autonomous driving systems occur, we could be subject to liability, negative publicity, government scrutiny and further regulation. Any of the foregoing could materially and adversely affect our results of operations, financial condition and growth prospects.

The evolution of the regulatory framework for autonomous vehicles is outside of our control and we cannot guarantee that our trucks will achieve the requisite level of autonomy to enable driverless systems within our projected timeframe, if ever.

There are currently no federal U.S. regulations pertaining to the safety of self-driving vehicles. However, the National Highway Traffic and Safety Administration has established recommended guidelines. Certain states have legal restrictions on self-driving vehicles, and many other states are considering them. This patchwork increases the difficulty in legal compliance for our vehicles. In Europe, certain vehicle safety regulations apply to self-driving braking and steering systems, and certain treaties also restrict the legality of certain higher levels of self-driving vehicles. Self-driving laws and regulations are expected to continue to evolve in numerous jurisdictions in the U.S. and foreign countries and may restrict autonomous driving features that we may deploy.

Unfavorable publicity, or a failure to respond effectively to adverse publicity, could harm our reputation and adversely affect our business.

As an early stage company, maintaining and enhancing our brand and reputation is critical to our ability to attract and retain employees, partners, customers and investors, and to mitigate legislative or regulatory scrutiny, litigation and government investigations.

We have recently received significant negative publicity, which has adversely affected our brand and reputation. Negative publicity may result from allegations of fraud, improper business practices, employee misconduct, unfair employment practices or any other matters that could give rise to litigation and/or governmental investigations. Regardless of whether the allegations or complaints are valid, unfavorable publicity relating to us or those affiliated with us, including our former executive chairman, could adversely affect public perception of the entire company. Adverse publicity and its effect on overall public perceptions of our brands, or our failure to respond effectively to adverse publicity, could have a material adverse effect on our business.

In September 2020, an entity published a report containing certain allegations against us. This report and the public response to such report, as well as other negative publicity we have received recently, have adversely affected our brand and reputation as well as our stock price, which makes it difficult for us to attract and retain employees, partners and customers, reduces confidence in and use of our products and services, harms investor confidence and the market price of our securities, invites legislative and regulatory scrutiny and results in litigation and governmental investigations. As a result, customers, potential customers, partners and potential partners may fail to award us additional business or seek to cancel existing contracts or otherwise, direct future business to our competitors, and investors may invest in our competitors instead.

The successful rehabilitation of our brand will depend largely on regaining a good reputation, meeting our vehicle commercialization schedules, satisfying the requirements of customers, meeting our fueling commitments under our future bundled lease arrangements, maintaining a high quality of service under our future bundled lease arrangements, improving our compliance programs and continuing our marketing and public relations efforts. Expenses related to our brand promotion, reputation building, and media strategies have been significant and our efforts may not be successful. We anticipate that other competitors and potential competitors will expand their offerings, which will make maintaining and enhancing our reputation and brand increasingly more difficult and expensive. If we fail to successfully rehabilitate our brand in the current or future competitive environment or if events similar to the negative publicity we recently received occur in the future, our brand and reputation would be further damaged and our business may suffer.

Although we maintain insurance for the disruption of our business and director and officer liability insurance, these insurance policies may not be sufficient to cover all of our potential losses and may not continue to be available to us on acceptable terms, if at all.

Social media platforms present risks and challenges that could cause damage to our brand and reputation, and which could subject us to liability, penalties and other restrictive sanctions.

Social media platforms present risks and challenges that could cause damage to our brand and reputation, and which could subject us to liability, penalties and other restrictive sanctions. We have adopted internal policies and procedures regarding social media, which may not be effective in preventing the inappropriate use of social media platforms, including blogs, social media websites and other forms of Internet-based communications. These platforms allow individuals access to a broad audience of consumers, investors and other interested persons. The considerable expansion in the use of social media over recent years has increased the volume and speed at which negative publicity arising from these events can be generated and spread, and we may be unable to timely respond to, correct any inaccuracies in, or adequately address negative perceptions arising from such media coverage. The use of such platforms by our officers and other employees and former employees has had and could in the future increase our costs, cause damage to our brand and reputation, result in the disclosure of confidential information, lead to litigation or subject us to regulatory inquiries, penalties and other restrictive sanctions and adverse consequences if the SEC, the Department of Justice, or any other government agency were to pursue legal action in the future. In addition, negative or inaccurate posts or comments about us on social media platforms could damage our reputation, brand image and goodwill, and we could lose the confidence of our customers and partners, regardless of whether such information is true and regardless of any number of measures we may take to address them.

General Risk Factors

Concentration of ownership among our executive officers and directors and their affiliates may prevent new investors from influencing significant corporate decisions.

As of September 30, 2020, Mark A. Russell, our President, Chief Executive Officer and director, beneficially owns, directly or indirectly, approximately 12.7%, of our outstanding common stock, and our directors and executive officers as a group beneficially own approximately 24.5% of our outstanding common stock. As a result, these stockholders will be able to exercise a significant level of control over all matters requiring stockholder approval, including the election of directors, any amendment of our second amended and restated certificate of incorporation, or our Certificate of Incorporation, and approval of significant corporate transactions. This control could have the effect of delaying or preventing a change of control or changes in management and will make the approval of certain transactions difficult or impossible without the support of these stockholders.

As of September 20, 2020, Trevor R. Milton, our founder and former executive chairman, beneficially owns, directly or indirectly, approximately 23.9% of our outstanding common stock. In connection with his departure in September 2020, for a period of three years from September 20, 2020, Mr. Milton has agreed to certain standstill provisions, including, among other things, agreeing not to (i) acquire ownership (beneficial or otherwise) of more than 19 million shares of our outstanding common stock in the aggregate, together with shares held by his affiliates and associates, (ii) propose or effect any extraordinary transaction with respect to us, (iii) solicit any proxy or consent with respect to the election or removal of directors or any other proposal, (iv) seek representation on our board of directors or the removal of any member of our board of directors, or (v) submit any stockholder proposal. In addition, for a period of three years from September 20, 2020, Mr. Milton has agreed to vote his shares of our common stock (x) in favor of the slate of directors recommended by our board of directors at any meeting of our stockholders and (y) against the election of any nominee for director not recommended and nominated by our board of directors for election at such meeting. These standstill and voting restrictions could have the effect of delaying or preventing a change of control or changes in management and will make the approval of certain transactions difficult or impossible without the support of our executive officers and directors and their affiliates.

Sales of a substantial number of shares of our common stock in the public market could cause the price of our common stock to decline.

As of September 30, 2020, we had approximately 384.1 million shares of common stock outstanding and private warrants to purchase approximately 0.9 million shares of common stock. Except as described below, all of the shares of our common stock are freely transferable without restriction or additional registration under the Securities Act of 1933 (the “Securities Act”).

Certain persons and entities holding shares of our common stock initially purchased by VectoIQ’s sponsor, VectoIQ Holdings, LLC, and Cowen Investments II, LLC in a private placement in connection with VectoIQ’s initial public offering in May 2018 (“IPO”) and VectoIQ Units purchased in a private placement in connection with the IPO (collectively, the “Original Holders”) agreed to be locked-up for a period of one year following the closing of the Business Combination, subject to early release if the reported last sale price of our common stock equals or exceeds $12.00 per share for any 20 trading days within any 30-trading day period commencing at least 150 days after the closing of the Business Combination, and subject to certain other exceptions, pursuant to that certain Registration Rights and Lock-Up Agreement dated June 3, 2020, as amended on July 17, 2020 (as amended, the “Registration Rights and Lock-Up Agreement”). The Registration Rights and Lock-Up Agreement also provides that certain stockholders of Legacy Nikola (collectively, the “New Holders”) will be locked-up for a period of 180 days following the closing of the Business Combination, except for certain entities controlled by Trevor R. Milton and Mark A. Russell, which will be locked-up until December 1, 2020 (up to 16% of which can be transferred prior to such time in connection with pledges of such shares as security or collateral to incur debt for the purpose of acquiring additional shares of our common stock), in each case subject to certain exceptions. In addition, certain stockholders of Legacy Nikola and our executive officers agreed to be locked-up for a period of 180 days following the closing of the Business Combination, subject to certain exceptions, pursuant to Lock-Up Agreements dated June 3, 2020. In November, 2020, members of our board of directors, executive officers, their affiliates and certain entities associated with those individuals voluntarily agreed to extend the lock-up provision on an aggregate of ~~800,000 Private Placement Units at~~approximately 136,500,000 shares of our common stock, including vested stock options and warrants, through April 30, 2021.

As a result, approximately 161 million shares of our common stock will become eligible for sale beginning on December 1, 2020 upon the expiration of the lock-up agreements described above. Approximately 5 million additional shares of our common stock held by the Original Holders may become eligible for sale beginning on or after December 1, 2020 pursuant to the Registration Rights and Lock-Up Agreement, depending on the price of ~~$10.00 per Private Placement Unit, generating total gross proceeds~~our common stock during the 30-trading day period commencing on or after November 1, 2020 at the time.

We have also registered shares of ~~$8,000,000. On May 29, 2018, simultaneously with~~common stock that we may issue under our employee equity incentive plans. These shares may be sold freely in the public market upon issuance, subject to existing market stand-off or lock-up agreements and relevant vesting schedules.

Sales of a substantial number of shares of our common stock in the public market or the perception that these sales might occur could depress the market price of our common stock and could impair our ability to raise capital through the sale of

additional equity securities. We are unable to predict the effect that sales may have on the prevailing market price of our common stock. In addition, the sale of substantial amounts of our common stock could adversely impact its price.

We have never paid dividends on our capital stock, and we do not anticipate paying dividends in the ~~Additional Units,~~foreseeable future.

We have never paid dividends on any of our capital stock and currently intend to retain any future earnings to fund the ~~Company consummated~~growth of our business. Any determination to pay dividends in the ~~sale~~future will be at the discretion of our board of directors, and will depend on our financial condition, operating results, capital requirements, general business conditions and other factors that our board of directors may deem relevant. As a result, capital appreciation, if any, of our common stock will be the sole source of gain for the foreseeable future.

Our stock price is volatile, and you may not be able to sell shares of our common stock at or above the price you paid.

The trading price of our common stock is volatile and could be subject to wide fluctuations in response to various factors, some of which are beyond our control. For example, the trading price of our common stock declined recently following a report published by an ~~additional 90,000 Private Placement Units at $10.00 per additional Private Placement Unit (the “Additional Private Placement Units”), generating total gross proceeds~~entity containing certain allegations against us. These factors include, but are not limited to:

•actual or anticipated fluctuations in operating results;

•failure to meet or exceed financial estimates and projections of ~~$900,000. The Private Placement Units are identical~~the investment community or that we provide to the ~~Units except as described~~public;

•issuance of new or updated research or reports by securities analysts or changed recommendations for our stock or the transportation industry in general;

•announcements by us or our competitors of significant acquisitions, strategic partnerships, joint ventures, collaborations or capital commitments;

•operating and share price performance of other companies that investors deem comparable to us;

•our focus on long-term goals over short-term results;

•the timing and magnitude of our investments in the ~~Initial Form 8-K. A total~~growth of ~~$30,300,000~~our business;

•actual or anticipated changes in laws and regulations affecting our business;

•additions or departures of key management or other personnel;

•disputes or other developments related to our intellectual property or other proprietary rights, including litigation;

•our ability to market new and enhanced products and technologies on a timely basis;

•sales of substantial amounts of our common stock by our directors, executive officers or significant stockholders or the ~~net proceeds from~~perception that such sales could occur;

•changes in our capital structure, including future issuances of securities or the ~~sale~~incurrence of debt; and

•general economic, political and market conditions.

In addition, the ~~Additional Units~~stock market in general, and The Nasdaq Stock Market LLC in particular, has experienced extreme price and volume fluctuations that have often been unrelated or disproportionate to the operating performance of those companies. Broad market and industry factors may seriously affect the market price of our common stock, regardless of our actual operating performance. In addition, in the past, following periods of volatility in the overall market and the ~~Additional Private Placement Units were deposited~~market price of a particular company’s securities, securities class action litigation has often been instituted against these companies. This litigation, if instituted against us, could result in ~~the Trust Account, with Continental Stock Transfer & Trust Company acting~~substantial costs and a diversion of our management’s attention and resources.

We will incur significant increased expenses and administrative burdens as ~~trustee, bringing the aggregate proceeds held in the Trust Account to $232,300,000.~~

a public company, which could have an adverse effect on our business, financial condition and results of operations.

We ~~paid a total of $4,600,000 in underwriting discounts~~face increased legal, accounting, administrative and ~~commissions and $644,622 for~~ other costs and expenses ~~related to our formation~~as a public company that we did not incur as a private company. The Sarbanes-Oxley Act of 2002, or the Sarbanes-Oxley Act,, including the requirements of Section 404, as well as rules and regulations subsequently implemented by the SEC, the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 and the rules and regulations promulgated and to be promulgated thereunder, the Public ~~Offering.~~

Company Accounting Oversight Board and the securities exchanges, impose additional reporting and other obligations on public companies. Compliance with public company requirements will increase costs and make certain activities more time-consuming. A number of those requirements require us to carry out activities we have not done previously. For example, we created new board committees and have adopted new internal controls and disclosure controls and procedures. In addition,

expenses associated with SEC reporting requirements will be incurred. Furthermore, if any issues in complying with those requirements are identified (for example, if the auditors identify a ~~description~~material weakness or significant deficiency in the internal control over financial reporting), we could incur additional costs rectifying those issues, and the existence of those issues could adversely affect our reputation or investor perceptions of it. In addition, we have obtained director and officer liability insurance. Risks associated with our status as a public company may make it more difficult to attract and retain qualified persons to serve on our board of directors or as executive officers. The additional reporting and other obligations imposed by these rules and regulations increase legal and financial compliance costs and the costs of related legal, accounting and administrative activities. These increased costs will require us to divert a significant amount of money that could otherwise be used to expand the business and achieve strategic objectives. Advocacy efforts by stockholders and third parties may also prompt additional changes in governance and reporting requirements, which could further increase costs.

Our failure to timely and effectively implement controls and procedures required by Section 404(a) of the ~~use~~Sarbanes-Oxley Act could have a material adverse effect on our business.

As a public company, we are required to provide management’s attestation on internal controls. The standards required for a public company under Section 404(a) of the ~~proceeds generated~~Sarbanes-Oxley Act are significantly more stringent than those required of Legacy Nikola as a private company. Management may not be able to effectively and timely implement controls and procedures that adequately respond to the increased regulatory compliance and reporting requirements that became applicable after the Business Combination. If we are not able to implement the additional requirements of Section 404(a) in a timely manner or with adequate compliance, we may not be able to assess whether our internal controls over financial reporting are effective, which may subject us to adverse regulatory consequences and could harm investor confidence and the market price of our securities.

We are an “emerging growth company” within the meaning of the Securities Act, and if we takes advantage of certain exemptions from disclosure requirements available to emerging growth companies, it could make our securities less attractive to investors and may make it more difficult to compare our performance to the performance of other public companies.

We are an “emerging growth company” as defined in Section 2(a)(19) of the Securities Act, as modified by the JOBS Act. As such, we are eligible for and intend to take advantage of certain exemptions from various reporting requirements applicable to other public companies that are not emerging growth companies for as long as we continue to be an emerging growth company, including (a) the exemption from the auditor attestation requirements with respect to internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act, (b) the exemptions from say-on-pay, say-on-frequency and say-on-golden parachute voting requirements and (c) reduced disclosure obligations regarding executive compensation in our periodic reports and proxy statements. We will remain an emerging growth company until the earliest of (i) the last day of the fiscal year in which the market value of common stock that are held by non-affiliates exceeds $700.0 million as of June 30 of that fiscal year, (ii) the last day of the fiscal year in which we have total annual gross revenue of $1.07 billion or more during such fiscal year (as indexed for inflation), (iii) the date on which we have issued more than $1 billion in non-convertible debt in the ~~Public Offering, see Part I, Item 2~~prior three-year period or (iv) the last day of the fiscal year following the fifth anniversary of the date of the first sale of common stock in VectoIQ’s IPO. In addition, Section 107 of the JOBS Act also provides that an emerging growth company can take advantage of the exemption from complying with new or revised accounting standards provided in Section 7(a)(2)(B) of the Securities Act as long as we are an emerging growth company. An emerging growth company can therefore delay the adoption of certain accounting standards until those standards would otherwise apply to private companies. We have elected not to opt out of such extended transition period and, therefore, we may not be subject to the same new or revised accounting standards as other public companies that are not emerging growth companies. Investors may find our securities less attractive because we will rely on these exemptions, which may result in a less active trading market for our common stock and the price of our common stock may be more volatile.

Our management has limited experience in operating a public company.

Our executive officers have limited experience in the management of a publicly traded company. Our management team may not successfully or effectively manage our transition to a public company that will be subject to significant regulatory oversight and reporting obligations under federal securities laws. Their limited experience in dealing with the increasingly complex laws pertaining to public companies could be a significant disadvantage in that it is likely that an increasing amount of their time may be devoted to these activities which will result in less time being devoted to the management and growth of the

company. We may not have adequate personnel with the appropriate level of knowledge, experience, and training in the accounting policies, practices or internal controls over financial reporting required of public companies in the United States. The development and implementation of the standards and controls necessary for the company to achieve the level of accounting standards required of a public company in the United States may require costs greater than expected. It is possible that we will be required to expand our employee base and hire additional employees to support our operations as a public company which will increase our operating costs in future periods.

Our Certificate of Incorporation provides, subject to limited exceptions, that the Court of Chancery of the State of Delaware will be the sole and exclusive forum for certain stockholder litigation matters, which could limit our stockholders’ ability to obtain a favorable judicial forum for disputes with us or our directors, officers, employees or stockholders.

Our Certificate of Incorporation requires, to the fullest extent permitted by law, that derivative actions brought in our name, actions against directors, officers and employees for breach of fiduciary duty and other similar actions may be brought in the Court of Chancery in the State of Delaware or, if that court lacks subject matter jurisdiction, another federal or state court situated in the State of Delaware. Any person or entity purchasing or otherwise acquiring any interest in shares of our capital stock shall be deemed to have notice of and consented to the forum provisions in our Certificate of Incorporation. In addition, our Certificate of Incorporation and our amended and restated bylaws, or our Bylaws, will provide that the federal district courts of the United States shall be the exclusive forum for the resolution of any complaint asserting a cause of action under the Securities Act and the Securities Exchange Act.

In March 2020, the Delaware Supreme Court issued a decision in Salzburg et al. v. Sciabacucchi, which found that an exclusive forum provision providing for claims under the Securities Act to be brought in federals court is facially valid under Delaware law. It is unclear whether this decision will be appealed, or what the final outcome of this ~~Form 10-Q.~~

~~Item 3.~~

~~Defaults Upon Senior Securities~~

case will be. We intend to enforce this provision, but we do not know whether courts in other jurisdictions will agree with this decision or enforce it.

This choice of forum provision may limit a stockholder’s ability to bring a claim in a judicial forum that it finds favorable for disputes with us or any of our directors, officers, other employees or stockholders, which may discourage lawsuits with respect to such claims. Alternatively, if a court were to find the choice of forum provision contained in our Certificate of Incorporation to be inapplicable or unenforceable in an action, we may incur additional costs associated with resolving such action in other jurisdictions, which could harm our business, operating results and financial condition.

If securities or industry analysts issue an adverse recommendation regarding our stock or do not publish research or reports about our company, our stock price and trading volume could decline.

The trading market for our common stock will depend in part on the research and reports that equity research analysts publish about us and our business. We do not control these analysts or the content and opinions included in their reports. Securities analysts may elect not to provide research coverage of our company and such lack of research coverage may adversely affect the market price of our common stock. The price of our common stock could also decline if one or more equity research analysts downgrade our common stock, change their price targets, issue other unfavorable commentary or cease publishing reports about us or our business. For example, in September 2020, an entity published a report containing certain allegations against us that we believe has negatively impacted the trading price of our common stock. If one or more equity research analysts cease coverage of our company, we could lose visibility in the market, which in turn could cause our stock price to decline.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

None.

~~Item 4.~~

~~Mine Safety Disclosures~~

Item 3. Defaults Upon Senior Securities

None.

Item 4. Mine Safety Disclosures

Not ~~Applicable.~~

applicable.

Item 5. Other Information

None.

Item 6. Exhibits

~~Item 5.~~

~~Other Information~~

~~None.~~

Exhibit No.

Description

4.1~~Item 6.~~

~~Exhibits~~

~~Exhibit~~ ~~Number~~				~~Description~~
~~2.1~~		~~Business Combination Agreement, dated as of March 2, 2020, by~~Amendment No. 1 to Registration Rights and ~~among VectoIQ Acquisition Corp., Merger Sub and Nikola Corporation.(1)~~

~~10.1~~		~~Stockholder Support~~Lock-Up Agreement ~~dated as of March 2, 2020,~~ by and among the ~~Company, M&M Residual, LLC, T&M Residual, LLC, Valueact Spring Master Fund, L.P.~~Registrant and certain stockholders of the Registrant, dated July 17, 2020 (incorporated by reference to Exhibit 4.1 to the Current Report on Form 8-K filed on July 23, 2020).
			10.1		#	Agreement by and between Trevor R. Milton and the Registrant , ~~VA Spring NM, LLC, OTW STL LLC, Thompson Nikola, LLC, Thompson Nikola II, LLC, Nimbus~~dated September 20, 2020 (incorporated by reference to Exhibit 10.1 to the Current Report on Form 8-K filed on September 21, 2020)
			10.2			Subscription Agreement by and between the Registrant and General Motors Holdings LLC, ~~Green Nikola Holdings LLC, Legend Capital Partners, and Iveco S.P.A.(1)~~dated September 3, 2020.

~~10.2~~		~~Form of Subscription Agreement.(1)~~

31.1				Certification of ~~Chief~~Principal Executive Officer ~~(Principal Executive Officer)~~ Pursuant to Rules 13a-14(a) and 15d-14(a) under the Securities Exchange Act of 1934, as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

31.2				Certification of ~~Chief~~Principal Financial Officer ~~(Principal Financial and Accounting Officer)~~ Pursuant to Rules 13a-14(a) and 15d-14(a) under the Securities Exchange Act of 1934, as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

32.1	^			Certification of ~~Chief~~Principal Executive Officer ~~(Principal Executive Officer)~~ Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

32.2	^			Certification of ~~Chief~~Principal Financial Officer ~~(Principal Financial and Accounting Officer)~~ Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
			101.INS			Inline XBRL Instance.
~~101.INS~~			101.SCH			Inline XBRL ~~Instance Document~~Extension Calculation Linkbase.
~~101.SCH~~			101.CAL		~~XBRL Taxonomy Extension Schema Document~~
~~101.CAL~~				Inline XBRL Taxonomy Extension Calculation ~~Linkbase Document~~Linkbase.
~~101.DEF~~			101.DEF			Inline XBRL Taxonomy Extension Definition ~~Linkbase Document~~Linkbase.
~~101.LAB~~			101.LAB			Inline XBRL Taxonomy Extension Label ~~Linkbase Document~~Linkbase.
~~101.PRE~~			101.PRE			Inline XBRL Taxonomy Extension Presentation ~~Linkbase Document~~Linkbase.
			104
~~(1) Incorporated by reference to an exhibit to the Current Report on Form 8-K filed by the Company on March 3, 2020.~~

Cover Page Interactive Data File (formatted as Inline XBRL).

________________

~~SIGNATURES~~

#Indicates management contract or compensatory plan or arrangement.

^In accordance with Item 601(b)(32)(ii) of Regulation S-K and SEC Release No. 34-47986, the certifications furnished in Exhibits 32.1 and 32.2 hereto are deemed to accompany this Quarterly Report on Form 10-Q and will not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934 (the “Exchange Act”) or deemed to be incorporated by reference into any filing under the Exchange Act or the Securities Act of 1933 except to the extent that the registrant specifically incorporates it by reference.

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

	~~VECTOIQ ACQUISITION CORP.~~
			NIKOLA CORPORATION
~~Dated: May 11, 2020~~		~~/s/ Stephen Girsky~~
		~~Name: Stephen Girsky~~	By:	/s/ Mark A. Russell
		~~Title:~~		Mark A. Russell
				President and Chief Executive Officer
		(		Principal Executive ~~Officer)~~

~~Dated: May 11, 2020~~	~~/s/ Steve Shindler~~Officer
		~~Name: Steve Shindler~~
		~~Title:~~	By:	/s/ Kim J. Brady
				Kim J. Brady
				Chief Financial Officer
		(		Principal Financial and Accounting ~~Officer)~~Officer

Date: November 9, 2020


☒			QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934


☐			TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

	March 31, 2020 (Unaudited)		December 31, 2019
Assets
Current assets:
Cash and cash equivalents	$	1,150,163	$	751,640
Prepaid expenses and other current assets		7,813		23,438
Total current assets		1,157,976		775,078

Non-current assets:
Cash and cash equivalents held in Trust account		238,377,571		10,316
Investments held in Trust account		-		238,372,960

Total assets	$	239,535,547	$	239,158,354

Liabilities and Stockholders’ Equity
Current liabilities:
Accounts payable	$	139,452	$	80,042
Accrued liabilities		79,911		244,644
Accrued income tax payable		694,852		408,275
Note payable		422,000		-
Total current liabilities		1,336,215		732,961

Deferred tax liability		-		101,521

Total liabilities		1,336,215		834,482

Commitments and Contingencies

Common shares subject to possible redemption, 22,509,588 and 22,552,141 shares at redemption value of $10.36 at March 31, 2020 and December 31, 2019		233,199,331		233,323,871

Stockholders’ Equity:
Preferred stock, $0.0001 par value; 1,000,000 shares authorized; none issued and outstanding at March 31, 2020 and December 31, 2019		-		-
Common stock, $0.0001 par value; 100,000,000 shares authorized; 7,130,412 and 7,087,859 shares issued and outstanding (excluding 22,509,588 and 22,552,141 shares subject to possible redemption) at March 31, 2020 and December 31, 2019, respectively		713		709
Additional paid-in capital		4,999,288		4,999,292
Retained earnings		-		-
Total stockholders’ equity		5,000,001		5,000,001
Total Liabilities and Stockholders’ Equity	$	239,535,547	$	239,158,354

	For the three months ended March 31,
	2020			2019
Expenses:
General and administrative expenses	$	698,512		$	254,228

Loss from operations		(698,512	)		(254,228	)

Other income:
Investment income in Trust account		759,028			1,350,021

Income before income tax expense		60,516			1,095,793

Income tax expense		185,056			286,002

Net (loss) income	$	(124,540	)	$	809,791

Weighted average shares outstanding, basic and diluted		29,640,000			29,640,000
Basic and diluted net (loss) income per share	$	(0.00	)	$	0.03

					Additional						Total
	Common stock				Paid-in			Retained			Stockholders’
	Shares		Amount		Capital			Earnings			Equity
Balance at December 31, 2019		7,087,859	$	709	$	4,999,292		$	-		$	5,000,001
Common stock subject to possible redemption		42,553		4		(4	)		124,540			124,540
Net loss		-		-		-			(124,540	)		(124,540	)
Balance at March 31, 2020		7,130,412	$	713	$	4,999,288		$	-		$	5,000,001


	Nine Months Ended September 30, 2019
	Redeemable Convertible Preferred Stock			Common Stock			Additional Paid-in Capital		Accumulated Deficit		Total Stockholders' (Deficit) Equity
	Shares	Amount		Shares	Amount
Balance as of December 31, 2018	76,817,224	$	278,062	60,166,667	$	1	$	6,742	$	(98,565)	$	(91,822)
Retroactive application of recapitalization	(76,817,224)	(278,062)		200,239,676	25		278,037		0		278,062
Adjusted balance, beginning of period	0	0		260,406,343	26		284,779		(98,565)		186,240
Issuance of Series D redeemable convertible preferred stock, net of $4,375 issuance costs (1)	—	—		6,671,998	1		60,624		—		$	60,625
Issuance of Series D redeemable convertible preferred stock for in-kind contribution (1)	—	—		5,132,291	—		50,000		—		$	50,000
Exercise of stock options	—	—		563	—		—		—		$	0
Stock-based compensation	—	—		—	—		3,772		—		3,772
Cumulative effect of ASU 2018-07 adoption	—	—		—	—		162		(162)		0
Net loss	—	—		—	—		—		(62,377)		(62,377)
Balance as of September 30, 2019	0	$	0	272,211,195	$	27	$	399,337	$	(161,104)	$	238,260

	For the three months ended March 31,
	2020			2019
Cash Flows from operating activities:
Net (loss) income	$	(124,540	)	$	809,791

Adjustments to reconcile net (loss) income to net cash used in operating activities:
Investment income earned on marketable securities held in Trust account		(507,040	)		(1,350,021	)
Deferred income taxes		(101,521	)		98,273
Change in operating assets and liabilities:
Decrease in prepaid expenses		15,625			15,625
Decrease in accounts payable and accrued liabilities		(105,323	)		(57,312	)
Increase in accrued income tax payable		286,577			187,729
Net cash used in operating activities		(536,222	)		(295,915	)

Cash flows from investing activities:
Purchases of investments held in Trust account		-			(236,038,264	)
Maturities of marketable securities held in Trust account		238,880,000			236,000,000
Net cash provided by (used in) investing activities		238,880,000			(38,264	)

Cash Flows from financing activities:
Proceeds from note payable		422,000			-
Net cash provided by financing activities		422,000			-

Net change in cash and cash and equivalents held in Trust account		238,765,778			(334,179	)
Cash and cash equivalents held in Trust account - beginning of period		761,956			1,216,579
Cash and cash equivalents held in Trust account - end of period	$	239,527,734		$	882,400

	Carrying value at March 31, 2020		Gross Unrealized Holding Gain		Quoted Prices in Active Markets (Level 1)
Assets:
Cash	$	384,710	$	-	$	384,710
Cash equivalents		237,992,861		-		237,992,861
Total	$	238,377,571	$	-	$	238,377,571

	Carrying value at December 31, 2019		Gross Unrealized Holding Gain		Quoted Prices in Active Markets (Level 1)
Assets:
Cash	$	10,316	$	-	$	10,316
U.S. government treasury bills		238,372,960		5,702		238,378,662
Total	$	238,383,276	$	5,702	$	238,388,978

	March 31, 2020			December 31, 2019
Deferred tax asset (liability):
Unrealized gains on marketable securities	$	-		$	(101,521	)
Start-up costs		357,750			241,613
Less: Valuation Allowance		(357,750	)		(241,613	)
Deferred tax liability	$	-		$	(101,521	)